ISAS Brief 2012 by Institute of South Asian Studies ISAS

ISAS Brief 2012

ISA S Brief No. 227 – 26 January 2012 469A Bukit Timah Road #07-01 Tower Block National University of Singapore Singapore 259770 Tel: 6516 4239 / 6516 6179 Fax: 6776 7505 / 6314 5447 Email: isassec@nus.edu.sg Website: www.isas.nus.edu.sg

India Eyeing a New Gateway to Southeast Asia C Raja Mohan 1

Abstract India’s strategic objective of establishing close connectivity with Southeast Asia has received fresh impetus following Prime Minister Manmohan Singh’s talks with Thai leader Yingluck Shinawatra and with Myanmar’s Foreign Minister Maung Lwin in New Delhi at this time. Coming into focus now is the interest expressed by India in associating itself with Thailand’s ambitious plans of developing an infrastructure hub at Dawei in southeastern Myanmar.

Thai Prime Minister Yingluck Shinawatra’s visit to India as Chief Guest at its annual Republic Day celebrations on 26 January has raised the prospect of New Delhi’s participation in Bangkok’s ambitious plans to develop a large infrastructure project in southern Myanmar. After years of expressing anxiety and wringing hands about China’s construction of ports in its neighbourhood in the Indian Ocean - at Gwadar in Pakistan, Hambantota in Sri Lanka, and Kyauk Phyu in Myanmar - Delhi now is eager to join the Dawei project that has been billed as Southeast Asia’s largest infrastructure venture ever. Thailand is taking the political lead in this project that is expected to transform the regional economy and reorder the historic trade routes between the Indian Ocean and the Western Pacific.

Dr C Raja Mohan is Visiting Research Professor at the Institute of South Asian Studies, an autonomous institute at National University of Singapore. He can be contacted at isascrm@nus.edu.sg. The views expressed are those of the author and do not necessarily reflect those of the institute.

Connectivity, over land and sea, with Southeast Asia has long been a major strategic objective of India, but largely unrealised. Cooperation with Myanmar and Thailand in developing a multimodal transport corridor at Dawei could change that. India’s Prime Minister Manmohan Singh has taken up the question of New Delhi’s participation in Dawei’s development with Ms Yingluck and with U Maung Lwin, Myanmar’s Foreign Minister, who was visiting Delhi at the same time. Promoted by a major Thai construction company, Ital-Thai, the Dawei project is estimated to cost about $50 billion and spread over nearly 250 sq km in the sleepy Tenasserim division of Southern Myanmar. As Myanmar ends its prolonged political and economic isolation, it hopes to become a major global investment destination. The Dawei project showcases the huge potential for economic growth in Myanmar, as well as its unique geopolitical location that bridges India, China, Southeast Asia as well as the Indian and Pacific Oceans. The Dawei project includes the construction of a deep seaport, superhighways, power plants, shipyards, oil refineries, a steel mill, and a petrochemical complex. The new trade route running across Myanmar and Thailand and connecting up with the coastlines of Vietnam and Cambodia could emerge as a complement to the current crowded sea lanes of the Malacca Straits, through which much of the trade between China and East Asia on the one hand and the Indian Ocean and Europe on the other traverses today.

Quest of Sailors and Sovereigns For centuries now, finding a short cut between the Andaman Sea and the Gulf of Thailand, through the long but narrow peninsula separating them, has animated sailors and sovereigns in the region. The most famous of them was the plan to dig a canal across the peninsula where the territories of Myanmar, Thailand and Malaysia converge. Like the Panama Canal linking the Atlantic and Pacific Oceans, the Kra channel would have connected the Indian and Pacific Oceans. A few decades ago there were plans to use nuclear explosives to blast through the isthmus. The Thai plans for the Kra canal were just too expensive and the project never took off. In recent years, Malaysia had considered the construction of an oil pipeline across its territory that would have allowed oil tankers heading to the East Asian waters bypass the Malacca 2

strait. There was some reported interest among the Chinese companies, but this plan too has gone off to the backburner. The Dawei project is similar in essence to the earlier ideas of shortening the sailing distance from the Bay of Bengal to the Western Pacific. It is different in the sense that the plan now is to create an overland system of logistical flow coupled with a massive industrial complex. Like all ambitious projects, the one at Dawei too has run into some political difficulties. Nay Pyi Taw recently overruled the Ital-Thai plans to build coal-fired plants, citing popular environmental concerns in the region. The Karen National Union, representing an important ethnic minority, has sought to block the construction of the road from Dawei to Bangkok. Many other issues on the Myanmar side relating to visas, customs facilitation and the development of associated road networks remain to be sorted out before the first phase of the project can be fully implemented. Somchet Thinaphong, managing director of the Dawei Development Corporation (DDC), in which Ital-Thai has a controlling stake, told the press in Bangkok recently that he has full confidence in the new political leadership of Myanmar to back the project. The DDC, he added, hopes to secure $8.5 billion by the end of 2012 to finance infrastructure and utilities under the first phase of the project. “China, Japan and South Korea are the key strategic partners of our projects”, Somchet said. “Finding a balance for each of these groups is important. For example, if we have a lot of Chinese partners, the US might not be happy with that”, Somchet emphasised.

China’s Interest The interest of Beijing, which has actively promoted transport corridors in the region including in Myanmar, is quite natural and strong in developing Dawei. China plans to build free trade centre in Bangkok and would like to use the Dawei port, 250 km away, to boost Chinese commerce across the Indian Ocean. Japan, competing with China for influence in Southeast Asia, is equally keen to participate in the development of Dawei complex. In recent years, Japan has also emphasised the importance of developing transport corridors between South and Southeast Asia.

For India, Dawei is a golden opportunity to tighten economic integration with Southeast Asia and develop a transport corridor to the shores of the Western Pacific through Myanmar and Thailand. By collaborating with Chinese companies in the Dawei project, Delhi can also reduce the sense of rivalry with Beijing in Myanmar and Southeast Asia and become an effective partner in cooperative development in East Asia. .....

ISA S Brief No. 228 – 13 February 2012 469A Bukit Timah Road #07-01, Tower Block, Singapore 259770 Tel: 6516 6179 / 6516 4239 Fax: 6776 7505 / 6314 5447 Email: isassec@nus.edu.sg Website: www.isas.nus.edu.sg

Painful Politics in ‘Paradise’: Changes in the Maldives Iftekhar Ahmed Chowdhury1

Introduction The Maldives conjures up an image of paradise, with turquoise seawater lapping against the silver sands of a thousand idyllic islets! Alas, this serene picture does not portray its politics, whose volatility has not ceased to surprise observers. Even prior to formal independence from the British in 1965, a head of government, Mohammed Amin Didi was lynched by the public as he had fallen foul of the people. The three-decade-long rather repressive rule of President Maumoon Abdul Gayoom, who won six consecutive elections (all uncontested, with no chance of his losing any), saw a number of coup attempts, in 1980, 1983 and 1988. The last one required Indian support to be put down.

The Maldives in the World Over a period of time, this tiny state, with a population of 300,000 and a total area of only 298 sq km spread over 26 atolls, has attracted some global attention. Three-fold reasons can be discerned: first, as a tourist destination where, attracted by the sights, sounds and scents of nature, foreigners have descended in great numbers; second, as an archipelago vulnerable to the possible effects of climate change, this Indian Ocean state is seen to face the threat of submergence; and third, as a focus of some amount of strategic competition between the two Asian Goliaths China and India, the Maldives is a recipient of their affections. The Maldivian 1

Dr Iftekhar Ahmed Chowdhury is Senior Research Fellow at the Institute of South Asian Studies (ISAS), an autonomous institute at the National University of Singapore (NUS). He was (Foreign Advisor) Foreign Minister of Bangladesh from 2007-2009. He can be contacted at isasiac@nus.edu.sg. The views expressed are those of the author and do not necessarily reflect the views of the Institute.

governments have also had positive exposure to a number of international events, such as United Nations sessions, SAARC (South Asian Association for Regional Cooperation) meetings and climate-related conferences.

The Coming of Democracy Eventually, even under Gayoom, democracy, or at least a slice thereof, came to the Maldives as he yielded to pressures and held elections in October 2008, in two rounds. He did handsomely in the first, polling 70,000 votes, with his principal rival, Mohamed Nasheed, leading the Maldivian Democratic Party (MDP), coming a distant second with 40,000. By then, Nasheed had been a long-term political activist, who was vocal on environmental issues and who enjoyed powerful western (particularly British) contacts, and whom Gayoom had imprisoned with a relentless regularity, leaving little space for any social cosiness. In the runoff polls, Nasheed‟s strategy of picking the right allies paid off (though many deserted him soon afterwards), and he was elected with a 54 per cent majority support. So Gayoom‟s Drivehi Rahiyyithunge Party (DRP) took a sound beating.

Nasheed’s Rise and Fall Nasheed came into office with a long „to-do‟ list, and to his credit, he did implement some of his plans. He championed the environmental cause, and added a touch of dramatic politics, by holding a cabinet meeting below sea-level to advertise the possible fate of his country. He floated the idea of creating a sovereign wealth fund from resources derived out of tourism to enable relocation of his population to Sri Lanka, India and Australia should the Maldives indeed sink. A combination of tourism, fisheries and garments led the Maldives to graduate out of the list of Least Developed Countries (LDCs), which may have lent prestige but also limited the favoured market-access to the world‟s poorest nations. In foreign affairs, he was both seen and heard. He succeeded in cultivating his friends from the United Kingdom – he had a British climate advisor – and from neighbouring Sri Lanka. He seemed to deal with India and China deftly. He hosted Wu Bangguo, a prominent Chinese political leader, obtained Chinese concessional loans to build 1,000 housing units. Under his watch, his country‟s trade touched US$64 million in 2010, rising by 56 per cent from 2009. The Chinese, who built the Maldivian Foreign Office building, however, learnt soon enough that the act of building the Foreign Ministry‟s physical structure does not necessarily translate into the ability to construct the Maldivian foreign policy too. For Nasheed soon travelled to India, acceded to India‟s request to deploy 26 coastal radars and refurbish the British Gan Island for reconnaissance use, and declared “Indian ocean is Indian Ocean”, all of which was not music to the Chinese ears. 2

Similar craftiness on the domestic scene would have served him better. Democratic institutions had not yet taken firm roots in the Maldives when he took office. Soon enough, Nasheed was embroiled in a clash with the Civil Service Commission, complaining about its inability to handle the friction between political nominees and civil service appointees. Meanwhile the global recession impacted negatively on the tourism industry, thus denting the economy and sharpening public disaffection. Nor did he himself appear to be steeped in democratic values, for he did go after his predecessor Gayoom, and when the Criminal Court Chief Justice Abdullah Mohammad refused to be obliging in this regard, ordered his arrest (Abdullah Mohammad, a former student of Gayoom is not known to be perfect, but corruption is said to be rife even amongst the judiciary, but Nasheed‟s drive against it reeked of political motivation!). In a 100 per cent Muslim society, with a sadly increasing marginalisation of tolerance, Nasheed‟s alleged taste for the tipple was held against him. As a result his honeymoon with power had a sorry end. Ordered to tackle the mounting protests, the police first disobeyed and then mutinied; some troops joined hands, and a flurry of activity on 7 February 2012 ended in the denouement of Nasheed‟s resignation. Or, as Nasheed later claimed in an interview with Al-Jazeera, he was forced to do so at gunpoint. He called it a coup in the space given to him for an op-ed in the New York Times. He accused his successor, former Vice-President Mohammed Waheed Hassan Manik, a Stanford educated ex-UN staffer, of complicity. Manik‟s Secretary said it was not a „coup‟, but „a wish of the people‟, without explaining how such a wish was ascertained. Manik‟s own, somewhat unconvincing defence, was the statement „Do I look like an accomplice?‟ This does not totally erase the doubt of a wink and nudge in support, for, of late, he had indeed fallen out with Nasheed. For a while now, academics and experts will debate the definition of a coup d‟etat. Nasheed was down, but not out. He has been able to organise a series of demonstrations in his favour and mobilise some foreign media support. He has also publicly pinned his faith on the forthcoming elections in 2013 (which some critics say he himself was conspiring to postpone!). The gainer in all this is Gayoom, who reportedly is in Malaysia at present, but no doubt would be planning a grand homecoming at not-too-distant a future!

Prognosis So, what appeared to be budding pluralism in the Maldives – the efflorescence of „spring‟ in yet another Muslim nation – appears to be withering in pain. Yes, the coup was bloodless, but only because what bled was democracy. As is natural, wounded democracy leaves no blood stains! However, there has been continued violence in many atolls since Nasheed‟s removal. 3

The phone call from the Indian Prime Minister Manmohan Singh to Manik, and the remark about „transfer of power‟ by Ban ki-Moon, the United Nations Secretary General, will be treated as „recognition‟ for the new regime. In any case, the change now appears to be a reality. The statement of the United States (US) State Department spokesperson Victoria Nuland that Washington considered the new government „legitimate‟ was much to Nasheed‟s chagrin. Was all this a tad hasty, one might reasonably ask. Stunned by the quick endorsement by the US and India of the change, Nasheed may have learnt the hard way some unsavoury aspects of „realpolitik‟. By force or not, technically Nasheed had resigned and a successor was sworn in, in accordance with the Constitution. Yet, this could create a destabilising international precedence! The new President‟s remark that Nasheed was „autocratic in many ways‟ is a sign of the difficulties to come in their relationship. But it will also be incumbent upon those who have accorded the change „recognition‟ to facilitate the elections next year. This will be Nasheed‟s focus henceforth. Rumours of arrest warrants against him can be worrisome. Gayoom and Nasheed will perhaps have another opportunity to sling it out again in the polls. It is too early to tell what Wahid Hassan Manik‟s role will be in this context. For now, Nasheed has rejected Manik‟s idea of an expanded cabinet of „national unity‟ and the US urgings for „compromise‟. However, it is only through elections that one will have the real chance of discerning „the will of the people‟.

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ISA S Brief No. 229 – 13 February 2012 469A Bukit Timah Road #07-01, Tower Block, Singapore 259770 Tel: 6516 6179 / 6516 4239 Fax: 6776 7505 / 6314 5447 Email: isassec@nus.edu.sg Website: www.isas.nus.edu.sg

A Musharraf Order Haunts Pakistan Sajjad Ashraf1

The spectre of Pakistan’s embattled Prime Minister Yusuf Raza Gilani being convicted for contempt of court on 13 February 2012 – for flouting court orders to write to the Swiss authorities to re-open money laundering cases against President Asif Ali Zardari – threatens to plunge the country deeper into a political crisis. Benazir Bhutto, Zardari’s slain wife and a former Prime Minister of Pakistan, was the co-accused in those money laundering cases. It is widely believed that Gilani will now be formally indicted. Earlier, after a two-day preliminary hearing, the court was ‘satisfied prima facie that there is enough case for further proceedings’. Gilani, who ‘had long stood convicted in the court of public opinion, guilty of crimes like incompetence and corruption’ (in the words of the editor of The News), may become the first sitting Prime Minister of Pakistan to be convicted for contempt of court, to be imprisoned and to stand disqualified for public office for five years. The contempt case stems from a ruling by the full-17-member Supreme Court on 16 December 2009 that the Musharraf-promulgated National Reconciliation Ordinance (NRO) of 5 October 2007 was illegal from the date of promulgation. As is well known, General 1

Ambassador (R) Sajjad Ashraf served as Pakistan’s High Commissioner to Singapore from 2004 to 2008. He is currently Adjunct Professor at the Lee Kuan Yew School of Public Policy, National University of Singapore and Visiting Senior Research Fellow at the Institute of Southeast Asian Studies, Singapore. The views expressed are those of the author and do not necessarily reflect those of the Institute of South Asian Studies, Singapore.

Pervez Musharraf was formerly Pakistan’s military ruler. And, under this judicial order of 2009, it was incumbent on the authorities to reopen all cases against the NRO beneficiaries. National Reconciliation Ordinance The NRO, admittedly brokered by the former United States Secretary of State Condoleezza Rice, allowed amnesty for crimes committed from 1 January 1986 to 12 October 1999 by thousands of politicians and crony bureaucrats. The NRO ‘white wash’ first paved the way for Benazir Bhutto’s return to Pakistan from exile and later catapulted Zardari to the presidency. The present government has remained mum over Zardari’s cases in Switzerland, despite 16 compliance directives from the Supreme Court. Its lack of sincerity in other cases is evident from the virtual non-pursuance of trials in the courts which has led to the acquittal of many who were accused of corruption, nepotism, money laundering, and related crimes. The Supreme Court’s latest move has come amid intense political uncertainty in Pakistan which has been caused mainly by maladministration. The court’s decision in the Gilani case is likely to aggravate tensions between the executive and the proactive judiciary just when the government’s apprehensions about the army appeared to be subsiding. With the judgment on the NRO issue having been delivered over two years ago, the key element of which remains unimplemented, the court’s credibility is also at stake. (Editor’s Note: These arguments reflect the current mood in Pakistan.) During the proceedings in Gilani’s case, his counsel’s arguments rested on Article 248 of the Pakistan Constitution, which grants immunity to the president. But the counsel exposed his real intentions by refusing to commit the government to writing the letter. The indictment process is, therefore, an inevitable consequence of institutional intransigence on the part of the present government. Facing the prospect of a judicial indictment of the Prime Minister, his counsel, speaking to the media and evidently politicking, warned that a ‘third party’ (meaning the army) could take advantage amid the growing tension between the judiciary and the executive.

Democracy Mantra and a Counterpoint While the government uses the ‘democracy in danger’ mantra, respected commentators agree that democracy is actually strengthened if the rule of law is upheld. The main opposition Pakistan Muslim League (Nawaz), led by former Prime Minister Nawaz Sharif, whom Musharraf toppled in 1999 and established military rule, has vowed not to resort to any extra-constitutional measures to throw the present government out. The rising

political star, the cricketer-turned-politician Imran Khan, has declared his support for the Court. The main religious parties, though agitating against the government, are yet to translate their strength in the mosque into electoral success. The other parties – essentially regional and the Musharraf-rule remnants – are in the governing coalition. Despite their bitter differences, all seem united in their opposition to military intervention and agree on holding early elections. The Chief Justice, who earned the respect of the country by twice standing up to Musharraf, has publicly stated that the Court will not condone a military takeover. The army, under Chief of Staff General Kayani, has shown no appetite for a direct intervention. His restraint shows that the army wants the civilian system to work. The theory of conspiracy between the army and judiciary to oust the government is being promoted to deflect attention away from the ineptitude of the government. Gilani has reportedly chosen to go down fighting by upholding the principle of presidential immunity under Article 248 and to become a political martyr. His conviction, considered likely, could in fact imply limitations on the immunity, opening another Pandora’s Box. In a logical next step, Zardari’s election to the office of the president could be challenged. Gilani’s disqualification, also considered likely, will mean that a new prime minister will have to be chosen. Given the present coalition’s numbers in parliament, the new prime minister will also be from Gilani’s party. So, the new prime minister may also refuse to write to the Swiss authorities. It will then lead to a real political deadlock. In the parliamentary system of governance, snap elections are meant to unravel gridlocks like these. So, the answer lies in early elections.

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ISA S Brief No. 230 – 21 February 2012 469A Bukit Timah Road #07-01, Tower Block, Singapore 259770 Tel: 6516 6179 / 6516 4239 Fax: 6776 7505 / 6314 5447 Email: isassec@nus.edu.sg Website: www.isas.nus.edu.sg

Pakistan’s Economic Troubles Shahid Javed Burki1

Abstract There are indications that Pakistan is again headed towards a deep economic crisis. While the country’s economic history was punctuated by many upheavals, the anticipated difficulties will come at a time when remedial action will be hard to adopt. There are good reasons why the world should watch the developing situation in Pakistan since its impact will be felt way beyond the country’s borders. Pakistan is central to the economic and political evolution of the Muslim world. Its experience could discourage other Muslim countries to adopt democracy in order to bring inclusive economic development.

Introduction In the past, whenever Pakistan was faced with a difficult external payments situation, it was helped by some country or some financial institution. The United States, China, Saudi Arabia, the United Arab Emirates and the International Monetary Fund have all played this role at different times in Pakistan’s torrid economic history. In 1997, China put $500 million in Pakistan’s external account to save the country from bankruptcy. Another $250 million was provided by UAE. In 2000 and again in 2008 Islamabad was able to negotiate large programmes with the Fund that injected much-needed foreign capital into the economy.

Shahid Javed Burki is Visiting Senior Research Fellow at the Institute of South Asian Studies (ISAS), an autonomous research institute at the National University of Singapore. He was former Finance Minister of Pakistan, and former Vice-President of the World Bank. He can be contacted at sjburki@yahoo.com. The views expressed are those of the author and do not necessarily reflect the views of the institute.

In 2009, President Barack Obama signed into law the Kerry-Lugar-Bermen bill that promised continuous and predictable flow of American money into Pakistan. This was to happen for at least five years at the rate of $1.5 billion a year. There was an indication that this level of assistance could be extended for another five years. But that promise was not kept. Islamabad read the help from these sources in the wrong way. It seems to have concluded that it was too large a country to fail, too large an economy to be allowed to go bankrupt, and located in too sensitive a geographic space to be ignored for too long. Financial markets have a term for this kind of behaviour. They call it “moral hazard”. This is the tendency on the part of individuals, institutions and countries to act irresponsibly in the belief that when difficult times come, they will be rescued. This is the way Islamabad has behaved not just recently but over the last several decades. Each time it received foreign assistance, it promised to mend its ways. It never did. Most recently it walked out of the programme with the Fund, unable to meet that institution’s requirement for long-postponed reforms. The Fund was worried in particular by Islamabad’s failure to mobilise more domestic resources for financing government business. By the Fund’s reading a growing fiscal deficit was central to Pakistan’s persistent economic problems

Genesis of the Current Crisis It is politics and poor governance that explains Pakistan’s failure to improve domestic resource mobilisation. The Pakistan People’s Party (PPP)-led government in Islamabad took office in March 2008 with the expectation that it will bring good quality governance to the country. But it has been reluctant to persuade a number of its diverse constituencies that they must pay their fair share as taxes. Unless those in power gather the political will to bring in most of the population into the tax net, the country will remain short of resources. It will also remain dependent on foreign sources for capital infusion. But the world may not be as accommodating this time as it was in the past. The country may not be able to get timely help as it heads once again towards a payments crisis. That a crisis is coming was made amply clear by the Governor of the State Bank of Pakistan in his press briefing following the decision by his organisation not to change the discount rate. He has provided information on the rapid run-down in foreign exchange reserves as the trade deficit continues to be large and as the flow of foreign funds is reduced to a mere trickle. The State Bank’s report for the first quarter of the current financial year points to the difficult situation that lies ahead. ‘In the past, Pakistan has sustained larger current account deficits without losing its foreign reserves due to healthy inflows in the financial account’, wrote the Bank. 2

‘Unfortunately owing to both domestic weaknesses and the international financial upheaval, financial flows have almost dried up, adding to the country’s economic vulnerability. While some financial flows are expected, a part of the current account is likely to be financed through reserves…Striking a balance in managing a flexible exchange rate driven by economic fundamentals and by market speculation (within the context of sharp currency movements in the global economy) is challenging.’2 In other words, the country seems headed towards another foreign exchange crisis of the type that has marred economic performance so many times in the past. But this time, there are some serious differences with the past. The crisis is coming in what is an election year for Pakistan. The next general election must be held before March 2013. With so much to be done to win votes, those in power will be tempted to use the budget to finance the activities that will win them favour with the voters. The last big balance of payments crisis came in 2008, after the government headed by General Pervez Musharraf had emptied the state’s coffers to help the political party, the Pakistan Muslim League (Q), which had given it support. The party did less well than the military leader had hoped but the budgetary deficit, because of the election-related expenditures, crossed the sustainable level by a large margin. High fiscal deficits almost always affect external payments balance. They create additional domestic demand that, in turn, increases imports and hence results in increasing trade deficit. Which is why the IMF, when called in to help with a foreign exchange crisis, almost always focuses its attention and that of the government seeking help on reducing the fiscal deficit. This is what the Fund did in 2008 when it agreed to provide Pakistan with more than $11 billion in quick-disbursing assistance. In the 2012 election year, the pressure on the PPP-led government to spend is even greater than was the case in 2007. Then the economy was performing reasonably well, there was an increase in the rate of employment, and there was no significant pressure on domestic prices. This time the country is faced with a serious economic crisis and, as indicated by the rise of Tehrik-e-Insaf led by Imran Khan, there is a great deal of discontent in the country. It has reduced the electoral chances of the parties that are in the PPP-led coalition. It can be said with some certainty that the government in power will use not only public finance to build electoral support for the coalition partners, but will also seek financing from the State Bank of Pakistan. Pakistan’s economic problems are not limited to the way fiscal and monetary policies have been formulated and implemented. There are a number of other structural problems, most of 2

State Bank of Pakistan, The State of Pakistan’s Economy: First Quarterly Report, Karachi, 2012.

them caused by poor governance. There are shortages of a number of production inputs, in particular that of electricity and natural gas. The State Bank of Pakistan estimates that transmission and distribution losses vary from 11 percent to 37 percent of total supply3. It is estimated that electricity cuts reduce by three percentage points the rate of growth of national product. According to a special report on Pakistan published by The Economist in February ‘at the end of November last year unpaid electricity bills reached 326 billion rupees [US$3.5 billion, or 1.85 per cent of GDP]. Among the big defaulters were the railways, the prime minister’s secretariat, the army and the ISI.’4

Remedial Actions Pakistan has two options to deal with the developing situation. It could take the steps demanded of it by the IMF in which case another programme of assistance could possibly be negotiated accompanied by a fresh flow of much needed funds. This may be difficult in an election year. Or, it could persuade the countries that have come to its rescue in the past to do that once again. This would require major adjustments in public policies, in particular the approach towards the United States. Washington is unlikely to help Islamabad unless it is reassured that it would receive Pakistan’s assistance in helping it to exit Afghanistan. Given the poor opinion the Pakistani public has of the United States at this time – a fact revealed by the opinion surveys conducted by the Washington-based Pew Research Center – a swing in the policy stance will be difficult in an election year. Therefore, to factor in continuing American financial support in significant amounts would be a mistake. This was done by the Ministry of Finance in preparing the budget for 2011-12. Would the cash-surplus countries in the Middle East help? They might as they have done in the past. But they too will need positive signals from the IMF and Washington. That, as discussed above, will not be readily forthcoming. China remains the only viable option but could not be counted upon to provide budgetary support. In this context I should recall my visit to Beijing in December 1996 to seek its help which led to the deposit of $500 million in Pakistan’s account in New York with the US Federal Reserve Bank. While Beijing stepped in with support, Prime Minister Zhu Rongji warned me that that kind of support would not be available in the future. He advised me that I should, during my brief tenure as the de facto finance minister, make a serious effort to reform Pakistan’s public finance. I believe the same message was given to President Asif Ali Zardari early in his tenure. He had then approached the Chinese for help. As the history of Pakistan’s 3 4

The State Bank of Pakistan, Annual Report, 2010-11, Karachi, 2011, pp. 35-43. The Economist, Perilous Journey: Special Report on Pakistan, 11 February 2012, p. 12.

relations with China shows, Beijing is willing to provide large doses of project aid but not programme assistance in the sense of budgetary support. With such limited options, Pakistan cannot hope to avoid a serious balance of payments crisis in the next few months. We will see a rapid run-down in the foreign exchange reserves maintained by the State Bank, a rapid drop in the value of the rupee, and continuing slow rate of economic growth. The year 2012 is likely to be one of the worst in Pakistanâ&#x20AC;&#x2122;s economic history. Economic difficulties will affect political and social stability.

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ISAS Brief No. 231 – 23 March 2012 469A Bukit Timah Road #07-01, Tower Block, Singapore 259770 Tel: 6516 6179 / 6516 4239 Fax: 6776 7505 / 6314 5447 Email: isassec@nus.edu.sg Website: www.isas.nus.edu.sg

Is the US–Afghan Strategic Partnership in Doldrums? Shanthie Mariet D’Souza1

Abstract As the search for the Afghan ‘end game’ has intensified in the United States, a Strategic Partnership Deal (SPD) entailing a limited but long-term presence of US forces in Afghanistan is seen as a crucial cornerstone to prevent the return of Afghanistan to the pre9/11 days. A series of incidents such as the burning of the copy of the Holy Quran and the massacre of civilians at the hands of an American sergeant has yet again thrown the US ‘exit strategy’ into disarray. In the ensuing negotiations over the contentious conditionalities, the recent incidents have worked into tilting the balance in favour of President Hamid Karzai, a shift that could have telling effects on just not on the future US-Afghan relationship but also for the overall prospects of peace and stability in the war-torn country.

Introduction The massacre of 16 civilians by an American sergeant, the Quran copy burning episode, the images of US soldiers urinating on the corpses of their Taliban adversaries, the mounting civilian casualties and controversial night raids combined with the anxiety emanating from the hasty announcements of exit - have added up and contributed to the differing perceptions on the nature of the partnership between the two allies, impacting on the future of peace and stability in Afghanistan. In the words of President Hamid Karzai, US-Afghan relations are at

Dr Shanthie Mariet D’Souza is Visiting Research Fellow at the Institute of South Asian Studies (ISAS), an autonomous institute at the National University of Singapore (NUS). She can be reached at isassmd@nus.edu.sg. The views expressed are those of the author and do not necessarily reflect those of the institute.

a breaking point. "It is by all means the end of the rope here. The end of the rope that nobody can afford such luxuries anymore"2, he said. However, even as citadels crumble all around him, Karzai knows that with the string of errors perpetrated by the Americans of late, his bargaining power vis-a-vis the Americans has increased enormously. Will this tactical positioning accrue benefits for Afghanistan in the long-run remains a critical question? Will the concessions granted from such bargaining consolidate or result in a reversal of gains?

The Emerging Faultlines and Divergent Perceptions Since early 2011, U.S. and Afghan officials have had series of meetings to ink a Strategic Partnership Deal (SPD) which will pave the way for retention of approximately 20,000 to 30,000 US troops in Afghanistan beyond 2014, the cut-off year for the withdrawal of all US troops from the war-torn country. These remaining troops, based in at least five bases (termed as ‘joint facilities’)3 in Afghanistan for the next two or three decades, would conduct specialised counter-terrorism operations and provide secondary (train and assist) support to the Afghan forces. Officials from both sides have met on several occasions, keeping such meetings far from the glaring eyes of the media, to finalise this long-term security agreement. However, such secrecy has only added to the anxieties both within Afghanistan and the region. Irrespective of the fact that the deal is a crucial piece of agreement for the Afghan leaders, who are not yet in a position to provide security to its populace, Kabul has been playing a delicate balancing game. President Karzai and senior officials see an enduring American presence and broader strategic relationship as essential, in part to protect Afghanistan from the onslaught of the insurgency and its meddlesome neighbours and also for the survival of the present regime. At the same time, the Afghan officials had made it clear that the country will sign a long-term deal only if the US meets certain conditions. Some of the main contentious issues laid out by the Afghans are: (a) the foreign troops should work within the Afghan legal framework; (b) they should not take prisoners or conduct night raids; (c) they must not own private prisons; (d) they have to equip the Afghan air force with F-16 fighter jets and Abrams tanks; and (e) US troops cannot launch operations outside

"Questions abound 1 week after U.S. soldier allegedly kills Afghan civilians", CNN ( 17 March 2012), http://articles.cnn.com/2012-03-17/asia/world_asia_afghanistan-shooting-soldier_1_soldier-afghan-civiliansjoint-base-lewis-mcchord/3?_s=PM:ASIA. Accessed on 18 March 2012. The term ‘joint facilities’ is used to dispel suspicion and opposition to the strategic bases both inside and outside Afghanistan. Discussions with key Afghan officials in January 2012 and May-June 2011 and US officials in Washington D.C. in May 2011. Shanthie Mariet D’Souza, "The Emerging Faultlines of the USAfghan Strategic Partnership", ISAS Brief No. 210 ( 10 August 2011), http://www.isas.nus.edu.sg/A ttachments/PublisherAttachment/ISAS_Brief_210_-_Email_The_Emerging_Faultlines_15082011115335 .pdf. Accessed on 16 March 2012.

Afghanistan from these bases, thus precluding the possibility of Abbottabad-type raids that killed Osama bin Laden.4

Tragedy of Errors: Tilting the Balance? The 11 March massacre in Kandahar and other incidents prior to that, point at the schism between the two allies. The American rationale that such incidents are an ‘aberration’ 5 and the civilian casualties are ‘collateral damages’6 caused not out of deliberate intent, but by accident- has very few takers in rural Afghanistan. For the Afghans, the killings indicate a lackadaisical attitude from the very forces who are assigned to provide them protection. The massacre has led to demands inside Afghanistan that the US sergeant should be tried in the country for committing such a heinous crime. Following the killing, President Hamid Karzai met with US Defence Secretary Leon Panetta in Kabul and demanded that NATO forces pull back from Afghan villages and relocate to their bases. This position is merely populist and also highly untenable as the withdrawal of the international forces would invariably pave the way for an unimpeded Taliban control over the countryside, especially when the insurgents are readying themselves for the spring offensive. Moreover, the Taliban miss no opportunity to work these incidents, killings into their narrative. They seem to ride on the wave of the rising anti-American sentiment in the rural areas of South Afghanistan. Karzai's stance is a curious medley of his frustration with the conduct of the international forces, his attempt to secure credibility among the Afghan civilian population and also to boost his own political prospects. If the urgency demonstrated to get out of the ‘long war’ has invariably made the American position vis-a-vis the Taliban insurgents appear weak, the recent spate of incidents too have been ably used by President Karzai to augment his own bargaining power and consolidate his position beyond 2014. It indeed represents a curious turnaround for the President who has faced the flak for several years from several American officials for presiding over a corrupt and ineffective regime known more for its indulgence in rigging the elections rather than ensuring transparent governance.

"Long-term deal with U.S. must be on Afghan terms: Karzai", Voice of America (26 July 2011), http://www.voanews.com/english/news/asia/south/Long-term-Deal-With-US-Must-be-on-Afghan-TermsSays-Karzai-126177223.html. Accessed on 16 March 2012. According to the United Nations, Afghan civilians were killed in war-related incidents at a rate of more than eight per day last year: 3,021 in all. Insurgents were blamed for nearly four in five of those deaths. Laura King, “U.S.-Afghan divide seen in perceptions of village massacre”, Los Angeles Times, (17 March 2012), http://www.latimes.com/news/nationworld/world/la-fg-afghanistan-killings20120318,0,1087725.story. Accessed on 18 March 2012. David Rothkopf, “A New Challenge for Our Military: Honest Introspection”, Foreign Policy ( 19 March 2012),http://www.foreignpolicy.com/articles/2012/03/19/a_new_challenge_for_our_military_honest_introsp ection. Accessed on 20 March 2012.

Not surprisingly, Afghans under President Karzai have attempted to use the SPD as an instrument to set binding deadlines for their assumption of control of detention centres and controversial US military night time raids. US officials initially insisted that such timelines should be based on conditions on the ground and that the partnership declaration is not the forum in which to settle them.7 The Americans are in a hurry to get the deal sealed before the Chicago summit in May 2012 and have been trying to de link the conditionalities from the SPD. But President Karzai remains adamant on issue of night raids and control of detention centres like the Bagram prison, which hold the most notorious Taliban leaders and local commanders.8 At the time of negotiations with the Taliban by individual countries, like the Qatar process by the Americans, Karzai wants to demonstrate his role with an image make over for a leader branded as an American puppet by the Taliban and his detractors. In an environment of depleting interest and raging domestic debate on the long war, with the Afghan war being the centre stage of the presidential debates, the Obama administration appears more than willing to concede to the Afghan wish list. For instance, after the Quran copy burning episode, in early March 2012, the US agreed to accelerate its transfer of imprisoned insurgents to Afghan government control. Even though it insisted on a veto power over the ones that can be released, the move was a major concession to the Afghans. The U.S. believes that the veto power, which would last as long as American troops are in Afghanistan, addresses American worries that human right violators as also Taliban fighters would be released prematurely and return to the battlefield.9 In yet another concession, the Obama administration is now reportedly considering the idea of giving Afghan legal and judicial authorities review rights in regard to night raids.10 Such concessions would have been unimaginable had a winter of weakness not set in the U.S. approach towards Afghanistan, following these string of errors. The hope that at least some progress could be reported regarding the negotiations with the Taliban, another crucial component of the endgame, too appeared to have been neutralised. After having been provided with an address for negotiations in Qatar, the Taliban too are mounting pressure on the U.S. and playing hard to get. They have reportedly suspended the process of negotiations complaining against what they termed as "the shaky, erratic and

Joshua Partlow, "Talks on long-term Afghan-U.S. partnership stalled", The Washington Post (29 July 2011), http://www.washingtonpost.com/world/asia-pacific/talks-on-long-term-afghan-us-partnershipstalled/2011/07/27/gIQAAX0AfI_story.html. Accessed on 30 July 2011. Nasruddin Hemati, "The NaĂŻve Risky Move", Daily Outlook Afghanistan (14 March 2012), http://outlookafghanistan.net/topics?post_id=3667. Accessed on 18 March 2012. Rod Nordland, "U.S. and Afghanistan Agree on Prisoner Transfer as Part of Long-Term Agreement", The New York Times (9 March 2012) , http://www.nytimes.com/2012/03/10/world/asia/us-and-afghanistanagree-on-detainee-transfer.html. Accessed on 10 March 2012. The Obama administration was discussing options with the Afghans including a warrant-based approach or possibly allowing local judges to review the raids before they occurred. Missy Ryan and Rob Taylor, â&#x20AC;&#x153; U.S. mulls changes to controversial Afghan night raidsâ&#x20AC;?, Reuters, ( 21 March 2012), http://af.reuters.co m/article/worldNews/idAFL3E8EK20X20120321. Accessed on 21 March 2012

vague"11 standpoint of the Americans. For the Taliban, negotiating with a retreating army that is losing the ‘hearts and minds’ battle is not a game changer. They are biding time as the U.S. military commits more of such follies, helping them build on their narratives in the Afghan hinterland that would eventually pave the way for their return to Kabul.

SPD: The Path to ‘Nowhere’? For the U.S., it is a time for unfounded hope. Sources within the U.S. administration continue to maintain a confident posture regarding the deal. There is even optimism that the differences will be bridged and the deal will be signed before the upcoming Chicago summit in May. However, as events unfold and Afghanistan continues to witness one catastrophe after the other, the prospects of such compromises are fading. What is evident is hardening of the position of the Karzai regime. It is, thus, a clear clash between a weakened U.S. position and an assertive Karzai who is bidding for his own regime’s survival by positioning to derive benefits from the SPD and also from his overtures to the Taliban and the hardliners, which has come to resemble a clueless pivot of an escapist ideology. In granting concessions, to ensure a long term presence, the U.S. policy makers seem to be undercutting what is crucial to Afghanistan’s long term stability- effective governance, transparency, accountability and rule of law. Under these circumstances, only the most ardent optimists would resist the temptations of predicting Afghanistan's return to days of total anarchy, far worse than the 1990s.

.....

Rob Taylor and Jack Kimball, “Karzai asks NATO to quit Afghan villages; Taliban end talks”, Reuters (15 March 2012), http://in.reuters.com/article/2012/03/15/afghanistan-taliban-idINDEE82E0AI20120315. Accessed on 16 March 2012.

ISAS Brief No. 233 – 26 March 2012 469A Bukit Timah Road #07-01, Tower Block, Singapore 259770 Tel: 6516 6179 / 6516 4239 Fax: 6776 7505 / 6314 5447 Email: isassec@nus.edu.sg Website: www.isas.nus.edu.sg

The Haves and the Have-Nots Pratima Singh1

A recent press note by India’s Planning Commission releasing the poverty estimates for 2009-2010 created a stir in the Indian Parliament and media. Widely criticised as being too low, the Planning Commission outlined S$16.61 (Rs 672.8 monthly per capita consumption expenditure) for rural areas and S$21.22 (Rs 859.6 monthly per capita consumption expenditure) for urban areas as the poverty line. Most say this line is perceived as identifying the starving, not the poor. The paper analyses the methodology behind the Planning Commission’s poverty estimates and recommends another measure -- including the burgeoning vulnerable classes in the estimates.

The Planning Commission of India found itself at the centre of controversy for the second time in the last six months as of 19 March 2012. The issue, again, was the estimation of poverty in India. The commission released its latest poverty figures (for the year 2009-2010) which, perceived as too low by many Members of Parliament, led to the adjournment of the Lok Sabha on 22 March, 2012. Poverty estimation in India is a herculean task: defining poverty and ‘poor’ people, benchmarking this definition using the given data, dividing it into rural and urban categories state-wise, and then identifying the people below this benchmark. Poverty can essentially be defined as deprivation, and the poverty line distinguishes between those who are extremely

Pratima Singh is Research Associate at the Institute of South Asian Studies (ISAS), an autonomous research institute at the National University of Singapore (NUS). She can be reached at isasps@nus.edu.sg. The views reflected in the paper are those of the author and not of the institute.

deprived and those who aren’t. The controversy lies here. Deprivation is, to a large extent, relative, and defining a poverty line is to define an absolute measure. Different committees have various recommendations on the methodology to determine the benchmark or poverty line, thereby determining the number of people Below Poverty Line (BPL). The most recent of these was the methodology recommended by the Tendulkar Committee which is being used for the current estimates. The Tendulkar Committee uses, as in previous years, private household consumer expenditure collected by the National Sample Survey Organisation (NSSO) to determine the poverty line. The main shift by the committee is that it has moved away from fixing the line from a calorie-intake measure, as this does not necessarily correlate to nutritional outcomes. This also helps take into consideration the multi-dimensional aspect of poverty as it is not defined squarely as deprivation of food. The committee also recommends the use of the newly adopted Mixed Reference Period (MRP) estimates of consumption expenditure by the NSSO as being more comprehensive that the previous Uniform Reference Period (URP). The MRP measures consumption of lowfrequency buys on a 365 day basis while the rest are measured, as in the URP, on a 30 day basis. One of the more important modifications to the methodology was that the new poverty line uses implicit prices ‘derived from quantity and value data collected in household consumer expenditure surveys for computing and updating the poverty lines.’2 It outlines the method for updating the poverty line for different years, using the implicit price indices (Fisher Price Index) from the NSSO surveys. This technique of updating the poverty line is claimed to be more comprehensive than the simplistic use of the Consumer Price Indices for India. Following the Tendulkar Committee recommendations ‘the state wise urban poverty lines of 2004-05 are updated for 2009-10 based on price rise during this period using Fisher price.’3 The latest poverty figures have been computed from the 66th Round of the NSS (2009-10) data of the Household Consumer Expenditure Survey. The State specific poverty lines for 2009-2010 can be seen in Table 1.

Table 1: State Specific Poverty Lines (2009-2010)

S. No. 1 2 3 4 2

States Andhra Pradesh Arunachal Pradesh Assam Bihar

Monthly Per Capita (Rs.) (2004-2005 figures in brackets) Rural

Urban

693.8 (433.43) 773.7 (547.14) 691.7 (478.00) 655.6 (433.43)

926.4 (563.16) 925.2 (618.45) 871 (600.03) 775.3 (526.18)

Planning Commission, Government of India, retrieved from http://planningcommission.nic.in/news/in dex.php?news=prbody.htm. Accessed on 22 March 2012. Planning Commission, Government of India, retrieved from http://planningcommission.nic.in/news/index. php?news=prbody.htm. Accessed on 22 March 2012.

5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30

Chhattisgarh Delhi Goa Gujarat Haryana Himachal Pradesh Jammu & Kashmir Jharkhand Karnataka Kerala Madhya Pradesh Maharashtra Manipur Meghalaya Mizoram Nagaland Orissa Puducherry Punjab Rajasthan Sikkim Tamil Nadu Tripura Uttar Pradesh Uttarakhand West Bengal All India

617.3 (398.92) 747.8 (541.39) 931 (608.76) 725.9 (501.58) 791.6 (529.42) 708 (520.40) 722.9 (522.30) 616.3 (404.79) 629.4 (417.84) 775.3 (537.31) 631.9 (408.41) 743.7 (484.89) 871 (578.11) 686.9 (503.32) 850 (639.27) 1016.8 (687.30) 567.1 (407.78) 641 (385.45) 830 (543.51) 755 (478.00) 728.9 (531.50) 639 (441.69) 663.4 (450.49) 663.7 (435.14) 719.5 (486.24) 643.2 (445.38) 672.8 (446.68)

806.7 (513.70) 1040.3 (642.47) 1025.4 (671.15) 951.4 (659.18) 975.4 (626.41) 888.3 (605.74) 845.4 (602.89) 831.2 (531.35) 908 (588.06) 830.7 (584.70) 771.7 (532.26) 961.1 (631.85) 955 (641.13) 989.8 (745.73) 939.3 (699.75) 1147.6 (782.93) 736 (497.31) 777.7 (506.17) 960.8 (642.51) 846 (568.15) 1035.2 (741.68) 800.8 (559.77) 782.7 (555.79) 799.9 (532.12) 898.6 (602.39) 830.6 (572.51) 859.6 (578.8)

Source: Planning Commission, Government of India, retrieved from http://planningcommission.nic.in/news/index.php?news=prbody.htm. Accessed on 22 March 2012.

Much of the media focussed on the figures in Table 1, converting them to their per day figures of Rs 28.65 per capita in urban areas and Rs 22.43 per capita in rural areas. While, it is evident that these benchmarks indicate severe deprivation, it is also unfair to convert the numbers to a per day figure as all the data is expressed in a monthly fashion and the concept of poverty is inevitably linked to a time factor. Merely expressing consumption on a per day level does not reflect the consuming patterns of those surveyed because households budget on a monthly, not a daily basis. The Planning Commission faced similar flak six months ago when it filed an affidavit with the Supreme Court in September 2011 re-computing the Tendulkar Committeeâ&#x20AC;&#x2122;s poverty line for June 2011 on the basis of inflation only. This resulted in a poverty line of Rs 4,824 per month for a family of five (Rs 964.8 per capita) for urban areas and Rs 3,905 per month for a

family of five (Rs 781 per capita) for rural areas4. The only variable used to update the poverty line was inflation as there was no NSSO data available for the period. While there is merit in understanding the data in an aggregate and not daily basis, it is also important to comprehend what the data implies. The poverty line, using NSSO data, measures consumption not income. There is no survey recording incomes in India as almost 90 per cent of the workforce is employed in the unorganised sector5. Thus, the poverty figures in the country are bound to be understated, as consumption is smoothed over time to compensate for lack of income leaving a large section of people extremely vulnerable to poverty. These numbers aren’t being recorded giving a skewed version of the situation. The Planning Commission justifies using the poverty line as it is today by citing its purpose as a comparative tool. ‘The real purpose of estimating a population below a fixed poverty line is to judge whether progress is being made over time. For this purpose, the poverty line must be the same over time and updated to reflect price changes on the basis of an established methodology. If a higher poverty line is used, the absolute number of people below the line will obviously be larger. However, the results regarding trends in poverty will not be altered.’6 While extreme poverty may be declining from 37.2 per cent to 29.8 per cent, as seen in Table 2, the proportion of those who are vulnerable are most likely to be rising at a faster rate. These vulnerable sections of people need to be identified under a new measure if not under the status of BPL.

Table 2: Percentage of Population below Poverty Line (BPL)

S. No.

States

2004-2005

2009-2010

Andhra Pradesh

29.6

21.1

Arunachal Pradesh

31.4

25.9

Assam

34.4

37.9

Bihar

54.4

53.5

Chhattisgarh

49.4

48.7

Delhi

14.2

Goa

24.9

8.7

Gujarat

31.6

Haryana

24.1

20.1

Himachal Pradesh

22.9

9.5

Jammu & Kashmir

13.1

9.4

Jharkhand

45.3

39.1

Planning Commission, Government of India, retrieved from http://planningcommission.nic.in/news /index.php?news=prbody.htm. Accessed on 22 March 2012. Informal Sector in India. Ministry of Labour, Government of India, retrieved from http://labour.nic.in/ss/INFO RMALSECTORININDIA-approachesforSocialSecurity.pdf. Accessed on 23 March 2012. Planning Commission, Government of India, retrieved from http://planningcommission.nic.in/news/index.ph ?news=prbody.htm. Accessed on 22 March 2012.

Karnataka

33.3

23.6

Kerala

19.6

Madhya Pradesh

48.6

36.7

Maharashtra

38.2

24.5

Manipur

37.9

47.1

Meghalaya

16.1

17.1

Mizoram

15.4

21.1

Nagaland

8.8

20.9

Orissa

57.2

Puducherry

14.2

1.2

Punjab

20.9

15.9

Rajasthan

34.4

24.8

Sikkim

30.9

13.1

Tamil Nadu

29.4

17.1

Tripura

17.4

Uttar Pradesh

40.9

37.7

Uttarakhand

32.7

West Bengal

34.2

26.7

All India

37.2

29.8

Source: Planning Commission, Government of India, retrieved from http://planningcommission.nic.in/news/index.php?news=prbody.htm. Accessed on 22 March 2012.

Although some may argue that the poverty estimates released by the Planning Commission are dubious, the report gives a detailed overview of what the statistics indicate and poverty ratios among social groups, religious groups and occupational categories. BPL is dominated by agricultural labourers in rural areas and casual labourers in urban areas thereby reiterating the vulnerability of those who lack a regular flow of income. While the current poverty line can be used as a tool to compare poverty statistics over years and within states, it is important to measure the deprived in a country. In the case of India this would probably include the ‘poor’ as defined by the poverty line, the vulnerable and other disadvantaged sections, whether calculated through the NSSO surveys, the Census of India or the forthcoming SocioEconomic Caste Census. In a country with more than a billion people it is important to know who is being targeted by policy and who else should be. It’s not an easy task but it’s got to be done. The new poverty line is probably just a beginning.

.....

ISAS Brief No. 234 – 28 March 2012 469A Bukit Timah Road #07-01, Tower Block, Singapore 259770 Tel: 6516 6179 / 6516 4239 Fax: 6776 7505 / 6314 5447 Email: isassec@nus.edu.sg Website: www.isas.nus.edu.sg

India’s Diaspora Vote P S Suryanarayana1 Abstract A comprehensive calculus of ethnic, political, and strategic factors has shaped India’s firm vote against Sri Lanka at the United Nations Human Rights Council on 22 March 2012. In a broad sense, India has cast a Diaspora Vote, which is compatible with the so-called ‘Indira Doctrine’ of the 1980s. However, New Delhi, by casting its lot with the United States and by being the lone Asian voice against Sri Lanka on this occasion, has charted a newly interesting and uncharted course in foreign policy.

Introduction: ‘Indira Doctrine’ By the logic of the long-forgotten ‘Indira Doctrine’, India’s latest decisive vote against Sri Lanka at the United Nations Human Rights Council (UNHRC) makes a lot of sense. In the early 1980s, the then Indian Prime Minister, Indira Gandhi, frequently expressed proactive concern over developments in the country’s neighbourhood. She was concerned that those developments might hurt the interests of India or the sensitivities of its ethnic groups.

Mr P S Suryanarayana is Editor (Current Affairs) at the Institute of South Asian Studies (ISAS), an autonomous research institute at the National University of Singapore. He can be reached at isaspss@nus.edu.sg. The views expressed are those of the author and do not necessarily reflect those of the institute.

No definitive foreign policy pronouncement on those lines was made, although her first comments were directed at Pakistan which was facing a gathering storm of political protest by the Movement for Restoration of Democracy (MRD). Led by Benazir Bhutto, the MRD was at the time campaigning against the then Pakistani military dictator Zia ul Haq. Regardless of whether or not Indira Gandhi’s comments catalysed the MRD’s campaign, her statements came to be categorised as ‘Indira Doctrine’ in some quarters (and not in her political circles). The so-called ‘Indira Doctrine’ was not the Indian equivalent or version of Washington’s old Monroe Doctrine of hegemony. In today’s political idiom, the ‘Indira Doctrine’ or at least some aspects of it can perhaps be described as a ‘Diaspora Doctrine’. Surely, New Delhi’s latest vote against Colombo in the UNHCR has not been portrayed by the present Indian Government as a revival or reaffirmation of the ‘Indira Doctrine’. But India’s championing of the “rights” of the minority group of Sri Lankan Tamils in the current situation in that island-republic can be characterised as a Diaspora Vote. It is too early to judge whether a Diaspora Vote in general and, more specifically, this particular one will enhance India’s enlightened national self-interest. Viewed from another angle, New Delhi’s latest vote, which tilted the political scales (not the voting trend) against Colombo on 22 March 2012, smacks of a double standard in India’s own human-rights diplomacy. The vote against Sri Lanka was adopted by a majority of 2415, with eight countries abstaining. With a total of 23 countries not having placed Colombo in the dock, as it were, there was a difference of just one extra vote against Sri Lanka in purely political (not numerical) terms. In this situation, the anti-Colombo vote by India, Sri Lanka’s closest neighbour in terms of both civilisation and geography, acquires unusual political importance.

‘Double-Standard Diplomacy’ Contrary to the calibrated enthusiasm with which New Delhi has now voted against Sri Lanka in the UNHRC, India had in the past successfully opposed being pushed into the UN dock on a human rights issue at home. Surely, the current Sri Lankan case and a past Pakistani move against India on the human rights front are not comparable in humanitarian and political terms. A walk down the memory lane is, therefore, necessary to understand the argument about India’s current ‘double-standard diplomacy’. In 1994, Benazir Bhutto, by then Pakistan’s Prime Minister, moved heaven and earth (metaphorically) to try and get a vote passed against India in the UN Human Rights Commission (the current UNHRC’s predecessor). Her government’s campaign was rooted in the allegations that India was violating the human rights of Muslim “freedom fighters” in the Kashmir valley.

Opposing the Pakistani move, India launched a diplomatic counter-offensive. During that battle of wits, Pakistani and Western diplomats told this writer, then in Islamabad as an Indian journalist, that China and Iran were still keeping Pakistan guessing whether they would at all vote against India. In the end, China and Iran influenced Pakistan into abandoning its quest for an anti-India vote. Benazir Bhutto was stopped in her tracks. Significantly, the Pakistani move against India had coincided with the efforts by Beijing and New Delhi to think out of the box and think of peace and tranquillity along their disputed border. Unsurprisingly, therefore, China’s willingness to give India the benefit of the doubt was partially traceable to a new spring in their relationship at that time. As for Iran, India found it necessary to try hard before succeeding.

A Strategic Calculus and a Risk Human rights diplomacy and strategic diplomacy may not always go together. However, it is evident that India has now jockeyed for possible but not guaranteed ‘strategic gains’ from the United States (US) in the regional and global arenas. This explains, at least partially, India’s agonised but firm choice of joining the beeline behind the US in its single-minded targeting of Sri Lanka on this occasion. Washington’s current calculations against Colombo are a different story altogether. In sailing along with the US, New Delhi has, therefore, reckoned with or simply discounted the hazards of isolating itself in the South Asian Association for Regional Cooperation (SAARC) and also in India’s extended neighbourhood. In the light of such a range of insightful standards, the domestic compulsion of coalition politics, which is generally believed to have influenced India’s Prime Minister Manmohan Singh, cannot fully explain its latest vote at the UNHRC. Widespread is the perception that Singh has had to dance to the tunes of a crescendo of proSri Lankan Tamil sentiment in the southern Indian state of Tamil Nadu. Conspicuous in this context is the parliamentary support that Singh’s coalition government at the pan-India level receives from the Dravida Munnetra Kazhagam (DMK) party of Tamil Nadu. Moreover, the ruling party in Tamil Nadu, led by J Jayalalithaa of the All India Anna DMK, did urge the Singh coalition, which does not include her party, to support the US-sponsored resolution against Sri Lanka. Such political peer-pressure on Singh can partially explain India’s voting choice – but only partially so.

More significantly, the other India-relevant factors rooted in the politics of this resolution are too weighty to be missed. It will, therefore, be a superficial exercise to see the Indian vote entirely under the prism of Singh’s domestic political compulsion. The relevant UNHRC Resolution is believed to be aimed at promoting reconciliation between Sri Lanka’s majority Sinhala population and the island-country’s minorities, including the Sri Lankan Tamils. South Indians – the people of Tamil Nadu in particular but also those of Andhra Pradesh, Kerala, and Karnataka – share the Dravidian ethnic identity with the Sri Lankan Tamils. While Sri Lanka’s Sinhala majority, too, has deep links of history and civilisation with India, this aspect has not had commensurate salience in the contemporary narrative of the relations between the two countries. It is noteworthy in this sub-context that the relevant UNHRC Resolution makes no direct mention at all of the minority rights of Sri Lankan Tamils by name. Nor is the resolution explicit about another key issue: the alleged extra-judicial killings of the Liberation Tigers of Tamil Eelam (LTTE) activists during Sri Lanka’s recent military triumph in an anti-terror war. This particular micro-aspect can be explained by the fact that the wider international community saw, and continues to see, the LTTE as a notorious terrorist outfit. The LTTE’s colours are no different in Official India’s view. Interestingly, the now-slain LTTE leader, Velupillai Prabakaran, had told me in the 1980s that he would not become a slave of India in any situation (quoted in The Peace Trap authored by this writer at that time).

UNHRC’s Concerns and Call The three essential elements of the relevant UNHRC Resolution are: (1) the Council’s “concern that the report of the Lessons Learnt and Reconciliation Commission of Sri Lanka [LLRC] does not adequately address serious allegations of violations of international law” by the victor, Colombo; (2) the Council’s “call” that the Sri Lankan Government “implement the constructive recommendations made in the report of the [LLRC] and ... take all necessary additional steps to fulfil [Colombo’s] relevant legal obligations and commitment to initiate credible and independent actions to ensure justice, equity, accountability and reconciliation for all Sri Lankans; and (3) the move by the UNHRC to “encourage the Office of the United Nations High Commissioner for Human Rights and relevant special procedures mandate holders to provide, in consultation with and with the concurrence of the Government of Sri Lanka, advice and technical assistance on implementing the above-mentioned steps”. Inherent in this long-winded language of the UNHRC are two defining interpretations of this resolution.

First, the Sri Lankan Government, often seen outside as an overwhelmingly Sinhaladominant executive, has been censured for not having moved towards ensuring post-conflict reconciliation among all communities in that country. The second and no less important interpretation flows from India’s strategic calculations in having succeeded in amending the original draft to make it more balanced with reference to Colombo’s sovereign rights. It is true that India’s intervention has not diluted the originally intended censure of the Sri Lankan Government. The absence of a direct reference to the Sri Lankan Tamils as the group in dire need of a healing touch from Colombo can only be seen by the Sri Lankan authorities as a matter of cold comfort. However, such an explicit omission by the UNHRC does not lend decisive credence to the commonplace theory that Singh has pursued a purely domestic political agenda. The reasoning on these lines helps open up the window on New Delhi’s strategic calculations, which override the political irony of India being the lone Asian voice against Colombo in the UNHRC at this time. New Delhi has in fact sought to stamp its strategic authority on India’s perceived sphere of influence – South Asia. In the process, New Delhi may have to pay a diplomatic price for being the solitary opponent of Colombo among the eight South Asian and East Asian members of the UNHRC. Of course, this scenario will become a reality only if India comes to be seen as an uncritical camp-follower of the US over the long term.

Defining India’s Diaspora Vote However, New Delhi cannot also afford to discount the line-up of the UNHRC members from South Asia and East Asia who chose to differ with India on the current human rights situation in Sri Lanka. Significantly, Bangladesh and Maldives – both SAARC members like India and Sri Lanka – voted against the US-sponsored resolution and, therefore, in favour of Colombo. Moreover, Indonesia, Philippines (quite often a supporter of the US), and Thailand – all three from the Association of Southeast Asian Nations (ASEAN) – favoured Sri Lanka. No less significantly, Malaysia, an ASEAN member with an ethnic-Indian minority, abstained from voting on this anti-Colombo resolution. Abstention was indeed an option which was open to India too. China from East Asia and Russia from Eurasia – both veto-empowered permanent members of the UN Security Council – turned their faces against the US, another unique power at the United Nations. In a sense, there is nothing very unusual about such an adversarial line-up of the US on one side and China as also Russia on the other, especially on the issue of statesovereignty over human rights. Nevertheless, what is noticeable is that India stands isolated from, or stands alone among, the UNHRC members from the South Asia-East Asia-Eurasia arc.

A logical question, therefore, is: Why has India chosen to vote against Sri Lanka, a fellowdemocracy with some ethnic diversity? Two of India’s strategic objectives, which define its latest Diaspora Vote, can be discerned behind the diplomatic scenes. The first strategic objective, which India has achieved in this context, is to set a precedent of an explicit norm for any future international vote on the human rights situation in any country. The US, in its original draft against Sri Lanka at this time, wanted the UNHRC to “encourage the Office of the United Nations High Commissioner for Human Rights [UNHCHR] ... to provide, and [encourage] the Government of Sri Lanka to accept advice and technical assistance”. An uncontested version in the public domain is that it was at India’s intervention that the substantive wording of this operative passage was altered to give Sri Lanka the elbow room to refuse to play ball with the UNHCHR. The relevant passage, as finally passed, reads as: ... to “encourage the [UNHCHR] to provide, in consultation with and with the concurrence of the Government of Sri Lanka, advice and technical assistance”. Now, the UN High Commissioner for Human Rights cannot at all hope to ‘set right’ the situation in Sri Lanka without its government’s explicit concurrence. By ‘engineering’ this, India has clearly sought to stamp its strategic authority as a norm-formulator in South Asia, at least in respect of some issues. However, a related question is: Why has the US winked at India’s sleight of hand in enshrining this ‘non-intrusive’ provision? At one level, the elbow room, which Sri Lanka has been given now, is in any case available to all sovereign states under international law and the UN Charter. At another level, it is also evident that the US will, therefore, continue to “impose pressure” (China’s words) on Sri Lanka for strategic purposes. Closely related to this aspect is India’s second strategic objective in voting with the US now. For a variety of reasons outside the scope of this analysis, India has in recent times ceded considerable space to China, in terms of diplomatic and strategic influence, in Sri Lanka. And, in a recent ISAS Interview, India’s External Affairs Minister S M Krishna steered clear of saying whether New Delhi would or would not seek commercial and naval access to the Sri Lankan coastline to match China’s presence at Hambantota. In these circumstances, India’s new closeness to the US on Sri Lankan affairs will be fully explored by both New Delhi and Washington for mutual gain, especially if the need arises.

Conclusion: A Critical Moment Viewed differently, India’s latest decision to vote against Sri Lanka, despite Colombo’s closeness to China, is seen by some observers as a sign of New Delhi growing out of its Beijing-fixation in South Asia. Regardless of any such perspective, India cannot afford to

discount the current and potential roles of both China and the US as major players in South Asia. Overall, it will be interesting to watch whether Sri Lankan President Mahinda Rajapaksa would make any new strategic move to contain the fallout of Colomboâ&#x20AC;&#x2122;s latest setback at the UNHRC. What he needs most is to retain optimism as a politician. During his recent visit to Singapore, Rajapaksa did indicate that he saw himself as an optimist-politician who would be willing to weather political storms without getting disheartened. While in Singapore, Rajapaksa made no secret of his belief that his administrationâ&#x20AC;&#x2122;s overtures to the Sri Lankan Tamils had not received a matching appreciation from the wider international community. He also appeared keen to let the world take a dispassionate look at his administrationâ&#x20AC;&#x2122;s ongoing efforts to reach out to the Sri Lankan Tamils, Muslims, and other minorities. It is now up to him to face this new challenge (or crisis, as some would say) as he deems fit.

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ISAS Brief No. 235 – 9 April 2012 469A Bukit Timah Road #07-01, Tower Block, Singapore 259770 Tel: 6516 6179 / 6516 4239 Fax: 6776 7505 / 6314 5447 Email: isassec@nus.edu.sg Website: www.isas.nus.edu.sg

An Indo-Pak Search for the China-India Model C. Raja Mohan1

In the world’s most accident-prone relationship, even the most carefully choreographed meetings between India and Pakistan tend to collapse in acrimony, thanks to the huge popular emotion and media hype that burden the ties between the South Asian subcontinent’s siblings and rivals. The private luncheon meeting in Delhi between India’s Prime Minister Manmohan Singh and the visiting Pakistan President Asif Ali Zardari has turned out to be a welcome exception. It appears to have set the stage for an early and productive visit by Prime Minister Singh to Islamabad. No Indian prime minister has travelled to Pakistan since January 2004, when Singh’s predecessor, Atal Bihari Vajpayee, went there to attend a South Asian summit. The absence of frequent visits across the border underlines the unending conflict between the nucleararmed neighbours and their tense political relations. Their leaders have often used sporting occasions to visit each other, break the political ice and kick-start their bilateral dialogue. The last Pakistan president to visit India, Pervez

Professor C Raja Mohan is a Visiting Research Professor at the Institute of South Asian Studies (ISAS), an autonomous research institute at the National University of Singapore, and a Distinguished Fellow at the Observer Research Foundation, New Delhi. The views expressed in this paper are those of the author and do not necessarily reflect those of the ISAS.

Musharraf, used the occasion of an India-Pakistan cricket match to travel to Delhi in April 2005. Musharraf’s visit, in turn, set the stage for a positive phase in bilateral relations. But the terror attack on Mumbai, plotted and executed by militant groups in Pakistan, at the end of November 2008 derailed the bilateral relationship once again. In the last two years, Singh and Zardari devoted considerable political energies towards a revival of the peace process. Negotiations between the two official establishments began last year. Earlier this month, Singh and Zardari surprised the world by organizing a diplomatic opportunity for sitting down together. This time it was not a cricket match but spiritual pilgrimage that provided the occasion. Zardari expressed the wish to make a private visit to the hugely popular Sufi shrine in Ajmer in India’s western state of Rajasthan. Muslims from all over the subcontinent as well as a large number of Hindus visit the shrine in thousands every day. Singh seized the moment to invite Zardari for lunch. Having set up an opportunity, Delhi and Islamabad had to carefully manage the public expectations. They said that the luncheon meeting in Delhi was not a summit and insisted that there would be no negotiations and ringing declarations by the two leaders. The limited purpose, the two sides agreed, was to identify a few areas of agreement and set a date for Singh’s visit to Pakistan. The prolonged lull in cross-border terror attacks in India and Zardari’s bold liberalization of Pakistan’s trade policy towards India provided the positive context for this political exploration. Pakistan has been pressing for a visit by the Indian Prime Minister ever since Musharraf travelled to India. In response, Singh had been declaring that he was eager to visit Pakistan but he insisted that the trip should deliver substantive agreements. Singh and Zardari now appeared to have a found a way of doing this. After their meeting in Delhi, the two leaders announced that they had reviewed the entire bilateral relationship, touched on all the difficult issues and were eager to proceed step by step in the normalization of bilateral relations. Implicit in the announcement that Singh would indeed travel to Pakistan at an early opportunity is the fact that the two leaders have agreed on some broad outcomes from the 2

visit. Senior officials from both sides will now sit down to translate the political understanding into specific agreements in the coming weeks. So far so good! The real test for Singh and Zardari, however, begins now. Both face difficult political challenges at home. Singh runs a coalition government of many parties and has been having problems in mobilizing their support for any new policy initiatives. In Pakistan too, Zardari’s government is preparing for general elections and is locked in a political argument with the judiciary. The army in Pakistan has traditionally exercised great influence, if not a veto, on the policy initiatives towards India. There are enough spoilers on either side to limit the possibilities. In the domestic politics of both countries, it has always been easier politically to oppose forward movement in the relations with the other rather than support it. Despite the real obstacles, it is not difficult to visualize a solid economic agenda for Singh’s visit to Pakistan. This has been made possible by recent moves by the Pakistan government to open up its economy for imports from India. Delhi in turn is looking at potential ways of boosting imports from Pakistan to reduce the trade deficit in its favour. Singh and Zardari, however, will find the big political issues a lot trickier. India wants progress in bringing the plotters of the November-2008 terrorist attack on Mumbai to book and more broadly on dismantling Pakistan’s terror infrastructure – issues on which Zardari has limited room for manoeuvre. Pakistan in turn wants a grand political gesture on Kashmirrelated issues where Singh might find it hard to deliver. It makes sense for Singh and Zardari to put the priority on economic cooperation rather than try and search for grand solutions to difficult political issues. In this context, Zardari’s reported emphasis on the ‘China model’ in his talks with Singh could mark an important inflexion point in India-Pakistan relations. China and India have made dramatic advance in recent years on economic cooperation, which in turn has made it easier to manage political differences and build military confidence. Zardari’s call to adopt this model for Pakistan’s relations with India is certainly welcome in India. If Singh and Zardari can build a domestic political consensus in favour of the ‘China model’, the South Asian subcontinent could be a very different, more peaceful and prosperous place.

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ISAS Brief No. 236 – 11 April 2012 469A Bukit Timah Road #07-01, Tower Block, Singapore 259770 Tel: 6516 6179 / 6516 4239 Fax: 6776 7505 / 6314 5447 Email: isassec@nus.edu.sg Website: www.isas.nus.edu.sg

Zardari’s Pilgrimage to Ajmer: Is Time for a Thaw in Relations Nigh? Iftekhar Ahmed Chowdhury1 Introduction The most strikingly remarkable feature of the visit of the Pakistani President Asif Ali Zardari to India on 8 April 2012 is that it took place at all! Analysts generally would agree that the level of the current understanding (or the lack thereof) between the two countries would not extend to the felt need for warm hospitality to be accorded by one to the other. Yet this has happened. It does not necessarily signal a thaw in relations between the two often-implacable South Asian protagonists. But it certainly points to the palpable desire on both sides for such a phenomenon to begin. Rational acts in their bilateral relations seem to come in sudden flashes. This occasion was one such. It was billed ‘private’. That was largely because to call it ‘official’ would have heightened expectations. Too often too many hopes have been raised in the past between the two. Those were only to be dashed to the ground almost immediately. Also, given their prevalent tensions, an official visit by one to the other would have brought grist to the mill of ardent detractors in both nations. They are, as the world knows, legion. The low-key nature of such a rare event is, therefore, quite understandable. Also is the fact that it would be fraught with circumspection. Despite the stated ‘spiritual’ nature of the trip, for it involved a pilgrimage to the tomb of the holy Muslim Saint Khwaja Mainuddin Chishti in Ajmer, the generally perceived characteristics of the Pakistani leader are really too ‘temporal’ or ‘earthly’ for the religious factor to be preponderant. As such the 1

Dr Iftekhar Ahmed Chowdhury is Senior Research Fellow at the Institute of South Asian Studies (ISAS), an autonomous institute at the National University of Singapore (NUS). He was the (Foreign Advisor) Foreign Minister of Bangladesh from 2007-2009. He can be contacted at isasiac@nus.edu.sg. The views expressed are those of the author and do not necessarily reflect the views of the Institute.

purpose of the brief sojourn was undoubtedly ‘political’. This, no matter how else it is described. The aim obviously was to shake the existing stasis in relations into a kinetic movement, however slow the motion.

Symbolisms South Asians tend to be partial to symbolisms: also to historical parallels. Of these there were plenty. President Zardari brought along with him his son Bilawal. This was just like when his late father-in-law Zulfikar Ali Bhutto had his daughter (and Zardari’s late wife) Benazir accompany him to the Shimla Conference in July1972. At that time, one might recall, the ice between the two recently war-fighting nations had actually been broken for a while. Another symbolism was implied in the meetings between Bilawal, and Rahul, the scion of the Gandhi-Nehru family. In reminiscence of the tradition of the mighty Mughals, a common historical legacy of both India and Pakistan, the potential leaders of the two countries – this ‘pair of prince-lings’ so to say – were corralled into a relationship of camaraderie. This set aside some clamour on both sides for more democratic optics! Prime Minister Manmohan Singh, a strict vegetarian, made a tremendous gesture in laying on a luncheon table of Kashmiri Kebabs, demonstrating, on the one hand, Indian hospitality and at the same time, on the other, making the subtle symbolic point that the cuisine, and by implication Kashmir, was Indian!

The Visit The 40-minute bilateral in New Delhi created positive atmospherics. Just the previous day an avalanche had engulfed nearly 150 Pakistani soldiers on the Siachen glacier in the Himalayas. For years on this sheet of ice where nothing grows, troops of both countries have been positioned eyeball to eyeball. Singh offered Zardari solace and comfort and even humanitarian support. The first was well-received, and the second not yet, which was not surprising. In the South there is also a dispute over a more economically worthwhile patch of water called the Sir Creek. Kashmir and water issues remain unresolved. Also to be noted is the case of Hafeez Saeed, the founder of Lashkar-e-Taiba, wanted by both India and the United States. Recently Washington has announced a bounty of US$ 10 million for information as to his whereabouts. The Pakistani authorities are unlikely to want to collect this amount, though Hafiz Saeed, in a public appearance, has tauntingly claimed it for himself since he would be happy, as he said, to declare his location. India has acted with restraint by making no such monetary commitments, taking the realistic situation into cognisance. But New Delhi has urged punitive action for Saeed’s alleged involvement in the massacre in Mumbai in 2008. 2

It was obviously not possible for the two heads of government to resolve the issues. But they at least agreed to address them. The methodology would be a series of meetings between the relevant Permanent Secretaries of both countries. This will commence with the Home Secretaries. Pakistan, perhaps with a modicum of excessive enthusiasm, suggested an early date, 16 April 2012. Sensing that haste might make waste, India suggested a later schedule. No matter. Talks have produced progress in the past. Take Pakistan’s offer of Most Favoured Nation treatment to Indian manufactures. Such actions create constituencies at home, and the beneficiaries eventually push their governments. The same may happen in the security area. Some Pakistanis have indeed grown tired of terrorism and are beginning to yearn for peace. Ironically most in Pakistan now see the West as a greater enemy than India, and the deterioration of the relations with Islamabad’s erstwhile friends appears to have become conversely related to the improvement of sentiments towards New Delhi. The South Asian diaspora, whose global influence is burgeoning, is also increasingly becoming the glue pulling the ‘desi’ communities together culturally. South Asian soldiers, peace-keeping for the United Nations in far-flung places, are coming to each other’s aid. Their diplomats are cooperating in the Security Council. All this is good news.

Conclusion But perhaps, not good enough! When analysts weigh the results of the visit to India, the scale of failures is likely to hang heavier than the one for success. But it would be wrong to ignore it. Both Zardari and Singh have shown courage in meeting. Both are facing uneasy times at home. Ironically, the relations of both vis-à-vis their military currently is stressful. Perhaps now is the time for some bonding of the civilian political masters. Elections are round the corner, in less than two years in both countries. Unfortunately, given current mindsets, such meetings still cost rather than gain votes for both sides. Hopefully someday this will change as the people begin to genuinely prefer peace to war. The leaders must lead, and it is to their credit that they appear to be doing so. While Indian and Pakistani heads of government tend to meet as their term ends, it is hoped some day they will meet as it begins. The Chinese have helpfully encouraged the current process. The complexities of South Asian politics sometimes prove too baffling for the Americans, but they too are making positive noises. A sad combination of hubris and hauteur may have led them to bleed too long for too little. They are exhausted and they want out. Over 60 years of sovereign independence should be sufficient for India and Pakistan to be able to manage their own backyards, Afghanistan for instance, without interference from faraway nations. The players of the ‘great Game’ should henceforth be indigenous, rather than alien hands from distant parts. At least this is what the regional actors are beginning to feel. It may be long, but let the process be an inexorable one. To the Pakistanis and Indians 3

respectively, Delhi and Islamabad should not, in the words of another past South Asian saint, Nizamuddin Auliya, be ‘hanooz door ast’— ‘yet too far!’ .....

ISAS Brief No. 237 – 18 April 2012 469A Bukit Timah Road #07-01, Tower Block, Singapore 259770 Tel: 6516 6179 / 6516 4239 Fax: 6776 7505 / 6314 5447 Email: isassec@nus.edu.sg Website: www.isas.nus.edu.sg

Taliban, Spring offensive and Transition in Afghanistan Shanthie Mariet D'Souza1

Introduction It was the biggest ever attack by the insurgents on capital Kabul, in terms of the number of suicide attackers employed. It was also one of the most audacious and well coordinated attacks in recent times. On 15 April 2012, simultaneous attacks on the Afghan capital and three other eastern provinces – Nangarhar, Logar and Paktia – left 51 people dead. Counted among the dead were four civilians, 11 members of the security forces and 36 insurgents.2 The Taliban announced the launch of its spring offensive and Afghanistan, which had registered some days of peace and tranquillity, has braced itself for another season of bloody violence. The assaults began simultaneously at 1:45pm, and residents were quick to discern nearly identical patterns of attack – light gunfire, followed by explosions and protracted fire fights with Afghan security forces, with the militants in several cases fighting from vacant buildings or unfinished construction sites near their main targets. The spectacular attacks that took almost 18 hours to quell once again brought to the fore the fragility of transition process based on arbitrary time tables. Coming ahead of the Chicago 1

Dr Shanthie Mariet D’Souza is a Research Fellow at the Institute of South Asian Studies (ISAS), an autonomous Institute at the National University of Singapore (NUS). She can be reached at isassmd@nus.edu.sg. The views expressed in this paper are those of the author and do not necessarily reflect the views of the institute. "Afghan leader Karzai blames attacks on Nato 'failure'", BBC (16 April 2012), http://www.bbc.co.uk/n ews/world-asia-17727036. Accessed on 16 April 2012.

Summit in May this year, the insurgents have sent a loud and clear message. By targeting the diplomatic enclave in Kabul's green zone, specifically using enormous fire power, the insurgents managed to underline what President Hamid Karzai later highlighted as 'intelligence failure, especially that of the NATO'.3 In face of a retreating coalition army and waning international interest, the insurgents are indeed well poised to carry out such attacks in future. The Taliban spokesman who described the onslaught as the opening of the Taliban’s spring offensive said, "This is a message to those foreign commanders who claim that the Taliban lost momentum. We just showed that we are here and we will launch and stage attacks whenever we want.”4

A Fragile Transition In the past year, United States (US) President Barack Obama's announcements of pulling American troops out of Afghanistan have met with several challenges. After recent weeks marred by the attacks on NATO units, riots after American military personnel burned copies of the Holy Quran and the killing of 17 Afghan civilians by an American sergeant, the US relinquished its right to carry out night raids and handed over the main coalition prison to the Afghan government in a bid to move ahead with the convoluted strategic partnership agreement before the Chicago Summit. However, with the beginning of the so-called 'spring offensive’; attempts at demonstrating some progress in the Afghan war by the US administration have once again been thrown into a quandary. In recent times, individual and uncoordinated attempts at negotiations with the Taliban have emerged as the principal conflict management strategy for the US. A political office came up in Qatar in January this year. Some desperate moves were made to release imprisoned Taliban commanders from the detention centre at Guantanamo bay, failure of which led the Taliban to suspend the peace talks in March. Efforts, however, have continued to keep the fledgling peace process going, both by the US and the Karzai administration. On 14 April 2012, a day before the attack, Salahuddin Rabbani, the son of slain Burhanuddin Rabbani was chosen to lead the 70-member High Peace Council (HPC). The HPC is charged with reaching out to Taliban insurgents. The attacks, the very next day, shows a complete disdain from the insurgents' side towards the process of negotiations.

3 4

ibid. Alissa J. Rubin, Graham Bowley and Sangar Rahimi, “Complex Attack by Taliban Sends Message to the West”, The New York Times, (15 April 2012), http://www.nytimes.com/2012/04/16/world/asia/attacks-nearembassies-in-kabul.html?_r=1&nl=todaysheadlines&emc=edit_th_20120416&pagewanted=all. Accessed on 16 April 2012.

Capability of ANSF Though the Afghan National Security Forces (ANSFs) were able to successfully neutralize the insurgents, concerns abound on their capability of gathering adequate intelligence on the planning and execution of such well coordinated multiple sieges. The fact that the insurgents could slip into the protected city evading several security check points with a huge stockpile of weapons and penetrate the most secure inner circle of Kabul's ring of steel – the Wazir Akbar Khan district – is also a matter of deep worry. NATO commended Afghan security forces for effectively defending the city and ultimately quelling the attack. But Afghan forces did receive some back-up from helicopters and NATO Special Forces. The NATO's praise for the ANSF is understandable, for on such success that the exit strategy is predicated.5 Afghan officials pointed at the handiwork of Haqqani network, by underlining the pattern of the attacks and area of operations. The Haqqani network was directly involved in one of the last major attacks in Kabul, an assault on the American Embassy in September 2011, and that too involved militants raining down rocket and gunfire from an unfinished building nearby.6 The Taliban, however, have indicated that their commander for eastern front, Haji Lala, was behind the attack.7 Haji Lala is Taliban's shadow governor for Kabul and is known to be based in the Pakistani city of Peshawar. The coalescence of insurgent factions and movement of armed opposition closer to provinces to Kabul is indicative of things to come this summer.

Strategic Assets or Spoilers? Irrespective of the involvement of particular persons or groups, the attack in a way could also signify the demonstration of control by the Taliban and, at a different but related level, the displeasure of the insurgents' Pakistani hosts for being sidelined in the peace talks. Pakistan, which had opted to stay away from the Bonn Conference hosted by Germany in December 2011 as a mark of protest against the US attack on Salala post in Mohmand Agency on 26 November that year, has decided to take part in the upcoming Chicago summit.8 However, heightened tensions between the US and Pakistan – over the issues of the Abbotabad raid last 5

Bilal Sarwary, Analysis: What Kabul attacks say about Afghan security, BBC News, Kabul, 16 April 2012, http://www.bbc.co.uk/news/world-asia-17725266. Accessed on 16 April 2012. Alissa j. Rubin, Graham Bowley and Sangar Rahimi, "Complex Attack by Taliban Sends Message to the West", The New York Times (15 April 2012), http://www.nytimes.com/2012/04/16/world/asia/attacks-nearembassies-in-kabul.html?_r=1&nl=todaysheadlines&emc=edit_th_20120416&pagewanted=all. Accessed on 16 April 2012. "Taliban Commanders Say Kabul Attacks Show New Strategy", Daily Beast (15 April 2012), http://www.thedailybeast.com/articles/2012/04/15/taliban-commanders-say-kabul-attacks-show-newstrategy.html. Accessed on 16 April 2012. Muhammad Saleh Zaafir, Zaradri to attend Nato summit next month in Chicago, 15 April 2012, http://www.thenews.com.pk/Todays-News-7-103102-Zaradri-to-attend-Nato-summit-next-month-inChicago. Accessed on 16 April 2012.

summer, closure of the NATO supply routes and the recent announcement of a $10 million bounty for information leading to the arrest of Lashkar-e-Toiba (LeT) leader Hafiz Muhammad Saeed – continue to simmer. Pakistan’s Parliament last week unanimously voted to forbid the US from conducting drone strikes inside Pakistani territory. There are some signs that the civilian leadership is changing tracks.9 But at the same time, there are still indications that there will be attempts by the Pakistani establishment at holding on to their strategic assets to influence the intended outcome in Afghanistan. Any movement towards talks or negotiations in the past have evoked violent backlash in one form or other. The recent attack could have been part of the same trend.

What Lies Ahead? Post-15 April 2012, Kabul may not be turning into an epicentre of insurgent activity. It has remained relatively safe, accounting for less than one percent of violent episodes nationwide.10 However, the relative safety of the national capital, in no way, marks the success of the stabilisation efforts in Afghanistan. The Taliban-led insurgency, in spite of the claims of the military about its weakening impact, remains a potent adversary capable of striking at will with huge demonstrative effect. That poses challenges both to the stabilisation of Afghanistan and the transition plans for the present US administration. In a time when President Karzai has announced an early election time table11, thereby complicating the already muddled transition process, further deterioration of security can be the worst possible development. As the summer sets in, the likelihood of targeted high profile killings, combined with spectacular attacks, would erode the public confidence. With the looming political uncertainty, whispers of a civil war, the insurgents are well positioned to fill in the vacuum. Ahead of the Chicago summit in May, there is, thus, a need for a realistic assessment on the ‘conditions and needs on the ground’ to which the security transition timetables of the coalition forces should be linked.

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With Pakistan’s economy in poor shape -- growth was 2.4 percent in 2011 and there is little foreign investment or aid -- its business community has convinced the military that expansion can come only through increased trade with India. Pakistan’s government has agreed to remove restrictions on the import of most goods from India by year’s end. Vali Nasr, Pakistan Spring Emerging From Winter of Discontent, Bloomberg, (16 April 2012), http://www.bloomberg.com/news/2012-04-15/pakistan-spring-emerging-fromwinter-of-discontent.html. Accessed on 16 April 2012. IAN LIVINGSTON AND MICHAEL E. O’HANLON, The State of Afghanistan, The New York Times, 13 April 2012, http://www.nytimes.com/2012/04/14/opinion/making-sense-of-trends-in-afghanistan.html? smid=fb-share. Accessed on 14 April 2012. Karzai considers changing Afghan election timetable, Radio Australia News, 12 April 2012, http://www.radioaustralianews.net.au/stories/201204/3476232.htm. Accessed on 13 April 2012.

ISAS Brief No. 238 – 23 April 2012 469A Bukit Timah Road #07-01, Tower Block, Singapore 259770 Tel: 6516 6179 / 6516 4239 Fax: 6776 7505 / 6314 5447 Email: isassec@nus.edu.sg Website: www.isas.nus.edu.sg

Beyond the Sparks and Fumes of India’s Agni-V Test P S Suryanarayana1 Abstract India now exudes confidence at having come of age as a space-faring power with a minimum credible nuclear deterrence. A follow-up task awaits New Delhi. It must prudently send out the right political message across to China and other major powers. Both China and India have consistently enunciated the principle of no-first-use of nuclear weapons in the conduct of international affairs. The two countries have also regularly called for the nonmilitarisation of space. It is, therefore, insightful commonsense that India and China should now be able to move towards meaningful engagement based on the principles of trust or at least ‘trust but verify’.

Introduction: Techno-Nationalism A post-modern dictum is: Space-faring leaders among states will dominate global affairs of the future in much the same way as the major sea-faring nations had in fact done in the past. The reasoning is quite simple but profound. Space is man’s new frontier for the foreseeable future, while the high seas were at one time the uncharted expanse across Planet Earth. Another similarity is that the compass of spacefaring enterprise will cover as wide a spectrum as in sea-faring activities. The space-faring agenda of a country can promote not only its developmental objectives but also its military

Mr P S Suryanarayana is Editor (Current Affairs) at the Institute of South Asian Studies, an autonomous research institute at the National University of Singapore. He can be reached at isaspss@nus.edu.sg. The views expressed in this paper are those of the author and do not necessarily reflect those of the Institute.

purposes of enhancing its defensive and/or offensive capabilities. In today’s international political discourse, such a high-tech agenda is increasingly being described as ‘technonationalism’. In such a conception, India’s success in test-firing the nuclear-capable Agni-V long-range ballistic missile on 19 April 2012 can be suitably viewed as an affirmation of ‘technonationalism’. Basking in the after-glow of Agni-V, officials of India’s Defence Research and Development Organisation, the architects of this missile, have in fact celebrated the event as a gigantic technological leap for ensuring the country’s security. India’s Prime Minister Manmohan Singh described the success as “another milestone in our quest to add to the credibility of our security and [defence] preparedness and to continuously explore the frontiers of science”.2 Taking due care, Singh did not identify the country or countries against which India was now reinforcing its security profile. However, a virtual tug of war in words ensued between the non-official commentators in India, on one side, and several opinion-makers in China with varying degrees of links to the Chinese establishment, on the other. On the whole, the Indian commentators are convinced that Agni-V has more or less placed India on par with China in the high-tech space-age domain of skills to design, develop, build, and launch intercontinental ballistic missiles.

A Chinese Reality Check A Chinese view, as reflected in Global Times, a newspaper believed to be close to the longgoverning Communist Party of China, is no less stark. The paper’s oft-quoted comment is: “India should not overestimate its strength. Even if it has missiles that could reach most parts of China, that [scenario] does not mean it will gain anything from being arrogant during disputes with China. India should be clear that China’s nuclear power is stronger and more reliable. For the foreseeable future, India would stand no chance in an overall arms race with China”.3 The paper further cautioned India against participating in any international project aimed at “containment of China”. These oft-quoted comments from China and the nationalistic triumphalism in India have, on the whole, puzzled and even dismayed observers in East Asia, where both Beijing and New Delhi are seen as players into the future.

‘New Delhi: PM congratulates DRDO scientists and technical personnel on Agni test launch success’ April 19, 2012, .http://www.pmindia.nic.in. Accessed 19 April 2012. http://www.globaltimes.cn/NEWS/tabid/99/ID/705627/India-being-swept-up-by-missile-delusion.aspx

Significantly, what has been generally missed amid all these sparks and fumes is a Chinese reality check which, too, has been articulated in Global Times in the same article that contains the passages quoted earlier. The reality check runs as follows: “China and India should develop as friendly a relationship as possible. Even if this cannot be achieved, the two should at least tolerate each other and learn to co-exist. ... It would be unwise for China and India to seek a balance of power by developing missiles. The geopolitics of Asia will become more dependent on the nature of Sino-Indian relations. ... China understands the Indian desire to catch up with China. China, as the most appropriate strategic target for India, is willing to take India as a peaceful competitor”.4 As part of this reality check, some concerns have also been expressed in China that a mood of triumphalism in India could disrupt the recent gains of Sino-Indian cooperation in a multilateral setting. Noteworthy in this regard is the recent initiative by the BRICS forum – which consists of Brazil, Russia, India, China, and South Africa – to study the feasibility of setting up a South-South Development Bank.

America’s Agnostic Stance Conspicuous too, beyond such a Sino-Indian bilateral perspective, is the new tendency in some international circles to look at New Delhi under the prism of the United States (US). The reason is not far to seek: the growing perception that the US and India are slowly but surely gravitating towards each other in a bid to act in concert wherever and whenever possible for shaping the now-unsettled global order. In this context, the US, while taking the line that “we always urge all nuclear-capable states to exercise restraint”, has evidently declined to condemn India on its Agni-V launch. Washington is equally emphatic about India’s “solid non-proliferation record”5 on the global stage. Ignored by Washington in this context is a parallel perception in some US quarters that New Delhi is engaged in vertical proliferation, i.e., the ‘sovereign’ right to proliferation within India to enhance its defence capabilities. In contrast, non-proliferation is shorthand for the restraint by a nuclear-capable country in transferring to external players its own nuclear arms or knowhow or their parts and the related delivery systems that could destroy targets in war. Not to be missed in this maze of euphoria in India, caution and a reality check in China, besides America’s politically agnostic stance, is the politics of space as applicable to New Delhi and Beijing in the civilian and defence domains. 4 5

Ibid. US Department of State, http://www.state.gov/r/pa/prs/dpb/2012/04/188120.htm#INDIA. Accessed 20 April 2012.

Quoting from Yanping Chen’s work on “China’s Space Policy: a historical review”, Michael Sheehan says in The International Politics of Space that “the Chinese space programme has had strong ties to the military from its inception”6. Moreover, the US Defence Secretary’s 2004 and 2005 reports on The Military Power of the People’s Republic of China, took serious note of what was described as Beijing’s “counterspace” initiatives such as anti-satellite (AST) weapons. Such perceptions and Beijing’s successful “kinetic kill” of a non-functioning weather satellite in a deemed AST experiment, have led to the world-wide impression of China as a premier space-faring power in the military domain.

China’s Space Prowess Not to be missed in the international discourse on China as a space-faring power is its phenomenal success in exploring space for civilian purposes of science and national economic development. In 2003, China sent its first taikonaut (astronaut), Yang Liwei, into space, and in 2008, Zhai Zhigang became the first Chinese to perform the space walk. Before China, only two other countries had achieved these feats – Russia (Soviet Union) and the US. China’s rising space profile has prompted a space scholar, Neil deGrasse Tyson, to write in Foreign Affairs as follows: “For the past decade, I have joked with colleagues that the United States would land astronauts on Mars in a year or two if only the Chinese would leak a memo that revealed plans to build military bases there. The joke does not seem quite so funny anymore. Last December (i.e., in 2011), China released an official strategy paper describing an ambitious five-year plan to advance its [Beijing’s] space capabilities”7. China does not fight shy of its space-faring prowess. But Beijing, like New Delhi too, has consistently advocated non-militarisation of space in general and non-placement of weapons in space in particular. India’s space-faring story is narrated with much empathy and accuracy by scholars like Michael Sheehan. He writes: “Though [India’s] contemporary programme is in dramatic contrast to Indian [economic] underdevelopment and [is] a striking achievement for a newly independent country, India in fact has a long historical legacy in terms of interest in astronomy and rocketry. [Globally] The earliest written account of anything resembling a space launch can be found in ancient Sanskrit texts such as the Rig Veda and the Mahbharatha, which speak of a vessel called Vimana ascending to heaven. The Vimana is

6 7

Michael Sheehan, The International Politics of Space, Routledge London and New York, 2007. P. 160 Foreign Affairs, March/April 2012, The Case for Space by Neil deGrasse Tyson, p.23

described as giving ‘forth a fierce glow, the whole sky was ablaze, it made a roaring like thunderclouds’ and then took off.8”

Vedic Vimana The resemblance between such a graphic account and the flawless Agni-V lift-off as an “intercontinental ballistic missile (ICBM)” is really remarkable. There is, of course, one significant difference between the trajectories of these two space-bound objects. Whereas the description of the Vedic Vimana’s lift-off corresponds to that of a civilian space launch of a satellite, the test flight of Agni-V was designed to use a dummy payload to ‘kill’ a dummy target at an ICBM range of about 5,000 km somewhere in the Indian Ocean. Also to be noted, though, is that India’s successive governments have guided the country’s civilian space programmes to address down-to-earth economic issues of poverty, education, and public health at home. The scientific dimension of India’s space-faring skills is no less known. Addressing the Indian Parliament in November 2010, US President Barack Obama referred to India in the grammatical usage of second person and said: “The world sees the results [of India’s indigenous efforts] from the supercomputers you build to the Indian flag that you put on the Moon”9. Now, with the success of Agni-V test flight, India exudes confidence at having come of age as a space-faring power with a minimum credible nuclear deterrence. So New Delhi faces an urgent follow-up task of sending out the right political message across to China and other major powers. Both China and India have consistently enunciated the principle of no-first-use of nuclear weapons in the conduct of international affairs. It is, therefore, insightful commonsense that India and China should now be able to move towards meaningful engagement based on the principles of trust or at least ‘trust but verify’. Such a choice by both India and China at the same time will help them consolidate the “gains” already made in the bilateral sphere and also take a realistic view of each other’s security concerns on the international stage. .....

8 9

Michael Sheehan, The International Politics of Space, Routledge London and New York, 2007. P 144 P S Suryanarayana, ‘India’s Place and ASEAN’s Primacy in the New East Asia’, Asean Matters!, Lee Kuan Yew School of Public Policy, National University of Singapore, 2011, p. 239

ISAS Brief No. 239 – 25 April 2012 469A Bukit Timah Road #07-01, Tower Block, Singapore 259770 Tel: 6516 6179 / 6516 4239 Fax: 6776 7505 / 6314 5447 Email: isassec@nus.edu.sg Website: www.isas.nus.edu.sg

Capital Loss for Congress in India Nalin Mehta1

The fog of war is confusing. The fog of defeat can be even more debilitating: the comfort of denial and post-defeat rationalization are its natural offspring. The Indian National Congress Party’s comprehensive defeat in the Municipal Corporation of Delhi (MCD) elections in April 2012 has added to its growing list of recent electoral setbacks and its public response has followed a time-worn typescript. Swinging between defensiveness and despair, its official statements have ranged from the technical “this was not my election” response by Chief Minister Sheila Dikshit to the carefully crafted “it was a local election” comment by Prime Minister Manmohan Singh. Further down the pecking order, party spokespersons, struggling to find silver linings in the defeat, have half-haughtily, half-hopefully pointed out that they managed to win the last Delhi assembly election after a similar MCD rout in 2007. The lone public voice of introspection has come from East Delhi MP Sandeep Dikshit who, in the first pang of defeat, talked of a general anti-Congress mood, a disconnect between the party and the people and national issues like price rise and corruption as key factors. The party has swiftly backtracked on this view but Dikshit, who is also the Chief Minister’s son,

Dr Nalin Mehta is Visiting Senior Research Fellow at the Institute of South Asian Studies (ISAS), an autonomous research institute at the National University of Singapore, and at the Asia Research Institute. He can be reached at arinm@nus.edu.sg. The views expressed in this paper are those of the author’s and do not necessarily reflect those of the ISAS.

should know: it is in his stronghold of East Delhi where the Congress has had the worst shocks, winning only 19 out of 64 wards. It was an area that was absolutely central to Sheila Dikshit’s return to power for a record third time in 2008 and it is home to several local party heavyweights and state ministers [Education Minister and Member of Legislative Assembly (MLA) from Gandhi Nagar, Arvinder Singh Lovely; Urban Development Minister and MLA from Laxmi Nagar, AK Walia; former Health Minister and Shahadra MLA, Narendra Nath] as well as the state Congress chief and Member of Parliament (MP) from Northeast Delhi, JP Aggarwal. It has been specially nurtured by the state government with hundreds of millions being pumped in on flyovers and development projects; yet voters have turned away, as they have in North Delhi (only 29 of 104 seats) and South Delhi (again 29 of 104). Why should any of this matter to anyone outside Delhi? It is always risky to draw general conclusions from a municipality election but there is always a certain symbolism to an election in the national capital. So what lessons does this poll hold and what does it really mean outside of its local context? First, this loss comes on the back of the Congress losing the Bangalore municipality for the first time in 2010 and failing to unseat the Bharatiya Janata Party (BJP)-Shiv Sena combine in the Mumbai municipality, despite being in alliance with the Nationalist Congress Party earlier in 2012. Of course, people vote differently in local, assembly and national elections but it is hard to ignore the growing impression of the urban vote slipping away from the Congress. In the 2009 Lok Sabha election, the party did well in at least 17 urban cities – it swept all seven parliamentary seats in Delhi, for instance – but the stink of big-ticket scams and a larger sense of stasis afflicting the central government has meant that something seems to have shifted, at least in urban India. On a wider canvas, the political vocabulary of the Congress since 2009 has been so focussed on the rural aam aadmi that it has struggled to evolve an imagery that resonates with the aspirations driving urban India. Ironically, Delhi was the one place where the party did walk the talk on development, focusing its entire campaign on good governance issues. The Chief Minister was the party’s main campaigner in this municipal election and nearly half of the party’s 20-page manifesto was devoted to the state government's achievements over three terms in sectors. In that sense, the party’s campaign was unambiguous that it was seeking a mandate in the municipal polls on the basis of the state government’s performance, even as it sought to focus attention on the alleged corruption in the current BJP-run MCD. The failure to translate any of this into votes means that the Congress must now ask itself serious questions. For example, the Congress lost ground in the assembly election segments

of every state government minister, with the exception of Arvinder Singh Lovely (in whose assembly constituency, the Congress won three out of four wards), which at the very least reflects a sharp trend of voter anger with the state government. Secondly, the flip-flops over the Sandeep Dikshit argument seems a microcosm of the larger problem within the Congress, between an old guard that seems smug and arrogant in the cushiness of power and a younger second line that is increasingly gloomy and worried about the prospects for 2014. Every defeat produces excuses but the road to recovery can only open if the right lessons are learnt. Third, in Muslim-dominated areas, Congress leaders failed to cut much ice despite trying to play a version of their tactics in Uttar Pradesh. The state Congress chief appealed to Muslims to vote in a consolidated manner and Sheila Dikshit raised the issue of Gujarat Chief Minister Narendra Modi but the party finished well behind the regional outfits and independents in Muslim-dominated areas. Elections after elections are showing that old certainties are changing. Fourth, the BJP has won a convincing victory (138/272 seats overall) but the election of several independents and candidates from the smaller parties (as many as 57) means that national parties have to be on notice. The BJP comfortably outpolled the Congress by a good six percentage points but with only a 0.54% increase in vote share from the 2007 MCD election. Despite the magnitude of the loss, the Congressâ&#x20AC;&#x2122; vote-share actually increased by a little over one per cent. The decline of the Congress certainly benefits the BJP but may not automatically translate into gains by itself. Despite the size of its victory in this local election, the BJP cannot rest easy as the focus shifts to bigger contests on the road to 2014.

.....

ISAS Brief No. 240 – 11 May 2012 469A Bukit Timah Road #07-01, Tower Block, Singapore 259770 Tel: 6516 6179 / 6516 4239 Fax: 6776 7505 / 6314 5447 Email: isassec@nus.edu.sg Website: www.isas.nus.edu.sg

A New Myanmar on South Asia’s Borders: Changes and Challenges Iftekhar Ahmed Chowdhury1

As Myanmar’s icon of democracy, the Nobel Laureate Aung San Suu Kyi, recently walked towards the Parliamentary Chamber to take her seat for the first time, a journalist asked her if it was going to be a historic day for her country. Her response was as laconic as it was profound: “Only time can tell”, she observed. And she is right! Myanmar is at a cross roads. Its future will hinge on choices it makes, the path it decides to take henceforth. What it expects from the international community is not direction, or advice or guidance with regard to the choice of the road. But support, empathy and understanding, and when asked for, aid and assistance, as Myanmar moves forward along the route of its own choosing. Myanmar must be allowed to be in the driver’s seat of its own destiny. Today that is the emerging consensus among the nations of the world. It was not a consensus that could have been easily arrived at. Much of it was the fault of the generals of that country, though others around the world had their share of the blame. Led by the ageing Senior General Than Shwe and others of his ilk, they tightened their stranglehold over the country, changed its name from ‘Burma’ to ‘Myanmar’ arguing that it was more in consonance with their tradition , refused to recognize the election results of May 1990 won by Suu Kyi’s National League for Democracy (NLD), and in a controversial move, shifted the capital from the historic Yangon, to the new site of Nay Pyi Taw, projecting it as being more central and thereby secure, presumably from a possible Western maritime intervention. 1

Dr Iftekhar Ahmed Chowdhury is Senior Research Fellow at the Institute of South Asian Studies (ISAS), an autonomous research institute at the National University of Singapore. He was the Foreign Advisor (Foreign Minister) of Bangladesh from 2007-2009. He can be contacted at isasiac@nus.edu.sg. The views expressed in this paper are those of the author and do not necessarily reflect those of the Institute.

Thereafter, in what was seemingly an ‘Alice in Wonderland’ trial with a ‘sentence first, verdict afterwards, the junta incarcerated Suu Kyi. Under a Constitution crafted to suit the military’s purposes, elections were held in 2010 which the NLD, understandably, boycotted. The West, in particular, was not amused. Its apprehensions, some genuine and some not, were reinforced by a number of other factors. The generals in Myanmar were intolerant of dissent, for which stiff prison terms were imposed. Two Myanmar defectors code-named ‘Moe Joe’ and ‘Tin Min’ reported, with inadequate supporting evidence, to an Australian academic Prof Desmond Ball that Nay Pyi Taw had developed a ‘knack for nukes’. Also that North Korea was helping Myanmar build a secret nuclear reactor and plutonium extraction plant with a view to producing a nuclear bomb in five years. The attendant fears were exacerbated by a story making the rounds that six years ago Myanmar had concluded a massive deal with the Ukraine involving the purchase of 1,000 armoured personnel carriers. The Myanmar government’s less-than-satisfactory response to the devastating Cyclone Nargis in May 2008 led to calls for invoking external intervention in the name of the newlyformulated (and, often dubiously interpreted) United Nations’ principle of ‘the responsibility to protect’ (as was done later to remove Libya’s Muammar Gaddafy) by the then French Foreign Minister Bernard Kouchner. The European Union and the United States slapped sanctions upon sanctions on Myanmar, ignoring the reality that the people rather than the targeted government would be consequently hurt. The response to the generals’ announcement of the ‘seven-step road-map to democracy’ – by the Australian Foreign Minister Alexander Downer – was that reforms in Myanmar were akin to glue running uphill. West of Suez the idea spread that the only conceivable way to treat Myanmar, or ‘Burma’ a name by which westerners and dissidents insisted on calling it, was as a pariah. Myanmar’s Asian neighbours urged calm. By and large their view was that engagement was the better option to effect the desired changes. India was unmoved by United States’ exhortations to ‘play a more responsible role’ (in other words act in accordance with Western wishes). Bangladesh, itself affected by the Rohingya refugee issue, continued to quietly interact with Myanmar to address their bilateral problems. So did Thailand. China resolutely opposed any UN sanctions, unequivocally stating that any move by the Security Council should be ‘prudent and responsible’ (implying that sanctions were not), and conducive to the mediation efforts of the UN Secretary General. While the Association of Southeast Asian Nations (ASEAN) was a ‘house divided’, most of the members preferred to engage rather that ignore their peer, hoping that change would come about as a result of internal pressures, and the force-feeding of democracy could have undesirable consequences (the memories of Iraq, and the experience of Afghanistan being fresh in Asian minds). This author had argued elsewhere that “the answer to curing the malaise in Myanmar lies, not so much in force as in peer pressure and persuasion”. While it will be an exaggeration to say that genuine change has come to Myanmar, there have been occurrences heralding such change. Perhaps it was as a result of both the carrot and the stick, though it would be difficult to measure how much was owed to which. Though there was no Runnymede moment (in 2

1215 King John of England sealed the Magna Carta in the meadow by this name, marking the beginning of English democracy), there were cascading events causing rapid and positive changes. It began with the election of a Parliament in 2010, far from perfect as NLD did not contest and a quarter of the membership was reserved for uniformed officials. Then Than Shwe made way for a President, Thein Sein, still an ex-general, but now in retirement mufti. Suddenly a sense of sweeping reforms pervaded the system. Suu Kyi and a large number of political prisoners were released, cease-fires were signed with most ethnic rebels, press censorship was largely lifted, and the NLD was allowed to take part in by-elections in April this year (it secured 43 of the 44 seats contested, including that of Suu Kyi). The recent resignation of the hard-line Vice-President General Tin Aung Myint Oo, reputed to have been close to the former strongman Than Shwe, has brought grist to the reformists’ mill. This was followed by an e-mail interview with Bloomberg by Ko Ko Hlaing, an adviser to the President, asserting that the “military is obedient, educated, and there would be no more coups”. Touchwood! The US Secretary of State Hillary Clinton, and the British Prime Minister David Cameroon visited Myanmar, Suu Kyi took her seat in the Parliament, and all seemed right with the world! But only for now! The Rohingya refugee problem and the fighting with the Kachins continue to fester. There is a lot of unfinished business in Myanmar. The next elections are due in 2015. The West would expect that there is greater movement towards democracy by that time, and Aung San Suu Kyi is in a position to lead the government. This would, however, be a triumph of hope over experience. The military is unlikely to goose-step away from power in its entirety so swiftly. So the West will have to do with what they perceive as the best of a bad bargain. Myanmar, a poor country, is rich in resources. These include gems and precious stones, and 90 per cent of the world’s rubies come from that country. It once produced 75 per cent of the world’s teak wood. It also provides over 50 million tons to global rice supply. On the negative side it produces over eight per cent of all opium. Lured by such statistics, understandably, Western firms are raring to go. The European Union has eased most of its sanctions for a year, but the US, where the process is more complicated, not yet, but is under domestic pressure to do so soon. Enter India and China. Both have provided military aid in the past (suspended by India since 2008 over human rights issues), and China, the much needed support in the UN Security Council. On 15 June 2009 China announced the construction of a 1,100-km crude oil pipeline from the port of Kyakryu in Myanmar to Kunming in China. It addresses China’s ‘Malacca Dilemma’, which is that the other option of procurement would be through the Malacca Straits, which would call for Chinese naval protection and, in turn, would provoke blue-water projection there by other regional states , including India. In pursuance of its ‘Look East ‘ policy India has been seeking engagement with Myanmar in areas such as remote sensing, energy exploration, information technology, hydro-power, and in constructing roads and bridges. Myanmar’s infrastructure is awful. Yet it is the conduit that links India to Southeast Asia. Thus the sector cries out for investment. Oddly, despite the closeness, relations with China have at times shown strains, particularly on ethnic conflicts. With India, it has largely 3

been strain-free. India also is the country Suu Kyi has spent time in and therefore is beholden to. Prime Minister Manmohan Singh’s prospective visit, therefore, does not come too soon. What we see is a new Myanmar emerging on South Asia’s eastern borders. It is one in which the changes are also spawning their own challenges. For instance, Nay Pyi Taw’s policy of ‘managed float’ for the country’s currency, kyat, and any hasty opening-up of its economy could be potentially damaging to Myanmar’s nascent industries. Professor Ralph Pettman of the Melbourne University, writing three decades ago, had delineated a traditional behaviourpattern for Myanmar. He had said: ‘It adapts and adjusts, but does not kowtow to its neighbour(s).’ Both India and China (and perhaps other big powers as well) would do well to heed this extrapolation from history. Thant Myint-U, a grandson of the former Burmese UN Secretary General U Thant and an analyst, has stated: “In Burma, where China meets India, a unique meeting place of cultures and peoples is created … Progress in Burma would be a boon for the region. A peaceful, prosperous and democratic Burma would be a game changer for Asia”. The author would like to add, with a touch of constructive optimism: ‘... and perhaps for much of the world’. .....

ISAS Brief No. 241 – 22 May 2012 469A Bukit Timah Road #07-01, Tower Block, Singapore 259770 Tel: 6516 6179 / 6516 4239 Fax: 6776 7505 / 6314 5447 Email: isassec@nus.edu.sg Website: www.isas.nus.edu.sg

Performance of the Indian Rupee: A Comment S Narayan1

The Indian Rupee has depreciated by around 22 per cent since August 2011, and is hovering around the 55-56 mark with reference to the United States Dollar. It has declined sharply since March 2012, and there has been considerable anguished comment about the reasons as well as the foreseeable trends in the value of this currency. At the top of the reasons cited is India’s worsening current account deficit. Trade imbalances have increased, with negative trade balances with most of the major trading partners including China, the US and the Gulf Countries. Currently, the deficit is around four per cent of the Gross Domestic Product. Since a significant quantity of capital flows are short term, into the financial markets, any volatility can increase the risk of financing the deficit. The Government has identified imports of gold as one of the sources of this imbalance, but this might not be the only culprit. The large energy imports envisaged, of oil, coal and gas, are likely to exacerbate the pressure on the current account. The budgeted figure for energy imports in Fiscal Year 2012-13 is around US $80 billion, an all-time high. Lower crude oil prices could be positive for the current account deficit — a $10-decrease in oil prices can decrease the current account deficit by 0.5 per cent of the GDP. However, the additional pressure this year is the very large coal imports that are being planned. The inability of the state-owned coal sector to ramp up coal production to meet the growing demands of the newly commissioned power generation plants is leading to increasing reliance on coal imports. In FY 12-13, coal imports for power generation are likely to exceed 120 million tonnes — an enormous expense and logistics management problem as well. 1

Dr S. Narayan is Head of Research and Visiting Senior Research Fellow at the Institute of South Asian Studies, an autonomous research institute at the National University of Singapore. He was the economic adviser to the former Prime Minister of India, Mr Atal Bihari Vajpayee. He can be contacted at snarayan43@gmail.com. The views expressed are those of the author and do not necessarily reflect those of the institute.

There is yet another liability â&#x20AC;&#x201D; that of over US$100 billion of liabilities of corporate overseas borrowings that need to be refinanced or repaid in the next 18 months. This would place considerable pressure on the reserves. In addition, there has been a decline in foreign exchange reserves as well. In May 2011, the reserves were adequate to cover 11 months of imports â&#x20AC;&#x201D; that is now down to six and a half. The current account deficit, coupled with volatility in the financial markets that has kept the equity and commodity markets volatile, has prevented the institutional investors from taking any but very short-term positions in the market, and the equity market, as a result is in a serious negative territory. The only support for the foreign exchange reserves appears to be coming from inward remittances, which continue to be healthy. If we add to all this the concerns over poor governance, the large fiscal deficit, the reluctance to rein in subsidies, and the poor image that the Government has overseas, the inflationary pressures on the economy etc., it is not surprising that analysts are looking at it as a serious problem for the economy. It is also apparent that short-term measures like duties on gold imports and liberalizing investments by FIIs (Foreign Institutional Investors) in local currency debt are unlikely to provide any long term relief. The Finance Minister of India has admitted to the media that he is worried about the depreciation of the rupee. Amidst this gloom, it is possible to take a different perspective about what is happening and to draw some conclusions about future expectations. First, the decline of currencies, especially those of the emerging markets, against the US Dollar, has been happening for some months now. There is a renewed confidence in the USD, given the dismal news from the euro-zone countries and the steady revival in manufacturing in the - US. Corporate results in the US have also been encouraging, and though consumer demand is still sluggish and job creation poor, the output of the US economy has been steadily expanding since August 2011. The uncertainties in China have also helped strengthen confidence in the US Dollar. The decline in the values of emerging market currencies mirrors the rise in confidence in the USD. The stepwise reduction in values in the Brazilian and Indian currencies is very similar, except that the Indian rupee has fallen much further. In terms of managing the currency, the Reserve Bank of India (RBI) has been unique in that it has been following a flexible exchange rate policy in the last couple of years (except for the heavy intervention in the three months to January 2012). The current stance is significantly different from the rigid stance of the pre-1991 period. This flexible stance led to a significant REER (Real Effective Exchange Rate) appreciation since 2009, and in part, the current depreciation mirrors the expected correction. From this point of view, the flexible approach of the RBI is likely to help resolution of the problem, and not likely to be the problem itself. The INR/USD equation appears to be close to its long-term trend, and barring shocks from

the euro-zone, the indications are that the Indian Rupee depreciation is close to its final adjustments. There is also positive news from the trends of oil and gas prices. The emergence of the US as a major oil producer with surplus of associated gas has, on the one hand depressed spot market prices of gas. On the other, it is likely to reduce US dependence on imported oil and thus reduce volatility in oil prices. Given the large subsidies that the Indian Government is committed to in the oil and gas sectors, this would be a relief. Of course, concern over coal prices and power tariffs would remain, but in terms of value, oil and gas imports would put a greater burden on resources than coal. There are also clear signs of fresh investments in the economy. In the automobile and auto ancillaries sector, there are several new players as well significant expansions of capacity that are taking place. The appreciation of the US Dollar has also led to increasing outsourcing of components to the Indian manufacturers, and the light engineering industry with all the associated electric, electronics industries. Japanese investments are increasing, with an increasing number of small and medium-size Japanese manufacturing firms setting up facilities in India. There is resurgence in the pharmaceuticals, textile and chemicals industries. The Delhi Mumbai industrial corridor and the Chennai- Bengaluru link are likely to see substantial local and foreign investment in manufacturing, infrastructure construction as well as urban management. A number of power projects would get completed in the next 15 months, adding close to 45,000 MW of fresh generation capacity. Campus hiring continues to be buoyant, with job offers from IT firms being matched by offers from infrastructure project firms. Real estate construction, especially retail housing, continues to grow rapidly. The growth of 7 per cent or above is not a myth, and is being driven by serious consumer demand that is leading to growth in the services sectors as well as in manufacturing. In short, there are no signs that the India story is over. However, it is also clear that there are several issues that can be tackled only by the Government. These include incentives to improve exports, sorting out issues related to coal production, fast-tracking infrastructure projects, etc. Also needed is clarity on reduction of subsidies, increasing prices of petrol, diesel and gas and greater control over expenditure. There is considerable resilience in the economy, which can bounce back on some positive news of lower interest rates, better fiscal prudence or some signs of improved governance. While the underlying story is still strong, sentiments would continue to remain depressed unless there are some clear positive signals from the Government.

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ISAS Brief No. 242 – 23 May 2012 469A Bukit Timah Road #07-01, Tower Block, Singapore 259770 Tel: 6516 6179 / 6516 4239 Fax: 6776 7505 / 6314 5447 Email: isassec@nus.edu.sg Website: www.isas.nus.edu.sg

Politics of the Indian Presidency Nalin Mehta1

Debating the role of the President in the Constituent Assembly on 21 July 1947, Jawaharlal Nehru articulated some of the dominant political expectations of the time, arguing that even though ‘we did not give him any real powers’ in the proposed Constitution, ‘we have made his position one of great authority and dignity’.2 As the discussion unfolded, Nehru made the case for the President being first and foremost a ‘symbol’ of the country, one who, despite not having the powers of the American President, is like him, the Commander-in-Chief of the defence forces. What India’s soon-to-be first Prime Minister chose not to focus on in his speech that day was the crucial political role inbuilt by the Constitution into the Presidency. The sheer moral certitudes attached to the Presidency and its ceremonial aspects have always served to obfuscate its key political function ever since and fostered a somewhat romanticised view that the Presidency is somehow meant to be an apolitical office. As the Constituent Assembly’s member from Bihar, Tajamul Husein, later argued, ‘the first President of India would be the first gentleman of the land and equal to any monarch in the world’. 3 Irrespective of gender, the sentiment behind this expectation was clear from the beginning. The moral dimensions notwithstanding, as India’s political parties debate candidates for the contest to elect the thirteenth President of the Republic, it is the politics that is paramount. The country is heading into an uncertain period of political turbulence leading up to the 2014 1

Dr Nalin Mehta is Visiting Senior Research Fellow at the Institute of South Asian Studies (ISAS), an autonomous research institute at the National University of Singapore. He can be contacted at arinm@nus.edu.sg. The views expressed are those of the author and do not necessarily reflect those of the institute. Jawaharlal Nehru in Constituent Assembly debate, 21 July 1947. Constituent Assembly of India Volume IV, Reproduced on http://indiankanoon.org/doc/621540/ (accessed 7 May 2012). Constituent Assembly of India Debates (Proceedings) Volume VII, Monday 27 Dec. 1948, http://164.100.47.132/LssNew/constituent/vol7p26.html (accessed 5 May 2012)

general election and when political horizons are murky, the role of the President becomes even more crucial. Under Article 75 of the Constitution, it is the President who appoints the Prime Minister after an election but in the absence of clearly laid down rules in the case of a hung house, has to use his or her own judgment on government-formation. The next President will have a particularly delicate role in the formation of the next government in 2014, given that the most reasonable guess in Delhi currently is that of another hung house, open to the most dexterous alliance. This is why the stakes are so high in this particular Presidential poll. Whether it is Finance Minister Pranab Mukherjee or Vice-President Hamid Ansari or former Lok Sabha Speaker P.A. Sangma or any other name that comes up before the last date of nominations, the shadow of the next general election is defining this Presidential contest. This explains why it is arousing such interest and intense jockeying behind the scenes between various political parties.

The Political Role of the President It is in periods of political uncertainty that the President has to play a particularly political role as the arbiter of constitutional propriety. President Neelam Sanjiva Reddy in 1979; R. Venkataraman in 1989, 1990 and 1991; Shankar Dayal Sharma in 1996 and K.R. Narayanan in 1999 faced such situations where Presidential discretion and judgment became crucial in the appointment of the Prime Minister. In addition, President Zail Singh’s decision to swear in Rajiv Gandhi as Prime Minister in 1984 despite there not having been a meeting of the Congress Parliamentary Party or any similar official nomination procedure before his anointment still remains controversial. For instance, when Nehru died in 1964, President Sarvepalli Radhakrishnan swore in the senior-most cabinet minister Gulzarilal Nanda as caretaker Prime Minister, and again when Lal Bahadur Shastri died in 1966. The current political debate is so intense precisely for this reason, not simply for the sheer imagery and symbolism of the office. The relatively settled nature of the current ruling alliance in Delhi and President Pratibha Patil’s quiet tenure until recently has meant that it is easy to forget just how crucial a swing factor the President can be. For example, in 1979, President Reddy’s decision to call for a general election instead of asking Jagjivan Ram to form a government after the Charan Singh government fell, led to Janata Party President Chandrashekhar calling him a ‘Lilliputian Fuehrer’ as he joined Atal Behari Vajpayee and Morarji Desai to call for his impeachment.4 President Reddy’s judgment that a stable government could only come from a new election only underscored the importance of the Presidency in unstable times.

Quoted in The Age, 24 Aug 1979.

Secondly, ever since Rajendra Prasad presided in his private capacity over the opening ceremony of the reconstructed Somnath temple in 1951 despite Nehru’s objections, it has been clear that the President has the capacity to act as a touchstone for key disjuncture in major political debates.5 In the 1950s, President Prasad’s opposition to the Hindu Code Bill eventually contributed to a legislation that was less far-reaching than Nehru had wanted.6 The first 10 years of the Republic were crucial for determining the balance of power between the office of the President and the Prime Minister. For example, in letters to Nehru and Attorney General M.C. Setalvad on 21 March and 27 March, 1950, President Prasad, in fact, sought several clarifications on the powers of the President including on whether he could act independently of the Council of Ministers. The Lok Sabha’s former Secretary General Subhash Kashyap has shown that Setalvad initially replied that the President did indeed have the right to dismiss the government and dissolve Parliament but changed his opinion by 1951, when it was established that the powers of the President could be exercised by him only with the aid and advice of his ministers, adding that the President could not dismiss a council of ministers enjoying the confidence of the House.7 This balance of power has generally held but while the President, under Article 74(1) of the Constitution, is mandated to follow the advice of the government of the day, he can also return advice, at least once. For example, in 1997 President Narayanan returned advice from Prime Minister Gujral to dismiss the Kalyan Singh government in Uttar Pradesh and in 1998 advice from Prime Minister Vajpayee to dismiss the Rabri Devi government in Bihar (in both cases, the respective Prime Ministers accepted his decision). Furthermore, in 2002, disapproving letters from Narayanan’s desk to the Vajpayee government put pressure on the Prime Minister over the Gujarat riots. It wasn’t quite like the Zail-Singh versus Rajiv Gandhi episode where things seemed to reach a breaking point in the late-1980s over the President’s refusal to agree to the postal bill, but the President’s pro-activeness in each case did act as a vital counterpoint to the political instincts of the government of the day. Thirdly, this election is also vital for the Congress’s image in the sense that it does not quite have the numbers this time like it did for President Pratibha Patil’s election. In 2007, a more settled and coherent UPA simply put up a candidate and that was that. This time the political context is entirely different and it genuinely needs support from the allies in the complex electoral college that will elect the President. The President is elected indirectly by an electoral college comprising 543 members of the lower house of Parliament, the Lok Sabha, 233 elected members of the upper house, the Rajya Sabha and 4,120 members of legislative

5 6

See for instance, Romila Thapar, Somnath: The Many Voices of a History, New Delhi: Penguin, 2004. See for instance Reba Som, ‘Jawaharlal Nehru and the Hindu Code: A Victory of Symbol Over Substance’, Modern Asian Studies, 28:1, 1994, pp. 165-194. Subhash Kashyap, ‘Clash of Titans That Strengthened India, The Times of India, 23 Jan. 2010. http://articles.timesofindia.indiatimes.com/2010-01-23/india/28134965_1_general-elections-prime-ministerjawaharlal-nehru

assemblies in the 28 states of India. The value of each vote by a Member of Parliament is proportional to the number of members of state legislative assemblies while the value of each vote cast by a legislative assembly member is proportional to the population in his or her state. Using this method, according to one count, in 2012, the value of the 776 Members of Parliament will account for a total of 549,408 votes while the 4,120 members of legislative assemblies will account for 549,474 votes.8 After humiliating reverses in Uttar Pradesh, Punjab and Delhi, the Congress party is on the defensive, its numbers in the states are reduced wobbly and it cannot quite afford the embarrassment of putting up a candidate that ends up losing. That would be a political bloody nose the ruling party can ill-afford and this is why it needs to be sure of its political calculations before it fields a candidate. The votes wielded by Mulayam Singh Yadav’s Samajwadi Party, Mayawati’s Bahujan Samaj Party and Mamata Banerjee’s Trinamool Congress in this regard will be crucial. Figure 1: PREVIOUS INDIAN PRESIDENTIAL CONTESTS9 S.N.

POLLING DATE

WINNER

VOTES POLLED (%)

MAIN RIVAL

1 2 3 4 5 6

May 2, 1952 May 6, 1957 May 7, 1962 May 6, 1967 Aug. 16, 1969 Aug 17, 1974

507,400 (83.8) 459,698 (98.99) 553,067 (98.25) 471,244 (56.2) 401,515 (48.01) 785,587 (80.18)

K.T. Shah N.N. Das Ch. Hari Ram K. Subbarao N. Sanjiva Reddy T. Chaudhuri

7 8 9 10 11 12 13.

Aug 6, 1977 July 12, 1982 July 13, 1987 July 13, 1992 July 14, 1997 July 15, 2002 July 22, 2007

Rajendra Prasad Rajendra Prasad S. Radhakrishnan Zakir Husain V V Giri Fakhruddin Ali Ahmad N. Sanjiva Reddy Giani Zail Singh R. Venkataraman S.D. Sharma K.R. Narayanan A.P.J. Abdul Kalam Pratibha Patil

Unopposed 754,113 (72.73) 740,148 (72.79) 675,804 (65.86) 956,290 (94.9) 922,884 (89.5) 638,116 (58.1)

H.R. Khanna V. Krishna Iyer G.G. Swell T.N. Seshan Lakshmi Sehgal Bhairon Singh Shekhawat

The potential of the Presidential election to serve as a political barometer for the ruling entity in Delhi has been evident ever since the 1969 Presidential election when Indira Gandhi decided to support V.V. Giri as an independent candidate against the official Congress candidate Neelam Sanjiva Reddy. Giri’s victory in what became a proxy battle in the larger 8 9

Figures from Saba Naqvi ‘The August Equation’, Outlook, 30 April 2012. Table uses Election Commission data quoted in J. Venkatesan, ‘How the President of India is Elected’, The Hindu, 14 June 2007. 2007 figures from Anita Joshua, ‘Pratibha Patil Elected President’, The Hindu, 22 July 2007. http://www.hindu.com/2007/07/22/stories/2007072250620100.htm (accessed 10 May 2012)

tussle between Indira Gandhi and the older Congress leadership eventually led to a split in the party paving the way for Indira Gandhiâ&#x20AC;&#x2122;s political dominance. This Presidential election is a very different one for the ruling party but the electoral contest will be a test case for Delhiâ&#x20AC;&#x2122;s new emerging political equations. Previous elections such as the A.P.J. Abdul Kalam-Laxmi Sehgal contest in 2002 also created much political chatter but the dominoes have fallen in such a way that this presidential election has assumed greater importance than any in the past three decades. .....

ISAS Brief No. 243 – 7 June 2012 469A Bukit Timah Road #07-01, Tower Block, Singapore 259770 Tel: 6516 6179 / 6516 4239 Fax: 6776 7505 / 6314 5447 Email: isassec@nus.edu.sg Website: www.isas.nus.edu.sg

Nepal’s Constitutional Crisis Hema Kiruppalini1

Abstract In November 2011, the Supreme Court of Nepal ruled in favour of a fourth extension for the promulgation of the constitution. A final deadline of 27 May 2012 was set for the delivery of this mandate. However, once again the task has not been fulfilled and this stalemate will certainly push Nepal into a deeper political crisis. Inter- and intra-party politicking, ideological clashes and the inability to reach a consensus on the state’s restructuring process on the basis of ethnic federalism have altogether hampered the major political parties from working together. Although some political headway has been made in the recent months, the transition to a federal democratic republic and the overall peace process in Nepal will remain incomplete if a constitutional crisis persists.

In a brief interview with the Prime Minister of Nepal, Dr Baburam Bhattarai, on 3 November 2011, questions relating to the future of Nepal’s political transition were touched upon. This interview which was held at the Prime Minister’s official residence in Baluwatar was conducted two days after the peace agreement that was achieved on 1 November 2011. This agreement was considered to be a political breakthrough as it was the result of Nepal’s major political parties – the Unified Communist Party of Nepal-Maoist (UCPN-M), Nepali Congress (NC), the Madhesi parties and the Communist Party of Nepal-United Marxist Leninist (CPN-UML) – agreeing to a landmark peace deal after years of disputes over the 1

Ms Hema Kiruppalini is Research Associate at the Institute of South Asian Studies (ISAS), an autonomous research institute at the National University of Singapore (NUS). She can be reached at isashk@nus.edu.sg. The views expressed in this paper are those of the author and do not necessarily reflect those of the Institute.

rehabilitation and integration of former Maoist combatants. The 1 November 2011 deal also saw the ‘parties [being] committed to forming an expert panel to work out the details of the federal system which was to replace the state restructuring commission mentioned in the interim constitution’.2 When asked whether he was hopeful about the constitution being drafted by the renewed deadline, Bhattarai remarked with much optimism that ‘the first draft will be ready by November 2011 and then we need another six months’3. And, prior to this affirmed that he is ‘focused on two tasks; the completion of the peace process and the writing of the constitution’. 4 However, yet again, Nepal missed the 27 May 2012 deadline for the promulgation of the constitution. And, Bhattarai addressed the nation, announcing the dissolution of the Constituent Assembly (CA) and the cabinet’s decision to hold fresh elections for the CA. This announcement has been disapproved by the NC, UML and other parties. Moreover, while the Prime Minister now added that the ‘current government would hold elections and he would enjoy executive rights as per the Interim Constitution, the NC, UML and other fringe parties have demanded immediate resignation of the PM to pave way for national consensus’.5 In April 2008, the citizens of Nepal voted for the CA, giving it a two-year mandate. In November 2011, when the Supreme Court granted the fourth extension, the May 2012 deadline was deemed final, and failure to meet the deadline would amount to the dissolution of the CA. Intra- and inter-party disputes, ideological clashes and conflicting viewpoints over the country’s state restructuring procedure have derailed Nepal’s constitutional transition. Firstly, the varying political stakes of the major parties have gradually sharpened the divide among them thus attenuating inter and intra-party tensions. While the UCPN (Maoists) and Madhesi Front agreed that the Prime Minister should not resign before the constitution was promulgated, the ‘Nepali Congress (NC) and United Marxist Leninist (UML) have been demanding the resignation of Dr Baburam Bhattarai to pave the way for national consensus government before the new constitution could be promulgated within the stipulated time’6. Also, the Maoist-Madhesi alliance is bolstered by their commitment to federalism and, in particular encourages the latter to seek political empowerment by allying with the largest 2

4 5

‘Nepal’s Peace Process: The Endgame Nears’. International Crisis Group (ICG). Kathmandu/Brussels. 13 December 2011. p.7. Interview with Dr Baburam Bhattarai, Prime Minister of Nepal conducted by Hema Kiruppalini. 3 November 2011. Kathmandu, Nepal. Ibid. Kamal Dev Bhattarai. ‘CA Goes Sans Statute; Govt Plans Fresh Elections’. The Kathmandu Post. 28 May 2012. http://www.ekantipur.com/the-kathmandu-post/2012/05/27/top-story/ca-goes-sans-statute-govt-plansfresh-elections/235347.html. Accessed on 29 May 2012. ‘UCPN (M) Decides to Remain in Power until Constitution is Promulgated’. 24 May 2012. http://www.nepalnews.com/home/index.php/news/2/19017-ucpn-m-decides-to-remain-in-power-untilconstitution-is-promulgated.html. Accessed on 27 May 2012.

political party. On the contrary, the opposition parties, the NC and CPN-UML insist that ethnic federalism will sow the seeds of disintegration.7 The political divide is further apparent because in an official promise made to NC president Sushil Koirala by the Maoists, the NC will be allowed to lead the government that will conduct the next elections once the new constitution is promulgated.8 However, having failed to deliver on the mandate, the Prime Minister has set new elections for 22 November 2012, thus making it difficult to ascertain the political position of the Congress party. In an interview that NC members gave to the International Crisis Group (ICG), the party acknowledged its fears of not being back in power before the next elections and therefore having less access to state authority.9 While the credibility of the Maoist party wanes in the eyes of the public and its ideological and organisational abilities are at stake, the opposition parties await how the leadership of the caretaker government will unfold in the coming days and how it is going to undermine or strengthen their position and power. In addition, intra-party cleavages in the Maoist party have jeopardised the party’s image in the eyes of the Nepalese. Responding to my question about whom he considers to be his closest associate given the intra-party tensions in the Maoist party, Bhattarai remarked: ‘Ours is a communist party and it has a different structure from the other parties…we need to have unity in action and centralism…as a communist, one always thinks as a collective. Individuals do play a role but the role of the individual is secondary to the role of the collective. In that sense, the individual expresses the will of the collective or the will of the masses. So, my close associates, I can’t just identify with individuals. It is about the expression of the will of the people through the party. That is my strength and I associate with all of my comrades. There is a division of labour and certain people specialise in certain things.’10 Although the PM alluded to cordial relations in the communist party, the divide between Maoist hardliner Mohan Baidya (Senior Vice-Chairperson of the CPN-M) who engages in the rhetoric of a revolutionary struggle on one hand, and Bhattarai who would rather take the line of ‘peace and constitution’ on the other, is clear. Now, in view of the post-CA climate, this factionalism has the potential to widen, threatening a split within the party.

9 10

John Narayan Parajuli. ‘Nepal Enters Crisis Mode as Constitution Talks Fail.’ BBC News Asia. 28 May 2012. http://www.bbc.co.uk/news/world-asia-18234114. Accessed on 31 May 2012. ‘Nepal’s Peace Process: The Endgame Nears’. International Crisis Group (ICG). Kathmandu/Brussels. 13 December 2011. p.4. Ibid. Interview with Dr Baburam Bhattarai, Prime Minister of Nepal, conducted by Hema Kiruppalini. 3 November 2011. Kathmandu, Nepal.

Secondly, a related question at stake is the political direction Nepal is headed in. In part, the stalemate in the country is a result of the challenge the Maoist party is encountering in trying to transcend from a communist formation to a social movement that will address the demands of the various ethnic groups that are clamouring for recognition in a ‘New Nepal’. When asked about the relevance of Maoism in contemporary Nepal and how the party’s communist ideology has evolved, the Prime Minister commented: ‘We are a communist party where the principles of democracy apply; where people have the freedom to discuss…we should see things in a dynamic frame and not in a static frame. Things always change, conditions change and you should also change according to the situation. When we mounted the Armed Peoples’ War, the autocratic monarchy was ruling the country. There was rampant feudalism in the countryside both in the economic, political and social sphere and to dismantle that, we had to apply force. Without force, what we did in 10 years would have taken 100 years. So that way, that struggle was needed. It was a historical necessity. After reaching a certain stage of the struggle, and the situation changes, we adopted a new strategy of overthrowing the monarchy – and go for Constituent Assembly (CA) elections and institutionalise changes through the CA. That has started a new phase of struggle…we have got republicanism, federalism, secularism, and then we have tremendous change in the mind-set of the people. We have to institutionalise these new changes through CA and through the new constitution…”11 The current political deadlock underscores the complexities of reconfiguring the Maoistcommunist ideology in the context of a transition to a federal democratic republic. Now, the dissolution of the CA implies that hardliners – the Mohan Baidya faction that resisted taking the line of ‘peace and constitution’ – may attempt to change the course of the party’s direction. The impending political polarisation within the Maoist party and among the major political parties reflects the failure of the leaders across different parties to work together. While the Maoist party itself is experiencing an ideological divide, the other major parties have their respective political affiliations – rightist, Marxist, federalist, etc – which, although are not necessarily mutually exclusive, have nonetheless contributed to a clash of viewpoints. Thirdly, disagreement over the state-restructuring process on the basis of ethnic federalism is one of the most sensitive issues plaguing the peace process. Major political parties are unable to reach a national consensus over details such as the number of provinces in federal structure, the boundaries and the names of the respective states. The state restructuring on the basis of ethnic federalism has proven to be a double-edged sword. Ultimately, a constitution premised on an ethnic based solution is a utopic ideal that will reap a catastrophic outcome in reality. In spite of the intricacies in Nepal’s ethnic diversity, there is a struggle to recognise 11

Ibid.

dominant groups that have been marginalised historically with the caveat that ethnic prejudices will not be present in any territory. Therein lies a potential danger because in the long run if ethnic federalism prevails, issues pertaining to ethnic/caste/clan identity and inequality will be politicised from a geographic standpoint contributing to heightened tensions between old and new identities. In recent months, different janjati groups have taken to the streets of Nepal to assert their identity and this new region-based politics on the basis on ethnicity has to be delicately handled. Nepalâ&#x20AC;&#x2122;s constitutional impasse has resulted in a renewed political uncertainty that is further threatened by a legal crisis with some political parties alleging that another extension would be considered unconstitutional and illegitimate. There are several possibilities that could redefine the political climate in Nepal. One, as the Prime Minster announced, is to seek a fresh mandate from the people by holding elections on 22 November 2012 for the Constituent Assembly. Another possibility could be: holding a referendum on ethnic federalism prior to making any demarcation of boundaries. In any case, it remains to be seen whether the Prime Minister will be able to gain the support of all his comrades, widen his coalition and remain in power till the completion of the peace process or will resign in the light of pressure he is facing from opposing parties to step down and make way for the formation of national consensus under another leadership. In either scenario, there is dire necessity for the major political parties and fringe parties to hold a series of discussions so that the respective stakeholders can attempt to reach a compromise.

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ISAS Brief No. 244 – 12 June 2012 469A Bukit Timah Road #07-01, Tower Block, Singapore 259770 Tel: 6516 6179 / 6516 4239 Fax: 6776 7505 / 6314 5447 Email: isassec@nus.edu.sg Website: www.isas.nus.edu.sg

Pakistan’s 2012-13 Budget: A political rather than an economic document Shahid Javed Burki1

Abstract Pakistan People’s Party (PPP), the leading political group in the coalition that has governed from Islamabad since 2008, presented the budget for the financial year 2012-13. It took great pride in the fact that this was the first elected government in Pakistan’s history that was presenting a budget for the fifth consecutive year. This was considered to be a triumph for democracy. But this sense of triumph was tarnished by the way the budget speech was received. It was read out by Finance Minister Abdul Hafiz Sheikh on Friday 31 May 2012. The presentation was made before a raucous parliament, with the main opposition party, Pakistan Muslim League (Nawaz), protesting the presence in the chamber of Prime Minister Yusuf Raza Gilani who had earlier been convicted by the Supreme Court for contempt. It was expected that this conviction would lead to the prime minister’s resignation. That did not happen and the opposition, led by Imran Khan, president of the Pakistan Tehrik-e-Insaf, had moved the court to remove Mr. Gilani from his position. This paper suggests that the 201213 Budget is more of a political than an economic and financial document. It postpones addressing the difficult problems the country currently faces, expecting that the PPP will have another term after the next elections that must be held before the end of the spring of 2013. Then it could deal with the economy.

A few days before his administration was to present its budget proposals, Pakistan’s Prime Minister Yusuf Raza Gilani informed the country of his main economic priorities. These had nothing to do with steadying a troubled economy and everything to do with trying to win the next election. In a democratic system it is legitimate for the governing party to showcase public sector expenditures for winning elections. This happens in both developed and developing countries. But while helping political supporters and those sitting on the fence is acceptable, what is not right is to use the public purse to create massive economic problems. That is precisely what is likely to happen if the proposals made in the 2012-13 Budget are fully implemented. The most worrying aspect of the budget is on the expenditure side. In his speech the Finance Minister expressed some frustration that he had not succeeded, in spite of the promise made by him, to lower the fiscal deficit to 4.1 per cent. It came out instead at 7.6 per cent. This was because of slippages in both expenditures and revenue collection. The government had spent much more and raised far less than promised by way of taxes. Its subsidies had also increased in particular in the power sector. The failure to meet last year’s targets was attributed to the government’s inability to stick to the timetable for licensing the 3G telecommunication bands. These were expected to yield handsome financial rewards. Also, Islamabad received considerably less from the United States- managed Coalition Support Fund by way of compensation for the support Islamabad provided to Washington and its NATO (North Atlantic Treaty Organisation) allies in the ‘anti-terror’ war in Afghanistan. The Finance Minister has now said that the government will attempt to reduce the amount of subsidies in particular those given to WAPDA (Water & Power Development Authority). In light of the on-going implementation of the 18th Amendment to the Constitution that transferred a number of functions from the federal government to the provinces, the Ministry of Finance expected to transfer much smaller amounts by way of grants and loans to the provincial governments. The promise for austerity was balanced by some indication of generosity. Government employees were to receive an increase of 20 per cent in their salaries and pensions. The Prime Minister has said that his first priority is not to impose any new taxes. He didn’t say whether the administration would reform the tax collection system in order to bring in those who have managed to escape the tax net and thus forced the tax-to-GDP (Gross Domestic Product) ratio down to less than nine per cent, one of the lowest in the world. The budget tinkered with the tax system but did not make any significant structural changes. This is in line with the Prime Minister’s pre-budget pronouncements which appeared to indicate that the ruling party had no interest in improving the country’s deteriorating fiscal situation. According to the Finance Minister’s estimate, his proposed measures will now increase the tax-to-GDP ratio to 10.1 per cent. This is only a marginal improvement and will not leave the 2

government’s financial position much healthier, than it is today, when the present administration completes its current tenure. How will the economy revive if the fiscal deficit remains large – at an unsustainable level – is a question that was left unanswered in this budget. It was not recognized that the government’s neglect of the social sectors is a consequence of its strained fiscal circumstances. Without increasing the outlays on education and health as well as on training the rapidly growing work force, the country is setting the stage for rates of growth that will remain anaemic for years to come. While much of the responsibility for the social sectors is now with the provinces, the provinces can only fulfil their mandate if they have the resources to do so. This should be the first priority of the government in the post 18th Amendment period, not a strong pledge that the tax burden will not be raised. We know from the experiences of other democratic systems that no-new-taxes types of commitments can tie down democratic states in difficult fiscal postures. The government’s second priority is to improve the energy situation which is now not only costing the economy dearly but is resulting in enormous discomfort for the population. Those who have attempted to estimate the damage to the economy have come to the conclusion that it is even more problematic than the rise of terrorist activities in the country. The government has had four years to deal with the situation but it has only worsened. There was mishandling of some of the measures that were adopted in particular for increasing generation capacity. First the Asian Development Bank in its review of the steps taken to buy power from rental units and later the Supreme Court came to the conclusion that there was considerable misuse of public money associated with this programme. There is also agreement among the experts in the energy area that the sector in Pakistan is poorly managed. Generation capacity, it is said, is not the real problem; managing the sector is the most important issue. However, very little attention has been paid by the authorities to formulate a comprehensive strategy to deal with the worsening situation. The budget mostly ignored the subject. It is the Prime Minister’s third priority that must cause a great deal of concern to those who worry about the country’s deteriorating economy. Mr Gilani said – and the budget reiterated – that his administration will create 100,000 jobs in order to provide relief to the unemployed. Pakistan has paid little attention to improve the economy’s statistical base in general. Data concerning the labour force are exceptionally weak. A simple back-of-the envelope exercise suggests that some five to six million people must be looking for work. Creating 100,000 jobs, therefore, touches only a small part of the problem equivalent to about 0.5 per cent of 3

the unemployed. The government’s focus in an election year, therefore, will be on creating jobs in the public sector, in particular in the already-stressed government-owned enterprises. Entities such as the Karachi Steel Mills, Pakistan International Airlines, the WAPDA and the Railways are already groaning under the weight of employment that serves the interests of the politicians who have the power to impose additional employees on these organizations. This way of managing public sector enterprises sets up a chain reaction that does not seem to concern today’s policymakers. Loss-making enterprises in the public sector are ultimately helped by the government although their deficits don’t figure in the official numbers about government finance. Not able to raise resources through taxation, the government resorts to printing money. The amount printed will no doubt increase as election-related expenditures rise during the year. As every student of economics knows if the amount of money chasing a limited amount of goods increases, it causes inflation. Pakistan has had double-digit inflation now for several years. Its incidence will increase as the Prime Minister and his team follow the announced policies. The real danger about persistent increases in prices – in particular the prices of goods of everyday use – is that it generates inflationary expectations. These bring about a fundamental change in economic behaviour which is highly damaging for the long-term performance of the economy. We know from the experience of Latin America, which lost a decade worth of development because of spiralling price increases, that to reverse inflationary trends takes tough measures. Few governments have the political will and the strength to implement such a policy package. The PPP-led government believes that it may have found a way of softening the impact of its “print, print, print” money approach to economic management. Some of the printed money as well as some of the assistance received from international development agencies are going into the Benazir Income Support Fund. The BISF is reasonably well managed and it appears that because of the safeguards, which have been built into it for identifying the families that receive regular grants to supplement incomes, funds do reach the intended beneficiaries. In other words the programme is protected from the types of leakages that are common with such income support programmes. That said, the problem is with the macro aspects of the programme – the source of its funding. The cash-strapped government – and the one in the words of the Prime Minister committed to not increasing taxes – will once again resort to printing money. This will add to inflationary pressures. There is circularity about this approach for helping the poor. A thousand rupee incomesupplements a month for the target households – these are the amounts targeted by the BISF – will certainly provide relief to these families. However, inflation that will result from raising the needed resources by printing new money will quickly erode into the buying power of the beneficiaries. As inflation eats into the relief they receive the beneficiaries will demand an 4

increase in the amounts they receive. A government that has built its political support on a programme such as BISF will find it difficult to resist this pressure. The size of the programme will continue to increase, the amount of money needed to fund it will continue to be provided by the printing press, the rate of price increase will continue, and the government will continue to move in this vicious circle. It is not clear whether the Prime Ministerâ&#x20AC;&#x2122;s economic advisors have briefed him on the dangers that lurk in his three-point programme. Not being mindful of these pitfalls means condemning the economy to perform poorly. The latest budget has not dealt with any of the serious issues faced by the countryâ&#x20AC;&#x2122;s economy. Its proposals will neither quicken the rate of economic growth; nor reduce the financial dependence of the government on the printing machine operated by the State Bank; nor indeed make the country less dependent on official capital flows in order to pay for the large and growing trade deficit. This budget will also not improve the performance of the state enterprises that are a heavy drain on the budget; not improve fiscal relations between the central government and the provinces; not reduce the rising level of inflation; and will not provide jobs to the unemployed in order to reduce the high incidence of poverty. The government seems interested in getting another term and expects that it can address these problems once it is back in office. However, by then the situation would have worsened considerably. .....

ISAS Brief No. 245 â&#x20AC;&#x201C; 21 June 2012 469A Bukit Timah Road #07-01, Tower Block, Singapore 259770 Tel: 6516 6179 / 6516 4239 Fax: 6776 7505 / 6314 5447 Email: isassec@nus.edu.sg Website: www.isas.nus.edu.sg

Siachen: Too Slow a Solution Iftekhar Ahmed Chowdhury1

Introduction There is one thing whose movement is slower than a glacier, and that is the India-Pakistan peace process. The Siachen issue is a case in point. It is a 70-km long glacier, where Indian and Pakistani armies confront each other eye-ball to eye-ball. At 20,000 ft above sea level it is said to be the highest battleground in the world. There have been occasional military flareups since 1984, though a ceasefire of sorts has been in operation since 2004. It has been costly in terms of lives. Two thousand soldiers have perished, not so many from shots fired in anger, but much more from the inhospitable climate. Some weeks ago, an avalanche killed 139 Pakistanis. That led to a statement by the Pakistani Army Chief, General Ashfaq Parvez Kayani, in which he underscored the importance of a settlement. The problem is such that renewed awakenings to the need for resolution are not accompanied by new ideas on solutions. When both sides meet for talks, as they did on 11 and 12 June 2012 (at Defence Secretary level), the positions are as dug in diplomatically as they are militarily. Figuratively and literally, both sides stuck to their guns. No surprise therefore that the talks end in failure.

Origin of the Conflict The conflict had its origin in the presumption that there could not be any dispute between India and Pakistan over such a barren terrain. Not only is it a sheet of ice where not a blade of 1

grass grows, but the climate is also woefully rough. The terrain has always therefore remained un-demarcated beyond the coordinate known as NJ 9842. In 1984 India, largely through ‘Operation Meghdoot’ established control over the entirety of the glacier, while Pakistan controlled the glacial valley. In the current stalemate situation, the Pakistanis cannot get up to the crest, while the Indians cannot come down from their high grounds. The line between them is now called the Actual Ground Position Line (AGPL). From time to time, including during the Kargil War, Pakistan made attempts to recapture all or part of the 1,000 sq mile territory lost to India, but without success. An Indian soldier received his country’s highest gallantry award for combat, the ‘Param Vir Chakra’ for fighting in the Siachen. So the conflict is also wrapped in some glory, and for the fighting men therefore not entirely meaningless.

So Close Yet So Far There were clashes between the two sides in 1990, 1995, 1996 and in 1999, the year of the Kargil War. Since that War, Indian apprehensions have been that Pakistan would move in to occupy any territory vacated by India, in the absence of an official acknowledgment on both sides of their current positions on the ground. There were intermittent negotiations, and according to the Indian newspaper ‘The Hindu’ (9 June 2012), a Siachen accord was almost a done-deal in 1992. The paper reported that in the talks held that year, the sixth round held on the issue, the Pakistani delegation offered a proposal that met India’s demand of recording existing ground positions before withdrawal of troops from a proposed zone of disengagement. It quoted the then Indian Defence Secretary N. N. Vohra, currently Governor of Jammu and Kashmir, as saying that just as he was about to sign on, he received instructions from the government led by Prime Minister Narasimha Rao, at a time when the BJP (Bharatiya Janata Party)-led campaign on Babri Masjid was on high gear, to wait till the next round of talks in Islamabad in 1993.Vohra added that that day never came. In India-Pakistan negotiations windows of opportunity are rare, and once missed, rarely recur.

Diplomatic Dig In So both sides dug themselves in diplomatically, not unlike their militaries. Pakistan called for demilitarisation. India wanted demarcation of troop positions on the ground first. The two Ds were too far apart to merit easy compromise on. The Indian fears persisted that any withdrawal on their part would invitee Pakistani intrusion. Pakistan on its apart could not provide reassurances to India’s satisfaction. It was against this difficult background that the two Defence Secretaries met on 11 and 12 June 2012.

The talks were doomed even before they started. As it is, the Defence Secretary–level is a bureaucratic and non-political one subject to higher political control. On the eve of the meeting, the political master of the Indian Defence Ministry, following a Cabinet Committee meeting, quashed any undue hopes in anyone’s minds. Minister A K Antony said no major breakthrough could be expected from the talks as “the subject was very important to (India) especially in the context of national security” and one could not “expect dramatic announcement from one discussion”. On the Pakistani side the Foreign Secretary, Shahid Malik, about to become High Commissioner to India, said that along with this, “progress should also be made on other issues (along with Siachen): Sir Creek, Kashmir and water issues…There is a golden phrase, all issues must move in tandem”. This, too, was a death knell for the talks, as it was made clear that no issue could be resolved in isolation of one from another. For all intents and purposes, it was a signal for a wait till the cows came home.

Unsurprising Failure of Talks Unsurprisingly, the talks met its low expectations. There was much pomp and ceremony, however, mostly signifying nothing. An eight-member Indian delegation led by Defence Secretary Shashi Kant Sharma arrived in Islamabad for the thirteenth round of Siachen talks. An equally formidable Pakistani side was led by Nargis Sethi, Pakistan’s most senior lady official, who held discussions with the visitors “in a cordial and friendly atmosphere”, the emphasis on atmospherics (in the official Joint Statement) probably indicating the lack of substance. Reportedly, both sides remained glued to their positions, only agreeing to continue their dialogue process for the resolution of “Siachen and other outstanding issues”. The conversation was entirely scripted. Importantly, it was agreed that the document to be signed would not specify the ‘other unresolved issues’. In other words, India and Pakistan could not even agree on what the unresolved issues between them were.

Conclusion The buck was to be passed to the Foreign Ministers for now. The Indian Foreign Minister S M Krishna is expected to pay a return visit to his Pakistani counterpart Hina Rabbani Khar soon. Thereafter, like the baton in a relay race it would be given to the Prime Ministers – a visit to Pakistan by Manmohan Singh is on the cards. But nothing has transpired recently between the two sides that holds out hope – except for some forward movement on trade, which, alas, may become hostage to progress on other issues, which alas is so often wont to happen between these two neighbours. One silver lining may be the trading instincts of the two countries: As a Pakistani businessman said, they want the ‘Line of Control’ to be converted into a ‘Line of Cash’!

Unfortunately, in any negotiations between India and Pakistan, even the â&#x20AC;&#x2DC;lowest hanging fruitâ&#x20AC;&#x2122; is often beyond grasp. At times, sheer ego plays a greater role than cold strategic calculations. Even the perceived national self-interest suffers because of that. The main driver of any understanding between the two protagonists is political will. Success or failure depends on its presence or absence. .....

ISAS Brief No. 246 – 25 June 2012 469A Bukit Timah Road #07-01, Tower Block, Singapore 259770 Tel: 6516 6179 / 6516 4239 Fax: 6776 7505 / 6314 5447 Email: isassec@nus.edu.sg Website: www.isas.nus.edu.sg

Delhi Investment Summit: Building on the Narrative of ‘Opportunity’ in Afghanistan Shanthie Mariet D'Souza1

Abstract The search for peace and stability in Afghanistan is taking a detour from a narrow securitycentric approach to trade and investment, aiming to use the country's resource potential to build its economic viability, sustainability and independence. The New Delhi Investment Summit on 28 June 2012 is a gamble worth taking to ensure that Afghanistan's economic and transit potential becomes its inherent strength to accrue the much-needed economic dividends for itself and the region.

A swing is perceptible. The search for peace and stability in Afghanistan is taking a detour. Far from a narrow security-centric approach that laboured in futility to ensure order in this war-torn country, the narrative is apparently shifting to regional confidence-building, development, governance, and most lately, trade and investment, aiming to use the country's resource potential to build its economic viability, sustainability and independence. The third in the series and the first in South Asia, an Investment Summit is being organised by the Confederation of Indian Industry (CII) on 28 June 2012 in New Delhi to attract investments

Dr Shanthie Mariet D’Souza is a Research Fellow at the Institute of South Asian Studies (ISAS), an autonomous institute at the National University of Singapore (NUS). She can be contacted at isassmd@nus.edu.sg. The views expressed in this paper are those of the author and do not necessarily reflect the views of ISAS.

for Afghanistan and ensure that the country’s economic and transit potential becomes its inherent strength to accrue the much-needed economic dividends for itself and the region.

The Security vs. Development Dilemma To a large extent, the genesis of this thinking is based on the inadequacies of the securityrelated approach. Without tangible progress on the ground, gains in security continue to be ‘fragile’ and ‘reversible’. While the chicken and egg (security vs. development) dilemma continues, the hasty announcement of ‘exit’ by the international community, which was the initiator and was the most crucial segment of the security campaign against the Taliban, has exacerbated the anxiety and fear of ‘abandonment’ among the Afghans. The North Atlantic Treaty Organisation (NATO) draw-down of forces, which has already commenced, is happening at a much faster pace than expected, even as the preparedness of the Afghan National Security Forces (ANSFs) to shoulder the enormous security responsibility remains questionable. It is fairly well established that Afghanistan has a large deposit of mineral and hydrocarbon resources. Its underdeveloped yet significant agricultural and human resource potential, and its strategic geographical location at the crossroads of Central, South and West Asia and Eurasia, offer vast opportunities for foreign investment, trade and transit connectivity. Such potential can be harnessed by an assimilation of the economic interests of regional countries through a mutually beneficial inter-dependent framework. The convergence of such interests could be the best leverage against slide of Afghanistan into instability. It would also mitigate the risks of negative zero-sum competition among regional countries and build stakes for long-term economic engagement in the region. In the long run, this could pave the way for the transformation of the Afghan economy from a prolonged phase of being aid-dependent to self-reliant. International financial assistance thus far has come with a string of conditionalities, which are often difficult to adhere to. Most of the international aid, being donor-driven and delivered through alternate delivery mechanisms and sub-contracting, has done little to build on the state institutions' capacity to deliver, resulting in diminishing credibility of the state. Moreover, in a scenario of dwindling financial assistance, there is a real danger of economic downturn. In such context, without building on the state’s revenue-generation capacity through large-scale investments, combined with funds and capacity-building programmes for entrepreneurship and employment, particularly in the social, agriculture, small and medium enterprise (SME), the dangers of reversal of gains are imminent.

Establishing a Link and Building on the Economic Dividend In this context, the Delhi Summit establishes a critical link between the recently held and forthcoming international conferences on the future of Afghanistan. While the Chicago NATO Conference (21 May 2012) underlined the need for international support and assistance for Afghanistanâ&#x20AC;&#x2122;s security and the Kabul Ministerial Conference (14 June 2012) focused on regional confidence-building, the forthcoming Tokyo Conference (8 July 2012) focuses on Afghanistanâ&#x20AC;&#x2122;s development and governance. While the Afghanistan International Investment Conference of 30 November 2010 held in Dubai2 and the Brussels Euro Mines Conference of 26 October 20113, aimed at promoting economic investment in Afghanistan, made valuable recommendations, they essentially put the onus for investment on actions to be initiated by Afghanistan. The Delhi Summit, taking into consideration the realities and needs on the ground attempts, explores near- and longterm possibilities in the current environment and at the same time, seeks a mechanism to address the needs of foreign and private investors and the government of Afghanistan. This is reflective in the efforts geared to catalyse investment decisions and forge cross-country and international partnerships to promote cooperation and greater collective confidence. A collective view of security for foreign investors would emerge from the reality of venturing together, rather than being externally provided to the individual investors risking an uncertain environment all by themselves. The Delhi Investment Summit aims to address the critical gaps that marred the past efforts. It is based on the premise that short-gestation investments in agriculture, SMEs, social sector ( health and education), telecommunications, IT (information technology) and so forth will broad-base economic development at the grassroots and provide the necessary counter-point for big-ticket investments in newer ventures and long-term gestation projects like mining and hydrocarbons that can together address macro-economic issues such as revenue-generation, fiscal viability, and help build a sustainable economy. It would also propel Afghanistan to work on improving its investment climate, particularly on its legal framework, arbitration and dispute-resolution mechanisms. For companies from the West, with concerns about security and cultural impediments, it would be an opportunity to partner with companies and business houses of regional countries like UAE, India, China and others, already working in Afghanistan. The 28 June 2012 Summit, the first-ever such venture for Indian business to promote investment in a neighbouring country, is designed not only to show-case Afghanistanâ&#x20AC;&#x2122;s economic potential and attract foreign investment, but also explore possibilities of cross2

"Afghanistan International Investment Conference", http://www.aisa.org.af/files/media/news/english/AIICnews.pdf. Accessed on 19 June 2012. "Investment opportunities and the economic future of Afghanistan", Ministry of Finance, Government of Afghanistan, 30 October 2011, http://mof.gov.af/en/news/4434. Accessed on 19 June 2012.

country investment partnerships and collaborative ventures from within the region and beyond. The summit is structured around presentations and panel discussions led by Afghans on areas like (i) investment potential and an enabling environment for foreign investment; (ii) Afghanistan’s development strategy; (iii) long-term investments in areas like mining, hydrocarbons, industries based on them; and (iv) shorter-term investments in areas like agriculture, industries, education, health and services. The summit is also scheduled to feature parallel business-to-business meetings linked to sector-specific sessions aimed at concrete investment proposals and partnerships.4

Staying the Course? The summit can be seen as a part of New Delhi’s efforts to ‘stay the course’ in Afghanistan, in an uncertain environment. Criticised sometimes in the West, for piggybacking on the sweat and blood of the NATO-led ISAF (International Security Assistance Force) to engage exclusively in aid-giving and economic reconstruction activities, New Delhi has cast its dice in favour of lifting its game in Afghanistan from development assistance to trade and investment. In its engagement with Afghanistan spanning over a decade, as a long-term stabilisation partner, India’s assistance centred on the plank of economic reconstruction, infrastructure development, trade and transit connectivity and regional cooperation.5 By this, India has gained tremendous goodwill and appreciation among the Afghans. Heeding to the sensitivities of its neighbour, Pakistan, and also as relayed by the West, India has refrained from playing a military role. Thus, the call by the United States (US) Defence Secretary, Leon Panetta, during his recent visit to New Delhi “to raise their level of engagement in Afghanistan”6 notwithstanding, New Delhi’s reluctance to commit itself to such military role has drawn praise from unexpected quarters, with the Taliban calling India as a "significant country".7

For more details, see "Delhi Investment Summit on Afghanistan", Confederation of Indian Industry, New Delhi, 28 June 2012, http://dsafghan.in/programme-outline.html. Accessed on 19 June 2012. E Ahamed ,Afghanistan can be rebuilt by making it trade, energy hub', Business Standard, New Delhi, 17 June 2012, http://www.business-standard.com/india/news/%5Cafghanistan-can-be-rebuilt-by-making-ittrade-energy-hub%5C/477534/ No longer satisfied simply with Indian provision of economic and development assistance, the American defence chief indicated he would like to see India engaged with Afghan security forces as well. Robert Grenier, The US, Afghanistan and the 'India card', Al Jazeera, 12 June 2012, http://www.aljazeera.com/indepth/opinion/2012/06/20126119229712686.html. Accessed on 13 June 2012. The group, accused of repeatedly targeting Indian interests in Afghanistan and believed to be close to Pakistani intelligence agency, ISI, praised India for what it called sending US defence secretary Leon Panetta "empty handed towards Kabul." For further details see “Taliban praises India for resisting US pressure on Afghanistan”, The Times of India, 17 June 2012, http://timesofindia.indiatimes.com/india/Taliban-praisesIndia-for-resisting-US-pressure-on-Afghanistan/articleshow/14208550.cms. Accessed on 18 June 2012.

Contrary to Western perceptions of India rushing in to reap the benefits or grab and plunder the Afghan resources8, India is on its way to becoming one of Afghanistan's largest foreign investors. In the last decade, India has pledged US$ 2 billion and involved itself in building roads, power lines, schools and a new Parliament building in Afghanistan, capacity-building and training programmes, as part of reconstruction efforts. New Delhi in October 2011 signed a Strategic Partnership Agreement with Afghanistan, establishing institutionalised processes and mechanisms for long-term engagement. The present initiative can be seen as an extension of such principled engagement with Afghanistan and the region. While international investors are expected to be a part of the New Delhi Summit, regional players like Pakistan9 and China have also been invited for participation, underlining the commitment to an inclusive, mutually beneficial and interdependent regional approach. Far from being an opportunistic initiative, the meet would complements efforts of Afghanistan and its partners to promote regional economic cooperation.

A Gamble worth Taking? The New Delhi Summit is a calculated gamble. The success of the meet would depend on the level of participation it generates among the national, regional and international investors. It remains to be seen whether both Pakistan and China choose to attend the Summit. Participation of regional countries would make the meet an inclusive economic confidencebuilding mechanism (CBM). It would go a long way in restoring the confidence among local, regional and international investors and promote the viewpoint that there is an alternate way of making Afghanistan a highly lucrative business and investment destination. On the contrary, failure of the region and international community to build on this â&#x20AC;&#x2DC;window of opportunityâ&#x20AC;&#x2122; would be seen as the real test of the commitment of these countries to Afghanistan's future. While military and development assistance is prone to be fickle, willingness to invest is a commitment to the future.

.....

Joel Brinkley, "China, India, Iran wait to pounce on Afghan riches", San Francisco Chronicle (15 June 2012), http://www.sfgate.com/cgi-bin/article.cgi?file=/c/a/2012/06/15/INPP1P0LDH.DTL. Accessed on 19 June 2012. India invites Pakistan for regional meet on Afghanistan, Pakistan Today, 16 June 2012, http://www.pakistantoday.com.pk/2012/06/10/news/national/india-invites-pakistan-for-regional-meet-onafghanistan/. Accessed on 17 June 2012.

ISAS Brief No. 247 – 27 June 2012 469A Bukit Timah Road #07-01, Tower Block, Singapore 259770 Tel: 6516 6179 / 6516 4239 Fax: 6776 7505 / 6314 5447 Email: isassec@nus.edu.sg Website: www.isas.nus.edu.sg

Gilani’s Removal: A Step in the Right Direction Shahid Javed Burki1

Abstract On 19 June 2012, Pakistan’s Supreme Court issued an order aimed at removing Yusuf Raza Gilani as Prime Minister. This should have happened earlier had the court’s decision in the “contempt case” on April 26 been fully implemented. The judgment was largely ignored by the administration headed by President Asif Ali Zardari, forcing the superior court’s hand. This time around, President Zardari blinked and accepted the court’s verdict. Gilani left office a few hours after the court spoke. After one misstep, Zardari was able to get his nominee in place as the new prime minister. This paper argues that these significant developments move Pakistan’s evolving political order in the right direction. There is of course an alternative view, held by some legal scholars and others, that the Supreme Court should have exercised judicial restraint and left the decision in the “contempt case” to take the slow route towards eventual implementation.

On 19 June 2012, in what it called a “short order”, Pakistan’s Supreme Court removed Syed Yusuf Raza Gilani as the country’s Prime Minister. He had held that position for more than four years, longer than any of his sixteen predecessors. He had been convicted weeks earlier of contempt of court. Gilani was charged in February 2012 after he refused to comply with an earlier court order that directed him to write to the Swiss authorities and demand that they reopen a money-laundering investigation against President Asif Ali Zardari that dated back to

the mid-1990s. Under Pakistan’s Constitution, a convicted person cannot serve in the national and provincial assemblies. Membership in the national assembly is required in order to hold the position of prime minister. The court issues short orders when it requires the authorities to take immediate action. Long judgments follow later in which the court provides detailed reasoning for the position it has taken on an important point of law. In the short order of 19 June 2012, the court said that “the Election Commission shall issue a notice for disqualification and the President is required to take necessary action to ensure the continuation of the democratic process.” Since the court’s detailed judgment issued on 8 May 2012 was not appealed against by Gilani, or the government, “the conviction has attained finality”, wrote the court in this short order. The Supreme Court’s May 2012 decision in the “contempt case” left the legislature and the government’s executive branch with very little room for manoeuvre. They had to take the next few steps required by the Constitution to remove the prime minister. The speaker of the national assembly had to act within 30 days to notify the Chief Election Commissioner that Gilani could no longer hold office. Upon receiving this notification the CEC was to inform the president that since the prime minister could no longer remain in office, the national assembly had to be reconvened to elect his successor. But the Zardari administration ignored the court’s instructions. All the steps the government needed to take were clearly specified in the Constitution that was written in 1973 under the watch of Zulfikar Ali Bhutto, the founder of the Pakistan People’s Party (PPP). He was then the Prime Minister. The PPP is now in power under the stewardship of Asif Ali Zardari, the founder’s son-in-law. The elder Bhutto indeed disregarded some of the provisions in the Constitution that sought to limit his power, although he had a hand in drafting them. His son-in-law has also acted in that political tradition. The president, the prime minister, and the speaker of the national assembly did not implement the judges’ order of May 2012, instead limiting themselves to responding to a follow-up petition moved in the court by two opposition parties, the Pakistan Muslim League (Nawaz) headed by Mian Nawaz Sharif and the Pakistan Tehrik-e-Insaf headed by Imran Khan. The petitioners asked the court to seek compliance and the court agreed. Zardari and his close political associates have shown little respect for the Constitution or the rule of law. Under the 18th Amendment to the Constitution that was signed into law by Zardari in the fall of 2010, the president was required to transfer almost all executive authority to the prime minister who, along with his cabinet, was answerable to the parliament. Zardari, however, was not prepared to lighten his executive burden. Using the mantle of the PPP’s co-chairman that he acquired following the assassination of his wife Benazir Bhutto on 27 December 2007, he has continued to exercise the kind of power he commanded before the adoption of the 18th Amendment. The Constitution also requires that once elected president, 2

he or she must resign from the political party that supported his or her candidacy. Zardari held on to the position of the PPP’s co-chairperson. The presidency must not be used for political purposes. Under Zardari, however, all the formal and informal party meetings were held at the president’s place. With the Supreme Court’s latest short order, the ball is back again in Zardari’s court. And he has had no choice but to play it duly this time. A day after the Supreme Court had now spoken, President Zardari decided to accept its verdict, allowed Gilani to step down, and nominated Makhdoom Shahabuddin, another politician from south Punjab, to be the PPP candidate for the newly vacant job of prime minister. However, the judiciary scuttled that nomination. A narcotics court issued an arrest warrant against Shahabuddin and his name was then withdrawn by the presidency. Instead, Zardari put forward Raja Pervez Ashraf as his nominee for prime minister’s post. Ashraf, dubbed by the media as “Rental Raja”, had been singled out as the official most responsible for giving lucrative contracts to some companies that leased to Pakistan ships with power-generating units. The ships were old and worked poorly. An investigation done by the Asian Development Bank suggested that Pakistan overpaid significantly for renting the ships. There was suspicion that kickbacks were involved. Ashraf at that time was the Minister in charge of water and power. Under pressure from the opposition and the press, he resigned from that position. This background does not seem to have bothered the president, but it is considered unlikely that the Supreme Court will look the other way. It is already engaged in investigating the power rental episode. It will also pursue the case against President Zardari that led to the removal of Gilani. With each move, President Zardari seemed to be digging a deeper political hole for himself. With the Supreme Court’s recent actions, Pakistan has taken one more step towards developing a political order based on the rule of law. The true meaning of a democratic system has been debated for decades by political scientists. There is now a consensus among the many scholars working in this field that democracy means more than the holding of periodical as also free and fair elections. It also means developing a robust system of rule of law, granting people enforceable property rights, and providing the citizenry with the institutional means to settle their disputes. Pakistan has held free and fair elections in 2002 and 2007 and is preparing to hold another either by the end of 2012 or early in 2013. Had Gilani not been removed by the action of the Supreme Court, he would have been the first Prime Minister to complete a full term in that high office. That did not happen, but his term in office was cut short not by military intervention but by the order of an independent judiciary. A number of his predecessors were removed by the military or by the president of the day who used a clause in the Constitution that was inserted and retained by a series of authoritarian rulers. Viewed in this perspective, 3

the Supreme Courtâ&#x20AC;&#x2122;s latest order has brought Pakistan a step closer to a functioning democratic system. Had Gilani now stayed on in office, he would have provided his political opponents and opposition parties with ammunition of the kind that the Zardari-led government was undermining the already tenuous rule of law in Pakistan. That said, some legal scholars do argue the case for judicial restraint, limiting the role of judges sitting in the superior courts to giving opinion on important legal matters. They should not get involved in seeing that their decisions are fully implemented. That should be the business of the governmentâ&#x20AC;&#x2122;s executive branch. So runs the alternative argument.

.....

ISAS Brief No. 248 – 27 July 2012 469A Bukit Timah Road #07-01, Tower Block, Singapore 259770 Tel: 6516 6179 / 6516 4239 Fax: 6776 7505 / 6314 5447 Email: isassec@nus.edu.sg Website: www.isas.nus.edu.sg

Tokyo Summit and Afghanistan’s Business Potential Suleman Fatimie and Arian Sharifi1

Delegations from over 60 countries and 20 international organisations gathered in Tokyo on 8 July 2012 and discussed plans for economic development in Afghanistan. The delegates pledged a total of US$ 16 billion in multi-donor aid to fill the Afghan government’s fiscal gap and to develop the Afghan economy over the next four years. The event attracted widespread media coverage – inside and outside Afghanistan – and raised hopes that the international community will stand by Afghanistan in the coming years. While this seemingly generous pledge by the international community does signal hopes ahead, if the Afghan government fails to correct the current state of affairs, this US$ 16 billion will be as much a waste as the tens of billions of international aid has been so far. To go ahead and create real hope for the future of Afghanistan, the Karzai Administration needs to come out of its 11year old cocoon and bring about some bold changes in its economic development strategy. At present, the bulk of the Afghan economy, about 95 per cent according to the World Bank, is donor-driven, whether financed through aid money or contracts for international military spending in the country. This clearly cannot be counted as the ‘real’ economy, simply because these activities will decrease proportionately with the draw-down of the international military forces and with the eventual reductions in international civilian aid. Therefore, if Afghanistan is ever going to become financially self-sufficient, it needs to work on building its ‘real’ economy, one that stands and operates independently of foreign aid. As such, it is high time the Afghan government puts its affairs in order and creates an enabling 1

Mr Suleman Fatimie and Mr Arian Sharifi are partners at Afghanistan Financial Services, a financial management firm in Afghanistan. The views expressed in this paper are those of the authors and do not necessarily reflect the views of ISAS.

environment for private sector development. To do so, a multi-pronged approach is needed to connect practical support with political and institutional change. In our view, the following aspects are the most important areas that need to be reformed:

Legal Framework A pro-business legal framework is nearly non-existent, and the existing laws are out of touch with ground realities. There is simply too much uncertainty about what rules and regulations apply. Some laws remain from many years ago, while others have been introduced recently. The new Investment Law was enacted in 2003, which needs a lot of improvement, but it is yet to be revised. In the past several years, the tendency has been to draft and enact as many laws as possible without much regard to regulatory impact assessments. Therefore, an overall review and amendment of existing laws is critical to make sure they are applicable and promote an environment conducive to business.

Institutional Framework Over the past decade, several executive and semi-autonomous governmental agencies have been reformed or established to streamline procedures, reduce red-tape, provide effective and efficient services and information and also advocate a pro-business environment. While some of these institutions have brought about some positive change, the mere existence of multiple organisations, doing more or less the same thing, has become part of the problem. There is much infighting over executive powers and responsibilities. In most cases, the amount of redtape has even increased, as the establishment of multiple organisations, working on the same issues, has led to duplication of roles and parallel structures. Therefore, a thorough mapping of roles, authorities and responsibilities of the relevant governmental and semi-governmental bodies must be conducted in order to reduce duplication, overlap, infighting and unnecessary bureaucracy.

Economic Growth as Primary Objective At present, the governmentâ&#x20AC;&#x2122;s main objective in its dealings with the private sector is to raise its own revenues through taxes. This has led to a situation where the Ministry of Finance relentlessly pursues businesses for tax collection without regard to the potential survivability of the businesses. While generating internal revenues is critical for the government, the growth of the private sector must be the primary objective. Afghanistanâ&#x20AC;&#x2122;s private sector is mainly composed of micro, small and medium enterprises, most of which are in their infancy 2

phase when the chances of failure are high. The government should provide the environment for these firms to grow and expand, and if that would entail short- to medium-term tax breaks, the government should consider them. There is no doubt that mobilising more revenue remains a crucial objective, but that should not be sought at the cost of unreasonable financial burden on businesses that are struggling for survival. A balanced and sound tariff and taxation system could create the platform for real and sustainable growth besides serving as a healthy source of revenue.

Role of the Private Sector in Reforms Private sector is the primary engine of economic growth in any market economy. As such, the Afghan private sector has a critical role to play when it comes to governmentâ&#x20AC;&#x2122;s policy formulations. A constructive and progressive two-way communication line between the government and the private sector will substantially facilitate relevant policy and regulatory reforms. To date, the dialogue has been limited, and even that limited interface has to do with the few larger businesses which do not share the same challenges and interests as those of the micro, small and medium enterprises that compose the bulk of the private sector in the country. This large divide between the government and the business community is a major factor contributing to the mixed results of economic governance and reforms in the business environment.

Curbing Corruption Widespread corruption has been one of the biggest obstacles to economic development in Afghanistan. Corruption is so prevalent that literally nothing can be done in government agencies without making some sort of payment. This has resulted in both a reduction in government revenue collection â&#x20AC;&#x201C; as businesses pay bribes to have their taxes and customs duties reduced â&#x20AC;&#x201C; as well as in many businesses failing. And this problem will continue, even get worse, if the Karzai Administration does not come up with a radical approach, firmly committed to curbing corruption. To conclude, while the recent pledge of US$16 billion of international civilian aid to Afghanistan is an important contribution which can help push the Afghan economy forward, Afghanistan will not get anywhere unless its government takes up responsibility of creating an enabling environment for private sector development. Pumping money into the Afghan economy is important for its survival, but there are many challenges facing the Afghan private sector that cannot simply be remedied by more money. Addressing those challenges requires bold, committed action on the part of the Afghan government. ..... 3

ISAS Brief No. 249 – 27 August 2012 469A Bukit Timah Road #07-01, Tower Block, Singapore 259770 Tel: 6516 6179 / 6516 4239 Fax: 6776 7505 / 6314 5447 Email: isassec@nus.edu.sg Website: www.isas.nus.edu.sg

India’s Infrastructure Needs Ishraq Ahmed1

Abstract The recent power blackout in India has shed light on the poor condition of the country’s infrastructure. Government spending on infrastructure has been long overdue even before the blackout took place in much of north India. For India to sustain its economic growth and development, spending has to be stimulated, both in quantitative and qualitative terms.

The recent massive blackout across much of northern India has highlighted the country’s ailing and aging energy grid. India’s overburdened electricity system is not quite up to the standards required to meet the demand of a rising economic powerhouse. The latest power outage plunged about 700 million people into darkness and revealed that while the Indian economy has been striding ahead in recent years, the infrastructure is similar to that of a less developed nation. The infrastructure requires a complete overhaul if India is to become the superpower it aspires to be. Despite impressive growth over the last few years, India’s basic infrastructure in terms of transport, ICT (information and communications technology) and energy is ranked a dismal 89th in the World Economic Forum’s 2011-12 Global Competitiveness Report – lowest among the BRICS economies. The Indian business community continues to cite infrastructure as being a drag on doing business in the country. In terms of electricity supply and telephone

Ishraq Ahmed is Research Associate at the Institute of South Asian Studies (ISAS), an autonomous research institute at the National University of Singapore. He can be contacted at isasishr@nus.edu.sg. The views expressed in this paper are those of the author and do not necessarily reflect those of ISAS.

lines, India ranks in the bottom third for overall quality of infrastructure. 2 India is clearly not on a level-playing field among the BRICS economies in infrastructure investment, and it risks being left behind if these issues are not addressed soon. India’s infrastructure spending is about eight percent of its Gross Domestic Product, compared to China’s nine per cent. As such, in terms of spending on infrastructure, India and China have devoted similar shares in their budgets. However, spending on infrastructure has fallen short of India’s economic growth – investment ratio has declined from about 50 per cent between 1988 and 1997 to 38 per cent in the period 1998-2007. In the 11th Five Year Plan, the government committed gross capital formation of four- to-nine per cent of GDP for the duration of the Plan 2007-12. The spending was estimated to be 28 per cent of the planned total infrastructure investment by the emerging markets and was to be only second after China’s.3 However, it remains to be seen how much of this planned investment can be realised over the course of the next Plan (201217), since spending during 2007-12 has fallen short of the slated target. During the 11th Plan period that ended in March 2012, investment in infrastructure sector fell short of the budgeted US$ 500 billion – over the past five years a total of US$ 425 billion was invested.4 This means that India has made an average investment of US$ 85 billion a year for the period 2006-2011, while it expects to spend on average US$ 200 billion a year for the period 201217. Although the target is realistic, the goal might turn out to be slightly overambitious due to India’s lower than expected growth rates and policy inertia in various sectors of the economy. In order to achieve and maintain its target of nine per cent growth rate, the Asian Development Bank (ADB) estimates that India needs to raise its infrastructure spending to about ten per cent of GDP by 2017.5 The 12th Five Year Plan (2012-17) has outlined this vision and predicts spending of about US$ 1 trillion in the sector. The total targeted investment will comprise of some private sector investment – US$ 500 billion, with around US$ 350 billion through debt and US$ 150 billion of equity over the next five years. Investment in the energy sector as a percentage of budgeted outlay has declined over the last decade, to about eight per cent as of fiscal year 2010. This is in contrast to the other sectors in the budget – most notably social services which has exhibited a consistent increase from about 27 per cent to just a touch under 40 per cent in fiscal year 2010. Spending on transport has remained more or less consistent at about 16 per cent of the budget but within the transport sector, allocation to railways has gone down to about five per cent from a high of eight per cent in the early 90s – the railway network has been starved for investment (Table 1).

3 4 5

India Blackout Shows Urgent Need For Infrastructure Spending Boost, International Business Times, Jul 31, 2012.http://www.ibtimes.com/articles/368850/20120731/india-blackout-infrastructure-spending-singh-statecongress.htm. Building India – Financing and Investing in Infrastructure, McKinsey & Company. 12th Five Year Plan (India) Asian Development Bank.

Table 1 – Outlay by select sectors, 1999 to 2010

Sectors Energy Transport a. Railways b. Others

Percentage distribution in Annual Plans (Actual) 1999- 2000- 2001- 2002- 2003- 2004- 2005- 200600 01 02 03 04 05 06 07 22.3 22 19.9 21.3 22.3 23 8.9 9.5 14.6 13.9 16.1 16.8 15.7 14.7 15.7 16.9 5.6 5.1 5.5 5.3 5.8 n/a n/a n/a 9 8.8 10.6 11.5 9.9 n/a n/a n/a

Social Services 23.9

24.9

27.1

27.9

30.2

37.4

35.7

200708 9.1 16.2 n/a n/a

200809 8.4 14.2 n/a n/a

200910 8.2 16.2 n/a n/a

39.7

Source: Planning Commission of India

Investment in electricity generation and transmission was budgeted to be a third of infrastructure investment during the 11th Plan (Figure 1). Despite increases in allotment to electricity, India has missed capacity addition targets by 50 per cent in last three Plans – an important implication for a country with increasing energy needs. 6 Aggregate investment targets were exceeded in fiscal years 2008 and 2007 in telecoms and pipelines, but investment in roads, railways and ports have been underwhelming. 7 These numbers have implications for the quality of the transport network. Even though India has the second largest road network in the world with 3.5 million km of road and a road density which is comparable to many developed countries, the quality is abject and below global standards. About 25 per cent of national highways are two- or four-lanes and an incredible 90 per cent of highways are inadequate to support the 10.2 tonne allowable load per axle8 – these are some grim numbers. As for the ports, the capacity of 600 million mega-tonnes is already close to being breached. Estimates show that the major ports are running at 95 per cent capacity and the demand for handling is likely to reach about 1000 million mega-tonnes by 2012. Here again, efficiency of these ports with respect to turnaround times is poor – the average time it takes between the arrival of a ship and its departure from the major Indian ports is 3.5 days, compared to 10 hours in Hong Kong.9 As such there is ample scope to increase competitiveness of the ports.

7 8 9

Power Grid Failure, deadly train fire highlight India’s crumbling infrastructure, The Economic Times, Jul 30, 2012.http://economictimes.indiatimes.com/news/economy/infrastructure/power-grid-failure-deadly-trainfire-higlight-indias-crumbling-infrastructure/articleshow/15283530.cms. Mid-Term Appraisal (MTA), 11th Plan. Building India – Financing and Investing in Infrastructure, McKinsey & Company. India – 2012 IMF Article IV Consultation

Figure 1:

Source: Eleventh Plan Mid-Term Appraisal

Various problems have plagued the implementation of a coherent strategy, such as those ranging from difficulties in land acquisition to bureaucratic red tape. Land acquisition in particular has been notoriously difficult. Government clearances have been difficult to obtain with numerous restrictions pertaining to environmental, social, political and economic concerns, each requiring their respective settlement in legal settings. This makes implementation of large-scale projects extremely complicated and in the process discourages foreign companies from entry – investment in new infrastructure projects is curtailed greatly. Infrastructure maintenance is also a problem, in addition to inadequate and poorly targeted spending. The indefinite closure of the flagship Delhi Airport Metro Express (DAME), which was built at a cost of US$ 1 billion and links the Indira Gandhi International Airport, is symptomatic of the larger problems. Questions about the quality of the construction and the maintenance thereafter have been raised. Faults were detected on the line which would have rendered travelling on the rail link potentially hazardous. The operation of the express was suspended on 8 July 2012, just 16 months after the link was opened. The fact that this was a build-operate-transfer PPP (Public-Private-Partnership) contract with Reliance is also a cause for some consternation – despite the involvement of an Indian private sector powerhouse in what was deemed a rather prestigious project, the outcome was not as positive as one would have hoped. Defects in the rail structure were reported just over a year after it was opened for traffic, again indicating that the construction might have been faulty to start with. India’s inability to attract foreign investment in infrastructure development has also been criticised, with potential foreign investors being wary of stringent government tax policies, a series of corruption scandals and political opposition to further opening up of the economy. India’s 4

faltering power infrastructure can be partly explained by the government control of the assets. The government controls 90 per cent of electricity assets at the moment, leading to numerous inefficiencies in the form of leakages, pilferages and allegations of corruption. Such inefficiencies extend to power network losses, which amounted to about 32 per cent in 2010, a significant proportion of which are “non-technical losses”. A high proportion of such losses have been attributed to illegal encroachment of lines throughout the country – with consumers and maybe even businesses extracting more than their share of electricity – and the defective electric meters that underestimate actual consumption of electricity. 10 In addition, the power sector remains over-regulated and there is not enough private sector investment; unless private companies are allowed to play a greater role, it will be difficult to rely on just the government to expand the power generation capacity of the nation.11 The government has laid out ambitious plans to further develop and upgrade India’s infrastructure. However, more dynamism has to be displayed in implementation. It is encouraging to note that private sector participation through PPPs is on its way to achieving greater efficiencies in the development, operation and maintenance of various aspects of the infrastructure. To that end, legislation should be passed to facilitate land acquisition and mining for infrastructure provision. The establishment of an active and liquid corporate bond market is being pursued, which should provide ample financing opportunities for investment. Financial inclusion of significant segments of the population should allow more savings to be channelled through the financial system as well. On a similar note, investment restrictions on long-term savings instruments such as insurances and pension funds should be eased to direct more funds into infrastructure investment. Finally, it is also vital that India strengthen its finances so as to free up public resources for further investment in infrastructure and power. .....

Uwe Remme, Nathalie Trudeau, Dagmar Graczyk and Peter Taylor (February 2011). "Technology Development Prospects for the Indian Power Sector", International Energy Agency France; OECD. India Blackout Shows Urgent Need For Infrastructure Spending Boost, International Business Times, Jul 31, 2012.

ISAS Brief No. 250 – 6 September 2012 469A Bukit Timah Road #07-01, Tower Block, Singapore 259770 Tel: 6516 6179 / 6516 4239 Fax: 6776 7505 / 6314 5447 Email: isassec@nus.edu.sg Website: www.isas.nus.edu.sg

Violence in Assam: Resource Wars, Illegal Migration or Governance Deficit? Shanthie Mariet D'Souza1 & Bibhu Prasad Routray2

Since 19 July 2012, a wide range of issues, combined with gargantuan administrative ineptness, has produced nearly 100 dead bodies in India's northeast state of Assam and displaced close to 400,000 people from their places of residence. The month-long violence between the Bodo tribal community and the Muslims had its impact on distant Indian cities as well where protests by Muslim organisations and a neatly crafted strategy of cyberintimidation led to the exodus of several thousand northeasterners.3 Even as a semblance of order has returned to the four Assam districts affected by the violence, and half of the displaced people have since returned home, each of the core issues that led to the mayhem has remained unaddressed. The danger of the subdued violence reappearing and possibly with worse manifestations, in these circumstances, cannot be entirely ruled out.

Dr Shanthie Mariet D’Souza is Research Fellow at the Institute of South Asian Studies (ISAS), an autonomous research institute at the National University of Singapore. She can be contacted at isassmd@nus.edu.sg. The views expressed in this paper are those of the two authors and do not necessarily reflect those of ISAS. Dr Bibhu Prasad Routray, an independent Security Analyst based in Singapore, is a former Deputy Director at India’s National Security Council Secretariat (NSCS). He was Director, Institute for Conflict Management (ICM) in Guwahati, Assam, between 2001 and 2005. He can be contacted at bibhuroutray@gmail.com. The views expressed in this paper are those of the two authors and do not necessarily reflect those of ISAS. Bibhu Prasad Routray, "Exodus of northeasterners: Reversal of globalisation?", New Indian Express, 26 August 2012, http://newindianexpress.com/magazine/voices/article594636.ece. Accessed on 2 September 2012.

Settlers or Migrants Two distinct sets of analyses have emerged, providing expert opinions, over the developments in Assam. The first set describes the violence as communal - between the Bodo tribal community and the Muslim settlers. The term 'settlers' portrays the Muslims as legal citizens of India with a fundamental right of movement to any part of the country. Among the known protagonists of this school are the Assam Government ruled by the Congress Party and the United Progressive Alliance (UPA) Government in New Delhi. The second set, consisting of opposition parties including the Bharatiya Janata Party (BJP) and a host of regional political and civil society organisations in Assam including several Bodo outfits, portrays the violence as between â&#x20AC;&#x2DC;Indians and Foreignersâ&#x20AC;&#x2122;, i.e. the Bodos and the Muslim migrants from Bangladesh. Both segments of analysis contain partial truth. Nearly 30 per cent of Assam's population is Muslim. Hence, to label and denounce all the Muslims who participated in or were affected by the violence as Bangladeshi migrants is not true. Also, Assam's demography has long been altered by large-scale migration from Bangladesh. At least five of the state's districts have turned Muslim-majority as a result. Thus, the argument that the affected area had only legal Muslim settlers is flawed.4

Conflict over Land However, much more than migration, which has been continuing from before the partition of the sub-continent in 1947 and the creation of Bangladesh in 1971 and has in a way been accepted as a fait accompli in Assam, it is the pressure over depleting resources that has been the source of the current as well as the past conflicts. Assam's recent history has been dotted with conflicts over scarce land resources and the recent conflict adds to the rather long list. By all means, the creation of Autonomous Territorial Councils as instruments of governance has been a failed experiment in Assam. Instead of being effective structures of governance, these Territorial Councils have become edifices for local power-brokering and are marred by enough loopholes for siphoning away of developmental funds, which by no means are meagre. The 2003 creation of the Bodo Territorial Council (BTC) is even more skewed.5 The BTC provided the erstwhile insurgent group, the Bodo Liberation Tigers (BLT) an opportunity to convert itself into a political party and grab administrative power. 4

For a detailed analysis of the impact of illegal migration on Assam, see Bibhu Prasad Routray, "Migrants or Settlers", Geopolitics, September 2012, pp.65-67, http://issuu.com/newsline/docs/e-mag_geo_sep_12/65. Accessed on 5 September 2012. For the 2012-13 financial year, the BTC's budget is Rupees 3.3 billion. "Bodoland Territorial Council budget session from April 9", Times of India, 28 March 2012.

While the BTC sought to protect the interests of the Bodo tribal community in an area where its numerical strength is significantly lower than the non-Bodos, little attention was paid to secure the rights of other minority communities inhabiting the area. Non-Bodos argue that political power in the hands of Bodos altered the dynamics on the ground. Bodos, on the other hand, allege that the immigration of Muslims, predominantly from neighbouring Bangladesh, has altered the demography of the region. Such competing narratives and rivalry over scarce land and depleting resources are bound to fuel ethnic conflicts at regular intervals. Not surprisingly, the area has witnessed regular communal flare-ups in the past years, each veering around the same issues and each resulting in large number of deaths and displacements of thousands. The last communal flare-up in 2008 had resulted in the loss of 55 lives and displacement of 200,000 people.6

Governance and Administrative Deficit In spite of the intriguing challenge Assam's ethnicity poses to the state government, described as a veritable ethnic tinderbox - â&#x20AC;&#x153;a volcano that frequently erupts due to ethnic unrestâ&#x20AC;? - by the state Chief Minister7, there is little doubt that the current phase of violence could have been contained in its early stage. Had the authorities been alert and deployed the required number of forces quickly in the affected district, the impact of the violence could have been limited to the deaths that took place in the early days of the conflict. Given the large number of central police force battalions and army contingents deployed in the state to deal with the now-subdued insurgency movements, moving them to the affected areas should not have been too difficult. However, while the state government erred in delaying the deployment of its own police force in the area, the Defence Ministry's dilatory tactics consumed three days8 before the Army personnel could be moved in. In spite of its long experience with insurgency and inter-ethnic conflicts, the state government has glossed over the necessity to establish an early warning system. Its response mechanism, therefore, remains reactionary and highly insufficient to deal with these exigencies. It remains 6

Bibhu Prasad Routray, "Violence in Assam: Battle for the Bodo Heartland", IPCS Issue Brief no. 85, October 2008, http://www.ipcs.org/pdf_file/issue/1418936928IB85-Bibhu-Assam.pdf. Accessed on 5 September 2012. Ratnadip Choudhury and Avalok Langer, "Why blood will flow in Assam again", Tehelka, vol 9, no. 33, 18 August 2012, http://www.tehelka.com/story_main53.asp?filename=Ne180812Why.asp. Accessed on 5 September 2012. Defence Minister A K Antony admitted in the Parliament that the Ministry of Defence (MoD) took 72 hours to give its nod for deployment of army in trouble-torn areas of Assam. "Assam ethnic strife: AK Antony admits delay", Daily News & Analysis, 28 August 2012, http://www.dnaindia.com/india/report_assamethnic-strife-ak-antony-admits-delay_1733539. Accessed on 28 August 2012.

overtly dependent on the central forces and often highlights their absence, as in the context of the recent development, as the main reason for its failure to contain violence. The fact of the matter, however, remains that the official conflict management strategies remain mired by myopic policies and also arguably by vote-bank politics, allowing a large number of migrants to fuse into the state's largely pro-Congress Muslim population.

Co-opted Insurgency? The availability of small arms, in the possession of militants who surrendered in the state, is another example of such complicity. The nature of ceasefire agreements Assam has entered into, to quell ethnic insurgencies in the past few years, has created an enabling environment for the rioters to be highly efficient killers. Neither the ceasefire agreements, which confine the militants to designated camps, nor the peace deals have given sufficient attention to the aspect of gaining control over the weapons in the possession of these insurgents. As a result, an environment of fragile peace coexists with a large number of former insurgents with access to stocks of firearms, stashed away for both personal use and also on occasions like the recent one. The erstwhile BLT militants, who now rule over the BTC, according to an estimate, have at least 1,200 firearms 9, away from the supervision of the authorities. Reports indicate that the Army contingent is now looking to recover the illegal weapons from these areas. Itâ&#x20AC;&#x2122;s a Herculean task, given the proximity of the area to the porous international borders and also its contiguity with other insurgency-afflicted districts.

The Future In his Independence Day address on 15 August 2012, Prime Minister Manmohan Singh said that his "Government will make every effort to understand the reasons behind the violence" and "work hard with the State Governments to ensure that such incidents are not repeated in any part of the country."10 If this goal is to be realised, immediate and long-term measures by the government need to address the basic issues that contribute to the frequent outbreaks of violence in Assam. Apart from restoring normalcy in the area by adequately deploying security forces and overseeing the return of the displaced population to their villages, the government will have to address fundamental issues of inter-community relations, illegal migration, land and resource distribution, small arms availability in the area, augmentation of police capacity and reforms of the territorial council structure. The need to establish an early

9 10

Gaurav Vivek Bhatnagar, "Sporadic violence in Kokrajhar", The Hindu (26 July 2012). PM's Independence Day Speech, 2012, Website of the Prime Minister's Office, Government of India, http://pmindia.nic.in/speech-details.php?nodeid=1199. Accessed on 30 August 2012.

warning mechanism and the building of a people-centred administrative approach will have to be factored into its conflict-resolution strategy to prevent the recurrence of violence and bring in â&#x20AC;&#x2DC;sustainable peaceâ&#x20AC;&#x2122;.

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ISAS Brief No. 251 – 13 September 2012 469A Bukit Timah Road #07-01, Tower Block, Singapore 259770 Tel: 6516 6179 / 6516 4239 Fax: 6776 7505 / 6314 5447 Email: isassec@nus.edu.sg Website: www.isas.nus.edu.sg

India-Pakistan Ties: Do Signs of Warming Indicate Climate Change? Iftekhar Ahmed Chowdhury1

Introduction Of late there has been a vast deficit of good news from South Asia. Each country of that subcontinent confronts a legion and varied problems. The governments of at least three – India, Pakistan and Bangladesh – face impending elections which, though not necessarily imminent, impinge persistently on their minds. This phenomenon is shaping all their actions. Each feels that there is much work to be done if it is to return to power. Each appears to be well past its salad days, and is understandably anxious to prolong its longevity. Happy tidings do not generally emanate from such circumstances. Indeed not many have in the recent times. One exception, somewhat intriguingly, though it can be explained as this paper will seek to do, is the gamut of India-Pakistan relations. There are ample discernible indications of a modicum of thawing in the chill that has traditionally enveloped them. The latest action indicative of that is the visit to Islamabad by the Indian Foreign Minister S M Krishna that, while not bereft of rhetoric, was not without substance either. This is definitely a sign of warming. But does it point to positive climate change? We shall see.

Dr Iftekhar Ahmed Chowdhury is Senior Research Fellow at the Institute of South Asian Studies (ISAS), an autonomous research institute at the National University of Singapore. He was the Foreign Adviser (Foreign Minister) of Bangladesh from 2007 to 2009. He can be contacted at isasiac@nus.edu.sg. The views expressed in this paper are those of the author and do not necessarily reflect those of ISAS.

Krishna-Khar Parleys The personality of Krishna does not usually arouse aggressive emotions on the part of his interlocutors. Nor does that of his charming and much younger Pakistani counterpart, Hina Rabbani Khar. Whenever unscripted, or even while making formal remarks, they have been known to say kind things about each other. Last year, immediately upon assumption of office, Khar travelled to New Delhi. So early in her term it reflected the importance she placed on these bilateral relations. Despite some media distractions regarding her sartorial elegance, which might have actually advanced her overall effect, as well as her acceptability to the Indian masses in general and fashion-conscious youth in particular, the trip was able to create a sense of affability between the two Ministers. Diplomacy is always the better for it. Since then Krishna has been known to be favourably disposed towards paying a return visit. The outcome now will of course determine if the anticipation was worthwhile. The build-up to the event, both political and economic, was as good as could have been expected between the two traditionally bitter rivals. Politically, the bilateral relations, stalled following the 2008 Mumbai mayhem, began to be resuscitated with the earlier Khar visit to Delhi, then a trip to the Ajmer shrine by Pakistan’s President Asif Ali Zardari last April, and a pleasant bilateral between him and India’s Prime Minister Manmohan Singh on the sidelines of the Non-Aligned Summit in Tehran this August. During the latter event both decided to take the process of bilateral relations forward and Zardari extended an invitation to Singh to visit Pakistan. Singh did not raise the issue of the cyber campaign allegedly by Pakistanis that actuated mass exodus of Assamese hill tribal communities back home from southern India, which could have unnecessarily queered the pitch of understanding. Mutual accusations are on the decline. The Indians have scaled down accusations of state-sponsored terrorism by Pakistan, and Pakistanis have likewise significantly lowered allegations of interference by the Indians in Balochistan. This development is assisted by a general burgeoning perception in Pakistan that India is no longer the ‘main enemy’, many now attributing those somewhat unsavoury credentials to the United States and the West. On the economic side there has been much progress, though as yet mainly on paper. Pakistan has announced a ‘most favoured nation’ status for India by the end of 2012. It may be recalled that India had already granted the same to Pakistan in 1996, but retaining some barriers (Most barriers are anyhow ‘non-trade’ or NTBs, and need to be dismantled if the desired goal is to be achieved). A happy sign was when in March 2012 Pakistan decided to allow a move from a ‘positive list’ of 2000 items to a ‘negative list’ of 1209 items for now, with the intention of phasing it out altogether when the MFN status kicks in. India, on its part, has agreed to open itself up to Pakistani foreign direct investment. To ease smooth trade and facilitate unhindered financial transactions, the two central banks will be allowed to open up branches in each other’s territories. While the implementation of agreements arrived at between the two countries tends to move at an irritatingly placid snail’s pace, there is the 2

practical view that reaching the understanding in the first place is no mean achievement. That has at least been achieved.

New Visa Regime A practical outcome of the visit has been the signing of the new visa regime by Krishna and the Pakistani Interior Minister Rehman Malik. While ready for some months, it was awaiting formal inking at a ‘high political level’, particularly by Pakistan, whose political government understandably deemed it fit to take the credit for it than leave it for the faceless technocrats. This would substantially increase the number of visitors for both countries. Eight categories of visas would be issued. The types are diplomatic, non-diplomatic, official, transit, tourist, civil society, media and business visas. Five hundred Pakistanis would be allowed pilgrimage to the holy shrine at Ajmer, while Indian Sikhs would be able to visit Pakistan for religious festivals. Special concession would be accorded to senior citizens. For both nations this would be a highly popular move in favour of greater people-to-people contacts, often spoken of, but not to-date, meriting serious attention. The talks were warm and friendly. Zardari was said to have stressed the need to move beyond reiteration of held positions to more substantive results. He identified terrorism as a ‘common enemy’ and pledged to fight it jointly, ‘to the finish’ in his words, somewhat dramatising for effect what he believed, with reason, to be music to Indian ears. Urging that ‘we learn from the past’, Prime Minister Raja Pervez Ashraf added that ‘we cannot change neighbours’ (though not mentioning if that was ever a serious Pakistani aspiration!). Significantly Khar underscored the need to ‘de-link’ from history and stop being its ‘hostage’. This mildly hinted at circumventing the issue of Kashmir for now, though she carefully called for ‘simultaneous progress’, including on Kashmir. As if to help her, should her ‘forwardlooking’ strategy land her in any trouble in Pakistan, a happy Krishna offered a ‘step-by-step’ formula: “to do what is do-able in the immediate future…ultimately coming to terms with complex issues” (including possibly Kashmir).

Under Watchful Eyes This festive feast of friendliness was doubtlessly being closely watched and monitored by a crucial actor, perhaps the critical actor, at least as far as Pakistan is concerned, the Army. Its leadership headed by General Ashfaq Kayani was not on the stage for now, but one might confidently stress without fear of contradiction, his approval must have been sought and obtained by the civilian authorities. Without it, the signing of a raft of pacts would be akin to a flock of sheep passing resolutions in favour of vegetarianism while the leopard remained of another opinion. But the Army has no reason to negate these advances. It knows an all-out 3

war between the two powers can be well nigh ruled out because of each other’s nuclear deterrence. Also enmity with India is no longer its sole raison d’etre; today the Taliban at home and potential adversaries on the West point to its need. Historically, the Army in power has not always sought conflict with India, as Ayub Khan’s relations with Jawaharlal Nehru and Pervez Musharraf’s with Singh indicate. Finally, if the people in Pakistan genuinely favour détente as it now appears they do, the Army is also likely to follow suit.

Beyond the Present The next milestone in this relationship would be a Manmohan Singh visit to Pakistan. It will help unleash tremendous positive energies on both sides. It is better undertaken sooner than later, as the political situations both for him and Zardari (and also Ashraf who is now surviving on the Pakistan Supreme Court’s good grace) are on a freefall. But Singh has reasons to be circumspect. His trip to his friendliest neighbour Bangladesh last year was an unmitigated disaster, thanks to the idiosyncrasy of West Bengal Chief Minister Mamata Banerjee. Happily in the case of Pakistan there is no such factor as an impeding ‘State Chief Minister’ (The British politician and analyst Richard Crossman had once written that in Great Britain the ‘Cabinet form of Government’ has given way to ‘Prime Ministerial Government’, referring to the transfer of real power from the cabinet to its head: in India it seems that one can increasingly speak of a shift from the ‘Prime Ministerial’ to the ‘Chief ministerial’, meaning a relocation of authority entirely away from New Delhi to the States!) Yet another cause for hesitation is a possible comparison that may be drawn with Neville Chamberlain’s sojourn in Munich before World War II , and his return to London with the illadvised brandishing of the promise of ‘peace in our times’, to be rudely shaken by the German invasion of Poland immediately thereafter. However Manmohan Singh, despite the current challenges to his reputation for competence, is too honourable a man to play by calculations of immediate political gains or losses. Only by a bold action can he carve for himself even at this late stage a niche in the annals of diplomacy. Can he dare damn the consequences, and do an Anwar Sadat? On it may depend, to a large measure, whether the present warming is a prelude to a positive climate change in the relations between India and Pakistan.

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ISAS Brief No. 252 – 13 September 2012 469A Bukit Timah Road #07-01, Tower Block, Singapore 259770 Tel: 6516 6179 / 6516 4239 Fax: 6776 7505 / 6314 5447 Email: isassec@nus.edu.sg Website: www.isas.nus.edu.sg

China-India Defence Diplomacy: Weaving a New Sense of Stability P S Suryanarayana 1 Abstract The real storyline of the Chinese State Councillor and Defence Minister’s latest talks with Indian leaders in New Delhi is in the timing and the broad-based themes of his visit to India – the first in eight years by a military dignitary in his position. Significantly, a passage in a report on this visit, as carried on the official website of the Chinese Ministry of National Defence, says that the coming together of China and India “could tilt balances” in global geopolitics. Inevitably, therefore, the emerging US factor in the China-India equation becomes a matter of debate.

Introduction: Military Charm Offensive For China’s leaders and diplomats, brevity has often been the soul of wit in their public discourse on their varied engagements with India’s representatives. Such brevity has also served as a reflection of the asymmetry between the fast-rising China and the slow-rising India in the economic and military domains. So, it is unusual that China’s Ministry of National Defence has now publicised, through five positive reports on its website, the five-

Mr P S Suryanarayana is Editor (Current Affairs) at the Institute of South Asian Studies (ISAS), an autonomous research institute at the National University of Singapore. He can be contacted at isaspss@nus.edu.sg. The views expressed in this paper are those of the author and do not necessarily reflect those of ISAS.

day visit to India by the Chinese State Councillor and Defence Minister, General Liang Guanglie, from 2 to 6 September 2012. If a colourful phraseology of marketplace is applied to the rarefied atmosphere of Sino-Indian defence diplomacy, it stands to reason that China is not at all animated by irrational exuberance of any kind towards India now. Indeed, irrational exuberance is quite alien to Beijing’s practised art of defence diplomacy, which is different from the perceived Chinese military activism in the zone of South China Sea, in recent years. Such a categorical view is evident from the methodical fashion in which an increasingly rich China is investing in its military modernisation of a very high order. Chinese military modernisation is routinely wellchronicled by the United States and several independent strategic-affairs institutions. In the latest China-India context, noteworthy is the fact that the Joint Press Communique on Gen Liang’s talks with his Indian counterpart A K Antony does not, in a turn of the political metaphor, set either the South China Sea or the Indian Ocean on fire. So, what is the true nature of the latest dynamics in China’s military-to-military ties with India? The real storyline is in the timing as much as in the broad-based themes of Gen Liang’s meetings with Antony and India’s Prime Minister Manmohan Singh in New Delhi on this occasion. Critics of this line of thinking will of course argue that the timing of any such visit is often decided well in advance to suit the respective calendars of the leaders concerned. To this extent, the timing of any key state-to-state discussion is often down-played in official discourses on international diplomacy. Transcending such a counter-argument, it is in fact easy to discern that Beijing’s defence diplomacy towards New Delhi at this time coincides with the ongoing run-up to a major political transition in China in the second half of 2012.Officially unstated but self-evident is the perception that China will be glad to weave a sense of stable ties, not necessarily a web of “all-weather friendships”, with as many major powers as possible in the wider Asia Pacific region during this run-up and beyond. In such a perspective, the Joint Press Communique2 – issued during the latest visit to India by Gen Liang, the first such visit by a Chinese military leader of high political standing after a time-lag of eight years – does help promote a degree of stability in the bilateral defence domain. However, the Press Communique must not be misread as a newly minted SinoIndian defence pact or even as a lower-order bilateral memorandum of understanding. This worthy piece of paper does not belong to either of these categories.

http://pib.nic.in/newsite/PrintRelease.aspx. Accessed on 7/9/2012.

Beyond the Past Paradigm An inference of this kind is traceable to the following political punch-line in the Press Communique: “The two Defence Ministers agreed to work together to enhance mutual trust in the security field and continue to maintain peace and tranquillity in the India-China border areas. They noted that the leaders of India and China have designated 2012 as the Year of India-China Friendship and Cooperation”. Beyond this, the Chinese Ministry of National Defence quoted, on 7 September 2012, Gen Liang as saying that he and his Indian interlocutors “have positively evaluated China-India relations and the ties between the armed forces of the two countries” 3 . In that Beijingdatelined report by China’s state news networks, he also emphasised that “we have affirmed cooperation between the armed forces”4 of the two countries. The leaders of the two armed forces, too, “attach great importance to developing the military ties” 5, he added for good measure. On 6 September 2012, the Chinese ministry endorsed a more significant Beijing-datelined report from the same state news networks. The report sought to place the latest China-India military-related engagement in some new light beyond the hitherto-known paradigm of bilateral defence diplomacy. The relevant passage reads as: “The two countries [China and India] ... discussed sensitive issues including improving border [-related] relations and the situation in South Asia and the Asia Pacific region”6. This was followed by a totally unusual comment: “The two sides also talked about America’s look east policy which includes plans to shift a large part of [US] navy to Asia Pacific region and India’s take on the same. As the world geo-political situation goes through a massive change, the coming together of the two largest countries [China and India] that also have the strength of their economies could tilt balances”7. This theory that China and India could together “tilt balances” in global geopolitics shows how the timing of Gen Liang’s visit to New Delhi is viewed by the Chinese officialdom beyond the coming political transition in Beijing. Here, the timing of the latest China-India Press Communique has been given an international dimension, with a recent offer to India by United States Defence Secretary Leon Panetta serving as the key reference point. In a speech in New Delhi on 6 June 2012, Panetta had offered America’s “best defence technology

3 4 5 6 7

http://eng.mod.gov.cn/DefenseNews/2012-09/07/content_4397869.htm. Accessed on 8/9/2012 ibid ibid http://eng.mod.gov.cn/DefenseNews/2012-09/06/content_4397715.htm. Accessed on 8/9/2012 ibid

possible”8 to India. Of equal or greater relevance to China, Panetta underscored that “a close partnership with America will be key to meeting India’s own stated aims of a modern and effective defence force”9.

An Open Secret It is an open secret that India’s military planners have China very much on their minds while wanting to build what Panetta has described as “a modern and effective defence force”. India first articulated such a military focus after testing nuclear weapons in 1998, with the then Indian Prime Minister, A B Vajpayee, writing to the then US President, Bill Clinton, that the tests were carried out to galvanise Indian defences against China. The dynamics of global geopolitics have changed a lot since that time, with China’s military capabilities rising dramatically and those of India rising slowly but steadily. Official Beijing is perhaps more aware than many ‘realist’ scholars that linear projections about the future-sustainability of China’s economic and military growth might, in fact, go wrong because of several still-unresolved issues concerning the Chinese society. Evidently, therefore, China’s present leadership is focusing on a host of priorities. One of them clearly is to keep the country’s military flanks secure, both internally and externally, during the planned political transition in 2012 and beyond. It is in this context that China has now gone out on a military charm offensive in India. This does not signify, implicitly or otherwise, that Beijing sees in India a potential military ally in China’s efforts to face what it tends to regard as a ballooning ‘America threat’. Several complicating factors, including the Chinese-Pakistani “all-weather friendship”, show that Beijing does not envision, and observers cannot assume, a simplistic China-India nexus, real or potential, against America at this stage. On the whole, Gen Liang’s latest charm offensive in New Delhi has had a more modest effect of recognising India as a potential military power worthy of China’s careful attention. No more than a theoretical possibility, as of now, is this semi-official (or non-official) Chinese idea that a China-India tie-up could indeed “tilt balances” in the current global geopolitical situation. In such reasoning, it is evident that Gen Liang’s just-concluded visit to India acquires additional importance because of US Defence Secretary Leon Panetta’s likely visit to China by mid-September 2012. In a manner of speaking, the China-US military-to-military engagement belongs to another planet, compared to the Beijing-New Delhi defence 8

http://www.defense.gov/utility/printitem.aspx?print=http://www.defense.gov/transcripts/... 9/6/2012 ibid

Accessed

diplomacy. Yet, intrinsically relevant to the China-US engagement is the latest semi-official (or non-official) Chinese idea that a Beijing-New Delhi tie-up could in fact “tilt balances” in today’s global geopolitical situation. With Gen Liang and his Indian interlocutors having discussed “India’s take” on US “plans to shift a large part of [American] navy to Asia Pacific region”, it is possible that he may ask Panetta about Washington’s knowhow-offer to boost New Delhi’s military capabilities. Overall, Panetta’s likely visit to China (as this is written) and US Secretary of State Hillary Clinton’s talks with Chinese leaders in Beijing on 4 and 5 September 2012 help the two countries finesse their ties ahead of a crucial political transition in China’s power structure. Fielding the usual flurry of questions about US-China issues, Hillary Clinton said in Beijing on 5 September 2012: “Our two nations are trying to do something that has never been done in history, which is to write a new answer to the question of what happens when an established power [the US] and a rising power [China] meet. .... We are going to have critics in both of our countries who are going to second-guess decisions that we are making. But I feel strongly that we are on the right track in building a positive, cooperative, comprehensive [US-China] relationship for the 21st century”10. This comment is meant to finesse US-China ties at this stage.

Conclusion: Who ‘Tilts Balances’ in Asia? The fine print of the latest China-India defence-related Press Communique is just basic in scope and does not address the totally unusual view in China about the players who could “tilt [global] balances” or at least the balance in the Asia Pacific region. Designed essentially as a confidence-boosting document, the Joint Press Communique outlines a future menu of agreed exchanges between the two sides on the civilian and military sides of the defence establishments of the two countries. As for the Sino-Indian boundary dispute, nothing new has been said by either side at this time. The Special Representatives of the two countries remain tasked to find a mutually acceptable formula that could help settle the dispute itself. There is also a relatively new Working Mechanism in place, since January 2012, to address ground-level issues along the Line of Actual Control in the harsh Himalayan terrain. The two countries have now agreed to “conduct the next round of [confidence-building] joint military exercises at the earliest”11. The aim is to break a four-year logjam in this regard, several issues of political sensitivity having caused the disruption. 10 11

http://www.state.gov/secretary/rm/2012/09/197343.htm. Accessed on 8/9/2012 http://pib.nic.in/newsite/PrintRelease.aspx. Accessed on 7/9/2012

Politically more significant are two other decisions by India and China at this stage. One, they have reached “consensus”12 to “further enhance and strengthen cooperation between the naval forces of both sides, in counter-piracy operations in the Gulf of Aden and off the coast of Somalia”13. Secondly, China and India have struck “consensus” to “work together [closer home] to maintain peace and stability of the Asia Pacific region”14. It is in the Asia Pacific theatre that triangular interactions among the US, China, and India might, if at all, come into play in “tilting [the global] balances”. China has now recognised, either semi-officially or only unofficially, that Beijing and New Delhi could potentially tilt the global balance. At the same time, India and the US have increasingly shown signs of gravitating towards each other. It is, therefore, significant that the official website of China’s Ministry of National Defence has purveyed a report by the Chinese state news networks on the potential of Beijing and New Delhi to work together to “tilt [the existing global] balances”.

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12 13 14

ibid ibid ibid

ISAS Brief No. 253 – 18 September 2012 469A Bukit Timah Road #07-01, Tower Block, Singapore 259770 Tel: 6516 6179 / 6516 4239 Fax: 6776 7505 / 6314 5447 Email: isassec@nus.edu.sg Website: www.isas.nus.edu.sg

Do the Bold Reforms Signal End of Policy Paralysis in India? Amitendu Palit1 Five major economic policies within 24 hours are not expected from a government saddled with charges of indecision, inaction and corruption for several months. But this is exactly what the UPA (United Progressive Alliance) Government in India has done. The last week ended with the UPA Government announcing a slew of economic reform measures. Not surprisingly, the stock market reacted with glee with the benchmark stock indices –Sensex and Nifty - surging by more than three percentage points within two trading sessions. The Indian industry, tired of pleading with the government for faster action, finally got a cause to cheer. And the global business community, which had practically given up on India, also endorsed the moves, with the US India Business Council (USIBC) declaring enthusiastically the bold reforms would cheer up investors from all over the world eyeing India2. The first decision signalling the government’s intent to move ahead was correcting retail prices of domestic petroleum products. Slashing subsidies on diesel and LPG (liquefied petroleum gas) is expected to improve the rather dismal fiscal situation, at least partially, in the short run. At a time when the economy is experiencing a deceleration and corporate and

Dr Amitendu Palit is Head (Partnerships & Programmes) and Visiting Senior Research Fellow at the Institute of South Asian Studies (ISAS) at the National University of Singapore. He can be contacted at isasap@nus.edu.sg. The views expressed in this paper are those of the author and do not necessarily reflect those of ISAS. ‘Big Bang Reforms, Says America Inc’, www.financialexpress.com/news/big-bang-reforms-says-americainc/1002985/0 (Accessed on 15 September 2012).

excise collections are anticipated to be low due to subdued economic activity, fiscal disciplining must be ensured through expenditure management. Cutting petroleum subsidies was therefore a step in the right direction. The expected howls of protest from the public, opposition and the coalition allies were reverberating across the country when the Cabinet announced a series of other radical measures. The first of these was the much discussed and debated step to allow majority foreign equity in domestic multi-brand retail operations. At the same time, the restriction on single-brand foreign retailers to procure at least 30 per cent of their requirements from domestic small and medium enterprises was amended. The decisions in retail were followed by the decisions to increase permissible ceiling of foreign equity in domestic aviation services to 49 per cent, allow similar foreign equity levels in power trading exchanges and permit four major state-owned enterprises to sell their shares3. None of the decisions are politically popular moves. Indeed, they can create considerable damage to the UPA Government. Mamata Banerjee – Chief Minister of West Bengal and leader of the Trinamool Congress (TMC) – one of the main allies of the government, has given an ultimatum of 72 hours for rolling back the decisions on petroleum price hike and foreign equity in retail4. Another major coalition partner, the DMK (Dravida Munnetra Kazhagam) has also demanded rollback. The Samajwadi Party (SP), a third ally and potential long-term partner of the Congress, has expressed its unhappiness in no uncertain terms. All these adverse reactions were expected. And this is where the government’s announcements have taken most by surprise. Why did the UPA Government do what it has done despite being fully aware of the repercussions? Several factors could have precipitated the decisions. The first is the poor economic outlook. Two successive quarterly GDP growth rates of 5.3 per cent and 5.5 per cent confirm the prolongation of a slowdown in the economy. An almost flat growth of 0.1 per cent in industrial output for July 2012 highlights the stagnation in manufacturing and infrastructure. As the only economy in the BRICS (Brazil, Russia, India, China, South Africa) group of emerging market economies facing the possibility of a major downgrade in credit rating, the cost of inaction was becoming increasingly onerous for India. It was evident that without a ‘big push’ economic revival over the next few quarters would not be possible. The low growth rate is a reasonably good excuse for the government to take tough measures. This would be one of the main grounds on which the government would try to placate coalition partners. The second factor which could have provoked the government into action is the almost complete erosion of the goodwill that it enjoyed. The recent ‘Coalgate’ scandal over the allocation of mining rights of coal fields and the shadow that it has cast on the Prime Minister 3

The four enterprises are Hindustan Copper Ltd (HCL), National Aluminium Co. (NALCO), Mines and Minerals Trading Corporation (MMTC) and Oil India Ltd (OIL). ‘Mamata Banerjee sets 72 hour deadline to withdraw decision on FDI, diesel price hike’, www.ndtv.com/article/india/mamata-banerjee-sets-72-hour-deadline-to-withdraw-fdi-diesel-hike-267557 (Accessed on 15 September 2012).

himself was probably the proverbial last straw on the camel’s back for the beleaguered government. The despair and helplessness with the state of affairs even among the senior ministers was reflected in the recent candid admission of ‘policy paralysis’ by Praful Patel, the Minister for Heavy Industries5. Realising that an economic turnaround can deflect attention from the scandals and scams surfacing almost every day and salvage some precious goodwill, the government appears to have decided to act. With about a year and a half to go for the next general elections, the urgency of ending policy paralysis by taking firm decisions might have finally dawned on the government. Corruption will continue to dominate public and political discussions as the elections draw near and there is little possibility of the government erasing its taints completely. But a robust economic story can bring down the overall public discontent with governance and give the UPA the opportunity of building a positive electoral agenda over the next year. The government has also displayed greater political maturity in handling a sensitive policy matter like foreign investment in retail. The minimum investment cap for proposals involving 51 per cent foreign equity in multi-brand retail has been pegged at US$100 million with 50 per cent of the investment to be in back-end processes and procurement systems in rural areas. The policy is meant to attract large investors with ‘deep pockets’ who can not only invest at least US$100 million, but also have the expertise of building back-ends of the supply chains. By introducing the slant towards rural procurement and back-end processes, the government can take credit for moving on the right track for removing intermediaries and tackling supply-side inflation. In this sense, the policy has considerable political virtue, which, the Congress would wish to capitalise. The even greater political maturity, however, is in leaving the eventual decision of inviting foreign multi-brand retailers to individual state governments within the purviews of their shops and establishment regulations. With eight states and two union territories willing to invite foreign retailers 6, the UPA Government can claim a fair bit of support for the move and can hope to politically isolate opposition on the issue. The attention would now be on Mamata Banerjee and her next steps. Having been steadfast in her opposition to foreign investment in retail and increase in petroleum product prices, it will be difficult for her to do a volte face. She will need to take a step that marks her unhappiness with the decisions and yet is not politically suicidal. Given that popular discontent against her is gathering momentum in her own state at least within the urban electorate, she might need to think hard before taking the extreme step of withdrawing support to the ruling government and creating political chaos.

‘Govt suffers from policy paralysis’, http://indiatoday.intoday.in/story/govt-suffers-from-policy-paralysispraful-patel/1/217301.htm (Accessed on 15 February, 2012). ‘Reforms get a major push, Cabinet opens up multi-brand FDI for retail’, www.samachar.com/Reforms-geta-major-push-Cabinet-opens-up-multibrand-retail-for-FDI-mjpeTRbfhad.html (Accessed on 15 September 2012).

Though the UPA Government has finally taken the tough economic decisions, the next few days will show whether it has enough courage to sustain the decisions. On more than one occasion during the last two years, the government has taken decisions only to withdraw them under pressure from allies. If something similar happens this time too, then not only will the government be stripped off whatever credibility it has, but policy paralysis will be there to stay for the foreseeable future. .....

ISAS Brief No. 254 – 22 October 2012 469A Bukit Timah Road #07-01, Tower Block, Singapore 259770 Tel: 6516 6179 / 6516 4239 Fax: 6776 7505 / 6314 5447 Email: isassec@nus.edu.sg Website: www.isas.nus.edu.sg

A Wake-Up Call for Pakistan Shahid Javed Burki1

Pakistani women are being targeted by Islamic terrorists who fear that women’s emancipation would ultimately reduce their influence over a society that has become increasingly conservative. It appears that the possible rise of women will not go unchallenged, particularly in the country’s more conservative areas such as the tribal belt on the border with Afghanistan. Just when women in Pakistan have begun to use education to improve their economic and social conditions, they have run into another obstacle: the obstinate resistance offered by Islamic extremists2. The attempted killing of Malala Yousafzai is part of a pattern that has begun to evolve – to harass young women who are ready to express their right to receive education. A grim reminder of this came in the case of Farida Afridi, 25, who was killed on 8 July 2012 as she was walking from her parents’ home to her office. She along with her sister had co-founded a non-governmental organisation to work for improving women’s situation in the socially backward areas in Khyber-Pakhtunkhawa province. Women working at SAWERA (the acronym stands for morning in Urdu), or Society for Appraisal and Women Empowerment in the Rural Areas, were “accused of not observing cultural norms – not 1

Mr Shahid Javed Burki is Visiting Senior Research Fellow at the Institute of South Asian Studies (ISAS), an autonomous research institute at the National University of Singapore. He can be contacted at sjburki@yahoo.com. The views expressed in this paper are those of the author and do not necessarily reflect those of ISAS. During a professional career spanning over half a century, Mr Burki has held a number of senior positions in Pakistan and at the World Bank. He was the Director of China Operations at the World Bank from 1987 to 1994 and the Vice President of Latin America and the Caribbean Region at the World Bank from 1994 to 1999. On leave of absence from the Bank he was Pakistan’s Finance Minister, 1996-97. For an analysis of how Pakistani women are using education to make economic advances see Shahid Javed Burki, Women’s Quiet Revolution in Pakistan”, ISAS Insights No. 173, 6 July, 2012.

wearing veils, encouraging other women to work outside the home and working alongside male colleagues”3. Another attack came three months later in Mingora, Swat, when a gunman stopped a school bus, fired at the girls on their way to school, and seriously injured 14-year-old Malala Yousafzai. This was not a random attack but a targeted one. Sirajuddin Ahmad, the spokesman for the Taliban in the Swat Valley, said that Ms Yousafzai became a target because she had been “brainwashed” into making anti-Taliban statements by her father, Ziauddin Yousafzai. “We warned him several times to stop his daughter from using dirty language against us, but he didn’t listen and forced us to take this extreme step”4. The girl survived and was taken by helicopter to the military hospital in Peshawar. The surgeons removed the bullet from her head and once her condition stabilised she was taken to the Armed Forces Institute of Cardiology in Rawalpindi. On 14 October 2012, five days after she was injured, an air-ambulance provided by the government of UAE flew her off to England for the long-term care the doctors determined she needed. For the last three years Malala stood up to Islamic extremism and let her voice be heard. She was only 11 years old when she began to raise her voice against the Taliban. “Her father, Ziauddin Yousafzai, who runs a school, said his daughter had defied threats for years, believing the good work she was doing for her community was her best protection…A Taliban spokesman said that [Ms] Yousafzai was targeted for trying to spread Western culture and that the group would try to kill her again if she survived.”5 Four days after the attack on her, the school that she attended in Mingora, Swat’s main town, reopened and 500 tribal elders held a rally there in Ms Yousafzai’s support, shouting “Malala, we are with you.” Ms Malala Yousafzai began speaking out after Swat – often called Pakistan’s Switzerland – had fallen to the Taliban. They took over the lush green valley that had been attracting tens of thousands tourists from all parts of Pakistan6. This place of peace and relative poverty was violated by a band of religious zealots who began to identify themselves as the Tehrik-eTaliban Pakistan (TTP) as they expanded their hold over some of the areas which were close to but not part of the tribal belt. Religious seminaries located in the tribal agencies in the area bordering Afghanistan were the birth place of the original Taliban. Once in control of Swat district the TTP introduced the form of governance the Afghan Taliban had imposed on Afghanistan in 1996-2001. This included banning girls from attending schools. To ensure that 3

Michelle Langevine Leiby, “Activist’s killing reverberates in Pakistan”, The Washington Post, July 18, 2012, p. 11A. Declan Walsh, “Taliban reiterate vow to kill Pakistani girl”, The New York Times, 13 October, 2012. Jibran Ahmad, “Pakistani teen shot by Taliban is moved to hospital in army town”, The Washington Post, 12 October, 2012, p. A22. For an analysis of the sudden turn in Swat’s situation in 2009, see Iftekhar Ahmed Chowdhury, “The Sorrows of Swat and the Mayhem in the Malakand: What now?” ISAS Insights No. 66, 19 May, 2009.

their writ would run, they not only closed girls’ schools but destroyed the buildings in which they were located. Ms Yousafzai gained notice in early 2009 when she wrote a diary under a pen name for the BBC’s Urdu service. “Many Pakistanis view [Ms] Yousafzai, who also promoted literacy and peace, as a symbol of hope in a country long beset by violence and despair. In 2011, the Pakistani government awarded her a national peace prize and 1 million rupees ($10,500). She also was a finalist for the International Children’s Peace Prize awarded by a Dutch organisation that lauded her bravery in standing up for girls’ education rights amid rising fundamentalism when few others were prepared to speak.”7 In a newspaper article Laura Bush, former first lady of the United States, recalled the barbaric mindset of the Taliban regime that governed Afghanistan before it was removed by the American forces that invaded the country in the fall of 2001. The regime “was dedicated in part to the brutal repression of ...women. Women were not allowed to work or attend school. Taliban religious police patrolled the streets, beating women who might venture out alone, who were not dressed ‘properly’ or who dared to laugh out loud. Women could not wear shoes that made too much noise, and their fingernails were ripped out for the ‘crime’ of wearing nail polish”. Mrs. Bush likened Ms Yousafzai’s campaign against the Taliban in her native Swat to another young diarist “who inspired many around the world. From her hiding place in Amsterdam, Ann Frank wrote, ‘How wonderful it is that nobody need wait a single moment before starting to improve the world’. Today, for Malala and the many girls like her, we need not and cannot wait. We must improve the world.”8 Could the attempted assassination bring the much needed political and social change in Pakistan? In an interview with CNN on 11 October 2012, Hina Rabbani Khar, Pakistan’s Foreign Minister, described the attack as a traumatic “wake-up call” that could prove to be a turning point in Pakistan’s war against extremism. Several newspapers in their editorials encouraged the citizens of Pakistan to turn Ms Yousafzai’s travails into an opportunity to break loose from the tightening grip of Islamic extremism. “For once, and at long last, Pakistanis appear to have woken up to the consequences of the extremism that has been allowed to take root in our country”, the liberal Dawn newspaper said in an editorial. “Which makes it all the more important to make the most of this moment of national consensus.”9 To show that most of the political parties stood together in condemning this incident, Prime Minister Raja Pervez Ashraf was echoed by the leaders of the Jamaat-e-Islami, the country’s largest Islamic party. Several religious leaders joined the chorus of condemnation that followed the attack on Ms Yousafzai. In a sign of unity, in the eastern city of Lahore, a council of Sunni Muslim scholars issued a fatwa signed by 50 clerics saying that the 7

Richard Leiby and Michelle Langevine Leiby, “Pakistan Taliban shoots, wounds girl”, The Washington Post, 10 October, 2012. Laura Bush, “Why Malala inspires us: We owe it to her to refuse to look the other way”, The Washington Post, 11 October, 2012, p. A19. Dawn, editorial, 12 October 2012.

justifications cited by the girl’s attackers were “deviant” and had no basis in Islamic law. But some influential religious leaders sought to link the attack with the policies pursued by the United States in hunting and killing the extremists in Pakistan. Maulana Fazlur Rahman, the leader of his own faction of the politically powerful party Jamiat Ulemai Islam, while condemning the brutal attack, said the attack was due to the wrong policies of the government. His position was echoed by some prayer leaders in Islamabad. One sermon given in a mosque in the capital city: “Those who are calling for condemnation are themselves the killer. Can they stop the bombing of innocent children, women and mosques?”10 Imran Khan, a rising political star in Pakistan, hinted in a TV interview that some of the leaders had not condemned the heinous attack because of fear. After all, the extremists had shown their ability to strike at those they considered “deviants”. Salmaan Taseer, Governor of Punjab, was gunned down by one of his own guards for having spoken on behalf of a Christian woman condemned to death by a court for having been critical of Islam and its Prophet. “The message has been clear for some time” wrote Farahnaz Isphani, for The Daily Beast. She is a member of the National Assembly and a prominent leader of the governing Pakistan People’s Party. “Do not criticise the military or the militants. Minorities in our society have become the ‘other’ – less human and almost untouchable. There have been systematic eliminations of the Ahmadiyas, of Shia Muslims, of Christians, and many moderate and liberal voices.”11 She appealed for a concerted move to stem the tide of extremism in the country. The fact that Ms Yousafzai is likely to survive will be a constant reminder to Pakistan’s citizens about the dangers they face and what needs to be done to bring the country on the path it was on before the rise of extremism. Had she died in the attack, she would have been forgotten after a while, a victim among many claimed by the extremists’ violent campaign. In life she will remain a symbol – a wake-up call.

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10 11

Richard Leiby, “A chorus of condemnation”, The Washington Post, 13 October, 2012, p. A8. Farahnaz Isphani, “After Malala Yousafzai shooting, can shock therapy free Pakistan, The Daily Beast, 12 October, 2012.

ISAS Brief No. 255 – 2 November 2012 469A Bukit Timah Road #07-01, Tower Block, Singapore 259770 Tel: 6516 6179 / 6516 4239 Fax: 6776 7505 / 6314 5447 Email: isassec@nus.edu.sg Website: www.isas.nus.edu.sg

What to Make of India’s Latest Ministerial Reshuffle Ronojoy Sen1 With 18 months to go before general elections are due, India’s Prime Minister Manmohan Singh announced on 28 October 2012 what is expected to be the final reshuffle of the federal Council of Ministers. With two heavyweight portfolios — Finance and Home — having been reallocated earlier this year, the latest reshuffle was more an exercise to inject some urgency into the Congress Party-led United Progressive Alliance (UPA) government which has been battered by corruption scandals over the past two years and is seen to be in a state of policy paralysis. There were some who had expected that the rejig, where 17 new ministers were inducted, would feature Rahul Gandhi, considered the heir to the Congress leadership. This was, however, not to be. It was always unlikely that Rahul would join the government at a stage where he would have little time to showcase his talent. He has said over the past few years that his interest lies in reviving the Congress party. Prime Minister Singh has now repeated this, saying that though he was keen to have Rahul in the Cabinet the latter was preoccupied with party affairs. Though Rahul stayed away from the Cabinet, he made his presence felt in the latest reshuffle. At least four members of his inner circle, all of whom are young by the standards of Indian politics, have been given fairly prominent portfolios. Three of them — Jyotiraditya Scindia, Sachin Pilot and Jitendra Singh — were already junior ministers but have now been given more responsibility as ministers of state with independent charge. Of the three, Scindia has 1

Dr Ronojoy Sen is Visiting Senior Research Fellow at the Institute of South Asian Studies (ISAS), an autonomous research institute at the National University of Singapore. He can be contacted at isasrs@nus.edu.sg. The views expressed in this paper are those of the author and do not necessarily reflect those of ISAS.

the most significant portfolio, that of power (electricity). The fourth, Manish Tiwari, is a new entrant with independent charge of information and broadcasting. The average age of the Cabinet has only gone down marginally from 59.6 years to 58.9, but the rejig has placed younger leaders at the helm of more visible ministries. Rahul might have left his imprint on the reshuffle, but it still raises real questions about his future role. Ever since he joined politics, it has been taken for granted that he will one day take over as prime minister. But now that UPA’s second term in government is coming to an end, Rahul’s elevation will have to wait. For the time being, moves are afoot to officially elevate Rahul, a two-time Member of Parliament and Congress General Secretary in charge of youth affairs, to No 2 in the party hierarchy. This would also signal that Rahul is the prime ministerial candidate when the Congress contests the next general elections. This strategy is not without its problems. By steadfastly refusing to take up government office, Rahul has no public record to speak of. His performance as an MP too is ordinary. The only yardstick to measure Rahul by is his attempts to turn things around within the Congress. Here too his record is mixed with the Congress debacle in the 2012 Uttar Pradesh election, where Rahul led the party’s campaign, a blot on his report card. Following the UP election, Rahul has kept a low profile and has hardly been seen or heard talking about any of the burning issues in India. This has meant that he still remains a cipher for most voters. Rahul’s reluctance to join the government is, of course, just one element of the latest rejig, the third since the UPA was re-elected in 2009. One of the more significant changes was the appointment of Salman Khurshid as External Affairs Minister in place of the ageing S M Krishna. Khurshid, who was earlier the Law Minister and has served as Minister of State for External Affairs between 1993 and 1996, was preferred over Commerce Minister Anand Sharma (earlier junior minister for External Affairs between 2006 and 2009), who was thought to be in the running for the foreign minister’s post this time. Though allegations of corruption have been lobbed at Khurshid by activist Arvind Kejriwal in the recent past, not many will quibble with the appointment of a younger and more articulate replacement for Krishna. A surprise has been the return of former Minister of State for External Affairs, Shashi Tharoor, who had resigned in the wake of a controversy over his links with the Indian Premier League’s cricket team from Kochi. He returns as junior minister of Human Resource Development (HRD). Some ministers have also been divested of their second portfolio with the important HRD ministry being taken away from Kapil Sibal and given to the relatively young M M Pallam Raju, who was earlier Minister of State for Defence. The other appointments have seen the usual game of musical chairs that are characteristic of Cabinet reshuffles in India. Many of the ministers had hardly settled into their jobs before they were moved out to a new ministry. Khurshid, for example, was appointed Law Minister in 2011 before he was replaced by Ashwani Kumar in this reshuffle. Perhaps the most controversial is the shift of Jaipal Reddy from the Petroleum Ministry to the relatively low 2

profile Science and Technology. Reddy himself is said to be unhappy about the move and there is speculation that it has something to do with his run-ins with private players, including the Reliance Group, over various issues. There are some other points to note about the reshuffle. First, the regional balance of the Cabinet reflects the immediate ground realities of Indian politics. There are as many as five new ministers from Andhra Pradesh, including the Telugu film star Chiranjeevi who has been given the tourism portfolio. In the 2009 general elections, Andhra returned the most Congress MPs of any state. But in recent times, the Congress has split in the state and the agitation for a separate Telangana has undermined the party. To stem the losses, the Congress has chosen to give the state as much representation as possible in the Cabinet. West Bengal is the other state that has profited from the reshuffle with three ministers. This was necessary not only to fill the vacancies created by the pull-out of the Trinamool Congress from the government, but also to show Trinamool who’s the boss. It’s no accident that two of the three ministers from West Bengal — Adhir Chowdhury and Deepa Dasmunshi — are known Trinamool-baiters. Second, the Railway Ministry is with the Congress for the first time in the period that the UPA has been in government since 2004. This period has seen a freeze in passenger fares which has pushed Indian Railways into the red. With Congress’ Pawan Bansal being appointed Railway Minister, there is an opportunity to bring the Railways back on track. Bansal has already hinted at a passenger fare hike to cut losses. Third, the additional portfolio of Parliamentary Affairs for Urban Development Minister Kamal Nath is significant ahead of the winter session of Parliament. The last session of Parliament was virtually a wash-out due to protests over corruption and the UPA needs to do some hard bargaining with the Opposition parties if it is to push through much-delayed legislation such as the land acquisition bill. Nath, a hard-nosed politician, is a good candidate to get the opposition on board. Will the long-overdue facelift of the Cabinet give the scandal-tainted Congress a bounce before the next elections? It might if the newly-appointed ministers are pro-active and have some achievements to show in the limited time that they have. They would do well to follow the example of Finance Minister Chidambaram who has been actively pushing an agenda of reform. It is, however, foolhardy to expect even the most vigorous of ministers to suddenly change the Congress’ culture and work miracles in this period.

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ISAS Brief No. 256 – 21 November 2012 469A Bukit Timah Road #07-01, Tower Block, Singapore 259770 Tel: 6516 6179 / 6516 4239 Fax: 6776 7505 / 6314 5447 Email: isassec@nus.edu.sg Website: www.isas.nus.edu.sg

What Does Obama’s Re-election Mean to South Asia Shanthie Mariet D'Souza1

Abstract

While the world watched the closely contested Presidential elections in the United States in much anticipation, most observers and policy wonks in South Asia were bracing for change or continuity in the foreign policy that the new administration in Washington would herald. Although India received scant mention during the third Presidential debate which was focused exclusively on foreign policy, Pakistan and Afghanistan gained ample attention but with a caveat. There was little differentiated gap between the positions of the two candidates – President Obama and Governor Romney – on ending the war in Afghanistan. It is therefore no surprise that with President Obama's re-election, many in South Asia are bracing for continuity in US foreign policy. However, with his likely focus on legacy and attention towards other hot spots, there are imminent dangers of other South Asian countries taking a back seat in the US foreign policy priorities.

US Presidential Elections and Foreign Policy The presidential elections in the US and changes in administration bring about change in the foreign policy making. While most of the change is not dramatic and continuity remains for some time, any new administration brings about a change of about 2,200 US Government (USG) personnel dealing with various arms of foreign policy. A Romney win would have seen such change of personnel, in addition to a shift in focus to the Middle East and China. Obama's re-election does away with that necessity. Even with the possibility of Secretary of State Hillary Clinton demitting office soon, her probable replacement – Susan Rice, an Obama loyalist who serves as the US Ambassador to the United Nations,2 or John Kerry, chairman of the Senate Foreign Relations Committee3 -- indicates little departure for Obama administration's project continuation. However, even with this trend towards continuity, the second term of the Obama administration can be expected to reveal subtle shifts in focus, much of which has already been set in motion; and each of these shifts could have significant implications for developments in South Asia.

Focus on Legacy It is widely expected that in his second and last term, President Obama would focus on his legacy. He would focus on key international hot spots, particularly in the Middle East. This could make the case of intervention in Syria a more likely possibility. The emphasis on ‘reset button’ with Russia will need to be recalibrated particularly since the reset sought in the first term has only compounded the existing problems. In particular, differences between the US and Russia have widened on how to respond to developments in Syria and Iran and also the US anti-ballistic missile systems in Europe. However with Obama promising Putin greater flexibility in a second term, for all of their differences, the Russians were relieved to have a Democratic victory President Obama would also focus his time and attention on nuclear disarmament initiatives. On China, the Obama administration would take a more accommodative public posture, in pursuit of greater engagement. At the same time, there are 2

Amb. Susan Rice could face a bruising confirmation hearing given that she was the first face of the administration's maligned explanation of the recent fatal attack on the US consulate in Benghazi, Libya. Ben Feller, Shaping a security team, Obama's challenge deepens, Bloomberg Business Week, 13 November 2012, http://www.businessweek.com/ap/2012-11-13/shaping-a-security-team-obamas-challenge-deepens. Accessed on 14 November 2012. Although Sen. John F. Kerry (D-Mass.) is thought to covet the job of secretary of state, senior administration officials familiar with the transition planning said that nomination will almost certainly go to Susan E. Rice. President Obama is considering asking Sen. Kerry to serve as his next defense secretary, part of an extensive rearrangement of his national security team. Karen DeYoung and Greg Miller, Obama considering John Kerry for job of defense secretary, The Washington Post, 13 November 2012, http://www.washingtonpost.com/world/national-security/obama-considers-john-kerry-for-job-of-defensesecretary/2012/11/12/8a0e973a-2d02-11e2-a99d-5c4203af7b7a_story.html?hpid=z1. Accessed on 14 November 2012.

moves made to counter-balance China’s assertive posturing. President Obama’s first overseas trip since his re-election, to the Southeast Asian nations of Thailand, Myanmar and Cambodia appears set to “reinforce the US ‘pivot’ toward Asia, a strategic shift since 2011 that communist China views as being aimed squarely at countering its influence and containing its growth”.4

Afghanistan On Afghanistan, there was very little divergence of opinion in the presidential debate. With both candidates clueless, in bringing an end to the war in Afghanistan, the Obama administration's policy of drawdown and retaining a limited troop presence beyond 2014, as expounded in the US-Afghan Strategic Partnership agreement, would form the benchmark of US policy in the war-torn country. With the intensification of scandals that has marred the military and intelligence leadership in the US, the civilian side of the USG could push for accelerated troop withdrawal. As Kabul and Washington negotiate a post 2014 troop presence through the Bilateral Security Agreement, any continued presence of US forces hinges on the negotiations over the next few months on a status of forces agreement, with the immunity to be provided to the US troops and detainee transfer remaining as contentious issues.

Pakistan With the US-Pakistan relationship hitting the rock bottom in Obama’s first term, there are indications that his administration will initiate a strategic dialogue with Pakistan. A softening of stand on Pakistan and a renewed attempt to prod Islamabad to act decisively on sanctuaries and safe havens would receive a boost, if Senator John Kerry is chosen as Secretary of State. Kerry was one of the US senators who sponsored the US$ 1.5- billion annual Kerry-LugarBerman aid package to Pakistan, and is known for his warm relationship with the country. He paid visits to Afghanistan and Pakistan, following the May 2011 Navy Seal raid that killed Osama bin Laden, in an effort to save the rocky partnership.5 However, drone strikes against the Taliban Al Qaeda leadership hiding in Pakistan's tribal areas are almost certain to continue. In spite of the fact that the drone strikes have strained the US-Pakistan relationship, the limited counter-terrorism and Special Forces activities in the military bases in Afghanistan beyond 2014 would have to be supported by such strikes for US' long term goal in Afghanistan. It remains to be seen how Pakistan engages the re-elected

Calum MacLeod, Obama's historic Asian tour gets China's attention, USA Today, 15 November 2012, http://www.usatoday.com/story/news/world/2012/11/15/obama-asia-trip-china/1707827/#. Accessed on 16 November 2012. Mahvish Ahmad, Will Obama's reelection change the US-Pakistan relationship?, The Christian Science Monitor, 7 November 2012, http://www.csmonitor.com/World/Asia-South-Central/2012/1107/Will-Obamas-reelection-change-the-US-Pakistan-relationship. Accessed on 8 November 2012.

government in US and how the latter uses its remaining leverage to retain its influence over the region. The evolving negotiations with the Taliban and the decision by Islamabad to release Taliban leaders are expected to gain momentum with the fast-approaching ‘end-game’ in Afghanistan

India India did not figure prominently in the US presidential election debates. While apologists attributed this to the lack of vital differences with regard to the significance of New Delhi between the two candidates, the dominant consensus among the Indian strategic community is that India and US have hit a plateau after the signing of the symbolic civil nuclear deal during the Bush Administration. Though the warming up of relations between the US and India could be traced to the Clinton presidency, conventional thinking among the officials and strategic thinkers in Delhi is that the Republicans are more supportive of India’s larger global role. The Romney camp had championed a greater 'geopolitical alliance' with India. Beyond the much-hyped nuclear deal, India and the United States have moved significantly in strengthening crucial areas of co-operation like agriculture, education, health, services sector and have had a forward movement on global commons like space co-operation and enhanced co-operation on clean energy, energy security, and climate change, in particular launching the Clean Energy and Climate Change Initiative. The Obama-Singh 21st Century Knowledge Initiative aims at building linkages between American and Indian universities through increased exchanges and programmes to strengthen educational opportunities for the disadvantaged. As the Indian government focuses on making ‘inclusive growth’ a mantra for surging India, these areas of co-operation will assume greater importance in the coming years, a part of the US strategy to help India build its national power capabilities.6 The Obama administration has been quick to dispel India’s doubts about the President's commitment to the civil nuclear initiative. Obama not only pushed through its implementation, but went a step beyond to support India’s integration into various multilateral non-proliferation export control groupings like the Nuclear Suppliers Group. He also supported India’s candidature for the permanent membership of the United Nations Security Council.7 Of late, there have been enhanced levels of counter-terrorism co-operation initiatives and strategic dialogues and consultations, including on Afghanistan, Myanmar and Africa.

Shanthie Mariet D’Souza, India-US Relations: The Need to Move Beyond Symbolism, IDSA Comment, 3 December 2009, http://www.idsa.in/idsacomments/India-USRelations_smdsouza_031209. Accessed on 8 November 2012. C. Raja Mohan, A pivotal moment, The Indian Express, 8 November 2012, http://www.indianexpres s.com/news/a-pivotal-moment/1028319. Accessed on 9 November 2012.

However, a change in guard in the Secretary of State's office worries New Delhi. It is expected that many of the strategic dialogues and consultations initiated by Hillary Clinton might temper down. The policy would now shift more towards specific programmes. The issues associated with outsourcing and H1-B visas are likely to remain contentious. While India and the US have a meeting of minds on most global trends -- whether it is partnership in Africa or beefing up collaboration in maritime security -- the biggest political divergence is on West Asia.8 Though the Indian lobbies and interest groups would continue to play a significant role, there are calls for New Delhi to step up to the plate. As the Obama administration embraces New Delhi as a strategic partner, as part of its ‘pivot of Asia’ policy, New Delhi will have to be decisive in charting a new trajectory for the relationship.

The Next Four Years Even with the anticipated continuity in US policy, there are indications that other South Asian countries could quietly recede to the ‘back-water’ for the present administration. While India would continue to remain a crucial component of the ‘pivot of Asia’ policy, other countries in South Asia will have to find ways and means for renegotiating their principles of engagement with the US. Afghanistan would continue to receive assistance beyond 2014, albeit reduced; Pakistan will have to find ways of mending its fences with Kabul as its relevance to the US in the Afghan end-game gradually diminishes.

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Sandeep Dikshit, Towards maturity, The Hindu, 10 November 2012, http://www.thehindu.com/opinion/oped/towards-maturity/article4082085.ece. Accessed on 11 November 2012.

ISAS Brief No. 257 – 26 November 2012 469A Bukit Timah Road #07-01, Tower Block, Singapore 259770 Tel: 6516 6179 / 6516 4239 Fax: 6776 7505 / 6314 5447 Email: isassec@nus.edu.sg Website: www.isas.nus.edu.sg

‘Something of a Homecoming’: Aung San Suu Kyi’s Visit to India Sinderpal Singh1

Background Daw Aung San Suu Kyi, Myanmar’s iconic pro-democracy leader, visited India for six days, from 13th to 18th November 2012, at the invitation of Sonia Gandhi, the Congress Party’s chairperson, to deliver the Jawaharlal Nehru memorial lecture in Delhi. As part of her trip, she also held personal meetings with India’s Prime Minister Manmohan Singh and other Indian leaders. Part of her itinerary also included a visit to the Indian Institute of Science in Bangalore as well as Andhra Pradesh to view the implementation of the Mahatma Gandhi National Rural Employment Guarantee Scheme. This is Suu Kyi’s first visit to India since 1987. Suu Kyi’s association with India stretches back several decades. Her father, General Aung San, Burma’s most prominent independence leader, was widely viewed as having a very close relationship with Jawaharlal Nehru while her mother, Khin Kyi, was appointed Burma’s ambassador to India in 1960 during which time Aung San Suu Kyi lived in India, graduating from the prestigious Lady Shri Ram College in Delhi. She has, at various points of her public life, affirmed the influence of these years spent in India on how she fashioned the core political attitudes of her later adult life. From 1989 to 1992, the Indian government extended 1

Dr Sinderpal Singh is Research Fellow at the Institute of South Asian Studies (ISAS), an autonomous research institute at the National University of Singapore. He can be contacted at isassss@nus.edu.sg. The views expressed in this paper are those of the author and do not necessarily reflect those of ISAS.

its full support to Suu Kyi in her challenge to the military regime in Myanmar for greater democracy. This however changed around 1992 when the Indian government reviewed its policy towards Myanmar due to the perception that its support for the pro-democracy movement was costing India significantly vis-à-vis China’s growing engagement with the ruling military regime in Myanmar. In addition, the Indian state also perceived the imperative for closer relations with the ruling regime in Myanmar in dealing with an insurgency on its northeast frontier, which borders Myanmar.

Engaging Suu Kyi and a ‘New’ Myanmar Suu Kyi’s release from house arrest in 2010, the third phase in an overall period of her detention that lasted15 of the last 21 years, was greeted with cautious optimism globally. As part of the military regime’s attempts at apparent political reform, in 2012 her party won handsomely in Myanmar’s by-election and joined the country’s parliament despite it still being an institution overwhelmingly controlled by the military-backed ruling party. Since then, Suu Kyi has been warmly courted by several governments, with Thailand, the United States and several European countries being notable examples. This particular visit was India’s attempt to re-engage with Suu Kyi. As Myanmar goes through a major transition domestically, the Indian government is acutely aware that Suu Kyi and her party may likely play an increasingly important role in her country. Having gone to significant lengths to build a durable relationship with Myanmar’s military regime, it now perceives the necessity of balancing this relationship by engaging Suu Kyi in order to further Indian interests in a Myanmar whose political future looks decidedly unclear at the moment. On balance, Suu Kyi’s trip did not provide any major clues for the future complexion of India-Myanmar relations. Suu Kyi did make clear that she felt ‘saddened’ by the Indian government’s decision to cease their earlier support for the pro-democracy movement ‘in its most difficult days’ and by its related engagement with the ruling military junta in Myanmar. However, in an apparent attempt to balance the tenor of her public statements in India, she claimed she felt ‘partly a citizen of India’ and that she had great faith in the lasting friendship between the peoples of India and Myanmar. In a clear reference to the uncertain nature of Myanmar’s current political transition, she asked for India’s help in realising Myanmar’s democratic hopes, noting that Myanmar had ‘not yet achieved the goal of democracy’. In addition, while understanding the lure of natural resources offered by Myanmar as well as the need for it to attract investments into the country, Suu Kyi advised her Indian audience that ‘responsible investment was needed’, especially in areas inhabited by Myanmar’s religious and ethnic minorities. This could signal one of her party’s future priorities in balancing the imperatives of development and empowering Myanmar’s various minorities in an increasingly democratic Myanmar in the near future. For India, this might mean engaging with a wider range of political stakeholders beyond the ruling party if it wants to increase its stake in Myanmar’s resource development. 2

Wider Implications: US, China and Myanmar One clear objective of India’s policy towards Myanmar since the early 1990s, as stated before, has been to limit Myanmar’s diplomatic dependence on China. Facing a stringent set of international sanctions over a sustained period of time, Myanmar’s ruling regime had only a few diplomatic options. It only became a member of ASEAN in 1997 and despite its membership, Myanmar has been subject to strident criticism from the European Union and the United States. India’s decision to engage the ruling regime in the early 1990’s was meant to provide Myanmar with wider diplomatic options besides China. ASEAN’s decision to make Myanmar a member (and to designate Myanmar as the chair of ASEAN in 2014) was informed by a similar imperative – to limit the possibility of Myanmar becoming a satellite state of China in much the same way North Korea has been for some time. Despite such aims on the part of India (and ASEAN), China’s influence and presence in Myanmar has been steadily growing. There has been much debate about the reasons surrounding the military regime’s decision to cautiously allow greater democratisation within Myanmar. Some see the punishing schedule of international economic sanctions as having finally borne fruit while another school of thought views ASEAN’s policy of ‘constructive engagement’ as the decisive factor. A third, and compelling view, locates Myanmar’s impetus for political transformation in the context of Myanmar’s ruling regime’s increasing unease over its over-dependence on China. Political change in this instance was meant to facilitate a wider range of diplomatic options globally, thus helping to ensure that Myanmar’s autonomy in global affairs was not curbed by an overdependence on China. While it is difficult to ascertain with certainty the one single reason for Myanmar’s seeming political transition, from India’s perspective, the ramifications of recent developments in Myanmar are largely positive. One major consequence of Myanmar’s apparent political transition is the cautious, but unambiguous thawing of relations between the US and Myanmar. The earlier visit of Secretary of State, Hillary Clinton, and the very recent visit of President Obama to Myanmar signals the US’s determination to seize this historical opportunity to prise Myanmar away from China’s growing diplomatic orbit. In the context of President Obama’s declared ‘pivot’ towards Asia, drawing Myanmar out of its dependent relationship with China has become an important foreign policy goal. For India, this is a very positive development. As much as India has tried to engage the military regime since the 1990’s to limit Chinese influence, both diplomatic and economic, it appreciates that it has not made enough headway mainly because it does not seem to have the resources at its disposal to pose a credible challenge to China in the case of Myanmar. The US will present a much more formidable challenge to growing Chinese influence in Myanmar and has the potential to push Myanmar to play a more even-handed role in Asian affairs, especially in relation to the competitive aspects of the India-China relationship in the near future. This however hinges crucially on the evolving complexion of Myanmar’s transition and the extent to which Suu 3

Kyi and her party are allowed to play an increasingly important role in Myanmar’s nascent democracy.

Conclusion Suu Kyi’s visit to India was largely seen as an important symbolic event and many in India placed a large amount of significance on the close personal and family links she had with India. The fact that India had largely abandoned its earlier support to her democracy movement did not however go unnoticed. Despite this, Suu Kyi’s public pronouncements suggest India remains a potentially important actor for Myanmar’s future evolution, in both domestic politics and foreign affairs. Also significant from India’s perspective is the slow but steady thawing of relations between Myanmar and the US. Greater US engagement of Myanmar will help limit future Chinese influence over Myanmar. For India, this is a very positive development.

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ISAS Brief No. 258 â&#x20AC;&#x201C; 3 December 2012 469A Bukit Timah Road #07-01, Tower Block, Singapore 259770 Tel: 6516 6179 / 6516 4239 Fax: 6776 7505 / 6314 5447 Email: isassec@nus.edu.sg Website: www.isas.nus.edu.sg

China-India Strategic Economic Dialogue Gains Momentum Amitendu Palit1

The 2nd China-India Strategic Economic Dialogue (SED) took place in Delhi on 26 November 2012. Coming at a time when the global economic outlook is hardly bright and both countries are visualising modest economic outlooks but when bilateral trade is growing at a fast clip, the SED was awaited for its decisions on future bilateral economic cooperation. While not announcing any radical initiatives, the Dialogue has built up on the momentum generated during the first meeting in Beijing in September 2011 by focusing primarily on cooperation in infrastructure and energy. The SED has some interesting features. The first is in its being only the second such bilateral economic dialogue that China has with any country other than the US. The second is in its excluding bilateral trade and trade-related issues as an area of focus and concentrating more on policy co-ordination and infrastructure cooperation. The third and final interesting feature is in it being co-ordinated not by economic ministries from either side, but by the National Development and Reform Commission (NDRC) from China and the Planning Commission from India. Having a SED with India underscores the importance China attaches to economic relations with India. To that extent, the SED confirms the deepening of economic linkages between the two countries and the priorities that both countries attach to their economic ties. By keeping trade out of its ambit, the SED displays the inclination to focus on non-trade aspects of the 1

Dr Amitendu Palit is Head (Partnerships & Programmes) and Visiting Senior Research Fellow at the Institute of South Asian Studies (ISAS), an autonomous research institute at the National University of Singapore (NUS). He can be contacted at isasap@nus.edu.sg. The views expressed in this paper are those of the author and do not necessarily reflect those of ISAS.

economic relationship. Despite sharp increase in bilateral trade, currently at around US$ 75 billion and well on its way to achieving the target of US$ 100 billion by 2015, contentious issues, pertaining to restricted market access for specific commodities and services on either side, remain unresolved. These issues are being separately looked into by the Joint Economic Group (JEG). The JEG, set up in 1989, had its 9th meeting in Delhi in August earlier this year. Clearly, the SED does not wish to be burdened by trade issues, probably due to the apprehension that inclusion of trade in the agenda will lead to its dominating discussions leaving less space and scope for exploring other areas of economic cooperation. Also, neither the NDRC nor the Planning Commission is mandated to deal with trade issues and policies. The NDRC plays an important role in policy-making and economic strategy formulation in China, particularly macro-economic policies, and its role has become increasingly significant following the opening up and global integration of the Chinese economy. This is in contrast to India, where macroeconomic policies are determined largely by the Ministry of Finance and the Reserve Bank of India, with the Planning Commission assuming a more indicative role in macro-economic policies, as opposed to a decisive role, and focusing largely on social and human development. Infrastructure development remains a major priority of the Planning Commission, as much as it is with the NDRC, and there is little surprise in infrastructure being a major subject of discussion in the SED, in terms of focus on high-speed railway development and cooperation in non-conventional energy (wind and hydro-electric), energy efficiency and power equipment manufacturing. Climate change and environmental protection - other important subjects discussed in the SED - are also natural turfs for both the NDRC and the Planning Commission. During its last meeting in Beijing in September 2011, the SED set up working groups for examining specific issues. These groups have been set up on policy coordination, infrastructure, energy, environmental protection and hi-technology. In the Delhi meeting, the groups exchanged views on several issues and discussed collaborative efforts. Some of the important areas and initiatives discussed include:2

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Investment environment in both countries

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Agreement to do joint studies on planning cooperation and skills development for employability

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High-speed rail development, heavy haul and station development

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Possibility of Chinese power equipment manufacturers setting up service centres in India

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Joint development of testing protocols and standards in energy efficiency

‘Agreed Minutes of the 2nd India-China Strategic Economic Dialogue- November 26, 2012, New Delhi’, Embassy of India, Beijing, 26 November 2012; http://www.indianembassy.org.cn/newsDetails.aspx? NewsId=383 (Accessed on 30 November 2012).

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Joint studies on IT/ITES markets and possibility of working together for developing common standards for digital TV and mobile communication technology.

The Dialogue is clearly trying to focus on areas where both countries have the possibility of cooperating for developing joint programmes. Railways, energy, environment and IT appear to be the four major areas, where considerable efforts are being devoted. It is also encouraging to note that the Dialogue is beginning to assume a multi-agency dimension by stretching beyond the NDRC and the Planning Commission – by including operational ministries such as the Ministries of Railways from both countries and also influential industry bodies such as the National Association of Software and Service Companies (NASSCOM) from India and the China Software Industry Association (CSIA) from China. The Railways ministries, and the NASSCOM and CSIA, have entered into MOUs for greater technical and functional cooperation and are expected to work out long-term work plans. As a mechanism, the SED, might, over time, become a strong confidence-building-measure (CBM) between the two countries. Economics has been the bright spot in China-India ties and both countries are aware of its role in stabilising what in some other respects is a rocky relationship. But notwithstanding the robust growth in trade, including land-routed trade through the Nathula Pass between Sikkim in India and the Tibet Autonomous Region of China following addition of more items, a lack of understanding regarding each other’s domestic economic regulations and market conditions constrains greater economic exchanges and cross-border investments. The SED’s efforts in this respect for reducing the information asymmetry are noticeable. But such efforts need to be matched by equally vigorous efforts for resolving the market access issues in trade. The JEG and the SED have to act together and in tandem for putting the bilateral economics on an even faster track.

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ISAS Brief No. 259 – 5 December 2012 469A Bukit Timah Road #07-01, Tower Block, Singapore 259770 Tel: 6516 6179 / 6516 4239 Fax: 6776 7505 / 6314 5447 Email: isassec@nus.edu.sg Website: www.isas.nus.edu.sg

US-Pakistan Relations and the ‘End-Game’ in Afghanistan Shanthie Mariet D'Souza1

Abstract As the rush towards the Afghan end-game intensifies, the United States and Pakistan are back to mending their fences. After more than a year of frayed relationship following the May 2011 raid that killed Osama bin Laden, the Salala incident and the increased drone strikes, the two allies are on the road to making amends to repair the relationship. As US prepares to drawdown, re-engaging Pakistan is seen as critical in maintaining its minimalist approach in Afghanistan. For Pakistan, ensuring its influence in post-2014 Afghanistan and avoiding implosion remain crucial. Whether the two can bridge their differences for the stabilisation of Afghanistan remains to be seen.

Pakistan’s Foreign Minister Hina Rabbani Khar's 28 November 2012 statement that the strained relations between Pakistan and the United States (US) have been "fully repaired"2 needs to be viewed in a context. With the US-Pakistan relationship hitting the rock bottom in President Obama’s first term, there are indications that his administration, with a mandate for

Dr Shanthie Mariet D’Souza is a Research Fellow at the Institute of South Asian Studies (ISAS), an autonomous research institute at the National University of Singapore. She can be contacted at isassmd@nus.edu.sg. The views expressed in this paper are those of the author and do not necessarily reflect those of ISAS. "Pakistan foreign minister: U.S., Pakistan ties fully repaired", Reuters (28 November 2012), http://in.reuters.com/article/2012/11/28/pakistan-usa-idINDEE8AR08020121128. Accessed on 3 December 2012.

the second term, is on course to initiate a strategic engagement with Pakistan. While softening its rhetoric on Pakistan, the new strategy could involve a renewed attempt to prod Islamabad to act decisively on sanctuaries and safe havens that act as capacity enhancers for the Taliban.3 As a result, the stalled negotiations with the Taliban have begun to see some movement though the contours of such negotiations continue to remain unclear. The ongoing negotiations between the Obama administration and an increasingly assertive Afghan government over a residual American military presence after 2014 are expected to result in a minimalist US presence on Afghan soil. US military commanders in Afghanistan have reportedly laid out options for a post-2014 force ranging from about 6,000 to 15,000, consisting of counterterrorism forces and trainers. A final decision is expected by the end of the year.4 In the post-2014 scenario, with the limited US troop presence and inability of the Afghan National Security Forces (ANSFs) to thwart the insurgent attacks in the countryside, particularly in South and East Afghanistan, there are worries about a military stalemate. Both the US and Afghanistan have long sought Pakistan’s assistance in facilitating talks with the Taliban. With the Taliban leadership ensconced in the southwestern Pakistani city of Quetta in Balochistan and the port city of Karachi, neither the US nor Afghanistan have much leverage to initiate a peace process with the insurgents without Pakistan's cooperation. Amid Pakistan's continuous denial that its military and intelligence establishment abets senior insurgent commanders in Afghanistan, the insurgents carry out an unceasing cross-border campaign of violence, combining both asymmetric as well as high-profile attacks. During the Bush administration, Pakistani establishment nurtured the Taliban as strategic assets. At the same time they used their counter terrorism cooperation as a bargaining chip to accrue huge financial windfall. The spread of the Taliban led insurgency in Afghanistan can be attributed to such policy.

A Strategic Embrace With the US retaining a limited troop presence and the present democratic regime showing no signs of imminent collapse, Pakistan's logic of nurturing strategic assets to reinstall a Pakistan friendly regime seems to be heading nowhere. The limited US troop presence in Afghanistan would ensure that a return to the situation of 1990s,5 would not recur. In such a scenario, the best bet for Pakistan would be to be seen as cooperating with Kabul and Washington to retain its minimal influence rather than be left out in the cold in a post-2014 order. This would 3

Shanthie Mariet D’Souza, "What Does Obama’s Re-Election Mean To South Asia – Analysis", Albany Tribune (20 November 2012), http://www.albanytribune.com/20112012-what-does-obamas-re-electionmean-to-south-asia-analysis/. Accessed on 1 December 2012. "Administration debate on pace of troop withdrawals from Afghanistan hinges on risk assessments", Associated Press (3 December 2012, http://www.washingtonpost.com/politics/administration-debate-onpace-of-troop-withdrawals-from-afghanistan-hinges-on-risk-assessments/2012/12/03/2108551e-3d24-11e28a5c-473797be602c_story.html. Accessed on 3 December 2012. The 1990s were not like the 1980s when the US had a strong stake and used Pakistan to further its interests. In the ‘90s the US had largely wiped its hands of Pakistan and Afghanistan.

further ensure Pakistan’s influence in the Afghan polity and curtail the influence of other regional powers. Moreover, this would allow Islamabad to negotiate with the US, the use of drone strikes and covert operations inside Pakistan and also dilute the US pressure tactics of raising the issue of human rights abuses in Balochistan. Of late, the cost of protecting their ‘strategic proxies’ has increased for Pakistan. The policy of covert support to the Taliban insurgency has the dangers of reaching a hurting stalemate. The country is facing a classic blowback where the TTP and its allied groups have raised the spectre of violent retribution. The possibility of the country splintering on religious and sectarian lines remains an imminent danger. Associated with this are the problems in Balochistan and Sindh. For the last three decades of conflict, the influx of Pushtun refugees in cities like Peshawar and Karachi has changed the demography and popular voices of resentment from within are growing louder. Similarly, for the US, a minimalist strategy in Afghanistan would require Pakistan to stop its support for the Taliban. With the troop numbers declining and a negotiation with the Taliban becoming more desirable, Pakistani involvement, if not approval, remains critical for limited achievements in Afghanistan to be maintained. Further, from a logistical point of view, the US needs the supply route through Pakistan to transfer its military hardware and equipment out of Afghanistan over the next two years.

A Compliant Pakistan? In the past one month, Pakistan has released several Taliban prisoners from its custody, a move that may boost the prospects of negotiations with the insurgents. On 14 November 2012, nine senior Afghan Taliban prisoners including Mullah Nooruddin Turabi, a former Taliban justice minister and religious hard-liner, were released. On 30 November, the Pakistani foreign ministry issued a statement agreeing to release another batch of Taliban prisoners. However, expectations that the releases will provide momentum to the peace process with the Taliban may be somewhat overblown. According to Rustam Shah Mohmand, who served as Pakistan’s ambassador to Kabul between 2002 and 2005, the release of mid-level Taliban members is unlikely on its own to persuade the movement’s leadership to begin substantial negotiations. 6 Pakistan not only has to effect many more releases, including that of senior Taliban leader Mullah Baradar, but also has to declare its univocal support for the peace process. There are no indications of Pakistan becoming compliant to that extent. Baradar had been arrested by the Pakistani authorities in 2010 after he initiated unilateral talks with the Afghan government, without Pakistani sanction. There are indications of Pakistan remaining somewhat glued to its age-old formula of underlining its criticality in the peace process. Media reports indicate that certain 6

Haris Anwar, Pakistan to Free More Taliban Captives to Back Afghan Peace, Bloomberg news (3 December 2012), http://www.businessweek.com/news/2012-12-01/pakistan-to-release-more-taliban-to-support-afghanpeace-talks. Accessed on 3 December 2012.

preconditions have been set by Pakistan 7 before it releases senior leaders like Mullah Baradar. Pakistan reportedly demands a "clear cut policy" from the US before they release the senior Taliban leaders. A senior Pakistani official was quoted as having said, "What if talks fail even after we release all the Taliban? Chances are that Pakistan will be held responsible for this. We want to pre-empt this scenario. That is why we are seeking a clear-cut policy not only from Afghanistan but also from the US.â&#x20AC;? 8 While the outcomes of such negotiations remain unclear, Pakistan wants to be certain that any settlement in Afghanistan does not ignore its interests and influence.

Evolving Policy Contours? On 3 December 2012, US Secretary of State Hillary Clinton met Foreign Minister Hina Rabbani Khar in Brussels to discuss US-Pakistan relations and Afghanistan. A handout provided by a senior State Department official said both countries "reviewed the progress in US-Pakistani relations in 2012 based on their commitment to identify shared interests and act on them jointly."9 However, the renewed camaraderie would depend on how quickly Pakistan addresses the US concerns in Afghanistan. The tact with which Islamabad builds on another chance to live up to its repeated promises would define the prospects of its bilateral relations with the Americans.

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8 9

Kamran Yousaf, "Pak-Afghan relations: Preconditions set for release of senior Taliban cadres", Express Tribune (3 December 2012), http://tribune.com.pk/story/474331/pak-afghan-relations-preconditions-set-forrelease-of-senior-taliban-cadres/. Accessed on 4 December 2012. ibid. Huma Imtiaz, "Pakistan, US agree to deepen bilateral, trade ties", Express Tribune (4 December 2012), http://tribune.com.pk/story/474958/pakistan-us-agree-to-deepen-bilateral-trade-ties/ Accessed on 4 December 2012.

ISAS Brief No. 260 – 14 December 2012 469A Bukit Timah Road #07-01, Tower Block, Singapore 259770 Tel: 6516 6179 / 6516 4239 Fax: 6776 7505 / 6314 5447 Email: isassec@nus.edu.sg Website: www.isas.nus.edu.sg

UN Counterterrorism Strategy in South Asia: Role of Media in its Implementation Iftekhar Ahmed Chowdhury1

The Strategy On 8 September 2006, the United Nations General Assembly adopted Resolution 60/288. It contained the United Nations Global Counterterrorism strategy. By then it had become fairly obvious that the then US President George W. Bush’s so-called ‘War on Terror’ was failing to achieve the desired results. Iraq and Afghanistan had become imbroglios that underpinned the fallacies of military approaches in addressing the issue. A more sophisticated handling was called for. The global community aptly recognised the necessity of the UN being the principal mechanism, rather than any of its powerful member or members. Better still if the General Assembly, where all countries are represented, than the Security Council where a handful is present, takes the initiative. So it did, and the strategy was born. It did acknowledge the key role of the Security Council, however. It agreed upon a comprehensive, global, strategic framework on counterterrorism. It brought all related activities of the UN system into a common framework. It accorded special emphasis to the Security Council’s Counter-Terrorism Executive Directorate (CTED) and the UN Secretariat’s Counter-Terrorism Implementation Task Force (CTITF). 1

Dr Iftekhar Ahmed Chowdhury is Senior Research Fellow at the Institute of South Asian Studies (ISAS), an autonomous research institute at the National University of Singapore. He was formerly Foreign Advisor (Foreign Minister) of Bangladesh. He can be contacted at isasiac@nus.edu.sg. The views expressed in this paper are those of the author and do not necessarily reflect those of ISAS.

The classical Greeks insisted that before commencing any debate, one must define the terms. On this issue therein lay the rub. The UN membership could not reach consensus on the definition of a ‘terrorist’ or an ‘act of terror’. The axiomatic point was made that one man’s ‘terrorist’ is another man’s ‘freedom-fighter’. A working denotation of an ‘act of terror’ could be one in which ‘innocent civilians’ are victims. Again, it is not an easy matter to always agree on who is an ‘innocent civilian’. Could a British District Commissioner during the Raj in India, engaged in actions against the freedom movement (which at times included acts, particularly in Bengal, which the British described as ‘terrorist’, and which often drew inspiration from the Irish situation at that time) be described as such? Indeed, as Professor Fred Halliday once said, frequent misuse of the term ‘terrorism’ employed routinely by politicians and others is a coded means of dismissing the volatility of a political cause. There is, therefore, no easy answer. But a rough rule of the thumb would be: indiscriminate killings in pursuit of a political goal (however ‘noble’ it may seem). As an analyst said, ‘I know a terrorist act when I see one’.

The Implementation The principal responsibility to implement the strategy, of course, as with all other UN resolutions, lies with the Member State and its agencies. But governments, as in other areas such as development or poverty alleviation, cannot do it alone. This is where the civil society organisations (CSOs) come in. A regional approach, as with other UN initiatives, is perhaps appropriate. This essay will look at South Asia, where the civil society is very active, and has often stepped into areas where a vacuum has been left by the State. All will agree, South Asia has had its share of terrorism: Afghanistan, Pakistan (in particular the Frontier regions), India – Mumbai mayhem of November 2008, the Maoist movement, though recognised as the ‘principal threat to stability’ by Prime Minister Manmohan Singh, Indian authorities are chary of describing Maoists as ‘terrorists’, another definitional quandary!) , Sri Lanka (where the government vigorously argued that the Tamil separatists were ‘terrorists!) and the Nepali example, where in complex political manoeuvrings former insurgents became part of the government!

South Asian Media Within the broad spectrum of the civil society, the media – both print and electronic – in South Asia has apparently a special role in this regard. South Asia can rightly pride itself on a vibrant press. It is truly reflective of the rich argumentative culture and ethos that Amartya Sen has spoken of. It has been extremely supportive of pluralist and democratic norms. In every country in South Asia the media has pushed for these values. Though rooted in the colonial era of the British Raj (the first press was Portuguese!), it has continued to largely champion national political struggle, fundamental rights and social reforms. It has battled attempts made from time to time to constrain and restrict it. The media in South Asia has 2

facilitated broader participation of women in this profession. Women are present in large numbers as television anchors and presenters in India, Pakistan and Bangladesh. This enhances their role in the socio-political and economic sphere (This was also the case earlier with ‘passive media’ such as the cinema, with women actors flowing into public life, mainly in India, as also in Bangladesh). Both the print and electronic media in the region today number legion, and are ever expanding. In most countries it is witnessing a metamorphosis into coporatisation from private ownership. This comes with accompanying ramifications, including monopoly trends. Obviously the media represents diverse view-points and causes. Sometimes it may be difficult to distinguish the struggle for positive change from unintended negative, and at times, violent consequences. There is a danger that, in the words of Margaret Thatcher, the media can become ‘the oxygen of terrorism’. There is the other extreme. Sometimes in South Asia the urge to combat violent extremism has also led a part of the media to call for the ‘hard state’ instead of the ‘soft state’ as it was wont to do earlier. Some see this reflection in India, following the Mumbai massacre .The challenge obviously is to seek and find the golden mean.

Media’s Role It would be in order for the media also to examine what causes violent behaviour pattern – political subjugation (Libya and Syria come to mind), extreme discrimination (we recall apartheid in South Africa), illegal occupation (Palestine, for instance). Add to these the neglect of those who cannot make the grade, those who are on the flip-side of the coin of success. These points must be addressed with a view to, if possible, helping resolve some of those issues or at any rate reducing their negative impact. We all know that such phenomena exist. These must not be cause for pessimism, but an invitation to sober reflection. No reaction is acceptable that causes the innocent to suffer. Investigative journalism in some countries may at times be impeded by legislation. Sometimes these can severely restrict interactions, such as the conduct of interviews, with persons and organisations perceived to be terrorists. This is worth noting. A feature in South Asia, in tune with globalisation and some developments as the ‘Arab Spring’ (or the ‘Arab Awakening’ as some prefer to call it!) is the burgeoning influence of the social media platforms. With the demographic changes leading to a much greater youth population, cyber space activity is on the rise and is exerting ever greater influence. In South Asia it would be appropriate to widen the connotation of social media to include, not just ‘twitter’ and the ‘face-book’ and the ‘internet’, but the penchant in South Asia for the ‘bazaar-gossip’, that is for non-technological verbal communication that can spread like wild-fire. So while there may be broad agreement that the media has a major responsibility, it is difficult to forge consensus on how this is to be discharged. Few in South Asia, both in the profession and outside, would conceivably support any restrictions imposed on the media, 3

particularly by the State. But some kind of a self-imposed discipline, a code of conduct for the media to avoid such reportage that tend to further the goals and purposes of ‘terrorists’, is not beyond the realm of possibility. Again, the media should consciously avoid giving in to the ‘producers’ of terrorist ideologies. This is more difficult than it appears because South Asian media likes to champion the causes of the down-trodden, who are also often the disgruntled, susceptible to violent extremism. This will require some ‘training’ (though journalists in South Asia tend to shun the term), or in any case ‘greater capacity-building’ in order to be able to do the required sifting. Most importantly the media can raise awareness of the threats, thereby ‘educating’ not just the public but also the policy-makers, collating ‘best practices’, and proactively setting norms and standards, not just from the region, but also from beyond. In short, the ‘fourth estate’ can be, indeed is, the fourth pillar upholding the structure of societal stability in South Asia.

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ISAS Brief No. 262â&#x20AC;&#x201C; 21 December 2012 469A Bukit Timah Road #07-01, Tower Block, Singapore 259770 Tel: 6516 6179 / 6516 4239 Fax: 6776 7505 / 6314 5447 Email: isassec@nus.edu.sg Website: www.isas.nus.edu.sg

India ASEAN FTA in Services S Narayan1

India and ASEAN finalized the Free Trade Agreement in services and investments on 20 December, on the sidelines of the commemorative India- ASEAN summit in New Delhi last week. The final legal documents on services and investment pact is to be given further shape by February 2013, and signing could take place in August during the consultations between ASEAN economic ministers in Brunei. ASEAN and India signed the ASEAN-India Trade in Goods (TIG) agreement in 2009, and this agreement came into force from 1 January 2010. This agreement has provided for a phased reduction of import duties between India and the ASEAN member countriesâ&#x20AC;&#x2122; agricultural and non-agricultural products between January 2010 and January 2016. Overall, the trade liberalization envisaged covers over 90% of products traded between the two regions. By 2016, tariffs of over 4000 product lines would be eliminated. Trade between ASEAN and India has been growing at a growth rate of 21.3% per annum in the decade 2001-2010. Over this period, foreign direct investment of around US$ 18 billion has flowed into India from ASEAN countries, mostly from Singapore. Two way trades reached US$ 80 billion in 2011, and there is an expectation that, with the signing of the services agreement, this would cross US$ 100 billion in 2015.

Dr S Narayan is Head of Research and Visiting Senior Research Fellow at the Institute of South Asian Studies (ISAS), an autonomous research institute at the National University of Singapore. He was formerly Economic Adviser to the Prime Minister of India. Dr Narayan can be contacted at snarayan43@gmail.com. The views expressed in this paper are those of the author and do not necessarily reflect those of ISAS.

Among the ASEAN countries, India’s trade links with Singapore, Malaysia, Indonesia and Thailand has been significant, while with Vietnam, Cambodia, Laos and Brunei Darussalam, it has been quite small. There has been a significant change in India’s trade strategy in the last decade. For the first time, the negative list is quite small, and nearly 90% of the total trade in goods is covered by the 2009 agreement.2 India needs ASEAN as a source of raw material and basic goods like edible oils, rubber, timber and coal. Diversification of energy trade requires reliance on oil from Malaysia and Brunei. At the same time, increasing globalization enables India to export intermediate manufactured goods in engineering, pharmaceutical, petrochemical and related sectors to integrate into global trade flows. The FTA in services and investments is intended to enlarge these opportunities to the mutual benefit of the participating countries. The Prime Minister of India has stated that, following the implementation of FTA in goods, trade grew by 41% in 2011-12. “Two way flows in investments have also grown to reach US$ 43 billion over the past decade. As ASEAN investments into India have multiplied, ASEAN countries have emerged as major destinations for Indian companies. From energy sources to farm products, from materials to machinery, and from electronics to information technology, Indian and ASEAN companies are forging new partnerships of trade and investment”, Dr Manmohan Singh said.3 India has been demanding that ASEAN should open up its service sector further. The new agreement provides for enlargement of the scope of services to cover healthcare, tourism. Transportation services, construction and commercial sectors. Under the ambit of this agreement there would be facilitation for temporary movement of business people, contractual service supplies, movement of independent professionals in accounting, architecture, engineering, medical and dental services, as well as in nursing and pharmacy services, computer services and management consulting. After a tough round of negotiations, India agreed to drop its request for independent professional services, and, as a tradeoff, ASEAN dropped its request for prudential measures in financial services. The implications of this agreement are widespread. First, it would lead to a rapid increase in trade between India and ASEAN, which could well reach US$ 200 billion by 2017. Second, it signifies recognition on both sides of the advantages of using regional geography and mutual competitive advantages to enlarge global competitiveness. For India, ASEAN is a natural source for a number of primary materials including pulses, oils, timber, coal, and energy, and for ASEAN the professional services that India can offer are likely to be extremely competitive in price and quality and thus enhance the competitiveness of local firms. Most importantly, India has developed financial markets, and products and processes could be leveraged across the boundaries for better access to capital and to finances. With the rapid growth in consumption demands in India, ASEAN products offer a natural enhancement of the supply chain for India, while ASEAN is a ready market for Indian intermediate goods

ISAS Insights 182 - India- ASEAN trade profile, dated 14 August 2012.

The Hindu December 20, 2012.

seeking global markets. In services, Indian firms are already competing with global majors in business and consultancy services, and in health care delivery as well as financial services. There is thus a significant opportunity for mutual complementarily. Third, it implies a recognition that trade with Asia is likely to grow faster than the trade with the developed world - in short, that the coming decade is a decade of Asian growth. ASEAN countries are likely to continue to grow at healthy levels. Growth and inflationary volatility is low in the ASEAN, and individual countries like Indonesia, Singapore and Malaysia have been recording steady five percent plus growth with low inflation for several years, a trend that is likely to continue. There is a growing pool of qualified professionals in the services and investment sector in India, who are naturally looking for global opportunities. With the openings in developed markets drying up, this FTA would offer fresh markets and opportunities for these professionals. At the same time, ASEAN professionals would have the opportunity of accessing the rapidly growing service delivery markets in India. Fourth, the integration of these services would also introduce India to global practices in these sectors, especially, architecture, health care, construction and real estate management and the like. The welfare benefits of such integration are likely to be far beyond trade effects. Indian firms, currently not exposed to international markets, would have an opportunity to improve product, production and service delivery efficiencies to match ASEAN standards and norms. At the strategic level, it reaffirms India’s engagement with ASEAN - a continuation of its ‘look east policy’. It also opens up opportunities for similar agreements with other countries, including Australia, Japan, and South Korea. It also offers a template for negotiations with the European Union on services. The negotiations have been a huge learning experience for India, whose negotiators have often been accused of being very reluctant brides at the wedding. This agreement is likely to give India the confidence to embark on larger agreements with likeminded blocs. Singapore has already been a beneficiary of this mutually enhancing growth process since the signing of the CECA in 2005. India – ASEAN trade is still dominated by India- Singapore numbers, and it is unlikely that Singapore would be a loser in this agreement. Rather, the Singapore experience would serve as a touchstone for businesses on both sides seeking to establish themselves in the host country.

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ISAS Brief No. 263 – 8 January 2013 469A Bukit Timah Road #07-01, Tower Block, Singapore 259770 Tel: 6516 6179 / 6516 4239 Fax: 6776 7505 / 6314 5447 Email: isassec@nus.edu.sg Website: www.isas.nus.edu.sg

Direct Cash Transfer of Subsidies: A Game-Changer for India? Amitendu Palit1

From 1 January 2013, India rolled out the much-hyped direct cash transfer of subsidies scheme. Widely tipped as a ‘game-changer’, the scheme is being heavily discussed for both its economic and political significance. Economically, it is expected to be a significant reform measure for improving distribution of subsidies by eliminating ‘leakages’ from the existing system of transfer in kind. Politically, the ruling Congress hopes to capitalise on the scheme’s spirit of ‘Aapka Paisa, Aapke Haath’ (‘Your money in your hands’) by publicising it is as a move pioneered by the Congress party for putting money directly in the hands of people. The scheme was expected to roll out in 51 districts across 16 states of the country, covering almost 30 social welfare programmes of several central ministries. The latter include various ongoing programmes of the Ministries of Social Justice, Human Resource Development, Minority Welfare, Women & Child Development, Health & Family Welfare, Labour & Employment. But it has taken off on a much moderate scale. It is currently running in only 20 districts and covering subsidies for seven existing programmes pertaining mostly to student scholarships and stipends. By March 2013, however, the government plans to extend the scheme to the remaining identified districts and include more programmes.

‘Aadhar’ and Bank Account The limited beginning of the scheme highlights the operational difficulties of administering it. It has two essential pre-requisites. The beneficiaries must have a unique identity number, christened ‘Aadhar’. These numbers are being issued by the Unique Identification Authority of India (UIDAI). After identifying the beneficiaries from the UIDAI platform, the scheme aims to deposit money directly into their bank accounts. The second requirement therefore is the possession of a bank account. Beneficiaries of the scheme must have both the ‘Aadhar’ identity and the bank account. Having one of the two will not help. Having both also is not going to help immediately since bank accounts will have to be ‘Aadhar’-enabled for facilitating transfer of cash. The main operational challenge is connecting the issued ‘Aadhar’ identity numbers to the bank accounts of the ‘Aadhar’ holders. Only bank branches equipped with Core Banking Solutions (CBS) are capable of doing so. The future progress of the scheme will be a function of the pace at which bank branches, particularly in rural areas, implement the CBS. It will also depend on the speed with which ‘Aadhar’ identity numbers are issued across the country.

Benefitting the Poor? The scheme is not targeted exclusively towards the poor or the below-poverty-line (BPL) population of the country. ‘Aadhar’ identities are being issued across all income groups and are not confined to the BPL. Indeed, given that possession of both ‘Aadhar’ and a bank account is necessary for benefitting from the scheme, it is more likely that the non-poor segments will be the greater beneficiaries of the scheme, at least during its initial phase. The non-poor segments have more bank accounts than their poor counterparts. India’s limited financial inclusion has ensured that most poor in the country, particularly in rural areas, do not have access to formal banking facilities. The non-poor are also able to satisfy the documentation requirements of ‘Aadhar’ faster than the poor. The scheme might create difficulties for the poor and those left out of it in another respect. It is expected to have an inflationary impact similar to the rural employment guarantee scheme, MGNREGA. Cash deposited into bank accounts of beneficiaries would be partly spent and saved. The spending would generate a fresh cycle of expenditure in the economy leading to some increase in prices. The early inflationary impact of MGNREGA was not entirely unwelcome, since it came at a time (2008-2009) when the economy was looking for demanddriven stimulus for revival following the slowdown inflicted by the global economic crisis. The current bout of fresh inflation might not be welcome given the already high consumer prices. Finally, the impact of the scheme on the poor might be even more limited, because cash transfers are not covering the government’s biggest subsidies – food, fertilizer and petroleum. 2

Monthly rations of food and kerosene will continue to be distributed to poor households in kind through fair price shops. Leakages from the public distribution system in these respects will also continue the way they do now.

Where Goes the Cash? The government’s great enthusiasm in flagging off the scheme is on account of its potential to reduce leakages. Direct transfers would connect the subsidy-disbursing agencies to the beneficiaries. It would eliminate intermediaries, reduce corruption and ensure properly targeted distribution of subsidies. In the process, it should not only ensure that the beneficiary receives the full quantum of the subsidy but should also reduce the overall subsidy burden of the government by minimising distribution costs. Theoretically, the scheme is capable of generating these benefits. There is, however, a different problem which might create complications. Subsidies delivered in kind cannot be used for any other purpose. Cash transfers are not so. Cash subsidies for student stipends deposited into bank accounts might end up being spent on purposes entirely different from education. There would be similar problems if the scheme in future is extended to food subsidies. There is little possibility of the scheme incorporating features for ensuring the usage of subsidies for specific and desired purposes only. In this respect, while the scheme can choke leakages, it might fail to achieve the basic objective of having subsidies in the first place.

Political Game-Changer ? The political ramifications of the scheme were evident when the Election Commission expressed its unhappiness over the announcement of its rolling out few weeks before the Gujarat assembly elections in December 2012. A politically and morally battered Congress is banking upon the scheme for weaving electoral magic. Congress leader Rahul Gandhi’s conviction that the scheme can win elections for his party if successfully implemented is a clear indication that the party will not spare any efforts to widen its scope during this year and in the run-up to the next Parliamentary elections. For the Congress, the scheme marks fulfilment of a promise made before the 2009 elections. It expects the scheme to be as politically powerful as the MGNREGA. After the latter, the cash transfer scheme would be the Congress’s most ambitious effort in promoting inclusive growth. The scheme will reduce the clout of local politicians with their constituencies, irrespective of the parties to which they belong, since beneficiaries of subsidies under different schemes often had to seek their interventions in availing the support. Direct transfers would reduce this possibility. While local Congress politicians would try to champion this as proof of the party’s overwhelming concern for the common man, opposition politicians 3

would need to think of other ways for countering the strategy. By introducing the scheme, the Congress also hopes to curb some of the flak it received for market-friendly controversial reforms, such as foreign direct investment in retail and correcting petroleum subsidies, which were touted as anti-people by the opposition parties and some allies. Much would depend on how deep and wide the cash transfers can become within this year. With around 200,000 beneficiaries and seven ongoing schemes, they are too limited in scope right now to make any visible political impact. Faster issue of â&#x20AC;&#x2DC;Aadharsâ&#x20AC;&#x2122; and tying them up with bank accounts is critical, as is coordination with various central government ministries for channelling their subsidies as cash. Ultimately, it is administrative and operational efficiency that will determine the schemeâ&#x20AC;&#x2122;s emergence as a political game-changer. Doubts remain strong in this regard as operational and administrative efficiency in implementing schemes has hardly been a conspicuous virtue of the current government.

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