ISAS Insights 2012 by Institute of South Asian Studies ISAS

ISAS Insights 2012

ISAS Insights No. 150 â&#x20AC;&#x201C; 14 January 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-Japan Ties: Part One

Visit of Prime Minister of Japan to India: Economic Synergies S Narayan 1 Abstract The India-Japan Strategic and Global Partnership has received a significant boost in the economic domain as a result of Japanese Prime Minister Yoshihiko Nodaâ&#x20AC;&#x2122;s latest visit to New Delhi. Japan has now agreed to finance the Delhi-Mumbai industrial corridor project to the tune of US$5 billion over the next five years. Independently, there is also a lot of interest among Japanese companies to invest in India. Overall, Japan is raising its economic stake in India in the context of their bilateral Comprehensive Economic Partnership Agreement. Interestingly, amidst the current concerns over slow-down in Europe and over governance issues in India, Japanese business is still very positive about opportunities in India.

Introduction Japanese Prime Minister Yoshihiko Noda visited India towards the end of December 2011. The visit was of considerable economic significance. Noda reached India directly from Beijing, after a visit to China earlier in December had been called off by the Chinese authorities. As Noda headed to New Delhi, a Chinese official cautiously welcomed the development even as the official Chinese media commented in a different tone. Chinese Foreign ministry spokesman Hong Lei told the media while responding to questions on reports that Japan was now looking to develop close ties with India with an eye on China: 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.

“Over the recent years China and India relations also maintained a momentum of good development. We believe China and India should keep political mutual trust and economic cooperation, as well as cooperation and coordination in international affairs. At the strategic level, Tokyo and Delhi’s concerns about a rising China are certainly part of the impetus for the acceleration of strategic cooperation, and this has not gone unnoticed in Beijing. China’s military and media have been alert to this increased strategic conversation between Delhi and Tokyo. Already Japan and India have had several ministerial level meetings to flesh out the contours of their strategic partnership, and have agreed to institute a two-plus-two meeting each year to include defence and foreign ministers. The interaction between the Japanese and Indian militaries is also increasing, as the two navies have worked closely on anti-piracy and other maritime security missions. The armies have had several high-level exchanges, and will soon initiate staff talks. In 2012, the two nations’ air forces will also upgrade their consultations. The recent East Asia Summit provided an important opportunity to consider how Japan and India might work together to help shape the regional environment as well. India and Japan are heavily energy-deficient countries. Both rely on massive imports from the Gulf region and therefore it is in the interests of both to secure the sea lanes leading from the Gulf to India and further beyond to the Pacific Ocean area. It would be natural if there is growing collaboration between the navies of the two countries as is happening now with joint naval exercises. Japan has lifted the ban on weapons exports. The joint declaration on security cooperation signed in 2008 led to a new stage in the Japan-India strategic and global partnership.

Japan’s Outreach Yet Japan’s renewed diplomatic outreach is not all about China. It is clearly all about Japan and its need for an active agenda of strategic engagement in Asia. Economic relations are growing, and there are several different areas where Japan sees an opportunity in India. At the government to government level, Japan has been happy with the utilisation of bilateral assistance through Japan International Cooperation Agency (JICA) and commercial assistance to banks and industry through Japan Bank for International Cooperation (JBIC). India is the largest recipient of bilateral aid from Japan. The breakthrough came around 10 years back with Japan agreeing to support funding for the Delhi Metro, a project that has been viewed as a successful example of bilateral cooperation. JICA has funded the second and third phases of the project as well. This project, headed by Sreedharan, had an excellent track record of implementation, and this has enabled JICA to offer assistance for other metro projects as well, currently Chennai, and perhaps Kolkata. Japanese companies have won contracts for supply of electrical and rolling stock equipment, and Japan clearly sees infrastructure development in India as an important aspect of its economic relationship.

As a part of this strategy, the Japanese government has been engaging India over the concept of the Delhi- Mumbai industrial corridor project ever since its announcement in 2005-06, and has offered assistance even for the development of a detailed project report. During the visit by Noda, Japan has agreed to finance US$5 billion for this project over the next five years. This is an ambitious project, attempting to develop the region between Delhi and Mumbai, through the establishment of a fast freight corridor, industrial townships and manufacturing facilities that would require the close participation of the state governments in India. The governments of Gujarat and Rajasthan have already shown considerable interest in the project and a number of pre- project activities including land acquisition have already started. The freight corridor, along with associated industrial undertakings, would make this region into a manufacturing and export hub. Japan’s assistance to India in the construction of vital infrastructure projects, most notably the Delhi-Mumbai Industrial Corridor Project, has been consistent and of obvious importance to integrating India’s growing local economies. Japan too has found a ready partner in India for diversifying their access to rare earth materials, a major concern since the fall of the supplies from China. Independently, there has been a lot of interest among Japanese companies to invest in India. The success of the Toyota and Honda motor companies in capturing a significant share of the C and D class market segment in automobiles has not gone unnoticed. The advent of Nissan in Chennai has spawned significant activity in the automobile ancillary sector. In the last three years, around 800 new companies have set up shop in and around Chennai, mostly in the light engineering and auto parts segments. The work culture here suits Japanese business, which is able to find technically qualified manpower in abundance here, as well as a benign, investor-friendly environment. There is a pressure on infrastructure in the area, most importantly land, water and logistics.

Japan’s Offer of Bullet Train Knowhow During the visit by Noda, Japan has offered to conduct a feasibility study of the ChennaiBangalore corridor for the introduction of a bullet train service. Japan is also willing to share its bullet train technology. The distance of 320 kilometers could be covered in two hours. Quite apart from dispersing economic and commercial activity along this corridor, it would relieve congestion in both Chennai as well as Bangalore, two cities of importance for Japanese business. Japan is also stepping up its economic stake in India. Both countries have also entered into a Comprehensive Economic Partnership Agreement (CEPA) under which 90 per cent of bilateral trade is covered. India has agreed to step up export of rare earths to Japan. A US$15 billion currency swap arrangement has been agreed upon. The Times of India in a 30 December 2011 editorial headlined “Look north east,” noted that Noda’s visit was “strategically important” for India. It said, “Both countries agreed to expand commercial ties

in diverse areas like infrastructure, energy and industry, with Japan even promising help in stabilising the rupee through a currency swap deal.” However, the overall Japanese investment in India is still quite low, amounting to just one per cent of the over US$1 trillion invested abroad by Japanese companies. India–Japan trade is less than a quarter of Japan-China trade. There is still a significant perception gap concerning India’s business environment. There have also been deals which have not gone well. The purchase of Ranbaxy’s pharmaceutical business by Daiichi of Japan turned out to be a very expensive deal for the buyer. The uncertainty has been tackled to a large extent as the countries have recently partnered effectively on big infrastructure projects The Hindu, on 30 December 2011, said, “The successful implementation of some large Japanese-funded projects like the Delhi Metro have allayed some of these worries, as indicated by the extension of Japanese support to similar big infrastructure projects like the Western Dedicated Freight Corridor, the DelhiMumbai and Chennai-Bangalore industrial corridors as well as high speed rail networks and expressways”. Investments in consumer brands are returning healthy profits, in skin care, garment and other personal products. Interestingly, amidst concern over slow-down in Europe and the governance issues in India, Japanese business is still very positive about opportunities in India.

Conclusion It is possible that India and Japan would have taken considerably longer to move closer to each other if it weren’t for the emergence of China as a major military and economic power. Both have considerable stake in a robust bilateral relationship with China. Japan’s trade volume with China is about US$340 billion while China is India’s largest trading partner. China, Japan and South Korea are emerging as significant trade partners for India, as its earlier ‘Look East’ policy now moves more towards north-east Asia. Trade with these countries has grown much faster than trade with the Association of Southeast Asian Nations (ASEAN) countries. While Singapore has emerged as a very important financial and investment destination for Indian companies, trade in goods and services has grown much slower than with China and Japan. In the case of infrastructure development, India has found in Japan a willing and technologically able partner to take projects forward. In fact compared to other multilateral lending and aid agencies, Japan has shown a greater willingness to participate in infrastructure projects. For India, given the shortage of capital and technology, this could be an important reason to strengthen ties with Japan. Both in terms of strategic as well as economic partnerships, India-Japan cooperation is likely to move strongly ahead. ..... 4

ISAS Insights No. 151 – 14 January 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-Japan Ties: Part Two

Life at 60 in Japan-India Relationship P. S. Suryanarayana 1 Abstract The newly maturing bonhomie between India and Japan is patently designed to create a nonmilitary level-playing field in facing a competitive China in the integral geopolitical space of the Indian and Pacific Oceans. This is evident in the spirit of the latest understanding between Japan and India on rare earths and civil nuclear cooperation. This can also be seen as a factor driving the new US-Japan-India trilateral dialogue.

Introduction: A new dynamic By the rulebook of conventional diplomacy, it is really a surprise that high-tech Japan, an increasingly inward-looking state, is now enhancing its ties with India, a deeply-troubled player despite its continuing rise. A new dynamic is, therefore, evident behind the move by Japanese Prime Minister Yoshihiko Noda to transcend his country’s post-Fukushima sensitivity and to agree to conclude a civil nuclear cooperation pact with India in due course. Also reflecting such a dynamic is the “decision” by Noda and India’s Prime Minister Manmohan Singh “that Japanese and Indian enterprises would jointly undertake industrial activities to produce and export rare earths at the earliest”. 2 These two decisions, primarily

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. Joint Statement issued by Prime Ministers Noda and Singh in New Delhi on 28 December 2011. The Statement, `Vision for the Enhancement of Japan-India Strategic and Global Partnership upon entering the

matters of economics, are of political-strategic significance to both India and Japan, which will in this year (2012) celebrate the 60th anniversary of the establishment of diplomatic ties between them. Beyond the intended celebration, what really is the substance of this new dynamic? Shorn of diplomatic niceties, it is all about a growing convergence of the projected interests of not only Japan and India but also the United States (US), Tokyo’s long-standing ally, in the emerging Indo-Pacific theatre. It requires no insight to identify China, in many ways an-already-risen multidimensional player, as a potential great power of the emerging Indo-Pacific geopolitical space. So, the newly maturing bonhomie between Japan and India is patently, not publicly, designed to create a non-military level-playing field in facing a competitive China in the integral geopolitical zone of the Indian and Pacific Oceans. It is the US which has recently conceived of a future scenario of power-plays in an emerging Indo-Pacific theatre, and there is no overt evidence, as yet, of moves by any major power(s) at a purely military ‘containment’ of China. Surely at this stage, there is no talk of a US-led Indo-Pacific military pact.

Smart Power is the Key Smart power, different from soft power and hard military prowess, is the key ingredient of current moves by the countries which try to create a level-playing field for themselves in facing a highly competitive, if not combative, China. What is being attempted now in the international domain, in relation to China, is akin to what George Kennan, author of ‘containment’, was believed to have actually advocated for the US in relation to the Soviet Union in the Cold War. Nicholas Thompson outlines, in a Review Essay in Foreign Affairs 3, that Kennan’s true preference was indeed a series of political acts and not the threat of military force as the best means for ‘containment’ of the Soviet Union. It was a different matter, though, that the US and its allies took a strident military course in their ‘containment’ of the Soviet Union in the Cold War. Interestingly, Kennan, at one time a top official at the US Department of State, had advocated ‘containment’ in a famous article in Foreign Affairs in July 1947 under the pseudonym ‘X’. Viewed in such a historical and contemporary perspective, Japan and India are now seeking to create a non-military level-playing field for themselves in facing a competitive China, without its ‘containment’ as the avowed objective. Nowhere is this aspect of Japan-India partnership more discernible than in the spirit of their latest agreement on rare earths and, in a different domain, on civil nuclear energy cooperation. Both civil nuclear energy and rare earths are of strategic importance, primarily in economic terms.

year of the 60th anniversary of the Establishment of Diplomatic Relations’, can be accessed at www.mofa.go.jp and www.mea.gov.in. Foreign Affairs, Special Anniversary Issue, January/February 2012, pp.149 and 150.

At the latest Japan-India annual summit, held this time in New Delhi on 28 December 2011, Noda and Singh recognised “the importance of rare earths and rare metals in industries of both countries”. As follow-up, the two leaders “decided to enhance bilateral cooperation in this area by enterprises of their countries” 4. While this agreement is purely bilateral in scope, the context cannot conceal a looming China factor. The wider international community is aware of how the sourcing of rare earths from China turned into a problematic issue for Japan in the context of their bilateral row over an unrelated matter in 2010. While the sourcing of rare earths and rare metals from India will be a plus for the Japanese economy in a strategic sector, Indian industry too will benefit from collaboration with Japan in this sensitive domain. Arguably, Japan has made a far more India-friendly gesture with a greater bilateral salience in the civil nuclear energy sector. Noda and Singh, in their Joint Statement on 28 December 2011, welcomed the “progress made to date in negotiations between Japan and India on an Agreement for Cooperation in the Peaceful Uses of Nuclear Energy”. More importantly, the two leaders now “directed their negotiators to exert further efforts towards a conclusion of the Agreement, having due regard to each side’s relevant interests, including nuclear safety”. 5

Timing and Themes of Civil Nuclear Cooperation In a sense, Noda’s green signal for the continuation of talks with India on civil nuclear cooperation is not as dramatic as it would seem outwardly. At the height of doubts in July 2011 over the future of these parleys, this writer, then the Asia Pacific Correspondent of an Indian newspaper, reported that the talks were not being called off despite the Fukushima disaster of March 2011. The relevant story was that the then Japanese leader Naoto Kan propagated his personal view that Tokyo could consider bidding farewell to civil nuclear energy altogether because of the tsunami-triggered catastrophe at Fukushima. It is true that Noda and Singh have now emphasised the need for “due regard to each side’s relevant interests, including nuclear safety”. Overall, though, nuclear safeguards, as distinct from nuclear safety, assume primacy in the negotiations between any two countries over their cooperation in the realm of peaceful uses of atomic energy. It is within the rights of countries which supply civil nuclear knowhow and/or equipment and materials to demand that the recipient countries must not divert any of these external supplies to military-related nuclear facilities anywhere. In simple terms, such an insistence by a supplier-country forms the essence of safeguards as a negotiating theme. On civil nuclear issues, the position of India for now is unique. India can try and secure external supplies without having to give up its nuclear weapons and without having to sign the Nuclear Non-Proliferation Treaty (NPT). There is some international debate on the perceived ambiguity about, or the ban on, India being able to access civil nuclear suppliers 4

Noda-Singh Joint Statement on 28 December 2011. Can be accessed at www.mofa.go.jp and www.mea.gov.in. Ibid.

for certain categories of knowhow or equipment or materials. In other words, the argument of some non-proliferation protagonists in this sub-context is that India has not secured a socalled “clean exemption” from the stringent guidelines of the Nuclear Suppliers Group. This subtle argument does not, however, impinge on the current status of Japan-India civil nuclear energy talks. The Japanese Foreign Ministry, while summarising the Noda-Singh summit outcome, noted that they decided to “move forward” for concluding an accord in “a mutually satisfactory manner”. A material argument of a different kind has already emerged in the three formal rounds of Japan-India talks held prior to the Fukushima disaster. Japan wanted the Indian negotiators to outline a practical version of New Delhi’s professed commitment to non-proliferation and nuclear disarmament. The pacifist line from Tokyo was that it might suspend or even stop its proposed civil nuclear cooperation with New Delhi if it were to test a nuclear weapon again. Yet, Japan is fully aware of India’s unilateral and voluntary moratorium on further nuclearweapon tests. Tokyo is also conversant with New Delhi’s doctrine of no-first-use of nuclear weapons. Unsurprisingly, therefore, Singh has now noted that the civil nuclear discussions with Japan “are moving in the right direction” 6. An unspoken issue in the Japan-India dialogue is whether New Delhi’s self-proclaimed moratorium on atomic arms-testing will be compatible with the letter and spirit of NPT and the Comprehensive Test Ban Treaty (CTBT). An equally complex issue is whether Washington’s nuclear umbrellas for its allies, including Japan, are in harmony with the letter and spirit of both the NPT and the CTBT. 7

‘Importance of India for Japan’ Given such niceties, if not also complexities, why did Japan, a serious pacifist, decide to initiate sensitive atomic energy talks with a nuclear-armed India? In a breaking-news comment on this issue on 24 June 2010, a top Japanese official Kazuo Kodama told this writer that Tokyo had begun considering various elements. Foremost among these was the “importance of India for Japan”. Also in Tokyo’s check-list at that time were the likely “impact [of prospective talks with India] on the international nuclear non-proliferation system” and “Japan’s contribution in the [global] area of civil nuclear cooperation”. The Japan-India exchanges for a mutually acceptable formula on New Delhi’s atomic armament posture can be traced to Tokyo’s view of the parleys as means to produce an impact on the international nuclear non-proliferation system. However, Noda’s latest pledge of continuing these talks, so soon after the flip-flop during Kan’s period in office, is

6 7

www.mea.gov.in, Speeches/Statements, 28 December 2011. For this perspective on Japan-India ties, see India’s Place and ASEAN’s Primacy in the New East Asia. By P. S. Suryanarayana in ASEAN matters! Edited By Lee Yoong Yoong. Published by Lee Kuan Yew School of Public Policy, National University of Singapore, 2011.

indicative of how Tokyo would – above all other factors – like to further explore the “importance of India for Japan”. Two significant developments, involving Washington besides Tokyo and New Delhi, will also be particularly relevant to any such exploration of the “importance of India for Japan”. First, these three countries had started holding joint naval exercises off Okinawa, not far from the Chinese waters, even before the Japan-India civil nuclear talks began in mid-2010. Second, Noda’s latest assurance to India on civil nuclear talks followed the first-ever USJapan-India trilateral dialogue at the official level in Washington on 19 December 2011.An Indian official has said that the issues discussed at the first-ever US-India-Japan trilateral diplomatic-level meeting covered notably counter-terrorism, maritime security, United Nations Security Council reform, and cooperation in the East Asia Summit process. The USIndia-Japan trilateral dialogue is not in the higher category of US-Japan-Australia strategic dialogue and cooperation. Both Australia and Japan are US allies in the military domain. Moreover, the US does engage several countries, including notably China, in various forms of dialogue. However, the timing of the US-Japan-India dialogue is particularly significant as it took place after Washington’s articulation of the importance of an emerging Indo-Pacific zone.

Conclusion: Eye on China Concerned over China’s capabilities which are magnified by its outreach to space and the cyberspace, the US may look upon the modestly powerful India, despite its high density of poverty, as a potential friend in the Indo-Pacific zone. This does not mean that India will readily place itself on a course of collision with China or uncritically play second-fiddle to the US. However and for now, India seems to have calculated that closer ties with the US and Japan may be useful in facing a highly competitive China on as good a level-playing field as might be possible. Such a calculation, not any old-style fixation about Pakistan, should explain the new vigour in India’s ties with Japan and its ally, the US. .....

ISAS Insights No. 152 â&#x20AC;&#x201C; 16 January 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

Panic in Pakistan: The Makings of a Meltdown? Iftekhar Ahmed Chowdhury1

Abstract Pakistan today is in the throes of a massive political impasse. There is a divisive dichotomy that places the Supreme Court and the Army on one side, and the civil government and the Parliament on the other. But all players have eschewed any unconstitutional cutting of the Gordian knot. This piece argues that the resolution to the apparently intractable conflict probably lies in early elections, consented to by all parties, and examines, briefly, the future prospects in that context, of the rising star in the Pakistani political firmament, Imran Khan.

Introduction Pakistan is careening from crisis to chaos at a bewildering pace over the past week or so. This has surprised even those who are used to chronic instability in that country. This has also been arousing justifiable concern among the international community. Pakistan is a major global actor with 180 million people, with over 700,000 in arms that render its conventional military forces one of the largest in existence, possessing one of the fastest-growing nuclear arsenals in the world. It is ridden with internecine strife, bloody insurgencies, and extremist fundamentalist beliefs. At the same time it enjoys vast intellectual and economic potentials. 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.

Geographically it is most strategically located bordering India, China, Afghanistan and Iran. It is friendly to some and inimical to others, both friendship and animosity running deep. Its role in the world in contemporary times is defined by its relationship with the sole superpower, the United States, which is one of supremely inscrutable love-hate pattern. Pakistan today may often appear to defy rational analysis, but one must take it into account because it is there. The worry that looks us in the face today, however, is that we may be seeing in the happenings there today the makings of a meltdown. If so, what is there to be done?

The Crisis Build-Up The crisis build-up was slow, but inexorable. In July 2010 almost the entire country was inundated by a flood of near-biblical proportions. The Pakistan Peoples’ Party (PPP)-led coalition headed by President Asif Ali Zardari and Prime Minister Yousuf Raza Gilani failed to secure public confidence in addressing the issue. Indeed, Zardari’s ill-advised foreign trip at that time, which reportedly included a visit to a family-owned chateau in France, was much criticised. Terrorist attacks continued to bleed Pakistan, while groups of them actually were said to be receiving support from the Army’s all-powerful Inter Services Intelligence (ISI) in shoring up a possible friendly succession to the Karzai regime in Afghanistan, particularly in the aftermath of the announced United States (US) withdrawal in 2014. Meanwhile Pakistan’s economy began to flounder and growth plummeted to merely 2.4 per cent, in dismal contrast to the 7-8 per cent of its arch rival India! The Pakistanis, whose country was once seen as the centre of the ‘Asian Drama’, found this a bitter pill to swallow! Then insult piled on injury. In May 2011, its main ally in ‘the war on terror, conducted a raid on Pakistani soil to eliminate the terrorist-in-chief Osama bin Laden right under the nose of the Pakistan Army, which remained bafflingly oblivious. An angry Pakistan began to make overtures to China. For the common Pakistanis, who placed great store by the valour and capability of their soldiers, many a myth was exploded! Maybe, the Army was not that invincible after all! Maybe the Emperor had no clothes! Even the civilian government took note, and somewhat emboldened, brought the Army and ISI chiefs, Ashfaq Kayani and Shuja Pasha respectively, to testify before the Parliament, a rarity in Pakistani governance! The last straw on the camel’s back was the killing of 24 Pakistani soldiers in November 2011 by the US and NATO on the Afghan border. The Pakistani government and Army cried ‘betrayal most foul’, closed down the Shamsi air base in Baluchistan used to date by the US for drone strikes on suspected terrorists as well as supply routes to Afghanistan, and reviewed

the total gamut of bilateral relations with the US. By now the reputation, vis-à-vis the public, of both the Army and the government was in mud! Unsurprisingly mutual suspicions between the two began to grow rapidly. It was reported, that, fearing a possible military coup, Zardari encouraged his confidante Ambassador Hussain Haqqani in Washington to approach the US authorities to rein in the Pakistani Army, through an unsigned ‘memo’. But alas, the conduit, a wealthy Pakistani-American businessman called Mansoor Ijaz blew the whistle on Haqqani, and spilled the beans to the ISI chief Shuja Pasha. To the Army this was treason, and much more! It forced Haqqani to resign, with the Americans now pleading for his gentle treatment (for Haqqani was well-liked by them), pleas likely to fall on deaf ears. However, Zardari and Gilani are being kind to him, and, now unemployed, he is said to be enjoying the Premier’s hospitality! But the ‘memogate’ issue became a stick (or baton) for the Army to beat the government with!

Enter Judiciary Not just for the Army. It appears that every segment of the Pakistani community loves a share of publicity, their fifteen minutes of glory, in the vibrant Pakistani media! The Judiciary appears to be no exception. To start with there was no love lost between the charismatic Chief Justice of the Supreme Court, Iftikhar Chaudhry, and the Zardari-Gilani duo. The Court made a two-pronged move last week; first it, via a five-member bench, threatened to take action against Gilani for failing to comply with the court’s orders to open up the corruption cases against Zardari. (In response to his colleagues’ request, Chaudhry has expanded the bench promptly to seven judges). Justice Asif Saeed Khosa, whose elevation to the Supreme Court itself was not without some drama, warned of consequences ‘not pleasant’ if action was not taken by Monday, 16 January 2012. (This would involve a letter by Gilani to some Swiss bankers). Indeed in an oratorical flourish he exceeded the restraint of Shakespeare’s Mark Antony (who had at least called Caesar’s assassin Brutus an ‘honourable man’) by describing Gilani as ‘dishonest’ and ‘not honourable’. A second move was in the form of an aggressive pursuit of the ‘memogate’ case by a judicial commission. Earlier, the Defence Ministry directly forwarded to the Court the Army’s submission, a strange one in any democratic set-up, that it was not under the ‘operational control’ of the civil government. This was not bounced off the Prime Minister’s Office, and Gilani reacted by immediately sacking the Defence Secretary, a friend of Kayani’s, and a retired General, Khaled Naeem Lodhi. (As was to be expected, this removal order has also been challenged in the Court). He was replaced by Nargis Sethi, who some said, would be 3

more amenable to signing Kayani’s and Pasha’s dismissal letters, should matters come to such pass!

Prognosis They may not. Right now the political dichotomy would place the Supreme Court and the Army on one side, and the civilian government and the Parliament on the other. The Army, unlike on occasions in the past, does not enjoy the kind of mass popularity to topple the government directly. A ‘judicial coup’ is possible if somehow the Prime Minister or the President is forced out through ‘rulings’ such as contempt or disqualified in other ways (the Pakistani judiciary can also be surprisingly innovative!). In fact, a ‘contempt’ ruling has been awarded and Gilani has been asked to appear before the Court on 19 January. But the government still has a majority in the Parliament, likely to be buttressed by a win in the Senate in March. A direct confrontation between the Supreme Court and the Parliament would be unhealthy. As for the civilian government, while Zardari has been behaving somewhat erratically by his curiously frequent departures to Dubai for various lengths of time, for reasons as diverse as medical treatments and wedding feasts, Gilani appears to have stuck to his guns not without a measure of courage, almost ready, as if it were, for possible political martyrdom. But when push comes to shove, it is possible that none of the key players in this intricate game, the Supreme Court, the civil government and the Army would behave irresponsibly. Indeed, each, by turn, has spoken against ‘unconstitutional methods’ of effecting governmental change, as has the formal opposition, the Pakistan Muslim League of Mian Nawaz Sharif. The Pakistanis have too much at stake: the failing economy, the burgeoning terrorism, the need to engage in the Afghan end-game, the relations with the US and India, and, even if it now seems somewhat distant, the restoration of a sense of pride that has always been a hallmark of the Pakistan psyche. Yet this impasse cannot continue, and something has got to give!

The Khan also Rises The answer may lie in early elections, before the scheduled 2013.There is someone waiting in the wings for just that: Imran Khan. He has prepared for fifteen long years, building his party ‘Tehrik-e-Insaaf’, ‘the path of justice’, from a scratch, with caution, care and commitment, and with patience that would match the tenacity of Robert Bruce.

Many see him as a budding morrow at Pakistanâ&#x20AC;&#x2122;s midnight. A cricketing hero, he wants to replicate his actions in the political arena, in a nation buffeted by the vicissitudes of misfortune, but thirsting, and indeed dreaming, for some glory. Imran Khan has understood that well. He has been carefully nurturing and feeding these sentiments, yet not going overboard with commitments that he would be palpably unable to deliver on. Initially he appeared to be fired with a sense of idealism, proclaiming a â&#x20AC;&#x2DC;tsunamiâ&#x20AC;&#x2122; against corruption and misrule, even proposing specific administrative reforms. He did that to pull crowds in Lahore and Karachi. Now he seems more chastened by reality. He has toned down his anti-American rhetoric; and on India, confined himself to the routine articulations on human rights in Kashmir. He has sacrificed some pristine postures by accommodating politicians from various spectra, for he needs them for his parliamentary support. A possible understanding with former President Pervez Mosharraf may irk Tehriki purists (such as Shirin Mazari), but the path to power will be through pragmatism, and Imran is, understandably, positioning himself to achieve that goal. For the Army, right now, he is its best bargain. Also, perhaps, for the Pakistani people and the global community .We should, indeed must, be able to tell soon, for time now in Pakistan, is very much of the essence! .....

ISAS Insights No. 153 – 6 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

Uttar Pradesh goes to Polls Ronojoy Sen1 Abstract A seven-phase election will be held in Uttar Pradesh (UP), India’s largest state, between February 8 and March 3. The election is important from the national perspective primarily for two reasons. One, it might bring about a change in the federal coalition governing India with one of the two largest parties in UP, the Bahujan Samaj Party or the Samajwadi Party, finding a place in the federal government in return for Congress support in the state. Two, it will be a test of strength for Rahul Gandhi’s leadership. UP elections are notoriously difficult to call, but what can be said with some certainty is that no party is likely to get a majority on its own leading to a scramble for post-poll alliances.

Introduction The coming election in five states in India is being dubbed a mini general election. While that might not be entirely true given that general election, if it were to happen according to the normal schedule, is still two years away, what makes these Assembly polls crucial is the Uttar Pradesh (UP) elections. With a population of around 200 million, UP would rank among the top ten most populous countries in the world if it were a nation. Given its size — the state sends 80 members to the Lok Sabha (India’s Lower House of Parliament) — the elections in UP always assume greater significance than those in other states of the country. This time the UP polls, which will take place in seven phases beginning February 8, have taken on additional importance for two reasons. First, despite UP, often referred to as the Hindi heartland, being traditionally crucial to the fortunes of who governs India, the two 1

dominant national parties — the Congress and the BJP — have done poorly in the state in recent times. The Congress won 21 seats from UP in the 2009 Lok Sabha election and 22 in the 2007 UP Assembly polls. The BJP won only 10 seats in the Lok Sabha election and 51 in the Assembly polls. So this will be a test of strength for both the BJP and the Congress. For the Congress, the stakes are particularly high since Rahul Gandhi is spearheading the party’s electoral campaign and the results could well determine the future course of his political career. Second, the Congress is desperately shopping for allies at the federal level ever since its largest coalition partner, the Trinamool Congress in West Bengal, has been persistently blocking major policy initiatives as well as voting against it in Parliament. The two main players in UP, the Bahujan Samaj Party (BSP) and the Samajwadi Party (SP), both lend ‘issue-based’ support to the government. In the event of a fractured mandate in UP, which at the moment seems most likely, the Congress could tie up with the SP, which has 23 MPs in the Lok Sabha, or BSP, which has 21, and in return bring either into the federal government. This would ensure the marginalization of the Trinamool Congress.

Perilous to Predict Poll Outcome Predicting UP elections is always a perilous task because of the state’s size and the complex interplay of region, caste and religion. What can be said with some certainty is that the Mayawati-led BSP, which in the last elections won an absolute majority with 206 seats in the 403-member UP Assembly, is going to take a hit. Opinion polls as well as local sentiments point to a fall in the seat tally for BSP. Two opinion polls, both conducted in November 2011, predict a dramatic decline for the BSP. The Star News-Nielsen survey predicts that the BSP will come down to 117 seats.2 The India Today-ORG poll, forecasts the BSP’s vote share will fall from 30.43 per cent in 2007 to 25 per cent in 2012.3 While opinion polls in India have often been wide of the mark, there is little doubt that the BSP has lost ground. Part of it could of course be ascribed to anti-incumbency. However, recent state elections results have shown that governments can beat anti-incumbency if they perform. The biggest black mark against the BSP is the perception that Mayawati, in her first full term as chief minister of UP, was running a very corrupt administration. In the India Today-ORG poll, 31 per cent of the respondents felt that the government had failed to curb corruption. The biggest scandal to rock the state was the one involving siphoning of funds from the National Rural Health Mission (NRHM), a federal government scheme. The CBI is 2

Telegraph India, http://www.telegraphindia.com/1111218/jsp/frontpage/story_14897525.jsp. Accessed on 30 January 2012. India Today, http://indiatoday.intoday.in/story/uttar-pradesh-assembly-polls-2012-india-today-opinion-pollmayawati-bsp/1/163597.html. Accessed on 30 January 2012. 2

investigating the scam which is believed to involve officials in 72 districts. Mayawati has thrown out two ministers, Babu Singh Kushwaha and Anant Mishra, both of whom have been implicated in the NRHM scam. She has dropped several other ‘tainted’ ministers and 110 sitting MLAs from her party’s candidate list, but it could be a case of too little too late. Mayawati’s announcement late last year that UP would be split into four separate states also does not seem to have resonated among voters in the way she hoped it would. Finally, the spending spree by the Mayawati government on building parks with giant statues of herself, other Dalit icons and elephants (the electoral symbol of the BSP), has not gone down well with voters. According to the India Today-ORG poll, 74 per cent of those surveyed disapproved of the statues. Here it might be mentioned that the federal Election Commission was too zealous by ordering in early January that each and every statue of Mayawati as well as the elephants be covered before the election. Not surprisingly, Mayawati turned this order to her advantage by calling it ‘casteist’ and ‘anti-Dalit’. Notwithstanding the charges of corruption and maladministration, the BSP still remains a formidable force because of its popularity among the Dalits (the former untouchables) who constitute 21.1 per cent of UP’s population. The BSP has evolved from being a party of the Jatavs (the caste to which Mayawati belongs) to a party that is able to garner broad support among the Dalits. In the 2009 general election, 85 per cent of Jatavs, 64 per cent of the Pasis and 61 per cent of the other Dalits voted for the BSP.4

A Formula that Worked One of the reasons for the BSP’s good showing in the 2007 Assembly election was that it managed to cobble together an unlikely coalition of Dalits, Brahmins, Muslims and Most Backward Classes (MBCs), which was dubbed the ‘Sarvajan’ formula. The BSP’s list of candidates for 2012 mirrors this trend. Tickets have been given to 88 Dalit or Scheduled Caste candidates, 117 to upper castes (74 of whom are Brahmins), 113 to the Other Backward Classes (OBCs), most of whom are MBCs, and 85 to religious minorities. Mayawati is clearly hoping that the electoral arithmetic of 2007 will again work for her. The BSP’s main rival, the SP, is likely to better its tally of 97 seats that it won in the 2007 election. A party that draws it support from the OBCs — primarily the Yadavs — and Muslims, the SP is banking on its own caste calculus and anti-incumbency sentiment. The party is sticking to its tried and tested ways by giving nearly 50 per cent of its tickets to Yadavs and Muslims. The only difference is that the face of the party is Akhilesh Yadav, the son of the ageing SP chief and former UP chief minister Mulayam Singh Yadav. Akhilesh has taken out ‘yatras’ to woo voters and to jumpstart the SP campaign, which was first off the

Christophe Jaffrelot, ‘Her Sarvajan Test,’ Indian Express (26 January http://www.indianexpress.com/news/her-sarvajan-test/903996/. Accessed on 30 January 2012. 3

2012).

blocks. It will be interesting to compare the campaigns of Akhilesh and Rahul, both of whom represent the future of their respective parties. The SP is, however, caught in a race with the Congress to capture the Muslim vote in UP. Though the Congress has announced several sops for Muslims, it is yet to shake off the taint of the demolition of the Babri Masjid in 1992, when Congress was governing India. More recently, events like the Batla House encounter in 2008 in Delhi where two youths from Azamgarh in UP, who were suspected of being terrorists, were killed and four went missing, have turned Muslim opinion against the Congress. The SP in turn has used these events to its advantage and championed the cause of Muslims. If opinion polls are any indication the SP will be the single largest party with 132 seats and 25 per cent of the votes. The Congress has been reduced to a bit player in UP for the past decade and had won only 22 seats in the 2007 elections. The Congress decline is illustrated by the dramatic fall from 29.13 per cent votes in 1996 to a mere 8.84 per cent in 2007. However, the Congress did much better in the 2009 Lok Sabha elections winning 21 seats. This time under the leadership of Rahul the Congress is looking to radically improve its position. Rahul has been concentrating for some time now on reviving the Congress in UP and has targeted the Mayawati government on several issues, including land acquisition policies in rapidly urbanizing areas like Noida.

A Gamble At the same time, the Congress is also aggressively wooing the Muslims and the MBCs. The Congress has announced a 4.5 per cent quota for the economically backward minorities within the OBC quota, which was later hiked to 9 per cent by the federal minority affairs minister, Salman Khurshid. The Congress strategy is a calculated gamble since Muslims, who have in recent times supported the SP in large numbers, constitute 18 per cent of the stateâ&#x20AC;&#x2122;s population (in 10 districts they number over 30 per cent) and can swing the result in 130-odd seats. The Congress has also targeted the MBC vote promising a sub-quota within the quota for OBCs. In addition, the Congress is the only major party that has gone for a pre-poll alliance, tying up with the Rashtriya Lok Dal (RLD) which is strong in pockets of western UP and had won 10 seats in 2007. According to the opinion polls, the Congress will win 70 seats and the RLD another 15 making the combine indispensable to any party forming government. Like the Congress, the BJP too has seen its fortunes decline dramatically in UP, falling from a high of 33.31 per cent vote share in 1996, following the Ayodhya movement and the demolition of the Babri Masjid, to 19.62 per cent in 2007. The BJP will be desperate to improve on its 51 seats won in 2007 and take third place ahead of Congress. It is this

desperation that has seen the BJP bring former Madhya Pradesh chief minister and Hindutva mascot, Uma Bharti, as its star campaigner. The Congress’ proposal to carve a minority sub-quota within the OBC quota has given a fillip to the BJP, which has branded the Congress as both anti-Hindu and anti-OBC. Part of the reason for pushing Bharti — who will be contesting from Charkhari in Bundelkhand — to the foreground is that she is from the OBC. That BJP is pulling out all stops to court OBCs is evident from the induction of expelled BSP minister, Babu Singh Kushwaha (who is also an OBC), into the party. While protests within the party and outside forced the BJP to rescind Kushwaha’s membership, he will still be campaigning for the party. The opinion polls predict that the BJP will marginally improve its tally to 65 seats, giving it the opportunity to ally with the BSP if the need arises. But anything less than the Congress tally would be a setback for the BJP. There will be plenty of other factors that will influence the eventual result: rebels contesting as independents, smaller outfits like the Peace Party and the Ulema Council acting as spoilers, and delimitation of constituencies. This is also the first major set of elections following the anti-corruption agitation by Anna Hazare in 2011. The Anna team has been campaigning in the poll-bound states for a stronger Lokpal to check graft, but its impact is likely to be minimal in UP.

Post-poll Possibilities What can be said with some certainty is that no party is likely to get a majority on its own. Depending on the election result, it is likely that the BSP will seek the support of the Congress or the BJP to form government. Alternatively, if the SP does well it could tie up with the Congress. A SP-BJP alliance is untenable since Muslims are a major support base of the SP, and the Hindu nationalist BJP is anathema to a majority of them. A hung verdict is not good news for UP voters since coalition governments in the past have been unable to last their full terms. Before her last term, Mayawati herself has been pulled down thrice by her coalition partner, the BJP, with her chief ministerial stints lasting for four, six and fifteen months respectively. The worst case scenario, however, is no party being able to form a government and a spell of President’s rule before fresh elections. Again this will not be unusual since the state had has had four bouts of President’s rule in the last two decades, with two of them lasting nearly a year each. We will have to wait till March 6, when the results will be announced, to find out which of these scenarios play out in UP.

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ISAS Insights No. 154 – 7 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

New Dynamic in China-India Dialogue P S Suryanarayana1

Abstract The new Working Mechanism on border affairs, which India and China have now set up, is designed to ensure that their disputed boundary will be a zone of peace and tranquillity. A follow-up question is whether China and India can muster political will to resolve the basic border dispute itself. For now, the imperative of shared political will remains elusive. While China and India have demonstrated ‘Copenhagen Spirit’ on a global issue like climate change, the Pakistan factor has not disappeared from their bilateral atmosphere. In these circumstances, there are signs of India exploring neo-nonalignment with reference to China and the United States of America.

Introduction: A New Panel with Clear Mandate By establishing a new “Working Mechanism for Consultation and Coordination on IndiaChina Border Affairs”, the two mega-state Asian neighbours have now signalled a shared sense of urgency in addressing a contentious bilateral issue. Article-I and Article-VI of the Agreement to set up this Working Mechanism, signed in New Delhi on 17 January 2012, spell out the primary mandate of this new panel. To carry out its unprecedented mandate, the Working Mechanism will consist of designated diplomatic and military officials of the two countries. 1

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 contacted at isaspss@nus.edu.sg. The views expressed are those of the author and do not necessarily reflect those of the institute.

Article-I empowers them to “deal with important border affairs related to maintaining peace and tranquillity in the India-China border areas”. More explicitly, Article-VI says the panel “will address issues and situations that may arise in the border areas that affect the maintenance of peace and tranquillity”. The designated officials “will [also] work actively towards maintaining the friendly atmosphere between the two countries”. Article-III of the Agreement tasks the new panel to “study ways and means to conduct and strengthen exchanges and cooperation between military personnel and establishments of the two sides in the border areas”. This task is exclusively aimed at maintaining peace and tranquillity in the border areas. In addition, Article-V slightly widens the scope of the panel‟s mandate to cover the possibility of economic cooperation across the Line of Actual Control (LAC) along the disputed border. By stating that “the Working Mechanism will undertake other tasks that are mutually agreed upon by the two sides”, the new Agreement opens room for ensuring a climate of sustained peace for a free flow of border trade. The conventional vision of normal inter-state cooperation across the LAC is heightened also by Article-IV. Somewhat emphatically it states that “the Working Mechanism will explore the possibility of cooperation in the border areas that are agreed upon by the two sides”.

All for Future Perfect! The new China-India Agreement, signed by their top envoys Zhang Yan and Subrahmanyam Jaishankar respectively, is explicit on a substantive aspect and a procedural issue in the ongoing China-India dialogue. Under Article V of the Agreement, the new panel, led by senior officials of foreign ministries of China and India, “will not discuss resolution of the Boundary Question or affect the [nearly decade-old] Special Representatives Mechanism”.2 Interestingly, the agreement on this officially-labelled Working Mechanism, not to be confused with the older mechanism of Special Representatives, was signed on the occasion of the latest talks between these Representatives themselves. Noteworthy, therefore, is the fact that there is no provision for new players in the procedural domain of who will try and resolve the China-India border issue. The Special Representatives will continue to wrestle with the task of coming up with a border settlement. In addition, there is no fresh development at this stage over the substantive aspect of resolving the border dispute itself. On balance, such a perspective, which will define the

The full text of the Agreement can be accessed under Bilateral Documents (January 17, 2012) at India‟s Ministry of External Affairs website: http://www.mea.gov.in

functioning of the new Working Mechanism, reflects the current state of affairs in the public domain. Arguably, the China-India boundary question is the most complex bilateral dispute of its kind in todayâ&#x20AC;&#x;s international political milieu. So, there being no public sign of any new ground being broken in the substantive and procedural domains of resolving the China-India border issue, what really is the new relevance of the latest Working Mechanism?

Beyond the Past CBMs While it is true that the core issue of a border settlement has not been addressed in the new Agreement, its true significance is derived from the existing ground reality across the LAC along the disputed boundary. China and India had often expressed a sense of shared political will to maintain peace and tranquillity along the LAC as the prelude to an eventual border agreement. Noteworthy in this context are the bilateral Agreements of 1993 and 1996, both being confidence-building measures (CBMs) for peace along the LAC. However, the implementation of these CBMs has so far remained problematic because of the lack of mutual agreement on the exact path that the LAC takes along the inhospitable Himalayan landscape. The latest Agreement is designed to address the unsatisfactory implementation of the earlier CBMs. From this, it is obvious that China and India have now demonstrated a shared sense of urgency to ensure the prevalence of peace and tranquillity along their disputed border. And, it is commonsensical that an ambience of sustainable peace and tranquillity will tone up the political atmospherics for serious parleys by the Special Representatives in their quest for the end-product of a border settlement. It is certainly impossible to exaggerate the criticality of genuine peace and tranquillity along the contentious China-India Himalayan border. Arguably, therefore, a certain degree of political wisdom was the basis of the path-breaking border-related CBM which China and India entered into in the 1990s when Jiang Zemin and P V Narasimha Rao were at the helm. As already noted in this sub-context, this accord and the follow-up CBMs have not, however, prevented the periodic outbreak of allegations of LAC violations by both sides. From this standpoint, these border-related CBMs have turned out to be an article of faith in the ideal of peace and tranquillity rather than a testament of practical purpose. The new Working Mechanism is now viewed by the two governments as a result-oriented instrument to achieve peace and tranquillity along the LAC on a sustainable basis: nothing more and nothing less.

The situation along the China-India border has, in recent times, come into sharp global focus because of periodic allegations of incursions by the army personnel of both sides across the admittedly blurred LAC. As a result, the evident overarching peace along this Line during the past couple of decades, in the broadly defined sense of political climate unclouded by open warfare, has often gone unheralded but not unnoticed.

Experimental Pragmatism Significantly, therefore, there is a method, best described as experimental pragmatism, in the charm offensives that the two sides now resorted to and set the stage for the latest accord. India‟s Special Representative Shivshankar Menon was the first to set the tone through a speech3 on 9 January 2012. Menon said “there is enough space” on the global stage “for both India and China to realise their development aspirations”. This, he noted, was evident from the fact that “economics and development are not zero-sum games”. More relevant, in his view, was the reality that India and China “are already integrated with each other to an unprecedented extent” as cooperative partners in the trade and economic spheres. On the argument that “India and China are bound to be strategic adversaries” despite their “cooperative elements in economic relations and approach to international issues”, he dismissed such “determinism” as “misplaced”. It “ignores the successful experience and demonstrated expertise of both governments in managing differences and building commonalities ... particularly since [India‟s Prime Minister] Rajiv Gandhi‟s visit to China in 1988”. Therefore, he argued, “the issue is whether we can continue to manage the elements of competition within an agreed strategic framework which permits both of us to pursue our core interests”. Acknowledging, in this overall context, that “the boundary question remains unresolved”, Menon said, “we are in the second stage of the three-stage process of agreeing [on political] principles, a framework, and finally a boundary line”. So, he reasoned, “the robustness of our bilateral relation will depend on dialogue and communication”, not just between the two governments but among all stakeholders including businesses, scholars, and media on both sides.

Speech by NSA [National Security Adviser] on “Developments in India-China Relations”: Full text can be accessed under Speeches/Statements (January 09, 2012) at India‟s Ministry of External Affairs website: http://www.mea.gov.in.

India‟s relatively rare charm offensive of this kind was amply reciprocated by China in its characteristically forthright fashion. In fact, it is learnt on good authority that it was China‟s move or initiative which resulted in the establishment of the latest Working Mechanism. Emphasising “China‟s tremendous sentiment of friendship towards India”, China‟s Special Representative Dai Bingguo noted, on 16 January 2012, as follows: “There does not exist such a thing as China‟s attempt to „attack India‟ or „suppress India‟s development‟. ... We need to view each other‟s development in a positive light and regard each other as major partners and friends, not rivals. ... What we face is a golden period to grow China-India relations. The world has enough space for China and India to achieve common development, as there are so many areas for us to work together”.4 Such elemental logic can easily explain the political basis of the new Working Mechanism. However, a follow-up question is whether China and India can muster the required political will and act in concert to go beyond their new symphony of positive sentiments and resolve the basic border dispute itself. Now, only the reckless can offer a quick one-word answer, one way or another, especially with reference to a timeline or countdown for a solution. At the same time, it will be inadvisable to dismiss the latest development as a non-event.

Glacial Pace of Border Parleys Surely, the latest wave of China-India reciprocal pragmatism, evident in the run-up to the new China-India accord, does little to hasten the glacially slow pace of formal negotiations on the central issue of a border settlement itself. For now, the two sides are still in the process of trying to evolve a “framework” for settlement. It is understood that a framework, if and when agreed upon in the future, will indeed be the same as the so-far-elusive border settlement itself. An agreed framework will then have to be translated into a cartographic nicety on paper and along the difficult Himalayan terrain. For the present, though, the latest reciprocal pragmatism has facilitated a meaningful understanding on a politically important procedural issue. Dai and Menon, who met in New Delhi on 17 January 2012 for the 15th round of talks at the level of Special Representatives, decided to compile an agreed record of the actual boundary negotiations held since 2003. The transparent objective is to lock in and build upon whatever progress had been achieved in those tricky negotiations. This is considered important for another reason too: the need to consolidate the progress made since 2003, especially in the context of Dai‟s expected exit from the centre-stage in China in the near future.

The full text of comments by Dai Bingguo, State Councillor of the People‟s Republic of China (on 2012/01/16) was accessed at China‟s Ministry of Foreign Affairs website: http://www.mfa.gov.cn. His comments are titled: A Brighter Future When China and India Work Hand in Hand.

At the bottom line, the mutual wariness of China and India towards each other, in the unfolding context of their rise on the global stage along different trajectories, cannot be explained entirely by the traditional paradigm of bilateral rivalry. The other factors relate to the historical and current power plays in the shared neighbourhood of India‟s and China‟s. Overarching these regional realities is the emerging dynamics of the open and subtle gamesmanship between the United States and China for primacy in the Indo-Pacific zone.

China-India Political Will is the Elusive Answer For the wider international community, the ongoing and elaborate process towards a possible India-China rapprochement may seem to reflect a surprising lack of time-sensitivity on their part. However, there is no puzzle to look for as the explanation for this state of affairs. The successful military campaign by China against India in 1962 and their subsequent tactical and strategic moves against and towards each other point to a central reality which is at stake into the future: the need for shared political will. Given that the China-India border is of far less strategic salience to them in the current space age than at any time in the past, it is possible to argue that their continuing stand-off is a political issue as much as it is a military matter. Now, while China, already a fully-risen power in many fields, seeks its own tryst with destiny as an eventual global superpower, it cannot afford to be really soft or appear to be soft on this border issue. For China, its real or perceived softness will be bad politics on the global stage. At the other end of the China-India spectrum, New Delhi is acutely aware of its continuing second-best position (euphemistically speaking). As a result, India also wants to avoid what might be interpreted as concessions or soft politics in any final settlement with China. India and China will have to break this logjam if they want to move towards the elusive answer of shared political will to settle their border issue. They can do so by moving away from the politics of their 1962 confrontation as also by reinforcing their recent display of „Copenhagen Spirit‟5 and extending it to some other areas of global concern and of ChinaIndia common interest. It was at the global climate summit in Copenhagen in 2009 that India and China made common cause in championing the inalienable rights of the developing countries in this future-sensitive Planet Earth issue. One way of looking at the logic of the 1962 conflict between China and India is to ponder over the rather transparent political objectives that the then Chinese leader Mao Zedong had set for himself. Arguably, Mao wanted to prove that the then Chinese political system and his own tactical and strategic acumen were superior to India‟s democracy and the then Indian 5

The expression refers to the cooperative manner in which China and India coordinated their positions at the United Nations climate summit held in the Danish capital in 2009.

leader Jawaharlal Nehru‟s political capabilities respectively. Not only that. Mao‟s 1962 military campaign against India was also aimed at testing or exposing America‟s attitude towards Nehru and the then Soviet Union‟s burgeoning ties with India. In the event, Mao‟s China won a decisive round over Nehru‟s India on the battlefield. Yet, as a matter of history, the 1962 episode did not lead to a situation in which the two countries might have had to re-order their ties, especially after the exit of Nehru and Mao, on the sole basis of a permanent victor-vanquished paradigm. It is evident that China does not always feel compelled to look back on 1962 with a sense of triumphalism. To this extent, and especially in recent times, Beijing does not tend to look down on India as the loser in their only bilateral trial of military strength. At the other end of the spectrum, a now-rising India, despite the drag of huge poverty at home, does not always look upon this particular military episode of 1962 as the sole point of reference. On that occasion, New Delhi‟s lack of military preparedness was utterly exposed, and it is true that India has moved ahead in the military domain as well since then. On balance, however, it is but natural that the ongoing China-India border negotiations cannot be completely divorced from the reality of the 1962 victor-vanquished paradigm.

‘Copenhagen Spirit’ and the Pakistan Factor Going forward, it is no less evident that there is sufficient political space for civilised dialogue within the China-India spectrum. A positive episode in this look-to-the-future scenario relates to the China-India „Copenhagen Spirit‟. In recent years, China and India have often been on the same wavelength on the global issues of climate change, macro-level maritime security as distinct from sovereign naval competition, and national energy security in generic terms. In a sense, some positive momentum has been generated by the sheer political logic of the commonsensical theory that China‟s skyrocketing ascendance and India‟s relatively slow rise are indeed compatible. It is possible to argue that mutual nuclear deterrence, since the 1998 atomic arms testing by New Delhi, has been one of the stabilising factors on the China-India front. China tested its first nuclear weapon as far back as in 1964. Now, this argument about nuclear deterrence as a bilateral stabiliser of sorts is of course just that: an argument. There are many other nuances in the worldwide debate on whether nuclear deterrence is a confidence-builder for peace among the nations with atomic arsenals or, in contrast, a confidence-buster. Significant in the China-India context is the fact that both countries officially swear by the principle of no-first-use of nuclear weapons. In addition, both Beijing and New Delhi, as 7

space-faring players, have often advocated the non-militarisation of the outer space, which is seen as global commons. These political snippets are of some relevance to the China-India engagement, if only because India‟s nuclear weapon testing in 1998 proved critical to their bilateral relationship. The context was the constant Pakistan factor in the China-India relationship. Rarely, if at all, New Delhi toys with the idea that Beijing might scale down its enthusiasm for propping up Pakistan against India.

The Nuclear Dimension In the mid-1990s, before India tested atomic arms, the then Chinese leader, Jiang Zemin, suggested to Pakistan that it consider shelving contentious issues in its relations with India and focus instead on doable aspects of cooperation. It required no clairvoyance to see that Pakistan‟s dispute with India over Jammu and Kashmir was (and remains to this day) the primary contentious issue in Islamabad‟s ties with New Delhi. By and large, Jiang‟s proposal was quickly viewed in New Delhi as possibly a sign of China‟s potential goodwill towards India. At that time, Beijing‟s calculations were largely governed by its perception that a peaceful external neighbourhood was essential for China‟s internal economic growth at a phenomenally rapid pace. All this changed, however, when India tested nuclear weapons in 1998. New Delhi soon began sensing China‟s waning interest in pressing Pakistan to shelve contentious issues in its relations with India and focus instead on developing friendly ties with it. The reason was too transparent to be missed. From Beijing‟s standpoint, the newly nuclear-armed India could be a complicating factor in China‟s external neighbourhood, despite Pakistan also going nuclear. Almost a decade later, China was not at all amused at the way the United States of America (US) virtually took the Indians under its wings by securing for New Delhi a much-coveted exemption from the strict guidelines of the Nuclear Suppliers Group. All these developments are well chronicled in contemporary diplomacy. To all intents and purposes at present, China‟s general preference for a Kashmir settlement through India-Pakistan dialogue – a position largely traceable to Jiang‟s perspective on South Asia – is not unacceptable to India. However, Official India continues to be wary of China‟s perceivably heightened political and strategic interests in today‟s Pakistan, in spite of or even because of its current instability or at least unstable equilibrium.

Conclusion: Signs of Neo-Nonalignment6 Given the totality of China-India relationship, defined increasingly by civilised dialogue on admittedly difficult issues, a new strategic reality, in a broad generic sense, is beginning to take shape. Beijing and New Delhi have, in their engagement, begun adhering to the same basic principle which Jiang had suggested to Pakistan for its relationship with India. The principle, in essence, is one of focussing on the doable at first. This does not mean that China and India have given up their search for a boundary settlement. But they have brought to the table much candid and civilised dialogue at the official political levels and in the public domain. There is, however, hardly any suggestion from either country that the other side give up its strategic preparedness in any sense of this term. It is in this overall ambience that India is beginning to think in terms of adopting a strategy which can best be described as neo-nonalignment. It is clear at this stage that India does not want to favour either the US or China in the event of an eventual confrontation, if not also an open conflict, between them. From New Delhi‟s standpoint, a degree of nonalignment, with reference to the US and China, is increasingly becoming a possible and perhaps even attractive option. This is evident from the insiders‟ views which this writer has elicited. At the same time, India is fully aware of the possible advantages of being on the right side of the US and some of its allies like Japan or South Korea on security issues. Balancing this, India is no less keen to capitalise on China‟s growing economic profile. This should explain the graphic upturn in the India-China trade and economic relations in recent years. In dramatic language, India can strike a posture of pro-US tilt of some kind in the security domain and a pro-China tilt of another kind in the economic realm. In essence and even without reference to the scenario of a post-American world, these elements of India‟s policy towards China, in today‟s context of the US‟ role in the IndoPacific region, constitute signs of possible neo-nonalignment. Several other Asian countries, too, are increasingly looking for greater economic benefits from good ties with Beijing without, at the same time, losing sight of a possible security dividend from close relations with the US. However, India, given its historical experience of practising nonalignment with reference to the US and the Soviet Union, is now better positioned than most to chart a path of neo-nonalignment. Indeed, India can, in its Look East 6

This phrase and the arguments in this article flow from the author‟s conversations with Indian and Chinese officials over a period of time. The author and not the representatives of these countries are responsible for this analysis.

policy, consider having closer security ties with the US and a more extensive economic engagement with China than at present. .....

ISAS Insights No. 155 â&#x20AC;&#x201C; 10 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 and the Not-So-Distant Thunder! Iftekhar Ahmed Chowdhury1

Abstract Pakistan, in many ways, is at a crossroads. The essay identifies the key players, and analyses the impact on the national politics of the major domestic and external actors. It seeks to discern the fundamental national spirit and values of the people of that country. It argues that it may well be that the main challenge is now up to the courts, to point to the appropriate path for the nation to take at this juncture.

Introduction Just when the situation appeared to have eased somewhat, the political sky of Pakistan became overcast again, forewarning an imminent thunderstorm. The Supreme Court has summoned Prime Minister Yusuf Raza Gilani again, to appear before it on the 13 February 2012, in the contempt case against him. Gilani is yet to write the letter to the Swiss authorities reopening the corruption case against President Asif Ali Zardari, contrary to what the Court has directed, thus seemingly challenging it. The future politics of Pakistan could hinge very well on the outcome of its proceedings.

The Key Players Though these proceedings directly focus on one key player, Prime Minister Gilani, it will impact on all the other key players in the Pakistani political scene. They do not, however constitute a team with any common goal, vision or purpose. Right now it is true that only Gilani is facing the brunt of judicial wrath. He has shown remarkable courage and a modicum of conviction by standing up to the Army in recent times on the one hand (he has dismissed the notion of ‘states within states’, in reference to the role of the military in Pakistan), and the Courts on the other (he is steadfast in the position that the President enjoys immunity).His problem is, while upholding democratic values vis-à-vis the Army, he cannot also be seen to be fickle in his support for his civilian superior. This has landed him between a rock and a hard place.His adamence has annoyed the courts no end, and as a result, the verdict may cause him to fall on his own sword. But should such a political demise be his fate, he will try make it look like martyrdom, which could open up the window, or at least a possibility, of a political afterlife! Of course, Zardari remains the ultimate target, the one both the courts and the military, together with a burgeoning number of Pakistan’s population, would like to see disappear from the game altogether. He started well, though the reputation of being ‘mister ten percent’ continued to dog him as a constant handicap, with the percentage rising, at least in public eye, in geometrical progression. To his credit, first, his government witnessed a rare restoration of civilian rule in Pakistan, though over time it seemed to become increasingly cosmetic. Secondly, the 18th constitutional amendment that transferred significant powers to the Prime Minister, and thus to the Parliament, was widely viewed as a democratic move, though he continued to remain the ruling party’s chairman. Then came the rub! The economy began to founder on corruption and maladministration. Both militant extremists and Americans began to relentlessly strike at Pakistan’s by now near-mythical sovereignty at will. Zardari’s inexplicable behaviour-pattern, like repairing to a family chateau in France during disastrous floods, fed welcome grist to the critic’s mill. Relations with the military reached its lowest nadir. His popularity plummeted in a free-fall. Thus it was how the situation for him came to this sorry pass! The formal opposition leader in Pakistan is Mian Nawaz Sharif, who heads the Pakistan Muslim League (PML, Nawaz), a former Prime Minister and an initial alliance partner of Zardari. He remains a player and even a possible alternative but increasingly less so. Noteworthy, though, is that his brother Shahbaz Sharif, as the Chief Minister of Punjab, runs Pakistan’s most powerful province. Nevertheless he is unlikely to be a player on his own on the federal scene and as of now can only buttress his brother. There is, of course a clutch of Islamic parties, whose electoral base, however, is not significant, despite Pakistan’s burgeoning fundamentalism, which finds more of an expression in violence, on a regular basis, perpetrated by the Islamist extremists.

The player insistent on not leaving the crease, though given out by the umpire, appears to be former President Pervez Musharraf. Committed to returning to Pakistan from exile, initially self imposed, in London and Dubai this month, he has now opted to delay the trip.. Wisely so. He is no Bonnie Prince Charlie, and would be well advised to continue in his travels rather than go back home, where there is no one waiting to enthrone him again. Indeed his homecoming would be unwelcome to most; to the government, which has threatened to arrest him on an assortment of charges, including some very serious ones, and as an indication of its unhappiness is seeking to confiscate his farm-house (though it cannot seriously believe it will substantially dent him financially!) ; to that rising star Imran Khan, who is in his good books, but to whom any vocal assertion of support by Musharraf could well nigh be a kiss of death; or even to his former military colleagues, who are keenly sensitive to the sentiments and impulses of a pro-democratic public. Just as for one there is a time to live and time to die, for an exile there is a time to return home, but for Musharraf , this has not yet come. But this is not to say that Musharraf is without powerful friends who are politically influential (he has a wide measure of US and Saudi support). Nor is it to say that he will forever be absent because he is currently out of sight. Then there is Imran, to some the Great Khan himself, waiting to be called to the wicket to commence his innings. Is it realistic to see him becoming the Pakistani leader in the near future? Perhaps! For long years Pakistanis have had little to cheer about. Like all nations, they too like to aspire to a bit of glory; and many of them see Imran as providing them some glimpses of it. This strikingly attractive star in their political firmament glows even more as there are so few of them. Though no longer young, he remains a role model for the youth, a cricketing hero, a philanthropist, well-schooled and well-heeled, an adoring son who has chosen life at home over one in vilayet, financially clean, and someone who has taken the responsibilities of leadership seriously enough to prime and prepare himself for power for a long time. He also reportedly has the blessings of the Army, who may be seeing him as the best possible bargain under the circumstances. But there are practical problems as well. Over time the need to field a winnable team for the Parliament will cost him some in terms of the pristine values that many cherish in him. Then there will in all probability be a Senate, to be elected next month, which is most likely to be hostile if and when he assumes office. So his leadership, if he is able to acquire it, will not be unencumbered or unchallenged. Finally, but by no means the least, there is the Army, and its leadership, General Ashfaq Kayani and his senior officers, the ISI and its chief General Shuja Pasha, in short the military echelons. Due to exigencies of circumstances, they are lying low for now, but licking their wounds, not only inflicted militarily by the USâ&#x20AC;&#x2122; and NATOâ&#x20AC;&#x2122;s superior strategies but also diplomatically by far lesser players like the journalist-turned diplomat Hussain Haqqani and the American-Pakistani businessman Mansoor Ijaz, who seemed to be operating against their perceived interests at ease beyond their clutches, unthinkable even in the recent past. But will the man on horseback so easily give up power? Unlikely! Only that militaryâ&#x20AC;&#x2122;s power now will be exercised differently, not overtly but covertly, not by performing themselves, but by 3

pulling strings from beyond the stage. In Pakistan military rule tends to come in varied avatars.

The International Community All these actors realise that better relations with India are a factor in Pakistan’s stability. But this does not mean they will be a factor in their strategy: at least, not just yet. All Pakistani leaders need to underscore a position on Kashmir, one that is not usually to India’s liking. The ‘India factor’ is the main raison d’etre of Pakistan’s armed forces. But this also does not mean the relationship will always be inimical as they evolve. Indeed more Pakistanis than ever before see the West as a greater enemy than India. They see in the West an existential challenge to Islam itself, and faith often supersedes patriotism in Pakistan. On the other hand, India is seen to have largely accommodated Islam. Thus the deterioration with the relationship with the West becomes somewhat proportionate to the relationship with India; when the former happens the latter tends to improve. Ironical it is for those Westerners, such as the Americans, who have publicly favoured better Indo-Pak relations. All political factions, parties and personalities in Pakistan vie with one another for the affections of China and Saudi Arabia. Perceived proximity to either, or better still both, undoubtedly add to political clout in Pakistan. The change of sentiments towards the US is worth noting. The two countries have had a long history of collaboration, and even now are formal allies. But the preponderant feeling of each is that with a friend like the other, who needs enemies? Those who feel it might just be a lovers’ quarrel may be mistaken in that it may be a quarrel after the love is over. That could be dangerous situation where there may be a sense of no love-lost on either side. Today the US sees Pakistan, perhaps with a modicum of reason, as running with the hare and hunting with the hound, fighting extremists at home and supporting them in the region. Pakistan sees the US, also not without some cause, as ignoring its critical interests and being in cahoots with India. On the crucial issue of Afghanistan, they are at odds, over its present, as well as future.But the reality is, both the US and Pakistan need each other, and neither side, can, or will, abandon the other. Both hope that Qatar’s ‘good offices’ over Afghanistan may reconcile some of the differences, including some of the current bilateral issues between the US and Pakistan, though it may yet turn out to be a triumph of hope over experience!

The Future Most Pakistanis feel today that their country is better left alone, and not be interfered with from outside. They would themselves like to be in the driver’s seat of their own destiny. What they would seek from the rest of the world is the provision of an enabling international ambience for the country to develop. They will tell you that this is not empty rhetoric. They 4

will hark back to the times of Gunnar Myrdal’s ‘Asian Drama’ when Pakistan was forging ahead of India in socio-economic matrices. All that now seems good history! But this also shows the Pakistanis have the capability – the intellectual, material, and political wherewithal – to deal with the manifold challenges that confront them. But this capability will need to be translated into reality. They will need to strengthen civic institutions, assuage the disgruntled provinces, handle extremism, and build consensus and coherence around policies. All this is not easy, but doable. In global history nations have re-emerged out of deeper morasses. The spread of fundamentalism may seem rightly inexplicable to the rational. Pakistan’s founder, Mohamed Ali Jinnah did not want an Islamist State. He wanted a State for the Muslims of the subcontinent (which was eventually to evolve into two sovereign States), where he famously stated ‘Muslims would cease to be Muslims and Hindus would cease to be Hindus’. In contemporary circumstances, he would perhaps have added the Shiias and Sunnis – such sectarian violence would have been quite inconceivable in his days! When Prime Minister Yusuf Gilani faces the courts personally later in February, Pakistan will be at a crossroads. It should not be that the Court by any quirk would throw the nation in a state of disarray. Nor would the courts be expected to be as conformist as they were when over half a century ago in a judgment on the famous ‘Dosso versus State’ case, they justified the overthrow of governments on the basis of the principle of efficacy derived from Hans Kelsen’s ‘General Theory of Law and State’. The people of the country would expect the decision of the courts to abide strictly by the law and the constitution, not upset the applecart by adding to the existing fragility from reasons of any personal vendetta or subjective suasion. So, it may very well be that it is now the courts, ironically of all the players in the scene, which face the challenge to guide the nation, although this is not their primary obligation. Thereafter, with this current episode behind them, Pakistanis must get for themselves a leadership that is honest, fair and strong. It must be there among its 180 million people. It is up to its citizens to seek it, and find. Only then will the rolling thunder fade away without developing into a cataclysmic storm.

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ISAS Insights No. 156 – 28 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

China and the United States: Will the US visit by Xi Jinping make some difference? Shahid Javed Burki1

Abstract China and the United States have become ever interdependent since then President Richard M. Nixon’s visit to Beijing 40 years ago. In February 1972, Nixon met with Chairman Mao Zedong and set into motion a relationship that led to their interdependence. But the relationship lacks trust. Starting this fall, Beijing will begin the process of transferring political authority to a new generation of leaders led by Xi Jinping, currently the country’s Vice-President. He will take over as the General Secretary of the Communist Party of China when the party meets for its five-yearly conclave later this year. In March 2013, he will become the country’s president, replacing Hu Jintao in both positions. He will remain in office for ten years, from 2013 to 2023. During this time, Washington will complete the process of shifting its attention from Europe to the Pacific, a change in policy focus that was announced by President Barack Obama on several occasions in 2011. The tone for this new relationship was set by Vice-President Xi during his recent visit to the United States. The United States’ visit has become one of the rights of passage for the Chinese leadership. Ten years ago, Hu Jintao made a similar trip. At that time George W. Bush was US President. The American president was focused entirely on the Middle East preparing his country for the invasion of Iraq. His successor, Barack Obama, has different ambitions for America and these include focus on Asia, both the eastern and southern parts of 1

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.

the continent. This paper examines how Washington and Beijing are likely to work together as the leadership in China changes. It will matter a great deal for Asia and South Asia as to how relations between the United States and China evolve over the next one decade, the period during which Xi is likely to lead his country. It would help South Asia enormously if this shift in policy stance adds to the economic strength of the Pacific region. It would hurt if the move produces even greater tension between the two superpowers.

Introduction It has become a part of the Chinese transfer of power tradition to have the heir-apparent visit the United States and meet the senior American leaders. This was done by Hu Jintao in 2002 when he was working his way towards assuming power in Beijing. Hu was identified for the leadership position by Deng Xiaoping. Even after the passing of the ‘great moderniser’ in China’s history, his wish was respected by the Communist Party of China (CPC). This was done again by Xi Jinping, the designated successor of President Hu. According to a carefully orchestrated plan, Xi will take over the reins of the CPC in the fall of this year and in March 2013 he will become the President of the People’s Republic of China (PRC). This succession plan has raised a number of concerns as well as hope in both China and the world outside. The concern is whether the succession exercise will proceed as planned. Pitfalls have occurred before and could happen again. On occasions planned successions were overtaken by unexpected events. This happened in 1989 when the Tiananmen Square crisis led to the dismissal of Zhao Ziyang who had already succeeded Deng Xiaoping as the head of CPC. As far as hope is concerned, there are many outside China who would like to see Beijing work constructively in fashioning a new world economic and political order. This will have to be done in association with the United States, currently the world’s sole superpower.

Political Transition With the planned change in the Chinese leadership to be executed over a period of several months, there is hope that this process would be as orderly as was the one in 2002-03 when Hu Jintao took over the reins of power from Jiang Zemin, then PRC President and the General Secretary of CPC. The difference this time around is the political coming of age of the princelings, the direct descendants of the leaders from the time of the revolution. Xin Jinping is one such ‘princeling’. The son of Xi Zhongxun, one a vice-premier, who was banished to the countryside by Mao Zedong during the Cultural Revolution, Xi has deep associations within the party as well as with the military. Branded as the son of a counter2

revolutionary, the younger Xi spent seven years in a distant and poor village in the coalproducing province of Shaanxi. He was sent there when he was only 15 years old. ‘I ate a lot of bitterness at that time’, Xi wrote later. ‘But my experience there had a profound influence on me and formed down-to-earth, striving character’.2 Upon being rehabilitated, he quickly rose up the leadership ladder serving as the assistant to Geng Biao, China’s defence minister and an old comrade of his father. This explains his good relations with the military. He was appointed governor of Fujian and the secretary of CPC in the prosperous province of Zhejiang in 2003. His elevation to vice-president and presumptive heir to President Hu came in 2007 a few months after he was sent to Shanghai to replace disgraced former party secretary Chen Lingyu, the most senior leader to be arrested for corruption in more than a decade. That experience may serve him well as he will have to tackle the serious questions being raised in the country about the rectitude of the senior leadership. In the leadership shake-up which will see the retirement of seven out of the nine members of the current standing committee of the Communist Party’s politburo, the assumption was that the vacated places will go to some of the second generation leaders. Among them is Bo Xilai, the son of Bo Yibo, a prominent leader of the revolutionary period and considered one of the ‘eight elders’ of the Communist Party. The younger Bo is currently the party chief of Chongqing, one in the group of autonomous municipalities that also includes Beijing, Shanghai and Tianjin. Some analysts divide the competition between two influential political camps made up mostly of princelings. ‘One group is made up of the “old left” who lament the passing of Maoism, and the “new left” who want to restore some of Mao’s more workerfriendly politics. This group extols Chongqing as a model of the way the country should be run’3. A bizarre incident involving the attempt to seek asylum by Wang Lijun, the deputy mayor of Chongqing and once the right hand man of Bo, in the United States consulate in Chengdu, the capital of Sichuan province, out of which Chongqing was carved out an as an autonomous municipality, may have cast a shadow on the orderly process of leadership transition. There is also a great deal of discussion about the direction the Chinese economy should take over the next decade or so. At the centre of this discussion is the role of the Chinese stateowned enterprises (SOEs). The move towards a capitalist economic system notwithstanding, these entities continue to dominate the Chinese economic landscape. The SOEs are responsible for granting the senior leaders the privileges that have come to be deeply resented by the population at large. According to one reading of the situation in China, ‘there is a longer-term debate about reforms going on even now, however. In recent months some Communist Party elites have privately debated the necessity of those reforms with renewed vigour; some of the discussion 2

Jamil Anderlini, ‘The enigmatic princeling set to ascend the Chinese throne’, Financial Times, 18 February 2012, p. 9. The Economist, ‘China’s princelings: Grappling in the dark’, 18 February, 2012, p. 43. 3

has crept into public discourse, and there are a growing number of attacks by intellectual and former officials and what they call the “vested interests” that threaten to take China further down the road of crony capitalism.’4 Some of the debate is focused on the role played by state-owned companies that now dominate several areas of the economy – banking, oil, aviation, construction, and telecommunications. Two former executives of the mammoth oil and machinery companies sit on the current nine-member Standing Committee of the CPC Politburo. These enterprises are in the lead as China projects its economic power in other parts of the world, including South Asia.

Issues of Concern for the United States Vice-President Xi Jinping arrived in Washington on 13 February 2012 at the start of a fourday visit to the United States. He visited Washington; Muscatine, a small town where he had gone as junior official to study pig-breeding and agriculture in the United States and finally to Los Angeles on the west coast from where he left for China on 17 February. ‘The visit came at a time of growing strategic distrust between China and the United States’, wrote Kenneth Lieberthal and Stapleton Roy, two China experts in a newspaper article. ‘The United States is far stronger and wealthier than China and will remain so for years. But the balance of resources and capabilities is shifting. Nowhere is that felt more acutely than in Asia where visions of future cast a long shadow over current perceptions around the region. As President Obama has stressed, Asia is the most vital region for sustained US prosperity’.5 These two authors focused their attention on the growing military competition between Beijing and Washington in the Pacific. However, in the two days Xi spent in Washington meeting President Barack Obama, Vice-President Joe Biden and Defence Secretary Leon Panetta, the American leadership talked mostly about economic issues with some passing references to China’s human rights record. For a number of years, undervaluation of the Chinese currency, Renminbi, was the main American concern. It began to be generally believed that it was because of the unfavourable rate of exchange between the Renminbi and the dollar that the Chinese had built up large trade surpluses with the United States. These in turn led to accumulation of large foreign exchange reserves by Beijing now estimated to be well over US$3 trillion. In 2007, the surplus equalled 10 per cent of China’s gross domestic product. This was obviously not a sustainable level. In 2011, the surplus declined to 3 per cent of GDP. This was the result in part of the rising value of the Chinese currency. It increased by 12 per cent since June 2010 on inflation adjusted basis, and by 40 per cent since 2005. Even with this increase, some experts calculate that the Renminbi remains undervalued by five to 20 per cent relative to all 4

Michael Wines and Edward Wong, ‘In charged moment, China’s political heir tries introducing himself to U.S.’ The New York Times, 12 February 2012, p. 13. Kenneth Lieberthal and Stapleton Roy, ‘Defuse the distrust with Beijing’, The Washington Post, 13 February 212, p. A17. 4

other currencies. ‘We are making progress, but it’s not sufficient,’ Lael Brainard, US Treasury Department Undersecretary for International Affairs, said in a newspaper interview, ‘And we will keep on pushing’. But the Chinese officials responsible for dealing with the value of the currency were critical of the fact that they had not been given credit for the efforts they had made over the last several years. Li Daokui, a member of the Chinese central bank’s monetary policy committee told the American press that the Renminbi was ‘probably the only emerging economy’s currency that has been rising against the US dollar’. 6 His reference was to Brazil and India that had significantly seen the depreciation of their currencies with respect to the US dollar. A number of other American concerns were raised by officials in their meetings with Xi. These included in particular enforcement of laws around intellectual property rights and altering rules that compel foreign companies to transfer technology to Chinese counterparts or the Chinese government in exchange for doing business in China. While the concentration was on economic issues, the American side also raised its concerns about China’s display, in an aggressive way, of its ambitions in Asia. Defence Secretary Leon Panetta told a congressional hearing while Xi was still in Washington that the United States needed to make substantial new investments in weapons and technologies because rising powers were ‘testing international rules and relationships’.7 In spite of budget cuts, Panetta indicated that the Pentagon was ‘protecting the capabilities needed to project power in the Asia-Pacific region’. Vice-President Xi had come prepared to deal with this issue. In reply to the questions sent by The Washington Post and published by the newspaper, Xi, in obvious reference to the initiatives launched during President Obama’s third visit to Asia in November 2011, laid the blame for increasing the chances of a military confrontation between the two great powers on the United States. ‘What the Asia-Pacific countries care most is to maintain economic prosperity and build on the momentum of economic growth and regional cooperation. At a time when people long for peace, stability and development, to deliberately give prominence to the military security agenda, scale up military deployment and strengthen military alliances are not really what most countries in the [Asia-Pacific] region hope to see. The vast Pacific Ocean has ample space for China and the United States. We also hope that the United States will fully respect and accommodate the major interests of and legitimate concerns of AsiaPacific region’, he wrote in one his replies to the questions posed by the newspaper.8 Xi Jinping delivered a strong message of his own on the second day of his stay in Washington. He told a lunch meeting organised jointly by the US-China Business Council and the National Committee on United States-China Relations that the two nations must 6

David Leonhardt, ‘As China’s currency rises, U.S. keeps up its pressure’, The New York Times, 16 February, 2012, p. A12. Geoff Dyer, ‘US defends shift in Asian military strategy amid criticism from China’, Financial Times, 15 February 2012, p. 1. The Washington Post, ‘View from Beijing: Chinese Vice President Xi Jinping: Transcript of answers on U.S.-China Relations’, 13 February 2012, p. A10. 5

respect each other’s core interests. ‘Mr. Xi’s use of the term ‘core interests’ was intended to emphasise the existence of a line that the United States and other countries should not cross in discussions with China. The Chinese government’s definition of the term has been evolving in recent years, but it has become standard in diplomatic conversations between China and the United States, and Chinese officials have been using it more assertively to push back against a variety of pressures from other nations. In particular ‘core interests’ has come to mean territorial integrity’.9 The Chinese are troubled in particular by the western support for the dissidents in Tibet and by the indication by Washington that the United States will not stand idly by if China pushes its territorial claims in the Pacific Ocean.

Implications for Asia How the relations between the United States and China evolve once the political dust settles down in the two countries will have enormous implications for Asia – both the eastern and southern parts of the continent. Xi Jinping is unlikely to take any major initiative before he is formally confirmed as his country’s president. That will not happen until March 2013. Since China has become a major issue in the process being followed by the Republican Party in the United States in choosing their candidate for the presidential election due in November 2012, President Obama’s hands are similarly tied. It is also worth noting that President Obama’s stance towards Asia has evolved considerably since he assumed office in January 2009. This evolution was clear in the three visits he made to the continent. In the first tour in November 2009, he took note of the economic rise of China and invited Beijing to become a partner of Washington in leading the world economy towards a new global economic order. He proposed what in effect was a three-tier system, with G2 (Group of 2) consisting of the United States and China, in the lead, followed by G20 and followed, again, by the rest of the world. One part of this initiative was to hold annual strategic dialogue between the two countries. These are held alternatively in Washington and Beijing. However, the virtual surrender of America’s preeminent position this approach implied was not appreciated by the conservatives in America. Obama listened to their objections and misgivings and changed his position.10 During his second visit to Asia in November 2010, President Obama changed his stance. He began the trip with a visit to India where he famously declared that India was not a rising economic power; it had already risen. He also promised America’s support for India in its attempt to secure a permanent seat in the United Nations Security Council. The reason behind these pronouncements and promises was clear: the American leader now wanted India to 9

Edward Wong, ‘Chinese Vice President urges U.S. to respect “core interests”’ The New York Times, 16 February, 2012, p. A12. See Shahid Javed Burki, ‘President Obama’s first Asian visit’ ISAS Brief no. 138, 9 November 2009, Institute of South Asian Studies, National University of Singapore. 6

partner with China to lead the rising continent of Asia. He was attempting to dilute China’s power and also to pull back from the partnership offered to Beijing in his first visit to Asia. Containment of China became the focus of attention in his third visit to the Asian continent in November 2011. On his way to Asia, President Obama stopped in Hawaii where he played host to the summit of the members of the Asia-Pacific Economic Cooperation (APEC) forum. He also announced the launch of another trade organisation, the Trans-Pacific Partnership, involving the countries on both sides of the Pacific but the initiative excluded China. He went to Australia and announced the establishment of a naval base in the northern part of the country that will host an American force of 2,500 Marines. In statements made during the visit he declared that America was a Pacific power and would have its presence felt in the area. In other words, the American president had made a 180-degree turn from the position taken in his first visit. Then the purpose was to include China; now China was excluded and challenged. While challenging this approach, Xi, during his visit to the United States now, sought to advance mutual cooperation and mutual respect as the basis of the relationship. In this context, it is worth noting what several policy analysts are debating about the proper US approach to Asia. ‘In Washington’s internal debates over China policy, several schools of thought are vying for primacy’, wrote Dan Twining of the German Marshal Foundation. ‘One – call it the ‘China first’ school – believes the People’s Republic of China is an ascendant superpower, whose new-found confidence is well-justified, and which America must do more to accommodate as the United States itself declines. In this view, America’s existing position in Asia is unsustainable. Military surveillance in international waters near China is too provocative to continue indefinitely’. This was the approach taken by the American president during his first visit to the Asian continent. ‘A second school of thought – call it the ‘Asia first’ school – reverses the China-first logic. It focuses on influencing Beijing’s strategic choices by constructing a robust balance of power in the Indo-Pacific region that hedges against Chinese assertiveness – and reassures America’s many friends and allies that we will not subordinate their acute concerns about China’s growing strength out of deference to China’s grievances, real or imagined. It acknowledges the pluralism of Asia, America’s historic role as a Pacific power, and the central truth that none of Asia’s great and regional powers is willing to allow Beijing to speak for the region’.11 This ambivalence towards China and its economic and military rise is reflected in several surveys of public opinion as well as those of opinion leaders. According to the latest China Daily-Gallup poll, ‘about 71 per cent of respondents said strong bilateral relations were somewhat or very important. Opinion leaders were even more positive with 85 per cent saying strong relations between the two countries were important. Americans want more cooperation between the two countries in economic and energy issues, followed closely by cooperation in cultural, educational, scientific, political and diplomatic fields, according to 11

Dan Twining, ‘A China policy primer for Xi Jinping’s visit’, Foreign Policy, 14 February, 2012. 7

the survey of 2,007 Americans and 250 opinion leaders conducted last December and released on 8 February 2012. However when asked whether China’s growing influence in the world is good or bad, only 32 per cent of the general population and 28 per cent of opinion leaders saw it as a good development’.12 China, in other words, is an important country, a rising power. However, it was not clear to the people and to the opinion makers what was the best way of dealing with Beijing. It was clear that the visit to the United States by Xi Jinping would not bring clarity to the situation. The Chinese leader’s real audience was at home, in China, and not in the United States.

Implications for South Asia It will matter greatly which of these two schools of thought prevails in setting America’s policy towards China. The ‘China-first’ school will ultimately focus on economic cooperation not only between the United States and China. It will create many opportunities for trade and other forms of economic cooperation for the world including the nations of South Asia. Already China is now the largest trading partner for India, and with a free trade arrangement and a currency swap agreement with Islamabad in place, it is on the way to becoming Pakistan’s largest trading partner. As the rate of economic growth slows down in the mature economies of Europe, North America and Japan, China’s healthy increase in GDP will make it become the economic engine for the rest of Asia. Several large Chinese state-owned companies are playing important economic roles in South Asia. The Chinese banking sector has a growing presence in India and Pakistan. Several state-owned construction companies are building important infrastructure projects in Pakistan. These include the port at Gwadar and the Karakoram Highway, or KKH, which connects Pakistan with the western parts of China.13 If China has to face a military challenge from the United States as is implied by the ‘Asiafirst’ school, it will seek to recruit some of the South Asian states to provide it with support. Beijing will attempt to work with Islamabad and possibly also Dhaka to manage what it will see as a Washington-inspired threat to its status as a rising global power. At the same time, Washington will try and recruit India to balance China. This will be unfortunate for the South Asian sub-continent. It will bring a new ‘great game’ to South Asia and complicate the relations of the countries with each other.

12 13

Chen Weihua, ‘Hands across the sea’, China Daily, 14 February 2012. Rajshree Jetley, ‘Sino-Pakistan Strategic Entente: Implications for Regional Security’, ISAS Working Paper No. 143, 14 February, 2012, Institute of South Asian Studies, Singapore. 8

Conclusion If there was a theme to the visit by Xi to the United States, it was ‘mutual cooperation for the good of the global economy’. It could have been ‘accommodating the military ambitions and interests of the two super powers’. Since much of the focus was on improving economic cooperation between the two countries, neither side took a confrontational approach towards the other. From all accounts, Vice-President Xi Jinping seems to have achieved the main objective of his visit to the United States. As was the case with the other trips made by other leaders in the past, Xi was attempting to establish his legitimacy as the new and undisputed leader of China. He seems to have reached that goal. As one observer, reading the blogs written for weibo, a popular website in China, noted in a dispatch from Beijing, ‘Chinese Vice-President Xi Jinping’s trip to the United States last week, covered in minute detail by the official media here, offered the first extended chance of the Chinese public to size up the man tipped to be their next leader. And judging from the initial reviews, Xi is proving a surprise hit with ordinary people…Xi seemed at ease around his American hosts, whether climbing into a tractor cab in Iowa or sitting tieless during the fourth quarter of Los Angeles Lakers game as he laughed alongside Mayor Antonio Villaraigosa. It is not an image Chinese are used to after the decade-long presidency of the stiff and formal-looking Hu Jintao, who often comes across in photos as a typical Communist Party bureaucrat. And many here noted the difference’.14 Xi will be different. Whether he will chart a new course for China and how soon he will be able to do so will depend on how quickly he settles down in his new jobs – general secretary of the party and president of the republic. .....

Keith B. Richburg, ‘In China, warm reviews for the heir apparent on his U.S. tour’, The Washington Post, 19 February 2012, p. A16. 9

ISAS Insights No. 157 – 5 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

Bangladesh and Paschim Banga: ‘Why this Kolaveri di?’ Iftekhar Ahmed Chowdhury1

Abstract Over the past few years Bangladesh and India have been painstakingly developing their bilateral relations. There was indeed a possibility that thereby a model of good neighbourliness could be created worthy of emulation in the rest of South Asia. Suddenly the appearance in the scene of the new Chief Minister of the State Paschim Banga, formerly West Bengal, in the Indian Union appears to have thrown a spanner in the works. All developments in the area seem to be hostage to her perception of the self-interest of her State, vis-à-vis both New Delhi and Dhaka. As a result, the burgeoning relationship between Bangladesh and India – already characterised by a complex mix of reason and passion and subject to the vicissitudes of domestic politics in both countries – stands threatened. Much hard work and deep innovative thinking by both sides will be needed to successfully overcome the newly created impediments.

Introduction It is rare in South Asia to have two governments entertain such friendly disposition towards each other as those of India and Bangladesh today. Of late, however, this chumminess is confronting severe strains. The relationship is being buffeted by repeated blows from a most 1

unexpected source. Both country capitals seem to be in accord as to its identity. In detective novels there is a French adage, ‘cherchez la femme’. It means ‘look for the woman’. It assumes that in all likelihood the person responsible would be a female. Doubtless it is an archaic and sexist approach, unacceptable in modern times. It so happens in this particular case that both parties agree that the person is indeed a woman. She is Mamata Banerjee, Chief Minister of the Indian State, renamed ‘Pachimbanga’ by her administration, somewhat puzzlingly because it implies the existence of a ‘purbobanga’ or ‘East Bangla’ when there is none. This is not to say that Mamata is actuated by any preconceived notion or sentiment of animosity towards Bangladesh. In fact her recent election to office was cheered by many Bangladeshis. Among them was Prime Minister, Sheikh Hasina, whose Awami League Party heads the coalition in Dhaka. Generally her government is largely perceived as one that is keen to widen and deepen relations with India (this is not true of most other political parties in Bangladesh, including the main opposition, the Bangladesh Nationalist Party, or BNP, of Begum Khaleda Zia). There were several reasons for the Bangladeshis’ initial friendly perceptions of Mamata. First, Mamata is a Bengali-speaking woman, like the major Bangladeshi leaders. Second, hers was expected to be a kinder face in Kolkata, as far as Bangladesh was concerned, than those of her Marxist predecessors. There was no clear justification for such hope, or better still aspiration, than wishful thinking, soon to be belied by the rough and tumble of practical politics. What appears to have become now a cascading crisis in India-Bangladesh relations is largely owed to the complexities that characterise the linkages and interactions in India’s domestic political matrix ( though there are also bilateral elements that must be taken cognisance of, as we shall soon see). The Union government of Prime Minister Manmohan Singh, structurally weak, is dependent on the support of the 19 Members of Parliament belonging to Mamata’s Trinamool Congress who are a part of the United Progressive Alliance (UPA) coalition.

Kolkata-Delhi Relations For the price for such support, Mamata is seeking to exact much more than the proverbial pound of flesh. She demanded Rs 20,000 crores (there are 10 million to a crore, essentially an Indian mathematical calculation) to rebuild the battered economy she inherited from the Marxists (in her claims, though also generally endorsed by the common man on Kolkata’s tramways, the local version of the ‘Clapham omnibus’!) The UPA government and the Finance Minister Pranab Mukherjee, a fellow Bengali, have been slow to respond. The personal rapport between Pranab and Mamata may have also taken a beating after Mamata failed to accommodate Abhijit Mukherjee, Pranab’s son, in her cabinet, and instead offered him the lesser position of Chairman West Bengal Industrial Development Corporation. Be that as it may, many of the Delhi government’s policy decisions have now become hostage to Mamata’s predilections. 2

She has been relentless over the past couple of years in badgering the Union government with annoying, and often seemingly idiosyncratic actions. For instance in June 2009 she succeeded in deferring the land acquisition amendment bill by two years. Then in December 2011 she blocked the passage of the 51 per cent foreign direct investment (FDI) in single-brand retail trade, much to the annoyance of those Indians within and outside the government, philosophically committed to the somewhat new-found values of the ‘free-market’ (not to speak of deterring much needed FDI).Thereafter in February 2012 she managed to marshal the support of some fellow Chief Ministers to stop the “rolling out” of the National Counterterrorism Centres (NCTC), a brain-child of the Home Minister P. Chidambaram on the grounds that it is an intrusion into the jurisdiction of the States by the Union ( as the subject of ‘law and order’ is constitutionally a State-preserve). This list does not include issues that involve Bangladesh, which are enumerated later in this essay. Mamata was thus apparently unafraid to tread where angels would be chary. Taking on Pranab and Chidambaram (who are also seen as rivals vis-à-vis each other) simultaneously may be an act of ‘quixotic’ courage that dangerously borders on foolhardiness. The victories that Mamata is winning on the home political front may eventually turn out to be Pyrrhic. For with regard to even the most docile political figures, of whom Manmohan Singh is usually seen as one, there is such a thing as the last straw on the camel’s back. Well might he now be thinking, with devastating logic, that with friends like Mamata, who needs enemies? It does hark back to the mediaeval era in the annals of Indian history when rebellions in Bengal seemed to perennially vex the sultans and emperors of Delhi. However mighty otherwise, they could be easily poked in the eye by even minor detractors from the Gangetic delta, to whom Delhi, both geographically and psychologically, was hanooz door ast, ‘yet very far’. That element of history seems to be repeating itself, albeit, as with all such historical repetitions, with a modern twist. Unlike those of the sultans and emperors, the present government of Delhi is a democracy which enjoins upon it the need to make uncomfortable, even at times unsavoury, compromises, as it is being forced to do with Mamata. But there is a serious analysis that if the election results in Uttar Pradesh and Punjab create circumstances whereby the UPA government would no longer require Mamata’s support at the Centre, it would act to marginalise her and cut her down to size. Indeed what the UPA would have liked to do, situation permitting, is to try and bring about Mamata’s political demise at the Centre at least, if not in the State, by inflicting upon her not just one, but many cuts. For now though, that idea remains a far-fetched ‘consummation devoutly to be wished’.

Dhaka-Kolkata Relations The embarrassments to the Manmohan government were not confined to domestic issues only. These also spread to relations with Bangladesh, with which the current ties were otherwise friendly, and out of which many had suggested a model be created in terms of

determining India’s behaviour pattern with its neighbours. That would seem unlikely now. Sheikh Hasina believes she has been generous to India, and arguably so, on security (by denying Indian insurgents safe haven and returning some prominent persons on India’s ‘wanted list’) and transit (allowing the connection between India’s north eastern states with others through Bangladesh territory). Both these issues were significant negotiating levers in diplomacy for Bangladesh with regard to India. It comes to Hasina as understandable hurt, compounded by a significant political cost, when returns for these gestures are assessed in Bangladesh as being insufficient. Last year Mamata refused to accompany Manmohan in the first visit of an Indian Prime Minister to Bangladesh in over a decade. It is possible that she was unwilling to play equal fiddle to the four other Chief Ministers accompanying Manmohan. But she also withheld support for the Teesta river water sharing accord between the two countries. As a result it was not signed during that visit though Bangladesh was most eager to do so. Mamata argued that providing 50 per cent of the river water to Bangladesh, as envisaged in the treaty, would render dry the northern parts of Paschimbanga. Pleas to her from both Dhaka and Delhi fell on deaf ears. Public opinion in Dhaka was inflamed. Its government was caught on the wrong foot. Delhi’s discomfiture was palpable. It was sad to see the helplessness of the Prime minister of a rising power like India. The lack of ability to control at home naturally erodes the power to influence the world beyond. Mamata is now poised to oppose the approval by the Indian Parliament of a piece of legislation that if adopted could have positive impact on India-Bangladesh relations. It is the Border Management Bill which the government wants to introduce, and if possible adopt, in this year’s budget session of the Parliament. It is designed to facilitate the transfer to Bangladesh of 55 enclaves, currently tucked inside of Indian territory, in return for 111 such units from that country. This would be in accordance with a much touted agreement reached between Dhaka and Delhi, seen by many as the only positive outcome of the Manmohan trip, separating the visit from what would otherwise be only a jaunt! Importantly, this has already been passed by the Bangladesh Parliament, which would risk looking strange indeed if the Indian legislature does not reciprocate! And it cannot do so, as being a constitutional amendment the passage would require two-thirds majority in both houses, not possible without Mamata’s endorsement. Finally, Mamata has of late been raising Cain with regard to the flow to Bangladesh of the Ganges waters at Farakka. She alleged that Bangladesh has been receiving much more in quanta than its due share due to mechanical failures in two of 108 sluice gates. She accused Delhi of keeping her in the dark about this. This caused consternation in Dhaka. It also raised ire in Delhi. Nonetheless to mollify her, the Indian government appointed a team of experts headed by R.C. Jha, Chairman of the Central Water Commission, to examine her allegations. The Bangladeshis were not amused.

Dhaka-Delhi Relations Just as India’s domestic politics impact on its relations with Bangladesh, those of Bangladesh impinge in the way its attitude towards the larger neighbour is shaped. While Bangladesh’s previous Caretaker government had sought to put bilateral relations on an even keel for pragmatic reasons, few doubted the Awami League would undertake major initiatives in this regard. Sheikh Hasina was prudent enough not to rush things, and waited a year to visit India. But when she did so, a foundation to build upon was laid. Implementation of understandings was nonetheless slow, as they are wont to be, given the culture of suspicion that often tended to create impenetrable barriers despite the best intentions of both authorities. Much was placed in store by the greatly trumpeted return visit of Manmohan Singh who was to have been accompanied by the Chief Ministers of five Indian states bordering Bangladesh, including Mamata. The much heralded accord on the sharing of Teesta waters, and another on the enclaves were readied for signing. Expectations were naturally high. Then on the eve of the trip, Mamata cried off, refused to come, negated the water-sharing accord, and rendered the entire visit a damp squib. She is now also bent on ensuring that whatever was signed, such as the agreement on the exchange of enclaves, also does not make any headway in being carried forward. All this put the Bangladesh government, in cricketing parlance, on the back-foot. The fiercely free media in that country, both printed and electronic, began to play merry hell with all policy decisions perceived to be disproportionately favouring India. The grant of transit was one such. Though some experts endeavoured to explain that it would earn Bangladesh ample revenues, and also bring in investments to improve the poor communications infrastructures, much of public opinion was un-persuaded. Unsurprisingly, making a point to advance preelection popularity (elections are due in 2014 and relations with India are bound to become a major debating point between the two main adversaries), Khaleda Zia before a huge and approving public gathering cryptically announced: “no water, no transit!” There is another issue that is feeding public wrath. It is the numerous killings of Bangladeshi civilians by Indian Border Security Forces (BSF) along the long borders, once described by the journal ‘The Economist’ as the “world’s bloodiest”. This, despite many assurances provided by Indian authorities that these would not recur. A 14-year-old Bangladeshi girl called Felani was shot dead some months ago, and recently the torture of a Bangladeshi peasant by some BSF members was recorded and aired, leading to white-hot anger in Bangladesh. This is not an issue on which the Centre could lay the blame on the States because the BSF reports to the Union Government. In February 2012 the Bangladeshi Home Minister Sahera Khatun raised the matter with Chidambaram. The outcome of the meeting, officially described as ‘successful’ will doubtless be keenly watched. The proof of the pudding will be in the eating. Meanwhile some angry Bangladeshi youth, unencumbered by niceties that constrain governments, took matters into their own hands and launched what they called a “cyber war’

aimed at official and commercial websites in India. In 10 days in February they hit more than 30,000 websites, including some they claimed to be ‘high value’ ones, defacing them with Bangladeshi flags, images of Bangladeshis killed or tortured by the BSF and lists of demands. Indians hit back in their own fashion. It was reported that Bangladeshis were aided by some Saudis, Malaysians and Indonesians, and the Indians by Israelis. Luckily, however, the damage was quickly brought under control, but not before it left a degree of bitter taste in the mouth on both sides. Such private warfare does not make for good inter-State relations. This is, on the whole, not a desirable state of affairs. In Bangladesh at least, the informed public is on such edge that every action by Delhi is put under the microscope for the most intricate dissection. For instance, recently, Delhi has nominated as its envoy a career official, who, though long on experience is short on rank (he is a Joint Secretary, which anyone with any familiarity with the complexities of the pecking-order of the South Asian official system, will be aware, is a middling official and not quite the bureaucratic brahmin, while his Bangladeshi counterpart, both suave and senior, carries the status of a Minister of State). Reaction among some opinion-shaping analysts writing in the Dhaka media was critical. There was appreciation, however, that no slight was intended, only that the existing extreme sensitivities were overlooked. Mercifully, however, the elevation of a Joint Secretary to the next higher, and more acceptable, designation of Additional Secretary is normally a seamless progression which is usually only a matter of time. Also it is likely to happen soon in this case. Happily, this non-issue then is bound to disappear. But the very fact that such a debate, which could easily baffle a non-South Asian, did take place is indicative of the current fragility, at least in public perception, of the ties! Particularly when the perfect relationship between two friendly powers is one in which envoys should be irrelevant! Historically, during the colonial period, the inhabitants of Eastern Bengal, now Bangladesh had never quite felt at ease with the middle class that dominated the-then Calcutta socially, politically and economically. This was the bhadralok (literally ‘gentlemen’), a Weberian status group, distinguishable by characteristics of dress, deportment, speech and culture from the common masses (the expression, though in vogue for decades, was introduced into the currency of serous sociological research by J.H. Broomfield in his book ‘Elite Conflict in Plural Society’). East Bengali Muslims were hardly represented in this group, and basically saw it, rightly or wrongly, as exploitative. Eventually, the 1947 partition facilitated the creation of a new bhadralok class in Dhaka who tended to nurture a sentiment of distrust towards their Calcutta forerunners. Contemporary Bangladeshis see in Mamata a bhadramahila (literally a ‘lady’) a female counterpart of the bhadralok of the classical mode sharing the same negative characteristics. Those championing Mamata ,on the other hand, view her as the modern version of Debi Choudhurani. This was a female warrior in the Bengali author Bankim Chatterjee’s 19th century classic novel of the same name, giving battle to the feringees or ‘foreign elements’, in that case the British, in this case Delhi-based rulers. That heroine, however, ultimately retreated into a life of demure domesticity, an unlikely transformation for Mamata anytime soon.

Conclusion The bilateral relations between India and Bangladesh are often driven by a mix of reason and passion. Into this cauldron also flow the dynamics and effects of domestic politics both within India and Bangladesh. The result is at times unintended negative consequences. These are further exacerbated by the mercurial temperament of the new actor on the scene Mamata Banerjee. Some may see her as merely championing the cause of her own State. But the lack of subtlety in doing so may bring short term benefits but long term harm, because Bangladeshi authorities may be compelled by reasons of political pragmatism, to retaliate. That could have nasty bilateral ramifications, and would erode, and might even evaporate, years of hard work on both sides. Visits between Dhaka and Delhi are unlikely to bridge the current divides, because both may be pushing open doors in each other’s capitals. It is not the number of meetings but the outcome that is important. The answer may partly lie in enhanced people to people contact. It is surprising that despite mutual cultural admiration between Dhaka and Kolkata, Bangladeshi electronic transmissions still cannot be accessed in that Indian city. Given the nature of their politics, mental and intellectual connectivity will need to either precede, or at least simultaneously accompany physical connectivity. All this will require much hard work, and deep innovative thinking. The constellation of forces for favourable relations is perhaps better now than ever before. Not to take advantage of it would be missing out on a rare opportunity. The cost of animosity is too great to contemplate. Bangladeshis feel that a greater responsibility for improvement of ties, under such circumstances, lies with the larger protagonist. Traditionally they see a variety of linkages with the Indian Bengal. Many fondly recall the fervent support that came from across the border during Bangladesh’s liberation war in 1971. And ponder. They see as apt to the situation the query posed in a very popular song by Dhanush, a South Indian, in Tamlish (Tamilian English). It asks: ‘Why this Kolaveri Di?’-meaning, ‘why this killer-rage, lady’?

.....

ISAS Insights No. 158 – 5 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

Quran Copy Burning in Afghanistan and the US ‘Exit’ Strategy Shanthie Mariet D'Souza1

Abstract The latest violent protestation in Afghanistan over the burning of the Holy Quran copies has a demonstrative effect. It has yet again brought to light the nature of the international intervention and the challenges of stabilising this war-torn country. While on the surface the incident appears to be a religiously motivated episode, a growing sense of anxiety and seething anger among a segment of the Afghan populace over other issues is being exploited by the Taliban and its allies in the wake of this incident. More importantly, this episode has raised important questions on the possibility of early international withdrawal and prospects for an effective transition of authority into the Afghan hands. The spate of violence and demonstrations that have erupted in Afghanistan over the issue of the Holy Quran copy burning (20 February 2012) has raised several important questions. What does explain the high level of violence this time around especially when reactions to previous such episodes have been relatively more muted or limited?2 What do these violent 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 are those of the author and do not necessarily reflect the views of the institute. Mr. Jones, the Florida pastor, caused an international uproar by threatening to burn the Quran copy last year on the anniversary of the Sept. 11 attacks. Among others, the overall commander of forces in Afghanistan, Gen. David H. Petraeus, had warned at that time that such an action could provoke violence in Afghanistan and could endanger American troops. Mr. Jones subsequently promised not to burn a Quran copy, but he nonetheless presided over a mock trial and then the burning of the Quran copy at his small church in Gainesville, Fla., on March 20, 2011 with only 30 worshippers attending. The act drew little response worldwide, but provoked angry condemnation in this region. In Afghanistan, thousands of protesters overran

acts signify? Who are the real instigators behind the protests and what are their motives? What does this portend for Afghanistan’s stability and the United States’ strategy in the near and long-term? It all apparently started with the Afghan cleaners discovering burnt copies of the holy book in a burn pit in the Bagram military base, north of capital Kabul. Despite the immediate public apologies issued by Gen. John R. Allen, NATO commanding general, and despite US President Barack Obama calling the incident a mistake, thousands of demonstrators gathered at the base. Afghan President Hamid Karzai has urged calm, saying that Afghans should not let the insurgents capitalise on their indignation to spark violence. Yet, the violence has spiralled. Protests have been reported from about half of Afghanistan’s provinces. In an escalation, there have been attempts to target American, United Nations’ or government sites. Attempts to storm military bases in Baghlan and Khost provinces turned violent and several protesters were shot. Demonstrations spread to Herat and Kabul.3 There are different perceptions on the levels and impact of violence caused by the present episode. While the street demonstrations captured instant media headlines, the depiction of the episode as religiously motivated was clearly overstated. More than just being an emotive issue, the present episode had less to do with religious sentiment of the Afghan people. It is a demonstration of the deep seething anger, anxiety and discontent among certain sections of the population over contentious issues like the use of force, night raids, civilian casualties combined with the prevailing sense of insecurity and lack of perceived progress among large segments of the Afghan populace. During discussions with the Afghans in Kabul early last month, it was evident that while the Afghans are disillusioned with the lack of progress (gap between raised expectations and tangible achievements on the ground) with the decade-long international presence, they want the international community to stay and help them stand on their feet and prevent the reversal of limited gains. The talks of the early withdrawal of international forces and the ongoing negotiations with the Taliban have not only raised the levels of anxiety but have also been exploited by various actors as they position and jockey for power in post-2014 Afghanistan. These levels of anxiety have been triggered by the Quran copy burning episode, with religion once again being used been a rallying point.

the compound of the United Nations in the northern Afghan city of Mazar-e-Sharif, killing at least 12 people. In previous instances, When a Danish cartoonist lampooned Prophet Muhammad, four people were killed in riots in Afghanistan within days in 2006. The year before, a media report alleging that guards at Guantánamo Bay, Cuba, had flushed a Quran copy down the toilet set off three days of riots that left 14 people dead in Afghanistan. Enayat Najafizada And Rod Nordland, "Afghans Avenge Florida Koran Burning, Killing 12, The New YorkTimes,(1April2011), http://www.nytimes.com/2011/04/02/world/asia/02afghanistan.html?pa ewanted=all. Accessed on 23 February 2012. Anger over the burnings led to the deaths of more than 30 Afghans during violent protests, as well as six US soldiers who were shot and killed by rogue Afghan security forces. "Copies of Koran were burned by mistake claims US investigation", Scotsman (5 March 2012), http://www.scotsman.com/news/internati onal/copies_of_koran_were_burned_by_mistake_claims_us_investigation_1_2153552. Accessed on 5 March 2012. 2

The negotiations with the Taliban constitute one such source of anxiety. As Americans claim that they have established contacts with the insurgents for peace talks in Qatar, various segments of the insurgency are aiming to outbid each other in order to secure a larger portion of the pie. Not surprisingly, most of the violence has taken place in areas dominated by the Hizb-e-Islami. Its leader Gulbuddin Hekmatyar is eyeing a major share of the peace deal. His connections with Iran are well known. Iran’s role in previous such episodes cannot be overlooked.4 There is very little clarity on the US strategy in Afghanistan. While it was more or less understood that it would pull out most of its troops from the war-torn country by 2014, the recent statement of US Defence Secretary Leon Panetta about withdrawal in 2013 has provoked widespread concerns. Panetta emphasis on the US military’s changing mission in Afghanistan to that of an advisory role has further added to the complexities and fragility of the Afghanisation of the security sector. Media reports of Panetta’s comments indicated that this meant US forces would further speed up their withdrawal from that country, when the White House is yet to make any such decision.5 As the debate inside US intensifies indicating a deep civilian and military divide over the time frame and numbers of troops to be withdrawn, the US has been embroiled in domestic politics and the presidential election campaign.6 Taliban thrives on its propaganda of driving the infidels (kafirs) out of the country. They lost no time in sending such messages. However, to a large extent, this issue of 'forced retreat' of the US forces from Afghanistan is being utilised by every possible power centre in Afghanistan in signalling and at the same demonstrating its capacities to inflict damage on a retreating army. By inciting higher levels of violent protests and depicting a weaker US position in Afghanistan, they seek to find a place at the negotiating table and in future power sharing arrangement. There is also something to reflect on for President Karzai as well. In the present instance, there were moments “when he seemed unsure whether he was supposed to play inciter,

Pastor Jones’ March 20 sacrilege and the April 1 massacre in Mazar has some interesting pointers. On March 24, simultaneously incendiary alarms emanated from Afghan president Hamid Karzai’s office, the Iranian government’s propaganda bureau in Tehran, and the Khomeinists’ Lebanese proxy Hezbollah. Afghanistan’s Tehran-allied Olama-e Shiia council marshalled the usual fist-shaking rioters to shout the usual slogans in Kabul. Terry Glavin, ‘Koran riots are about more than religious zealotry’, The Ottawa Citizen, (24 February 2012),http://www.vancouversun.com/opinion/columnists/Koran+riots+about+more+than+religious+zealotry /6206589/story.html. Talks with One Group Will Not Bring Peace in Afghanistan, Hezb-i Islami Says, Tolo News, Kabul, ( 20 February 2012) http://tolonews.com/en/afghanistan/5417-talks-with-one-group-will-notbring-peace-in-afghanistan-hezb-i-islami-says. Accessed on 21 February 2012. Ronald E. Neumann, "U.S. troops will remain in Afghanistan beyond 2014", The Washington Post (20 February 2012), http://www.washingtonpost.com/opinions/us-troops-will-remain-in-afghanistan-beyond2014/2012/02/13/gIQA3lxFOR_story.html. Accessed on 28 February 2012. Amanda Terkel, Newt Gingrich To Afghanistan: 'Figure Out How To Live Your Own Miserable Life', The Huffington Post (27 February 2012), http://www.huffingtonpost.com/2012/02/27/newt-gingrich-afghanistanmiserable-life_n_1305337.html. Accessed on 28 February 2012. 3

consoler or victim”.7 On previous occasions, he has used the anti-American card to deflect criticism, gain popular support to boost his dwindling credibility or as a pressure tactic to accrue benefits. At a time of negotiating the US-Afghan strategic partnership, this mode of ambivalence could work to his advantage in increasing his bargaining power.8 The recent spate of violence, no doubt, has thrown the US transitional strategy in Afghanistan into a quandary. At a time, when the US and its allies are looking for an early exit and are in search of a political solution to end the long war, these turn of events has created new complexities. The 25 February killing of two US Army personnel by an Afghan within the secured complex of the Ministry of Interior9 and consequent withdrawal of all civilian advisers by NATO has further led to the deepening of the debate in the west. It has sharpened the debate in the US on the nature of the US assistance during the transition process (shift from fighting to train and assist mission) and seems to have strengthened the hands of those in Washington who argue for a faster reduction of U.S. troops. 10 Moreover, it has created a trust deficit between the Americans and their Afghan counterparts. Despite an American-led training effort that has cost huge billions of dollars,11 the Afghan security forces are still widely seen as riddled with dangerous levels of infiltrations, unreliable soldiers and police officers. 12 Moreover, the recent announcement to cut the size of the Afghan army and police to 230,000 by 2014 from 352,000 today to save a few billion dollars out of a federal budget of nearly $4 trillion will be detrimental in the long run. These turns of events are surely not 7

Terry Glavin, ‘Koran riots are about more than religious zealotry’, The Ottawa Citizen, (24 February 2012), http://www.vancouversun.com/opinion/columnists/Koran+riots+about+more+than+religious+zealotry/62065 89/story.html. Accessed on 25 February 2012 US Suspends Talks On Afghan Strategic Agreement, TOLO news, Kabul (4 March 2012), http://www.tolonews.com/en/afghanistan/5538-us-suspends-talks-on-strategic-agreement. Accessed on 5 March 2012. Shanthie Mariet D’Souza, The Emerging Faultlines of the US-Afghan Strategic Partnership, ISAS Brief No. 210.( 10 August 2011), http://www.isas.nus.edu.sg/Attachments/PublisherAttachme nt/ISAS_Brief_210_-_Email_-_The_Emerging_Faultlines_15082011115335.pdf. Accessed on 28 February 2012 Rahim Faiez and Amir Shah, "Afghanistan Violence: 2 Americans Killed At Interior Ministry, Officials Say", Huffington Post (25 February 2012), http://www.huffingtonpost.com/2012/02/25/afghanistan-natoofficers-killed_n_1300918.html. Accessed on 26 February 2012. Max Boot, Afghans Don't Hate America, The Wall Street Journal, (28 February 2012), http://online.wsj.com/article/SB10001424052970204653604577249363870929358.html?mod=googlenews_ wsj. Accessed on 29 February 2012. Since 2001 the US has spent $52 billion training and equipping the Afghan national security forces. Officials say that the majority of these costs were for start-up, and that future costs will be much lower – $5.7 billion in 2013 compared to $11.2 billion in 2012. Still, Afghanistan, with its $18 billion GDP, will be unable to cover the costs of security forces for quite some time. Mary Kaszynski, “Cutting veterans’ benefits to save the war budget”, Report of the Afghanistan Study Group, (16 August 2010), http://www.afghanistanstudygroup.org/NewWayForward_report.pdf. Accessed on 23 February 2012. About 70 members of the NATO-led force were killed in 42 insider attacks from May 2007 through the end of January this year. Some of these incidents have been carried out by Afghan security forces reacting to the recent Quran copy burning, some have been due to private grievances and others have been carried out by Taliban insurgents who infiltrated the security forces. Hamid Shalizi ,” Afghan army says Taliban infiltration very sophisticated”, Reuters, (3 March 2012), http://www.reuters.com/article/2012/03/03/us-afghanistantaliban-infiltration-idUSTRE82208H20120303. Accessed on 4 March 2012. Matthew Rosenberg And Thom Shanker, Afghan Uproar Casts Shadows on U.S Pullout, The New York Times (26 February 2012), http://www.nytimes.com/2012/02/27/world/asia/burning-of-korans-complicates-us-pullout-plan-inafghanistan.html?_r=2&pagewanted=all%3Fsrc%3Dtp&smid=fb-share. Accessed on 27 February 2012.

encouraging signs if the goal of building capable and independent Afghan security forces is to be actualised. The recent episode is indicative of the need for a rethink of the US exit strategy in Afghanistan. That the gains made in a decade of war are highly tenuous has been underlined by the current phase of protests and violence. Beyond narrow domestic political considerations and a re-election bid, the Obama administration needs to understand that the present strategy of announcements of early withdrawal and consigning this unstable country into the hands of recalcitrant insurgents through negotiations is bound to be counterproductive. If the goal of effective transition of authority to Afghan hands has to be actualised by 2014, these are signs that cannot be ignored. Ahead of the upcoming summit in Chicago in May this year, it is crucial to bring about clarity on the transition time tables and recast strategies.

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ISAS Insights No. 159 – 12 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

State Polls and National Echoes in India Ronojoy Sen1 Abstract The Congress was the biggest loser in the Uttar Pradesh (UP) elections. Its poor showing has come as a blow to the Congress’ prime ministerial aspirant, Rahul Gandhi, who led the election campaign in the state. It also showed up a campaign that did not send out the right message as well as the poor organization of the party at the grassroots. Though the big win of the Samajwadi Party in UP confounded analysts, it won on an anti-incumbency wave where the voters saw it as the only viable alternative to form a stable government. The national implications of the poll result are likely to be more assertive regional parties and policy gridlock.

It couldn’t have got much worse for the governing Indian National Congress party in India. When results to the five state elections (Uttar Pradesh, Punjab, Uttarakhand, Manipur and Goa) — dubbed a mini general election by some — was announced on March 6, the Congress had only one victory to show for in the tiny north-eastern state of Manipur2 and the possibility of forming the government in the hill state of Uttarakhand.3 The most crushing blow, however, for the Congress was in India’s largest state Uttar Pradesh (UP) — which not only has a population of around 200 million, but is also home to 8 per cent of the world’s poorest people — where it was not supposed to win, but was meant to be a litmus test for the scion of the Nehru-Gandhi family, Rahul Gandhi, who had concentrated his 1

2 3

Ronojoy Sen is Visiting 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 are those of the author and do not necessarily reflect the views of the institute. In Manipur, the Congress won 42 seats in the 60-seat Assembly. At the time when the results were announced, the Congress had won 32 seats and the BJP 31. Latest reports suggest that the Congress might be able to stake a claim to form government with the help of three independent legislators, a legislator from the Uttarakhand Kranti Dal (P) and three BSP MLAs.

energies on the state for the past few years. But for all of Rahul’s efforts and his vigorous campaigning during the election, the Congress won a mere 28 seats in the 403-seat UP Assembly, an increase of just six from its 2007 seat tally and a change of 3 percent in terms of votes from the last elections. But what was even more disturbing was the inability of the Congress to win a majority of the seats even in their pocket borough of Amethi and Rae Bareli, the two constituencies that Rahul and his mother Sonia Gandhi, the Congress president, represent in Indian Parliament. The Congress lost all five seats in Rae Bareli and won two out of five in Amethi, bringing into question the popularity of the Nehru-Gandhi brand. The reasons for the Congress’ poor showing are as complex as the state of UP with its multiple caste, class, religious and regional cleavages. But if it had to be boiled down to a couple of reasons they were: one, the Congress’ lack of organization on the ground, which has gradually eroded over the years, and an over-reliance on Rahul; two, the rejection of Congress’ negative campaign and its electoral promises such as quotas or reservations in government jobs and educational institutions for Muslims which did not wash with the electorate. If the UP result was a shocker for the Congress, it equally surprised most analysts who had predicted a hung verdict in the state. In the event, it was a regional party and the original frontrunner, the Samajwadi Party (SP), which won a thumping majority, the likes of which haven’t been seen in the state since 1977. The wide margin of victory for the SP, which won 224 seats (compared to 97 in the 2007 elections), and the abysmal performance of the governing Bahujan Samaj Party, whose tally plummeted from 206 to 80 seats, can be explained by a few factors. First, unlike in some states like Orissa, Gujarat, Bihar and, most recently, Punjab — to name a few — which have bucked anti-incumbency trends, the incumbent government in UP led by Mayawati had become unpopular due to several reasons, the primary being widespread corruption charges, inability to deliver on electoral promises as well as high-cost projects to build statues of the chief minister, other Dalit icons and her party symbol, the elephant. The SP, which has been a key player in UP politics since the early 1990s, was the best placed to reap the advantages of anti-incumbency unlike the national parties, which lacked the organizational strength. As the frontrunner it also promised stability that the other parties were unlikely to provide. Second, because of multi-cornered contests a relatively small percentage swing in votes can bring about huge changes in the number of seats won. Hence, a 3.3 percent vote advantage of the SP over BSP gave it 144 extra seats.4 Incidentally, in the last elections, the BSP had a 5 percent advantage over the SP but the difference in seat between the two parties was smaller at 109. Third, the SP had a relatively fresh face in Akhilesh Yadav, son of three-time UP chief minister Mulayam Yadav and a sitting member of Parliament, who seemed to have connected with voters. He cycled (the cycle is SP’s electoral symbol) his way across the state and was instrumental in putting together a slick ad campaign for this party with the tagline: “Umeed ki Cycle” (Cycle of Hope). His promise of a “cleaner” administration, despite SP’s poor track earlier, struck a chord with voters. He 4

The SP won 29.2 percent of the votes while BSP won 25.9 percent.

emphasized English education and use of technology as key to the state’s growth, something which his father and the old guard of the party had been antithetical to. Fourth, the Congress efforts to woo the Muslims, who constitute 18 per cent of the state’s population, by promising a quota for ‘backward’ Muslims seem to have backfired with the SP winning 65 of the 133 seats in UP which have a population of at least 25 per cent Muslims. Indeed, this time the UP assembly will have the most number of Muslims ever. Fifth, it seems that some of the core Dalit support base of the BSP, who constitute around 21 per cent of UP’s population, might have deserted it. A telling statistic is that of the 84 reserved constituencies for Scheduled Castes or Dalits, the BSP won only 17 whereas the SP won 54. And unlike the last election, Mayawati’s efforts of forming a coalition cutting across castes was not successful with her five-year tenure having alienated many of the upper castes as well as OBCs who felt she had been partial to Dalits, and particularly her own sub-caste, the Jatavs. The larger story of the election results, however, was not only the failure of the Congress but also the decline of its rival national party, the Bharatiya Janata Party (BJP), which scored 47 seats in UP, down four from the last election. Though the BJP had more reason to be cheerful since it convincingly won the coastal state of Goa and will form the government in the north Indian state of Punjab as a junior partner to the Shiromani Akali Dal, 5 these elections were a triumph of regional parties over the national. This trend has gathered momentum in the last two decades and does not bode well for both national parties in the next general election expected to be held in 2014. Several analysts have pointed out that the election result was a watershed verdict in that the parties which spoke the language of aspiration and development were rewarded, and the Indian voter had also shown great maturity in rising above identity politics. There is some substance to this since anti-incumbency has seen a decline in India. At the same time, too much should not be read into this verdict. Lest we forget, the SP was the same party that in its last term from 2003-2007 in government in UP had a terrible record with regard to law and order and practised the worst kinds of crony capitalism. Whether Akhilesh, who is going the next chief minister of UP, will be able to give his party a radical makeover and deliver on promises remain to be seen. The medium-term implications of the election don’t look good for India. The Congress-led federal government has been in a state of paralysis for the past several months, hit by corruption scandals and troublesome allies who have blocked most major policy initiatives. This election result makes the situation even more grim for the Congress which had hoped to play a decisive role in the formation of government in UP and pick up a pliant ally in the federal coalition. But now the Congress is condemned to bargaining with assertive regional parties for the rest of its term, making big-ticket reforms extremely difficult. The outlook for the Congress in the 2014 elections doesn’t look too bright at the moment. However, it is also true that people vote differently in state elections, which are dominated by 5

In Goa, the BJP and its allies won 24 seats in a 40-seat Assembly while in Punjab the BJP won 12 seats, which along with Akali Dal’s 56 seats, gave the alliance a majority in a 117-seat Assembly.

local issues, as opposed to national elections. So it would be foolhardy to make any predictions about the 2014 elections based on the results in UP and the other states. What is certain, however, is that difficult times lie ahead for the Indian government.

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ISAS Insights No. 160 – 13 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

Pakistan’s Baluchistan Problem Shahid Javed Burki1 Abstract A resolution tabled by Dana Rohrabacher, a Republican Congressman from California and with recent history of work against Pakistan, has suggested that the United States should lend support to the demand by some nationalists from Baluchistan to obtain independence for their province. These nationalists have been fighting the Pakistani state for decades. While the tabling of the resolution will not affect the American policy towards Pakistan, it has focused the attention of many in Pakistan on the country’s Baluchistan problem. The Baluch account for only 2.5 percent of Pakistan’s population of 180 million. However, they live in a sensitive area. Their province has borders with Afghanistan and Iran. A deep water port has been developed at Gwadar on the province’s Mekran coast that may provide access to the sea to China’s landlocked provinces in the country’s west. This paper suggests a number of steps that can be taken to address Baluchi resentment. Some of these have already been taken. These include the devolution of authority to the provinces by amending the constitution and by a near-doubling of the share of the province in the “divisible pool” – the resources mobilised by the federal government for use by the provinces. More needs to be done to bring in the Baluchi population in Pakistan’s expanding political space.

Baluchistan’s Past What is called Baluchistan today was not governed as a province by the British when they ruled India. The area was divided into a number of semi-autonomous princely states and an “agency” administered by an agent appointed by the government in New Delhi. Kalat was the largest state of the area. The then ruler, the Khan of Kalat, resisted joining Pakistan when the latter achieved independence in 1947. He seriously toyed with the idea of acceding to India, 1

an offer that was not accepted by Jawaharlal Nehru, India’s first prime minister. It took the threat of military action by the new government to obtain the state’s accession to Pakistan. The state’s ruling prince, the Khan of Kalat, went into exile. That is where his descendants live and lend support to the idea of creating an independent state of Baluchistan. In 1955, what is called Baluchistan today was merged with the other areas of West Pakistan to form an administrative unit called the “one unit”. This was done to introduce the concept of “parity” as a solution to Pakistan’s constitutional problem: how to balance East Bengal, by far the largest province by population, in Pakistan’s federation. There was hope that by dividing the country into two provinces – East and West Pakistan – and giving them equal representation in the national legislature the country could construct a durable political structure. It would provide balance in the planned political system. The hope was not realised. East Pakistan remained unhappy and ultimately left Pakistan to become the independent state of Bangladesh. West Pakistan’s smaller provinces – Baluchistan and Khyber-Pakhtunkhawa in particular – felt that they had lost the little bit of autonomy they had by being merged into a much larger administrative unit. West Pakistan’s capital was located at Lahore, close to a thousand miles from Quetta, the capital of Baluchistan. However, the concept of parity was the foundation on which General Ayub Khan, Pakistan’s first military president, built a new political structure by promulgating the constitution of 1962. The general, while aware that the smaller provinces were not happy with the arrangement, did little to assuage their concerns. In 1969 when the government of President Ayub Khan fell, his successor dissolved the “One Unit of West Pakistan” into four provinces including Baluchistan. It is Pakistan’s largest province in terms of area— 134,051 sq. miles or 44 per cent of the total. According to the population census of 1998, the province had eight million people equivalent to five per cent of the total. The rate of fertility is higher than the rest of Pakistan which means that the share in population must have increased to possibly 5.5 per cent of the total by 2012. This means that the province’s population is now close to 10 million. The ethnic composition has changed significantly. About 40 per cent of the population speaks Baluchi; another 40 per cent speaks Pashto while the remaining 20 per cent speak Brahui, Urdu and Punjabi2. Counting those who live outside the province, Pakistan’s Baluch population is about 4.5 million, or 2.5 per cent of the total. Gwadar, a deep water port built in the 1990s and the early 2000s with Chinese assistance, is now the province’s second largest urban centre. The port’s development work started on 22 March 2002 during the tenure of General Pervez Musharraf, Pakistan’s fourth military president. The first phase was completed three years later in March 2005 with the construction of three multi-purpose berths. The port is managed by PSA International, a subsidiary of the Port of Singapore Authority. While it has failed to achieve some of the goals spelled out by the administration headed by President Pervez Musharraf when its first phase was constructed, it now offers a viable alternative to the congested port of Karachi. Gwadar is

Government of Pakistan, Percentage distribution of households by language usually spoken and region/province, Pakistan Statistical Year Book, 2008.

also strategically located. It is close to the mouth of the Strait of Hormuz and offers the shortest route to the oil-rich but landlocked states of Central Asia. A system of highways is being built to connect the port with Karachi and also with the areas in the country’s northeast. The aim is to build an all-weather highway that would connect China’s landlocked provinces in the country’s west to Gwadar and thus to the sea. However, the Baluchi nationalists resent the development of the port having concluded that like the large deposits of natural gas in the province, it would benefit other parts of the country and not their own province. The nationalists believe that by attracting migrant workers from all over the country, the port is contributing to changing the demographic profile of the province. Quetta, the province’s capital, was built by the British as forward army post in the coloniser’s attempt to tame the wild west of their Indian domain. It housed a large contingent of the British Indian army. After Pakistan achieved independence, the military turned the city into a major cantonment housing the Army Staff College. At one time it was also the centre of the Electrical and Mechanical Engineers, the army’s technical arm. The city attracted a great deal of migrants from all parts of Pakistan. Punjabis arrived to take advantage of the jobs available in the public sector. For instance, Iftikhar Muhammad Chaudhry, the current Chief Justice of Pakistan’s Supreme Court is from Baluchistan but is of Punjabi descent. Pathans from the neighboring province of Khyber-Pakhtunkhawa came to provide labour for the construction of infrastructure in the province. The city now has a population of 2.5 million people, onequarter of the provincial total.

Insurgencies in Baluchistan Since Pakistan’s creation in 1947, Baluch nationalists have waged five insurgencies seeking greater autonomy and control over the province’s considerable resources – not just natural gas that was discovered in 1957 at a place called Sui and is the main source of fuel for industry and households in most of Pakistan. However, the gas took time to reach Quetta and other parts of Baluchistan. A vast network of pipelines managed by gas supply companies – Sui Northern Gas Pipeline and Sui Southern Gas Pipeline – radiate out from Sui and reach many distant parts of Pakistan. Baluchistan, however, is poorly covered. Since the companies are headquartered in Karachi, they have not provided many employment opportunities to the Baluchis with education and skills. The province also has large deposits of copper and gold. A copper mine at Sandak, near the border with Afghanistan, has brought a Chinese company to the area. Islamabad has responded to the Baluch insurgencies mostly with an iron fist. “In 1972, Zulfikar Ali Bhutto reinvigorated an army defeated by India in 1971 by sending it to quell the Baluchi uprising. Thousands died”, wrote Pervez Hoodbhoy, the nuclear-scientist-turnednewspaper-columnist in a comment on what has come to be called the Rohrabacher incident. (The incident is discussed below.) “In 2006 under General Pervez Musharraf the Army claimed the killing of 80-year old Nawab Akbar Bugti as yet another victory, saying this would end the insurgency. But it turned out otherwise, and Bugti’s murder was yet another thread torn loose from the unravelling national fabric. Vengeful Baluch nationalists now 3

target non-Baluch innocents and have murdered, among others, Punjabi and Muhajir teachers”.3 The latest rebellion has included fierce clashes between the Pakistani military and the underground Baluchistan Liberation Army, BLA. The government estimates that the most recent insurgency involves a force of about 1,300 battle hardened fighters who are engaged in skirmishes with the Frontier Constabulary. FC draws most of its manpower from the Pashtun population in the province. This has led to another ethnic dimension to the conflict. In fact, the state’s investment in developing the province has brought in a significant number of Pashtun workers to the province, many of them with experience of work in the construction projects in the Middle East. According to one assessment, the insurgents are killing the “poor labourers working on road and development projects because they say they don’t want any development projects in their areas, that they will develop the areas themselves after they’ve gained independence”.4

Baluchistan: The Rohrabacher Incident As reported in several American newspapers, “an inflammatory call by an American congressman for the secession of Pakistan’s largest province has sparked uproar in the country, injecting fresh complications into stalled efforts to restart relations between Washington and Islamabad. The furor stems from a non-binding resolution introduced Friday [17 February 2012] by Representative Dana Rohrabacher, Republican of California, which stated that the people of Baluchistan, a sprawling western province racked by a seven-year old separatist insurgency, should have the right of self-determination and to their own sovereign country”. The Congressman, who leads the House Foreign Affairs Sub-committee on Oversight and Investigations, “has a recent history of aggressive Congressional action against Pakistan. ‘They’ve constantly been a two-faced enemy of the United States’, he said in a telephone interview”.5 He had the support of two other members of his sub-committee – Louie Gohmert and Steve King – who joined him in co-sponsoring the resolution. The Congressman has a record of working against Pakistan. He has sought to limit American aid to Pakistan; he has suggested that Dr. Shakil Afridi, a Pakistani who helped lead the Central Intelligence Agency to Osama bin Laden should be given an American passport and Congressional Gold Medal; and he held a Congressional hearing on 8 February that included testimony from human rights groups and Pakistani experts. The sub-committee also heard from Ralph Peters, a former United States military officer, who in 2005 wrote a strategy paper that included a hypothetical map of an independent Baluchistan, drawn from parts of Iran, Afghanistan, and Pakistan. The Rohrabacher resolution was condemned by several senior Pakistani officials including Prime Minister Yusuf Raza Gilani, Foreign Minister Hina Rabbani Khar, and Sherry 3 4 5

Pervez Hoodbhoy, “Is Rohrabacher wrong on Baluchistan?” Express Tribune, 27 February 2012, p. 7. Cyril Almeida, Baluchistan, the unattributable story, Dawn, February 26, 2012, p. 7. Declan Walsh, “Fury in Pakistan after Congressman suggests that a province leave”, The New York Times, February 22, 2012, p. A4.

Rehman, the new Pakistani ambassador to the United States. As was to be expected it drew the support of the Baluchi nationalists, in particular those living outside Pakistan. Congressman Rohrabacher had help from Suleiman Daud, the current Khan of Kalat, who lives in exile in Cardiff, Wales. The hearing conducted by Rohrabacher’s sub-committee and the tabling of the resolution based on it resulted in two summons in seven days to Richard Hoagland, the U.S. charge d’affaires, by Pakistan’s Foreign Office. He was called in to convey Islamabad’s strong protests over perceived US support for Baluch separatists. But the protest against Rohrabacher was not confined to the Pakistani leadership and bureaucracy. According to one American newspaper report, “Pakistani leaders and the public exploded with anger, street protests and claims that the United States wants to dismember Pakistan. The resolution, though it had no force of law, stirred traumatic memories here of the 1971 secessionist uprising that led to the loss of East Pakistan and creation of Bangladesh”. 6 A visit to Pakistan by a US Congressional delegation provided an opportunity to express Pakistan’s anger and frustration. The delegation was led by David Dreier, chairman of the House Rules Committee. It was a sub-committee of this committee that was headed by Congressman Rohrabacher and had held the hearing that led to the presentation of the Baluchistan resolution. Initially the meetings with the Pakistanis “were very tense,” Dreier said in Islamabad but the anti-US rhetoric moderated after the visitors swore they did not support breakaway Baluchistan. “I want to convey to the people, and the government of Pakistan, that the US is committed to the sovereignty and territorial integrity of Pakistan”, Drier told the local media after the group met Thursday [23 February] with Prime Minister Yusuf Raza Gilani and offered him similar assurances. The visiting delegation also explained how the US legislative process works. The Rohrabacher resolution is among thousands of resolutions introduced so far in 212th Congress that started functioning in January 2011 following the elections of November 2010”7. There was no expectation that the tabled resolution would go any further.

What is the solution? Notwithstanding the aspirations of the really radical Baluchis and some of the US Congressmen, independence for Baluchistan is not a solution for the province’s problems. As Anatol Lieven wrote in his recent book on Pakistan, “if the Pathans of the province are stirred up against the Pakistani state, their latent tensions with the Baluch would also be awakened, above all concerning who should rule Quetta itself. Baluch nationalists who say that an independent Baluchistan would be prepared to let the Pathan areas break away to join a new Baluchistan fall very silent when you ask them what then will happen to Quetta. With Pathans against Pakistan and Baluch (and other Pathans), and Hazaras and others caught in the middle, that would have all the makings of a really unspeakable mess”.8

7 8

Richard Leiby, “U.S. delegation greeted with uproar in Pakistan”, The Washington Post, February 25, 2012. p. A10. Ibid. Anatol Lieven, Pakistan: A Hard Country, New York, Public Affairs, 2011, p. 342.

It is only with broad political and economic development that Pakistan will be able to placate those who have taken up arms to challenge the state. The state is much too powerful for the insurgents to stage a successful operation and achieve. However, the Baluchis’ resentment at having been left behind will need a concerted action by the state on several fronts – institutional, political, and economic. Some of the recent attempts to bring government closer to the people by transferring a significant amount of authority to the provinces are a step in the right direction. The eighteenth amendment to the constitution passed in the summer of 2010 has fulfilled the promise made to the smaller provinces at the time the constitution of 1973 was written. It was said then that they would be given rights and responsibilities to mind their own affairs. That would have satisfied some of the demands of the Baluchi nationalists9. The 18th amendment devolution followed those made in the formula for transferring financial resources from the centre to the provinces. The seventh National Finance Commission issued its award in November 2009, basing distribution not only on population as was the case in the previous six awards but on several other considerations as well. As the Institute of Public Policy wrote in its 2011 annual report, the 2009 award for the first time adopts “a revenue sharing formula for the divisible pool…to ensure that a degree of fiscal equalisation occurs through the inclusion of indicators like backwardness/poverty” to determine provincial shares. Under the new formula, Baluchistan’s share has almost doubled from those adopted by the earlier awards. It will increase from 5.3 percent in 1991 and 1996, to 5.11 percent in 2006, to 9.09 percent in 2009.10 At the same time an attempt should be made to bring the disaffected within the province by encouraging them to participate in the political and economic process. The moderate elements chose to stay out of politics in the elections of 2008. This created space for the more radical elements. In the next national and provincial elections due in the next one year those who opted out of the political process should be encouraged to join it.

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Shahid Javed Burki, “The 18th amendment: Pakistan’s Constitution Redesigned” ISAS Working Paper No. 112, 3 September, 2010, Institute of South Asian Studies, National University of Singapore. Institute of Public Policy, State of the Economy: Devolution in Pakistan, Lahore 2011, p. 90.

ISAS Insights No. 161 – 16 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

Change of Guard at Pakistan’s ISI: Some Implications Iftekhar Ahmed Chowdhury1

Abstract In Pakistan, appointments to senior staff positions in the military often tend to acquire disproportionate political importance. This is also the case with the incoming head of the awe-inspiring Inter-Services Intelligence (ISI), Pakistan’s principal spy agency, Lieutenant General Zaheerul Islam. He assumes office in March 2012. In direct contradiction of Clemenceau’s famous dictum, Pakistan is milieu where war is considered too important to be left to the civilians! The matrix that Islam will operate on is in constant flux, nationally and regionally. It will not be his responsibility to formulate state policies but given the prevalent culture of governance in Pakistan, he will certainly be in a position to influence, and even at times to shape, them. His contribution to strategy can be positive and constructive, depending on how dexterously he is able to play his cards in a challenging and scenario.

Introduction In most countries, military appointments, even to senior posts, are generally considered routine. They rarely generate discussions. They may merit media attention but ordinarily not academic analyses. Not so in Pakistan. In that country these are scrutinised with great care. Not just by its citizens, but also by foreigners who have interest in that volatile land. Their 1

numbers are legion. For, Pakistan is high in the pecking order of interest of most analysts of contemporary global politics. It is one of the world’s largest Muslim countries. It is strategically located in one of the most troubled parts of the planet. Violence, even of extreme nature, is of regular occurrence in that turbulent democracy. Its institutions of governance are woefully fragile. Yet, it is militarily one of the strongest powers that exist, with a rapidly expanding nuclear arsenal, and an army that is both large and proud. Sometimes though, it is hard-pressed to find feathers for its caps (or berets). Its combat credentials have not always been remarkable. Yet politically and traditionally, the proverbial ‘man on horseback’, the soldier, remains powerful. And the most powerful component among them is the aweinspiring Inter-Services Intelligence, the ISI, the principal spy agency. That is why the recent placement at its head of Lt General Zaheerul Islam attracts such attention and provokes examination. He is due to assume office on 18 March 2012.

The Appointee’s Background Lt General Zaheerul Islam’s background is impeccably military. He has been the immediate past Corps Commander of Karachi. This position is usually reserved for the army chief’s confidant. Also, for someone with a commendable professional record. One would expect, therefore, a degree of closeness between him and the Chief of Staff Ashfaq Parvez Kayani. While the appointment of the Director General of the ISI is made by the Prime Minister, one would have to be naïve to believe that this can be done without the active consent or even without nomination by the Chief of Staff. Moreover, while Gen Islam will formally report to Prime Minister Yusuf Raza Gilani, it is a safe bet that Gen Kayani will always be kept informed of all such communications. So the departure of Lt General Ahmed Shuja Pasha, and his replacement by Islam is not to be construed as an erosion of power of the Chief, or as the accretion of strength to the Prime Minister. Most things will remain the same. Islam comes of an intensely military family. His father was a Brigadier General in the Pakistan Army. One of his uncles was the near-legendary Shah Nawaz Khan of India, a general in Netaji Subhas Chandra Bose’s Azad Hind Fauj, aka the Indian National Army. As is well known, Bose wanted to liberate India from the British during the Second World War by force with aid and comfort from the Japanese. He assumed that the end would justify the means. But Mahatma Gandhi and Pandit Nehru preferred the British to the Japanese. Indeed, Nehru did not allow Shah Nawaz Khan and others of his ilk to rejoin the Indian Army when he was Prime Minister of the Dominion of India, and, as some have argued, still somewhat chary of cutting loose the British connection in its entirety. But the Indian people reacted differently, and returned Shah Nawaz Khan to the Parliament no less than four times. But the two, Khan and Islam, had never met. Also reported in the media now was a possible familial link between Islam and the King of Bollywood, Shah Rukh Khan. The Pakistan Army denied it in decent haste. Some believe though, were it a fact, political bilateral relations would have been better served. 2

On a Sticky Wicket In cricketing parlance, the wicket Islam is being sent in to bat on could not be stickier. In the best of times, the ISI chief confronts a stupendous task. At present, the difficulties are immense. At home, the civilian masters have grown deeply suspicious of the military in general and of the ISI in particular. And Pakistan’s American friends, if they can at all be described as such these days, are getting increasingly wary. These make for huge complexities. However, from some key quarters there are more pleasant signals. The Indians have wisely kept themselves aloof from any of the many intramural feuding in the Pakistan government, and the Chinese as a rule are non-interfering, offering ‘all-weather friendship’ to all and sundry in Pakistani politics. Pasha, named by the Time magazine recently as one of the world’s 100 most powerful figures, should have heaved a sigh of relief at being reassigned, though the pang of parting from this office may have been palpable to his own person. In Pakistan, old soldiers never die, as the saying goes: but nor do they simply fade away, by the same token. They are usually transferred to another post, uniformed or otherwise. Luckier among them land themselves plum ambassadorial posts (Lt General Asad Durrani, for instance). Some others choose to be political activists or strategic commentators (one such, of somewhat fiery reputation, is Lt General Hamid Gul). Of the 17 Generals who have headed the ISI since its founding in 1959, only one has made it to the top in the Army; he is none other than Kayani himself. No one has been a head of State. So, from lessons of the past, undue ambitions, if any, on the part of the incumbent would not be warranted. Only for a job done well there may be a cushy reward at the end, but nothing overly attractive.

The Task Ahead Any chief of ISI is likely to have the Sword of Damocles hanging above his head. Pasha, for instance, was sharply criticised for failing to detect the American raid on Abbottabad that killed Osama bin Laden last year. Or for failing to discover in the first place that Osama was living in Abbottabad under the Army’s very nose (or had he known it and kept it secret?) For these the Parliament had put him on the carpet, and he had reportedly offered to resign. The Prime Minister might not have acted then, but would have taken note. Pasha was also suspected of having travelled to the Gulf countries to seek their support for a coup, an unlikely accusation. Then, though it could not have been his responsibility, 24 Pakistani soldiers were killed in a US-led operation during which the Pakistani side was bewilderingly passive. The Army was taking a lot of flak, and a major change was apparently called for. Pasha’s retirement date fell due, and not to renew his services would have seemed an advisable course of action without ruffling too many feathers. Islam was ready and much like Barkis in David Copperfield willing, with the right connections. There were other aspirants, as is wont to happen in such cases. One such was Major General Sahibzada Isfandiyar Ali 3

Khan Pataudi (of blue blooded feudal lineage, a scion of that Indian Princely family). But Islam had a higher military rank and greater experience, and became the chosen one. Islam has his work cut out for him. He will endeavour to gain back for the ISI the confidence of the countryâ&#x20AC;&#x2122;s civilian, though some will say nominal, rulers. He is likely to remain in office till October 2014 when he is due to retire. This means he will see through the next elections, and almost certainly changes in political governance. The Americans have always proved a challenge for the ISI chiefs. While Pasha was at least generally acceptable to Washington, and often liked, his predecessor Lt General Nadeem Taj had very testy relations with the US. It saw him as being in cahoots with extremists (though it is not easy for any ISI head to evade this perception, as indeed it was not so for Pasha, and nor will it be so for Islam). Right now the Americans are in the throes of a deep crisis in Afghanistan, the latest being the burning of copies of the Holy Quran and the mindless shooting spree of a rogue soldier. By such actions they have well and truly shot themselves in the foot. Consequently, they are likely to leave that country sooner than later. So how does Pakistan position itself in that unruly land? Since much of the Pakistani public see the West as a bigger threat, is it, somewhat ironically, a good time to mend fences with India? Recently in Singapore the Indian Foreign Minister S M Krishna has stated that India-Pakistan wars are facts of the last century; the present has brought with it promises of change of mindset. He spoke glowingly and warmly of his past and anticipated interactions with the new Pakistani Foreign Minister, Ms Hina Rabbani Khar. These are heartening sentiments. How can one take positive advantage of such changing moods?

Conclusion This is the matrix on which the new Director General of ISI will operate. He will himself not formulate policies with regard to any of these issues. But he will doubtless be in a position to influence them. His contribution is likely to come, drip by drip, on a daily basis, in a tactical fashion, but eventually feeding into the stream of strategy. It is not always easy to drink the intoxicating draught of authority and yet keep a steady head. The French statesman Georges Clemenceau had said that war was too important to be left to the generals. In Pakistan, the exact opposite is felt to be true: war is seen to be too important to be left to the civilians and is expected to be conducted by generals. Yet even here, things may be in a state of flux, changing, albeit ever so slowly. Gilani of late has shown courage and commitment in facing up to the courts and critics. In any State every citizen has the opportunity to contribute to the shaping of the nationâ&#x20AC;&#x2122;s destiny. For Gen Islam it will be much more than that of an average citizen. One hopes that his contribution will be constructive and positive and point towards calm, and stability.

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ISAS Insights No. 162 – 2 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

Pakistan’s Political Transition: One More Step Forward Shahid Javed Burki1

Abstract On 26 April 2012, Pakistan took one giant step forward in its long struggle to erect a political structure supported by a legal system in which citizens have full confidence. That will happen when the people’s elected representatives can exercise full authority and when there is respect for the rule of law. On that day, as helicopters hovered over the imposing structure that houses the senior judiciary, the Supreme Court decided to hold Prime Minister Yusuf Raza Gilani guilty for having committed contempt of court. The much anticipated verdict by the court was delivered not by a bench headed by Chief Justice Iftikhar Mohammad Chaudhry who has shaken up the Pakistani political system on more than one occasion. This time the sentence was read out by Justice Nasirul Mulk, presiding over a bench of seven men. (No woman is a member of the 19-man Supreme Court.) How will this verdict affect the political development of Pakistan? This “Insight” maintains that the decision to hold the prime minister to account – for contempt of the court – has enormous implications for the development of the Pakistani state.

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 has served as Finance Minister of Pakistan and as Vice-President of the World Bank. 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 the Institute.

The National Reconciliation Ordinance Pakistan’s political development hit yet another speed-bump as a result of the involvement of the Supreme Court in the National Reconciliation Ordinance case. The NRO was passed in 2007 by the then President Pervez Musharraf as a part of a deal with political leader Benazir Bhutto and her husband, Asif Ali Zardari. This effort at reconciliation was sponsored by the United States and Britain. The Western powers wished to move Pakistan towards a democratic system of governance. The idea was that the highly popular Bhutto, who had twice served as prime minister, would return to the country from exile, contest and win the elections scheduled for January 2008, and keep General Musharraf as president but with vastly diminished authority. Such a political order will not only have the support of the citizenry. It will also bring to office a regime that would be able to direct the military to give up on its India obsession and concentrate on battling the non-state actors who were mounting lethal attacks on the NATO and American forces fighting in Afghanistan. These attacks were launched from the sanctuaries in Pakistan’s tribal agencies. Rapprochement between Benazir Bhutto and President Musharraf, therefore, was critical for the American effort to defeat the Taliban in Afghanistan2. But bringing Bhutto back to the country meant wiping her slate clean. There were pending cases of corruption against the former prime minister, her husband Asif Ali Zardari and hundreds of people who had worked in various capacities with the couple when they held the reins of power. The NRO was promulgated as a part of the plan to give the couple a new start. The rapprochement depended on forgiving hundreds of officials who had worked under Bhutto while she was prime minister. But the plan did not work. The Taliban, perhaps fearing something like that was in the works, assassinated Bhutto on 27 December 2007 after she had addressed an election rally in Rawalpindi, a city next door to Islamabad, the capital. The elections were postponed by a month; held in February 2008, they produced a hung parliament with Bhutto’s Pakistan People’s Party winning the most seats but not a majority. In Bhutto’s absence, the PPP now under the chairmanship of Zardari, her widower, did not have the political and moral authority it would have possessed had Bhutto been alive. In March the PPP chose Yusuf Raza Gilani, a minor political figure from central Punjab, to lead a coalition of parties as prime minster. Gilani’s choice was to give more room to Zardari to operate the Pakistani state even though he was the head of the state in a parliamentary system of government. But he could rely on the powers that were bestowed on the president by the 17th Amendment to Pakistan’s Constitution inserted by then President Musharraf as a part of his plan to allow some authority to the people’s elected representatives.

This story is well told in Ahmed Rashid, Pakistan on the Brink: The Future of Pakistan, Afghanistan and the West, London, Allen Lane, 2011.

It took Zaradari another six months to get President Musharraf to give up his office. In this effort he aligned himself with Pakistan Muslim League (Nawaz), the second largest party in the National Assembly, but with control over the government in Punjab, by far the largest province in the country. The PML(N) was led by Mian Nawaz Sharif who, like Benazir Bhutto, was also twice Pakistan’s prime minister. He bore a deep grudge against President Musharraf since his second tenure was cut short by the general in October 1999. Musharraf, after forcing Sharif from power, instituted a case against the deposed prime minister that could have resulted in a long jail term. But a deal was worked out with the help of Saudi Arabia. Sharif chose exile over imprisonment and also agreed to give up politics for a period of 10 years. After Musharraf’s resignation, Zardari managed to get himself elected president but he surprised the opposition by showing no hurry to rid the Constitution of the 17th Amendment that would have turned him into a head of state with few executive powers. That was the intention of the Constitution of 1973 before it was disfigured by the 8th amendment passed at the urging of President Ziaul Haq and the 17th amendment by General Musharraf. Zaradari was also inclined to have a tame judiciary in place—certainly not the one headed by the strong-willed Iftikhar Mohammad Chaudhry who had refused to resign when asked to do so by President Musharraf. This was the beginning of the chain of events that included a movement by the legal community to restore Chaudhry and his colleagues to the Supreme Court. Ultimately, Zardari was pressured on both counts: he agreed to the passage of the 18 th Amendment that restored the Constitution to its original form and also accepted the demand of the “Pakistani street” to bring Chaudhry back to the Supreme Court as its Chief Justice. However, the ever-innovative Zardari kept most of the executive authority in his hands by remaining the Chairman of the PPP and by opting for a politically weak prime minister. Initially the military did not lose its authority. But by extending the term of office of General Ashfaq Pervez Kayani by three years, from 2010 to 2013, he was able to secure the tacit support of the head of the armed forces. It was in this political situation that the Supreme Court stepped in and disturbed the applecart by declaring the NRO unconstitutional. With the NRO taken off the books, the court wanted the reopening of all the corruption cases which were deemed closed in the NRO context. Included in these was the case against Benazir Bhutto and Asif Ali Zaradari that was filed by the Musharraf regime in a court in Switzerland. The couple was accused of stashing away tens of millions of dollars in a Swiss bank. This amount was alleged to have been paid by a Swiss company in return for winning a large contract in Pakistan during Bhutto’s second tenure in office. The court ordered the government to write to the Swiss authorities to reinstitute the case. The government under Gilani demurred and the Supreme Court began contempt proceedings against the prime minister. The proceedings lasted for months. The first judgment came on 26 April 2012.

The Verdict In giving its ruling about the prime minister, the Pakistani Supreme Court said that it was satisfied that “the contempt committed by him is substantially detrimental to the administration of justice and tends to bring this court and the judiciary of this country into ridicule.” The court promised a longer judgment to be provided later. For the moment it said “that the accused, Syed Yusuf Raza Gilani, Prime Minister of Pakistan/Chief Executive of the Federation, is found guilty for contempt of court, under Article 204(2) of the Constitution of Islamic Republic of Pakistan, 1973, read with Section 3 of the Contempt of Court Ordinance (Ordinance 5 of 2003) for willful flouting, disregard and disobedience of this court’s direction contained in Paragraph Number 178 of the judgment delivered in the case of Dr. Mubashir Hasan versus the Federation of Pakistan”3. At first glance, it appears that the court displayed leniency towards the offending prime minister. It was generally believed that Gilani will be made to serve a six-month term in jail. This was something the prime minister was himself expecting. But the court took a different stance: “As regards the sentence to be passed … we note that the findings and the conviction for contempt of court recorded above are likely to entail some serious consequences in terms of Article 63(1) (g) of the Constitution which may be treated as mitigating factors towards the sentence to be passed against him. He is, therefore, punished under Article 5 of the Contempt of Court Ordinance (Ordinance 5 of 2003) with the rising of the court today.” Since the court rose 37 seconds after announcing the judgment that was the amount of time served under “detention” by the prime minister. But there was agreement among most legal scholars that it was not the length of the detention that was of interest to the court but the “serious consequences” that will ensue from it. The court did not spell out what was meant by the “serious consequences” – at least not in the “short order”. It was the use of the 2003 Ordinance that immediately drew the attention of the legal scholars. “For an astute politician like Prime Minister Gilani, a few months or even years in jail are part of the job description” wrote Zahid F. Ebrahim, a lawyer in a newspaper article. “In fact a prison sentence now would have held him in good stead – political martyrdom is an investment to encash when it comes to the next polls. However, the consequence of coming under the purview of Article 63 (1) (g) of the Constitution is much more lethal as the Supreme Court has suggested”4. It would disqualify the prime minister not only from his current position but bar him from holding public office for five years. 3

Dr Mubashir Hasan was one of the founding members of the Pakistan Peoples’ Party and had served as the Minister of Finance in the first cabinet headed by Prime Minister Zulfikar Ali Bhutto from 1972 to 1974. He filed a case in the Supreme Court challenging the constitutionality of the National Reconciliation Ordinance issued by President Pervez Musharraf in September 2007. The Supreme Court’s decision in that case is reported in Pakistan Legal Decisions. Zahid F. Ebrahim, “Why didn’t the court jail the prime minister?”The Express Tribune, 27 April, 2012, p. 3. Also see Amir Wasim, “PM’s conviction generates debate on legal issues”, Dawn, 27 April, 2012, p. 3.

There was pressure on the prime minister to resign and not let the matter drag on for months. But more sober experts on the matter were inclined to let the matter run its course, thereby strengthening the legal foundations of the state. As one legal expert wrote, “once an order is passed by the Court it becomes binding on everyone it is addressed to, the legal flaws in the judgment are a ground for an appeal, not refusing to comply. However, it might also be useful to remind ourselves that courts draw their legitimacy and authority from the Constitution and equally significantly from a perception of fairness”5. The Chaudhry court’s extreme caution in dealing with the Gilani contempt case was attributed by some analysts to a tussle between the “hawks” and the “doves” sitting on the bench. The Chief Justice is a consensus man and does not want split decisions. According to newspaper Dawn’s Cyril Almeida, the doves are for accepting “the limits of judicial power and [for] dropping the matter or else run the risk of system collapse”. The hawks on the other hand are “for violating their oaths of office by defying a categorical order of the Supreme Court, chucking out Prime Minister, Zardari and the law minister from politics forever”6. The court opted for the mid-course, indicating that it anticipated serious consequences once its orders were fully carried out. The carrying out, however, will have to be the parliament’s responsibility.

The Verdict’s Aftermath The Constitution and the Contempt of Court Ordinance were clear as to the process that needed to be followed once a member of parliament was convicted of contempt. The first step was for the convicted member to decide whether he or she would file an appeal against the conviction. For that to happen, the court had to issue a full rather than a “short order” as was done by the Supreme Court in the case of Prime Minister Gilani. Within 30 days of the conviction including the decision on the appeal if one were filed, the Speaker of the National Assembly was required to refer the case of the offending member to the Chief Election Commissioner. The speaker would give his or her – in the current case “her” since the office was currently occupied by Dr. Fehmida Mirza, female legislator from the province of Sindh – opinion on the case. The power to unseat the member was with the Chief Election Commissioner, to whom the speaker had to refer the case. If the process were to be strictly followed, it could take months before the prime minister could be forced out of office. That was the strategy the PPP decided to follow in case an unfavourable judgment was given by the Supreme Court. Right after the short order was issued, Aitezaz Ahsan, the council for the prime minister, announced his intention to appeal the decision to the Supreme Court which would have to constitute another bench to deal with the challenge. The government 5 6

Saroop Ijaz, “Should the heavens fall?” The Express Tribune, 29 April, 2012, p. 7. Cyril Almeida, “Appeasing the hawks”, Dawn, 29 April, 2012, p. 7.

was inclined to use all means at its disposal to delay the case from reaching its logical conclusion: the departure of Prime Minister Gilani. On 28 April 2012, two days after the short order was passed, Law Minister Farooq Naek held a press conference and announced that his party was inclined to move a privilege motion against an official of the Supreme Court for having written to the National Assembly and the Chief Election Commissioner to take “further necessary action”. This move went beyond the power of the court, the minister maintained. He took the position that the Parliament under the Constitution was supreme while the role of the court was confined to facilitating the implementation of the parliament’s acts and orders, not directing the officers of the legislative body to carry out its wishes. “If the Supreme Court decides to disqualify Prime Minister Yusuf Raza Gilani, the government will be ready to comply with all its orders” he assured the press and through it the people7. But in Pakistan there was no tradition of going by the book. The opposition was not prepared to give the prime minister and his political party the amount of time that they were inclined to take. Rather than allow the law to run its course, the PPP adopted a confrontational approach in response to the Supreme Court verdict. A day after the court announced its decision, the prime minister returned to the National Assembly as the opposition walked out of the chamber. He told the House that he would not cede his position as prime minister unless the parliament disqualified him from holding that position. But the opposition was not in favour of giving the prime minister any time. “The prime minister should immediately step down without prolonging the crisis, dissolve the national and provincial assemblies and hold fresh polls” advised Mian Nawaz Sharif, president of the Pakistan Muslim League (Nawaz). He threatened to launch a movement if the prime minister chose to take the slow track. Similar sentiments were expressed by Imran Khan, a rising star of Pakistani politics and the president of Pakistan Tehrik-e-Insaf8.

Conclusion The move by the Supreme Court of Pakistan should be viewed in the context of the political developments taking place in many parts of the Muslim world. Several large Muslim countries are going through a second thaw after the Arab Spring of 2011. Now many large countries, having dispensed with rule by military autocrats, are engaged in developing legal and political systems not dictated by religious ideology but by the demands of truly democratic societies. This transition is occurring not only in Pakistan but in several large Muslim countries including Egypt and Turkey.

7 8

Ahmad Hasan, “Govt objects to SC move in Gilani case”, Dawn, 29 April, p. 1. Amjad Mahmood and Ahmad Hasan, “Nawaz, Imran ask Gilani to step down”, Dawn, 27 April, 2012, p. 1.

In Egypt, there are two on-going struggles: between the remnants of the political order from the days of President Hosni Mubarak and the developing political establishment and also between people espousing different ideologies. In Turkey where the process of political development has advanced the most in the Muslim world, the conflict between the powerful military establishment and a political party with Islamic roots has been settled in favour of the latter. The Islamic party has now ruled for more than 10 years and through its conduct while in office has demonstrated that it can operate a political system that separates faith from governance. This interpretation of a political system is acceptable to the majority of the population. Pakistan has also been waging several battles. These have pitted ordinary citizens against some non-state actors who wish to establish an Islamic caliphate by destroying the political order before it has the time to establish itself. At the same time the Pakistan Peoplesâ&#x20AC;&#x2122; Party is battling with the judiciary in suggesting that a political system in which peopleâ&#x20AC;&#x2122;s elected representatives can and should govern without constraints is the only one that suits the country. While engaged in this quarrel, the party under President Asif Ali Zardari has succeeded in confining the military to the barracks. What appears at this stage in the political evolution of the Muslim world is that most countries that are engaged in developing systems that will suit their situations will be able to devise orders in which Islam will have a role to play in defining some aspects of governance, the military will be kept at bay, the judicial system will keep watch on the people given the responsibility to govern, and ordinary people will be prepared to use the power of the street and the public square to keep check on the ruling establishment.

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ISAS Insights No. 163 – 3 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

Bhutan: Shades of ‘Shangri-La’ in a Haven of ‘Happiness’ Iftekhar Ahmed Chowdhury1

Abstract Bhutan conjures up in the mind’s eye idyllic images of a ‘Shangri-La’. In line with this fairy tale perception, it has sought to propagate the concept of Gross National Happiness as a serious index for measuring development. However, there is today a realization in that country that idea-label needs to be matched by performance. Changes are afoot in its politics, economics, and international relations. Cautious reforms on these fronts including modernizing initiatives are rapidly rendering this tiny Kingdom into ‘everywhere else’. So, while ‘Shangri-La’ does not exist in reality, myths continue to remain a driver of human destiny, as the example of Bhutan amply demonstrates.

Introduction The idea of ‘Shangri-La’ is owed to a fiction authored by a British writer James Hilton in the early 1930s. In the book titled ‘The Lost Horizon’, Hilton describes an exotic mythical utopia in the Himalayan mountains of Asia, where harmony and happiness reigned supreme2. The novel inspired a longing for such an earthly paradise, which appeared far too distant from reality in a world that had recently experienced what was one of the bloodiest conflicts in the 1

First Great War and was hurtling inexorably towards the Second, with Nazism and Fascism digging their claws into many a European society. The concept of such a peaceful haven continued to linger into our own times, which had also seen a huge number of wars, both cold and hot. It is to the credit to the rulers of Bhutan, who took advantage of these nostalgic sentiments, and crafted the concept of ‘gross national happiness’. This was done as a brand for their tiny Kingdom, of 46,500 sq km and 900,000 people (though estimates vary, depending on sources!), which nestles near the ‘roof of the world’ between two mighty neighbours India and China. Indeed, in 2006 Business Week rated the Kingdom as, first, the ‘happiest’ country in Asia and, second, eighth happiest in the world3. Bhutan’s leaders were consequently left with a clear and palpable challenge: to retain their position at the peak in the first, and improve on their ‘pecking-order’ in the second. They appear to have decided to meet it in real earnest and with great enthusiasm.

Gross National Happiness Defined The term ‘Gross National Happiness’ (GNH) was coined by King Jigme Singye Wangchuk, the present monarch’s father, in 1972. It was he who had opened up Bhutan, till then a secluded State heavily reliant on India for its protection and security by a Treaty signed in 1949. Initially viewed as a casual remark, the GNH ringed genuine in terms of an aspiration to combine the country’s unique culture of Buddhist values with the goals of socio-economic development. This royal-speak, however off-the-cuff, was carried forward by the Centre for Bhutan Studies which, with a modicum of external intellectual assistance, converted it into a sophisticated instrument of social survey to measure well-being. It implied a holistic approach towards progress based on both economic and non-economic factors. The concept of GNH was based on four pillars: good governance, sustainable socio-economic development, cultural preservation, and environmental conservation. These were further classified into a number of domains to reflect the totality of its range. These included psychological well-being, health, education, time use, cultural diversity, resilience, and living standards. A GNH Index was developed from 33 indicators, categorized under these domains, based upon a robust multi-dimensional methodology known as the Alkire-Foster method4. This was now serious business. The Bhutanese leadership wished to ensure that not just Bhutan but also the world took note. Prime Minister Jigme Thinley, who had once served as Ambassador to the United Nations in Geneva, wisely perceived in it a useful tool to raise Bhutan’s international profile, and became an ardent advocate5. 3 4 5

Issue of 10 November 2006. See, Bhutan GNH Index. http://www.grossnationalhappiness.com/articles/ Retrieved on 30 April 2012. www.youtube.com/watch?v=g23-dNpttUU, 16 February2010. Retrieved on 30 April 2012.

Happiness at the UN It was decided both the word, and the happiness, must be spread globally. What better forum was there to begin to do this than in the General Assembly of the United Nations, the ‘Parliament of Man’ itself6? In the meantime some positive political developments within Bhutan had attracted favourable global attention. In 2006 the then King Jigme Singye Wangchuk abdicated in favour of his son Jigme Khesar Namgyel who was crowned in 2008. By then elections had been held in the Upper and lower houses of Parliament, giving Thinley’s Druk Phuensum Tshongpa (DPT) a resounding majority, making him Prime Minister. A ‘Himalayan Spring’ had quietly but starkly been effected in those mountain ranges. So the time was now ripe for spreading some of this happiness around the world. It was decided to test the waters for an appropriate resolution at the United Nations. It would be a ‘non-binding’ one that would render happiness a ‘development indicator’. Initially there was some understandable scepticism, given the fact that the stoic UN diplomats often tend to be irreconcilably pragmatic. There was still too much of an idealistic aura around the concept. But with a bit of a helping hand from India, with which Bhutan always coordinates foreign policy initiatives ( a small price for India to pay to humour a trusty and perennial ally!), the draft resolution collected as many as 66 cosponsors, a remarkable number by all counts, including the more worldly UK representatives. As a result the resolution was enthusiastically adopted in 2011. Ambassador Lhatu Wangchuk of Bhutan, in a somewhat simplified Aristotelian fashion, argued that wars and disputes do not indicate happiness or otherwise, and are caused by egos and interests of leaders, stressing the importance of ‘dreams, sleeping time, and time with families’, points that, like motherhood, aroused no negative opposition from any quarters7. Having a g flagship resolution of this kind under its belt was no mean achievement for tiny Bhutan’s burgeoning multilateralism.

Less Happy Backyard But alas, there was less happiness in parts of its own backyard. In the late 1980s, a “one nation, one people” campaign, leading to a “Bhutaninization’ programme, resulted in a large number of people of Nepali origin, known as ‘Lhotshampas’ fleeing Bhutan. Originally, the refugees numbering well over 100,000 were housed in seven camps in eastern Nepal. But due to UN High Commissioner for Refugees (UNHCR) consolidation programme, only two of

Borrowed originally from a rambling verse by the English poet, Alfred Lord Tennyson, by the historian, Paul Kennedy, as a title for his masterful tome on the United Nations: Paul Kennedy, The Parliament of Man: The Past, Present and Future of the United Nations (New York: Random House, 2996). See, Barbara Plett, ‘Bhutan spreads happiness to UN’, BBC News World, 21 July 2011.

the original seven are expected to remain open by the end of 20128. By now more than 43,500 of them have been resettled, including 37,000 in the United States. According to one analyst, Bill Frelick, the continued refusal by Bhutan to allow any of them to return home, could look like the ‘gloss’ of Bhutan’s ‘peaceable image’ is being used to ‘escape international scrutiny and censure’9. The expected result was a bitter taste in the mouth in terms of Bhutan-Nepal bilateral relations. Formally the two countries established diplomatic relations in 1983, presumably prompted by the enthusiasm created by the Bangladesh-led initiative to establish the South Asian Association for Regional Cooperation (SAARC) that took formal shape in 1985 and was joined by both kingdoms of Bhutan and Nepal10. In this piece Lok Raj Baral refers to the ‘worst- case scenario’ apprehension of the Bhutanese authorities of the division of that Kingdom into Nepali and non-Nepali states, but argues that it does not weigh the security concerns, not just of Nepal, but importantly of India, implying that the latter would not endorse it. Be that as it may, there has not been much improvement in the Bhutan-Nepal bilateral relations since. Writing more recently, Prof Narayan Sharma of the Kathmandu School of Law has lamented: “Bhutan-Nepal relationship has never witnessed any vibrancy, and despite being neighbours there has remained no mutual intercourse worth the name between the two”11. The altered domestic situation in both countries and their increasing multilateral engagements may provide a resolution to the refugee issue, and end such travails.

Between the Elephant and the Dragon Bhutan’s geostrategic location has expectedly attracted the attention of both India and China. Metaphorically, therefore, the ‘Druk’, or the mythical animal that symbolizes Bhutan, is caught between two others, the elephant and the dragon. Bhutan has tended to follow what the Scandinavian analyst Erling Bjol, while describing Finland’s relations with the Soviet Union, had called the ‘pilot-fish behaviour’, that is ‘keeping close to the shark to avoid being eaten’12. As long as India was the only major protagonist to relate to, this could be done more easily. For instance, much like what was done between Finland and the Soviet Union, there

UNHCR, Bhutan: 2012 regional Operations Profile-South Asia. http://www.unhcr.org/cgi-bi n/texis/vtx/page?page=49e487646..Retrieved on 1 May 2012. ‘For Bhutan’s refugees, there’s no place like home’, Global Post, 30 March 2011. http://www.hrw.org/news/2011/03/30/bhutan-s-refugees-there-s-no-place-home. Retrieved on 1 May 2012. Lok Raj Baral, ‘Bilateralism under the Shadow: The Problems of Refugees in Nepal-Bhutan Relations, Contributions to Nepalese Studies Vol.20, No.2 (July 1993). ‘Bhutanese Refugee Situation: An Assessment of Nepal-Bhutan Bilateralism’ .Kathmandu School of Law, Bharatpur, 2009.www.ksl.edu.np. Erling Bjol, ‘The small states in International Politics’ in August Scou and Arne Olav (eds.) Small States in International Relations ( Stockholm: Almqvist and Wiksell , 1971) p.33.

was the 1949 Indo-Bhutan Friendship Treaty whose Article 2 stipulated that Bhutan be “guided by the advice of the government of India in its external relations”.13 Soon China entered the scene and sphere, as a major player, and also as a major adversary of India. They fought a border war in 1962. The fate that befell Tibet vis-à-vis China, and Sikkim vis-à-vis India, was of not inconsiderable concern to the Bhutanese. Global politics began to alter and the once-secluded States found it necessary to play roles in the international arena designed to enhance their own protection and sense of security. Incrementally, slowly but surely, they began to assert their independence and sovereignty. Wisely India played along. The 1949 Treaty was renegotiated in 2007. Both countries now agreed to “reaffirm their respect for each other’s independence, sovereignty and territorial integrity”, though India’s acknowledgment of this with regard to the smaller and weaker neighbour was much more important. India became Bhutan’s largest trading partner. Its energy-hungry economy bought back the hydroelectric power funded by it in Bhutan. Bhutan cooperated with Indian troops in flushing out insurgents of North Eastern Indian origin. Small wonder that one of India’s former Ambassadors to Thimpu should announce with unrestrained gleeful alliteration that Indo-Bhutanese relations were “healthy, happy, smooth and harmonious”. With China the developments have been more problematic. Bhutan and China have no diplomatic relations. However this does not mean they have had no diplomatic interactions. Since 1971 Bhutan has been a member of the United Nations, as also China. Their diplomats have continued to see each other in both key UN headquarters, in Geneva and New York. In the past Bhutan had trading ties with Tibet, which largely ceased in recent decades. In fact the borders between Bhutan and Tibet closed with the influx of some Tibetan refugees into Bhutan in the 1960s14. In 1998 Bhutan and China signed an Agreement on Peace and Tranquillity on the Bhutan-China Border. However, since then the 470 km border has not been free from troubles. There have been allegations of Chinese intrusions. The suspicion, however, at least in India, is that these alleged intrusions have more to do with India than with Bhutan itself, though it has been denied by the former Indian Army Chief, General Deepak Kapur. This line of thinking may be substantiated by the fact that India has relocated some troops from Jammu and Kashmir to the Sino-Indian-Bhutanese border. Logically such diversion of Indian capabilities should benefit China. Understandably, Bhutan’s relationship with China may have a mathematical correlation with its ties with 13

This quote, and some other relevant ones, as well as information, have been gleaned from: Jyoti Malhotra, ‘Indo-Bhutan relations age better with time’, live Mint.com, Wall Street Journal, 25 April 2008. http://www.Livemint.com/2008/04/24232542/IndiaBhutan-relations-age-bet.html Retrieved on 1 May 2012. Data in respect of Sino-Bhutanese relations have been cited from, Mohan Balaji, ‘In Bhutan, China and India collide’, Asia Times, 12 January 2008.http://www.atimes.com/atimes/China/JA12Ad02.html. Retrieved on 1 May 2012.

India. When the latter strengthens, the former will weaken, and vice verse. As Bhutan matures into an active international actor, as it is showing signs of doing, its leadership will need to be aware of such axioms in the interplay of international relations. In the view of a close observer of Bhutan, Caroline Brassard, the keen interest of the current young King in politics and international relations, and his outward outlook, are likely to influence a positive attitude towards China, albeit in a manner that is cautiously cultivated15.

Conclusion Bhutan provides a good example of the fact that even if the primary interests of a small state is limited to domestic well being and good relations with immediate neighbours, sheer necessity will require it to play roles that have global ramifications. Bhutan might have merely wanted “happiness” for its citizens. Then this expanded to a desire to try to set global norms by propagating the concept of GNH through the UN resolution in order to design for itself a peaceable profile. It was hoped that this would better equip Bhutan to define its ‘one nation, one people’ ideal of citizens more sharply, and tackle the consequent refugee problem with Nepal more effectively. Its peaceful domestic reforms and democratic transition heightened its positive international profile, rendering its role on the global matrix more welcome and acceptable. To buttress its sense of sovereignty it needed to reduce its total reliance on India, which it sought to do through its membership of the UN, the Non Aligned Movement and SAARC. This raised the possibility of a better understanding, or at least a reduction of tensions, with China. The challenges that Bhutan faces are legion. With a GDP (2011 estimates) of US $1.488 bn and a per capita income of only $ 2,121, it is still in the UN list of the world’s Least Developed Countries (LDCs). The UNDP Human Development Index of 2007 placed it at 132nd position, among the UN membership of 192 (then). But despite the tiny economy, and also its tiny international linkages, Bhutan is increasingly ‘becoming more like everywhere else’16. While the main exports still go to India, Hong Kong and Bangladesh, and imports come from India, Japan and Sweden, Bhutan is making efforts to diversify. It has diplomatic relations with 21 countries and with the European Union. It has embassies in India, Bangladesh, Kuwait and Thailand, and two UN Missions, one each in Geneva and New York. Some thinking is on the cards about opening up with Singapore, going further east. So current endeavours are concentrated on the need, not to rely solely on expanding the philosophy of ‘happiness’, but also to give it some concrete content. The reality is that ‘The Lost Horizon’

Caroline Brassard, ‘Bhutan: Cautiously Cultivated Positive Perception,’ in S. D. Muni and Tan Tai Yong (eds.) A Resurgent China: South Asian Perspectives (Routledge: New Delhi,2012) pp73-91. The Economist 16 December 2004. http://www.economist.com/node/3445119. Retrieved on 2 May 2012.

is still a work of fiction, and sadly, â&#x20AC;&#x2DC;Shangri-Laâ&#x20AC;&#x2122; like Santa Claus does not really exist. However, myths, as always, remain a powerful force as drivers of human destiny.

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ISAS Insights No. 164 – 15 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

Hillary Clinton Visits India: Understanding the Unstated S. D. Muni1

Abstract United States Secretary of State Hillary Clinton visited India on the third leg of her Asian ‘farewell’ tour after discussions in China and Bangladesh. This short visit to India was important in three aspects. It reemphasized the US resolve to promote its strategic partnership with India in the wider context of Asia-Pacific region. It brought into public domain the persisting differences between India and the US on two critical issues of US priorities in relations with India i.e. isolating Iran and creating a ‘level playing field’ for the American companies in India’s civil nuclear energy field. Thirdly, the visit also underlined the emerging dimensions of the US approach towards India and Asia. In India Mrs. Clinton appeared comfortable in directly broaching the sensitive issues of India’s federal and regional (in relation to immediate neighbours) affairs with the provincial leadership. And in Asia, the US, appearing to have failed in coping with the imperatives of China’s rise and assertion, is trying to hedge through engagement in ‘mini-laterals’; triangular consultations involving other Asian majors and China’s regional competitors like India and Japan.

Professor S. D. Muni is Visiting Research Professor at the Institute of South Asian Studies (ISAS), a research institute at the National University of Singapore. He can be reached at isassdm@nus.edu.sg. The views expressed in this paper are those of the author and do not necessarily reflect those of the Institute.

The US Secretary of State Hillary Clinton’s hopping visit to India, as formally projected, was to bid farewell to her Indian interlocutors. She has made it clear that even if President Obama wins his second term, she would not be the part of his team. Ostensibly, the visit was also to revamp and stimulate, what is critically remarked as, the sagging pace of Indo-US strategic partnership. Thus it was the occasion not only to reiterate the basics of the “strategic partnership” but also to push the issues of mutual differences affecting American interests directly.

Converging Interests For the visiting American stateswoman, the best way to reiterate the importance of India to the US was to recall President Obama’s famous statement that it was the “defining partnership of 21st century”, and add that India and the US have “increasingly convergent interests” in various fields. The growing economic cooperation between the two countries was underlined by Mrs. Clinton by flagging the growth of bilateral trade between India and the US which from a low level of US$ 9bn in 1995 has grown to US$100bn at present; with tremendous potential of its further growth still remaining untapped. In the area of defence, bilateral cooperation has fast paced since the conclusion of the Defence Cooperation Agreement in 2005 and this is indicative of the ‘unprecedented nature of exercises’ being undertaken by the two countries. Only a couple of weeks back, US Assistant Secretary of State for Political-Military Affairs had said that that “the level of our willingness to share technology with India has never been higher”. He disclosed that in the past decade, defence trade between India and the US jumped from nil to US$ 8bn and added that in the “next decade, sky is the limit. We think we have the best defence products in the world. India is interested in modernizing its military across all services. We think we have competitive technology and defence articles that would be able to serve their needs for each of their services”.2 The US it seems is trying its best to ensure that in future it does not lose lucrative deals like its failed bid last year for Medium Multi-Role Combat Aircraft (MMRCA). Strategically, Mrs. Clinton highlighted the importance of regular dialogue between the two sides where “we talk everything and nothing is left to be brought on the table”. The significance of Indo-US convergence in the Asia-Pacific region was emphasized and India’s “Look-east policy” was appreciated. With an eye on the revival of the Asian “Silk Route”, India was asked to pay greater attention to building trade and economic cooperation with Bangladesh and Burma. In taking Burma forward on the road to democracy and economic reforms, a special role was seen by her for India. Afghanistan came for a special reference as both India and the US have by now, their respective “Strategic partnership” Agreements in place with Afghanistan. That both India and the US are also consciously dealing with the challenges of security in South and Central Asia was disclosed by the visiting dignitary. The 2

The Daily Pioneer, (New Delhi) 27 April 2012 2

US resolve to cooperate with India in fighting terrorism in this region was also reaffirmed, and to comfort India, Pakistan was blamed for not doing enough in this respect. Mrs. Clinton told Pakistan that ‘we need stronger and more concerted effort’ on its part in the field of counter-terrorism, recalling US bounty for relevant and credible information to book terrorists like the former Lashker-e-Toiba chief Hafiz Saeed.

Persisting Differences While highlighting the areas of convergence with India, the US Secretary of State did not leave persisting differences between the two countries unattended. The issues of India’s imports of Iranian oil and the inflexibility of Nuclear Liability law passed by the Indian parliament with regard to civil-nuclear deal figured prominently in her discussions with the Indian leaders, including Prime Minister Manmohan Singh and the ruling United Progressive Alliance (UPA) President Sonia Gandhi. On the Iranian issue, the US side accepted that India has been moving forward in reducing its dependence on oil imports. India imported 410,000 barrels per day (bpd) of Iranian crude in March 2012, but in April 2012, this came down to 260,000bpd. While some years ago, Iran accounted for 14 percent of India’s energy needs but now this has been brought down to only eight percent, according to Finance Minister Pranab Mukherjee.3 India was now importing more oil from Saudi Arabia, which would be supplying 32 million tonnes of crude in 2012-13 as against 27 million tonnes a year back. India’s State owned Mangalore Refinery and Petrochemicals Ltd as well as the Essar Oil Ltd have been informally asked to cut back on Iranian imports. Mrs. Clinton also assured India that the US is trying to get more oil released in the market by major producers like Saudi Arabia and Iraq and as such, energy starved countries like India would have no dearth of available supplies in the market. She explained that the US was asking India to do more in reducing Iranian oil imports in order to put greater pressure on Iran for negotiating positively on the nuclear issue. India, however, urged upon the visitor that the question of India-Iran relations was much bigger than the oil imports as Iran, besides having civilizational synergy with India was also an important strategic player in the Persian Gulf region as well as in Afghanistan and Pakistan. In India’s assessment any escalation of conflict in the West Asian region on Iranian nuclear issue was not in India’s or anyone else’s interest. This region has a high concentration of India’s migrant labour force and, therefore, a source of substantial remittances. Foreign Minister S. M. Krishna, in the press conference address with Mrs. Clinton, urged for a “peaceful settlement of the Iranian nuclear issue through diplomacy”. He also made it clear that Iran was a key country for India’s energy needs and that despite the differing ‘positions’ and ‘perspectives on energy security’ of India and the US, this issue was “not a source of

S. Samuel C. Rajiv, “India and the US: Squaring the circle on Iran”, Institute for Defence Studies and Analyses Comments, May 10, 2012. http://idsa.in/idsacomments/indiaandtheUSSqua ringtheCircleonIran_sscrajiv_100512 3

discord between our two countries”. 4 And how can there be ‘discord’ when both the sides were playing this issue cautiously. While emphasizing its foreign policy autonomy in dealing with Iran, India appeared amenable to further reduction in its oil imports from Iran.5 The details of India’s scaling down of oil imports from Iran may be further discussed during the US Energy Coordinator Carols Pascual’s visit to India in coming weeks. The US on its part, as noted earlier, was sensitive to India’s energy needs while asking for cooperation in pressurizing Iran. On the Nuclear Liability legislation, India’s position is that if other countries like France and Russia can work within its parameters and invest in India’s civil nuclear industry, why are the US companies shying away from it. Mrs. Clinton explained that unlike in other countries, the US nuclear companies are entirely private and have no backing by the US State to cover their risks and support their businesses. She accordingly asked for ‘a level playing field’ for the US companies in this respect.6 India was willing to address the concerns of the US companies by showing flexibility in its procedures and administrative rules but it was not possible to change the law passed by the Parliament. The possibility of this issue also being discussed, so as to make it more comfortable for the US companies to come forward with investments, during the visit of the US Energy delegation cannot be ruled out.

Mediating India’s Federal and Regional Affairs Perhaps, more than Mrs. Clinton’s discussions in New Delhi, there was greater media hype on her visit to Kolkata and discussions with the firebrand Chief Minister of West Bengal, Mamata Banerjee. In these discussions, while there were images of great warmth between the two leaders, there arose controversies on two of the prominent issues. One was the question of Ms. Banerjee’s opposition to opening of the Indian markets for Foreign Direct Investments (FDI) in multi-brand retail sector. As a result of this opposition, the UPA government at the Centre had to withdraw its decision to open the retail (multi-brand) sector for FDI, affecting US interests adversely. Mrs. Clinton publicly announced soon after her landing in Kolkata, that she was going to raise this issue with the West Bengal Chief Minister.7 Perhaps she did so as was disclosed by the US Consul General in Kolkata after the talks between the two ladies. However, soon after Mrs. Clinton’s departure from Kolkata, the State Finance Minister Amit Mitra wrote to the Consul General that the multi-brand retail FDI was not mentioned by Mrs. Clinton and that it should not be so stated by the US side.8 It is possible that Mrs. Clinton raised the issue of investment in broader terms with Ms. Banerjee, urging 4 5 6 7

The live press conference on May 07, 2012 was telecast by the NDTV. The Hindu, May 09, 2012, (Editorial). Joint Press Conference on May 07, 2012. Ibid. This was disclosed by Mrs. Clinton in her more than an hour long interaction with young people of Kolkata under the NDTV’s “We the people” programme anchored by Ms. Barkha Dutt on May 06, 2012. Headline News, (New Delhi based TV Channel), May 07 2012. 4

upon her that while her resolute political mobilization to defeat the communists in her state was credible, she would not be able to advance her economic agenda for the people of West Bengal without facilitating greater investments and economic opening. Behind Mr. Mitra’s denial on FDI was, if at all a linguistic technical point driven by the political constraints of Ms. Banerjee and the ruling Trinamool Congress Party in West Bengal. The Trinamool Congress of Ms. Banerjee had highlighted its opposition to opening the FDI in multi-brand retail in its election manifesto in 2011 elections. It would be politically expensive now to admit that the issue was discussed by the Chief Minister with the top American diplomat. But the fact that investment issue was discussed with Mrs. Clinton and that Ms. Banerjee was looking for investments in her state was admitted by Ms. Banerjee. After her talks with Mrs. Clinton, the Chief Minister said: “This is a matter of pride that a US Secretary of State has come and talked to us here for the first time after independence…We are all happy, and we think that West Bengal should be a destination for investment”.9 The second issue was that of the Teesta river’s water sharing between India and Bangladesh. Here again, the Central Indian government had all planned to resolve this issue and sign a Treaty during Prime Minister Dr. Manmohan Singh’s visit to Bangladesh in September 2011. But Ms. Mamata Banerjee’s last minute opposition to the Teesta deal and her refusal to accompany the prime minister led Indian delegation to Dhaka not only embarrassed Dr. Singh but also frustrated the Bangladeshi side.10 The US is now toying with the idea of supporting the old Asian ‘Silk route’ for which it wants greater cooperation among the countries of the region like India, Bangladesh, Burma, China etc.11 This will enhance economic opportunities for the region and also the US. Greater understanding between India and Bangladesh is also a part of the agenda shared by both India and the US as it will integrate the South Asian economies and curtail China’s growing influence in the region. It is not publicly known as to how strongly Mrs. Clinton put forth the Bangladesh and Teesta issues to her hosts in Kolkata, but her emphasis on India’s ‘Look-east policy’ was clear and forthright and in this context she talked about developing Kolkata port and laying down oil pipelines for smooth flow of energy in the eastern region of India. Mrs. Clinton was obviously playing on Ms. Banerjees’s ‘vision’ for an economically dynamic and prosperous West Bengal. It was not for the first time that a prominent US leader has focused so much attention on an Indian state and assertive regional leaders during official visits to India. Nor was such a state visit first on Mrs. Clinton’s itinerary as she visited Tamil Nadu to greet another strong woman regional leader of India, Jayalalithaa last year in July 2011. There also Mrs. Clinton 9

Nirmala Ganapathy, “3-party talks with India, China essential: Clinton”, The Strait Times (Singapore), May 08, 2012, p. A10. For the background on this issue see, The Times of India, September 07, 2012; The Hindu, September 08, 2012; Iftekhar Ahmed Chowdhury and M. Shahidul Islam, “Manmohan Singh in Bangladesh: The Visit Revisited”, ISAS Working Paper no. 134, 13 September 2011. Syed Tashfin Chowdhury, “Clinton draws Dhaka in the Great Game”, http://www.atimes.com /atimes/South Asia/NE12Dfo3.html (Accessed on May 12, 2012). 5

had talked of India’s relations with Sri Lanka, the neighbour across the Palk Strait, its ‘Lookeast policy’ and its fast growing stakes in the Asia-Pacific region.12 Mrs. Clinton’s regional forays in India and her statements and discussions with these regional leaders were obviously focused on the issues of American interests. Besides this, many observers have also seen these side visits as her respect for empowerment of women in India and South Asia. In her interaction with the younger people in Kolkata, she admitted that though the women in the US have advanced in education and social equality, they are still far behind their Asian and Indian counterparts when it comes to their place in the country’s power structure. She hoped that she would be able to see a woman President of the US in her life time. Inherent in these state visits within India and parleys with the strong regional leaders in India is a strong indication of the emerging and rather significant aspect of American approach towards India and the Indo-American relations. This clearly underlines the US lack of hesitation in mediating in India’s federal affairs and sensitive relations with the neighbours. The US cannot be unaware of the changing political context in India where not only strong regional leaders have emerged but they have also succeeded in stalling major policy initiatives of the Central government, even if they are in alliance with that government. In the context of this political shift within India, the US approach is an attempt to cope with the imperatives of sustaining strategic partnership with India. What is however debatable, and even questionable in some respects is the implied endorsement, even active acceptance, of this new US approach by New Delhi. India and the US have for the past more than five years, been regularly consulting and coordinating their initiatives and responses to the developments in India’s immediate neighbourhood under the rubric of their “regional strategic dialogue”. But the US initiative in mediating neighbourhood relations and extending such initiatives even to federal relations with India’s connivance if not declared acceptance point towards the intensity of this dialogue that may be a matter of serious debate and discussion in India. It points towards a contradiction of India’s assertion of foreign policy autonomy as was demonstrated on the Iranian and civil nuclear issues.

US-India-China Trilateral Engagement Yet another dimension of the new US approach, involving India but encompassing the whole of East Asia and the Asia-Pacific and having long term implications for Asian relations, sounded by Mrs. Clinton in Kolkata was the proposal of initiating a trilateral consultation between the US, India and China. In her public interaction in Kolkata, Mrs. Clinton making this proposal said that she was working on “building constructive relationship not only bilaterally but among our three countries in fact. The trilateral connection among China, India

This was stated in her speech at the Anna Centenary Library. See The Hindu, July 20, 2011; The Times of India, July 20, 2011. 6

and the United States will be essential in the future as well.”13 The rationale behind this trilateral connection was that the problems of 21st Century, like those of climate change and world trade could not be solved without cooperation among these countries. And the significance of this statement lies in the fact that Mrs. Clinton had come to Kolkata after her talks with the Chinese leaders. Mrs. Clinton discussed this aspect with the Indian leaders in Delhi also but there was no formal Indian reaction to this. The media though quoted some unknown official for saying that “Let the US and China talk to each other and then we will take a decision. We are open to the idea”.14 This was not for the first time this trilateral consultations proposal was made. Mrs. Clinton sounded the proposal first in New Delhi in July 2011. Outlining the proposal in a statement in October 2011 in Washington DC, she said that “a strong and constructive” relationship between India, China and the US was necessary for addressing the “pressing issues of 21 st century”. She admitted that this will not always be easy. There are important matters on which we all disagree, one with the other. But we do have significant areas of common interest…Ultimately, if we want to address, manage or solve some of the most pressing issues of 21st century, India, China and the US will have to coordinate our efforts.15 Senior US diplomats have subsequently followed this up. Speaking at a national conference of World Affairs Councils of America, Deputy Secretary of State William Burns said: Let me explicitly state that (in) the 21st century Asia-Pacific (what) we seek is one in which India, the United States and China all enjoy good relations. Whatever our differences, we know that as this century advances, fewer and fewer global problems will be solvable without constructive cooperation among our three great countries…I have no doubt that Asia and the world are big enough for the three of us- if we want them to be.16 Again in December 2011, Assistant Secretary of States for East Asian and Pacific Affairs Kurt Campbell said: “We believe that it is absolutely critical that the three great States of the 21st century – United States, China and India – begin closer consultation.” He also disclosed that the “US was in active consultation with Chinese friends” on this proposal and a similar order of consultations between the US, China and Japan.17 13 14 15

Nirmala Ganapathy, The Strait Times, May 08, 2012, op.cit. ibid Jagran Post, October 09, 2011. http://post.jagran.com/Clinton-proposes-relationship-betweenIndiaChina US-1318159. .Accessed on May 10, 2012. Jagran Post, Nov.05, 2011. http://post.jagran.com/india-China-and-the-US-should-togetherresolve-global-problems-1. Accessed on May 12, 2012. Jagran Post, December 16, 2011. http://post.jagaran.com/US-for-closer-consultations-with-IndiaChina-1324044743. Accessed on May 10, 2012. 7

India’s response has been positive to the idea of such trilateral consultations. India’s Foreign Secretary Ranjan Mathai speaking at a major American think-tank, the Centre for Strategic and International Studies in Washington DC in February 2012 endorsing the Clinton proposal said that; There are a number of global and regional challenges on which India, China and the United States must work together…China is our largest neighbour, a major country in the Asia-Pacific region and a country with great global influence. We have considerable challenges in our relations, but also enormous opportunities for mutually beneficial partnership at the bilateral and global levels…We will continue to invest in building a stable and cooperative relationship with China that is mutually beneficial and also a source of regional stability and prosperity.18 India hopes that such trilateral consultations will considerably improve the prospects of reducing conflict and enhancing cooperation with China. This mechanism may also help consolidate India’s regional position in South Asia by blunting many of the fault-lines between India and its immediate South Asian neighbours, including Pakistan, and limit the scope of these neighbours playing China against India for their own narrow advantages. The idea of trilaterals also takes away India’s fears about a possible China-US coordination (G.2) on critical Asian strategic affairs. China kept silence on the proposal for a long time. Perhaps it did not look forward to sitting at the same table with its Asian neighbours like Japan and India, preferring instead to sit separately with the US to discuss critical global and Asian strategic issues. Of late, however, there is some change in the Chinese position as the Chinese Assistant Minister of Foreign Affairs Le Yucheng accepting the proposal in principle said that China was “open and positive towards such mechanism” as “we believe dialogue is better than confrontation”.19 It was perhaps the positive Chinese response to the proposal that prompted Mrs. Clinton to repeat it during her recent visit. It however, remains to be seen if the shift in the Chinese position on this proposal is more tactical or real. The details of the structure and mechanism of the proposed trilateral are yet to be worked out and surely China, as also India and the US, will have definite views on what issues are put on the table and what not. The US proposal to initiate trilateral consultations that include China and Japan as also China and India is a reflection of its own dilemma in dealing with China’s burgeoning power, influence and assertion in the Asia-Pacific region and global affairs. This has been brought out clearly in a Brookings Institute Study released in March 2012 on the strategic distrust

Foreign Secretary was speaking at the Statesmen’s Forum of the Centre on February 06, 2012. The Text of his speech was circulated by the Indian Embassy in Washington DC. The Hindu, April 11, 2012, “In Shift: China backs trilateral talks with India and US” by Anantha Krishnan. 8

between the US and China.20 The US seems to be aiming at a number of objectives by institutionalizing such trilateral consultations or the “mini-laterals” to engage China. This will blunt any possibilities of the US being excluded from regional gatherings, as could be seen in past attempts by China and Malaysia on the membership of the East Asia Summit. There are a number of strategic “mini-laterals” that keep the US out like, BRICS, India-Russia-China meetings and now China, Japan South Korea Free Trade Area. While explaining the rationale of such trilateral consultation, the US Assistant Secretary of State Kurt Campbell had reiterated: “we see none of these venues as in any way exclusive or exclusionary…we are interested in supporting a range of interlocking, overlapping dialogues in Asia going forward” 21. These triangular mechanisms will also facilitate US cooperation including in defence and strategic affairs with its Asian allies and partners without invoking the respective mutual suspicion and tensions towards each other. It will alleviate China’s suspicion also that US was trying to contain the Chinese interests and influence in Asia by promoting its Asian competitors like India and Japan. The Brookings Study in this respect had suggested “such trilaterals may reduce the chances of developing strategic cleavages that puts US on one side and China on the other and other countries in the region in a position of having to choose sides”.22 In fact the trilaterals will reinforce the US Asia-Pacific Strategy of “pivot”, and of hedging against China and keeping it constructively engaged. It will place the US in a position to balance China with its Asian rivals by moderating their mutual differences and areas of prospective conflicts. The India-China-US trilateral also contains the promise of facilitating the US approach towards post-withdrawal Afghanistan and the persisting uncertainty about Pakistan’s role in countering terrorism in the region and the world. The extent to which these US objectives will really be advanced would depend upon the manner in which the agenda and structures of these trilaterals will be finalized and their functional dynamics will gradually evolve.

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21 22

Kenneth Lieberthal and Wang Jisi, “Addressing US-China Strategic Distrust”, John L. Thornton China Centre Monograph, No.4, March 2012, Brookings Institute, Washington DC. Op.cit, n.14. Lieberthal and Wang, op.cit, n.17, pp. 12, 47-48. 9

ISAS Insights No. 165 – 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

State of Bangladesh Economy: A Prognosis for the Future Ishraq Ahmed1

Abstract Against the backdrop of the global economic slowdown, the Bangladesh economy has performed strongly over the past few years. Despite the fallout from the Euro debt crisis still contributing to an uncertain economic environment, the Bangladesh economy has pursued accommodative monetary and fiscal policies. However, if the global economic slowdown is much more prolonged than the current forecasts indicate, the impact on Bangladesh is expected to be adverse. The economy has persevered so far in the face of global recession, but the domestic challenges are manifold with respect to soaring inflation, import-export imbalances, devaluation of the currency, a slow growth of remittances, increasing budget deficit and government borrowing. This paper provides an overview of the Bangladesh economy with respect to its fiscal, monetary and trade performance. The aim is twofold – to assess the current state of the economy, followed by an appraisal of Bangladesh’s economic outlook and opportunities ahead.

The Current State of the Economy The table below presents a brief snapshot to show how the Bangladesh economy has performed in comparison to the world economy and other economies in the Asian region. 1

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

One of the ways to evaluate how the economy has fared can be seen by comparing the growth of GDP since 2009. Table 1 – GDP Growth rates at a glance

World Output Emerging and Developing Economies Developing Asia China India Pakistan Bangladesh

2009 -0.6 2.8

Actual 2010 5.3 7.5

2011 3.9 6.2

7.1 9.2 6.6 1.7 5.9

9.7 10.4 10.6 3.8 6.4

7.8 9.2 7.2 2.4 6.1

Projections 2012 2013 3.5 4.1 5.7 6 7.3 8.2 6.9 3.4 5.9

7.9 8.8 7.3 3.5 6.4

Source: IMF World Economic Outlook

Compared to the global average, Bangladesh has witnessed higher GDP growth rates. Despite a fall in world output during the immediate aftermath of the financial crisis in 2009, Bangladesh has consistently exceeded growth rates of five percent since 2009. However, when compared to the developing and emerging countries which rebounded strongly from 2010, Bangladesh has achieved average growth rates – its economic growth has not quite stood out among other countries and is projected to remain close to the developing countries’ averages in 2012 and 2013. Further disaggregating the countries in the developing Asia region, it can be seen that output growth of Bangladesh has been below average since 2009. While regional powers like India and China have witnessed growth rates of around nine to 10 per cent, Bangladesh has been hovering around the six per cent mark. The GDP growth is also projected to be lower till 2013 – China and India are estimated to have rates of 8.8% and 7.3% respectively, while Bangladesh is estimated to be at the six per cent mark. Compared to Pakistan, the Bangladesh economy has fared much better over the last three years – the economy has grown more than three times faster on average. The performance of the economy can be evaluated through the three channels: fiscal, monetary and trade. Fiscal Channel Until recently Bangladesh’s financial sector did not experience any substantial turbulence from the aftermath of the global financial meltdown. This can be attributed to its limited connectivity with the international financial system and as such, Bangladesh was relatively well insulated on the financial side of the economy. The banking sector is a major player in the financial sector and it has functioned reasonably well since 2009. The profitability of the

banks has improved quite substantially over the period 2007 to 2010, as illustrated by the return on assets and return on equity: Table 2- Performance of the Banking System

Year 2007 2008 2009 2010

Profitability Ratios Return on Assets Return on Equity (%) (%) 0.9 13.8 1.2 15.6 1.4 21.7 1.8 21

Source: Bangladesh Bank

The return on assets in the banking system has increased from 0.9% in 2007 to 1.8% in 2010, while the return on equity has increased significantly from 13.8% in 2007 to 21% in 2010. The basic banking sector indicators appear to have improved over the period and as such the sector is quite vibrant. On the fiscal side of the government, cracks have begun to emerge due to increasing subsidy costs borne to maintain fuel consumption at a reasonable price. This strain has emerged despite tax revenues exceeding around 10 per cent of GDP in FY 2011 (Fiscal Year)2 â&#x20AC;&#x201C; a record first for Bangladesh. 3 Despite an improved tax revenue mobilisation, the government fiscal management has been mediocre in this regard. Along with spending pressures from fuel subsidies, other sources include spending on agricultural input subsidies and higher cost of crude oil. The government borrowing from the banking sector has also increased quite significantly. According to the latest banking statistics, loans to the government from the commercial banks has reached around Tk 163 billion (US $1.96 billion) in addition to those from the central bank, during the first nine months from July 2011 to April of the current fiscal year. From the commercial banks alone, the government has borrowed around $1.3 billion. However, the government loan was less than a billion US dollars ($0.92 billion) during the first nine months of FY 20114 â&#x20AC;&#x201C; borrowing has more than doubled over the last one year leading to concerns of higher inflation in the economy. The borrowing has in fact exceeded the entire fiscal year target in nine months due to a large spending on subsidy in the power and energy sectors and on social safety net coverage. Since FY 2008, government borrowings have increased substantially, with only a dip in FY 2010 (Figure 1).

2 3 4

Fiscal year/ Budget year runs from July 1st to June 30th of the next year. Annual Report 2010-2011, Bangladesh Bank (2011). Ibid. 3

Figure 1- Government borrowing

Total Government Borrowing 25000

In crore taka

20000 15000 10000 5000 0 2007-08

2008-09

2009-10

2010-11 (Jul-Jun) Year

Source: Bangladesh Bank

The government borrowing has increased significantly even by historical standards – this could manifest itself in various problems for the economy. First, the increased borrowing may force up interest rates and crowd out private sector investment in Bangladesh. Second, if this borrowing trend continues, the government may need to increase the tax burden in the long-run. In addition to a dampening of demand and economic growth, this decision will be deeply unpopular. Finally, the increase in national debt would mean that the annual interest payments will rise – money that could have been spent in priority areas of the economy. Monetary Channel On the monetary side, the rate of inflation has reached very high levels during FY 2011. This is probably the single most important indicator that affects all spheres of the Bangladesh population. According to Figure 2, general inflation has been increasing since FY 2009. The initial target for the general inflation was around 6.5% in FY 2011, but it ended up being around 9%. Food inflation has been a major driver of inflation, increasing steadily over the last three years while non-food inflation has been falling somewhat. Food inflation hurts the poor even more than non-food inflation – the general basket of goods of the poor typically consists of a higher proportion of food items. As of March 2012 inflation has reached double digits around 10.92%.5 Food inflation has eased somewhat to 11.91% (12-month average basis) in the same month largely as a result of a good harvest, but non-food inflation has exhibited a reversal in its trend exceeding 9%.6 If the first few months of 2012 are any 5 6

Bangladesh Bank Economic Data. Accessed 2 May 2012. Major Economic Indicators: Monthly Update, April 2012, Bangladesh Bank (2012). 4

indications to what lies ahead, Bangladesh is in danger of exceeding its end of the year target yet again. Higher inflation has been attributed to rising commodity prices in the world market and is also a consequence of higher than budgeted government spending. In addition, the high rate can be attributed to continuing supply and infrastructural bottlenecks â&#x20AC;&#x201C; the road and railway networks are still very dilapidated nationwide which leads to poor market linkages within the districts. The inflationary pressures have persisted despite a bumper rice production along with potato, fruits and vegetables production in the economy. The growth rate of money supply has also been identified as an important determinant of this rising inflation by the Bangladesh Bank (the central bank of the country) and as a result, a restrained monetary policy is currently being adopted. Figure 2- Inflation

Inflation rates FY 2009 to FY 2011 12

11.34

8.8

8.53

7.31

7.18 6.66 5.91

5.45 4.15

4 2 0 2008/09

2009/10 Non-food

Inflation

2010/11 Food

Source: Bangladesh Bureau of Statistics (BBS)

An accommodative monetary policy has been identified as one of the causes of a precarious macroeconomic situation. The increase in broad money which includes demand deposits, time deposits and saving deposits has increased by 18 per cent at the end of January 2012. Domestic credit growth has further exhibited an increase of 23.59% at the end of January 2012, with credit to the private sector increasing by 18.94%.7 These figures illustrate the years of liquidity expansion at rates beyond what is considered sustainable for maintaining economic activity and growth. Such expansion has led to the asset price inflation prevailing in Bangladesh at the moment, along with the recent stock market bubble and the subsequent burst â&#x20AC;&#x201C; the excess liquidity overhang could cause the economy to unravel. 7

Major Economic Indicators: Monthly Update, March 2012, Bangladesh Bank (2012). 5

Trade and Current Account Channel The balance of payments went into a deficit in FY 2011, the first time in a decade. Balance of payments pressures have stemmed from rising oil and capital goods imports, volatile commodity prices and weak aid inflows. Large oil and capital imports have been associated with the newly-installed fuel-intensive power stations. However, exports achieved a growth spurt in FY 2011 due to the ready-made garments (RMG) sector. Bangladesh’s relative performance has been very strong and as such, it has been one of the better performing textile exporting countries in the US and EU markets. The slowdown in remittance inflows along with increased import payments for goods and services have however offset the large gain in export growth. Imports had increased by around 40 per cent in FY 2011 resulting from a strong domestic demand and high global commodity and petroleum prices, thus causing the trade balance to deteriorate. Figure 3 – Trade Balance

Trade Balance

2009-2010 July-June -5155

(In million US$) 2010-2011 July-June -7328

Source: Bangladesh Bureau of Statistics (BBS)

The data further shows that trade balance has taken a turn for the worse – trade deficit has increased by 42 per cent over one year. The current account balance has deteriorated by around three percentage points of GDP as well.8 The foreign currency reserves of Bangladesh have increased to $10.19 billion in April 2012 after the first installment of the IMF loan was disbursed under the Extended Credit Facility (ECF) arrangement.9 According to the Bangladesh Bank, the foreign reserves had been hovering below the $10 billion mark since last August. This led to concerns that the policy buffers were inadequate in the event of adverse real shocks. Furthermore the IMF had stated that $9 billion is not a sufficient reserve for three months’ imports. Higher import payments might have exerted pressure on the foreign exchange combined with a relatively lower growth in export and remittances. A significant portion of the foreign reserve buffer built during 2009-2010 has been used up in 2011. The IMF loan could therefore bolster the volatile reserves somewhat and create some breathing space for the macroeconomy to function. The fall in foreign currency reserves had caused a very steady depreciation of the taka against the US dollar last year and also during the first few months of this year. The weakening balance of payment situation and instability in the money market has also contributed to a 8 9

Bangladesh Bank Economic Data. Accessed 4 May 2012. “Bangladesh’s April foreign currency reserves rise on IMF loan disbursement”, Xinhua News, May 2 2012, http://news.xinhuanet.com/english/business/2012-05/02/c_131564383.htm. Accessed 4 May 2012. 6

significant depreciation of the nominal exchange rate of the taka against the dollar and other major currencies. Official data as of March 2012 on the taka-dollar exchange rate (end period) has revealed that one US Dollar equalled to about 81.829 taka compared to about 72.7648 taka one year ago. The taka has depreciated by over 12 per cent over the last one year (March 2011 to March 2012), thus further increasing the dollar amount of import, debt servicing and interest payments. The inflow of remittances, which make up a crucial component of the economy, have picked up to some extent during the current fiscal year with some fluctuations. Inflows have been more volatile during the current fiscal year, with a low of around $855 million in September 2011 and $900 million in November 2011. January 2012 witnessed a record high in remittance inflows, crossing $1.2 billion. Figure 4 â&#x20AC;&#x201C; Remittance

Remittance inflows Remittances ( million $)

1400 1200 1000 800 600 400 200 0

Time

Source: Bangladesh Bank

The Outlook Despite the sluggish global economic situation, the Bangladesh growth performance has been consistent, with GDP growth rates consistently exceeding 5% or so. While the medium-term prospects are favourable, the long-term economic outlook of Bangladesh will be determined by the extent to which it can correct its macroeconomic fundamentals. 7

Fiscal Scenario The immediate government forecasts show that the fiscal deficit (excluding grants) is expected to widen to US$5.4 billion in FY 2012, equivalent to five per cent of GDP. 10 Fiscal policy therefore risks being somewhat unstable if there are no concrete plans of fiscal prudence. Fiscal consolidation needs to be undertaken to reduce inefficient and wasteful spending and create more space for critical, growth-oriented spending – budget management has to be a priority.11 The Asian Development Bank (ADB) also forecasts a significant budget deficit, in part due to the high subsidies provided to the energy sector along with recent hikes of fuel, diesel and octane prices. The government will have to either cut its spending and/or raise taxes, or finance the increasing deficit through some other means. The former option presents political difficulties, while the latter option poses significant macroeconomic risks through inflation and crowding out private investment, the scenarios of which are currently present. The subsidy bill, which had constituted less than one per cent of GDP historically, has been estimated to increase to 2.43% in FY 2012. However, the amount of subsidies demanded by the relevant ministries had originally pushed the figure to around 5.4% of the GDP and even after the estimates were revised downwards, the subsidy bill has now been estimated to be more than four per cent of the GDP in the current fiscal year. The government’s insistence to keep on subsidising food and energy prices will place a lot of strain on the public finances in the near future. However the rationale is that a provision of subsidies will support povertyalleviation efforts and is also intended to be a populist measure – the risk of social unrest is expected to be reduced greatly.12 In order to fund the high subsidy bill, the government sanctioned an increase in electricity tariffs in March, thus compounding inflationary pressures further – Bangladesh continues to have one of the highest inflation rates in Asia. Monetary Scenario On the inflation side, IMF projects the rate to decline and stabilise around single digit at the end of this year through a combination of restrained fiscal and monetary policies along with an easing of supply constraints over time. It is hoped that with a stable and flexible exchange rate and interest rate, inflation can be stabilised. A tighter monetary policy is however expected to be politically unsavory, as it would involve hiking up interest rates to curb the excess liquidity in the market. The private sector and consumers will deem the hikes to be restrictive and investment might be hampered as a result. In addition, should there be further credit squeeze in the global financial market, interest rates will rise even more. Lenders will

10 11

Annual Report 2010-2011, Bangladesh Bank (2011). “IMF Executive Board Approves Three-Year ECF Arrangement for Bangladesh”, International Monetary Fund, 11 April 2012, http://www.imf.org/external/np/sec/pr/2012/pr12129.htm. Accessed 3 May 2012. Economist Intelligence Unit (April 2012). 8

seek relatively less risky borrowers and credit spreads will widen as a result – Bangladeshi businesses will find it even harder to borrow money thus adversely affecting investment. Trade and Current Account Scenario The IMF predicts that the current account will most likely reach a deficit in FY 2012 of about 0.75% of the GDP and will remain at or near this level over the next few years. However remittances and exports are expected to be at a favourable level over the near future, although the encouraging outlook will be offset by increased fuel imports and infrastructure-related investment, which is long overdue. The government contrary to its election mandate has so far failed to address the inadequacies in infrastructure; and the stalemate in securing the World Bank funding to construct the Padma Bridge has been perceived as a microcosm of the government failure. Foreign reserves are predicted to cover only 2.3 months of import cover at the end of this year, compared to three months cover at the end of last year. This is indeed a precarious situation that Bangladesh finds itself in – the import cover is expected to decline further over the medium term if stronger policy adjustments and structural reforms are not carried out. If the import cover does run out, Bangladesh will have to resort to domestic and external sources of financing, which will further pile up its levels of debt. In fact, Bangladesh has recently signed up for the ECF on a three year arrangement in the sum of US $987 million. The ECF arrangement is expected to support the restoration of some macroeconomic stability and strengthen the external position. 13 However on the brighter side, which will take quite a long time coming, the overall balance of payments is projected to return to a surplus in FY 2013 through more conducive global conditions, a combination of tightening measures and exchange rate flexibility. The foreign reserves are expected to exhibit an upward trend, reaching close to about three months import cover by FY 2015.14 It will be extremely critical that remittance earnings continue to rise even more rapidly, since remittances have bolstered household income and boosted consumption in recent years. If remittance growth falls, it will have an impact not only on consumption levels but also on the financial sector whose business depends heavily on these inflows. Furthermore, the flow of remittances will remain a crucial component of the current account as they make up the bulk of inward transfers. With respect to the exchange rate, a high inflow of remittances is also expected to cause the taka to gain against the US dollar. Further appreciation of the taka against the dollar can be achieved by limiting the supply of taka – as such, Bangladesh will be able to maintain the stability of its currency and protect its value against the major currencies.

13 14

IMF (2012). “IMF Article IV Consultation with Bangladesh”, International Monetary Fund, 1 November 2011. 9

Conclusion Bangladesh economy is at a critical juncture, where the policymakers will have to tackle the ongoing and emerging macroeconomic pressures head-on. Although the economy is still quite robust, the macroeconomic indicators do point to warning signs that need to be heeded. Inflation is still rampant across Bangladesh and it risks becoming a drag on the growth rate. Bangladesh Bank has finally adopted a contractionary policy to counter the excess liquidity which has been further exacerbating the inflation. However there is a risk that private investment might be deterred with the spike in interest rates and a slowdown in private sector credit growth. Furthermore the government needs to cut back its borrowing in case it spirals out of control. To that end, revenue mobilisation has to be stepped up further to lessen the need for excessive borrowing. It is also high time that Bangladesh diversify its export basket – a continuing reliance on RMG exports will result in Bangladesh being a perennial producer of garments. Dependence on just one commodity might prove to be unwise if the global economic downturn takes a turn for the worse – the trade balance will become even more unfavorable. There is little room to maneuver at the moment. Should the worst case scenario come to pass – an extended global slowdown causing demand for Bangladeshi exports to fall combined with continuing inflation in Bangladesh – the country could face a period of stagflation with high inflation and low economic growth. The growth forecasts by the IMF, ADB and the World Bank have repeatedly been revised downwards, even though the policymakers in Bangladesh maintain an optimistic view. A view through rose-tinted glasses with little or no acknowledgement of the emerging economic strains might prove to be costly.

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ISAS Insights No. 166 – 1 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 Judicial Renaissance: A New Phase? Rajshree Jetly1

Abstract This paper considers the relationship between the judiciary and government of Pakistan in light of the recent developments involving the Supreme Court and the Prime Minister, which culminated in a historic conviction of the Prime Minister for contempt of court. Pakistan’s judiciary, historically seen as relatively passive in political matters, has witnessed a new phase. A strong judiciary is clearly vital in any democracy, and it will be important for the key institutions and players to find the right balance to ensure the success of Pakistan’s return to democracy.

Evolution of the Judiciary in Pakistan Pakistan’s political history has been characterised by ongoing tussles between the military and democratic establishments. The judiciary has a significant role to play in checking the executive and the legislature, and in protecting the constitution. For a long time, the judiciary in Pakistan was seen as playing a pliant role to military dictatorships, leading to this harsh observation by one commentator: ‘In short, Pakistan’s Supreme Court has followed the path of least resistance and least fidelity to constitutional principles…the courts have been the military’s handmaiden in extra-constitutional assaults on the democratic order.’2 1

Dr Rajshree Jetly is Research Fellow at the Institute of South Asian Studies (ISAS), an autonomous institute at the National University of Singapore (NUS). The author can be reached at isasrj@nus.edu.sg. The views expressed in this paper are those of the author and do not necessarily reflect those of the Institute. Tasneem Kausar, ‘Judicialisation of Politics and Governance in Pakistan, Constitutional and Political Challenges and the Role of the Chaudhry Court’ in Ashutosh Misra & Michael E Clarke, Pakistan’s Stability Paradox, Domestic, Regional and International Dimensions (Oxon: Routledge, 2012), p.30.

The years from 2005 however, saw a turning point in Pakistan’s judicial history with the Supreme Court coming out on its own and questioning many government policies.3 The change was brought about by the newly-appointed Chief Justice, Iftikhar Chaudhry, who as Chief Justice implemented reforms to improve the efficiency of the judiciary and gave new impetus to public interest litigation through a Human Right Cell established in the Supreme Court. Consequently, the Supreme Court dealt with several matters of public interest and human rights violations, including issues that directly affected the ordinary person. This made the Supreme Court popular among the masses and the liberal intelligentsia, and gradually the court began to take on more complicated issues pertaining to rights and liberties that began to threaten the Musharraf government, culminating in the dismissal of the Chief Justice by President Pervez Musharraf. Not surprisingly, the dismissal proved a catalyst in galvanising lawyers, civil activists and people at large into a broad-based social and political movement for the ouster of Musharraf and restoration of democratic governance. This was a defining moment for Pakistan’s judiciary as it was a stark reminder to the public at large of the connection between the independence of the judiciary and the restoration of democracy in Pakistan. Untoward delay by the newly-elected PPP-led government in reinstating Chief Justice Chaudhry, who was seen as a champion of justice and rule of law, created tensions between the executive and judiciary. Sympathy for the Chief Justice and popular satisfaction with the Supreme Court, which continued to be active in hearing public interest issues such as the privatisation of steel mills and sugar price hikes, further enhanced the power of the Court. Notwithstanding some disquiet about the independence of the judiciary being ‘crystallised in a personal rather than institutional framework, symbolised by Iftikhar Choudhry,’4 the widespread support from the media and civil society further emboldened the court. The growing popularity of the Supreme Court, seen widely as reflecting the general will of the people, has come at the expense of the government, which is seen as inefficient and failing to deliver on economic, political and security issues. 5 The judiciary is clearly asserting its independence. The judiciary, historically the weakest of the three institutions of government – the other two being the legislature and the executive – paradoxically is today in a position of considerable strength given the popular support that it has gained. This could be a potential tipping point, where the judiciary risks going beyond its role as defender of the constitution to become a political player, but one that is not democratically accountable, unlike the other two arms of government.

3 4

Ibid., p.28. Mohammad Waseem, ‘Judging Democracy in Pakistan: Conflict between the Executive and Judiciary’, Contemporary South Asia Vol. 20, no.1, 2012, p.21. Tasneem Kausar, ‘Judicialisation of Politics and Governance in Pakistan’, op.cit., p.34. 2

Conviction of the Prime Minister for Contempt of Court This near-brinksmanship between the executive and judiciary reached a head on 26 April 2012, when a seven-judge Supreme Court bench headed by Justice Nasir-ul- Mulk, issued a historic verdict convicting a sitting Prime Minister for contempt of court. To recall briefly, in December 2009 the Supreme Court overturned the National Reconciliation Ordinance (NRO), declaring it unconstitutional and against the national interests of Pakistan. The NRO had been promulgated by President Musharraf in October 2007, and was part of a deal between President Musharraf and the late Benazir Bhutto, which allowed the latter to return to Pakistan and participate in politics without facing criminal charges. The NRO put an end to corruption investigations and prosecutions against almost 8,000 individuals – ministers, bureaucrats and politicians, including President Asif Ali Zardari. Having declared the NRO unconstitutional, the Supreme Court held that none of the actions and orders taken pursuant to the NRO was valid, and it ordered Prime Minister Yousaf Raza Gilani to reopen the cases of graft against President Zardari. Gilani refused to comply with the order on the ground that the Government could not initiate any criminal action against the President, who was protected by Presidential immunity. This immunity was guaranteed under the constitution and remained for as long as the President held office. On 13 February 2012, Gilani was formally charged with contempt of court for wilfully disregarding and disobeying orders from the Supreme Court to re-open corruption cases against the President. Having convicted the Prime Minister, the Supreme Court imposed a symbolic sentence by ‘imprisoning’ him until the court rose – a duration that lasted less than a minute. This unusually short sentence was explained in the full judgment of 8 May 2012 where the court seemed to suggest that it did not intend for the Prime Minister to be disqualified from holding office as a result of a criminal conviction – a possibility under Art 63(1) (g) and (h) of the Constitution – preferring to leave the Prime Minister’s fate to the political process. The court’s short order of 26 April 2012 is reproduced here: For reasons to be recorded later, the accused Syed Yousaf Raza Gilani, Prime Minister of Pakistan/Chief Executive of the Federation, is found guilty of and convicted for contempt of court under Article 204(2) of the Constitution of Islamic Republic of Pakistan, 1973 read with section 3 of the Contempt of Court Ordinance (Ordinance V of 2003) for willful [sic] flouting, disregard and disobedience of this Court’s direction contained in paragraph No. 178 of the judgment delivered in the case of Dr. Mobashir Hassan v. Federation of Pakistan (PLD 2010 SC 265) after our satisfaction that the contempt committed by him is substantially detrimental to the administration of justice and tends to bring this Court and the judiciary of this country into ridicule.

2. As regards the sentence to be passed against the convict we note that the findings and the conviction for contempt of court recorded above are likely to entail some serious consequences in terms of article 63(1) (g) of the Constitution which may be treated as mitigating factors towards the sentence to be passed against him. He is, therefore, punished under section 5 of the Contempt of Court Ordinance (Ordinance V of 2003) with imprisonment till the rising of the Court today.

Legal and Political Consequences of the Judgment Since the issuing of the order and publication of the May judgment, there has been some confusion as to the actual legal consequences of the conviction. While it appears from the judgment that the court had not intended the disqualification of the Prime Minister, a literal reading of Art 63(1) (g) suggests that the conditions for disqualification have been met. Art 63(1) (g) is reproduced below: 63 Disqualifications for membership of Majlis-e-Shoora (Parliament): (1) A person shall be disqualified from being elected or chosen as, and from being, a member of the Majlis-e-Shoora (Parliament), if:g. he has been convicted by a court of competent jurisdiction for propagating any opinion, or acting in any manner, prejudicial to the ideology of Pakistan, or the sovereignty, integrity or security of Pakistan, or morality, or the maintenance of public order, or the integrity or independence of the judiciary of Pakistan, or which defames or brings into ridicule the judiciary or the Armed Forces of Pakistan, unless a period of five years has elapsed since his release. If contempt of court is an offence that is captured by Art 63(1) (g), all that is required is a conviction for the Prime Minister to be disqualified. The sentence is immaterial as the offences in Art 63(1) g) are sufficiently serious, unlike a conviction under Art 63(1) (h), where disqualification only occurs when the accused is sentenced to a minimum of two years’ imprisonment. The effect of the Supreme Court’s conviction on the legality of Gilani’s continued holding of office and all actions taken in that capacity will have to be tested in court. A petition has already been submitted in the Supreme Court seeking the disqualification of the Prime Minister on grounds that the application of Art 63 (1) (g) is a ‘self-executor provision and does not need implementation through any subordinate legislation or through Article 63 (2) or Article 63(3) of the Constitution.’6

‘Petition moved in SC seeks PM’s disqualification’, Dawn (11 May 2012) http://dawn.com/2012/05/11/petition-moved-in-sc-seeks-pms-disqualification/ Accessed 11 May 2012. 4

The political consequences are also significant. The judgment raised questions about the powers of the executive, the sovereignty of Parliament and the role of the judiciary – the long-term implications of which are yet to unfold. Predictably, the judgment created immediate political ripples for the beleaguered government. Opposition parties lost no time in asking the Prime Minister to step down in view of the Supreme Court judgment. Pakistan Muslim League-N PML (N) has said that Gilani does not have any moral or legal authority to continue and should step down. Tehreek-e-Insaaf chief Imran Khan has said that, in principle, his party did not accept Gilani as Prime Minister after the conviction, but conceded that he had the right to appeal the conviction.7 Even as the dust settles on the judgment, it is clear that Gilani is in a vulnerable position and the confrontation between the Pakistan People’s Party (PPP) and the opposition, particularly the PML (N) is likely to gather steam in the days to come. Once the detailed judgment was out, the government had 30 days to file an appeal against the order. The matter, as per the parliamentary procedures, went to the Speaker of the National Assembly for referral to the Election Commission of Pakistan to decide whether the Prime Minister remained qualified to be in Parliament. However, on 24 May 2012, the Speaker of the National Assembly, Dr Fehmida Mirza, rejected the order on grounds that that there was ‘no specific charge regarding the propagation of any opinion or acting in any manner against the independence of the judiciary or ridiculing the judiciary as stipulated under Article 63 (1) (g).8 Therefore there was no question of disqualification of the Prime Minister. In light of this development, the government has reversed its earlier decision to file an appeal against the Supreme Court’s decision.9 This has irked the opposition parties and it is likely that the matter could be taken to court again.10

Implications for Democratic Governance The judgment has stirred a fierce debate on the role of the judiciary in Pakistan. According to one view, it is argued that judicial activism, including the recent actions resulting in the conviction of the Prime Minister, could weaken democratic institutions, which would be tragic in a country where a civilian democratic government is for the first time heading towards the completion of a full term of office. Najam Sethi, a respected Pakistani analyst, has cautioned that a continued standoff between the judiciary and the executive carries the 7

‘All parties stick to earlier positions’, Dawn (9 May 2012) http://dawn.com/2012/05/09/all-parties-stick-toearlier-positions/ Accessed 12 May 2012. ‘Complete text of Dr Fehmida Mirza’s ruling’ http://www.geo.tv/important_events/2012/ PM_indicted/pages/DrFahmidaMirzaRuling.asp Accessed 27 May 2012. ‘No appeal to be filed against PM conviction, says Aitzaz’, Dawn (26 May 2012) http://dawn.com/2012/05/26/no-appeal-to-be -filed-against-pm-conviction-says-aitzaz/ Accessed 27 May 2012. Qamar Zaman ‘PM Contempt Case: Case will go to Court again, says confident opposition’, International Herald Tribune (27 May 2012) http://tribune.com.pk/story/384818/pm-contempt-case-case-will-go-to-courtagain-says-confident-opposition/ Accessed 27 May 2012.

risk of infighting within the political parties, and that ‘at one level this serves the Army’s purposes’.11 There is also concern that the judiciary ‘may have implicitly played politics by trying to determine not just the legal issues but to influence the preferred political outcome in Pakistan’.12 Asma Jehangir, a noted human rights activist and former Supreme Court Bar Association President, echoed this sentiment when she said that the Apex court ‘should have pondered over how they had damaged the image of Pakistan by the judgment’.13 Stating that the PM had appeared before the court and remained submissive to the court, she added that it was ‘not a good tradition to disqualify the prime minister under Article 63,’ and that no Prime Minister would survive in future if that same tradition continued.14 On the other hand, there is continued support particularly from civil society and the media for a strong and independent judiciary. The empowerment of the judiciary is seen as a critical ingredient of the democratic process. An independent judiciary upholding constitutionalism and the rule of law is a positive development at a time when Pakistan is engaged in building its democratic institutions and processes. The judiciary in Pakistan is trying to tread cautiously to keep within its constitutional mandate. It bears pointing out that the Supreme Court had exhibited restraint in sentencing the Prime Minister for conviction, conscious of the risks that would follow if the conviction resulted in the Prime Minister’s disqualification from office. This is reassuring at a time when judicial activism or the ‘judicialisation of politics’ has become an integral part of Pakistan’s political scene. Pakistan stands today at a critical juncture in its political history as it seeks to put in place durable political processes and structures within the framework of democratic governance. The present political scene is characterised by a quest for a new equilibrium between the key political institutions—the executive, judiciary and legislature which are seeking to find their space in a dynamic democratic milieu. Three factors deserve attention in this regard. First, if democracy is to survive and thrive in Pakistan, the balance of powers between the legislature, executive and judiciary has to be carefully maintained, with none encroaching upon or threatening the other’s mandate. Second, the ruling political elite needs to show both the will and capability to provide effective, transparent and clean governance in line with popular will and aspirations. Third, the judiciary has to be strong and independent, but should exercise caution in walking the fine line between constitutionality and political populism. Any upset in 11

‘Pakistan PM charged with contempt in case that could drag on’, (13 February 2012) http://www.themalaysianinsider.com/world/article/pakistan-pm-charged-with-contempt-in-case-that-coulddrag-on/ Accessed 12 May 2012. See Rajshree Jetly, ‘Pakistan’s Supreme Court and the National Reconciliation Ordinance: What now for Pakistan?’ ISAS Brief no. 147, 22 December 2009, p.3. Jamaluddin Jamali, ‘PPP lawyers, Asma Jahangir rant against SC verdict’, Pakistan Today (27 April 2012) http://www.pakistantoday.com.pk/2012/04/27/news/national/ppp-lawyers-asma-jahangir-rant-against-scverdict/?printType=article Accessed 12 May 2012. Ibid.

this delicate political balance at this juncture would only prove counter-productive and imperil the future of democracy in Pakistan.

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ISAS Insights No. 167 – 4 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

How Goliath Slew David at the United Nations: A South Asian Perspective Iftekhar Ahmed Chowdhury1 Abstract Recently five smaller member-states of the United Nations – Singapore, Switzerland, Costa Rica, Jordan, and Liechtenstein – describing themselves as ‘Small Five’ or ‘S5’ sought to have a resolution adopted in the General Assembly. This was a modest effort at restraining the behaviour-pattern of the larger and more powerful Permanent Five or P5 of the Security Council – the United States, the United Kingdom, Russia, China, and France – mainly with regard to their unrestricted exercise of veto powers. It failed. This was caused by a calibrated opposition from the major states and others opposed to Security Council reforms, particularly with regard to its expansion. India and Pakistan among South Asian nations played out their traditional rivalry, with India supporting the ‘S5’ initiative and Pakistan opposing it. There were lessons to learn from the story for the South Asian ‘others’ as well. The paper argues that sustained and persevered efforts would be necessary to bring about changes in a system naturally resistant to them, and a setback is not, and must not be seen as, a defeat. Introduction Small may at times may be beautiful, but is rarely powerful in global realpolitik. This axiom was proven one more time on the floor of the United Nations General Assembly in May 1

2012. In a reverse of the Biblical slaying of the mighty Goliath by tiny David with a little bit of appropriate stratagem (or rather tool) and a helping hand, or leg up, from Jehovah, here we saw a demolition of the smaller fellow (s) by the larger ones. This was easily executed with devastating decisiveness. Fortune and the gods of diplomacy favoured, not the brave, but the strong. An initiative to change the working methods, albeit marginally, of the all-powerful United Nations Security Council, often viewed as opaque, unaccountable and non-inclusive, came a cropper, mainly due to intense opposition by the five veto-wielding permanent Council members. Or by the P5, which is their UN cognomen. The initiative figured in discussions between the author and Prince Zeyd Raad al Hussain, Ambassador of Jordan to the UN, and a key sponsor of the effort, during the latter’s visit to the Institute of South Asian Studies (ISAS) in Singapore. In the events that were unfolding in New York at the time of these discussions, there were lessons to be drawn for the countries of South Asia as well.

‘S5’ versus P5 The smaller five states – Costa Rica, Jordan, Liechtenstein, Singapore, and Switzerland – had acquired the name of ‘S5’ hoping that such a description would attract a modicum of sympathy when pitted against the Permanent Five (P5) – the United States, the United Kingdom, Russia, China, and France. Each of these carried, through the veto power, the authority to negate any vote-count in the Security Council, the organ of the UN that calls most shots. The S5 were never seen as harbouring any ambitions themselves, given their size and capabilities. Therefore, they took it upon themselves to spread only goodness and light, and help somewhat ‘improve’ in their view, ever so moderately, the global multilateral system. This they sought to do through a low-key resolution in the General assembly. But even that modest goal was seen as too ambitious by those who regarded themselves as ruling the roost, and shot down, with no quarters given. The Security Council, one of the principal UN organs, and indeed the key one, is charged with the maintenance of international peace and security. It has 15 members, the P5 and 10 non-permanent members each elected for a two-year term. Under Chapter 6 of the UN Charter it can make recommendations that are non-binding with regard to peaceful settlement of disputes. Article 7 empowers the Council to use force to obtain compliance in situations involving “threats to peace, breaches of peace or acts of aggression”. The 2005 World Summit adopted the principle of ‘Responsibility to Protect (aka R2P) that further entitled it to intervene in certain special circumstances. In reality, however, the only limit to its powers is when one or more of P5 refuse to play ball. Each of them pursues perceived national selfinterest and uses the veto freely to that end. The structure and working methods of the Council reflect post-World War II power equations that are obviously outdated. So, emerging States like India, Germany, Japan, and Brazil (also from Africa, perhaps, South Africa want 2

to join as permanent members, each opposed by its neighbours. As the historian Paul Kennedy tells it: “Everyone knows that the present structure is flawed, but a consensus on how to fix it remains out of reach”. Attempts to reform this archaic body has been on the cards for long. These encompass five key issues: categories of membership, question of veto, regional representation, size of membership including the permanent members, and working methods. For sometime India, Germany, Japan, and Brazil, or the Group of Four (G4) as they are called, have flagged their aspirations to permanent membership, with or without veto powers. They have been vehemently opposed by their immediate neighbours: Pakistan, Italy, China, and Argentina. The latter meet with sympathizers in what has been called the ‘Coffee Club’ (aka ‘Uniting for Consensus’ group), where despite its name, champagne and similar libations has often flowed freely to convert the uncommitted. They argue that such reform is an’ important question’, thus requiring, according to the UN Charter, a two-thirds majority in the General Assembly, not easy for the G4 to collect.

The Failed Initiative The ‘S5’ initiative became mixed up with this debate. To an extent it was unavoidable. At a regular meeting on Security Council reforms held at the UN on 2 May 2012, some delegates made comments on the initiative that indicated the confusion. In order to remove it, one of the ‘S5’ envoys, Ambassador Paul Seger of Switzerland, circulated a memo on 4 May 2012. It underscored two main points: One, the fact that the ‘S5’ draft resolution did not ‘prejudge, undermine or replace a future decision on the enlargement of the Security Council’; and two, that it only dealt with how the Council should work ‘within its current composition’. The draft was innocuously described as ‘enhancing the accountability, transparency, and effectiveness of the Security Council’. It was thought to be as non-controversial and universally acceptable as motherhood. But in the culture of suspicion that perennially pervades the UN, even motherhood can also be potentially controversial. The draft resolution had an annexe with a number of recommendations. The last three, numbering 19, 20 and 21 concerned the veto. It asked that the P5 explain the reasons for casting veto, refrain from doing so in cases involving ‘genocide, war-crimes and crimes against humanity’, and establish the practice that at certain times their negative vote would not tantamount to a veto. These were red rags to the bull. The P5 were unused to being told what to do. The US was always protecting Israel against allegations of ‘war-crimes’ with its veto power, and Russia and China had just exercised it in the case of Syria. The ‘S5’ had opened up too many fronts to fight. Added to it were the apprehensions of the UfC or ‘uniting for consensus’ members to whom any changes in the functioning of the Security Council might directly or indirectly smoothen or facilitate its dreaded expansion. 3

The voting on the draft in the General Assembly was set for 16 May 2012. The P5 lobbied hard against it not just in NewYork, but in the capitals as well. They made demarches and despatched notes. As the date for the vote approached, the UN principal legal officer Patricia O’Brien, weighed in with a view that favoured the recalcitrants. The Chef de cabinet of the President of the General Assembly, Ambassador Nasr al Nasr had asked her advice. An astute diplomat, Nasr represented Qatar, which though a small state that played a disproportionately larger role in the international scene was not usually a champion of changes. O’Brien’s advice was that while a two-thirds majority was necessary to decide on an ‘important question’ such as an amendment to the Charter, in 1998 the General Assembly had passed a resolution asking for a two-thirds majority on Security Council issues and ‘related matters’. This, she opined, was a ‘related matter’ requiring such a majority. Even before her opinion could be formally announced, the Chinese delegation reportedly appended it to a note asking member states to vote for a ‘no-action’ motion against the ‘S5’ resolution. This put paid to any support the ‘S5’ could have expected from even such South Asian nations as Bangladesh, Nepal, Sri Lanka or Bhutan, the Chinese dragon having breathed fire that rendered the proposed draft into a pile of ashes. Sensing an embarrassing result if put to vote, the ‘S5’ withdrew their initiative. Except for Singapore and Jordan, the other three members of the ‘S5’ – Switzerland, Costa Rica and Lichtenstein – were disinclined to take the resolution to the vote. But this defeat does not mean that the ‘S5’ were wrong to venture forward to seek changes, however small, in an archaic global order. If global bodies are to be reformed, as they must be to keep up with changing times, those who seek it must have the tenacity of a Robert Bruce. And some must lead, with ideas and initiatives, with courage and conviction.

The Relevance to South Asia There is a lesson in this for the countries of South Asia as well, not just India and Pakistan, who currently sit in the Security Council and in any case are viewed as important (and nuclear-weapon) States, but others such as Bangladesh, Sri Lanka, Nepal, Bhutan, Afghanistan and Maldives as well. The India-Pakistan rivalry was played out in this instance too. Interestingly, both Pakistan and India based their positions on similar philosophical premise that comprehensive reforms of the Council and improving working methods are inter-related and cannot be divided. Suspecting that it was indeed a veiled attempt at greater reforms, Pakistan (also as a UfC member) opposed it. India supported the proposals, arguing that both reforms must go hand in hand. However, India did object to the classification of the five initiators as small states, on two counts. One, at the UN, all States, large and small, are on sovereign equal footing (this was a populist position and India was wise to adhere to it), two, each of the five was influential and thereby 4

powerful, some like Singapore, for instance, as also perhaps Switzerland and Liechtenstein, were wealthier than most). The other South Asian states were notably, and understandably, quiet. Sri Lanka would be hesitant to empower any international body in a way that made intervention in any form easier. It would be happier to have on its side a friendly P5-member like China to have the wherewithal to cast veto in its favour without having to explain its action in any way. There was another reason for the relevance of this story for some other South Asians. There are countries in the region with pet causes they champion, like environment in the case of Bangladesh and Maldives. They should feel inspired by the courage displayed by ‘S5’ even if it did not find fruition. Indeed Bangladesh was able in 2008 to be instrumental in taking the environmental issue as a thematic subject for discussion in the Security Council, much against the sentiments of many fellow-developing countries who were chary as a matter of principle of any accretion of powers to the already powerful (too powerful, according to some!) Security Council.

Conclusion Despite the fact of this particular initiative coming to naught, the ‘S5’ should not disappear from the scene, Not only should it continue to exist but further buttress itself by holding regular consultations with diverse groups. It should continue to be a forum, as a Singaporean representative stated at a meeting in Mexico last year, for thinking ‘out of the box’. African participation would be useful, both on substantive and optical counts. South Asian states, other than India and Pakistan – the South Asian ‘others’ – could become an effective support base, for reasons cited in the previous paragraph. So this setback must not be seen as a defeat. The Singaporean leader Lee Kuan Yew had once said: “In an imperfect world we have to search for the best accommodation possible. And no accommodation is permanent”. Change will come, even to the UN, though not without effort, and not that soon. When the UN was first set up, and P5 given veto powers in the Security Council on substantive issues, a non-P5 member had reportedly asked the then Soviet Ambassador: ‘How would we know whether a matter is substantive or procedural?” Pat came the Soviet response: “We will tell you!” Last week the Swiss, Paul Seger, in a similar vein, had reportedly asked Ambassador Vitaly Churkin of Russia if he could sit in on the Council’s informal deliberations as a resource person? The quick, sharp, and pointed response was ‘No’. So, the time for change had not yet come. For now at least it was a matter of Roma locuta, causa finita: Rome had spoken, the case was finished!

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ISAS Insights No. 168 – 13 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

Power Shortages in India’s Southern Region: Challenges for Growth S Narayan1 The power industry is one of the largest and most important industries in India as it fulfils the energy requirements of various other industries. India has the world’s fifth largest electricity generation capacity and it is the sixth largest energy consumer accounting for 3.4 per cent of global energy consumption. In India, power is generated by State utilities, Central utilities and private players. The share of installed capacity of power available with each of the three sectors can be seen in the pie-chart below: Figure 1: Top Players in the Power Sector

State Sector 48%

Central Sector 31% Private Sector 21%

Top Players in the Power Sector NTPC Public NHPC Sector Power Grid Corporation Reliance Power Private TATA Power Sector Adani Power

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 the Economic Adviser to the former Prime Minister of India, Mr A B Vajpayee. He 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. The author acknowledges assistance from Researcher Sarin Paraparakath.

Figure 2: The Power Sector Value Chain

Major Inputs

Source of Power

Central Transmission Utilities and State Transmission Utilities

Coal

Oil

Transmission Utilities

Thermal Power (66%)

User Industries Domestic Consumption (25%) Commercial Consumption (10%) Industrial Consumption (35%)

Gas

Water

Radio Active Elements (Uranium, Thorium, etc) Solar panels, Wind Mills, Etc.

Distribution Channels Hydro Power (19%) State Electricity Board State Distribution Boards Private Distribution Utilities

Nuclear Power (3%) Renewable Energy Sources (12%)

Agricultural Consumption (21%) Railway Traction (2%) Public Utility (4%)

Bulk Supply (3%)

The continuing gap between demand and supply led the Planning Commission to adopt an ambitious target for power generation for the Eleventh Five Year Plan (2007-2012) of 78,000 MW of fresh generation capacity. This had to be scaled down, and only around 54,000 MW could be added in this period, and that too with a significant contribution from the private sector. The gap between availability and demand, in a growing economy, has increased. In the Southern Region, in particular, the gap has become even more, as this region has been growing faster than the rest of the economy. The Southern Region now contributes 26 per cent of the countryâ&#x20AC;&#x2122;s GDP, with only 23 per cent of installed capacity (excluding renewable). The industrial sector contributes 80 per cent of revenue and accounts for 60 per cent of the Gross State Domestic Product. Energy consumption of the industrial and commercial sectors has been growing and the current power constraints have started affecting output from manufacturing as well as commercial sectors. This paper argues that neglect of the Southern Region in power generation and transmission facilities is affecting the regionâ&#x20AC;&#x2122;s growth potential.

Table 1: GDP and GSDP of Southern Region and India GSDP in Rs. Crore 2007-08 2008-09 2009-10 2010-11 2011-12 Andhra Pradesh 306645 327731 347344 381942 407949 Karnataka 228202 244421 257125 279932 297964 Kerala 154093 162659 177209 193383 208468 Tamil Nadu 305157 320085 350258 391372 428109 Southern Region 994097 1054896 1131936 1246629 1342490 Total All-India GDP(20043896636 4158676 4507637 4885954 5222027 05 base) Source: Directorate of Economics & Statistics of Respective State Government (2004-2011) & Central Statistics Office

Table 2: Annual Electricity Consumption 20082009201020112007-08 09 10 11 12 666149 690787 746704 788355 857537

Consumption in Million Units India Energy Consumption Southern Region Energy Consumption

176001

188711

206459

217949

237395

Source: Load Generation Balance Reports (2007 - 2012), Central Electricity Authority

The energy intensity of growth in Southern Region has been expanding faster than the all India requirements. This has led to a growing deficit in energy availability in the region. The energy deficit in million units has almost doubled in 2011-12, although some new generation capacity has been added.

Figure 3: Energy Requirement vs. Growth India

India (GR)

Southern Region(GR)

600,000 400,000

13.2

12.2

800,000 MU

Southern Region

8.8

8.1 6.9

5.1

4.2 3.7

200,000

0 2007-08

2008-09

2009-10

2010-11

Source: Load Generation Balance Reports (2007 - 2012), Central Electricity Authority

2011-12

percentage(GR)

1,000,000

Figure 4: Growth in Energy Deficits SR Energy Deficit

Southern Region %

13.3

11.1

9.9

20000

India % 10.1

8.8

8.5

7.5

8.5

6.4

10000

10 5

3.2 0

percentage

30000

0 2007-08

2008-09

2009-10

2010-11

2011-12

Source: Load Generation Balance Reports (2007 - 2012), Central Electricity Authority

Figure 5: Load Shedding Trends in the Southern Region Load Shedding of Energy Tamil Nadu

MU 2000

Karnataka

Load Shedding of Peak Power

Andhra Pradesh Kerala

1,880

6000

1,313

4000

500 0

Andhra Pradesh Kerala 4653

1500 1000

Tamil Nadu Karnataka

3479

1,130

2723

873

2000

607 445 33

Oct/11 Nov/11 Dec/11 Jan/12 Feb/12 Mar/12

3222 2430

1850 500

300

Source: Monthly Report on Power Cuts to Industries, Central Electricity Authority, accessed on May 12, 2012

It may be seen that Tamil Nadu has been affected the most, with a sharp energy load shedding after January 2012. The pattern of consumption growth trends indicates increasing industrial and commercial activity in the region.

Figure 6: Energy Consumption in the Southern Region Consumption Trends

Consumption Growth Rates

Industrial/ Commercial

Others

120000

100000

80000

percentage

Industrial/ Commercial

Others

60000 40000

20000

Source: Annual Revenue Requirement & Retail Supply Tariff (2005-2012), various State Electricity Regulatory Commissions.

Even in terms of installed capacity, growth in the western and northern regions has been far greater than the Southern Region. This has led to a situation where shortages have increasedâ&#x20AC;&#x201D;the Southern Region is growing faster, and yet the generation capacities have been lagging behind, thus exacerbating the shortages. The installed capacity (conventional source) of the Western Region grew at a CAGR (compounded annual growth rate) of over 9.5 per cent since 2004-05 and for the Northern Region it grew at 7.5 per cent, however in the Southern Region only a 5.9 per cent growth was witnessed during the same period.

Figure 7: Installed Capacity (Conventional sources) SR

60000 50000

10000

49,285

56,484

41,171

32,098

20000

32,597

30000 29,054

40000

CAGR WR 9.5 NR 7.5 SR 5.9

0 2004-05

20011-12

Source: Installed Capacity (In Mw) Of Power Utilities in the States/UT (2005-2012), Central Electricity Authority

Even more serious is the lack of transmission capacity in the Southern Region. The growth of transmission in the Southern Region in the last decade has been much smaller than in the other regions (see map) thus constraining the flow of power into and out of this region. There is thus a mismatch between the growth of availability of power in the northern and western regions and the ability to use this power in the Southern Region, where there are severe shortages and bottlenecks. During the 11th Plan, the inter-regional transmission capacity between the Southern Region and the rest of the country increased by 500 MW, where as capacity between other regions such as the Western and the Northern Region increased by over 8,500 MW during the same period. Congestion in the SR grid occurred almost daily between June 2010 and Aug 2011 with congestion touching 25 per cent for most months and over 50 per cent congestion for four months. Rs 573 crore additional congestion charges were paid by southern consumers for purchasing power form the exchanges. As a result of this congestion, the South was unable to draw enough power from the exchanges. Table 3: Growth in Inter-regional Transmission Capacity End of 10th Plan

as on 2009-10

as on 30th Dec 2011

ER-SR

3130

3630

ER-NR

3430

6330

7930

ER-WR

1790

2990

4390

ER-NER

1260

NR-WR

2120

4220

WR-SR

1720

India Total

13450

20150

23150

In MW

Figure 8: Inter-Regional Transmission Capacity

Source: Draft National Electricity Plan (Volume II â&#x20AC;&#x201C; Transmission) Feb- 2012, Ministry of Power, Central Electricity Authority

The clear evidence of this mismatch has been in the price of exchange traded power in the Southern Region. These prices have been ruling at several multiples of the rates in the rest of the country.

Figure 9: Exchange Traded Power (2011-12) NR

15 10 5 0

2011-01 2011-03 2011-05 2011-07 2011-09 2011-11 2011-13 2011-15 2011-17 2011-19 2011-21 2011-23 2011-25 2011-27 2011-29 2011-31 2011-33 2011-35 2011-37 2011-39 2011-41 2011-43 2011-45 2011-47 2011-49 2011-51 2012-01 2012-03 2012-05 2012-07 2012-09 2012-11 2012-13 2012-15 2012-17

Average weekly Prices (Rs/Unit)

Source: Indian Energy Exchange, Average Weekly Prices, Accessed 12 May , 2012. http://www.iexindia.co m/Reports/AreaPrice.aspx

It is clear that there are serious constraints to availability and distribution of power in the Southern Region that needs to be addressed through short term as well as long term measures. A common feature among the four states of the Southern grid (Tamil Nadu, Andhra, Karnataka and Kerala) is the substantial losses in transmission and distribution. The energy lost through T&D losses in the Southern Region is equivalent to the annual consumption of Madhya Pradesh and in terms of value is just above the expenditure requirement of all distribution utilities in Karnataka. In 2011-12, 43.12 billion units of energy were lost owing to T&D losses. A one per cent reduction in T&D losses in the Southern Region can result in 2.13 billion units of energy saving annually.

Figure 10: Expected Losses due to T&D Energy Lost through T&D (BU)

In Value Terms (Rs . Crore)

26608.5

25000

19404

20000

59.13

55.53

52.19

48.36

45.94

40 15000 10000

Rs. Crore

23485.5

43.12

Billion Units

30000

5000

10 0

2011-12

2012-13

2013-14.

2014-15

2015-16

2016-17

Source: High Level Panel of Financial Position of Distribution Utilities, Dec- 2012, Planning Commission of India

The financial health of the power utilities is also poor (see graph below). In the Southern Region, accumulated losses as on 2011-12, exceeded Rs 46,000 crore, and almost all the utilities are financially unviable. Due to the high financial losses faced by most utilities, they are unable to purchase power in times of deficit, leading to power cuts. The accumulated losses are about one per cent of the national GDP and are estimated to grow to over Rs. 1.16 lakh crore by the end of the 12th Plan. Owing to such high losses, utilities have increased the tariff on power, which is above the cost to serve. Figure 11: Financials of Utilities in the Southern Region Total Revenue

150,000

Total Expenditure

Accumulated Losses

100,000

Rs Crore

50,000 0

2011-12

2012-13

2013-14.

2014-15

2015-16

2016-17

-50,000

-100,000 -150,000

Source: High Level Panel of Financial Position of Distribution Utilities, Dec- 2012, Planning Commission of India

Rs/uint

Figure 12: Per Unit Revenue Realised vs. Average Cost to Serve Domestic

Commercial LT

Industrial LT

Commercial HT

Industrila HT

Averege Per Unit Cost of Supply

8.00 7.00 6.00 5.00 4.00 3.00 2.00 1.00 0.00

4.92 4.21

Andhra Pradesh

3.95

Karnataka

Tamil Nadu

4.35

Kerala

Source: Annual Revenue Requirement & Retail Supply Tariff (2012-13), High Level Panel of Financial Position of Distribution Utilities, Planning Commission of India

It is evident that the high level of subsidies would continue to stress the financials of the power utilities.

Conclusion There are opportunities to address these infirmities, both in the short term as well as the medium term. Among the alternatives to cut down T&D losses would be the introduction of demand side measures to manage peak loads and to introduce a franchise model for collection and billing. Tariff reforms could consider time of day tariffs for all consumers, and perhaps adopt the Gujarat model of separate feeders for free power and metered power. There is also an opportunity for taking public lighting off the grid in smaller towns by encouraging decentralised and distributed generation through hybrid sources of energy through solar and wind. Plant load efficiencies could be incentivised through higher tariff purchases. In the medium term, apart from focusing on fresh generation capacity, there could be an emphasis on reducing congestion in the transmission grid. Investment in improving transmission appears to be among the most urgent priorities for the Southern Region. Given the growth potential of the Southern Region, and the constraints to growth that is seen as being due to inadequate power supply, there is need for urgency to address both short term as well as long term measures.

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ISAS Insights No. 169 – 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

India-Myanmar Ties: The Trade Perspective S Narayan1

The recent visit by India’s Prime Minister Manmohan Singh to Myanmar had as much to do with bilateral trade as with diplomacy and security. The Gross Domestic Product (GDP) growth in Myanmar firmed up to 5.1 per cent in 2009 after a decade of anaemic growth. 2010 was even better, at close to 5.5 per cent. Growth in the neighbouring countries, especially those that import gas, also helped to boost these GDP figures. Nominal GDP has risen from US$ 16.7 billion to an estimated US$ 35.2 billion in 2010. There are also large projects that have been committed by foreign investors in power, petroleum and infrastructure that are likely to contribute to Myanmar’s economic growth in the next few years. Natural gas reserves are estimated to be 2.54 trillion cubic metres, and Myanmar is emerging as a major supplier of gas to its neighbours. It has also large deposits of metals, minerals and gems, and accounts for 90 per cent of the global production of rubies. In addition, there is considerable opportunity for development in agriculture and fisheries. Rice, pulses, wood and vegetables are important agro-based products that are being increasingly exported. Myanmar’s total exports have grown from US$ 2.8 billion in 2001 to US$ 6.4 billion in 2010.

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.

India lost out to China in an attempt to secure gas supplies from Myanmar, and China has already an important presence in several infrastructure projects that include roads, port development and power. Myanmar’s trade ties with India are historical and even today the pulses trade in Myanmar is controlled by the Marwaris and Chettiars of Indian origin. However, these trade connections have been at the enterprise level, with little or no support from government or governmental agencies. The diplomatic engagements have focused more on international relations and security perceptions, rather less on trade. India’s share in Myanmar’s foreign trade has not been significant.

Table 1: India’s Exports of Major Commodities to Myanmar (US$ mn) Product Code All products 2

Meat and edible meat offal

2001

2005

2006

2007

2008

2009

57.7

117.2

124.1

162.8

237.3

208.2

0.1

1.5

Pharmaceutical products

10.5

23.3

33.9

40.9

50.4

54.3

Iron and steel

16.4

37.7

36.4

38.4

43.4

51.2

Electrical, electronic equipment

2.6

6.1

5.3

10.1

14.6

14.7

Machinery, boilers, etc

2.0

9.1

6.5

10.3

23.6

9.7

Residues, animal fodder

0.1

0.5

0.8

1.6

3.7

Cotton

0.4

0.6

0.7

2.9

4.1

4.2

Sugars and sugar confectionery

0.1

0.3

0.1

Plastics and articles thereof

2.7

2.1

3.4

3.3

2.7

4.7

Rubber and articles thereof

2.3

3.8

6.1

8.6

7.1

7.8

1.8

6.0

5.7

9.0

13.4

5.6

Articles of iron or steel Vehicles other than railway, tramway

3.1

6.0

4.1

10.3

5.0

3.8

Misc. manufactured articles

0.3

0.9

1.3

1.6

3.0

3.2

Misc. chemical products Miscellaneous articles of base metal Essential oils, perfumes, cosmetics, toiletries Tools, implements, cutlery, etc of base metal Mineral fuels, oils, distillation products, etc

0.2

1.8

1.3

1.8

2.1

1.9

0.3

0.5

0.9

0.7

1.6

3.0

0.3

0.9

1.2

1.1

1.9

2.0

1.2

1.7

2.2

3.1

2.9

2.5

1.9

0.2

0.4

2.0

12.7

Misc. edible preparations Paper & paperboard, articles of pulp

0.1

0.6

1.6

0.9

1.1

0.4

0.8

0.4

2.0

0.9

83 33 82 27 21 48

Source: Trade Map, ITC Geneva

Figure 1: Indiaâ&#x20AC;&#x2122;s Trade with Myanmar

It can be seen that India does not have a significant place in Myanmarâ&#x20AC;&#x2122;s imports.

India’s trade balance with Myanmar is currently negative, with imports far exceeding exports. The Indian Prime Minister’s recent visit to Myanmar was an attempt to redress this imbalance. There was an emphasis on improving bilateral relations, and Dr Manmohan Singh divided his time between Myanmar’s Government and the opposition maturely. On the trade side, there were three important initiatives. The first of these was the announcement that an Indian company had secured drilling rights for oil and gas at an on-shore field. Second, there was the announcement that the road-link project would be completed expeditiously, opening up the northeast of India with Myanmar. Third, and more importantly, it was announced that funds under India’s earlier promise of trade aid of US$ 500 million would start to flow. There were also discussions on solar energy and on setting up power plants, but these discussions remained at a preliminary stage. At one level, it could be argued that these efforts are too little, too late. Given Myanmar’s need for infrastructure and for large projects, it would have been appropriate for New Delhi to consider the engagement of major Indian companies in the public as well as private sector in that country, tied in with some bilateral assistance and aid. Another opportunity could have been to offer value additions in agriculture, in terms of packaging, processing and storing, given that India is likely to be a major consumer of the exportable output of Myanmar’s agriculture. A third approach could have been to engage with the traditional trading communities on both sides to attempt to sort out trade-related barriers, both tariff- as well as non-tariff-based, to smooth the flow of goods between the two countries. Dr Singh’s recent visit to Nay Pyi Taw and Yangon appeared to have missed such a focused approach. There are opportunities for export of India’s pharmaceuticals, light engineering goods, agricultural machinery, textiles and even telecommunication products, apart from twowheelers and three-wheelers as well as small vehicles so popular in India for freight and goods. It is important to improve the presence of Indian corporate sector in Myanmar, and the likes of Tata and Mahindra can hope to expand their footprints there significantly. The focus should be on value-added goods, in the intermediate and small industries sectors, that would be needed by the Myanmar economy. The External Affairs Ministry in India is stretched thinly across all the continents, and is perhaps not able to adopt a fully nuanced approach towards bilateral issues. In Myanmar, it appears as though the Indian Prime Minister’s visit mirrored that of US Secretary of State and several of the visits from China. While it is important for New Delhi not to be left out of the diplomatic race, it is equally important that India establishes strong trade linkages that would provide opportunities for Indian companies to do business in Myanmar.

It is not clear that the visit achieved as much as it could have. The Chinese media and Government welcomed Dr Manmohan Singhâ&#x20AC;&#x2122;s visit â&#x20AC;&#x201D; perhaps they had expected much more on the business side to emerge from his interactions in Myanmar! More needs to be done to engage Myanmar in bilateral trade, otherwise India would lose the initiative to other players.

.....

ISAS Insights No. 170 – 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

NATO and Afghanistan: Beginning of an Orderly or a Messy Process of Withdrawal? Shahid Javed Burki1 Abstract The leaderships of the NATO (North Atlantic Treaty Organisation) countries were pushed by domestic considerations to lay out a programme for withdrawal of their troops from Afghanistan at a more accelerated pace than they had originally envisaged. There were both political and financial reasons for America’s rush to the door. The war was no longer regarded by the citizens as “necessary”. This change in sentiment could not be ignored by the country’s leadership especially when President Barack Obama faced stiff opposition in the run-up to the November 2012 presidential contest. America’s European allies were even less enthusiastic about the war. They were too engrossed in solving their growing economic problems to focus much attention on a difficult and distant land. And the cost of continued engagement was way beyond what America and Europe could afford. President Obama told the press after the conclusion of the NATO summit in Chicago, held on 20-21 May 2012, “We can pull our troops back in a responsible way and we can start rebuilding America and start making some of the massive investments.... in America here at home.”2 But such a neat outcome does not seem to be on the cards even after the NATO summit in Chicago. This paper suggests that the “great pullout” is likely to be a messy affair and not as desired by the United States and its allies. Unlike the Soviet Union, the

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 is a former Finance Minister of Pakistan and a former Vice-President of the World Bank. 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. Scott Wilson and Karen DeYoung, “NATO leaders agree on ‘road map’ to end Afghan war”, The Washington Post, 22 May, 2012, p. A2.

United States will remain engaged in one way or other in Afghanistan for years to come. Its pullout will not be as complete as was that of the Soviets.

Introduction The [initiative for a] great NATO pullback from Afghanistan made political and economic sense but Pakistan’s help was needed to bring it about in a less costly way. But NATO’s relations with Pakistan had become complicated by a series of crises involving the United States in 2011. Islamabad had denied access to its territory following the deaths of 24 of its soldiers on 26 November 2011 as a result of an American attack on its post near the Afghan border. Islamabad wanted an apology from Washington for the attack, something the Obama administration was not prepared to tender. Having been repeatedly accused by his Republicans opponents for not protecting the US interests, an apology was politically not possible for President Obama. The Pakistanis also wanted the United States to cease its attacks by unmanned aircraft – the drones – on the Pakistani tribal areas near Afghanistan. These attacks were part of the US strategy to prevent Afghanistan from once again becoming a haven for the terrorists who could carry out 9/11 type attacks. In spite of Pakistan’s objections, attacks by drones continued. On 6 June 2012, Washington reported that the second-in-command of the Al Qaeda was killed two days earlier in an attack on a village in North Waziristan. In so far as Pakistan’s role is concerned, it will be defined by its own strategic reasons. In this context it will not want to totally alienate the groups that had given the United States a great deal of problems during its Afghan adventure. How this pullout from Afghanistan plays out will have enormous implications not only for the region that includes Afghanistan and Pakistan but for long-term global security.

The Great Pullback The NATO alliance agreed at its November 2010 summit in Lisbon, Portugal, that the Afghans would assume control of their security at the end of 2014, the exit deadline for the coalition. According to one assessment, “since then as public disapproval of the war has risen the coalition has become increasingly anxious to test Afghan force capabilities, US Defence Secretary Leon E. Panetta and others have indicated that the ‘transition’ outlined in Lisbon would be accelerated, and that all of Afghanistan will be under Afghan security by the end of 2013, while the coalition continues to provide assistance for another year until the withdrawal of NATO troops”3.

David Nakamura, “Obama aims to gain consensus from NATO, G-8 summits”, The Washington Post, 18 May, 2012, p. A14.

The effort to gain international acceptance of an unambiguous plan of troop withdrawal was accelerated by Barack Obama by convening two summits. A G-8 summit was held on 19 May 2012 at Camp David, the presidential retreat in the Maryland State’s mountains, followed a day later by a two–day meeting in Chicago at which 61 heads of state and government were invited. The G-7 – not G-8 since Russia under its newly sworn-in President Vladimir Putin declined the American invitation – was focused on how the deteriorating situation in Europe was affecting the global economy. That said, the United States took the opportunity to press its allies in G-7 to commit financial resources of their own to complete the final phase of the Afghan enterprise. The invitation to Pakistan’s President Asif Ali Zardari was issued late and only after there was an indication from Islamabad that it was willing to open the supply route from the port of Karachi to landlocked Afghanistan. However, it transpired after Zardari arrived in Chicago that there was a price associated with Pakistan’s willingness to accommodate the American needs. As discussed later in this paper, the price Islamabad wanted to charge was not acceptable to Washington.

Transferring the Task to Afghanistan In planning for their withdrawal, the NATO leaders were guided by the experience gained in Iraq where a sizeable local force was built up with American help to take over the responsibility for maintaining law and order. A contingent of 670,000 made up of the military and police forces was raised, trained, and armed before the American withdrawal was completed. The Americans did not leave an entirely secure Iraq but the country was able to return to a degree of normalcy. It had also appeared on the international scene as a player: in end-May 2012 it hosted the second of a series of meetings to resolve the West’s dispute with Iran on the latter’s nuclear policy. The initial plan for Afghanistan called for a force of 352,000 uniformed personnel. Several experts including Ronal E. Neumann who had served as the United States’ ambassador in Kabul from 2005 to 2007 termed the operation for creating such a force successful. “Underappreciated amid all the frustrations, losses and tragedies of the United States’ longest war is some good news: Afghanistan’s army and police are improving substantially”, he wrote in a newspaper article. “To be sure they still suffer from politicisation at senior levels, and they have a long way to go on the battlefield. But their progress has been real. Their numbers are growing; ethnic balance is reasonably good; and they are leading some 40 per cent of operations on the ground (albeit mostly simpler ones).”4 Other areas of progress were noted by other analysts. Some 260 of the country’s 403 districts covering 65 per cent of the population were by early summer 2012 secured primarily by Afghan troops. Night raids with Afghans now fully in the lead had taken out many skilled insurgents off the battlefield. 4

Ronald E. Neumann and Michael O’Hanlon, “NATOS’s undue optimism”, The Washington Post, 18, May, 2012, p. A19.

But the main problem for maintaining a force of this size was finance. Afghanistan on its own could not keep a force as large as Americans had initially aimed to develop. It would need a great deal of financial support for years to come. Accordingly, the force was to be scaled back to the suspiciously precise figure of 228,500 starting around 2015. The number was obtained by dividing the amount of financial resources that were likely to become available by the estimated cost of maintaining an Afghan in uniform. According to Ambassador Neumann, this reduction in the planned size of the force “would save about $2.5 billion a year bringing the expected cost of sustaining the army and police down from $6.6 billion to $4.1 annually. In fairness, having a specific target such as $4.1 billion would help the United States elicit pledges from other allies for supporting the Afghan state in future years and would help the Afghans to concentrate on responsibilities they must shoulder”. Before the NATO meeting in Chicago, the United States indicated it would be willing to provide $2.4 billion a year of the cost to maintain the reduced force. However, counterterrorism experts relying on the experience of other places and countries suggested “that in a country of 30 million, like Afghanistan, as many as 600,000 soldiers and police officers would be required.”5 There was apprehension in many policy circles that a force of the planned size would not keep the Taliban at bay once the NATO troops left the battle scene. There were other problems faced by the United States and its allies as they did their planning to begin the pullout. One of them was the loyalty of the troops they had trained and would leave behind. A number of Afghan soldiers turned their American-supplied weapons back on the Americans on what the U.S. military called “green on blue” attacks. According to one account “already this year [May 2012], 22 coalition service members have been killed by men in Afghan uniform, compared with 35 for all of last year, according to coalition officials”.6 These attacks were threatening the training model adopted by the United States and its allies. One such incident occurred on 1 March 2012 at Sangesar camp in Zahre district in Kandahar province. It took the lives of two American servicemen while three Afghan soldiers were killed. A pattern of mistrust was emerging. “Just days before [the Sangesar incident], hundreds of American advisers had been pulled from Afghan government offices in Kabul after two American officers were killed by an Interior Ministry employee, worsening an already poisonous situation during the rioting that broke out after American military personnel burnt [copies of] Koran”7. If this trend continued there was fear that trained Afghan soldiers may harass the American troops as they began to leave their country.

5 6

Ibid. Matthew Rosenberg, “As trained Afghans turn enemy, A U.S.-led imperative is in peril”, The New York Times, 16 May, 2012, p. A1 and A10. Ibid.

It was also recognised that even if the Afghan forces were able to hold on to most of the country’s territory there were areas in the south and east that would be hard to bring out from under Taliban’s control. In these parts of the country ethnically based militias were reorganising themselves while the Taliban were gaining strength in the contested and strategically important provinces of Helmand and Kandahar. Theses provinces were the focus of attention of the American troops when thousands of additional soldiers were ordered into the country by President Obama in what was dubbed as the “surge”. The New York Times quoted from a recent Pentagon report “that enemy attacks in Kandahar rose 13 per cent in the more recent OctoberMarch time period versus the same period last year.”8 An analyst looking at the problems the United States and its NATO allies were likely to face as they work out the logistics of the great pullback from Afghanistan recalled what happened in 1842 when the British decided to pull out of the country: “Few images better sum up what NATO wants to avoid as its troops exit Afghanistan than the exhausted Dr William Brydon, riding a half-dead pony into the garrison town of Jalalabad after Britain’s retreat from Kabul in 1842. His skull shattered, he was the only member of the British army to avoid death or capture. Since then other foreign armies have suffered similarly bitter departures from the region, most recently the Red army in 1989”9. There was nervousness about meeting such a fate although the circumstances then were very different. Then, the arrival of the British in the country invited universal Afghan hostility. That was also the case when the Soviet Union came marching in although there were elements in the Afghan society that looked with favour to Moscow’s attempt to change the highly conservative Afghan society. The American presence in Afghanistan had much greater support among the Afghans, in particular the ethnic groups in the country’s north. It was the Pushtun population that was largely opposed to the United States’ invasion and its attempt to create a new political order in the country. This made Pakistan’s cooperation an essential element of the pullout strategy since the majority of the world’s Pushtun population lived on its side of the border. There were other reasons for seeking Pakistan’s support in particular in the troop pullout phase of the operation. The military planners working out of Washington were well aware of the logistical scale of the operation that will have to be put in place to move the American troops out of the country in which they had fought for more than 10 years. The planning for the pullout had begun a year earlier – in May 2011. In a prime time address, President Obama announced that 10,000 of the 100,000 US troops will be withdrawn by the end of 2011 and pledged to pull out 30,000 by the end of 2012. However, some of the heavy weights in his administration did not support this timetable. “A powerful quartet comprising Robert Gates and Hillary Clinton, the secretaries of defence and state respectively, Admiral Mike Mullen, chairman of the Joint Chiefs of Staff, and 8 9

The New York Times, editorial, “NATO and Afghanistan”, 19 May, 2012, p. A18. Carola Hoyos, “Analysis: Bringing it all back home”, Financial Times, 17 May, 2012, p. 7.

General David Petraeus, the US commander in Afghanistan, have been pushing for a continued strong presence there. [But] Vice-President Joe Biden has long been an advocate of smaller, counterterrorism – as opposed to counter-insurgency force in Afghanistan.”10 The fact that the support for the war declined in the United States helped Obama to firm up his commitment to leave Afghanistan. In the spring of 2011, 56 per cent of Americans surveyed by the Pew Research Center said the troops should be brought home as soon as possible, while 39 percent favoured keeping troops in Afghanistan until the situation stabilised11. The Obama administration firmed up its plans for withdrawal a year later, in the spring of 2012. It planned to pull out 129,000 troops, the UK another 9,500. Some 70,000 vehicles would be involved in the process, most of which were armoured. About 120,000 container-trips would be needed to move this equipment. The cost of the equipment was estimated at US$49 billion; another US$15 billion would be needed to prepare what could be salvaged for further use. If the price Pakistan initially suggested for the use of its roads and territory was paid, it would amount to a total of US$600 million additional cost for the United States. An alternate route was available to the Americans through the countries to the north of Afghanistan. However, the Northern Distribution Network was much more expensive and passed through difficult geographic and political terrain.

Change of Course by President Obama It took President Obama about 30 months of deep reflection and careful watching of the unfolding of events in Afghanistan to conclude that his country had followed a flawed strategy to avoid the possibility of another 9/11 type of event. Initially he called the conflict in Afghanistan a “war of necessity” while that in Iraq was “war of choice”. He had campaigned in 2008 by pledging to end the second while increasing American commitment to the successful conclusion of the former. However, left unexplained was the objective that was to be pursued as Washington increased its involvement in Afghanistan. The reason why the goals were not clearly laid down as Obama campaigned for the high office and even after his inauguration in January 2009 was simple: he was not clear as to what America was set to achieve in that difficult land. Even if the newly elected president had wanted a radical change in his approach to America’s dealings with the world and the way it was handling the war against terrorism, his room for manoeuvre was limited. As argued in a recent book by Jack Goldsmith, a conservative legal scholar who headed the Office of the Legal Council for a time under the administration of President George W. Bush, Obama was unable to shift the US foreign policy very far because by 10 11

Anna Fifield and Matthew Green,“US to reveal plan for troop-pullout”, Financial Times, May 22, 2011, p. 4. Ibid.

the time he took office it was already pitched at the centre of gravity of American political society12. Obama was not the first American president to feel so constrained. “Although the Bush administration set out to expand the scope of executive action in the field of national security, it was ultimately forced back by a framework of checks and balances built into the American political system. The restrictions imposed on Bush administration and his officials were frustrating, but the policies that emerged enjoyed a degree of legitimacy that made it hard for the new administration to abandon them.”13 President Obama operated under the same set of constraints. He had to bide his time before he could bring about a significant change in his country’s policies towards defeating international terrorism. Of course, the change President Obama was to articulate at Chicago on 20-21 May 2012, with the leaders of NATO and the presidents of Afghanistan, Pakistan and several Central Asian states present in his audience, was the result of three developments: the financial problems the United States and its European allies faced in the summer of 2012; the inability or the unwillingness of the leadership in Afghanistan to usher in a political and social order that would give comfort to those who would have wanted the American and the Europeans to pursue nationbuilding objectives in Afghanistan; and the steady deterioration of the economic, political and security situation in the nuclear armed Pakistan14. Having agreed to the demand of his generals to add more American troops to those already fighting in Afghanistan, President Obama began to chart for himself and his country a course that would be different from the one Pentagon wanted him to follow. The generals wanted a straight forward victory – a complete defeat of the Taliban. Having succeeded in getting the new and inexperienced president to give them more troops, they did not want any constraint placed on them as to the time over which this additional force would be needed. Such an unconstrained commitment was increasingly difficult for President Obama as he began to wrestle with the economic and financial situation his country faced. According to David Sanger who chronicled in a recent book the change in the American course in Afghanistan, “if the generals’ counterinsurgency plan were left on autopilot it would cost US$1 trillion a year over 10 years. And the more [President Obama] delved into what it would take to truly change Afghan society, the more he concluded that the task was so overwhelming that it would make little difference

12 13

Jack Goldsmith, Power and Constraint: The Accountable Presidency after 9/11, New York, W.W.Norton, 2012. , Anthony Dworkin, “Capping unbridled power of the presidency”, review of the book by Jack Goldsmith, Book World, The Washington Post, 20 May, 2012, p. B6. The change in President Obama’s approach towards Afghanistan and Pakistan is chartered out in an important book written by David Sanger of The New York Times who had followed Afghanistan for his newspaper for several years. The book was published a couple of weeks after the NATO meeting in Chicago. See David E. Sanger, Confront and Conceal: Obama’s Secret Wars and Surprising Use of American Power, New York, Crown, 2012.

whether a large American and NATO force remained for 2 more years, 5 more years or 10 more years.” 15 The way the Afghan political system was evolving reduced President Obama’s confidence in nation-building as a legitimate objective of the American involvement in Afghanistan. An increasingly erratic President Hamid Karzai who had won his second term as president in an election that was generally considered rigged, the Afghan leader’s support of local warlords known to be corrupt and little interested in creating a modern state in their country, and the failure of the NATO and American forces to clear and hold regions in Afghanistan in which the concept of the “government out of a box”—a government ready to work the moment an area was cleared by the military of insurgency – persuaded Obama and his civilian advisors that a very limited goal was needed for the American involvement. This would be to ensure that Al Qaeda would not return to the country to do damage to the United States. It was the failure of the “clear and hold” operation in Marja, a town in Helmand province, which swung the Obama team away from pursuit of ambitious objectives. The operation proved that progress was possible but not on the kind of timeline that Obama thought was economically or politically affordable. As the NATO leaders gathered for their important meeting in Chicago, they had hoped for an improving situation in Afghanistan. That was not on offer. On the eve of the meeting, a new and even more ruthless group of insurgents announced its presence. The group called itself the Mullah Daudullah Front, after a notorious Taliban commander who was killed in 2007. “People claiming to represent it have in recent days sent text messages and made telephone calls to numerous members of the Afghan Parliament, threatening suicide attacks if they vote to ratify the strategic partnership agreement between Afghanistan and the United States.”16 The group took responsibility for the assassination in early May of a former Taliban minister, Mullah Arsala Rahmani who was living in Kabul under government protection and was seen as the bridge to the mainstream Taliban for the off-and-on negotiations with the insurgents. Finally, Pakistan’s political system was not developing in the way that would ensure that a democratically elected government in a country with the world’s fourth largest nuclear arsenal could be trusted to remain a friend of the West, in particular that of the United States. In the first days of his presidency, President Obama had asked Bruce O. Riedel, a former CIA (Central Intelligence Agency) officer with a deep knowledge of the region, to lead a rapid review of the situation. The Riedel team’s central insight was that Pakistan posed a far greater threat than Afghanistan. “If we were honest with ourselves, we could call this problem ‘Pak/Af, not 15

David E. Sanger, “Charting Obama’s journey to a shift in Afghanistan” The New York Times, 20 May, 2012, pp. 1 and 9. Rod Nordland, “In Afghanistan, a new radical insurgent group begins a campaign of terror”, The New York Times, 20 May, 2012, p. 9.

Af/Pak,’” Mr. Riedel said shortly after turning his report. But the White House would not dare admit that publicly – even that rhetorical reversal would further alienate the Pakistanis”17. Riedel went on to present his case in a book which, it was reported, was widely read by the Obama team18. Invited late to the Chicago meeting, Pakistan’s President Asif Ali Zardari would have like to have an agreement concluded with the United States for reopening the supply routes to Afghanistan through Pakistan. They were blocked after the deaths of 24 Pakistani soldiers following an attack by the United States, on 26 November 2011, on a post near the Afghan border and could not be reopened before the start of the summit in Chicago. Having reacted sharply to the incident, Pakistan found it difficult to restore relations with the United States. Islamabad’s position was complicated by the fact that the Pakistani sentiment against the United States had turned extremely negative following a series of incidents throughout 2011. They started with the killing of two young men on a busy Lahore street by Raymond Davis, a CIA operative who was keeping a watch on the extremist organisations in and around the capital of Punjab. Davis was kept in prison for several weeks but his release was eventually secured after the United States put a great deal of pressure on Islamabad and arrangements were made for the payment of “blood money” allowed under Islamic law to the families of the men killed. The next major incident was the raid on Abbottabad on 11 May 11 2011 by the US Navy Seals that took the life of Osama bin Laden. The fact that the terrorist leader had lived for six years in a compound so close to the Pakistan Military Academy caused a great deal of embarrassment for the country’s armed forces. Two conclusions could be drawn from this fact: that the Pakistani military was either complicit or incompetent. Neither interpretation was comfortable for the senior commanders. They sought to deflect the attention of the citizens by focusing their attention on another fact: that the United States had wilfully violated Pakistan’s sovereignty. The November 2011 raid that killed more than two dozen soldiers was the last straw and a sharp reaction from Rawalpindi/Islamabad was the result. Pakistan blocked the movement of NATO convoys on its roads; told the United States to vacate the base at Shamsi in Baluchistan from where the CIA had operated drone flights; asked the CIA to pull out most of the agents that had operated in Pakistan; and demanded that all drone attacks should be stopped. The United States responded by suspending the flow of all aid to Pakistan. The American reaction created enormous difficulties for the authorities in Pakistan. The suspension of the $11-billion programme Pakistan had negotiated with the International Monetary Fund in the closing days of 2008 had made the country extremely vulnerable. It was now even more dependent on official capital flows from Washington than was the case when the IMF was disbursing funds. 17

David E. Sanger, “Charting Obama’s journey to a shift in Afghanistan” The New York Times, 20 May, 2012, pp. 1 and 9. Bruce O. Riedel, Deadly Embrace: Pakistan, America, and the Future of the Global Jihad, Washington DC, Brookings Institution Press, 2012.

Caught in this difficult situation, the government headed by President Asif Ali Zardari decided to use the parliament to find a way out. A committee was appointed to suggest to the parliament the basis on which relations with the United States could be restored. After long deliberations in which the opposition used its leverage to force an approach stronger than the one President Zardari and his associates would have preferred to follow towards United States, the committee was able to present to the national legislature conditions on which the supply line to Afghanistan could be reopened. An apology by the United States President for the November 2011 killing of Pakistani soldiers, suspension of drone attacks and compensating Pakistan for the use of its road network for moving American equipment were the more important conditions proposed by the parliament.

The Chicago Summit: Seeking Security in an Age of Austerity President Obama and his advisors choreographed the Chicago event by first convening a one-day summit of G8 (but actually G7 as it turned out) at which there was much discussion of the way the rich nations should handle the economic crises they faced. That summit did not produce major results of significance for the winding down of the conflict in Afghanistan. There was tacit agreement among the assembled countries that they will pay some attention to economic growth as they worked to manage their large and increasingly heavy burden of debt but the need for austerity remained the main focus. The drive for austerity left little room for giving large amounts of assistance to Afghanistan. The Americans began to put pressure on their allies to make financial contributions needed to keep in place at least a scaled-down fighting Afghan force once the NATO completed its pullout from the country. There was little enthusiasm among the allies for the American plans. Europe was passing through an exceptionally difficult economic period and did not have the appetite to continue to fund the Afghan effort. “The planned budget for post-2014 security spending is $4.1 billion a year, with the Afghan government providing $500 million. Even this was a significant amount for a country as poor as Afghanistan. It represented 3 percent of its GDP of $17 billion. NATO allies were pressed to contribute $1.27 billion a year, while the US was expected to foot the balance.”19 The UK indicated a contribution of $110 million, Germany $191 million, Australia $99.5 million. There was also a profound political change taking place in the European continent as several liberal parties were able to successfully challenge rule by the conservatives. The greatest change 19

Geoff Dyer and Kiran Stacey, “US presses allies on Afghan funding pledges” Financial Times, 18 May, 2012, p. 4.

had occurred in France where in mid-May 2012, following the presidential election held a few weeks earlier, Francois Hollande replaced the conservative Nicolas Sarkozy. The new president met his American counterpart, Barack Obama, for 20 minutes on 18 May, two days before the meeting in Chicago. Before arriving in the United States for the meeting of G8 at Camp David and the NATO’s Chicago conclave the new French president had announced his intention to accelerate the timetable for the withdrawal of his country’s troops from Afghanistan. This was to be done before the end of 2012 when 3,400 French troops would be pulled out. In his comments after the brief meeting with President Obama, Hollande said he was committed to providing assistance to Afghan security but not for the fighting. “I reminded President Obama that I made a promise to the French people to the effect that our combat troops would be withdrawn from Afghanistan by the end of 2012. That being said, we will continue to support Afghanistan in a different way. We’ll seek a different format. And that will be done with good understanding with our allies”20. The summit began with remarks by NATO Secretary General Andres Rasmussen saying that the focus of the gathering would be on “security in an age of austerity”. In his opening statement President Obama emphasised the need for collaborative effort on the part of all nations to solve the world’s more pressing problems. That had been the theme of his presidency, distinguishing it from that of his predecessor George W. Bush. He called for all member countries to invest in the “defence capabilities and new technologies that meet our collective needs”. NATO can “work together and pool our resources,” he said, allowing each of our nations to accomplish what none of us can achieve alone”21. This was in sharp contrast to his predecessor who paid scant attention to the opinions of other countries – even those the Americans counted as its allies and friends. Bush ordered American troops into Iraq without much support from his European allies. The only exception was Prime Minister Tony Blair’s Britain, who began to be called “America’s poodle” by the liberal segment of the British press. The Chicago summit did not begin well for Pakistan. The United States rejected the proposal from Pakistan to charge $5,000 per container moving through its territory carrying non-lethal supplies for Afghanistan. Asked if the Pakistani proposal was anywhere near what Washington would be prepared to pay, a senior US official responded: “Not when seven or eight months ago we were paying a fraction of the figure.”22 The NATO delegation, not happy with the Pakistani position, cancelled the meeting that had been scheduled between President Zardari and Andres Rasmussen. The meeting had been initially set for 20 May, a day before the start of the two-day 20

Quoted in David Nakamura, “Obama, Hollande disagree on Afghan efforts”, The Washington Post, 19 May, 2012, p. A10. The Rasmussen and Obama quotes are from Karen DeYoung and Scott Wilson, “NATO focuses on war’s closure”, The Washington Post, 21 May, 2012, pp. A1 and A4. AFP dispatch carried by Dawn under the heading of “US rejects Pakistan fess for supply routes”, www.dawn.2012/05/2012/us-rejects-high -pakistan, accessed on 20 May, 2012.

summit. The White House also indicated that President Obama’s schedule did not allow a oneon-one meeting with the Pakistani president. Instead, Zardari spent a significant amount of time meeting Hillary Clinton on Saturday (20 May 2012). As one news analysis put it, “it was a measure of just how bad things have gotten between the United States and Pakistan that, by contrast, Mr Obama’s relationship with Mr Karzai – which has been rocky ever since Mr Obama came to office [and] vowed to end what he viewed as former President George W. Bush’s coddling of the mercurial leader – looked calm and stable on Sunday. The two men, fresh off Mr Obama’s unannounced trip to Kabul this month to sign a strategic partnership agreement with Mr Karzai that set departure of American troops in 2014, presented a united front before reporters after a one-hour meeting on the outskirts of the NATO summit. It was a sharp contrast with the past when Mr Karzai berated American troops, threatening to join the Taliban and chastised the American-led NATO mission.”23 The Chicago summit delivered what was expected of it: a withdrawal plan with the promise that the NATO countries will remain engaged to strengthen Afghanistan’s ability to manage its security. There was a sober assessment of what was achieved. “We leave Chicago with a clear road map” President Obama told a news conference held after the meeting had concluded. “This alliance is committed to bringing the war in Afghanistan to a responsible end.” Each nation will determine its own pace of withdrawal, coordinated with coalition planners. However, there was no clear indication as to how the Afghan government will finance the large force that was required to keep peace in the country by securing a number of contested areas in which the Taliban remained active. Obama said that the strategy formally endorsed at Chicago would “achieve a stable Afghanistan that won’t be perfect.” The withdrawal would be messy, the American president conceded. “I don’t think there is going to be an optimal point where we can say, ‘this is all done, this is perfect, this is just the way we wanted it, and now we can wrap up all our equipment and go home. This is a process, and it’s sometimes a messy process, just as it was in Iraq.” 24 The robustness of the enemy, the Taliban, was not the only reason why the process of withdrawal was likely to be less clean than what the Americans and their NATO allies had hoped for. Real challenges remained in dealing with Pakistan. Islamabad was hoping to solve its severe financial problem by heavily taxing the trucks and containers that will bring out the equipment the United States did not wish to leave behind. The amount Pakistan wanted for the use of its communication system was regarded as extravagant by Washington. Also, the Pakistanis were not prepared to commit that they will bring under their control the Haqqani group that had been 23

Helen Cooper and Matthew Rosenberg, “Pakistan dispute casts a shadow on NATO meeting”, The New York Times, 21 May, 2012, pp. A1 and A6. Scott Wilson and Karen DeYoung, “NATO leaders agree on ‘road map’ to end Afghan war”, The Washington Post, 22 May, 2012, p. A2.

operating out of its territory and had brought considerable grief to Kabul and the Americans operating in Afghanistan. President Obama showed his unhappiness with Pakistan by not meeting President Zardari. He “pointedly exchanged only a few words with the country’s president, Asif Ali Zardari, during the two-day summit meeting – ‘very brief, as we were walking into the summit,’ he said. The two men also stood and spoke briefly with the Afghan president, Hamid Karzai, before all three joined the other leaders for a group photograph.” That said, the American president was willing to grant that Pakistan had to be part of the solution to the Afghan problem. “We believe that Pakistan has to be part of the solution in Afghanistan”, he said at the news conference. “Neither country is going to have the kind of security, stability, and prosperity that it needs unless they can resolve some of these outstanding issues”.25

Implications for Pakistan Pakistan’s failure to accommodate the United States’ interests further worsened relations between the two countries. Tensions flared as a Pakistani court imposed a 33-year sentence on a doctor, Shakil Afridi, who assisted the CIA in the hunt for Osama bin Laden. “The doctor had conducted a vaccination programme in the Pakistani city of Abbottabad to determine whether, on the basis of DNA taken from his relatives, bin Laden was living there. The court convicted him of treason”26. Three days after the conclusion of the Chicago summit the United States resumed drone attacks aimed at the militants operating out of Pakistan’s tribal belt. Ten insurgents, reportedly from some Central Asian nations, were killed in back to back attacks. Keeping the pressure on Pakistan, a US Senate committee reduced to $50 million an $800 million administration request for a fund that reimburses Pakistan for its military efforts against terrorists. Pakistan says it has $3 billion in unpaid counterterrorism expenses while the United States puts the figure closer to $1 billion. The Senate committee took out another $33 million, one million for each of the year Dr. Afridi was meant to serve in prison for his help to CIA. How well have the Pakistanis played their cards in protecting their interests as the great pullout begins? Not very well is one answer provided by David Ignatius, a syndicated columnist, who knows well Pakistan and the Muslim world. “As America begins to pull back its troops from Afghanistan, one consequence gets little notice but is likely to have a lasting impact: Pakistan is losing the best chance in its history to gain political control over all of its territory – including the warlike tribal areas along the frontier,” wrote Ignatius in a newspaper column.27 According to this line of thinking, Pakistan should have made use of the opportunity presented by the presence 25

Helene Cooper and Matthew Rosenberg, “NATO agrees on Afghan security transition in 2013”, The New York Times, 22 May, 2012, p. A6. Haq Nawaz Khan and Richard Leiby, “U.S. drone kills 10 suspected militants”, The Washington Post, May 25, 2012, p. A8. David Ignatius, “Pakistan’s blown chance”, The Washington Post, May 17, 2012w, p. A15.

of a large American force north of the country’s troubled tribal areas to pacify them and bring them under the government’s control. The Americans would have been very willing to partner with the Pakistanis in achieving these objectives. But this argument was based on two assumptions, neither of which was correct. That a large force would succeed in Pakistan’s tribal areas while it had mostly failed in securing the Afghan provinces such as Kandahar, Helmand and Khost on the other side of the border was an assumption hard to accept. It also implied that Pakistan would be willing to tolerate the attacks on its cities and civilians that the Pakistani Taliban had shown the ability and expertise to launch once they came under pressure of the Pakistani security forces. This notwithstanding, pressure from the West mounted as the countries deeply involved in the Afghan conflict assembled in Chicago. “President Asif Ali Zardari will also be there”, wrote The New York Times in an editorial on the eve of the meeting. “President Zardari is close to persuading his government to reopen supply lines. Mr Obama has as yet to figure out how to get Pakistan’s military to cut ties to the extremists. Until that happens, even a competent Afghan force will have a hard time maintaining stability. The cost for Pakistan’s fragile democracy could be even higher.”28 The treatment meted out to President Zardari by senior US officials did not go unnoticed in Pakistan. According to an assessment by The New York Times, “for Mr Zardari, the visit to Chicago was a political disaster at home exposing the increasingly embattled president to blistering criticism…Imran Khan, a former cricket star who has become one of the most popular opposition leaders, declared that the visit a disgrace to the country, and accused the United States and NATO of ignoring the demands of Parliament and its own sacrifices in the fight against terrorists. ‘This is not our war,’ Mr Khan said of Afghanistan, ‘so let’s get out of it.’”29 In a detailed personal account of his career and the reasons for entering politics, published in 2012, Imran Khan had argued at some length against Pakistan’s policy towards the United States. “The current strategy can only increase radicalisation – a dangerous prospect given that Pakistan is a country with a fast growing population, a youth bulge and high rates of unemployment”, he wrote. “Now there will be a generation born of anger, an army of young men who lost relatives to US drone attacks or Pakistani military operations. And that radicalisation will not just be limited to the poor and dispossessed. Even for the youth of the rich elite, Pakistan’s abdication of responsibility for its own sovereignty is a searing humiliation”.30 There is no doubt that the United States’ withdrawal from Afghanistan would become a very complicated operation if relations between the two countries continue on their present trend. Both sides will need to give and take. For Pakistan options are limited given the speed with 28 29

The New York Times editorial, “NATO and Afghanistan”, 19 May, p. A18. Steven Lee Myers and Eric Schmitt, “Frustrations grow as U.S. and Pakistan fail to mend relations”, The New York Times, May 28, 2012, p. A8. Imran Khan, Pakistan: A Personal History, London, Bantam Press, 2012, p. 309.

which the process of democratisation is proceeding. Policymakers in Washington have not fully recognised that the development of the democratic systems in much of the Muslim world has reduced the degrees of freedom for their counterparts in the countries that were experiencing rapid political change. General Ziaul Haq’s Pakistan and Pakistan of General Pervez Musharraf could easily switch sides in foreign affairs31. This was done when Pakistan chose to side with America in the latter’s effort to expel the Soviet Union from Pakistan. It took one phone call to Musharraf from Washington after 9/11 for Pakistan to sever relations with the Taliban regime in Afghanistan and begin to aid the Americans32. A democratically elected government – especially the one faced with elections a few months hence – must be responsive to public sentiment. That, as Imran Khan observed in the passage quoted above, is not supportive of the United States. That support will further wither away if Washington continues to demand more from Pakistan than it is prepared to give in return. There is palpable sentiment against Pakistan in Washington, in particular in the US Congress.

Conclusion The much anticipated NATO summit held in Chicago to which President Barack Obama, the host, had invited a number of non-NATO nations directly involved in the Afghan conflict did not produce the needed results. The American president wanted two commitments to be made by his country’s allies: a firm financial commitment by them to Afghanistan in the post-pullout period, and an undertaking by Pakistan that it would facilitate the NATO pullback. He received neither. There were only vague promises by the NATO allies of financial support that would make it possible for the Afghans to maintain a military and police force in their country that would ensure reasonable security to the citizens of the long-troubled country. He also wanted Pakistan to work closely with the NATO nations as they pulled their troops out of Afghanistan. Islamabad’s cooperation was needed to protect the flanks of the retreating forces against assaults by the well-armed groups of insurgents that operated out of the sanctuaries in Pakistan’s tribal areas. The Pakistanis, concerned about their economic and security situation, sent their president to Chicago but did not make any tangible promises of assistance. After Chicago, there was no assurance that the American involvement in the longest-ever war in its history would wind down according to a well-laid out plan. The withdrawal is likely to be messy and may result in producing some unforeseen consequences. While this analysis has looked at the withdrawal of the US forces from Afghanistan mostly from the prism of Washington-Islamabad relations, this part of the campaign will not end with the 31 32

This theme is developed more fully by the author, in “mmm” Business Standard, June 4, 2012. How this actually happened is described by General Musharraf in some detail in his autobiography. See Pervez Musharraf, In the Line of Fire: A Memoir, New York, Free Press, 2006, pp. 199-207.

American pullout. Several other countries in the region around Afghanistan have legitimate interests in the countryâ&#x20AC;&#x2122;s future. China, India, Iran and Russia in particular have strategic interests that go beyond maintaining some order in this difficult country. An Afghanistan with a strong presence of Islamic forces â&#x20AC;&#x201C; a repeat of the Taliban era in some form or other â&#x20AC;&#x201C; will be of concern to all these countries and their concerns will have to be factored into whatever the international community decides about its future involvement in this hard place. Even after the Americans have completed their pullout from Afghanistan, the country will loom large, as a brightly lit spot of concern, on the international radar screen.

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ISAS Insights No. 171 – 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

Northeast India: Trade and Development Prospects Laldinkima Sailo1

Abstract The idea of building roadways, railroads and a multi-modal transport corridor for linking India through its Northeast states to Southeast Asia is significant in many respects. This paper examines the current state of development in Northeast India and its economic prospects should the idea of building connectivity infrastructure of this kind come to fruition and if trade relations with Southeast Asia were to flourish. Discussed, in particular, is the readiness of the region to open up. Also highlighted are some key issues that need to be borne in mind if Northeast India is to witness development and improve standards of living.

Introduction At a recent Town Hall meeting held in Kolkata, United States (US) Secretary of State, Hillary Clinton said that the idea of establishing transportation connectivity from East India to Northeast India and then onto the countries of Southeast Asia is “the kind of vision that should occupy the minds of the leaders of the region right now”. And indeed this is just what the leaders of the region are doing. Singapore Foreign Minister K Shanmugam, who visited India a few days after 1

Mrs Clinton’s visit, is reported to have discussed the ongoing efforts during his meeting with India’s Prime Minister Manmohan Singh2. The issue also formed a substantial part of Prime Minister Manmohan Singh’s discussions with the President of Myanmar during his May 2012 visit to Nay Pyi Taw. The idea of building physical connectivity between India and Southeast Asia gained momentum about a decade ago as part of what India’s former Foreign Minister Yashwant Sinha described as the second phase of New Delhi’s ‘Look East Policy’, beginning sometime around the dawn of the new millennium3. This was posited as a logical progression of a relationship, which was based on shared experiences of colonialism and cultural ties, now moving to trade, investment and production. ASEAN’s (Association of Southeast Asian Nations’) own interest in this initiative has been demonstrated by its commitment to developing infrastructure for greater regional connectivity which will also enable the region to connect with neighbouring countries 4. The most significant connectivity projects that are in the pipeline include the development of a multi- modal transport project that will link Mizoram in India by road and an inland waterway to the Bay of Bengal through the Sittwe port in Myanmar; road links to connect Northeast India up to the highways of Thailand and beyond; and a rail road from Delhi to Hanoi that will pass through Northeast India. Work on the multi-modal project began in 2008 and is expected to be completed by 20155. The May 2012 visit of India’s Prime Minister to Myanmar saw the signing of an agreement to develop a road link from Moreh in Manipur to Myanmar that will eventually reach Moe Soe in Thailand, as part of the commitment to the trilateral highway project. The target date of completion for this is 2016. The visit also saw an agreement to set up a joint committee to explore the possibility of developing rail infrastructure from India, through Myanmar, to the Southeast Asian region6. Simultaneously, there has been an exploration of ways to develop facilities that will link NE India to Bangladesh, a country for which the same arguments, of shared experience and cultural ties, hold true for the development of deeper economic ties.

4 5

Law Minister K Shanmugam visits India's PM, Asia One, 10 May 2012. http://news.asiaone.com/News/L atest%2BNews/Singapore/Story/A1Story20120510-345189.html. Accessed on 14 May 2012 C. Raja Mohan, ‘Look East Policy: Phase Two’, The Hindu, 09 October 2003. http://w ww.hindu.com/2003/10/09/stories/2003100901571000.htm. Accessed on 14 May 2012 See ASEAN’s Master Plan on ASEAN Connectivity (MPAC) document. Prime Minister’s address to think-tanks and business community at an event organised by Myanmar Federation of Chambers of Commerce and Industry and the Myanmar Development Resource Institute in Yangon on India and Myanmar: A Partnership for Progress and Regional Development. Ministry of External Affairs, Govt. of India. http://www.mea.gov.in/mystart.php?id=190019561. Accessed on 30 May 2012. Media Briefing by Foreign Secretary in Nay Pyi Taw on Prime Minister’s ongoing Myanmar Visit. Ministry of External Affairs, Govt. of India. http://www.mea.gov.in/mystart.php?id=190019561. Accessed on 30 May 2012

In the age of internet communication technology and advanced maritime and aviation technology, the issue of physical connectivity holds particular significance for the Northeast states of India. It brings the hitherto isolated region into focus while enabling it to become part of the regional and global economy. As much as this is exciting for NE India, it is also potentially beneficial to the economies of the region. The entry of the eight NE states into the hustle and bustle of trade and commerce would be akin to bringing into being a region, if it were a country, comparable in population and size to Poland with a combined Gross State Domestic Product (GSDP) roughly equal to that of the GDPs of Cambodia, Brunei and Laos7 put together! It is, however, not without reason that the landlocked NE India has remained isolated and on the periphery of trade and economics. Insurgency, harsh geographic terrain and the resulting difficulty in building infrastructure have kept the region in a state of under-development which made any economic activity very difficult to accomplish. It is then on this note that the exuberance over new ideas needs to be moderated as it poses questions about the viability of our current vision. It also compels us to ponder on the key question of whether this process will benefit NE India and bring much-needed development as is hoped for. Is the region ready to open up and trade or will it witness immiserising growth and further social unrest. These are pertinent questions that will determine the viability, sustainability and success of the process. What are the current conditions in NE India and is it in a position to reap the benefits of potential trade with SE Asia? Despite the difficulty of viewing NE India as a collective entity for analysis, mainly owing to the absence of a unified decision-making mechanism for solving economic problems ( with every state in the region enjoying autonomous political powers to make decisions), there is an assumption in this paper about certain binding factors, including the shared history and geography of these states, their similar economies (basically agrarian and industrially backward) and their economic and psychological distance from the rest of India.8

Trade for Development It has been suggested that one of the ways in which NE India can overcome underdevelopment and achieve sustained economic development is through trade beyond this region. The 7

See figures for Northeast India in Table 3 below. Figures collated from IMF’s World Economic Outlook Database. http://www.imf.org/external/pubs/ft/weo/2012/01/weodata/index.aspx. Accessed on 15 May 2012 Alokesh Baruah, ‘Introduction’ in Alokesh Baruh (ed.) India’s North-East Development Issues in a Historical Perspective (New Delhi: Manohar Publications 2005) p.15

postulation is that the region can benefit from the economies of scale in its production of primary and secondary goods, if there is access to a larger market, which would in turn create viable conditions for the huge investments needed to develop road and communication facilities. These facilities can first connect the eight states within NE India and then connect the region to the rest India and then to SE Asia. This is expected to bring NE India into a virtuous cycle of trade and development. This argument is based on the assumption that trade promotes growth and that growth reduces poverty. While it is indeed encouraging that negotiators at the latest World Trade Organisation (WTO) talks – the Doha Round – were able to position development and concerns of poverty alleviation at the heart of trade, the evidence of trade ushering development and poverty reduction is still tenuous and inconclusive. Studies such as those conducted for East Asia and Latin America show different effects of trade on their communities. For instance, while the income distribution pattern, more specifically wage inequality between skilled and unskilled labour, has been redressed in the former, by contrast it has worsened in the latter9. The debate around whether trade is able to reduce poverty which heightened following the publication of a series of papers by David Dollar and Aart Kraay10 generated a particularly heated argument – shedding some light on the causal effect trade might have on improving the plight of the poor. Bhagwati and Srinivasan11 have also strongly supported the hypothesis that trade brings about growth that reduces poverty, citing the case of India and China which saw the most significant reduction in poverty during their periods of high growth where, “it is also relevant that these were also the decades in which both China and India increased their integration into the world economy”12. This is in contrast to the previous three decades 19501980 when poverty fluctuated around at around 55 per cent. Arguments at the other end of this debate, led by Harvard economist Dani Rodrik, have been positioned around the evidence which show that the benefit of trade is being reaped by developed countries at the cost of developing countries13 and that trade has led to growth but

12 13

Maurizio Bussolo and Henri-Bernard Solignac Lecomte, ‘Trade Liberalization and Poverty’, ODI Policy Briefing 6: December 1999 Such as David Dollar and Aart Kraay (2001), ‘Trade, Growth and Poverty’, World Bank Policy Research Working Paper No 2615 and David Dollar and Aart Kraay (2001), ‘Growth is Good for the Poor’, World Bank Policy Research Working Paper No.2587. Jagdish Bhagwati and T N Srinivasan (2002),’Trade and Poverty in the Poor countries’, American Economic Review vol. 92, issue 2, pages 180-183. Ibid. Vlad Spanu (2003), ‘Liberalization of the Trade and Economic Growth: Implications for both Developed and Developing Countries’, Harvard Center for International Development (CID) Trade Paper. http://www. cid.harvard.edu/cidtrade/Papers/Spanu.pdf

with a negative effect on income equality in Chile, China and Poland14. The common ground and near-consensus both these schools of thought find themselves in is on the point that growth otherwise reduces poverty, but even then scholars like Jayati Ghosh say that growth per se is no guarantee for the improvement in the condition of human poverty15. The debate then raises the pressing question about the how of generating growth, through trade, that reduces poverty. Indeed, the difficulty of linking trade with reduced poverty, independent of other variables, is itself an enormous challenge. And while there continue to be differences on the measurement process, previous studies that found differing results (of trade on poverty) have pointed us towards the prevalence of different initial conditions leading to different development experiences16. This affords a clue through which we might be able to see what effect trade may have on North East India. Among these initial conditions are the varying levels of poverty, human capital development, inequality and infrastructure that will facilitate the participation by and access to benefits, in a time of growth, for the widest sections of society.

Current Conditions Despite the decision by the Government of India, when headed by H D Deve Gowda, to allocate 10 per cent of the total budgets of ministries/departments for projects/schemes of development in the northeast region, including Sikkim, the region still lags behind on many fronts. The allocation is disproportionate to the size of the region. In terms of size, at 262,230sq km, NE India forms 8 per cent of India’s total area and constitutes about 3.75 per cent of India’s population. Yet, income poverty has increased in five of the eight states at a time when the rest of the country has seen significant reduction in poverty levels for the period 2004-05 to 2009-10. Other than in Arunachal Pradesh and Sikkim, per capita income is lower than the national average. And, signs of the ‘trickle-down effect’ of India’s growth dividends are barely noticeable.

Dani Rodrik, ‘Growth Versus Poverty Reduction: A Hollow Debate’, Finance and Development :A quarterly magazine of the IMF, December 2000, Vol 37, No.4 Jayati Ghosh (2010), ‘Poverty Reduction in China and India: Policy implications of recent trends’, DESA Working Paper No 92 For different initial conditions and factors in East Asia and Latin America see Maurizio Bussolo and HenriBernard Solignac Lecomte, ‘Trade Liberalization and Poverty’, ODI Policy Briefing 6: December 1999. For other cases see Hyun H Son and Nanak Kakwani (2004), ‘Economic Growth and Poverty Reduction: Initial Conditions Matter’, UNDP International Poverty Centre Working Paper No.2. And, Anne Booth (1998), ‘Initial Conditions and Miraculous Growth: Why is South East Asia different from Taiwan and South Korea’, SOAS Dept. of Economics Working Paper. http://www.soas.ac.uk/economics/research/workingpapers/file28887.pdf.

Table 1: Population, Poverty Line and Per Capita Income State

Population ‘000

Poverty Line (Tendulkar Per Capita Income Methodology) % of persons (in Rs.) 2011 2004-05 2009-10 2009-2010 All India: 1210193 37.2 29.8 46492 Arunachal Pradesh 1383 31.4 25.9 51405 Assam 31169 34.4 37.9 27197 Manipur 2722 37.9 47.1 27332 Meghalaya 2964 16.1 17.1 43555 Mizoram 1091 15.4 21.1 45982 Nagaland 1981 8.8 20.9 45353 (2008-09) Sikkim 608 30.9 13.1 68731 Tripura 3671 40 17.4 35799 Source: 1. Data Table. Planning Commission of India, Govt. of India. Retrieved from http://planningcom mission.nic.in/data/datatable/index.php?data=datatab on May 15, 2012 2. NEDFi Databank, Retrieved from http://db.nedfi.com/content/capita-income on May 15, 2012

Juxtaposing this with the relatively higher levels of human development is interesting. Literacy rate is higher than the national average, except in Arunachal Pradesh and Assam, and the infant mortality rate is better than the all-India average, except in Assam and Meghalaya. On the face of it, in keeping with classical models like Arthur Lewis’, greater human capital development should enable large number of the population to benefit from increased job opportunities. But one of the salient features of India’s growth is one with no significant change in employment opportunities17!

Table 2: Social Indicators State

All India: Arunachal Pradesh Assam Manipur Meghalaya Mizoram Nagaland Sikkim Tripura

Infant Mortality Rate 2010 (per 1,000) 47 31 58 14 55 37 23 30 27

Access to safe drinking water (in per cent), 2001 90 90.7 70.4 59.4 73.5 47.8 42.3 97.1 85.8

No. of hospitals (and beds in ‘000) 11613 (540) 161 (2) 135 (8) 28 (2) 38 (3) 20 (1) 48 (2) 30 (1) 31 (2)

Literacy Rate %, 2011

Dropout Rate 2009-10 (%)

74.04 66.95 73.18 79.85 75.48 91.58 80.11 82.20 87.75

28.86 41.35 35.89 36.48 57.60 46.03 39.95 18.58 25.48

Amitendu Palit, India’s Jobless Growth Problem, The Financial Express (12 April, 2012).

Source: 1. Data Table. Planning Commission of India, Govt. of India. Retrieved from http://planningcommission.nic.in/data/datatable/index.php?data=datatab on May 15. 2012 2. India Statistics, Ministry of Statistics and Programme Implementation, Govt. of India. Retrieved from http://mospi.nic.in/Mospi_New/site/India_Statistics.aspx?status=1&menu_id=14 on May 15, 2012

While literacy rate is high, the adjoining column (Table 2) displays a worrying trend. Dropout rates are much higher than in the rest of the country and the standard of the few years of education is low. Continuation of this trend will necessarily pose difficulties as greater elasticity of labour will be affected as and when the engine of growth moves from agriculture to manufacturing, in the Kaldorian sequence, or even if it were to jump straight to the services sector as it has done in the rest of India. This is likely to negate any benefit that might accrue as suggested in the model previously mentioned and puts the region at a risk of multidimensional inequality. As the agriculture that is practiced in NE India is mostly subsistence agriculture, the possible increase in food price that affects regions newly opened to trade can affect a majority of the population. It will be of utmost importance for the government to continue directed public spending on food subsidies and health, while aligning education policies to meet the demands of the new economic circumstances.

Table 3: Growth State

State-wise Growth Rate (Annual Average in %) of Agriculture Sector in India(Avg 2004-05 to 200809)

Growth Rate (%) of Net State Domestic Product in Industry State-wise (Avg. 2004-05 to 200809)

All India: 3.06 8.54 Arunachal Pradesh 4.49 2.85 Assam 1.51 3.61 Manipur 1.31 4.55 Meghalaya 5.06 13.18 Mizoram 2.85 5.58 Nagaland 4.92 7.73 Sikkim 3.64 4.86 Tripura 3.74 17.34 Source: Data Table. Planning Commission of India, Govt. of India. Retrieved mission.nic.in/data/datatable/index.php?data=datatab on May 15, 2012

Gross State Domestic Product (GSDP) at Current Prices (as on 1503-2012) Rupees in crores) 2011-12 8279976 9357 115408 10118 17459 6058 (2010-11) 1206 5652 (2010-11) 19731 from http://planningcom

The current level of unemployment and the prospects of employment are of particular concern because the prevailing insurgency makes the unemployed youth prone to persuasion from the 7

insurgents operating in NE India. The lack of industries or organised agricultural practices has meant that the government and the public sector are the main employment sources and there can only be minimal government jobs for the entire population. Unemployment along with increasing inequality could continue to provide stimulus for social unrest.

Table 4: Employment State All India: Arunachal Pradesh Assam Manipur Meghalaya Mizoram Nagaland Sikkim Tripura

Estimated employment in the public and private sectors ( in â&#x20AC;&#x2DC;000)2007-08 27549 N/A 1173 80 82.6 40.8 76 N/A 160

Total Employment (â&#x20AC;&#x2DC;000), 2005 100904 110 2208 236 242 107 175 68 386

Source: India Statistics, Ministry of Statistics and Programme Implementation, Govt. of India. Retrieved from http://mospi.nic.in/Mospi_New/site/India_Statistics.aspx?status=1&menu_id=14 on May15, 2012

In terms of infrastructure, the region has poor facilities. Transport linkages within the region and with the rest of India are still primitive. Bhagwati and Srinivasan concede that if growth is modelled in a way where it does not affect a segmented pool of the poor and if there are areas not linked to the mainstream or inner cities which are structurally delinked from the main city where growth is occurring, then growth will pass the poor by18. Trade in the absence of poor interlinking facilities may exacerbate regional and intra-regional inequality. Availability of power is still a huge problem. Household access to electricity is very low. And the inability to develop and harness the hydro-power potential in the region has meant inadequate power supply, stalling the development of much-needed irrigation facilities and the development of industries.

Jagdish Bhagwati and T N Srinivasan (2002),Trade and Poverty in the Poor countries, American Economic Review vol. 92, issue 2, pages 180-183

Table 5: Irrigation, Hydro & Electricity State

State-wise Irrigation Potential ('000 ha) Potential Utilized

Hydro Potential Status (MW)

Access to Electricity (% of Population)

Identified Developed Capacity All India: 139893 85222 148701 30947 55.85 Arunachal Pradesh 168 87 50328 424 54.69 Assam 2870 720 680 375 24.90 Manipur 604 155 1784 105 60.04 Meghalaya 168 54 2394 185 42.74 Mizoram 70 15 2196 0 69.63 Nagaland 85 72 1574 99 63.60 Sikkim 70 26 4286 84 N/A Tripura 281 126 15 15 41.84 Source: 1. Data Table. Planning Commission of India, Govt. of India. Retrieved from http://planningcommission.nic.in/data/datatable/index.php?data=datatab on May 15, 2012 2. Statistical Abstract of India, 2003 in Samir K Mahajan, â&#x20AC;&#x2DC;Attainment of Human Development: A Study of North East Indiaâ&#x20AC;&#x2122;, Delhi Business Review, Vol 10, No.2 (July-Dec 2009).

Moving Ahead Despite the challenges, the need to facilitate trade within the region, with the rest of India and with the countries east of the region is a proposition that is difficult to run down. Besides the income from trade there are related potential revenue generators for NE India. Of great significance are those in the development of hydro-electricity and tourism. Cost of consumer goods coming from as far as Bangkok and Guangzhou, which are very popular in NE India, will come down drastically and the idea of greater access between families and kinsmen along borderlands (including India-Myanmar; Myanmar-Thailand etc) in itself reflects the social and emotional aspirations of the people. But, in light of this discussion, opening up and development of connectivity infrastructure may not necessarily lead to a fairy-tale situation. NE India could see itself worse off than before, given its proneness to insurgency and social unrest if measures to enable the region itself to benefit from trade are not put in place. The challenges are enormous and some work needs to be done in the region first. The diversity as well as the unifying factors of NE India point towards the need for intraregional cooperation amongst the eight states in some areas but also different approaches in each of the states in other matters. Central and regional planners in India need to have a better appreciation of the social and economic problems posed by each state but also need to build on the areas 9

where each state can benefit from such cooperation. For instance, the region and indeed some of the states within it have different needs in terms of the focus on education compared with the rest of the country. While in the rest of India literacy rate needs to be brought up to mark across the board, the focus in the region needs to be one of improving quality, providing skills-based training and looking at ways to improve retention rates. The NE states of India can work together to manage water resources and cooperate to harness hydropower potential. The social context for centrally-designed poverty-alleviation schemes needs to be taken into account. In Delhi, policymakers need to ask questions such as the possible long-term social impact of a policy that seeks to engage a traditional agricultural society in construction activities. And so on and so forth. In turn, relevant state government officials must provide necessary contextual input based on the feedback they get from the grassroots. Integrated development of NE India must feature in any planning process that looks at linking the region to Southeast Asia or using this northeast arc as a link between the rest of India and SE Asia. In a recent article, the development economist Dani Rodrik cheered upon the good news of the increasing convergence of different traditions of development practitioners in favouring diagnostic, pragmatic, experimental, and context-specific strategies19 for the different approaches they advocate. Nowhere is the need to see this in practice greater than in the NE India region, if it is to see an improvement in the standards of living. And if the grand idea of connectivity is to occupy the minds of the leaders of the region, in India and South East Asia, they must also, first, concern themselves with the local context and dynamics affecting the regions and ensure that measures that will enable the widest sections of society to participate and benefit from trade are in place. This in turn will ensure that the building of qualitative and durable highways and railway tracks is worth the investment.

.....

Dani Rodrik, â&#x20AC;&#x2DC;Doing Development Betterâ&#x20AC;&#x2122;, Project Syndicate. May 11, 2012 http://www.projectsyndicate.org/commentary/doing-development-better. Accessed on 15 May 2012.

ISAS Insights No. 172 – 29 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

Re-balancing of India-US Equation P S Suryanarayana1

Abstract United States Defence Secretary Leon Panetta’s visit to New Delhi and India’s diplomatic activism in June 2012 have given rise to some clear signs of a possible re-balancing of IndiaUS equation in the military and political domains. The paper tracks these signs and draws attention to a fine diplomatic nuance. India and China are still engaged in defence and strategic dialogue while New Delhi and Washington are raising the possibility of military and strategic cooperation. Both India and the US are, nonetheless seeking to hedge against China – without challenging it – in the present state of flux in global affairs. Introduction: A US’ strategic tilt The overarching trend-line in the flurry of India’s diplomacy in June 2012 signifies the beginning of a new and uncharted process. Conspicuous are the signs that India and the United States (US) are seeking to re-balance their equation in the military and political domains. Equally noticeable is the current fact that the new US tilt towards India is not explicitly directed against China. India, too, is signalling that its rising comfort-level in the company of the US is not part of any grand global-strategy aimed at containment of China. As of June 2012, both India and the US are, at best, trying to hedge against the possibility that China may rise above the extraordinary state of flux in global affairs and may even reach the top of the world-order. Such a hedging against China is evident from the public diplomacy of the relevant countries at play. Moreover, there is no discernible action behind 1

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 the views of ISAS.

the scenes to indicate a coordinated US-India move against China. Indeed, the current international context militates against a potential anti-China move by two or more countries. The context, favourable to China, consists of the vagaries of US presidential poll process, persistent signs of political and economic stasis in India, the Euro-zone crisis, and the finessing of a settled but imminent leadership change in China itself. Viewed in this panoramic setting, the India-US diplomatic concert in June 2012 has brought into sharp focus the compulsions of the two countries to hedge against China without challenging it. Speaking at the Singapore Shangri-La Dialogue, organised by the London-based International Institute for Strategic Studies (IISS) on 2 June 2012, India’s Defence Minister A K Antony said: “Regarding whether China is a threat to India or not, I don’t think it’s a relevant issue. The Chinese’ growing military expenditure is a matter of concern to us. At the same time, even though we don’t believe in arms race, since China is increasing their capabilities and spending more on defence, in our own way, to protect our national interest, we are also strengthening our capabilities in our borders. At the same time, even though we have our still-unresolved border disputes between India and China, we [believe] both India and China has an interest in maintaining peace and stability in not only Asia [but] beyond Asia [as well]”.2 Taking note of the present and future scenarios, Antony said: “Both India and China has an interest in maintaining peace and stability. That’s why, of late, we have started establishing a contact [at] our military-to-military [level]. With the Indian Navy also, now we have started [cooperation with] Chinese Navy. At the moment, it exists mainly in the area of anti-piracy. [It’s] a beginning. In the area of anti-piracy, we are sharing information. And in coming years, wherever possible, in the area of anti-piracy and also maintaining maritime security, we’ll try to have close relations with China. It’s only a beginning. It has to evolve in the coming years. But between India and China, [at the] military-to-military [level] also, of late, we have started dialogue, joint exercises and relations”.3

India’s Confidence in US Overture Three aspects of India’s long-term perspective on China, as currently outlined by Antony, stand out. One, New Delhi’s concern today over Beijing’s rising military expenditure does not necessarily translate into an immediate or imminent threat to India’s security. A political nuance to be noted here is that Antony voiced India’s concern over China’s “growing military expenditure” and not over Beijing’s “exponential military growth”. It has been inaccurately recorded in some quarters that Antony was concerned over China’s “exponential military growth”. He did not utter these politically loaded words at all during his interventions at the 2

Transcript of the actual recording of Mr Antony’s answers to questions at Shangri-La Dialogue 2012 on 2 June 2012. http://www.iiss.org/conferences/the-shangri-la-dialogue/shangri-la-dialogue-2012/speeches/second-plenarysession/qa/

Shangri-La Dialogue 2012. So, the nuanced meaning of his actual observations is that India is not as much concerned over China’s growing military capabilities as over its greater defence spending. Some observers may in a hurry see this subtle distinction as meaningless. In this writer’s way of thinking, a truly new insight is that New Delhi feels confident about its own rising military capabilities in the emerging context of US overtures towards India in the defence domain. The US overtures may help add value to India’s indigenous efforts at scaling up its own military capabilities. Such a line of thought can be inferred from the substance of US Defence Secretary Leon Panetta’s visit to New Delhi on 5 and 6 June 2012. The second aspect of Antony’s observations at the Shangri-La Dialogue 2012 is, in effect, a political argument. As outlined by him, India’s current perception of China is shaped by, among other factors, the empirical evidence that both these countries seek peace and stability in Asia as also beyond this continent. Peace and stability of this order are easily portrayed as pre-requisites for the continued economic growth of not only China but also India. The third but not the least aspect of Antony’s profiling of India is that both New Delhi and Beijing are indeed making “a beginning” in military-to-military cooperation for the antipiracy and maritime security purposes. An implicit message in this profiling is that India and China, as of now, are not on a collision course in the military domain. In a significant sense, Antony’s overall argument about India’s current military posture in regard to China has been amply supported by Panetta, in some detail, during his recent visit to New Delhi. On the evidence, discernible behind the scenes at the present moment, that the US and India are not seeking to confront China, Panetta, speaking at the Institute for Defence Studies and Analyses (IDSA) in New Delhi, said: “As the United States and India deepen our defence partnership with each other, both of us will also seek to strengthen our relations with China. [Because] We recognise that China has a critical role to play [in] advancing security and prosperity in this [Asia-Pacific] region”.4 Panetta’s political narrative about China’s potential role in advancing Asia-Pacific security reinforces Antony’s arguments that both India and China are in search of peace and stability in Asia and beyond. More relevant to the wider international community, though, is Panetta’s virtual confirmation of Antony’s primary argument that India does not (or rather, need not) see China as an immediate or imminent military threat.

US’ stake in India’s capabilities

http://www.defense.gov/utility/printitem.aspx?print=http://www.defense.gov/transcripts/... Accessed on 9 June 2012

Panetta’s virtual confirmation of Antony’s primary argument is evident from the reality of America’s stake in enhancing New Delhi’s military capabilities. Panetta told IDSA on 6 June 2012 that “defence cooperation with India is a linchpin in this [US] strategy ... of ... rebalancing towards the Asia-Pacific region”. The punch-line followed. Panetta said: “I want to stress that the United States is firmly committed to providing the best defence technology possible to India. We are both leaders in technology development, and we can do incredible work together. Indeed, I think, a close partnership with America will be [the] key to meeting India’s own stated aims of a modern and effective defence force”.5 At the same time, Panetta did not miss the counter-reality which he portrayed as the challenge of helping India raise its military profile. “In terms of regional security, our [US] vision is a peaceful Indian Ocean region supported by growing Indian capabilities. .... But the fundamental challenge here is to develop India’s capabilities so that it can respond to security challenges in this region”. On a more optimistic note, however, Panetta acknowledged that “at a strategic level, we [the US and India] have worked together to counter piracy, to counter terrorism”. Expanding the theme, Panetta said: “Now, we should join forces to tackle new and even more complex threats. We can do more to drive the creation of a rules-based [international] order that protects our common interests in new areas like cyber-security and [outer] space”.6 China’s quantum leaps in the scientific and experimental exploration of outer space can be viewed by the US or India under the telescopic lens of military theory and practice. Both India and China, unlike the US, have repeatedly called for the non-militarisation of space. However, the Pentagon chief’s reference to the possibility of cooperation with India in the domains of cyber-security and space cannot be devoid of the potential military dimension of outer space. A fact that both the US and India are acutely aware of is China’s demonstrated success in using an anti-satellite weapon to destroy an object in space. In this broad-spectrum context of America’s stated political will to enhance New Delhi’s military capabilities, questions have arisen in some quarters about the US-India aims towards not only China but also Afghanistan and Pakistan. Speculation is rife about Washington wanting New Delhi to play a military role in the post2014 or perhaps, a ‘post-American Afghanistan’, a possible political label for that country after the promised withdrawal of US troops from there by the end of 2014. But such speculation has already been scotched, for now at least, by Panetta himself during the course of his speech and question-answer session at IDSA in New Delhi in early June 2012. Panetta categorically said: “What I asked of the leaders here [India’s leadership] is that they continue to provide the training that they are providing now. My understanding is that the training [of Afghan military personnel] takes place here in India for those that are brought 5 6

ibid ibid

here. What I urged [the Indian leaders] is that they continue to do that, if possible expand that training in order to improve the efficiency of the Afghan Army. There was nothing said about [India] doing anything in terms of additional military efforts in Afghanistan itself”.7 The Delhi Investment Summit on Afghanistan, held on 28 June 2012, reinforces the Pentagon narrative that India has not been asked to take any military initiative inside ‘a post-American (post-2014?) Afghanistan. India is generally seen to be averse to getting involved military in Afghanistan in the present and prospective scenarios there. On Pakistan as a factor in the US-India relations of the future, Panetta said: “Just as India views the relationship with Pakistan as complicated, so do we [Americans]. And it is. It’s a complicated relationship, oftentimes frustrating, oftentimes difficult, But at the same time, it is a necessary relationship. ... They [Pakistanis] also happen to be a nuclear power, and it’s extremely important that we [Americans] maintain the [necessary] relationship with them”.8 Nothing patently new has been disclosed about Pakistan as a factor in the India-US equation into the future. So, Washington’s “necessary relationship” with Islamabad is to be seen against America’s “indispensable partnership” with India, a catch-phrase US President Barack Obama had uttered with due deliberation in New Delhi in 2010.

Hillary-Krishna meet Some aspects of an “indispensable partnership” were evident during India’s External Affairs Minister S M Krishna’s talks with US Secretary of State Hillary Clinton in Washington on 13 June 2012. Speaking of “something new”, Hillary Clinton said: “The strategic fundamentals of our [US-India] relationship are pushing our two countries’ interests into closer convergence. By strategic fundamentals, I mean not just our shared democratic values but also our economic imperatives and our diplomatic and security priorities. ... What does this mean for our partnership? Well, today there is less need for dramatic breakthroughs that marked earlier phases in our relationship, but more need for steady, focussed cooperation aimed at working through our differences and advancing the interests and values we share. This kind of daily, weekly, monthly collaboration may not always be glamorous, but it is strategically significant”.9 True to this non-glamorous punch-line that overshadowed the terminology about the sound US-India “strategic fundamentals”, no major announcements were made. But, the HillaryKrishna meeting itself was preceded by tangible progress towards the implementation of the US-India civil nuclear pact. Such progress, too, is reflective of some momentum towards the re-balancing of India-US ties in the civil domain.

ibid ibid 9 http://www.state.gov/secretary/rm/2012/06/192269.htm Accessed on 23 June 2012 8

This was duly taken note of by Krishna in Washington on 13 June 2012. He said the signing of a Memorandum of Understanding between the Nuclear Power Corporation of India Ltd and America’s Westinghouse “should put at rest ... some of the confusion” that clouded the US-India civil nuclear pact until recently. “Nuclear commerce is now beginning to expand”,10 Krishna emphasised. The re-balancing of India-US equation in both the civil and military domains should also be viewed in the light of New Delhi’s diplomatic activism towards China and in the wider Group of Twenty (G20) forum in June 2012. To maintain the continuity of cordial contacts with China, Krishna represented India at the Shanghai Cooperation Organisation (SCO) Summit in Beijing on 7 June 2012. India has Observer status in the SCO, in which China and Russia are the lead-players.

India-China Dialogue On a different diplomatic track, India’s Prime Minister Manmohan Singh met his Chinese counterpart Wen Jiabao at the time of the G20 Summit at Rio de Janeiro on 21 June 2012. After the meeting, India’ Foreign Secretary Ranjan Mathai said the two Prime Ministers saw as “a very positive step” the first-ever round of talks held recently under the banner of the new Working Mechanism on border affairs. The panel was in fact constituted at Wen’s initiative. Mathai also quoted the two Prime Ministers as saying that the Defence and Strategic Dialogue between India and China should be continued at the present level and stepped up.11 Evident from the latest India-China interactions at the highest political levels is the fact that New Delhi and Beijing are still at the stage of engaging each other in defence and strategic dialogue. In significant contrast, India and the US have indicated that they are beginning to engage each other at the far higher plane of defence and strategic cooperation. In this evolving context, the inevitable China factor in New Delhi’s global diplomacy will have an impact on the signs of a new re-balancing of India’s equation with Washington in the military and political fields. New Delhi will need to do a fine balancing act in its interactions with China and other major powers in order to get the new re-balancing of the India-US equation right. China will take note of India’s moves. Worth noting is the analysis by scholars like Jonathan Holslag. In his 2010 book, China and India Prospects for Peace, Holslag has noted that “the [civil] nuclear deal between India and the United States is widely perceived in Beijing as a stepping stone to future rallying against

10 11

ibid http://www.mea.gov.in Press Briefings June 21, 2012

China”.12 This may, in his view, impel China to “lay more emphasis on military deterrence and diplomatic counter-balancing” with reference to India. Significantly, New Delhi and Washington have now dropped signs of re-balancing their equation in the military and political domains after beginning to place the US-India civil nuclear pact on a course of practical action. This aspect will surely be noticed by the other major powers. .....

Jonathan Holslag, China and India Prospects for Peace, p 171, Columbia University Press/New York, 2010

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Women’s Quiet Revolution in Pakistan Shahid Javed Burki 1

Abstract The term ‘quiet revolution’ sounds like an oxymoron since revolutions normally produce a lot of noise. But when something entirely unexpected happens, that too can be called a revolutionary event even if it is not very noisy. That is precisely what is happening to women in Pakistan. A significant number are leaving their homes and entering the work force. The numbers involved are large enough to make a difference not only to the women’s overall welfare. This trend will profoundly affect the way Pakistani society functions, the way its economy will run and the manner in which its political order will evolve. The paper suggests that this change is coming about as a result of developments in three areas: Education, employment and entrepreneurship.

Educating the Pakistani Women 2 Let us begin with education. There is a widespread belief that women in Pakistan are doing poorly in receiving education. That impression is correct to some extent. The overall rate of literacy for women is low; much less than that for men which is also not very high. Although the 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 is a former Finance Minister of Pakistan and a former Vice-President of the World Bank. 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.

This paper draws upon the comments made by the author at a seminar organised by the Pakistan High Commission in Singapore. The seminar was held on 27 June 2012 and dealt with the subject of ‘Women in Pakistan’s Development’.

Government of Pakistan is a signatory to the declaration that committed nations around the world to the Millennium Development Goals, the MDGs, the country is far from achieving them. Attaining universal literacy for both boys and girls by the year 2015 was one of the MDG mandates. With literacy rates of 70 per cent for boys and only 45 per cent for girls in 2010, Pakistan will miss these goals by a vast margin. However, in speaking of a revolution, the reference is to the rate of growth in women’s enrolments in institutions of higher learning. Here, the recent trends are extraordinary – in fact revolutionary. It is interesting and puzzling that some of the numbers used here to make this point have not appeared in the discourse in the country about economic and social issues. Over the period 1993-2010, the number of girls enrolled for primary education has increased from 3.7 million to 8.3 million. This implies a rate of growth of 4.8 per cent a year, about two times the rate of increase in the number of girls entering the primary school-going cohort. However, even with this impressive rate of increase, it is worrying that girls still account for less than one half – the proportion was 44.3 per cent in 2010 – of the total number of children in school. Much more remains to be done before the goal of universal primary education can be reached. It is in higher education that girls have made the most spectacular advance. The number of girls attending what is described as ‘professional colleges’ has increased in the same 17-year period at a rate of 5.6 per cent per annum. In 1993, there were only 100,400 girls attending these institutions. Their number increased to more than 261,000 in 2010. There are now more girls than boys in ‘professional colleges’. The proportion of girls in the total population of students in these colleges has increased from 36 per cent to 57 per cent in this period. It is the attendance in the universities where the real revolution has occurred. There were less than 15,000 girls in these institutions in 1993; their number increased to 436,000 in 2010. The proportion of girls is approaching the 50 per cent mark, with the rate of increase in their numbers at an impressive 20 per cent a year. While a very large number of girls drop out between the primary stage and the stage of professional and university education, the numbers completing higher education now are large. Three quarters of a million girls are now leaving the institutions of higher learning every year. 3 A significant number of them are entering the work force. In education, it is the numbers that make a revolution. Given the rate of increase in the number of girls attending these institutions, it is not an exaggeration to suggest that by 2015, a million girls will be ready every year to enter the modern sectors of the economy. That has already begun to happen and here the statistics on the presence of women in the work force don’t tell the complete story. Official statistics still indicate very low levels of women’s share in the work force. 3

These numbers are computed from the data in Government of Pakistan, Pakistan Economic Survey, 2009-10 Statistical Annex, Islamabad, 2010.

According to the official data, only 16 per cent of women were working compared to 50 per cent of men. The rate of women’s participation in the work force is higher in the countryside than in the urban areas – 19 per cent as against eight per cent. But these statistics don’t paint the real picture. A lot of the work that women do either in the households or in the work place does not get recorded. This is not only the case for developing countries. The same happens in more developed economies that keep a better record of what people do for living. In Pakistan, for instance, women are very actively engaged in the livestock sector but that goes mostly unnoticed in official accounting. There are a number of sectors in the modern areas of the economy where women now make up a significant part of the workforce. These include the traditional areas where educated women have been active for decades – such as teaching and medicine. However, more recently, as the number of women with high levels of skills increased, they have become players in sectors such as banking, communications, law and politics. They also now make up a significant proportion of the work force in the information technology (IT) companies. Some IT experts have estimated that in their sector there are tens of thousands of women engaged in doing work in what they call ‘cottage businesses’. These women with good computer skills are working from their homes undertaking small contractual work for members of their families or their friends who are living and working abroad. Some estimates suggest that more than a billion dollars worth of work gets done in these informal establishments. These are by large one-person shops that receive payments through informal transactions. However, it is the entry of women in the entrepreneurial field where the real revolution is occurring. 4 To develop this point we will use one example of the development of entrepreneurship among women in Pakistan. This is in the field of education. As already indicated, it is in education that women have made the most spectacular advance. They will achieve higher status in their increasingly conservative society by using the education and higher-level skills they are acquiring. Here, numbers count for more than proportions, but even in terms of proportions, in some areas of education and skill development, women are doing almost as well as men – in some cases even better. This, as noted earlier, is in the enrolment in professional schools and colleges. What we are seeing is the development of a giant wave that has begun to hit the shores of the Pakistani economy, its society and the political system. With nearly one million women graduating every year from professional colleges and universities, what we are seeing is a change in the composition of the work force and its quality. At the upper levels of the labour market,

The author is grateful to Netsol Technologies, Pakistan’s largest IT firm for providing this information.

there are times when more women than men available to do the needed work and potential employers have to choose from this field. The change noted above has come about for the reasons that are not unique to Pakistan. It is happening in other parts of South Asia as well. The state was failing to get the public sector to deliver the quality of education demanded by parents belonging to the middle class. As the demand for places within the educational system increased, the state came under growing pressures. More financial and human resources were required to take in all the students knocking at the doors of the system. Most South Asian states did not have the funds in the amounts required, qualified teachers in the numbers needed and textbooks of the quality which parents demanded for the benefit of their children. One conclusion drawn was that the availability of finance to match the needs would reform public education. This turned out to be a wrong assumption to make. That additional funds alone won’t solve the problem was vividly illustrated by the embarrassment caused to the World Bank by the spectacular failure of its large social action programme, or SAP, in Pakistan. This multi-donor, multi-billion-dollar programme was aimed at giving a major lift to the educational sector in the country by increasing the rate of enrolment for both boys and girls, by building new schools in the rural areas so that children didn’t have to walk long distances to attend classes, by providing better-trained teachers, and by improving the quality of instruction through better textbooks. The objectives of the programme were good but the cause of its almost total failure was in its implementation. In the initial stages, the programme concentrated on the province of the Punjab. The education department in Lahore, the provincial capital, had a poor reputation. It was under the influence of the political forces that put pressure on its officials to employ their friends and relatives or to move those who were already working in the system to more desirable places. To use a jargon, the provincial education department was focusing on ‘postings and transfers’ of teachers as its principal function. An enormous increase in the availability of funds for the system, because of the resources provided by the SAP, led to a sharp rise in the level of corruption, which was already high. The programme, because of these design failures, was eventually abandoned by the World Bank and other members of the donor community.

Women Education-Entrepreneurs However, failed efforts such as these created an opportunity for women with good education, with access to family funds, and with children of their own to step in and establish institutions of their own which they would themselves manage. Their own children and the children of their 4

friends and relatives formed their first batch of students. Nasreen (‘Mona’) Kasuri, from a wellestablished political and business family, was one of the pioneers in this area, and her performance ranks as an excellent example of the marriage of entrepreneurship to the availability of opportunity. Some of the more impressive school systems in Pakistan started modestly, with the foundingmother creating a facility which she could monitor as her own children were being taught. Some of these ventures started at the homes of the budding education-entrepreneurs. These modest institutions grew from the pre-school and kindergarten stage to the primary stage to the high school stage. In one case – in the case of the school started by Kasuri – its progress took it to the university stage. The Beaconhouse school system is said to be one of the world’s largest, having received an infusion of a significant amount of foreign capital provided by a private equity fund. It has gone beyond Pakistan’s borders and established – in some cases, acquired – school systems in Africa, the Far East and Britain. The owners of this for-profit educational system have ploughed back some of their accumulated earnings by giving a large donation for the establishment of a liberal arts university called Beaconhouse National University (BNU). The BNU, specialising in liberal arts, has concentrated on the subjects that attracted women and for which there were growing markets. It is providing instruction in communications, IT, visual arts, architecture and economics.

Conclusion This one example provides a good illustration of how women’s advanced education and acquisition of modern skills have begun to change the social and political landscape. Wellqualified women with the right kinds of skills have decided not to stay at home and just build and nurture their families. They are increasingly becoming professionals and occupying high-level positions. Some economists maintain that supply creates its own demand and that has indeed happened in the case of Pakistan with some significant changes in public policy. For several decades after independence, Pakistan did not admit women into what were called the ‘superior services’. These included the Civil Service of Pakistan and the Pakistan Foreign Service. That ban on the recruitment of women was lifted a couple of decades ago, and now women have advanced to the senior most echelons in both services. According to a recent paper written by a woman diplomat, there are now more than a dozen women serving as ambassadors around the globe. It is, therefore, fair to conclude that even in a country, which is presently in a severe depressedcondition, women’s educational and professional performance may offer some cause for hope for a better future. By relegating women for so long to the back benches, Pakistan was operating its 5

economy with one hand tied to the back. That hand has now been loosened and may contribute to the countryâ&#x20AC;&#x2122;s revival. .....

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Singapore Symposium 2012 Papers-1 Pakistan Should Go Asian1 Shahid Javed Burki2 Abstract Given Pakistan’s current chaotic situation in both politics and economics, it would be rather presumptuous to suggest that the country could act as the glue for binding different parts of Asia, a large continent which is now on the move. Several analysts have suggested that the 21st century will be the Asian century; that the extraordinary combination of demography, the role of the state, and recent economic history will take Asia forward. The 19th century was the century of Europe and the 20th that of America. This was now the turn of Asia. According to this line of thinking, Asia could, in the not too distant future, overtake both Europe and America in terms of the respective sizes of the economies of these three continents. There is enough dynamism in Asia for several scholars to be comfortable with the thought that such a repositioning of the continental economies is inevitable. However, the pace of change could be quicker and the result more definite if the various Asian countries, large and small, could work together and become a 1

The paper by Mr Shahid Javed Burki is based on his comments during the second session of panel discussion at the Singapore Symposium, organised by the Institute of South Asian Studies (ISAS), an autonomous research institute at the National University of Singapore, and Aspen Institute India in New Delhi on 12 July 2012.The session was chaired by Ambassador See Chak Mun, Adjunct Senior Fellow, ISAS, and Senior Adviser, Ministry of Foreign Affairs, Singapore. Mr Shahid Javed Burki is Visiting Senior Research Fellow at ISAS, and 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.

well-connected economic entity with strong inter-country links. Such an outcome could become possible if there is the political will to act on the part of Asia’s large countries. In this context Pakistan’s role could be critical even when its own economy is very weak at this time. Pakistan’s Delicate Economic Situation In terms of the economic well-being of its citizens, Pakistan today is the poorest performing economy in South Asia. It is not doing well when its performance is measured in terms of variety of economic and social indicators. It has had a declining rate of growth for almost 50 years. The trend started in 1965 when Pakistan fought a brief war with India over the issue of Kashmir. That led to a sharp decline in external capital flows on which Pakistan was dependent for maintaining a reasonable rate of investment. But punctuating this declining growth trend were a few spurts, each lasting about three to four years. All of these occurred during military rule and all were associated with large foreign capital flows. A significant proportion of external finance received by Pakistan came from the United States. The military leaders were able to access foreign aid since it was consequent upon subscribing to America’s strategic interests in the area around Pakistan. They had greater degrees of freedom, than the civilian leaders, to work with foreign governments. They did not feel they needed to be constrained by public opinion. As can be gauged from Pakistan’s difficulties with the United States in 2011-12, a democratic government has to take people’s views into account while fashioning foreign policy. As a recent survey by the Washington-based Pew Research Center revealed, a very large proportion of people – 74 per cent of those surveyed – in Pakistan view the United States unfavourably. The proportion is larger than for most other Asian countries.3 Pakistan’s current economic downturn has been extremely severe, lasting longer than any other in its history. It has lasted five years and is likely to persist for a while. One way of dealing with this situation is to completely reorient the country’s approach to economic development. The country needs to focus more on developing strong links with the Asian nations in its neighbourhood rather than continue to seek a close relationship with the United States. For some time now, Pakistan has been attempting to negotiate a free trade arrangement, FTA, with the United States. That is an impractical approach since Washington has signed FTAs with mostly small nations such as Panama. These countries could be given tariff-free access since they did not pose much threat to America’s domestic industry. For a large country such as Pakistan with one large sector – textiles – the path to an FTA will be slow and will not be particularly rewarding. Instead this may be a good moment to think about “going Asian”. 3

Pew Research Center, Pew Global Attitudes Project, “74 % call America an enemy”, Washington DC, 17 June 2012.

Several Asias Some analysts have suggested that rather than one Asia there were, in fact, two Asias, one dominated by China, the other by India. The question was whether the two Asias would converge and become a loosely-bound economic entity or diverge â&#x20AC;&#x201C; each part going its own separate way, developing separate economic and political systems and pursuing different goals. There were just too many systemic differences between these two parts of Asia for them to bind together. The state systems in the two anchor economies, China and India, were so different that their working together within a common policy framework would not be a practical proposition. It was further emphasised that China was a highly centralised state. In Indiaâ&#x20AC;&#x2122;s evolving political system, federating states possessed considerable autonomy, a trend that was weakening the centre. Political systems were also different. China was able to orchestrate regime change in a fairly orderly manner; a process in which it was actually engaged now for more than a year and which will reach a well-choreographed finale in the spring of 2013. However, the transfer of power in India occurred through elections and the formation of governing coalitions and was not always a smooth process. The two countries were headed in quite different directions. Divergence was the more likely outcome. So ran the argument. It is perhaps more realistic to think in terms of not one or two Asias but about four rather different parts. Such a division of a geographic entity, which many would like to see turn into one cohesive economic system, complicates the thinking about the future. But, as I will presently argue, it makes it more practical and easier to handle in terms of the making of public policy. The four Asias include the two that have China and India at their respective centres. But two more need to be added: Central Asia and the Middle East. Bringing them in also brings in Pakistan, since that country occupies an extraordinary geographic space. It is in Pakistan that South and Central Asias meet. It is through that country that India should be able to trade and engage in commercial activities with the resource-rich countries in Central Asia and the Middle East. And it is also through that country that increasingly energy-deficient China could gain an easier access to the enormously rich energy sources around the Persian Gulf. How can these four parts of a continent act in concert to ensure that the larger entity, the Asian continent, could become a dominant player in the global economy? Before answering that question, a slight detour needs to be taken to bring in geopolitics. That China and India will exercise greater political and economic influences on the countries that lie on their peripheries can no longer be disputed. In that respect, most of East Asia and most of South Asia are well within the spheres of influence respectively of Beijing and New Delhi. But there is one problem with this evolving structure. Washington at this point is not inclined to surrender any space entirely to Beijing. The Chinese on their part are not inclined to seek a 3

monopoly for themselves any time soon. In the longer term, both sides will learn to accommodate each other’s interests. But it is in the two other parts of Asia where there is no dominant political player to keep order – the word ‘order’ being used in a broad rather than a narrow sense – that political jockeying for appropriate positioning is underway. The old “great game” is once again being played. As was the case in the one enacted more than a century ago, the game may have an uncertain end. However, the large Asian countries can prevent such a situation from developing by acting on their own, rather than following the strategic interests of outside powers. In the resource-rich Central Asia, there are strong interests on the part of three large powers – the United States, China and Russia. Each would like to, if not altogether dominate this geographic space, be in a position to retain influence over it in the making of public policy. In the Middle East, as a result of the “Arab Spring”, the old grand bargain has broken down. That bargain was centred on the understanding that the region’s autocrats would be left in place if they did not disturb the flow of oil to the West by keeping the vital sea lanes open to international shipping, and did not threaten the security of the state of Israel. As the results of the recent elections in Egypt demonstrate, the new political order that is emerging will have a very different set of objectives. Nationalism, tinged in some instances by lslamism, will be the driving force in many Middle Eastern states. For many, Turkey will be the model most likely to be followed. Similarly, the Asian countries themselves could do a great deal to create an economic order that serves their purpose. This is where Pakistan enters the picture. Given its geographic position, it is through Pakistan that a number of links that might bring Asia together could run. For the moment, the economic integration of Asia is happening, in bits and pieces. There are a number of trading arrangements in place involving several different groups of countries. There is the Association of Southeast Asian Nations (ASEAN) but it has thrown out tentacles to bring in other countries into its orbit. There are now several ASEAN-Plus configurations in place. The South Asian Free Trade Agreement (SAFTA) has only now begun to show some signs of life – indeed, after the decision by Islamabad and New Delhi to concentrate on economic and trade issues rather than keep their focus on hard-to-resolve problems. There is the Shanghai Cooperation Organisation (SCO) in which China is attempting to tie the countries of Central Asia to itself in some kind of a trading and security arrangement. And then, there are numerous bilateral arrangements between different countries. Examples of these are: China-Pakistan, India-Sri Lanka, Pakistan-Sri-Lanka, India-Bangladesh and so forth. All this sounds perplexing, but it is the right way to proceed. It may not be a good idea to overdesign a regional arrangement as the Europeans did decades ago. They – and the world – are now paying a price for quickly pushing ahead with that model of regional arrangement. For Asia, a multi-step approach aimed at regional connectivity would be a much better proposition.

Steps towards Regional Connectivity The first of these steps would be to bring Pakistan back into South Asia in the economic sense. Those who remember their history would recall that the area that is now Pakistan was an integral part of what was British India. Then, Pakistan exported three-fourths of its food and commodity surpluses to India, getting in return about the same proportion of imports from the other side of the border. And then, politics intervened, and with it came suspicion particularly on the Pakistani side of the border about perceived Indian intentions towards the neighbour. Following the trade embargo imposed by India in 1949, trade between the two countries dried up. Pakistan turned its back on India and started looking towards the West. The distant United States became its largest trading partner, defying what trade economists call the “gravity model of trade”. India adopted what some analysts call the ‘Look East’ policy. The first step, therefore, would be to bring Pakistan back to South Asia and breathe new life into SAFTA. The process has begun but there should be full commitment from both sides to maintain the momentum. There are groups on both sides of the India-Pakistan divide that have an interest in derailing the process. They must not be allowed to succeed. The second step should be to open the Pakistani space for use by India to trade with Afghanistan and beyond. Once again, there is movement here; a transit agreement involving passage through Pakistan is in the works for India to exchange goods and commodities with land-locked Afghanistan. Such an agreement should not come with too many strings attached. The movement of transport equipment through the Pakistani territory should be as unconstrained as possible. India should also be able to use the Pakistani space for trade with China, in particular with that country’s western provinces that lie on the other side of the famed Karakoram Highway that links Pakistan and China through a formidable mountain range. The third step would be to link the various Asian countries through a network of oil and gas pipelines, complete with an electricity grid, so that energy begins to flow from the energysurplus to the energy-deficit countries. Some work has been done in this context. A gas pipeline is being constructed on the Iranian side of the border to eventually link it with Pakistan. The socalled Iran-Pakistan-India (IPI) pipeline was meant to extend to India; but New Delhi has, for the time being, opted out of the arrangement. Another pipeline, the TAPI, connecting Turkmenistan in Central Asia with Pakistan and India through Afghanistan, is under consideration. It has received the support of the Asian Development Bank and an expression of interest from the World Bank. The Chinese have long been interested in connecting their western provinces with the gas-rich countries in the Middle East by a pipeline that will cross the length of the Pakistani territory. The private sector in India is planning to lay an oil pipeline from a new refinery located in Batinda in the Indian state of Punjab with the Pakistani province of Punjab. This will provide gasoline and other refined products to Pakistan. 5

Financing Intra-Regional Connectivity It would take a great deal of investment to develop these routes of international commerce. Pakistan does not have the means to do this but it can be done with the help of private finance and private technology. There is precedence for this, and that could be followed. In the 1960s, after India and Pakistan signed the Indus Water Treaty, a massive construction programme was launched to build link-canals among the rivers that were assigned to Pakistan as a part of the settlement. This was an expensive and technically challenging programme. It was successfully implemented over a period of 10 years by a consortium of donors led by the World Bank. Such a programme – this time focused on creating a regional network to facilitate trade – could be launched. And it should have much greater involvement of private enterprise. This is where Singapore enters the picture. It has the banking sector and other instruments of finance to establish financial consortia to implement such a project. It could mobilise construction companies from East Asian countries to undertake large and inter-country projects. A city-state such as Singapore may well become the headquarters of a large consortium to handle these infrastructure projects. In so far as the financing of such an investment programme is concerned, there are several possibilities. The traditional sources would be the two multilateral development banks, the World Bank and the Asian Development Bank. To this two more could be added. The BRICS countries – Brazil, Russia, India, China and South Africa – are now working at the possibility of setting up a development bank of their own which would be capitalised by them from their large external reserves. Large inter-county infrastructure construction projects would be a good starting point for the proposed BRICS bank. The other possible source of finance is the South Asian Diaspora that now has about 40 million people disbursed in three continents. They could be encouraged to join this effort. They have the finance and the expertise to make a contribution. While no firm estimates are available, the South Asian Diaspora probably has a total annual income of US$ 2 trillion and a savings rate of probably US$ 500 billion a year. The asset base is probably of the order of US$ 5 trillion. Some of these savings could go into projects such as intra-regional connectivity projects. The South Asian Diaspora should be encouraged to set up shop in Singapore, where its members already have a presence, and begin work on inter-country and intra-country regional infrastructure development projects.

Conclusion What is emerging over time is an Asian continent with its several parts loosely linked together initially through commerce. In this endeavour, Pakistan, given its location, could be a central player. But, for it to perform that role, it will need to steady its economy, improve the quality of governance, reverse the tide of Islamic extremism, and get closer to the countries in Asia to its east and southeast. These may seem difficult goals to reach, but the countries in Pakistanâ&#x20AC;&#x2122;s neighbourhood could be helpful in this regard. To do so is in their interest.

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ISAS Insights No. 175 – 2 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

Pranab and the Future of Indian Presidency Robin Jeffrey1 In May 1969, the President of India died, and a story began that continues to unfold in New Delhi today. The tale involves the office of the presidency of India, the new occupant of that office, Pranab Mukherjee, and the descendants of Jawaharlal Nehru. It’s a story with an unpredictable future and a twisty history. Mr Mukherjee was sworn in as India’s 13th President on 25 July 2012, but his career in the Congress Party and his connections with the Nehru family took off in the fateful monsoon months of 1969.

The Office In theory, the President of India is a symbol, a head of state, a greeter of important guests and reader of scripted speeches. In times of uncertainty, however, the President becomes immensely important, capable of determining the fate of governments, as Indira Gandhi, Nehru’s daughter and Prime Minister from 1966-77 and 1980-4, was well aware. She had become Prime Minister as a compromise among party bosses in 1966. They thought ‘the dumb doll’, as she was described with memorable misjudgement, was going to be easy to push 1

Professor Robin Jeffrey is Visiting Research Professor at the Institute of South Asian Studies (ISAS), an autonomous research institute at the National University of Singapore, and Visiting Research Professor at the Asia Research Institute (ARI) in Singapore. He can be contacted at isasrbj@nus.edu.sg. The views expressed in this paper are those of the author and do not necessarily reflect those of ISAS.

around. She wasn’t dumb, and she was no doll. By 1969, she was itching to get rid of the old heavyweights, and the death of President Zakir Hussain gave her the chance. The President is elected by members of the national parliament and members of state legislatures, each individual wielding a number of votes proportionate to the number of people she or he represents. In the election for a new President, the party bosses in 1969 put up one of their cronies. Indira Gandhi supported a rival, split the party and got her man elected. From that point in 1969, the presidency of India became much more than a ceremonial walk-inthe-park or ride-in-a-carriage. It became a politically charged and, at times of crisis, pivotal institution.

The Man In the same monsoon summer of 1969, Mr Mukherjee came to Delhi for the first time as a member of the upper house, representing the Bangla Congress, a breakaway party in West Bengal. He had a reputation as a good organiser, having got a man from faraway Kerala in the deep south elected to a seat in parliament from West Bengal. (This was V. K. Krishna Menon, the failed ex-Defence Minister of 1962). Indira Gandhi needed energy and talent to maintain her new party. Mr Mukherjee, who started working life as government clerk, needed a patron once the Bangla Congress disintegrated. By 1972, Indira Gandhi had inducted Mr Mukherjee into her Congress Party. By 1973, he was a 38-year-old Minister in her government. He kept his head down as Minister of Revenue and Banking during her ‘emergency’ of 1975-7, and he stayed loyal when she was swept out of office in elections in 1977. More important, during the two years in the wilderness in 1978-9, he was treasurer of Mrs Indira Gandhi’s party at a time when she needed funds. He built links with India’s greatest rags-(almost)-to-riches success story, Dhirubhai Ambani. Indira Gandhi returned to power in 1980, and Mr Mukherjee prospered. By 1982 he was Finance Minister, No. 2 in the cabinet and described as her ‘hatchet man’. He fell out with Indira Gandhi’s family after her assassination in 1984. The office of the President was crucial in the estrangement. On the two previous occasions when a Prime Minister died in office, the President had called on the senior minister in the government to act as Prime Minister. In 1984, that would have been Pranab Mukherjee, a point that he is said to have made to Indira’s son and heir, Rajiv Gandhi. Indira Gandhi’s family appear to have inherited an unfortunate belief that India cannot get along without them, and a compliant President – carefully chosen by Mrs Gandhi for his loyalty – duly swore in her son as Prime Minister. 2

Thereafter Mr Mukherjee was excluded from Rajiv Gandhi’s circle and even briefly formed a rival political party in West Bengal. He came back into the Congress fold in 1989 and rose to prominence again after Rajiv Gandhi’s assassination in 1991. He ran the Planning Commission from 1991 to 1996, during the economic reforms driven by the Congress-led government of 1991-6. By 2001, he was back in cautious favour with Rajiv Gandhi’s Italian widow, Sonia, who was by that time the matriarch of the Congress Party, as she remains today.

The Future Mr Mukherjee brings remarkable qualities to the presidency. Near the centre of power for 40 years, he has an unrivalled knowledge of India’s power-elite and gets on with a wide variety of people. He has the reputation of a wary Minister, a fixer with a memory for detail and an ability to protect reputations with meticulous paperwork. In getting the Congress Party’s support for the presidency – and this seems to have meant, crucially, Sonia Gandhi’s support – Mr Mukherjee had other desirable qualities. He lacks characteristics of an effective demagogue: it is hard to imagine him giving a rousing speech or leading the masses to the barricades. In earlier years, he had trouble winning elections and had to be brought to parliament through the indirectly elected upper house. India’s political environment makes it likely that the President is going to have big decisions forced upon him in 2014, if not before. The current government, in which Mr Mukherjee was Finance Minister, is on the skids with the electorate, mired in corruption allegations and bereft of policies or the ability to implement them. The government is unlikely to fall in the 20 months remaining in its term because no parliamentarian of any party wants to face the uncertainties of an immediate election. However, it is highly likely that the Congress Party will lose heavily in the elections scheduled for 2014. What also appears likely is that no party will win enough seats to be an obvious leader of a coalition government. In India’s states, a number of Chief Ministers, able to command regional support, are preening and preparing for a call to the prime ministership in 2014. They base their hopes on the knowledge that in the mid-1990s India had two short-lived Prime Ministers who got the job through the compulsions of chaotic coalition politics, though they were far from being household names.

In a hung parliament, the President decides who gets first chance to form a government and at what point new elections need to be called. Mrs Sonia Gandhi, authority-figure of the Congress Party, who becomes ever more mysterious like her late mother-in-law, is said to harbour an apprehension that in such circumstances, Mr Mukherjee might not be the totally loyal President that Indira Gandhi required. For his part, Mr Mukherjee can keep his counsel. If he has to make major decisions in 2014, he will draw on a wide and deep knowledge of India’s political circumstances and a keen awareness going back to 1969 of the influence that a President of India – dead or alive – can exercise on politics.

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ISAS Insights No. 176 – 2 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

Singapore Symposium 2012 Papers – 2

ASEAN-India Relations1 See Chak Mun2 Abstract ASEAN-India relations intensified when the Narasimha Rao government initiated India’s Look East Policy in the early 1990’s. Initially the engagement was mainly economic, but the Vajpayee government added a security dimension to it. The 2004 agreement on an ASEAN-India Partnership for Peace, Progress and Shared Prosperity envisaged a multi-faceted co-operation programme, but the implementation of the Action Plan has not been fully satisfactory. For the ASEAN-India relations to be elevated to a higher level such as a strategic partnership, there should be new impetus which should come from (a) shared political and security interests, (b) increase in the economic stakes and inter-dependence, and (c) greater public understanding and awareness of the historical and cultural links between India and ASEAN.

1 ASEAN-India relations saw a quantum leap when the Narasimha Rao government initiated India’s Look East policy in the early 1990’s. ASEAN (Association of Southeast Asian Nations) responded positively. The Cold War was over and the Cambodian conflict was drawing to a close. At the same time, there was a heightened sense of political uncertainty in the region 1

The paper by Ambassador See Chak Mun is based on his comments during the first session of panel discussion at the Singapore Symposium, organised by the Institute of South Asian Studies (ISAS), an autonomous research institute at the National University of Singapore, and Aspen Institute India in New Delhi on 12 July 2012. The session was chaired by Professor Tan Tai Yong, Director of ISAS. Ambassador See Chak Mun is Adjunct Senior Fellow, ISAS, and Senior Adviser, Ministry of Foreign Affairs, Singapore. He can be contacted at isasscm@nus.edu.sg. The views expressed in this paper are those of the author and do not necessarily reflect those of ISAS.

after the United States of America (US) withdrew from its base facilities in the Philippines in 1992. India was accepted as a Sectoral Dialogue Partner in 1992 and a full Dialogue Partner in 1995. The initial India-ASEAN engagement was primarily economic as the Rao government sought more trade and FDI flows from Japan, Korea and the ASEAN countries to bolster its economic reforms programme. Simultaneously, it also concluded defence co-operation MOUs with Malaysia, Vietnam and Laos. The Indian navy began a series of multilateral (MILAN) naval exercises with foreign navies, mainly from countries surrounding the Bay of Bengal. Those were not real military exercises as such but more in the nature of naval interactions intended to allay regional concerns about a rapid Indian naval build up in the late 1980s as well as speculations about India allowing the Soviet fleet to use its naval base facilities in the Andaman and Nicobar Islands. 2 There was also a noticeable shift in ASEAN’s attitude towards its role in regional affairs. While détente was evident among the US, China and the Soviet Union, there was the absence of any multilateral security dialogue among the great powers in Asia, quite unlike the situation in Europe. There was also the need to engage China amidst growing concerns about China’s assertiveness in the South China Sea. Thus ASEAN decided to launch the ASEAN Regional Forum (ARF) in Bangkok in 1994 which included all the ten Southeast Asian countries, ASEAN Dialogue Partners (Australia, Canada, European Union, Japan, New Zealand, and the US) plus China and Russia. The ARF was envisaged to be the primary forum to enhance political and security co-operation in the Asia Pacific via confidence building measures and preventive diplomacy with ASEAN as the driving force. India was admitted into the ARF in 1995. 3 When the Vajpayee government came to power in 1998, it added a security dimension to India’s Look East policy in the light of Delhi’s new concerns about possible links between Islamic extremist groups in South Asia and Southeast Asia (example, the Jemaah Islamiyah) and China’s rising influence in Southeast Asia, especially Myanmar. The Indian navy began to project power beyond the Indian Ocean and began a series of joint naval exercises in the South China Sea. While the ASEAN countries generally welcomed holding bilateral naval exercises with the Indian navy, there was noticeable apprehension among the ASEAN littoral states about involving the Indian navy in safeguarding maritime safety in the Straits of Malacca as they have previously rejected a suggestion for a Regional Maritime Security Initiative by an American admiral in 2004. 4 To a large extent ASEAN saw a continuation of policy approach under the Manmohan Singh government since 2004. The then new Defence Minister Pranab Mukherjee in an address to the 7th Asian Security Conference in Delhi held on 29 January 2005 pointed to the need to maintain ‘an equitable strategic balance’ in the East Asian region which had now been expanded to include the Pacific. 2

5 ASEAN formally accepted India’s admission as a founding member of the East Asia Summit (EAS) in 2005 together with Australia and New Zealand, thus effectively recognising India as a regional player which could help shape the evolving regional architecture as well as community building in the East Asian region. Notably, the debate over the composition of EAS membership brought to the surface an underlying divergence of views within ASEAN as to what would constitute the balance of power in East Asia, given the US pre-eminent power and influence in the Asia Pacific. In October 2010, India was also invited to join the ADMM+8 forum (ASEAN Defence Ministers Meeting plus Australia, China, India, Japan, South Korea, New Zealand, Russia and the US) whose objective was to move beyond the ARF dialogue process towards practical co-operation such as in maritime security, humanitarian and disaster relief, counter-terrorism, and peacekeeping. Despite India’s hitherto aversion to participation in a multilateral security alliance, it has decided to join the ADMM+8 partly because it was primarily ASEAN driven, and partly because it was only a co-operative security forum that poses no threat to any major power.

ASEAN-India Relations – A Stock-Take and Future Directions 6 ASEAN-India economic relations accelerated after India became a Sectoral Dialogue Partner of ASEAN in 1992. ASEAN-India total trade rose from US$ 2.9 billion in 1993 to US$ 55 billion in 2010. By 2010, India’s FDI flows to ASEAN amounted to US$ 2.58 billion or 3.4 per cent of total FDI flows to the ASEAN region. Still, the volume in trade and investments flows lagged behind those of other ASEAN Dialogue Partners such as China, Japan and Korea. 7 ASEAN’s dialogue relations with India were conducted under a multi-faceted cooperation framework which ranges from energy, tourism, FTAs to issues of counter-terrorism and transnational crimes. There has however been comparatively less activism in political and security as well as socio-cultural sectors of engagement. Hence much can be done to deepen ASEAN-India relations by bringing into focus the core interests of both India and ASEAN in implementing the 2004 agreement on an ASEAN-India Partnership for Peace, Progress and shared Prosperity. There has certainly been no lack of ideas and proposals. The Action Plan (2010-15) comprises 82 items and includes a wide range of proposals for ASEAN-India co-operation in various fields ranging from international terrorism, drugs to transportation and energy. However, the diverse range of proposals and the resources and manpower that they demand have obviously prevented full implementation at the bureaucratic level. At the March 2011 ASEAN-India Senior Officials meeting, the ASEAN

Secretariat reported that only some 40 per cent out of 94 activities listed in the Action Plan (2004-2009) had been completed. 8 As ASEAN and India will be commemorating the 20th anniversary of ASEAN-India relations in December 2012, both sides could consider how the ASEAN-India relations could be qualitatively improved and be elevated to a higher level such as a strategic partnership. From the ASEAN perspective, the key consideration is whether India has the strategic interest and the commitment to engage ASEAN on a sustained and long term basis. This would depend to a large extent on how both India and ASEAN perceive their shared interests in the region. India saw the need to engage ASEAN in order to increase trade and investment flows, to forestall a perceived threat of an Islamic arc spreading from its western front to the east, and to check the rising influence of China in ASEAN, particularly Myanmar which shares a land border with India. On the ASEAN side, India’s growing economic strength, its status as a de facto nuclear weapon state, and its readiness to engage all players in the Asia Pacific would offer not only new economic opportunities for ASEAN but India’s active involvement in the region would provide additional driving space for ASEAN in dealing with the major powers. 9 India’s overriding interest is to preserve its strategic autonomy in a multi-polar world. Thus India has indicated its preference for an open, inclusive and loosely structured economic and security architecture in the Asia-Pacific where India’s role would be welcomed by ASEAN. This coincides with ASEAN’s interest, as ASEAN’s ability to retain its centrality and to leverage its influence on the major powers would diminish in a geo-political situation where power relationships for example between China and the US are sharply defined in the region. Hence since 1994 ASEAN has initiated a process of multilateral security dialogue that is open, transparent and inclusive of extra-regional powers and which has led to the establishment of such regional mechanisms as the ARF, ADMM+8, EAS. Together with APEC and sub-regional functional groupings like BIMSTEC, Greater Mekong Basin Cooperation, Mekong-Ganga Cooperation, they have provided a regional framework for strategic and economic co-operation. Their roles overlap, but they have served ASEAN well as they have given all interested parties an appropriate role to play in the region. 10 However, shared political and security interests, important as they are, such as in the evolving regional security architecture, or ideological affinities alone are insufficient to sustain a durable long term relationship. Nor are commonalities in value systems such as democracy and pluralism, as ASEAN societies are also diverse, as in India. Such shared interests and values could serve as the foundation of a durable long-term relationship only if they are accompanied by efforts to increase the economic stakes and inter-dependence as well as public understanding and political awareness of the historical and cultural links between India and the ASEAN countries. A notable example in the revival of such links is the Nalanda Univeristy project. From 4

5th Century A.D. until its destruction during the 12th Century, Nalanda was a pre-eminent centre of research and Buddhist learning. The Nalanda University project would serve to revitalise the historical links between India and East and Southeast Asia, and to reinforce the perception that India is not at the periphery of East Asia but part of an ancient Buddhist world. At the practical level, the Nalanda project would help to attract foreign investment to develop infrastructure in the Indian state of Bihar, particularly at Buddhist pilgrimage sites like Bodh Gaya, Rajgir and Nalanda. Collaboration in the Nalanda project would provide many spin-offs for ASEAN-India co-operation in the educational, cultural and tourism fields. 11 India’s greater engagement in the region would require a more proactive India, instead of being a ‘benign actor’, in the deliberations in such fora like ARF, ADMM+ and the EAS about the evolving regional security and economic structure particularly in areas where they are likely to affect the core interests of India such as maritime security and freedom of navigation. India is a major stakeholder as it controls the sea lanes between the Andaman and Nicobar Islands in the Indian Ocean. 12 India’s participation in the ASEAN Connectivity will benefit not only ASEAN but also India, as it would demonstrate India’s commitment to further integrate itself with Southeast Asia and other parts of East Asia. Economic linkages could be explored through India’s involvement in the implementation of the Master Plan on ASEAN Connectivity which not only covers physical infrastructure connectivity (both land and maritime) but also institutional connectivity and people-to-people links. Through Myanmar, roads and railways could connect the landlocked northeast states of India with the rest of Southeast Asia, and which could help develop the natural resources of the region. In fact, India’s Prime Minister Dr Manmohan Singh flagged off an Indo-ASEAN car rally at Guwahati, capital of Assam, on 22 November 2004 to symbolise this land link between India and ASEAN and to demonstrate that with improvement of land connectivity, India and ASEAN could become an integrated region. 13 In short, the new impetus to ASEAN-India relations should come from (a) shared political and security interests, (b) increase in the economic stakes and inter-dependence, and (c) greater public understanding and awareness of historical and cultural links between India and ASEAN. India’s greater involvement in the regional security dialogue and re-connecting India and ASEAN could be the focal points in the future direction of the ASEAN-India relations. This should be extended to include enhancing business connectivity as well as exchanges among the media, academics, parliamentarians and civil society groups.

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ISAS Insights No. 177 â&#x20AC;&#x201C; 7 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

A Worrisome Blackout in India S Narayan1

On 30 and 31 July 2012, India was hit by a massive power outage that affected three major electricity grids covering the north, east and north-eastern regions. The outage affected over 700 million people. This was arguably the most serious power outage incident in the country in over 50 years. The southern grid, which covers transmission to Andhra Pradesh, Tamil Nadu, Kerala, Karnataka and Puducherry (formerly, Pondicherry), escaped the brunt of this blackout, as it is isolated from the north, east, north-eastern and western grids. India is divided into five electrical regions, namely northern, eastern, western, north-eastern and southern, each with a regional load despatch centre to sustain grid frequency. Over the years, all regions except the southern region have achieved interconnectivity through grid synchronisation, which resulted in the formation of the NEW grid, and a National Load Despatch Centre in Delhi. Southern region is not yet connected to this, and has its own grid network. Thus there are five regional load despatch centres (LDCs), with four of them being interconnected to the National Grid. The regional LDCs function under a subsidiary of Power Grid Corporation of India, a public sector utility vested with the responsibility of managing the national grid. The LDCs are autonomous bodies that have the right to cut off supplies to a state grid after warnings, if the state continues to draw more than its entitlement.

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 the Economic Adviser to Indiaâ&#x20AC;&#x2122;s former Prime Minister A B Vajpayee. He 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.

The grid frequency is supposed to be 50 hertz at all times but typically ranges between 49 and 50. When demand overshoots supply, the frequency can drop, causing stress on the grid. Demand beyond a limit will result in the interconnections collapsing and the generating stations shutting off automatically as a result. There are relays and circuit breakers that are supposed to cut off demand when the grid is overloaded, but they obviously did not work on those two days â&#x20AC;&#x201D; whether accidentally or deliberately will have to be established only after an inquiry. There is power scarcity in the country, and the demand-supply gap worsens during the summer. Northern region is a deficit region, and draws heavily from western and eastern regions.

Deficits (MU) Punjab Haryana Rajasthan Uttar Pradesh

28-Jul-12 38.15 11.50 1.72 40.55

29-Jul-12 15.05 3.98 0.00 39.59

30-Jul-12 0.00 1.54 2.07 35.56

31-Jul-12 55.52 12.93 1.54 28.60

01-Aug-12 39.72 24.62 3.69 66.27

02-Aug-12 38.14 36.18 0.01 54.21

03-Aug-12 38.40 24.29 0.00 49.33

It is reported that the heavy overdrawing of power from the transmission line between the western and northern regions resulted in the generating stations in this region breaking down, which increased the load on the other generating stations, which then began to break down one after the other.

The obvious cause was overdrawing by one or more states that are part of the grid, perhaps among Uttar Pradesh, Rajasthan, Haryana and Punjab. It may be seen that prior to 30 July 2012, there was a heavy overdrawing, resulting in the outage. This was followed by better grid discipline. The total addition to generation capacity has been only around 50 per cent of the targets in the 8th, 9th and 10th five-year Plan periods. The performance during the Eleventh Plan (2007-2012) has only been marginally better. The reasons include non-availability of coal, the poor financial conditions of the state electricity utilities, project delays due to delays in environmental clearances and lack of gas for approved power stations.2

Northern Region- Energy Scenario (MU) Requirement Availability Deficit %

Western Region- Energy Scenario (MU) Requirement Availability Deficit %

Jan-12

22,799

21,155

7.8

Jan-12

26,454

23,180

14.1

Feb-12

22,090

20,604

7.2

Feb-12

24,286

21,010

15.6

Mar-12

22,759

21,441

6.1

Mar-12

24,921

22,656

10.0

Apr-12

21,149

20,096

5.2

Apr-12

24,075

23,006

4.6

May-12

26,138

23,639

10.6

May-12

25,069

24,198

3.6

Jun-12

29,003

25,965

11.7

Jun-12

23,098

22,181

4.1

Eastern Region- Energy Scenario (MU) Requirement Availability Deficit % Jan-12

8,183

7,690

6.4

Feb-12

8,142

7,668

6.2

Mar-12

9,206

8,806

4.5

Apr-12

9,019

8,471

6.5

May-12

9,540

9,056

5.3

Jun-12

9,595

9,048

6.0

The reasons will require a separate and detailed analysis.

However, chronic shortages have been managed hitherto by resorting to graduated power cuts that would help manage the demand-supply imbalance. However, the latest blackout has no precedent. The Central Electricity Regulatory Commission has commenced an investigation into the reasons for the collapse, which would look at the grid frequencies prevailing prior to the collapse, the voltages at inter-state points, and examine the recorders at the LDCs. The report is expected in about a week. Meanwhile, several hypotheses are being advanced. First, there was heavy overdrawing from Uttar Pradesh. This has been happening for some time now, but went out of hand during this period. The failure of the monsoons has caused the farmers to try desperately to save the crops by pumping out water from wells and reservoirs, and some reports suggest that the agricultural load rose by 20 per cent in the week prior to the latest blackout. This overdrawing was concentrated in sugarcane- and wheat-growing areas. And, since farmers, by and large, act in concert, the sudden surge in demand from this sector resulted in a heavy overdrawing. A second argument is that while states have the option to purchase power from private producers, they are reluctant to do so since upfront payments for such power-purchase is required. State utilities are notoriously in the red, and are unable to make this payment. Overdrawing from the national grid provides some cushion in this regard, because the national grid prices are usually lower than those for privately produced power. In the race to be the first to draw the most, the four northern states caused the collapse. Third, it is pointed out that non-adherence to grid discipline of reducing the demand as frequency falls below 49.5 hertz, was not followed by these states. It is argued that the new Government in Uttar Pradesh did not want to annoy its rural electorate and the farmers by resorting to large-scale blackouts, or regulated power cuts. It is interesting to note that, faced with an identical situation, the newly elected Tamil Nadu Government last year decided to bite the bullet and imposed severe power cuts across regions and industries while simultaneously attempting to address issues of fresh capacity. It has been a very unpopular move, and is certainly likely to affect the future of the ruling party, but it was a very sound and strong decision, transparently implemented. Evidently the UP Government did not have the stomach for such a move. There is also the allegation that these northern states do not adhere to the grid discipline. These arguments are perhaps only part of the truth. R Ramachandran 3 argues that data obtained from NTPC station on 30 July 2012 shows that the grid conditions and frequency conditions were stable till the grids collapsed. He also points out that it was a rainy night, and that it would be extremely unlikely that farmers would draw power on a rainy night (of course, the rains may have been localised). Ramachandran puts the blame squarely on the poor management of the LDCs: at the time of the outage, there is evidence of a power overflow in some circuits rather than overdrawing. In the case of overflow, the LDCs are expected to make 3

The Hindu, August 3, 2012

parallel lines available to handle the increased flow. As per this argument, LDC mismanagement was the cause of the outage, not the overdrawing. It is also argued that in the case of any overdrawing, the sophisticated systems available would have automatically shut down the excess load lines, unless this was not done deliberately. Finally, suspicion that this was a deliberate act cannot be totally ruled out without a proper inquiry. The LDCs have been identified as a vulnerable and weak link in the system, and now steps would have to be taken to make them fail-safe and disaster-proof. Most interestingly, the damage did not affect the southern grid. It is common knowledge that grid discipline is much better in the southern states, and the generators and transmitters here are in regular touch with each other. The southern states have also the capacity to â&#x20AC;&#x2DC;islandâ&#x20AC;&#x2122; or isolate parts of the grid in the event of generation failures, so that the damage does not spread. It is clear that, even though the southern states may have identical problems of demand-supply gaps and financial stress, the governance and administration of these institutions is still quite sound.

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ISAS Insights No. 178 – 8 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

Afghanistan After America: Possible Post-Drawdown Scenarios Iftekhar Ahmed Chowdhury1 Shahid Javed Burki2

Mullah Omar’s face was much unlike that of Helen of Troy. Yet it too was one that caused the launch of a thousand ships – airships to be more precise. Like the besieged city in Homer’s ‘Illiad’, Afghanistan of the present was swarmed by invaders, not by the Greeks, but as some see them, by their modern counterparts – the Americans and their allies. As in the Trojan War, 10 years down the line the War Council met, as it must have also in Mycenae of ancient Greece. This time the venue was Chicago in the United States, home of the modern-day mighty Agamemnon, President Barack Obama. In Chicago, as it had happened in the epic tale, the invaders finally decided to call it a day. They agreed to depart after a decade of unwinnable and unrewarding warring. This time, too, a Trojan horse would be required to be left behind. But a problem had arisen. On that mythical occasion the jubilant but unwary Trojans had dragged the huge wooden horse inside their city walls, not heeding the warnings of that perceptive priest of Poseidon, Laocoon, who had beseeched them, in vain, not to: ‘I fear the Greeks’, he had 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 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. 2 Mr Shahid Javed Burki is Visiting Senior Research Fellow at ISAS, and 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.

bemoaned, ‘even though they come bearing gifts’! The Trojan counterparts of today, the Afghans, drawing, not perhaps from the lessons of the ancient Classics but from many practical experiences, had become suspicious of the potential contemporary horse. However, unlike in the case of Trojans, the Afghans will discover not just one group (or nationality) of riders inside the ‘horse’ but several, in conflict with not just the Afghans but also among themselves. The Pakistanis would have liked to be the only ones on their own, like the Greeks, but they would have to contend with others who would have climbed onto the bandwagon, like the Iranians, the Indians, the Chinese and the Russians. The problem would be further exacerbated by the ‘horse’, or rather the riders inside, now having a mind of their own, and refusing to play the current version of the classic part! This became evident in what transpired in Chicago at the gathering of the US and its allies in May 2012. Gentle snubs are acceptable modes of diplomatic communication. These have been in vogue since Solomon failed to offer Sheba a seat immediately upon her arrival in his court (the torrid love affair was a later development). But one delivering the snubs must be cautious that these are not perceived as slights, or worse still, insults to the one to whom they are delivered. Such disequilibrium is bound to upset the apple-cart! This is what may have happened at the NATO summit in Obama’s hometown. In his inaugural remarks Obama thanked the Central Asian leaders, including the Russians (somewhat ironically given the historical context of earlier collaboration in happier times between the US and Pakistan against the Russian occupation of Afghanistan!) for assistance in reaching supplies to ISAF (International Security Assistance Force) in Afghanistan. Alas, he made no mention of Pakistan, whose President, Asif Ali Zardari, was present. The fact that the omission was not an unintended error was made clear by Obama’s denial to Zardari of a one-on-one meeting, like the one granted Afghanistan’s Karzai. The last straw on the camel’s (or if the earlier metaphor is to continue, the horse’s) back was to exclude the Pakistani President from a group photograph on the occasion. Obama was obviously miffed at Pakistan’s intransigence in not opening up the NATO supply routes through its territory, closed since the killing of 24 Pakistani troops by the Americans in November at Salala near the Pak-Afghan border (Actually Pakistan asked for a thirty-fold increase in fees per container, which the Americans, not unreasonably, judged too excessive, though the asking price may have been a function not of value but of rage, or perhaps of need. With the US not paying Pakistan’s bills, its so-called ‘frenemy’, Islamabad, was beginning to slowly go bankrupt!). Coming from a culture that puts great store by rules of hospitality, in accordance with which a guest is to be treated at a level he himself assesses to be deserving, President Zardari took these ‘unkind cuts’ to heart. Surely there was no dearth of red carpets (Afghan, Pakistani or otherwise) in Chicago, but only the lack of intention on Obama’s part to lay one on for this visitor!

The Pakistani retaliation was swift. There was sharp rebuke of Obama’s policies by Bilawal, Zardari’s son, the Pakistanis lowering the level at which criticism was delivered by a whole generation, thereby perhaps making a subtle point as well. Bilawal urged that Obama ‘show courage’, hinting that the American President was short of it, by apologizing for the Salala incident, indicating that there is no ‘open sesame’ mantra in the near future for NATO with regard to the gates of entry into Afghanistan. Also, almost immediately, a physician largely seen as being responsible for the lead in locating Osama bin Laden in Abbottabad that led to his killing by the Americans. Dr Shakeel Afridi, was sentenced to 33 years in prison by a tribal ‘jirga court’, often a contradiction in terms, for ‘treason’ (though Abbottabad, where his offence was purported to have been committed is a ‘settled district, in which the regular judiciary should have jurisdiction). Obviously America’s hero, by the same count, was Pakistan’s traitor! Doubtless a puzzled Afridi, a tribal medical practitioner, may be paying a heavy penalty for his understandable inability to comprehend the complexities of US-Pakistan relations, often bafflingly obtuse even to the sharpest observer of international politics. The tit-for-tat reaction to Afridi’s conviction on the part of the US was also somewhat unconventional. The US Senate Appropriations Committee said it would cut aid to Pakistan by US$ 33million, explaining the amount, should anyone query the computation, as US$ 1 million for each year of Afridi’s detention! (One cannot help but be reminded on this score of the title of Henry Kissinger’s book: ‘Does America need a Foreign Policy?’ when Congress appears to be of the view that such a titfor-tat on every occasion is all that is needed!) In a farcical twist to the melodrama, Pakistan announced Afridi was tried not for complicity with the US but with the extremist Lashkar-eTaiba! Of Pakistan, said Senator Patrick Leahy: “It’s ‘Alice in wonderland’ at best”, though the term could perhaps be more appropriate to describe the essence of US-Pakistan relations. Meanwhile, following a judicial fiasco in Pakistan, the Prime Minister Yusuf Raza Gilani was forced to leave office, preferring to fall on his own sword in June 2012 rather than comply with the Supreme Court’s orders to open correspondence with the Swiss authorities on Zardari’s alleged assets parked in that country. He was replaced by Raja Pervez Ashraf who faces an uncertain future for several reasons one of which cost Gilani his position. As is now the evolving tradition among the senior echelons of the Pakistani political society, personal gain is often seen to replace social betterment. While Ashraf was the Minister-in-charge of water and power, he had approved exorbitant amounts of payment, allegedly for personal gains, to rent ship-based power generating plants from Turkey. An Asian Bank investigation had found the rent paid egregious. This earned the Prime Minister the cognomen of ‘Rental Raja’. Though unrelated to this political development, and more to do with Pakistan’s economic difficulties, there was a slight easing of US-Pakistan relations when Pakistani authorities – for ‘authorities’ read the ‘military’ – agreed to reopen the transit routes to Afghanistan for NATO. This was in return for assurances of reimbursement of US$ 1.2 billion previously unpaid amounts owed to the Pakistan Army for costs incurred in earlier anti-terrorist operations. Though this was not ‘new money’ but 3

only amounts already due, it was a balance of payment support that Pakistan required badly (despite the claim by Bilawal Bhutto in a US TV interview that “Pakistan did not measure soldiers’ blood in aid”). The understanding was the result of painstaking negotiations conducted by Pakistan’s new envoy to Washington, Sherry Rahman, who was eager to henceforth “use time and space (to quote her) to build on convergences” in bilateral relations. Unfortunately the convergences were getting increasingly difficult to locate, and the episode was yet another evidence that the Pakistan-US relations had now become purely ‘transactional’ than ‘strategic’. The recent signs of some improvement such as the signing of the MOU regarding the above payment, or the visit to the US by the new Chief of Pakistani military intelligence Lt General Zahir ul Islam, does not point to substantive ‘bettering of ties’ but only strengthens the thesis of ‘transactional relationship’. It appears that come what may, US and its NATO partners are determined to depart Afghanistan by 2014, leaving behind small numbers of so-called ‘residual presence’ that will unfortunately become greatly vulnerable. They are willing to pay enormous amounts to be able to leave. In Chicago in May 2012, NATO assured Afghan military US$ 4.1 billion in aid. In July 2012 in Tokyo donors pledged civilian sectors an amount of US$ 16 billion, with the US, Japan, Germany and the UK in the lead. (In World Bank calculation, 95 per cent of Afghan GDP will comprise foreign resources, an unsustainable situation by any standard). The assistance is to be spread over four years. This is a long time in Afghan politics and no one can be sure as to who will rule the roost in Kabul in 2018, with the Taliban waiting and biding their time. These are not the only sums NATO will be paying. Now that Pakistan has obtained promises of US$1.2 billion (the final figure is closer to US$ 1.1 billion, for which a Memorandum of Understanding has already been signed) for opening up the southern supply routes. Russia, Kyrgystan, Kazakhstan and Uzbekistan will ratchet up their demand for rent for the use of the northern supply lines, critical for NATO withdrawal. NATO is saddled with Hobson’s choice, for there is no option but to leave. Their people want them to. This war has lasted twice the time-span of World War II or the Vietnam War. It also cost the US and allies 3083 dead and counting (with many more with injuries and trauma, not to speak of Afghan casualties), and US$ 546 billion. One has to remain supremely optimistic to believe that the Taliban will continue to remain on the sidelines once NATO withdraws. In fact to date, the Taliban unsurprisingly has been assertive in regions the US and NATO have vacated in pursuance of their 2014 withdrawal plan. For instance – in the Wardak province in the east. A few months ago, the US evacuated from the Combat Outpost Conlon, leaving Afghan government troops in control. Within weeks the State’s patrolling activities were severely hobbled by the insurgents. A rueful commander of the government forces, Lt Col Kohdamany remarked: “The enemy has got stronger since the Americans left, and their morale is up”. There is no reason to believe this situation would not be replicated elsewhere. Recently when two New Zealand soldiers were killed in Taliban attacks, 4

that country’s Labour Party leader David Shearer (who has had experience of work in Afghanistan) said: “Unfortunately Afghanistan is generally a very violent place , and there is always the threat of danger, and that is what’s happened today”. This was a clear admission that a decade’s bloodletting initiated by the invasion has changed little, a lesson, some would have said, an obvious one, learnt at great and continuing cost. It is true, though, a Taliban take-over may not be a shoo-in. This, for two main reasons. One, the Karzai forces are stronger and better trained and equipped than before. And two, no major regional protagonist wants the Taliban back – the Pakistanis, the Indians, the Iranians, the Chinese, the Russians or any of the Central Asians. But neither reason is an insurmountable impediment. If the Taliban has succeeded in forcing the world’s most powerful militaries to withdraw, Karzai’s Army, or that of his successor, is unlikely to be able to stand in its way. As to the second, no neighbour will risk a military confrontation with the Afghan Taliban, for the consequences of such a misadventure would be clear. Afghans would be best left in the driver’s seat of their own destiny. An intellectual non-acceptance of an eventual Taliban control would put us in a state of illogical denial. As we know full well, it cannot be thwarted by force. There is a painting that hangs in the Tate Gallery in London called ‘The Remnants of an Army’; it is one, by an English artist called Elizabeth Butler, of the sole British survivor of the first Anglo-Afghan War in 1842, William Brydon, and his horse staggering out of their traumatic battle experience. This was part of the famous (or infamous) ‘Great Game’, the competition in Afghanistan among the ‘Great Powers’ of the day (in the 19th century).There was a lesson in it, to which thereafter the British, the Russians and the NATO had not accorded sufficient heed. For this they all paid a heavy price. We should now be that much wiser. If the Americans, metaphorically, are to be ‘the remnant of an army’ struggling out of Afghanistan on something akin to Brydon’s horse, and if a bunch of free predatory riders are in the Trojan horse being pulled into the country by unsuspecting Afghans, what would Afghanistan after America look like? This is the question we posed in the title of this paper. Our answers are based not just on reinterpretation of ancient Greek classic in the contemporary context of Afghanistan. They are based on an analysis of how the current dynamics in international political and economic affairs will affect Afghanistan and its neighbours. We believe: The United States and its NATO allies will keep increasing their distance from Kabul, eventually treating it as just another in a long list of capitals in small countries around the world where they had left their boot-print. Afghanistan’s neighbours will begin to aggressively pursue their own perceived strategic interests in that unfortunate country. The pursuit is likely to be individualistic rather than collaborative. There may be attempts to bring into play relevant international groupings like the Organisation of Islamic Cooperation (OIC), but its continuing failure to influence any international situations, not just Palestine, but also Libya and Syria, does 5

not provide cause for confidence in any such initiative. Some of this may result in proxy-wars which the new, large and well-equipped Afghan Army will attempt to bring under its control. Thus engaged, the Afghan National Army will most likely take control of the government and do away with the democratic institutions so painstakingly put in place by the West. The Taliban will, re-energised and emboldened, heighten its resistance and strengthen its onslaughts. So, in this inhospitable terrain, the graveyard of many a foreign ambition, and yet a magnet for external attention, the modern variant of the â&#x20AC;&#x2DC;Great Gameâ&#x20AC;&#x2122; will go on. And on!

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ISAS Insights No. 179 – 8 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

Pakistan-India Detente: A Three-Step Tango Shahid Javed Burki1

Abstract Pakistan-India détente is moving at a reasonable pace, with steps being taken that should bring a bit closer the long-separated economies of South Asia’s two largest countries. The process started once Pakistan had accepted the Indian position that it would be more practical for Islamabad and New Delhi to focus on economic and trade issues, putting on the back-burner some of the more contentious differences such as Kashmir. Now three additional steps have been taken in this dance by the two countries. They are moving from the slow fox trot to the brisk pace of tango. The three steps are the invitation by India to Pakistan to resume cricket matches between the two countries, starting this fall with a visit to India by the Pakistani side. A formal invitation by President Asif Ali Zardari to Prime Minister Manmohan Singh to visit Pakistan and attend the birth anniversary of Guru Nanak Dev on November 28 this year. The third decision comes from India that allows individual Pakistanis and Pakistan firms to invest in India. This paper examines what these steps may achieve for the two countries.

Mr Shahid Javed Burki is Visiting Senior Research Fellow at ISAS, and 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.

Introduction Over the last several months a number of important decisions have been taken by India and Pakistan to improve their ties. One of the more important of these was to replace the positive list with the negative list of items that can be traded between the two countries. This already has had an impact on increasing both the volume and value of trade. Earlier in the year, Pakistan opened a new gateway to India at its Wagah border which can handle a much larger flow of truck traffic than was possible with the antiquated facility that was in place. One very positive development during the first five years of Zardari’s rule was the decision to place on the back-burner a number of disputes that had kept India and Pakistan apart ever since the two countries gained independence. His government chose to focus instead on improving economic relations between Pakistan and India. After a series of meetings involving senior political leaders and bureaucrats from both sides in 2010-12, there was, in the words of Salman Bashir, the new Pakistan High Commissioner in India, a “sea change” in the way the two sides looked at one another. Bashir told an Indian TV anchor that it “was Prime Minister Manmohan Singh who said that we should invest in building trust by having frequent visits and exchanges at various levels”.2 These have taken place and with each high level meeting, the two countries have moved a step closer. It is likely that before the year is out, the Indian Prime Minister may visit Pakistan.

President Zardari’s Invitation A formal invitation was sent on 27 July 2012 by President Zardari to Prime Minister Manmohan Singh to visit Pakistan and participate in the observance of birth anniversary of Guru Nanak Dev (generally known in Pakistan as Baba Guru Nanak Sahib). There was an indication that such a visit might take place around 28 November 2012, the birth anniversary of the founder of the Sikh religion. “Such a visit would reinforce our mutual desire to promote inter-faith and interreligious harmony”, wrote President Zardari in his invitation letter. “It is important to sustain this process and make it more productive and result-oriented. The intensity and the range of these engagements will help promote our ties in the right direction and will also help reshape our shared dream of peaceful and prosperous South Asia”.3 There is expectation in Pakistan that if no terrorist attack occurs in India that could be traced to the groups in Pakistan, this long-awaited visit by the Indian Prime Minister may indeed take place. Considerable symbolism would be attached to the visit if the Prime Minister were to include a trip to Nankana Sahib -- the birth place of Guru Nanak Dev, a few miles north of Lahore. It had 2 3

Dawn, “Sea change in atmosphere with India: Pak envoy”, July 16, 2012, p. 3. Quoted in Baqir Sajjad Syed, “Indian PM invited on Guru Nanak’s anniversary”, Dawn, July 28, 2012, p. 1.

been the hope of the administration of the Punjab province of Pakistan that they could encourage Sikh religious tourism by improving the facilities at the various holy sites in Pakistan. At one time there was some discussion of connecting the Wagah border-crossing at the Lahore border with India by constructing a high-speed motorway with a dedicated high-speed bus line. Some companies in Pakistan also have plans to construct reasonably priced hotels around the holy sites to accommodate religious tourists. This is not the first time that Dr Singh has been invited to visit Pakistan, the country of his birth. In fact, President Musharraf had asked this author at one time to raise the issue of the Indian Prime Minister’s visit to Pakistan when he (the author) met Dr Singh at his residence in New Delhi in December 2005. The Indian leader’s response was interesting. “It is easy for President Musharraf to travel to India”, he said. “He doesn’t need to bring on board – not on the plane itself but as supporters of the initiative – a large number of people and have them accept the importance of making such a visit. It was essential to build such a consensus for the head of the government in a democracy such as India”. There were many people with political influence who felt that at that time the moment was not just right for such a visit, he explained. The author passed the message to President Musharraf, to the latter’s great disappointment. What would a Singh visit do that could not be achieved by ministerial and senior official visits? A number of these have taken place and they have produced results. Perhaps the most significant achievement of a prime ministerial visit will be to give a strong signal to the people in India that there is considerable high-level support in Pakistan for the easing of the tensions between the two countries. There is no doubt that the sentiment in Pakistan has gone though a significant change in the last couple of years. It is now recognised by most segments of the Pakistani society that a high economic and social cost has been paid by the country by keeping the Kashmir issue alive. In a study for which this author was commissioned by the United States Institute of Peace, he used a simple economic model to suggest that the rate of GDP growth in Pakistan would have been considerably higher, had such a large price not been paid for persisting with the Kashmir dispute.4 However, there is still some scepticism in India that there is a change of heart on the part of a significant number of Pakistani people that could have an impact on the making of public policy. A warm reception that Dr Singh will undoubtedly receive in Pakistan should help in changing the Indian perceptions as well.

Permission to Pakistan to Invest in India On 1 August 2012, the Department of Industrial Policy and Promotion of the Ministry of Commerce and Industry in India issued a notification “to permit a citizen of Pakistan or an entity 4

Shahid Javed Burki, Kashmir: A Problem in Search of a Solution, Washington DC, United States Institute of Peace, 2007.

incorporated in Pakistan to make investments in India, under the Government route, in sectors other than defence, space and atomic energy.”5 This waiver brought India at par with Pakistan which has by far the most liberal investment regime in all of South Asia. Islamabad allows foreign investors to own 100 per cent of the entities in which they have invested and repatriate 100 per cent of the profits made on the investment. There is no obligation to enter into joint venture agreements with the Pakistani companies. Indian investments were also allowed but none was made.6 The investment regime in India was considerably more restricted. However, even with such an open investment regime in place in Pakistan, non-economic considerations sometimes prevailed. There were once plans made by a large private sector oil company in India to use the depleted salt miles in Khewra, about 60 miles south of Islamabad, for storing crude oil. The oil would have been brought in from the ports of Karachi or Gwadar, taken by a pipeline to Khewra, and when the need arose, pumped on to a large refinery in a western Indian state. The cost of transport and storage would have been considerably less than the cost of the alternatives available in India. However, the project was vetoed by the security establishment in Pakistan. If the author’s many conversations in the last several months with Pakistan’s senior serving and retired military officers serve as indications, there has been a mindset change in the military. It no longer considers India to be the enemy. Its focus now is on the forces of extremism.

Likely Impact Pakistan is not a capital-surplus country and not much foreign capital has come in. According to the State Bank of Pakistan, foreign direct investment (FDI) in the country fell by 65.6 per cent to US$ 680.4 million in the year ending 30 June 2012. The amount of FDI in 2010-11 was US$ 1.98 billion.7 On other hand, with virtually no capital controls in place, a considerable amount of capital flight was taking place. Dubai, Malaysia and Singapore were the favoured destinations. The Indian move is not likely to result in a large outflow of money from Pakistan, however. Some of the press commentary in Pakistan, by suggesting that this will facilitate capital flight to India, misses the real point. The main initial impact of this will be beneficial to the Pakistani textile exporters who have discovered that some of their products are popular in India. They will be able to establish warehouses, display centres and retail stores in India. Investments needed for this purpose under the previously restricted investment regime were not possible. As one analyst wrote, “the amounts of capital moving from Pakistan to India will probably not be very big, at

6 7

Government of India, Ministry of Commerce & Industry, Department of Industrial Policy & Promotion (FC-I Section) Press Note No. 3 (2012 Series), 1st August, 2012. Farooq Tirmizi, “Trade diplomacy: Why this should matter to Pakistan”, The Express-Tribune, 2 August 2012. Dilawar Hussain, “India allows investment from Pakistan” The Express-Tribune, 2 August 2102, p. 1.

least not in the initial phase. But being able to ‘invest’ in India is really a license to freely do business in India, or at least as freely as any other foreign country.”8

More to Come More moves will be made by the two sides in the next few weeks and months. These will include a relaxation in the visa regime for business people. The highly restricted visa procedures operated by the two countries have inhibited the movement of people across the border. The grant of the “most favoured nation” status to India by Pakistan by the end of 2012 “will mean that India can export 7,500 tariff lines to Pakistan, up from around 2,000 at present”.9 This is expected to increase bilateral trade from US$ 2.7 billion to an estimated US$ 10 billion over a period of two to three years.

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Aditi Phadnis, “Trade diplomacy: India opens doors to Pakistan investment”, Express-Tribune, August 2, 2012, p.1. ibid

ISAS Insights No. 180 – 10 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 Cabinet Reshuffle: Paucity of Talent, Plethora of Challenges Ronojoy Sen1

Just as India was reeling from its worst power outage in recent times affecting some 22 states and millions of people, the country’s Power Minister, Sushil Kumar Shinde, was appointed Home Minister on 31 July 2012. If some saw this as a baffling promotion, the equally significant event the same day was the return of P Chidambaram to the Finance Ministry from Home. Corporate Affairs Minister M Veerappa Moily was given the additional charge of Power.

Congress’ Empty Cupboard The 70-year-old Shinde’s elevation as Home Minister was a surprise, not least because he had had an undistinguished tenure at the Power Ministry marred by the recent collapse of the power grid. Shinde’s USP is not so much a good administrative record as loyalty to the Congress party and his electoral experience in Maharashtra where he has won five Assembly elections. Besides Shinde is one of the few prominent Dalit (as the former untouchables are now known) faces in the Congress, which makes him important for the next general elections. Appointed Chief Minister of Maharashtra in 2003, a little under two years before Assembly polls in that state, he led the Congress-Nationalist Congress Party combine to victory in a close contest. However, the 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.

Congress did not show much faith in Shinde’s administrative acumen and post-election appointed him Governor — a post usually filled by politicians past their use-by-date and retired bureaucrats — of Andhra Pradesh. Shinde’s appointment is less about his track record and more about the dearth of talent in the Congress. Many of the more high profile and articulate ministers in the Congress have shown remarkable lack of political acumen in dealing with crisis situations such as the Anna Hazare agitation in 2011. This meant that Pranab Mukherjee, recently elected as India’s President, had to play the role of government’s chief troubleshooter and headed all 12 ‘Empowered Group of Ministers’ (EGoMs) and a dozen ‘Groups of Ministers’ (GoMs) within the Union Cabinet. The Congress’ predicament is even more visible in its party organisation where its highest decision-making body, the Congress Working Committee, has some members that even party members might have trouble recognising. This coupled with the reluctance of the Congress to assign greater responsibilities to its younger Members of Parliament has made the party seem slow and inefficient.

The Problem At Home Traditionally the Home Ministry has been one of the most crucial portfolios in the Union Cabinet — often seen as the No 2 position — going back to Sardar Vallabhbhai Patel’s tenure in the first years of independent India and more recently L K Advani’s stint when the BJP-led NDA Government was in office. In recent times the ministry has become singularly important because of terrorist attacks on Indian soil of which the 2008 Mumbai attacks is the foremost example. It is widely believed that the response of Shivraj Patil, the Home Minister during the Mumbai attacks, was far from adequate. Chidambaram was called in to replace Patil in the wake of the Mumbai attacks. His remit was clear: ensure better coordination between the intelligence and security agencies to thwart terrorist attacks. He responded by taking a hands-on approach and holding regular meetings with the heads of intelligence agencies. Security experts have lauded Chidambaram’s tenure with one of them saying: “He rapidly identified the deficiencies that had contributed to the 26/11 [Mumbai] strikes and took action to remove them. He decentralised the deployment of the National Security Guards, set up the National Investigation Agency to investigate serious cases of terrorism with a pan-Indian dimension and considerably strengthened co-ordination among the

intelligence and security agencies in collecting, analysing and assessing intelligence and taking the required follow-up action”.2 While there were no major terror incidents during Chidambaram’s tenure, his handling of the Maoist threat left a lot to be desired. The stress on a purely security response meant that the real grievances of the Adivasi population in Maoist-affected areas were not adequately addressed. Chidambaram was also foiled in his attempt to bring in a National Counterterrorism Centre which ran into concerted opposition from state chief ministers. On the whole, however, Chidambaram’s handling of the Home portfolio was a decided improvement from his predecessor’s and there are fears that the unassuming Shinde might not be the right person to replace him

Financial Mess This is Chidambaram’s third stint as Finance Minister. The challenges before him are immense. India’s growth rate slowed down to 5.3 per cent in the first quarter of 2012, the rupee has dramatically slumped in the past few months, the fiscal deficit has reached worrisome proportions and there is a drying up of foreign investment. Given his past experience, Chidambaram is the only minister, besides Prime Minister Manmohan Singh himself, in the Congress line-up who could give much-needed momentum to the Finance Ministry. Indian industry has reacted positively to the appointment. Immediately after taking up his new position Chidambaram has shown positive intent by ordering a review of the retrospective tax changes, a controversial measure introduced in the 2012-13 Budget by his predecessor Pranab Mukherjee. Chidambaram is also drawing up a blueprint to attract more investment, both domestic as well as foreign. To show that he means business, Chidambaram has warned senior bureaucrats in the Finance Ministry that they must be willing to work long hours. However, this time around, Chidambaram is on somewhat shaky ground. His name has been linked to the 2G spectrum scam which is believed to be India’s biggest corruption scandal; his election to the Lok Sabha (Lower House of Parliament) is also under challenge in the courts. In the past few Parliament sessions, the Opposition has shouted down Chidambaram whenever he has tried to speak. The Opposition is unlikely to relent in the ongoing monsoon session of Parliament, which will make life very difficult for India’s new Finance Minister. 2

B. Raman, ‘Change of Guard in Home Ministry,’ Paper No 5143, South Asia Analysis Group. See http://www.southasiaanalysis.org/%5Cpapers52%5Cpaper5143.html

Conclusion Chidambaramâ&#x20AC;&#x2122;s induction as Finance Minister might be a case of too little, too late for the Congress-led federal government and the feeling is that it has missed the bus on big-ticket economic reforms. The government has less than two years before the next general elections (if they are held as scheduled) to show concrete results and dispel the widespread gloom that policy paralysis has set in. Chidambaram will of course have to play a vital role in this regard. At the same time, the Congress needs to carry its allies along on important policy measures, such as opening up the retail sector to FDI, something that it has been unable to do in the recent past. This might prove to the trickiest bit, given the absence of good negotiators within the Congress and the elevation of their chief troubleshooter to the Presidentâ&#x20AC;&#x2122;s office. .....

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X-Factor in Sino-Indian Detente and Deterrence P S Suryanarayana1 Abstract The X-factor that makes China view India more seriously now than at any time before is the rising interest in both Washington and New Delhi for reciprocal defence cooperation. There is, of course, no direct evidence, at the official levels, to suggest that the United States and India have already begun to act in concert against China. At the same time, the latest ‘classified’ recommendations of India’s Task Force on National Security, led by Naresh Chandra, have stirred a debate. In this evolving milieu, the recent offer by the US to help India upgrade its military capabilities – in qualitative terms – is, potentially, a new factor in New Delhi’s longcherished calculus of strategic autonomy. India’s moves towards the US in this context will be watched closely by the larger international community.

Introduction: Task Force on India’s Security2 People’s Republic of China and the Republic of India have shared a chequered and complex relationship with each other since their emergence as two independent players on the international stage in the mid-20th Century. 1

Mr P S Suryanarayana is Editor (Current Affairs), 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. India’s Task Force on National Security, headed by Mr Naresh Chandra, presented its report to India’s Prime Minister, Dr Manmohan Singh, in New Delhi on 23 May 2012. http://www.pmindia.gov.in/content_print .php?nodeid=1436&nodetype=1. Accessed on 28 July 2012.

By 2012, when they are poised for global roles, this being true of China more than India as of now, their relationship has already been marked by a continuous phase of deterrence and diplomacy which began in 1998. This phase, which in fact marks the fourth definitive stage in Sino-Indian ties since the 1950s, may last into the foreseeable future. The reason is simple. Today’s uneven competition between the two countries, if it continues, is likely to sustain the ongoing bilateral dynamics. Significantly, the United States (US) is becoming a factor in the India-China equation, with Washington and New Delhi being inclined to consider acting in concert whenever possible to hedge against Beijing’s continuing rise. In the event, an extension of the current phase into the future will signify a period of greater diplomatic duality: India-China political detente or political diplomacy and Sino-Indian military deterrence. In fact, it is evident that such a possibility guides the thinking in some key circles of strategic and security affairs in India at this time. This seems to be true of India’s Task Force on National Security, whose recommendations are being selectively purveyed in the Indian public domain now. Officially, the entire report of this panel, however, remains a ‘classified’ document. Headed by Naresh Chandra, formerly a civil servant as well as a diplomat and a constitutional office-bearer, the panel is the first of its kind set up in normal times to review India’s entire defence and national security establishment. In one significant sense, the main recommendations of the panel are believed to cover the many details of this establishment. It is also learnt by this author, on good authority, that a serious look by the Naresh Chandra committee at India’s external environment, in strategic and security terms, set the stage for the panel’s main study and related proposals. Much of what is now selectively known in the public domain pertains to this grand sweep of India’s external strategic and security environment. Evident from these snippets is the scenario that the panel wants India to pursue a dual policy of detente and deterrence in dealing with China. Arguably, the panel may or may not have used these precise words in the same sequence and with the same exactness of meaning as perceived and narrated here by this writer. However, the committee’s basic approach is reported to be an advocacy that India must raise its military profile in order to be able to face an increasingly powerful China which is also willing to project and exert that power. In simple terms of political science, the principle of India-China detente translates into the idea that they can and must co-exist peacefully as Himalayan neighbours now and also into the future. This simple but profound proposition is not nullified by the fact that China is enormously ahead 2

of India as a rising power in many respects. Several international observers have already begun to see China as a fully-risen power in many key economic and military aspects.

Equivalence, Not Equality As for the military doctrine of deterrence, there is a very subtle nuance to be noted in the IndiaChina context. Even before the Naresh Chandra panel was set up, India started seeking a credible degree of equivalence, not absolute equality, with reference to China’s defensive and offensive military capabilities inclusive of its nuclear posture. Indeed, India’s recent success in test-firing Agni-V ballistic missile testifies to this aspect of New Delhi’s actions. Official India, still smarting under the psychological impact of the 1962 war with China, has not so far chosen to publicise the report of Naresh Chandra panel. Unsurprisingly, in addition, India’s Prime Minister Manmohan Singh has not announced so far any action plan on the basis of proposals made by this Task Force, which submitted its unprecedented report to him on 23 May 2012. However, the current public debate in India on this issue reflects strong support for a muscular military posture by New Delhi with reference to China. Genuine advocacy of caution will, therefore, be needed to temper this debate. In addition to the moral dimension of an arms race anywhere in the world at any time, India simply cannot afford a costly arms race with China, weapon-system for weapon-system. The current gap between the economic resources of these two mega-state-aspirants for global roles puts India at a huge disadvantage. There are also prudent geo-political reasons why India should tread firmly but cautiously in pursuing its genuine national interest.

A US Offer to India Unsurprisingly in this context, a new international reality has emerged in recent years, or more precisely, in recent months. The United States has now offered to help India enhance its military capabilities in qualitative terms as different, in nuance, from a quantitative build-up of New Delhi’s arsenal. Concerned about the skyrocketing economic and military rise of China as a mega-state, the US is eager to mobilise friends and allies on its side to meet a possible day of reckoning with reference to China sometime in the future. For the American strategic and military officials, therefore, a fellow-democracy like India is an obvious choice as a potential friend in their strategic calculus 3

for global dominance. For the US, a more tempting factor is India’s geo-strategic location as China’s Himalayan neighbour in the Indo-Pacific region. India’s potential, not actual, economic strength is another factor that the US does count on at this stage. In the perception of pro-US or US-sympathetic Indian experts, too, Washington’s strategic interest in New Delhi can promote India’s own national interest of not remaining far behind China far into the future.

Changing Seasons on India-China Front It was in the mid-20th Century that Nehru’s India and Mao’s China began their engagement on a promising note of friendship which, for a variety of reasons, turned into a fight in 1962. These two aspects defined the first definitive phase – Friendship to a Fight – in Sino-Indian ties since the 1950s. Inevitably, as it were, the bitterness of the 1962 War, on both sides, paved the way for the second phase – a Long Winter in Sino-Indian relations – which lasted until 1988. In that year, India’s young leader of the time, Rajiv Gandhi, travelled to Beijing for a historic meeting with China’s paramount leader, Deng Xiaoping. In many ways, it was that summit which set the stage for the third phase – a New Spring, which lasted nearly a decade. The New Spring reached a high point during the time China’s Jiang Zemin and India’s P V Narasimha Rao launched Confidence-Building Measures (CBMs) for peace and tranquillity along the disputed Sino-Indian border. The two countries were beginning to think out of the box during that period – the third phase. Not all of those out-of-the-box thoughts were acceptable to both sides, though. Notable during that period (1988-1998) was the fact that Rao stopped in his tracks, for whatever reason, after firmly deciding to test nuclear weapons. His initial decision to take India up the atomic arms avenue and his subsequent U-Turn were classic examples of some out-of-the-box thinking that aroused mixed feelings in the Sino-Indian domain. Many Indians, regardless of their pro- or antinuclear-weapons positions, were dismayed that Rao stopped in his nuclear tracks at the “behest” of an external power like the US. For Official China on that occasion, India’s incoherent actions only confirmed its incompetence.

A Signpost to Diplomatic Duality As a nuance, Rao’s approach of launching CBMs with China and dallying with the option of testing nuclear weapons served as a signpost to the possibility that India would choose the duality of detente and deterrence in dealing with China. 4

Eventually, the generally positive mood of the New Spring in Sino-Indian relations got buried under the political fallout of the nuclear-weapons tests that India, under A B Vajpayee as Prime Minister, conducted in 1998. It is public knowledge that China took a stridently dim view of the event. In significant contrast, China’s first nuclear-weapon test in 1964 and India’s controversial ‘peaceful nuclear explosion’ in 1974 occurred during the Long Winter in Sino-Indian relations (1962-1988). Viewed thus, Beijing’s decision to take serious note of New Delhi’s 1998 nuclear-weapon tests and India’s move to project them as an essay in military deterrence against China marked the start of the fourth phase in Sino-Indian ties. It is easy to notice that a big political bang from the Indian side set off this fourth phase, which is still ongoing. As for the politics of this current phase, India’s general preference for the military-deterrence card against China since 1998 has gradually led to some qualitative diplomacy between the two countries. It is in this context that India now clearly hopes to re-order its relationship with China on the basis of the complementary principles of political detente and military deterrence. Such a new strategic insight rings true, but not necessarily as the only possible prescription, in the present-day context of China-India engagement on a host of issues. In fact, the duality of detente and deterrence makes sense when viewed from both New Delhi’s standpoint and Beijing’s commanding heights, despite the current asymmetry between India and China in their military profiles. Theoretically, China, the decisively stronger economic and military power as of now, need not have the same degree of strategic compulsion as India’s for reciprocal deterrence. In today’s real world, however, there is no mystery about the strategic compulsions of both India and China to try and deter each other.

An X-Factor The X-factor that makes China view India more seriously than at any time before is the rising interest in both Washington and New Delhi for reciprocal defence cooperation. There is, of course, no direct evidence, at the official levels, to suggest that the United States and India have already begun to act in concert against China. Fu Xiaoqiang, an expert on South Asian affairs at the China Institute of Contemporary International Relations, has commented on India in the context of the current developments in the South China region. His comment in the Global Times, relevant to that context, is of illuminating value to our present discussion as well. As published on 22 May 2012, a day before 5

the Naresh Chandra panel report was presented to Prime Minister Manmohan Singh, Fu said: “India’s ‘Look East Policy’ has gradually become a strategy of acting in the east. Although it [India] won’t make itself a second US in the region, at least it believes it should set itself higher targets. It will speak out in more international affairs and try to extend its influence”. 3 Noting, too, that Beijing’s neighbours “have more concerns about China [now than before] and will seek support from the US”, Fu said these neighbours “retain close economic ties with China” at the same time. “Breaking that contradiction is a task that China faces”, Fu emphasised. Significantly, Chinese Premier Wen Jiabao told his Indian counterpart in Rio de Janeiro on 20 June 2012 that China and India should enhance political and strategic mutual trust so as to advance bilateral ties on the right track.4 This comment acquires importance because of some media reports that the Naresh Chandra panel has drawn attention to the long-standing perception, in some Indian quarters, about China’s policy of containment of India. The panel is also reported to have drawn attention to the possibility that the US might eventually turn cautious towards an increasingly powerful China and even accommodate or accept its global stature.

A School of Thought It is in this milieu that an emerging school of thought tends to advocate that India must now seize the moment and seek to capitalise on the latest US offer to enhance the qualitative dimension of India’s military machine. In this line of thinking, there can be a window of opportunity for India to benefit from – before the US begins to accept the finality of a fully-risen China. Surely, Official India has not even whispered a word about any move to ride on US shoulders in this fashion. However, the relevant US offer is a matter of definitive public record. Speaking in New Delhi on 6 June 2012, US Defence Secretary Leon Panetta categorically stated as follows: “I want to stress that the United States is firmly committed to providing the best defence technology possible to India. We are both leaders in technology development, and we can do incredible work together. Indeed, I think, a close partnership with America will be [the] key to meeting India’s own stated aims of a modern and effective defence force”. 5Building up the theme, Panetta said: “In terms of regional security, our [US] vision is a peaceful Indian 3

Global Times, Wang Wenwen, Published on May 22, 2012. http://www.globaltimes.cn/DesktopModule s/DnnForge%20-%20NewsArticles/Print.as... Accessed on 28 July 2012 Global times (Quoted from Xinhua and Agencies). http://www.globaltimes.cn/DesktopModules/DnnForge%20%20NewsArticles/Print.as ... (Published on June 21, 2012). Accessed on 28 July 2012. http://www.defense.gov/utility/printitem.aspx?print=http://www.defense.gov/transcripts/... Accessed on 9 June 2012.

Ocean region supported by growing Indian capabilities. ... At a strategic level, we have worked together to counter piracy, to counter terrorism”. More significantly, he also spoke of cyber security and outer space exploration as two post-modern areas of possible collaboration between the US and India.

Conclusion: India’s Nuclear Profile and Strategic Autonomy A strand of out-of-the box thinking remains totally unsaid by Panetta and is totally absent from the official and non-official discourse in India as well as the US at this time. This relates to the technological capability of the US to help India safeguard its nuclear deterrence, more precisely nuclear weapons, in a credible state of good repair over the longer term. It occurs to this writer that New Delhi may eventually feel compelled to think of such a US-related option for two reasons: one, India’s own military compulsions to keep its nuclear weapons in a credible state of good repair far into the future; and two, the international expectation that India will continue to honour its current public commitment of observing a voluntary and unilateral moratorium on nuclear-weapons testing. Such an insightful option, which India can think of, is surely not on offer by Washington at this stage. Nor has Official India dropped any hint whatsoever about any such option. However, the US and several other major powers have already come to accept the current status of India as a de facto nuclear-armed state. It follows, therefore, that the US, if it seeks the company of India to hedge against China’s continuing anti-gravity rise as a potential superpower, cannot afford to let New Delhi’s nuclear deterrence wither because of a genuine moratorium on further Indian ntests. In the same breath, it must be said that the envisioning of such a scenario is not an argument in favour of any particular course of action in regard to the sensitive issue of the future of India’s nuclear deterrence. In fact, while there is room for many conventional possibilities in the light of Panetta’s recent offer to India and on the basis of Naresh Chandra panel’s report, it is in India’s enlightened selfinterest to retain strategic autonomy as far as possible.

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ISAS Insights No. 182 â&#x20AC;&#x201C; 14 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

Singapore Symposium 2012 Papers-3 India-ASEAN Trade Profile1 S Narayan2

There has been a significant growth in bilateral trade between the Association of Southeast Nations (ASEAN) and India in the last decade. Between 1993 and 2003, the growth rate of this trade was 11.3 per cent per annum, and this has grown to 21.3 per cent per annum in the last decade (2001-2010). Over this period, Foreign Direct Investment (FDI) flows have amounted to US$ 18.3 billion from ASEAN countries into India. In 2010 alone, the inward flow into India was US$ 3.4 billion. India has been keen to leverage the advantages of closer linkages with the ASEAN countries, and a trade in goods agreement was signed in 2010. This is a first step towards the envisaged ASEAN-India Free Trade Area. Of the ASEAN countries, Indiaâ&#x20AC;&#x2122;s trade with Singapore, Malaysia, Indonesia and Thailand has been significant, while that with Vietnam, Cambodia, Laos and Brunei Darussalam has been fairly small.

The paper by Dr S Narayan is based on his comments during the second session of panel discussion at the Singapore Symposium, organised by the Institute of South Asian Studies (ISAS), an autonomous research institute at the National University of Singapore, and Aspen Institute India in New Delhi on 12 July 2012. The session was chaired by Ambassador See Chak Mun, Adjunct Senior Fellow, ISAS, and Senior Adviser, Ministry of Foreign Affairs, Singapore. Dr S Narayan is Head of Research and Visiting Senior Research Fellow at ISAS. He was the Economic Adviser to the Prime Minister of India. He 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.

The Gross Domestic Product (GDP) growth in the ASEAN countries has mirrored the GDP growth variations in the rest of the world, with 2008-9 showing a sharp dip in the case of all countries. However, inflation figures indicate that some of the countries have faced greater inflationary pressures than others. Inflation in Vietnam has been particularly worrying. It is also interesting to note the congruence between the inflation data for most of the countries in this set, indicating that they faced similar supply/demand issues over this period.

Table 1: Inflation in India and ASEAN Members (CPI, 2005 =100)

Source: Consumer Price Index, Base Year 2005; World Development Indicators and Global Development Finance, Databank, the World Bank

The Table below indicates the exports from India to the ASEAN nations. It is important to note that ASEAN still accounts for a small proportion of the total exports from India. However, Singapore alone is the destination for around 40 per cent of this trade indicating that this is the most preferred destination. The next country is Indonesia, followed by Malaysia. The comparison in the table at constant prices indicates that while Indian exports to ASEAN have been growing, they have been growing at almost the same pace as with the rest of the world, and accounted for some 10.42 per cent of Indiaâ&#x20AC;&#x2122;s total exports. In dollar terms, however, the significant increase over the decade can be seen.

Table 2: Indiaâ&#x20AC;&#x2122;s Exports to ASEAN Members in 2010 (Current Prices USD Million) 2544021 2314436.47

229584.53

Total Rest of the ASEAN Exports World Nations

90662.3

45570.83 35553.12

Singapore Indonesia Malaysia

21395.81 8016.07

24755.96

610.46

Thailand Philipinnes Vietnam Cambodia

81.8 Lao

2938.18 Myanmar

Source: Trade Competitiveness Map, Trade Statistics for International Business Development, International Trade Centre, Geneva, Switzerland

Table 3: Indiaâ&#x20AC;&#x2122;s Exports to ASEAN Members (at Constant Prices, 2001) 300000 8.99

250000 200000

7.56

10.25

9.95

10.21

8.54

10.69 9.48

10.13

12.00 10.00 8.00

150000 100000 50000

10.42

36,570 49,678 55,949

83,312

152,500 113,467 136,452

214,379 197,450

253,265

6.00 4.00 2.00

0.00 2001

2002

2003

2004

India's Exports to ASEAN Nations (in Million USD)

2005

2006

2007

2008

2009

2010

India's Exports to ASEAN Nations (as a percent of Total Exports)

Source: Trade Competitiveness Map, Trade Statistics for International Business Development, International Trade Centre, Geneva, Switzerland

Similarly, while imports have grown nearly nine times in constant dollar terms between 2001 and 2010, the percentage of trade remains more or less stationary at around 8.5 per cent of total imports. 3

Table 4: India’s Imports from ASEAN Members (at Constant Prices, 2001) 350000 300000

12 8.58

8.37

9.23

9.15

8.64

9.62 8.46

7.55

250000

9.00

8.47

200000 150000

294,522

100000 50000

179,819 47,937

53,031

73,766

2001

2002

2003

232,003

326,974 264,403

6 4 2

94,319 117,287

0 2004

India's Imports from ASEAN Nations (in Million USD)

2005

2006

2007

2008

2009

2010

India's Imports from ASEAN Nations (as a percent of Total Imports)

Source: Trade Competitiveness Map, Trade Statistics for International Business Development, International Trade Centre, Geneva, Switzerland

Of interest is the trade with Singapore, which has grown multi-fold even at constant prices. India’s exports to Singapore have grown from US$ 10215 m in 2001 to around US$ 97000 m in 2010. Imports from Singapore to India have also increased at the same pace. There has been a gradual change in the composition of trade over the years. Manufactured goods, especially engineering products, have started to constitute a significant proportion of India’s imports from Singapore. While these figure in the exports list as well, it is apparent that India has integrated more with the global economy, with intermediate as well as finished manufacturing goods, including engineering goods and chemicals, finding global acceptance and even integrating into global value chains. This is a clear indication of the rising levels of sophistication of the Indian economy. There continues to be a significant reliance on agricultural goods in both imports and exports. There is considerable import of palm oil from Malaysia and pulses from Myanmar as well as timber from Indonesia into India. Indian spices, rice and other condiments find their way into ASEAN markets, to cater not only to ethnic South Asian population there, but to local palates as well. The decline in the proportion of handicrafts in the bilateral trade indicates the growing up of the Indian economy. Leather figures in both imports as well as exports, indicating that some value addition is taking place in India. The dip in trade in 2009 is attributable to the effects of the global financial crisis of that year. It is interesting to note the sharp and quick recovery in the next year indicating the resilience of both the economies. This also indicates that over the years, there has been an increasing degree of sophistication in India’s trade flows and practices.

Table 5: Trends in Indiaâ&#x20AC;&#x2122;s Trade with Singapore (In Million USD, at Constant Prices 2001) 100000 90000

97671

Exports

80000

75318

70492

67592

2006

2007

59874

70000 60000 50000

37688

40000 30000 20000

10215

15228

18775

10000 0 2001

140000 120000

2002

2003

2004

2005

2009

2010

131727

Imports

110240

102205

84526

100000

65012

80000

46034

60000 40000

2008

30018

29096

2001

2002

34096

20000 0 2003

2004

2005

2006

2007

2008

2009

2010

Source: Trade Competitiveness Map, Trade Statistics for International Business Development, International Trade Centre, Geneva, Switzerland

Trade in financial services has grown hand in hand with trade in goods and services. There has been a substantial flow of FDI from the ASEAN countries, overwhelmingly from Singapore. It must be noted that a number of Indian companies have used Singapore as a base for raising capital and investing into India, and hence the FDI figures could well account for inward investment by Indian companies as well. In any case, Singapore benefits substantially from these transactions, through its banks, and other service providers that include law and financial services firms. The contribution from other countries has been negligible so far. However, Indian companies have invested in Thailand (manufacturing), Malaysia (palm oil and rubber), 5

and Indonesia (coal) and even in Laos and Cambodia (agriculture). India is looking at the ASEAN countries to meet its growing shortage of primary goods.

Table 6: FDI Inflows in India from ASEAN Members from 2000 to 2012 (In Million USD) 18,000 15,000

10.05 %

12,000 9,000 6,000 3,000

0.35 %

0.0 %

0.18 %

0 Singapore

Indonesia

Malaysia

Philippines

Vietnam

Thailand

Myanmar

FDI Inflow (in USD Million)

Source: Fact Sheet on Foreign Direct Investment from April 2000 to April 2012, Department of Industrial Policy and Promotion, Ministry of Commerce and Industry, Government of India

It is clear that India’s trade strategy has undergone a significant change in the last decade. The recent India-ASEAN free trade agreement is a clear indicator of this. For the first time, the negative list has become quite small, and nearly 90 per cent of India’s trade is covered by this agreement. It is clear that India realises that it needs ASEAN, not just for access to sophisticated financial services and markets, but also as a source of basic goods like edible oils, rubber, timber, and coal. Diversification of energy trade requires India to rely on oil from Malaysia and Brunei, as well as to keep the trade route open for energy imports from Australia, with Singapore as a major trading hub. The integration is with India’s needs in mind, and since India represents a very large consumption market, the agreement would be of great advantage to the ASEAN nations, who would continue to supply the products that India needs.

Annexure A.1 Macroeconomic Profile of India and Southeast Asia Figure A.1.1: Growth of Economies: India and ASEAN Members 15

0 2000

2001

2002

2003

2004

2005

2006

2007

2008

2009*

2010*

-5 India

Indonesia

Malaysia

Philippines

Singapore

Thailand

Vietnam

Source: Gross Development Product, Deflated at 2001 Prices; World Development Indicators and Global Development Finance, DataBank, World Bank • •

•

The ASEAN countries faced very low growth rates in early 2000s and 2009 due to the Southeast Asian Financial Crisis and the International Financial Crisis respectively The average growth rate from 2003-07 in these 6 countries together (excluding India) was 6.1% , with the average growth rate of Vietnam and Singapore being amongst the highest at 8.1% and 7.5% respectively. According to the OECD Economic Development Outlook, these countries are expected to continue with this growth rate of 6% till 2015.

Figure A.1.2: Exchange Rates (Local Currency Unit per US Dollar) 60.00 50.00 40.00 30.00 20.00 10.00 0.00 2001

2002

2003 India

2004

2005

2006

Malaysia

2007

2008

Singapore

2009

2010

2011

Thailand

Source: Official Exchange Rate in Local Currency Unit per US Dollar; World Development Indicators and Global Development Finance, DataBank, World Bank • ASEAN Nations have experienced less volatility in the value of their national currency with respect to US Dollar. • The Thai Baht has appreciated to its highest value in 2010, since the Southeast Asian Economic Crisis of 1997. It gained by 2.9% in September 2010 from the previous month, which had been the best performance among the major currencies in Asia. • On the contrary, the Indian currency has depreciated by 10.24% in March 2012.

A.2 Trends in India’s Trade with ASEAN Members Figure A.2.1: Trends in India’s Trade with Malaysia (In Million USD, at Constant Prices – 2001) 40000

33474

35000

38883

39220

2009

2010

30000 25000

20411

20000 15000

8694

8194

8749

2001

2002

2003

10000

11475

12617

2004

2005

14687

5000 0 2006

2007

2008

71884

80000

64881

70000

56528

60000

53275 44101

50000 40000

27991

30000

17397

19472

2001

2002

33260

20000 10000 0 2003

2004

2005

2006

2007

2008

2009

2010

Source: Trade Competitiveness Map, Trade Statistics for International Business Development, International Trade Centre, Geneva, Switzerland

• •

The exports to Malaysia have grown at an annual compounded rate of 16%. Of all the goods, the major export products to Malaysia include engineering and ores and minerals with their respective shares of 27.5% and 26.8% in the total exports in 2010. Increase in textile exports by 37.23% in 2010 from its previous year. India mainly imports minerals and ores from Malaysia. However its share has reduced from 53.2% of the total imports in 2008 to 32.9% in 2010

•

Figure A.2.2: Trends in India’s Trade with Indonesia (In Million USD, at Constant Prices – 2001) 109377

120000 100000

79022

81996

2008

2009

80000

54538

60000 40000 20000

11626

14362

2001

2002

19222

23944

31752

37405

0 2003

2004

2005

2006

2007

2010

50271 50000 40000

29336

33127

30000 20000 10000

5260

8490

11468

13299

20627

20719

2006

2007

15334

0 2001

2002

2003

2004

2005

2008

2009

2010

Source: Trade Competitiveness Map, Trade Statistics for International Business Development, International Trade Centre, Geneva, Switzerland

• •

The exports to Indonesia have grown at an annual compounded rate of 25.32%. Of all the goods, the major export product to Indonesia are engineering and mineral products, with their respective annual growth rate in the last decade being 36.4% and 45.3% There has been an increase in the exports of Chemical products and textiles in 2010. India mainly imports Agricultural Products from Indonesia, with its share being 47% of the total imports in 2010.

Figure A.2.3: Trends in India’s Trade with Thailand (In Million USD, at Constant Prices – 2001) 25000

23603

22121 18873

18459

20000

14903 15000

10000

11685 6600

8176

8072

2002

2003

9452

5000

0 2001

2004

2005

2006

2007

2008

2009

2010

48467

50000 45000

37167

40000

35547

31471

35000 30000 25000

16756

20000 15000 10000

5318

4558

2001

2002

7063

19975

10057

5000 0 2003

2004

2005

2006

2007

2008

2009

2010

Source: Trade Competitiveness Map, Trade Statistics for International Business Development, International Trade Centre, Geneva, Switzerland • • • •

The exports to Thailand has grown at an annual compounded rate of 13.59% in the last decade In the same period, the imports to India from Thailand have grown at an annual compounded rate of 24.73%. Till 2003, India had a trade surplus with Thailand. Since 2004, deficit has grown annually by 45%. The reason for this deficit can be attributed to the increase in the imports of engineering products at an annual rate of 22%. 11

A.3 Trade Policy Agreements A.3.1: ASEAN – India Free Trade Area (AIFTA) •

ASEAN and India signed the ASEAN – India Trade in Goods (TIG) Agreement in Bangkok on 13th August 2009. This agreement came into force on 1st January 2010. • The main features of the AIFTA are: i) A phased reduction of import duties on Indian and ASEAN members’ agricultural and non-agricultural products between January 2010 and January 2016. ii) India, Indonesia, Malaysia, Singapore, Thailand and Brunei Darussalam have to eliminate tariffs by 2013 for the products under Normal Track 1 (NT-1) and by 2016 for products under Normal Track – 2 (NT – 2). The items under NT – 1 and NT – 2 include: mineral fuels, chemical products, plastics, rubber, iron and steel, electrical equipments, transport and machinery. iii) Nearly 70% of the tariff lines fall under the NT-1, covering agriculture, marine and manufactured goods. Nine per cent fall under NT-2. There rest of the 496 products constitutes the Exclusion List, which form 9.8% of the total goods traded. The remaining 11.1 % belong to the Sensitive Track (ST) and the rest of the 0.1% items are Special Products. These two categories are non-free trade products. • Overall, AIFTA is a trade liberalisation of over 90% of products traded between the two regions. Tariffs of over 4000 product lines will be eliminated by 2016.

Normal Track – 1

Table A.3.1: Targets for Tariff Reduction set under AIFTA Agreement for Agricultural Sector

Product Category (Based on HS Code)

Average Preferential Tariff in 2007 for Most Favoured Nations (%)

Average Preferenti al Tariff in 2010 (%)

Average Preferential Tariff in 2013(%)

Meat and edible meat offal

30.0

25.0

0.0

Products of animal origin

28.7

23.8

0.0

Edible fruits, nuts, peel of citrus fruits, melons

27.4

22.9

0.0

Normal Track -2

Coffee, tea, meat and spices

30.0

25.0

0.0

Lac, gums, resins, vegetable saps and extracts

27.0

22.5

0.0

Residues, Wastes of Food industry, animal fodder

29.1

24.1

0.0

Miscellaneous edible preparations

31.0

25.0

0.0

Coffee, tea, spices (Cardamom and Saffron)

30.0

25.0

11.0

Milling products, malt, starches, insulin, wheat gluten (Rye flour)

30.0

25.0

11.0

Animal, vegetable cleavage products

37.0

23.6

10.0

fats

and

oils,

Source: Table 2. India’s Tariff Reduction Scenario of Major Agricultural Sectors under Normal Track, pp. 15 and Table 3. India’s Tariff Reduction Scenario of Major Agricultural Sectors under Normal Track, pp. 16, Smitha Francis (2011)

Table A.3.2: Targets for Tariff Reduction set under AIFTA Agreement for Non Agricultural Sector Average Preferential Tariff in 2007 for Most Favoured Nations (%)

Average Preferential Tariff in 2010 (%)

Average Preferential Tariff in 2013(%)

Mineral fuels, oils, distillation products

8.5

6.4

0.0

Organic chemicals

7.1

4.9

2.0

Miscellaneous chemical products

8.8

6.3

3.0

Plastics and articles thereof

7.5

5.0

2.5

Normal Track – 1 and Normal Track -2

Product Category (Based on HS Code)

Rubber and articles thereof

9.4

7.1

3.0

Pearls, precious stones, metals, coins, etc

9.2

6.9

0.0

Iron and steel

10.0

7.5

0.0

Electrical, electronic equipment

6.1

4.4

2.7

Vehicles, other than railway and tramway

17.0

9.1

3.0

Optical, photo, medical, etc

7.3

5.1

2.2

technical,

Source: Table 4. India’s Tariff Reduction Scenario of Non - Major Agricultural Sectors under Normal Track, pp. 17 and Table 5. India’s Tariff Reduction Scenario of Non - Major Agricultural Sectors under Normal Track, pp. 17, Smitha Francis (2011)

References Francis Smitha (2011) ‘The ASEAN-India Free Trade Agreement: A sectoral impact analysis of increased trade integration in goods’ Economic and Political Weekly, Vol. 46, No. 02, January

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ISAS Insights No. 183 – 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

Is South Asia Condemned to Backwardness? Shahid Javed Burki1

Abstract A blog, “Reflections on India”, written by Sean Paul Kelley, an investment banker-turned travel writer, went viral on the internet. Posted on 7 August 2012, Kelley warned: “If you are Indian or of Indian descent I must preface this post with a clear warning: You are not going to like what I have to say”. Then he went on to write about “filth, squalor and all around pollution” he saw on his most recent travel to the country. Observing this and much more, he went on to suggest that there was “lack of respect for India by Indians”. It is the last observation that is worth some attention since it points to a feature of the South Asian culture which stands in the way of this region’s sustained economic development and social improvement. This paper attempts to shift the development discourse back to the impact of culture on economic growth and modernisation.

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.

Introduction The Kelley blog has led to much discussion among South Asia watchers. The question is being asked whether the sub-continent would ever break out of the vicious cycle of low growth, mass poverty, environmental degradation and inequitable income distribution. This question is not only prompted by the blog but also by the fact that the Indian rate of GDP (Gross Domestic Product) growth has slowed down by three percentage points in a couple of years. Bangladesh is struggling to maintain the rate of growth in its national product at about six per cent a year. Pakistan has been stuck at the rate of GDP increase of three to 3.5 percent a year over a period of five years, the longest recession in its history. At the same time the development and finance institutions such as the World Bank and the International Monetary Fund (IMF) have come to the conclusion that growth rates of between seven and 7.5 per cent a year are needed by the South Asian countries to alleviate poverty and improve in general the citizen’s welfare. That was the main point of the Kelley blog. Given the recent slippage in growth it is also the worry of many analysts. Does South Asia possess the culture of growth?

Culture and Development The American presidential campaign has brought the subject of culture and how it impacts on development to the centre of political discussion in the United States. In remarks made while on a visit to Israel, Mitt Romney, the presumptive Republican candidate, suggested that there was something in the Palestinian culture that kept that particular community backward. Conversely, there was something in the culture of the Jewish community that made it possible for Israel, occupying the same geographic space as the Palestinians, to match First World standards. “When people invoke culture in the Romney manner, what they are really invoking is a scale by which humanity may be ranked from totally dysfunctional to totally awesome”, wrote Ta-Nehisi Coates, a senior editor at The Atlantic2. On this scale it is not difficult to see where some South Asian countries – Pakistan for instance— belong. Economists have struggled for centuries with the question of why some countries grow and succeed while some others remain poor and fail. Adam Smith, the discipline’s founding father, found in the “pursuit of personal interests” the reason for economic advance of the entire society. It was the “invisible hand” that turned personal greed into social good. But why isn’t that happening in South Asia where there is considerable personal greed. Why is that not pulling up the entire society? This question did occur to Smith. He maintained that the pursuit of personal interest involves more than greed. Along with the book Wealth of Nations he published Theory 2

Ta-Nehisi Coates, “Romney’s side course of culture”, The New York Times, August 9, 2012, p. A21.

of Moral Sentiments that put emphasis on values and cultures. This line of thought was picked up by John Stuart Mills who came four decades after Smith, and a century and a half later it was also the theme of Max Weber’s most important works. Writing in the early 20th century, Weber coined the phrase “Protestant work ethics” to suggest why some societies did better than others in terms of economic advance and social improvement. His emphasis was hard work, honesty and trust. Once these pioneers had done their work, economists began to labour on what they called the “growth functions”. They generally moved away from culture as an important contributor of development or conversely for keeping societies backward. They discarded the notion that there were good cultures and bad cultures. Instead, their work involved the identification of the factors that could be easily quantified and put in formulas and models. From these came a string of policy recommendations for pushing forward economies and societies. A list of conditions had to be met for economies to grow at a fast pace: a stable and inclusive political system; laws that clearly enforce property rights; courts that used the laws on the books to settle disputes; government officials who were not corrupt and did not seek rents that were beyond their remunerations; a civil service system that provided services to the people efficiently; flows of foreign investment that also brought with them technologies and management practices; and easy entry of firms wishing to do business. The lists kept on becoming longer; several Nobel prizes were won on introducing new factors into the growth equation. And several development institutions and think tanks developed survey techniques to measure these attributes and place them on scales that stretched from the poor and weak to the rich and strong. South Asia does poorly in most of these measures. Into this intellectual thicket jumped in Amy Chua, not an economist but a mother in an AsianAmerican family who worked hard to make her daughters excel. Her much acclaimed book, Battle Hymn of the Tiger Mother3, introduced a new dimension into the thinking about culture as a contributor to growth. She looked around her community of people of Chinese origin and noticed that they were doing a great deal better than those who lived and worked around them. That was the case not only with the Chinese in America. She found that the migrant Chinese had done exceedingly well in other parts of the world as well. For instance, the ethnic Chinese in the Philippines, accounting for less than two per cent of the country’s population, controlled 60 per cent of the economy. The Chinese diaspora was equally successful in several other parts of the world – in Malaysia, Indonesia and also in such unlikely places as northern Italy.

Amy Chua, Battle Hymn of the Tiger Mother, New York, Penguin Press, 2011.

Migrants as Achievers There was perhaps something about migration that produced the drive to succeed. What Amy Chua in her book called “dominant minorities” had excelled in their adopted homelands around the globe – the Indians first in East Africa, then in Britain and America; the Lebanese in Sierra Leone and Ecuador; the Pakistanis in America and the Gulf States. A number of Indian professionals have risen to the top of the corporate world not only in the United States but also in Europe. This has led several scholars who focus on the contribution of culture to development to ask the following important question: did the act of migration generate a new set of values or was it that the old set of values did better once the overall environment changed? The migrants by moving into new social environments that were supportive of their values did well, many of them scaling the heights in their adopted homelands. This question is being looked at by economic and social historians as well as by anthropologists and political scientists. Many of them have found that there is some substance in the belief that the factors on which Max Weber put so much emphasis – work ethics, thrift, interest in bringing about change and hence innovation – do count as the drivers of growth and development but their contribution is greater when the social environment is supportive. Is South Asia destined to remain backward since it has an environment in which people even with the Weberian values can’t succeed? The same values have propelled the people of the region to flourish in more supportive environments. This is what Kelley has implied in his blog. When a more supportive environment is available, the same cultural traits that fail in the subcontinent seem to pay off when the environment changes.

Culture and Social Environment Using some quantitative analysis, Gregory Clark in his A Brief Economic History of the World maintained that the 19th century Industrial Revolution in Britain was not necessarily the result of technological advance4. The factors to which economists now attach a great deal of importance – stable political institutions, viable legal systems, predictable land values, patent laws, and functioning markets – were necessary but not sufficient conditions to get the Revolution going in Britain. They made their contribution after changes had occurred in the environment in which people worked. However, those changes occurred over centuries. Clark brought Darwinian thinking into economics, suggesting that over time those with the right set of values will become dominant in the societies in which they live. To make his point he compared productivity levels in Lancashire’s textile mills with those that were using the same technologies in British India. 4

Gregory Clark, A Farewell to Alms: A Brief Economic History of the World, Princeton, N.J., Princeton University Press, 2008.

The Indian workers’ productivity was one-quarter that of their counterparts in Britain. It was not only Britain that had productivity levels so much higher than that of India. Japan which came much later to industrialisation, including the production of textiles, was able to quickly outperform India in terms of worker productivity. It didn’t have India’s many advantages in the manufacture of textiles. It did not grow cotton but was able to quickly acquire much larger market share than all of South Asia. Perhaps the most cogent argument for the importance of culture in encouraging economic development is made by David Landes in his The Wealth and Poverty of Nations5. “Thrift, hard work, tenacity and tolerance are the cultural factors that make the most difference”, he suggests. But he and others who have pursued this line of thinking don’t know how to move from a culture that inhibits development to the one that promotes it. Some believe that education is the most important contributor for bringing about this kind of change. Amy Chua’s book focused on education and how parents can improve and motivate their children to excel in their fields of endeavour. That education has a role to play in promoting economic development and social change has attracted the attention of the economists as well as policy-makers. This was one reason why the heads of governments of most nations, in the Millennium Declaration on Development signed in New York in 2000, gave so much attention to education. However, since then there has been a great deal of new thinking on non-economic factors of development. Some political scientists had come to the field of culture and development long before it attracted the attention of the economists. For instance, more than half century ago, Edward Banefield looked at southern Italy and concluded that what kept the area backward was an excessive pursuit of narrow self-interest6. The “self’ was not limited to one individual. It was extended to families and sometimes to communities (or sub-castes in India and baradaris in Pakistan). This, of course is the case in South Asia, even in the institutionally more advanced India. One manifestation of this is dynastic politics in the four major countries of South Asia – Bangladesh, India, Pakistan and Sri Lanka. This has impeded the development and professionalising of political parties which is a necessary condition for creation of advanced political orders. Political dynasties flourished in those cultures that put individual interest above that of the society. Looking at the copious amount of literature that is now available on culture and development, Francis X. Hezel has identified six cultural attributes that may help with development. His list, by no means exhaustive, includes belief in the importance of individual effort; trust; generalised

David Landes,The Wealth and Poverty of Nations: Why Some Are So Rich and Some Are So Poor, New York, W.W. Norton, 1999. Edward Banefield, The Moral Basis of a Backward Society, New York, Free Press, 1967.

morality; autonomy; ethic of hard work; and thrift7. This is a descriptive but not perspective approach. Why is that some communities in culturally backward societies have these attributes but they don’t spread to the entire society? Decades ago, the American sociologist Hanna Papanek studied entrepreneurial communities in South Asia such as the Marwaris in India, the Chinoties in Pakistan and the Memons in both India and Pakistan8. To these we can add the Sylhetis in Bangladesh and the Sikhs in the Indian state of Punjab. She came to much the same conclusion as did Hezel but added another dimension to the thinking on culture and its impact on development. Small communities flourished since their members could only trust those who were related to them in some way or the other. This was one reason why most firms in South Asia remained family-owned and family-controlled. Good institutional development was needed to extend this trust to the entire society. South Asia did not have such institutions.

Conclusion For those interested in promoting the development of South Asia it is important to recognise three things. One, culture is an important contributor to development. However, culture usually is a narrow concept, confined to small communities not to entire societies. An environment is supportive when it has rich institutional base. Two, for culture to spread across the entire society what is required is a supportive environment. Three, an environment also becomes supportive when there is interest on the part of those who are prominent in the society to develop general respect for the law by giving it respect themselves. If this conclusion is acceptable it explains the South Asia conundrum: why do certain communities do so much better than others in an even non-supportive environment and why individuals from the sub-continent do so well when they move into supportive environments. The answer is to be found in the development of institutional infrastructure and respect for law. Perhaps a good way to conclude this discourse on culture, social environment and economic development provoked by the Kelley blog is to quote from a review by Benjamin Friedman of Gregory Clark’s above cited book. “Let’s hope that the human traits to which he attributes economic progress are acquired, not genetic, and the countries that grow in population over the next fifty years turn out to be good at imparting them”.9 ..... 7

Francis X. Hezel, Strangers in Their Own Land: A Century of Colonial Rule in the Caroline and Marshall Islands, Honolulu, University of Hawaii Press, 2003. Hanna Papanek, “Muslim Separatism, Entrepreneurship and Pakistan’s Modernization”, Economic Development and Cultural Change, Vol. 21, No.1 October, 1972. Benjamin Friedman, “Industrial Evolution” The New York Times Sunday Book Review, December 9, 2007, p. 12.

ISAS Insights No. 184 – 29 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

Peace Held Hostage in Sri Lanka Gloria Spittel1 Abstract The Institute for Economics and Peace (IEP) published its annual Global Peace Index (GPI) report in June 2012 which ranked 158 countries on their state of peacefulness. Sri Lanka was the largest mover on the index, ranking 103, up from 130 in the 2011 report. This paper situates this GPI ranking in the current socio-political environment in Sri Lanka, showing that the GPI ranking is not indicative of a sustainable trend and that ‘peace’ in itself is a problem for certain pockets in Sri Lanka.

‘Unknown’ Peace in the Time of Confusion For many of Sri Lanka’s 20.32 million people, the war between Sri Lanka’s armed forces and the separatist Liberation Tigers of Tamil Eelam (LTTE) was almost a political norm, if not a normal state of social life. The insecurity and the curtailing of civic freedoms through mechanisms such as the Emergency Regulations and the Prevention of Terrorism Act contributed to an environment hardly conducive to healthy living. Many sought refuge overseas for personal security, economic well-being and social mobility; these masses comprise the diaspora, a 1

Ms Gloria Spittel is Research Associate at the Institute of South Asian Studies (ISAS), an autonomous research institute at the National University of Singapore. She can be contacted at isasgloria@nus.edu.sg. The views expressed in this paper are those of the author and do not necessarily reflect those of ISAS. Population reported is at 20,277,597 at the recently concluded nationwide census 2012. Department of Census and Statistics, Sri Lanka, ‘Population of Sri Lanka by District, 20 April 2012. http://www.statistics.g ov.lk/PopHouSat/CPH2011/Pages/sm/CPH%202011_R1.pdf Accessed on 27 July 2012

powerful factor and an essential element in Sri Lanka’s post-war reality. The war in Sri Lanka was the commonly flouted excuse for the lack of resources, the lack of development and the lack of everything else; citizens who remained in Sri Lanka felt the brunt of the war through personnel, personal, and economic loss, while those who migrated were not far removed from the homeland’s woes either; having left their families behind, economic aid to them and worry for their safety were compounded by the geographic miles in between. In May 2009 the war ended, much to the relief of many, especially those in the island living in mortal fear and economic stagnation – leaving behind a war-battered, war-weary and vulnerable society, transcending land and ethnic boundaries within the country. The end of internal warfare brought peace that generations had not known but fervently hoped for but the peace that dawned is the type that knows no bombs and no war. This is an overarching ‘negative’ peace which by its nature limits its enjoyment. It is apparent that the politicians in Sri Lanka were the least prepared to welcome and nurture peace, having lost their muse popularly used by politicians to explain their policy deficiencies. Three years after that turning point in Sri Lanka’s contemporary history, the country is yet to consciously prescribe its post-war identity; and importantly the country’s progress to peace remains constrained and marred by the absence of clear government policy and by petty political bickering amongst the political elite. The same lack of direction and unilateral policy is present amongst the diaspora. It appears the question is asked: Now that there is peace in Sri Lanka, what is to be done with it and how?

Negative and Positive Peace Yet, progress is not entirely stagnant in Sri Lanka, if the Global Peace Index (GPI) of the Institute for Economics and Peace (IEP) is anything to go by. The post-war country was the biggest mover towards peacefulness in 2012, ranking 103 among the 158 countries surveyed, a considerable improvement compared to the country’s ranking of 130 among 153 countries in 2011. The IEP conceptualises peace on the GPI scale (first published in 2007) as ‘harmony achieved by the absence of war or conflict’3defined as ‘negative’ peace and measured by a composite index of 23 qualitative and quantitative indicators. The indicators are used to evaluate countries on three dimensions: ongoing domestic and international conflict (five indicators), societal safety and security (which measures the level of harmony in a country, 10 indicators), and the level of militarisation in a country (eight indicators). A low score on the composite GPI is indicative of a peaceful country4.

Institute for Economics and Peace ‘Global Peace Index 2012’, p.10. http://www.visionofhumanity.org/wpcontent/uploads/2012/06/2012-Global-Peace-Index-Report.pdf. Accessed on 20 July 2012 For a comprehensive explanation of the methodology in weighting scores, refer to annexes A and B of the report.

The IEP differentiates between ‘negative’ and ‘positive’ peace where the latter is defined as the ‘strength of attitudes, institutions, and structures’5 within a country that would ‘determine the capacity to create and maintain a peaceful society’ 6. The 2012 edition of the GPI report is the first instance in which IEP has measured positive peace. The Positive Peace Index (PPI) is based on a statistical framework utilising ‘eight key pillars of peace’7 which is a combination of economic, cultural and political factors that influence peace in a country. Each of these pillars has an average of three indicators8 weighted on a 1-5 scale where one is most positively peaceful. The PPI, in comparison with the GPI, provides an insight into a country’s propensity for future peace, identifying if a country has a peace surplus or deficit. A peace surplus is identified when a country’s GPI ranking is higher (as a number) than that of the PPI ranking; the inverse in rankings depicts a peace deficit. A peace surplus tends to illustrate a country’s ability to maintain and improve its peacefulness given the availability of appropriate attitudes, institutes and structures, while a peace deficit depicts the propensity for a regression in peacefulness. Table 1 depicts the peace surpluses or deficits in the region. Table 1: Peace Deficit/Surplus for South Asian Countries 2011 GPI 2012 PPI Peace Country Ranking Ranking Surplus/Deficit Bangladesh 83 99 Peace Deficit India 136 87 Peace Surplus Pakistan 145 105 Peace Surplus Sri Lanka 130 81 Peace Surplus Source: Adapted from http://www.visionofhumanity.org/gpi-data/

Sri Lanka is ranked 81 on the PPI based on 2010 data, for the comparative period, Sri Lanka ranks 130 among the 153 countries surveyed on the 2011 GPI. When the PPI ranking is compared to both the 2011 and 2012 (103/158) GPI rankings, Sri Lanka has a peace surplus. This paper analyses both the GPI and PPI rankings, paying specific attention to some indicators. The analysis begins with a brief discussion of the GPI results in South Asia.

5 6 7

Ibid, p.67 Ibid. The eights pillars of peace composing the PPI are a well-functioning government, sound business environment, equitable distribution of resources, acceptance of the rights of others, good relations with neighbours, free flow of information, high levels of education, and low levels of corruption. Retrieved from the Global Peace Index 2012 report, p.72-73 The Indicators utilise various recognised sources for their data such as the World Bank, the United Nations, Reporters Without Borders, Transparency International and other renowned.

Sri Lanka and Peace in South Asia Figure 1 displays the GPI scores since 2006 for surveyed South Asian countries. Afghanistan and Pakistan are the least peaceful countries in South Asia, the ranking is likely reflective of the security conditions in these two countries. Bhutan’s controlled environment and focus on happiness may be instrumental in placing the nation as the most peaceful in the region, while Nepal’s ceasefire with the Maoist forces has played a significant role in improving peace in the country. Both India and Sri Lanka are sandwiched between the other South Asian countries, however while Sri Lanka is seen moving towards a more peaceful environment, India is moving in the opposite direction, according to the GPI rankings. The tense situation on India’s western border involving Pakistan and Afghanistan and India’s local troubled North-East region likely influences the ranking. As seen from the graph below, Sri Lanka’s average is around the 2.5 mark with discernible progress since the war with the LTTE ended in 2009. Figure 1: South Asian Countries Ranking on GPI 2007-2012

South Asian Countries GPI 3.4 3.2 3.0 2.8

Sri Lanka

2.6 2.4 2.2 2.0 1.8 1.6 1.4 1.2

1.0 2007

2008

2009

2010

Sri Lanka GPI

India GPI

Nepal GPI

Afghanistan GPI

Bhutan GPI

Bangladesh GPI

2011

2012

Pakistan GPI

Source: Adapted from http://www.visionofhumanity.org/gpi-data/

Table 2 provides Sri Lanka’s scores on each of 23 indicators since 2007. The most notable change over the six-year period is in the indicator ‘deaths from conflict (internal)’ plunging from

an all-time high in 2010 and 2011 to an all-time low in 20129. Considering the mid-yearly collection and analysis of data, the figure quoted in 2010 is accumulative of the final stages of the war between Sri Lankaâ&#x20AC;&#x2122;s government forces and the LTTE in 2009. The score for deaths by internal conflict in 2011 is puzzling, given a full year would have elapsed since the end of the war with the LTTE. The figure is likely indicative of violence involving armed groups and other criminal elements. The drop from 2011 and 2012 is remarkable. Table 2: Sri Lanka GPI Scores 2007-2012 GPI Indicators 2007 2008 Dimension One: Ongoing Domestic and International Conflict Organised Conflict (Internal) 4.5 4.5 Neighbouring Country Relations 2 2 Deaths From Conflict (Internal) 2 3 Deaths From Conflict (External) 1 1 Conflicts Fought 3 3 Dimension Two: Societal Safety and Security Perceived Criminality in Society 4 4 Violent Demonstrations 4 3 Political Instability 2.3 2.1 Political Terror 5 5 Displaced Persons 1.3 1.2 Terrorist Acts 5 5 Homicide 3 3 Jailed Population 1.5 1.5 Violent Crime 2 2 Security Officers and Police 2 2 Dimension Three: Militarisation Military Expenditure 1.9 2 Armed Services Personnel 1.9 1.5 Heavy Weapons 1 1 Weapons Exports 1 1 Military Capability 2 2

2009

2010

2011

2012

4.5 2 4 1 1.5

3 2 5 1 1.5

3 3 1 1 1.5

4 3 2 5 1 5 3 1.5 2 2

4 3 2 4.5 1.5 5 3 1.5 2 2

3 3 2 5 1.5 3.5 3 1.5 2 2

3 3 2.1 4.5 1.5 3 2 1.5 2 2

1.5 1.5 1 1 2

2 1.5 1 1 2

1.9 1.5 1 1 3

1.7 1.5 1 1 3

UN Peacekeeping Funding Weapons Import Access to Weapons

1.5 1 4

NA 1 4

Source: Adapted from http://www.visionofhumanity.org/gpi-data/

The IEP measures this indicator based on data made available by the International Institute for Strategic Studies (IISS) Armed Conflict Database.

Nearly 300,000 civilians were internally displaced at the end of the war in 2009, adding to the existing displaced populace which includes those driven out of their homes by the LTTE two decades ago. Since 2009, government resettlement programmes have made inroads 10 and most displaced persons have been resettled in either their places of origin or with friends and family. However, there are displaced persons yet to be resettled. It was only in August 2012 that resettlement in the former LTTE strongholds of Puthukudyiruppu and Mullaitivu11 began; it is in this context that the score for displaced persons on the GPI can be understood. Although the LTTE is no longer operational in Sri Lanka and there have been no reports of mass-casualty terrorist attacks since May 2009, the IEP has the indicator ‘terrorist acts’12 valued relatively high; this is likely indicative of politically motivated attacks using small arms such as grenades and automated weapons13. The score for ‘military expenditure’14 has remained relatively the same in Sri Lanka and is still significant; the government has claimed that the high expenditure on military is due to payments for heavy weaponry obtained during the war, a large troop base and post-war rehabilitation15 . The score for ‘violent demonstrations’16 has remained high and constant. Street protests and demonstrations are common in Sri Lanka; in early 2012, street demonstrators protested against the rise in cost of living, and police brutality was reported in the town of Chilaw17. The GPI indicators picked for a more detailed analysis are marked in italics in Table 2. These indicators were picked as they are considered relevant to peace building in Sri Lanka in the current socio-political context. Prior to embarking on this discussion, a brief look at the PPI and the scores of the South Asian nations and Sri Lanka is necessary for a holistic discussion. The inaugural PPI measured 108 countries. On this index the South Asian countries rank low, the highest rank is 81 (Sri Lanka) while the lowest is 105 (Pakistan). Table 3 illustrates the scores for each of the pillars of peace attributed to the South Asian countries. Sri Lanka while having the highest overall ranking in terms of positive peace, scores the worst on the indicator for ‘free flow of information’ which measures internet usage and media 10

14 15

16 17

Sri Lanka Mirror, ‘UN praises progress in Sri Lanka’, 03 August 2012. Available at http://srilankamir ror.com/news/856-un-praises-progress-in-sri-lanka. Accessed on 4 August 2012. The Indian Express, ‘Sri Lanka begins resettling in former LTTE nerve centre’, 11 August 2012. Available at http://www.indianexpress.com/news/sri-lanka-begins-resettling-in-former-ltte-nerve-centre/987022/. Accessed on 12 August 2012 The IEP measures this indicator based on data made available by the Global Terrorism Database, University of Maryland, and data collected by the Institute for Economics and Peace Ada Derana, ‘Two Killed in Shooting at JVP Rally’, 15 June 2012. Available at http://www.adaderan a.lk/news.php?nid=18468 Accessed on 21 July 2012 The IEP measures this indicator based on data made available by the IISS, The Military Balance. Colombopage, ‘Sri Lanka's defence expenditure as a percentage of GDP expected to decline’, 31 May 2012. Available at: http://www.colombopage.com/archive_12/May31_1338486275CH.php. Accessed on 25 July 2012 This is a qualitative assessment by the Economist Intelligence Unit D.B.S. Jeyaraj, ‘One Killed and eight critically injured in crackdown on fisherfolk protesting fuel price increase in Chilaw’, 16 February 2012. Available at: http://dbsjeyaraj.com/dbsj/archives/4247. Accessed on 25 July 2012

freedom. Media freedom in Sri Lanka was severely regulated during the last stages of the conflict in Sri Lanka by relevant government authorities. The regulation of media, bordering on censure continues to this day in the guise of crackdowns, closure and high registration fees 18 for media organisations and through intimidation, the practice of self-censorship by once independent media organisations. There is no indication the environment for media in Sri Lanka would improve in the near future given the existing socio-political conditions including a ‘fledgling’ justice system and a culture of impunity. Table 3: Pillars of Peace Scores for South Asian Countries Pillars of Peace Country Sri Banglades Lanka India h Well Functioning Government 2.62 2.87 3.45 Sound Business Environment 3.41 3.89 3.91 Equitable Distribution of Resources 1.96 2.92 2.75 Acceptance of the Rights of Others 3.49 3.40 3.35 Good Relations with Neighbours 3.09 3.07 3.05 Free Flow of Information 3.93 3.03 3.53 High Levels of Education 2.06 3.30 3.62 Low Levels of Corruption 3.88 3.80 4.34

World Pakistan Average 3.42 2.59 3.67 3.07 3.13

2.11

4.48

2.57

3.78 3.65 3.80 4.38

2.52 2.50 2.19 3.28

Source: Adapted from http://www.visionofhumanity.org/gpi-data/

Post-war economic expectations are increasingly unmet. Not only has the Rupee devalued (and continues to float), the cost of living has surged driving throngs on to the streets to protest the price increases of various essential goods. The business environment has not been spared, reflected in the low ranking (90) in June 2012 compared to the February 2012 ranking of 141 on the LMD-Nielsen Business Confidence Index19. The June 201220 ranking is the lowest since the end of the war. Therefore, while Sri Lanka’s score on the indicator ‘sound business environment’ on the PPI is better than those of its South Asian neighbours, internally the business environment has regressed significantly since February 2012. The deteriorating economic and business conditions in the country are a worrying sign not just for the populace, but for the government 18

19 20

United Press International, ‘Criticism over Sri Lankan closure of news websites’, 02 July 2012. Available at http://www.upiasia.com/Top-News/International/2012/07/02/Criticism-over-Sri-Lankan-closure-of-newswebsites/CVB-1341262114716/. Accessed on 27 July 2012 Lanka Monthly Digest (LMD), ‘Index Plunges to Post-War Low’, July 2012, pp 23-24. Ibid.

that had sold a prosperous economic dream to its vote base. The obstacles to overcome in delivering and sustaining economic development are steadfastly increasing under the current government’s watch and unless these are mitigated and citizens’ concerns are addressed, the current government would find its popularity has declined. The pillars indicated in italics in Table 3 will be analysed alongside the selected GPI indicators in latter sections. Halt the Celebrations Taken at face value, Sri Lanka’s rankings on the GPI and PPI are encouraging, and while both qualitative and quantitative measures were utilised for the indices, it is worth delving into some of the indicators in an attempt to explore whether the positive peace surplus would aid in Sri Lanka’s post-war recovery and if there, indeed, is a cause for celebration. Three themes will be analysed: governance, social harmony, and relations with neighbours. Table 4 depicts the themes as corresponded with GPI and PPI indicators. Table 4: Themes and Indicators Themes Indicators Political Stability Governance Political Terror Well functioning government Acceptance of the rights of others Social Harmony High Levels of Education Access to Weapons Good Relations with Neighbours Relations with neighbours

Index GPI GPI PPI PPI PPI GPI GPI and PPI

Governance: Victimising Peace The indicators grouped in this theme measure government effectiveness, political culture, and rule of law on the PPI; the political stability and terror indicators are qualitative measures on the GPI. As such, the gamut of indicators combined provides a concise insight into the governance aspect of a selected country. Sri Lanka’s scores for these indicators on the indices are similar, but vary for the indicator of political terror, in respect of which Sri Lanka scores low. Under the prism of PPI, regionally Sri Lanka is the best governed in South Asia, while locally the governance indicator is the third-best score. These scores are not reflective of current sentiments in Sri Lanka.

By all measures, Sri Lanka’s government should be considered stable. There are no visible external threats to the government in power, in either a strong and viable political opposition or a militant organisation. The government enjoys a majority in parliament, through which new bills and amendments are casually passed; an example is the 18th Amendment to the Constitution21, which many analysts, onlookers and citizens have considered as a death knell for democracy. Yet, the government is seemingly inundated by a stasis. The absence of a clear policy towards a political solution to the ethnic conflict, combined with non-committal verbosity on the implementation of the 13th Amendment to the Constitution and on the ambiguous ‘13th ‘plus’’ and home-grown solution, has tainted the government’s track record. In 2012, the economic dreams of many are beginning to crumble; consumer and business faith in the government’s economic policies have shrunk considerably as evident in the LMD-Nielsen surveys discussed earlier. The government has put itself at square one where it needs to face two major issues simultaneously: a political solution to the ethnic conflict and mitigating economic hardships minus the euphoria of having ended a three-decade long war. While the government will be pressured to solve the economic downturn domestically, the political solution to the ethnic conflict has the government facing international pressure too. Foremost in terms of international pressure is the impact of the United Nations (UN) vote on Sri Lanka. The March 2012 UN Human Rights Council (UNHRC) session voted in favour of the implementation of the recommendations of the Lessons Learnt and Reconciliation Commission (LLRC). The UNHRC will monitor Sri Lanka’s progress in implementing the recommendations; to this effect the government has produced a National Action Plan22 that tackles 91 recommendations. The LLRC recommendations are mostly generic and applicable to all ethnic communities: the establishment of the rule of law, good governance, fundamental rights, administration of justice and an advocacy of strengthening democracy while highlighting the need to build public confidence in state systems, especially justice. The report does not delve in depth into the issue of alleged war crimes and human rights violations during the final stages of the conflict. This shortcoming of the report has been criticised by the Tamil National Alliance (TNA)23, local civil society groups and NGOs. In a section of the report entitled ‘issues relevant 21

The 18th Amendment to the Constitution removed presidential term limits, previously restricted to a maximum of two. More worrying, the amendment also gives the executive president increased powers and freedom over legislative, judiciary and electoral appointments through a new mechanism known as the Parliamentary Council replacing the Constitutional Council. The Parliamentary Council, unlike the Constitutional Council, can only consist of members of parliament. Through the amendment, the executive president can also attend and partake in parliamentary sessions. 22 Perera, Jehan, ‘LLRC Action Plan And Taking LLRC Report Seriously’, Colombo Telegraph 30 July 2012. Available at: http://www.colombotelegraph.com/index.php/llrc-action-plan-and-taking-llrc-report-seriously/. Accessed on 2 August 2012 23 The TNA released a report on the LLRC and its report, showing up the commission as biased and the processes involved as flawed, in a 70-page rebuttal of the LLRC report, titled ‘Responses to the Lessons Learnt and Reconciliation Commission Report’. Accessed at: http://www.sangam.org/2012/01/TNA_LLRC_Response.pdf The Tamil National Alliance is the main coalition Tamil political party in Sri Lanka

to addressing grievances and promoting reconciliation’, the committee laments the delay in the full implementation of the recommendations24 of the Interim Report25 and emphasises that ‘all allegations should be investigated and wrongdoers prosecuted and punished’26. At present the implementation of the report is tied to the National Action Plan whose contents have not been released to the public. International pressure is also exerted mainly by the Sri Lankan Tamil diaspora, directly and indirectly by lobbying international media hubs, government representatives and engaging the public. The Sri Lankan Tamil diaspora’s main thrust is the issue of war crimes and the lobbying for an international investigation into the same. The current government’s transition into a post-war, peace-time government has been remarkably slow, hindered by the alliances made with some allegedly unsavoury yet necessary individuals and groups as required during the war. This is now a cause for concern. Allegations are many that individuals and groups, party to the ruling coalition, are responsible for a variety of crimes including enforced disappearances and harassment.27 In a strange twist, post-war Sri Lanka still suffers from a fear psychosis, enabled by the near-absence of impartial and independent state law enforcement authorities, but the government itself is a victim of this fear psychosis, except that its dilemma must be one of political survival. Political stability has not achieved much in Sri Lanka since the defeat of the LTTE; unbridled political power, insecure political elite and dysfunctional opposition political parties have made the political environment in Sri Lanka anything but well functioning. It is pertinent to wonder if ‘peace’ is a cause of this ruckus.

Social Harmony: Myths and Myth-busters Scores for the three indicators grouped in the social harmony theme vary considerably. On the PPI, access to education is the second-best score, while acceptance of the rights of others is the third-worst, while there is no change in the access to weapons, although the war with the LTTE ended in 2009. The ‘access to weapons’ indicator was included in the social harmony theme

25 26 27

The interim report carried recommendations on language, persons held in detention for prolonged periods of time, law and order, and land issues. While the government has made overtures to address the language issue by introducing a tri-lingual policy, its implementation is left wanting, particularly due to the lack of resources. The interim report called specifically for the publication of a list of names of those detained, this is also being done in stops and starts. Chapter 8, Reconciliation, Lessons Learnt and Reconciliation Commission Report, p. 302 Ibid. Gunasekera, Tisaranee, ‘Sri Lanka, Through The Bathiudeen-Mirror’, The Sunday Leader, 29 July 2012. Available at http://www.thesundayleader.lk/2012/07/29/sri-lanka-through-the-bathiudeen-mirror/. Accessed on 3 August 2012. Edirisinghe, Dasun and Mudugamuwa, Maheesha, ‘SLFP sacks four members accused of child abuse, rape’, The Island, 19 July 2012. Available at http://www.island.lk/index.php?page_cat=articledetails&page=article-details&code_title=57201. Accessed on 25 July 2012

because it is regarded as an enabler of violence juxtaposed with the low acceptance of the rights of others. Sri Lanka has maintained literacy rates in the upper 90 percentile cutting across gender, ethnicity and social class. However, where education suffers in Sri Lanka is at the tertiary level. To correct this, there have been initiatives to introduce private and international universities in Sri Lanka, which has met stiff opposition from current university students and some academicians. Regardless of the situation with tertiary education, there is no dearth in the ability to read and write, the issue lies with the access to information, for example, the LLRC report recommendations have not been sufficiently28 translated into Sinhalese and Tamil and disseminated to the public. What is known of the recommendations is that which is communicated via media and other civil society groups, of which there is insufficient coverage due to a lack of resources. The PPI’s indicator—acceptance of the rights of others incorporates empowerment including gender-based empowerment and intergroup cohesion. Given the nature of Sri Lanka’s ethnic conflict, which involved the majority Sinhalese and minority Tamil ethnic groups, the acceptance of the rights of others is paramount for peaceful co-existence. In a survey questionnaire on the causes of the ethnic conflict29, 61.9 per cent of the Sinhalese agreed with ‘legitimate grievances held by minorities’, while 61.4 per cent cited the ‘lack of equal treatment for all citizens’ and 44.4 per cent indicated ‘lack of space for diverse ethnic/cultural identities’ as reasons for the ethnic conflict. However, 59.2 per cent of the Sinhalese respondents also cited ‘unreasonable demands made by minorities’ and 90.1 per cent indicated ‘terrorism’ as reasons for the conflict. In the same list, over 90 per cent of all minorities30 indicated the ‘lack of equal treatment for all citizens’ or ‘legitimate grievances held by the minorities’ as the reasons for the conflict. These statistics are indicative of a need to engage the majority community in a bid to propagate that the acceptance of another’s rights is not tantamount to the curtailing of one’s own rights. In Sri Lanka, it appears the responsibility of this falls on civic groups, educational hubs and media until the political parties and government in power can get their acts together. At present the political parties remain communal in outlook and ready to manipulate communal emotions. They suffer from a policy paralysis that has resulted in the invoking of ancient and modern history to galvanise primordial emotions among the Sri Lankan people.

Translations of the complete report in both Sinhala and Tamil languages are undertaken by civil society groups and only available on the Internet. The International Centre for Ethnic Studies in Sri Lanka, ‘Seeking Space for State Reform’, 2 January 2012. Available at: http://ices.lk/wp-content/uploads/2012/01/20111207_PSRP_Booklet.pdf. Accessed on 15 July 2012 Minorities include all other ethnic races in Sri Lanka excluding the Sinhala ethnicity

Relations with Neighbours: The India Factor The PPI and GPI indices combine qualitative and quantitative techniques when measuring relations with neighbours. Sri Lanka’s scores on these indices are relatively the same as those of the neighbouring nations, although the score on the GPI has changed negatively for Sri Lanka. Sri Lanka’s relations with its regional neighbours are overshadowed by its relationship with India, which since the defeat of the LTTE has taken some beating but remains cordial and friendly. The overall cordiality of relations between India and Sri Lanka is unlikely to change but the number of storms that will need weathering will increase. There are three reasons for the increased tension in relations between India and Sri Lanka. Foremost is the apparent support for the formation of a separate state of ‘Tamil Eelam’ in the North and Eastern provinces of Sri Lanka, emanating from some Tamil Nadu politicians. These demands are hardly supported in Sri Lanka,31 especially by the majority ethnic community which is not in favour of a federal system of government (78.4 per cent) as a solution to the ethnic conflict, let alone a separate state. Demands for Tamil Eelam in Sri Lanka by Tamil Nadu politicians not only antagonise their counterparts in Sri Lanka but promote distrust in the Sri Lankan populace towards its largest neighbour. Because of the dark clouds of India’s covert support for the LTTE in its formative years and the Indo-Lanka peace accord of 1987, India is increasingly gazed at with unmitigated suspicion in many circles in Sri Lanka. Secondly, India’s vote against Sri Lanka at the 29th session of the UNHCR in March 2012 has further contributed to suspicion of India’s interests in Sri Lanka. This aspect, however, is of lesser unanimity than the opposition to Tamil Eelam. Delhi’s vote against Sri Lanka, considered a stab in the back by some, is regarded by others favourably as it calls for the implementation of the LLRC recommendations. India’s involvement in Sri Lanka’s ethnic conflict has left both nations at logger-heads occasionally, but the resistance to Indian political pressure probably has its origins in 1987 in the context of the Indian Peace Keeping Force’s (IPKF) bloody sojourn in the island nation that caused the LTTE and the Sri Lankan government to work together to rid the island of the IPKF. Indian involvement in Sri Lanka’s ethnic conflict and Sri Lanka’s distrust of Indian tactics are both rooted in India’s funding and training of young Sri Lankan Tamil militant groups in the 1970’s, the IPKF involvement in the 1980’s and the living contestation of the 13th Amendment32. Nevertheless, given this less than rosy past, the two countries have worked together amicably. Thirdly, the fork in the works is the Sri Lankan government’s complacent attitude towards peace building and evolving a political solution to the conflict. It is indeed a telling commentary that most of Sri Lanka’s sore points with India have revolved around Sri 31

83.9 per cent of all survey respondents disapproved of the idea of forming a separate state, in the ICES report on ‘Seeking Space for State Reform’, p.27 The 13th Amendment has been contested by right wingers in the country as an imposition on the island nation, by the ruling government as a flawed move and by some members of the TNA as insufficient.

Lanka’s ethnic conflict. Until the Sri Lankan government makes haste (while the sun shines on it) to solve the ethnic conflict, opportunistic Indian and Sri Lankan politicians can and will manipulate the situation in Sri Lanka for their own ends. For normalisation of relations with India, Sri Lanka needs to get its act together, the war-victory party is over and it’s time to nurse a 3-year-old hangover.

The Problem with Peace How does a politician ‘sell’ peace when there is no physical threat to it? By listing ways in which peace could be lost, by creating a new or exaggerating an existing bogey, by continuously referring to measures taken in the past to ensure peace or by promoting a vision of a prosperous future. Politicians in Sri Lanka, whether in the government or opposition, have adopted all three tactics; peace is a commodity in Sri Lanka, rare at first and now extravagantly priced. Regardless of whether the peace that Sri Lanka now enjoys is negative or positive, the current situation is the most peaceful state of affairs that many of its people have ever known so far. It is precisely this existing peacefulness that has enabled the shifting of focus to a milieu of issues which were previously ignored by and large and for a protracted period of time. Issues addressed in Sri Lanka today include the abuse of women and children, corruption, injustice; and amongst these is the seeking of a solution to the ethnic conflict. While there has not been a large and vocal push for a solution, a sizeable portion of the population has commanded government attention and action. All small actions are powerful as an aggregate, and given today’s connected world, small movements and initiatives do not remain small for long. For the politicians in the country, peace is an issue; it underscores their ineptitude and provides no muse as the war with the LTTE did. For them, there is also no incentive in sustaining peace and building an inclusive society, because the more united a society is, the more accountable a politician has to become. The absence of war in Sri Lanka has made the issues of economic development and equality for all very real. It takes effort, determination and the will to resolve these – this may actually be harder than fighting a terrorist group. Peace is also not an incentive for a segment of the Sri Lankan Tamil diaspora which had supported or sympathised with the LTTE and continues to support the demand for the establishment of a separate state, Tamil Eelam. Arguably, if peace progresses amongst the communities in Sri Lanka, the extreme positions held by various communities will lose out. A harmonious society makes it difficult for extreme ideologies to cause schisms; for those who want to prevent this from happening, the easy way is to prevent the existing peacefulness from flourishing by highlighting communal differences and leveraging past atrocities – not for the purpose of grieving but for furthering a political agenda. This too should in some form or manner be considered a dastardly act. 13

Delivering peace by coming to terms with a war-torn past requires political maturity. The problem with peace in Sri Lanka is that while it has dawned, the politicians have not awoken to post-war realities. Identity politics has taken centre stage in Sri Lanka; although there is initiative to define what it means to be Sri Lankan, this initiative falls on its head when it is imposed upon people and not nurtured from the ground up. A great deal of self-introspection, recognition of realities and forward movement is required if the peacefulness that Sri Lanka currently enjoys is to include all its citizens and improve over the years.

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ISAS Insights No. 185 – 29 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

Multi-State Groupings Shaping the Global Scene: Case Study of European Union and Bangladesh Iftekhar Ahmed Chowdhury1

Introduction This paper examines how evolving multi-state groupings such as the European Union are likely to shape international relations of the future. In doing so it analyses relations between one such grouping, the EU, and a state-actor, Bangladesh in South Asia, eventually extrapolating some more-generally applicable conclusions. Europe’s relations with South Asia are undergoing a process of renewal. They date back very far, when Alexander the Great in 323BC knocked at the doors of India and established the Bactrian kingdoms in today’s Afghanistan and Khyber-Pukhtunkhwa in Pakistan. Two thousand years later the Europeans returned as traders. Their flags followed their trade. Lord Clive’s victory at Plassey through a combination of dare and deceit over Nawab Sirajuddowla of Bengal began a period of British imperial rule that ended when India (and Pakistan) made their ‘tryst with destiny’, in Nehru’s words in August 1947. It had left a mixed taste in the mouth. However, connections continued.

The British period witnessed a dichotomisation of Bengal. One half joined Pakistan in 1947 and morphed into an independent Bangladesh in 1971.There was a strange sense of mutual abandonment when in 1964 the British joined the European Union. The subsequent British withdrawal from ‘East of Suez’ had sentimental and emotional implications for both sides. South Asians, used to British-German rivalry, started to view their new-found linkages with a modicum of puzzlement. International relations had evolved. South Asian nations were now having to deal with this new avatar called the European Union. This paper includes the study of how this phenomenon is developing vis-a-vis the sovereign segment of the old Bengal, Bangladesh.

From Nation-States to Union in Europe We all know that the modern nation-state was the product of the Treaty of Westphalia in Germany in Europe in 1648. It came at the end of the disastrous 30-year religious war that nearly decimated half of Europe’s population. It took two more wars in the 20th century for man to pause and ponder over the state system and give it a rethink. In Europe a theory of international relations developed during the inter-war years known as ‘functionalism’. It saw merit in integration among states on the basis of common interests in limited economic and technical areas and issues. This was more mundane and realistic than the idealism of the philosopher, Emmanuel Kant, or even the statesman, Woodrow Wilson. ‘Functionalism’ transformed into ‘neo-functionalism’ when it was realised that territories were still important. Mention must be made in this regard of my own teacher and father of the so-called English School in International Relations, Hedley Bull. He makes this point in his seminal work The Anarchical Society. The principal intellectual proponents of ‘neo-functionalism’ were David Mitrany and Ernst Haas. They saw the integration of individual sectors as furthering the process involving states leading to regionalisation. They were the theoretical gurus of the practitioners of European integration such as Jean Monnet, Robert Schuman, Paul Henri-Spaak, and Alcide de Gaspari. Those (including this author) who were involved with crafting the initial documents of South Asia’s regional body, SAARC, were also inspired by the ‘neo-functionalist’ thought-leaders. The current-day European Union can be traced back to the European Coal and Steel Community formed by six countries in 1951 and the European Economic Community set up by the Treaty of Rome in1958.The Maastricht Treaty established the European Union in 1993, and finally the Treaty of Lisbon in 2009 gave it its present incredibly complex shape and character. The number of members swelled to 27 with a growing queue of aspirants. It has its own Parliament, a cabinet called the Council, a huge bureaucracy called the Commission, its own Foreign Service, Court and Central Bank. Its total population is over 500 million, or 7.3 per cent of that of the world , has a GDP of US$ 17.6 trillion which is over 20 per cent of that of the globe. It is a single market, within its Shengen Areas there are no passport controls, it enacts common legislation on 2

an increasing list of subjects, and it has a monetary union called the Euro-zone ( 17 countries), as those of us who follow the current Euro-zone economic crisis are well aware. The sad experience of Greece, Spain and Italy has resulted in the debate as to whether such Union was structurally dysfunctional to begin with. Europe’s problems have ramification for other regions. For instance India’s economic challenges today such as the decline of its growth rate to 5.3 per cent can be traced to the recessionary situation in southern Europe. In today’s interconnected world, doubtless when Europe catches cold, a region as distant as South Asia sneezes! The EU does not have a common military but most members are party to NATO. It has a High Representative for foreign policy or a foreign Minister in Catherine Ashton, but whose influence on global politics has so far been largely unremarkable. That is because while they seek to speak on foreign policy in one voice, they are not always able to. A case in point is Iraq where the UK, on the one hand, and France and Germany, on the other, assumed different postures. Where they speak with one voice is on Trade, that is why only the European Commission speaks for the EU in the WTO, but most members retain their Ambassadors to that organisation who try and protect individual country interests in the corridors, while maintaining their quiet in the chamber. The European Union is not just a model for other regions to emulate, but also a school for them to draw lessons from. This also applies to ASEAN looking to its own union in 2015. The principal lesson is that union for its own sake, the desire arising out of idealism or emotion, without adequately addressing potential disequilibria, can create more problems than provide solutions. Where the EU believes they are strong on is their soft-power, emanating from, as they claim, their European values. These are an amalgam of Europe’s rich intellectual and societal history, both revolutionary and evolutionary. It is through this that it engages with much of the developing world. This phenomenon covers Bangladesh as well. For Bangladesh, this was a reengagement with Europe, taking place at a different time in history, also different in substance and content from the earlier interface between Bengal and Britain in the eighteenth century.

EU-Bangladesh Engagement The relations between the EU and Bangladesh are grounded in three major documents, that are dated 1973, 1976 and 2001.The last was the most substantial one that included political dialogue. In 2007 the EU drafted its Country Strategy Paper that covered the period till 2013.It identified the following as key challenges confronting Bangladesh: A continued struggle in addressing the structural problems of poverty and to achieve the (UN) Millennium Development Goals by the target date of 2015.

Good governance problems that affect the efficient and effective delivery of the basic public services to the poor. Potential economic and political shortfalls following the ending of the WTO textile quota system and the need to diversify the industrial base and to improve the enabling environment for business. It is noteworthy that the document was prepared acknowledging Bangladesh’s own response to the challenges contained in its Poverty Reduction Strategy Paper crafted in November 2005. The EU determined that its impact would be maximised and there would be more effective use of resources if development commitments were concentrated on three focal areas (Human and social development, Good Governance and human rights, and Economic and trade development) and two non-focal areas (Environment and disaster management, and Food security and nutrition). The EU’s decision to provide unimpeded market access through EBA or the policy of ‘Everything but Arms’ has been a great boon for Bangladesh’s garment exports. Along with America’s, the European market turned Bangladesh’s garment industry into the locomotive of economic growth of that country, helping poise it on the threshold of being perceived as another emerging Asian economy, which takes full advantage of the preferential trading system. The EU is currently the destination of 48 per cent of Bangladesh’s total exports. As for foreign aid over the next three years, the EU will provide Bangladesh with US$ 413-million for support to health, education, food security and rural development sectors. This is part of the plan to assist Bangladesh achieve by 2015 the MDGs set by the UN. While many western and developed countries are critical of the EU’s policy of agricultural subsidy, ironically it renders grain cheaper for net food-importer like Bangladesh. In the setting up of Bangladesh’s National Human Rights Commission, European support has been invaluable. As also, in the election process in 2008. Having been a member of the government through this period, the author would like to underscore the critical nature of his relationship with Ashton’s predecessor, Austria’s Benita Ferrero.

The European Consensus The EU’s development policy, applicable not just vis-à-vis Bangladesh, generally flowed from what has been called ‘the European Consensus’. It was adopted by the European Parliament in December 2005. For the very first time it provided for a common vision guiding both the member-states individually and the Union collectively. The foremost objective of the EU’s development policy, it was agreed, would be the eradication of poverty in the context of sustainable development, including the pursuit of MDGs. Several other elements, in line with 4

standards norms and values, as broadly perceived, of the European ethos were to be emphasised. These included respect for human rights, fundamental freedoms, peace, democracy, good governance, gender equality, the rule of law, solidarity and justice, and commitment to effective multilateralism. The EU was also at pains to demonstrate that its own values were consistent with global ones. For instance the document for Bangladesh stressed the importance of strengthening the social dimension of globalisation and of promoting productive employment and decent work opportunities. In order to do so it cited in full the relevant article of the ‘Outcome Document’ of the UN Summit of world leaders held in 2005. In it the member-states committed themselves to “strongly support fair globalisation and resolve to make the goals of full and productive employment and decent work for all, including for women and young people, a central objective of our national and international policies as well as our national development strategies, including poverty reduction strategies, as part of our efforts to win the MDGs”.

Some Pertinent Criticisms There are many criticisms of the EU as well: First, the one being the firmly held view that their values are universal. Sometimes this is not an easy sell to partners, particularly in parts of Asia. Asia at times stresses its own values that flow from a mixture of Confucianism and other Asian spiritual traits that have underscored hard work, family and company loyalty and moral high grounds that many also see as principal determinants behinds Asia’s recent economic successes. Second is the EU’s inability to put its own economic house in order. The Euro-Zone crisis and the problems confronting Greece, Italy and Spain in particular at the present time have brought little credit to the EU. In fact it has encouraged some ‘decoupling proponents’ in Asia, who argue that greater safety may lie in restricting exposure to Europe. Third, is the fact that despite a very sophisticated development cooperation strategy, the EU is seen as a lightweight political player. It has not been successful in projecting itself as a serious diplomatic protagonist on the international scene, the treaty of Lisbon notwithstanding. Other nation-states, including the partner examined at some greater length here, Bangladesh, still prefer to deal with individual European States such as the UK, France, Sweden, or Germany. The Brussels-based EU leadership has not yet been able to leave a decisive footprint on the rest of the world as those residing in London, Paris, Stockholm or Berlin have.

Conclusion Nonetheless, the EU remains a fountainhead of novel ideas. One of them is â&#x20AC;&#x2DC;Weltinnenpolitikâ&#x20AC;&#x2122;. This refers to global domestic politics. It is attributed to the German statesman Karl von Weizacker. With States eroding, he emphasises the intramural politics within nation-states, among non-state actors and NGOs. Are they not better suited to respond to contemporary challenges of poverty, disease and environment? This might mean todayâ&#x20AC;&#x2122;s existing State-system is faced with two kinds of challenges; one, the thrust towards regionalisation on the one hand, and on the other, the pull of consolidation of internal communities. So, for now the EU remains an important entity in the global scene despite the above mentioned shortcomings. Slowly a European identity is emerging. While its engagement with Asia is still concentrated on development cooperation, as the relations with Bangladesh demonstrate, Asia, on the rise, is also beginning to acquire certain commonalities, working through its own groupings such as SAARC and ASEAN. Eventually there will be three main supra-states in the world: Europe, America and Asia. This trilateral arrangement will call the shots on the global matrix. But the struggle of each to attain the goals of a common identity will take some more decades yet, and till then international relations will largely comprise inter-state interactions.

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ISAS Insights No. 186 – 3 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

Clouded Sunshine Over India’s Economy S Narayan1

India’s local-currency bond yields are at 8.21 per cent, an all-time high. Yields rise if there is increase in supply of Government paper, indicating that Government is borrowing more—a sign of fiscal stress. Inflation risks and monetary stance affect yields, with lower inflation indicating higher bond prices and lower yields. In Asia, yields on Indonesian paper used to be very high, but are now around 6 per cent, based on better macro-economic management, a greater openness to the foreign exchange markets and lower inflation. Moody’s now rates Indonesia as investment grade, S&P one notch below. By contrast, ratings for Indian debt have been falling over the last year. India’s bad run with the rating agencies started in 2009, soon after the new Government (United Progressive Alliance, UPA-2) was sworn in. S&P downgraded India to BBB minus with a negative outlook. The argument was that the Indian Government had initiated several policies prior to the elections that put the fiscal position under stress. Moody’s was more positive, giving India a Baa3 rating, on the argument that India’s diversified economic structure and its strengths had to be factored in. Moody’s was confident the India’s formal institutions and institutional mechanisms would be capable of enacting corrective policies and regulations to overcome the fiscal stress.

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 is a former Economic Adviser to the Prime Minister of India. He 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.

In 2010, S&P improved India’s outlook to stable from negative, while still keeping the rating at BBB minus. It pointed out that the fiscal position had improved and that some efforts at fiscal consolidation had been made. It continued to express concern over high government borrowings and inflationary pressures. Moody’s continued with Baa3 and a stable outlook, taking note of the healthy external indicators, India’s sharp recovery from the Global Financial Crisis and fiscal reforms that had happened in the interregnum. S&P’s worries about India continued in 2011. While keeping the rating and outlook unchanged, serious concerns were expressed about inflation and the growing fiscal deficit and the inaction on the part of Government to address the growing burden of public debt. Moody’s continued to be optimistic about the capabilities of the Indian economy to overcome fiscal difficulties, but pointed to persistent inflationary pressures and domestic policy paralysis. Moody’s predicted that India’s growth would exhibit a persistent downward trend over the next two periods, but was still hopeful that India would pull through on the strengths of its vibrant private sector. By 2012, the comments were becoming far more strident. S&P downgraded India to a negative outlook at BBB minus. They warned that ratings may be downgraded again if external position continued to worsen and if fiscal reforms continued to be sluggish. S&P commented adversely on the retrospective taxation proposals, noting that this would affect investments. Moody’s, without changing their ratings, pointed out that there were several negative trends in the economy including slowing investment and poor business confidence.

Lack of Fiscal Prudence Over the three years, the rating agencies have been quite unhappy with the developments in the Indian economy, in particular the lack of fiscal prudence, the inflationary pressures and the lack of business confidence. It is clear that, with little or nothing being done on governance, market expectations are that there would be further downgrades. This could even take Indian paper to junk-bond status, severely impacting on the ability to raise capital overseas. Without external capital, India’s growth story would be seriously hampered. It is interesting to note that during August 2012, several public sector banks and even ICICI have raised funds overseas. These have been three- to five-year debt papers, raised in Singapore and elsewhere, and have been of the order of a billion dollars each. The investment markets have subscribed to these papers without demur, and the coupon rates have ranged between 4.00 per cent and 4.5 per cent, which is not at all unfavourable, given the above credit rating story. Simultaneously, the financial (equity) markets have been buoyant, with institutional inflow of

close to 2.75 billion dollars (US) in August 2012 alone. These numbers help analyse the current developments in the Indian economy. First, it is clear that Government has been able to make little progress in improving its image. It has not been possible to transact any business in the ongoing Parliament session as the principal opposition party â&#x20AC;&#x201C; the Bharatiya Janata Party (BJP) â&#x20AC;&#x201C; has been stalling the proceedings, demanding the resignation of Prime Minister Manmohan Singh, alleging that he is responsible for the loss in allocation of coal mining blocks to private sector companies. The complaint is that, instead of auctioning these blocks and thus maximising revenues to the Government, they were parcelled out to applicants in a non-transparent manner at very low prices. There is claimed to be evidence that one such allocation was made to the close relative of a sitting minister. In the face of these complaints, there has been little progress in any governance-related activity. The promises of reduction of subsidies, increases in diesel and gas prices, and efforts to control the fiscal deficit, have taken a backseat to political expediency. The latest GDP figures indicate growth of around 5.5 per cent, an eight-year low. Government borrowings have exceeded budgetary targets for the period, and tax collections are likely to be affected by the slowdown. The report on the power blackout that occurred in late July 2012, plunging large parts of the country into darkness, indicates that it was due to reckless overdrawing from the grid by some of the states. The power utilities in these states are incurring huge losses and are unable to buy power from the market. As they are short of funds, rather than buying power from the market, they resorted to overdrawing from the grid, an approach that gives them some leeway in payment and settlement of dues. The fiscal condition of states is also poor.

RBI is a Single Sane Voice From all points of view, India is staring at a serious fiscal situation. The Reserve Bank of India (RBI), a single sane voice in this chaos, has been repeatedly pointing to the need to rein in public debt â&#x20AC;&#x201C; arguing also that monetary and fiscal policies need to go hand in hand. At a recent appearance before a Parliamentary Standing Committee, the RBI Governor, D Subbarao, openly differed with the Government on monetary easing, arguing that action now lay in the hands of the Government through fiscal correction. The supply of Government paper is considerable at this point in time, and coupled with poor outlook by the rating agencies, it is not surprising that yields have gone up significantly. On the other hand, market behaviour appears to be driven by some opposing arguments. Developed-market funds need to be invested in the emerging markets for annual gains before 3

Christmas; and even among the emerging markets, India is one of the few countries with a transparent financial architecture that is performing at around six per cent. Company balance sheets continue to show healthy profits, and though margins have been squeezed by increased input costs, volumes are continuing to rise â&#x20AC;&#x201D; a clear indicator that consumption spending has not decreased. Interestingly, there is evidence from bank balance sheets that savings are on the decline â&#x20AC;&#x201D; perhaps due to inflation as well, but consumption has not dropped. Especially, demand for real estate and gold remains very high, as savers consider these to be a better hedge against inflation. Thus, while investment and capital formation appears to be low, consumption spend continues. As India goes into the busy festival season of Diwali and Christmas, this would keep cash registers rolling.

A New Look at Some Budget Moves Investors are also likely to see announcements by the Finance Minister, P Chidambaram, and the Securities regulator as positive. On 1 September 2012, a committee that was set up to examine some of the draconian legislation introduced in the budget has suggested postponement of the measures by three years. Mauritius has been a source of investment funds into India for many years, and there has always been a suspicion that some of the funds are laundered funds of Indian entities. The proposed GAAR (General Anti-Avoidance Rules) would have changed all that. Now that the committee has proposed postponement of these provisions by three years, it would be business as usual. Markets are likely to react extremely favourably to these announcements. The acceptance of overseas debt paper put out by banks and other corporate entities at reasonable rates is an acceptance of the fact that the business environment and the public policy environment are currently out of synchronisation; and while little can be expected from Government policy, it does not mean that business will come to a stop. If this argument is to be extended further, then one would be looking at a sharp rally in financial markets in the next couple of months. However, rather than a sector-specific or a broad-based rally, it is likely that investors would carefully pick stocks that perform well, would steer away from balance sheets that have governance concerns and focus on those that are performers and have a good, ethical management record. The proof of this hypothesis is likely to be visible within the next few weeks â&#x20AC;&#x201C; with bullish tendencies seen in the markets, select stocks rising fast, and with the visual media generally talking up the Indian economy. The real worry is that this euphoria is likely to be short-lived. There is no evidence that capital investment has restarted. On the contrary, banks continue to sit on huge debts of incomplete infrastructure projects. Large corporate are sitting on huge cash

balances that they are reluctant to invest in India. There is little clarity in Government policy, especially on fiscal reforms. Unless these fundamental issues are tackled, the sunshine period may well be short. And actually, that is what the credit rating agencies are getting worried about.

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ISAS Insights No. 187 – 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

The Great ‘Exodus’: Violence in Assam and its Aftermath Laldinkima Sailo1 The recent (and continuing) spate of violence in Assam and the purportedly related scare of retaliatory attacks on those from the northeast, living in different parts of India, have drawn unprecedented media attention towards the region. This may not be the type of attention that the region has yearned for but nonetheless presents an opportunity to put the crucial issues afflicting the region into perspective. The series of events also brings to light some pan-Indian issues that affect a much larger constituency. This paper analyses the background to the violence itself, the ‘exodus’ of northeast-origin citizens back to their home states and what all these mean for India as a whole. ‘The enemy is fear: we think it is hate, but it is fear’ - Mahatma Gandhi Fearing for their lives amidst threats and rumours of retributive violence, many citizens from Northeast India have fled the Indian metropolitan centres of Bangalore, Chennai, Hyderabad, Pune, and some smaller towns and cities. Within four days, up to 30,000 students and workers returned to their homes in the northeast2 from Bangalore alone in August 2012. Media images showed packed railway stations across the state capitals with hordes of northeast-origin citizens 1

Mr Laldinkima Sailo 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 isasls@nus.edu.sg. The views expressed in this paper are those of the author and do not necessarily reflect those of ISAS. Bangalore under tight security for one more week, The Hindu, 22 August. http://www.thehindu.com/news/cit ies/bangalore/article3804381.ece?homepage=true. Accessed on 23 August 2012

waiting to board trains bound for Guwahati, the only railhead connecting the region to the rest of India. This ‘exodus’ was in response to SMS messages and word-of-mouth rumours suggesting that Muslim youths and organisations were planning an attack on northeast-origin citizens living in different parts of the country. About a month earlier, violence had erupted in the district of Kokrajhar in Assam. The incident involved the indigenous Bodo community and ‘illegal’ Bengali migrants from Bangladesh. Thousands of Bengali-speaking Muslims were forced out of their villages after an attack by the indigenous Bodo tribe. Before the rumours went viral, a software professional from Manipur was beaten by miscreants in Pune. In the next few days, several other attacks were reported following which the 10,000strong community formed an association in Pune3. In Kerala, migrant workers from Assam, working in a hollow brick manufacturing unit at Manjeri in Malappuram district, were allegedly threatened by a 12-member gang asking them to leave the state failing which they would be harmed4. Elsewhere, welfare associations of different northeast communities sent out cautionary notes to their members, citing minor incidents and sharing precautionary warnings by Muslim landlords about possible attacks and sharing news about these landlords encouraging them to take shelter elsewhere. Most northeast migrants coming to different Indian cities are either students or workers, mostly employed in the retail, hospitality and call centres, moving to get away from the violence and insurgency back home and in search of better economic opportunities5. Dr Duncan McDuie-Ra, author of North-east Migrants in Delhi: Race, Refuge and Retail, writes that northeast migrants working in Indian cities help in recreating a ‘life abroad in India’ experience for the upper and aspiring middle class in Indian cities by projecting a global aesthetic, particularly an East Asian aesthetic. This is in reference to the East Asian features of the Indians of northeast descent. As the northeast people went on an ‘exodus’, officials in Karnataka, Tamil Nadu and Andhra Pradesh as well as the Union Home Minister and the Union Home Secretary tried in vain to allay fears, dismissing the rumours as mischievous and unfounded. The Deputy Chief Minister, also Home Minister, of Karnataka, R. Ashok, went to the railway station to dissuade the northeastorigin Indians from leaving, but was met with scant success. Meetings between leaders from the 3

Doctored MMS provoked Pune attacks on North-Eastern community, NDTV, 14 August 2012. http://www.ndtv.com/article/cities/doctored-mms-provoked-pune-attacks-on-north-eastern-community-254540. Accessed on 23 August 2012. Workers from Assam threatened in Kerala, the Times of India, 20 August 2012. http://articles.tim esofindia.indiatimes.com/2012-08-20/india/33286813_1_migrant-workers-assam-manjeri Duncan McDuie-Ra (2012), ‘The North-East’ Map of Delhi’, Economic and Political Weekly, Vol XLVII No 30. Pg. 70.

northeast communities and the Muslim community were called and security forces were deployed in large numbers across the cities. Media channels interviewed students and workers from the northeast. Some of them said they were intent on leaving while a few others said they would stay despite expressions of fear and concerns of safety. Even on Independence Day, 15 August, many were on their way back to Guwahati or preferred to play it safe. Many others anxiously waited to see what might happen after the holy month of Ramadan. Security forces continued to be placed on high alert in the cities and patrolling was intensified in areas considered sensitive. The incidents in Kokrajhar and neighbouring districts are not the first time that Muslim migrants were attacked. The Bodos accuse the Muslims of being illegal migrants from Bangladesh, which is just south of the region. According to some analysts, Assam’s Muslims ‘first migrated here in the 19th century from Bengal when this was all part of colonial India. Over time, the Bengali migrants prospered, just like immigrant communities all over the world. This created a sense of resentment among the native Assamese communities as they both competed for resources and jobs’.6 This resentment is shared by other tribal communities that inhabit the border regions of Northeast India and Bangladesh. State governments and the central government in India have been fencing the border but work has not been completed as planned. In fact, following the recent incidents, calls for the speeding up of fencing work has been made by political parties, students unions and various other local groups in the region. In 1993, more than 100 migrants were killed in one of the raids at Bansbari, a makeshift camp for displaced Muslims, by Bodo rebels. The Bodos, who have been demanding a separate state, have an autonomous territorial council controlled by the Bodoland People's Front (BPFT). They, however, feel migrants have taken over much of the land they traditionally occupied and fear the threat of losing their identity because of assimilation and swamping by the migrants. One of the demands of the separatist group in Assam, United Liberation Front of Assam (ULFA), is for more concrete protection for indigenous populations against what is described as ‘relentless illegal migration from across the border’7. Bodos mainly practice Hinduism, Bathouism and Christianity while a few continue to be Animists. Their language belongs to the Tibeto-Burmese family and according to the 2001 census there were about 1.3 million Bodos, rising to about 1.5 million by 20078. 6

How the Assam Conflict creates a threat to India, BBC, 20 August 2012. http://www.bbc.co.uk/news/world-asiaindia-19315546. Subir Bhaumik, What lies behind Assam violence?, BBC, 26 July 2012. http://www.bbc.co.uk/news/world-asiaindia-18993905. Accessed on 23 August 2012. Languages of the World: Bodo, http://www.ethnologue.com/show_language.asp?code=brx. Accessed on 23 August 2012

While heightened violence in Kokrajhar and the neighbouring Chirang district have been brought under control, curfew was imposed but sporadic incidents have continued and the death toll has surpassed 80 [as at the time of writing], while over 8,000 refugees have left camps for homes in Kokrajhar and Chirang districts. Those in temporary shelters in Dhubri and Bongaigaon continued to stay9. Nevertheless, Eid celebrations were largely peaceful amid high security all over Northeast India. BBC correspondent Subir Bhaumik says the debate over so-called ‘infiltration’ is at the heart of Assam's troubles. This is also true for the other states that border Bangladesh. While this has served as a fuel for the incidences of violence, the larger problems can be traced to issues of scarcity, lack of economic opportunities, access and benefit, sharing of resources and the fear of a loss of identity. In an article titled, On the Threshold: Environmental Changes as Causes of Acute Conflict,10 published in the fall of 1991, Thomas Fraser Homer-Dixon of the University of Toronto predicted that future wars and civil violence will often arise from scarcities of resources such as water, cropland, forests, and fish. Robert Kaplan has built on this, in his essay, The Coming Anarchy,11 and identified ‘surging populations, spreading disease, deforestation and soil erosion, water depletion, air pollution, and, possibly, rising sea levels in critical, overcrowded regions like the Nile Delta and Bangladesh’ as ‘developments that will prompt mass migrations and, in turn, incite group conflicts’. Added to these, he mentions poor governance and corruption as drivers for conflicts which will make ‘more and more places like Nigeria, India, and Brazil ungovernable’. Paul Collier and Anke Hoeffler further identify (low) level of income per capita and (low) rate of economic growth as two of the three most significant drivers of conflict 12. These are persistent and pervasive in large parts of Northeast India, including Kokrajhar in Assam and other border regions. For northeast and the communities reeling in low-income subsistence agriculture, the lack of access and inability to benefit from resources that surround them (often due to poor infrastructure facilities to exploit them), chronic underdevelopment, and the pressure of hosting migrant communities have been a particularly huge burden. This pressure has fanned out in the towns and cities in the region too. And, the symptoms have manifested in terms of intolerance towards migrants from other parts of India as well as from 9

Two labourers killed in fresh attacks in riot-hit lower Assam, The Times of India, 22 August 2012. http://timesofindia.indiatimes.com/india/Two-labourers-killed-in-fresh-attacks-in-riot-hit-lowerAssam/articleshow/15604885.cms/ Accessed on 23 August 2012 Thomas F Homer Dixon (1991), ‘On the Threshold: Environmental Changes as Causes of Acute Conflict’, International Security, Vol 16, No 2. Pg 76-116. Robert Kaplan (1994), The Coming Anarchy, The Atlantic. http://www.theatlantic.com//ideastour/ar chive/kaplan-2.html. Accessed on 23 August 2012. Collier, Paul and Anke Hoeffler (2002), ‘Aid, policy and peace: Reducing the risks of civil conflict’, Defence and Peace Economics, Vol. 13 (6), pp. 435-450.

within northeast itself. In the early 1980s, the All Assam Students’ Union (AASU) led a spirited campaign against migrants which led to the signing of an accord that promised to disenfranchise migrants who came after 1966 for a period of 10 years, after which they would be included in electoral rolls. Delhi has since reportedly promised a replay of the 1985 Assam accord disenfranchisement of the migrants who came between 1966 and 1971 for a period of 10 years13. In 2003, violence erupted in Assam and Bihar over the issue of preferential appointment of local job-seekers in the Northeast Frontier Railway (NFR). Candidates from outside the State who had travelled to Guwahati for tests conducted by the Railway Recruitment Board, for appointment to lower level jobs were prevented from taking the test. According to some reports at the time, they could not take the test because some local aspirants for these jobs seized and destroyed their entry cards. Among those affected were candidates from Bihar and Tripura. On this occasion the local-‘outsider’ divide was drawn along the lines of Hindi-speaking and nonHindi speaking people. In retaliation, students and mobs allegedly led by politicians attacked passengers of trains going to and from Assam, while they were passing through Bihar14. In Meghalaya, the Khasi Students Union (founded in 1978) is notorious for its agenda against illegal migration. Many non-tribal, non-Khasi businesses have been driven out of Shillong over the years and what was once a cosmopolitan capital of Northeast India is now a shoddy remnant of the past. Militant-like campaign by the KSU made even owning property or seeking jobs by migrants from other northeast states difficult, as efforts to preserve jobs and economic opportunities for the local community grew fierce. Many Nagas, Mizos, Assamese along with Bengalis moved out of Shillong, and many had to sell their properties at below-market rates. Besides this, in Meghalaya too, illegal migration from Bangladesh is a serious issue. In the midst of the continuing violence, political parities across the board as well as civil organisations and student groups have come out strongly, warning against any movement into Meghalaya by those trying to flee the violence in Assam15. Across northeast, the determination to keep economic opportunities within the community has been juxtaposed with the overwhelming fear of a loss of the distinct identities by the different groups. Even conflicts among the different tribes within the region have been seen to be ‘waged not merely on questions of land, immigration and settlement, but also on the overweening fear of loss of identity itself’.16 Further, studies have also shown that reproductive behaviour in the 13

Subir Bhaumik, What lies behind Assam violence?, BBC, 26 July 2012. http://www.bbc.co.uk/news/world-asiaindia-18993905. Accessed on 23 August 2012. M.S.Prabhakara, Outrage in Assam, Frontline, Volume 20 - Issue 25, 6-19 December 2003. http://www.frontline onnet.com/fl2025/stories/20031219006800800.htm After Assam violence, parties caution Meghalaya against influx, DNA, 26 July 2012. http://www.dnaindia. com/india/report_after-assam-violence-parties-caution-meghalaya-against-influx_1720116. Accessed on 23 August 2012. Bhagat Oinam (2003), ‘Patterns of Ethnic Conflict in the North-East’, Economic and Political Weekly, Vol XXXVIII No. 21

region is strongly influenced by the insecurities associated with the fear of identity loss and the perception of becoming a minority17. This fear is magnified by the example of Tripura where Kokborok, a Tibeto-Burman language, was the lingua franca of the state but is now mainly spoken by the tribal population. The indigenous people, including the Tripra, Reang, Jamatia, Kaipeng, Naotia, Koloi, Halam, Hrangkhal, Mog and Bangcher, who accounted for 95 per cent of the population of Tripura in the 1931 census, had been reduced to just 31 per cent at the time of the 1991 census. This has led to serious discontent among the tribal communities who have become a minority on their own lands. The genesis of insurgency in Tripura has always been traced to the massive influx of Bengali refugees from East Pakistan following partition18. This fear of loss of identity also plays out in the economic realm and influences businesses. The grant of contracts by politicians to non-tribal population or non-locals is frowned upon and the setting up of any business by non-locals, without a local partner is near impossible. There is great sensitivity to the use of the region by the central government and any perception of exploitation is easily magnified. For tribal communities, whose identities, culture, customs and daily life are intertwined with the environment around them, any change or disruption to this is vehemently unacceptable. This could be seen in the protests against the Tipaimukh hydro-electric dam, proposed to be constructed on River Barak at the tri-junction of Manipur, Mizoram and Assam19. Indigenous-rights groups as well as students’ organisations also opposed the building of a gas pipeline that was proposed from Sittwe in Myanmar to West Bengal 20 as there were concerns of environmental degradation that might affect livelihood opportunities and practices and therefore cause a change in the lifestyle of those affected. The Indian central government’s suspension of the requirement of an Inner Line Permit (ILP) for foreigners and Indians from other states, in January 2011, was met with protests and opposition21. This affected Manipur, Nagaland and Mizoram but even in Meghalaya where this 17

Udoy Saikia, ‘Threats from migration, socio-political injustice and reproductive behavior in tribal communities a study in the Khasi tribe in northeast India’, Irmgard Coninx Stiftung Publication (Population and Politics). http://www.irmgard-coninx-stiftung.de/fileadmin/user_upload/pdf/Population_Politics/PopPolitics/Saikia.pdf. Accessed on 23 August 2012. ‘Tripura Backgrounder’, South Asia Terrorism Portal (SATP)/ Institute for Conflict Management. http://www.satp.org/satporgtp/countries/india/states/tripura/backgrounder/index.html. Accessed on 23 August 2012. Internal attack, Down to Earth, 31 January 2005. http://www.downtoearth.org.in/node/9035. Accessed on 23 August 2012. Students’ organisation say no to gas pipeline in northeast, Down to Earth, 15 September 2006. http://www.downtoearth.org.in/node/8390. Accessed on 23 August 2012. NSF Warns Centre on Inner Line Permit Issue, Eastern Panorama, http://www.easternpanorama.in /index.php?option=com_content&view=article&id=430:nsf-warns-center-on-inner-line-permit-issue&catid=38:august-. Accessed 23 August 2012.

rule had been relaxed earlier, there are demands for the imposition of an ILP-like requirement22. And, the lure of economic benefit that might accrue from increased tourist arrivals and development of tourism has done little to dampen the campaign againt the suspension and for the restoration of ILP. While the roots of the current tension can be traced to unresolved issues in the region, the current events, along with the recent case of an alleged murder of a Manipuri boy in Bangalore and the increasing incidents of assault on northeast women in cities across India bring out questions that affect Indians as a whole. While the inter-tribal and regional divides within the northeast have been known to exist, these recent incidents bring to light the fragile state of the integration process of minority Indians. Within the region, tribal groups have contested each other for political power and territories through the use of force for centuries; and, localised incidents involving groups from the border regions of different states have, from time to time, played out, often leading to loss of lives. On the other hand, while a feeling of alienation is known to exist amongst the northeast communities living in different parts of India, the manifestation of their sense of being segregated and targeted and the resultant sense of insecurity among them had not played out as clearly up to this point in time as to warrant an ‘exodus’ that now took place in large numbers. This episode also brings out another pan-Indian concern. This is about the concern related to the ability of the state to protect lives and the confidence that citizens have in the state to protect them. As the Indian Parliament debated the issue as a matter of national importance, and rightly so, central and state government officials pleaded for calm. However, the assurances by the Home Minister of Karnataka, the Director General of Police of Karnataka, the Union Home Minister, the Union Home Secretary as well as their counterparts from other states which saw an ‘exodus’ went unheeded, and the ‘exodus’ continued. In a rare display of incisive empathy, Arun Jaitley of the Bharatiya Janata Party, while speaking in the Indian Parliament on the issue, said: “Their (northeast communities’) presence in various parts of the country, in fact, promotes national unity and integrity. And therefore a situation like this, where a fear psychosis is created amongst them and some of them have to move back to their states in a state of panic, is a challenge which each one of us faces. In fact, so genteel in their behaviour are those persons whose interview I was watching, that, as they sat in the compartments on the trains, they yet wanted to deny the fact that they were being intimidated. They wanted to give other reasons for going back to their regions. And, I think it is an onerous responsibility on each one of us to make sure that this panic situation comes to an end, rumour mongering comes to an end, central government, state governments, all political parties, all 22

Inner line permit demand gets louder, Northeast Today, 22 August 2012. http://www.northeasttoday.in/ourstates/meghalaya/inner-line-permit-demand-gets-louder-in-meghalaya/. Accessed on 23 August 2012.

communities speak in one language and make sure this exodus stops immediately and those who have been misled to go back return to their place of work and study.” The tone and tenor of the speech provided the backdrop for some positive tangent in this story. The episode has provided an opportunity for a transformative response. Even as people thronged the railway stations in the southern Indian cities, Muslim youths as well as Hindu organisations held placards proclaiming amity and brotherhood. Some even distributed food and went about hugging those waiting for trains. Some Muslim leaders gave assurances and the media went full throttle. There was round-the-clock broadcast of the issue. The media interviewed northeast students and workers living in different cities of India and also others who expressed solidarity with the north-east communities and asked them not to leave in fear. There were emotional calls and broadcasted appeals for calm and a timely proclamation of affinity towards people from the northeast. While all this did not change the minds of people intent on ‘being safe than sorry’, as one girl who was interviewed put it, some of the messages will linger in the subconscious. There may be an increased interest in Northeast India among people who do want to know more about the region and the people. This may even lead to a better understanding about the people from the northeast in the Indian metropolitan cities. Similarly, an opportunity also presents itself for the government to prove that unfounded fear was created by miscreants and to prevent an escalation of the situation into further violence. If the government seizes this opportunity, this can prove to be effective for the future. Security forces can demonstrate ability to protect lives, save citizens and allay fears. Politicians can demonstrate that they can rise to the occasion and present a united front. That all of this should happen just a few days after the entire nation cheered and celebrated Mary Kom, a five-time world champion boxer from Manipur, for her success at the London Olympics, is the greatest irony. There was a mini Mary Kom fever across India. Yet, the situation is still fragile. Fear persists among the north-east communities; and, in Assam, sporadic violence continues as affected communities have yet to find time and space to grieve their losses and adjust to their new circumstances. Some organisations in Manipur and Nagaland have in turn threatened Muslims in the state with ‘eviction’23. Meanwhile, the Indian government has now come out saying that the sources of the SMS/MMS clips have been identified as originating from Pakistan; and political parties are accusing each other of playing vote-bank politics, fomenting divide and now bidding to take advantage of the 23

Subir Bhaumik, India’s north-eastern Naga groups in ‘evict Muslims’ call, BBC, 20 August 2012, http://www.bbc.co.uk/news/world-asia-india-19316282. Accessed on 23/08/2012 & Manipur alert after warning, The Telegraph, 23 August 2012. http://www.telegraphindia.com/1120823/jsp/northeast/story_15883319.js p#.UDWYZKNQCKc. Accessed 23 August 2012.

situation. These are common refrains and rhetoric that Indians are used to hearing, to a point of indifference. While fear might not manifest in more untoward incidents as the rumour mills predicted, it may yet foment hate and the politics of division that Indians have become accustomed to. Fear would have done its job, giving way for hatred to take a life of its own.

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ISAS Insights No. 188 – 25 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

‘Green on Blue’: Clash of Colours in the Afghan Coalition Iftekhar Ahmed Chowdhury1 Abstract Afghanistan has proved to be the quagmire that has sunk many an invader. Getting in is not always easy, and getting out even more difficult. This is also now the experience of the United States and other foreign forces. The ‘green on blue’ attacks are symptomatic of the existing complexities. The plan to leave behind a large Afghan National Army, also without assured requisite funding upon Western withdrawal in 2014, is not a good one. The chances are, as before, and as has happened in the case of Libya, the Army will dissolve into militias on ethnic and tribal lines, exacerbating intra-mural conflicts. It will be more worthwhile spending the available resources on ‘peace-building’ projects, some of which have already been tested, than on a non-existent sense of central, or Kabul-based, security.

Introduction Invading Afghanistan must surely be one of the most difficult undertakings in the annals of warfare. Holding on to it must be even more so. For thousands of years this arid patch of inhospitable territory has been the graveyard of foreign armies. For the same amount of time it has also been their lure like a Lorelei of the desert, inducing them to enter, with its fatal attractions and then destroying them. The attractions are not resources or riches but mainly 1

Afghanistan’s strategic location as gateways to South, Central and West Asia. To this one should add a modicum of romance fed by the tales of a wild, often seen as fiercely freedom-loving and nomadic culture of the many tribes that inhabit this land. From Alexander the Great in 326 BC, through Ahmed Shah Durrani in the 1700s, to the British in the 19th and the Russians in the 20th to the Americans and NATO (North Atlantic Treaty Organisation) in the 21st centuries, conquerors have achieved only varying degrees of success. None has entirely prevailed. History has repeated itself with relentless regularity. Alas, man has not drawn lessons from it. Not even to this day!

Foreign Forces in Afghanistan In all fairness it must be said of the US and NATO forces that none of the above attractions of romance or resources caused the Western invasion in 2001. The reasons were more urgently political and pressingly immediate. Afghanistan was serving as a haven for the terrorist Al Qaeda. Its Taliban rulers led by Mullah Omar was sheltering the alleged master-mind of the New York ‘9/11’ plot, Osama bin Laden. The US demanded that Osama be handed over. It was a demand unlikely to have been met because of a variety of reasons including the Pashtunwali culture that accorded enormous privilege to guests, including to the most undesirable ones. Moreover, US popularity by then had been considerably dented in the Muslim world because of President George W. Bush’s Iraq imbroglio. As a result, the Taliban were not predisposed to easily oblige. In the event, even if bin Laden could not be had, the dislodging of the Taliban was a fair prize. So the US invaded Afghanistan in October 2001.The Taliban decamped from Kabul, Mullah Omar and bin Laden, however, proving as elusive as the Weapons of Mass Destruction in Iraq. Thereafter the United Nations Security Council got into the act. And in December that year, UNSC Resolution 1386 gave mandate-cover to the foreign presence on Afghan soil. It created the International Security Assistance Force which drew troops, often in token numbers, from many countries. However, the brunt was to be borne mainly by the US and the United Kingdom. A government led by Hamid Karzai was installed in Kabul. While in the circumstances he was condemned to be tainted by a touch of the Manchukuo in terms of his reputation, also, as luck would have it, his government appeared to fall into corrupt ways. The Taliban retreated, regrouped, and returned in 2003, with the leadership allegedly headquartered at Quetta in Pakistan. What followed was a war of attrition comparable in time and effect to the siege of Troy in the Classical Age. Or, even the deadly and indecisive battle of the Marne in Modern Times (World War I). The alien presence gave the Taliban an opportunity to sharpen and hone their asymmetric-warfare skills which they did with gay abandon. When President Barack Obama came to office, he understandably focused on ending the ‘no-win’ situation. He ordered a ‘surge’ 2

of 33,000 troops, akin to further ‘bleeding’ (in older medical parlance) to end the pain. The result was only mixed. Thereupon he invited the US allies to Chicago in May 2012, laid out an ‘exit strategy’ and declared a complete pull-out by 2014. Security would thereafter be the responsibility of the Afghan police and Army who would by then number 352,000. These were being raised and trained. On paper it seemed like a neat plan. The rub lay in its execution. Afghans are being recruited into these forces as planned. The problem is that not all Afghans see their Western ‘coalition partners’ as friends and comrades. Of late their numbers appear to be on the rise. Often they turn their guns on the Americans, the British and other allies. This is called ‘green on blue’ named after the colours of their respective uniforms. Till mid-September this year, 51 international troops have been killed by their Afghan colleagues, while the number last year was 35. This, compared to a total of nine in the three previous years combined. It is not the numbers that are important. It is the psychological impact. The American, the British or the Australian has no way to tell which Afghan is friendly, and which is not. Many are in understandable awe of the armed Afghan in their midst. They can be forgiven for thinking that the day the Afghan colleague has not shot at them is a day he has spent on planning, and waiting! The resultant paranoia has led many joint operations to be scaled back. This doubtless will have implications for any future co-operation, and for now any future without such co-operation is inconceivable.

The ‘Insider Attacks’ How is this phenomenon of the so-called ‘insider attacks’ to be explained? Why are the ‘green’ turning on the ‘blue’? What is causing the clash of colours to morph into conflict in this coalition? Simply to say that the Taliban has infiltrated the allied ranks is insufficient, though it is partly true. Infiltration is very much a part and parcel of asymmetric warfare in which the Taliban seem to excel. But there are other causes as well. It should come as no surprise that there are many Afghans who are now out to avenge the killing or maiming of a near and dear one, whether a collateral victim or otherwise of allied action. Revenge is looked upon as an obligatory reaction and indeed as a mark of manliness in that society. Unfortunately the one upon which it is wreaked is not always the one who is guilty. Yet another cause is common to all societies, a feeling of resentment against the foreign occupier. Afghanistan may not as yet always inspire nationalistic patriotism, but it does have strong tribal identities which lead to viewing the alien as the enemy. Finally recent events such as the anti-Islamic movie in the US or the objectionable cartoons on the Prophet of Islam in a French magazine have fuelled a sense of deep anger. The common Afghan soldier may not be in a position to appreciate principles of ‘freedom of speech’ and, consequently, may have the predilection to use the weapon in hand to avenge a grave perceived slight.

For a nation of fighters (or various nations, as to bracket together the northern tribes of Taziks and Uzbeks with the Pashtuns of the south will require papering over some sharp fault-lines, both ethnic and ideological), the Afghans more often than not had a weak central army. That is because central governance was seldom powerful, and the tribes being nomadic were largely rootless. Necessities of livelihood or security caused them to move from place to place, often from province to province. But for their animals, they had few possessions and therefore little impediments to this kind of lifestyle. Yet geographically and strategically the territory was important. This rendered Afghanistan a prey to the powers of the day – principally Russia and Britain – which were locked in a conflicting relationship that was named ‘the Great Game’ in the 1840s by Arthur Conolly, an officer of the British-Indian Sixth Bengal Light Infantry. The Afghan Army was first organised in the early 18th century by the Durrani rulers. After the AngloAfghan wars the British sought to re-organise it in the 1880s. In contemporary times, King Amanullah and Zahir Shah attempted, with some success, to modernise it. It performed poorly, however, in the fight against the Mujahideen during the Soviet occupation between 1978 and 1989. There is not much to show for the fact that it will not be the same, this time under Western tutelage vis-à-vis the Taliban. Dauntless individual warriors do not necessarily collectively make a powerful force.

Post-Withdrawal Development-Paradigm Mere understanding of a problem does not necessarily lead to a solution. But it surely helps in moving towards it. Some of these problems will be automatically resolved with the passage of time. When the foreign forces have largely withdrawn, then the collateral damage suffered by Afghans will also diminish, and the cause for revenge will probably disappear substantially. Over time the slights from cartoons and movie-clips will be forgotten, and with the spread of education curiosity about alien cultures will be enhanced in a way that is both positive and healthy. Between then and now, the best strategy should to comprehend the nature of provocation and deliver as less of it as possible. It is a fact that in a changing world, in those parts we are talking about, the friendly Mahbub Alis to Rudyard Kipling’s ‘Kim’ is perhaps on the decline. The local surrogate who would enable a replay of the Great Game will be increasingly difficult to locate. The solution of the Afghan problem cannot be crafted in distant capitals but must be left to the region, to those immediately concerned. The time may have come to intellectually accept a Taliban-oriented government in Kabul, perhaps in not-too-distant future. But it can be an enlightened one unlike its previous incarnation. The answer may lie in nation-building interventions, like those introduced by some regional civil societies. Asked if a programme like ‘girls’ education’ would not go against the grain of local culture, the head of one such civil society, BRAC of Bangladesh, Sir Fazle Hasan Abed told the author: “The purpose of intervention is to change the culture”. The current behaviour-pattern of the Muslim Brotherhood in Egypt may serve as a case in point. 4

It must be added that BRAC has been involved in many areas in Afghanistan in such fields as micro-credit, education of women and health for some years now. BRAC officials have confirmed to the author that the Taliban have been, contrary to received wisdom, enthusiastically receptive. These should be the components of any post-withdrawal development-paradigm in Afghanistan. This would also provide development-oriented Western countries, including those of the European Union, a more positive method of engagement with the Afghans. Such activities can form the core of ‘peace-building’ in Afghanistan, and constitute the best chance to ensure that there is no slide back into the conflict-situation of status quo ante.

Conclusion The vast projected force of 352,000 Afghan men in arms is too ambitious, and costly. NATO has calculated it would require US$ 4 billion annually. The US is to bear the lion’s share and the others are to fork out US$ 1.3 billion every year. There is absolutely every reason to believe that any future Administration in Washington would find this unpalatable. This is all the more true, because the ‘green on blue attacks’, unlikely to completely subside even in the post-withdrawal phase (indeed the smaller number of foreign troops that remain might become more vulnerable) will empower those in the Congress who will argue for complete cut-off. To date the UK has assured only US$ 110 million of security support every year. Others have not been heard from on the subject. Even in the unlikely situation that such vast sums are forthcoming, it would be a pity to spend it for security while development remains starved. That would only bring us back to square one. Not only will the planned Army be too large for the immediate post-withdrawal Kabul government to control, but factors such as lack of funding will force it to fragment into militias, as in Libya, and along tribal and ethnic lines. We are all witness to the efforts of the Libyan authorities to curb their lawless militia that have given the Arab Spring a bad name. As in medicine, also in the lexicon of politics, prevention is better than cure. So the Afghan Army must be smaller and leaner. Many may challenge Lenin’s ideological legacy, but he has left behind a number of gems as aphorisms, and one such was when he said: ‘Better fewer, but better!’

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ISAS Insights No. 189 – 16 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

Environmental Challenges in South Asia 1 Shafqat Kakakhel 2

Introduction The prosperity of the South Asian region, home of the glorious Indus civilisations and cradle of Buddhism, and its ability to be part of the Asian renaissance of the 21st century are predicated on the prudent management of its fragile and excessively exploited ecosystems and on its ability to cope with the multifaceted challenges of climate change. Sound governance in each South Asian country, peace and cooperation with neighbours, and an enabling global context are the essential prerequisites of a sustainable, prosperous future for South Asia.

This paper by Mr Shafqat Kakakhel, former Assistant Secretary General/Deputy Executive Director of the United Nations Environment Programme (UNEP), draws upon the South Asia Environment Outlook 2009, jointly produced by UNEP, South Asian Association for Regional Cooperation (SAARC) Secretariat and Development Alternatives (New Delhi).The paper is also based on Mr Kakakhel’s seminar on this subject under the auspices of the Institute of South Asian Studies (ISAS), an autonomous research institute at the National University of Singapore, on 18 September 2012. The views expressed in the paper are those of the author and do not necessarily reflect those of ISAS, UNEP, SAARC Secretariat and Development Alternatives (New Delhi). Mr Shafqat Kakakhel is a retired Pakistani diplomat who is currently a Member of the Advisory Group on Climate Change and Development which provides independent advice to the Government of Pakistan on environment and sustainable development issues. He had earlier served at UNEP from 1998 to 2007. His other postings as career diplomat included Deputy Head of Pakistan’s Mission in New Delhi and Head of South Asia Division at the Ministry of Foreign Affairs in Islamabad. Mr Kakakhel can be contacted at shafqatkakakhel@gmail.com.

Geophysical Setting The eight countries of South Asia occupy no more than 4.5 million sq km of land but host over 1.6 billion people – more than a fifth of the global population – growing at an alarming rate of 1.5 per cent – 1.8 per cent annually, which makes South Asia one of the most densely populated regions of the world. The amazingly diverse geophysical features of South Asia comprise the lofty mountains of the Himalayas, Karakoram and Hindu Kush (HKH), vast and verdant plateaus and valleys, three major river systems with scores of tributaries, islands, lakes and wetlands, enormous barren deserts and dry-lands, and a 10,000-km long coastline. The tropical monsoon climate of the region is sustained by the summer and winter spells of the monsoon winds that bring in rains which feed the rivers and aquifers and are indispensable for agriculture and human survival. The role and state of agriculture provide the backdrop for South Asia’s natural environment profile. Significant successes in non-agriculture production and the services sector notwithstanding, agriculture accounts for a quarter of the region’s GDP, half of all jobs, 55– 65 per cent of livelihoods to the majority rural population and industrial raw material for domestic consumption and export. In India, agriculture contributes just 15 per cent to the GDP but supports livelihoods of over half of the population. Thus far, agriculture has served South Asians well but its ability to continue to do so would require the resuscitation of the health and resilience of the ecosystems.

Ecosystems South Asia has inadequate land resources in terms of both quantity and quality. India supports 17 per cent of the global population with just 2.4 per cent of the land area, 45 per cent of India’s cultivable land is arid or semi-arid or severely degraded; the figures for Pakistan being similar. Vast river deltas and large swathes of irrigated fields account for less than half of the cultivable land in India and Pakistan. The inputs-centred Green Revolution of the 1960s and 1970s, intense farming necessary to feed the exponentially growing populations and produce industrial raw material, poor maintenance of irrigation infrastructure, excessive use of chemical fertilizers and pesticides, growing industrial run-off, and water-logging and salinity have led to degradation of the soil. Population growth and unplanned and uncontrolled urbanisation and poor land-use practices have led to the shrinking of cultivable land and

reduction of crop yields in the excessively cultivated fields. The forest resources of Pakistan have suffered wanton destruction. South Asian countries need to evolve land-use policies aimed at ensuring the health of the ecosystems, promoting rural development as a means to stem rural-to-urban migration, protecting forest resources and undertaking reforestation; improving watershed management; undertaking integrated coastal and river-basin development, fostering local capacities and research and development and promoting soil conservation techniques.

Water Resources Once a water-affluent region, South Asia is rapidly becoming water-poor due to phenomenal population growth in nearly all countries coupled with unplanned urbanisation. Other contributory factors are the unsustainable share – 90-95 per cent – of water consumed by agriculture, poor governance and management of water infrastructure, insufficient storage, and archaic as also wasteful irrigation methods. Except Bhutan and Nepal, per capita availability of water in South Asia is less than the world average. South Asia has 4.5 per cent of world’s freshwater resources. Afghanistan, India, and Pakistan face varying degrees of water scarcity. Groundwater depletion caused by growing irrigation needs is a serious concern in Pakistan, India, Bangladesh, Sri Lanka and Maldives. Cross-border water degradation – caused by unregulated release of sewage, industrial and agricultural run-off, fertilizers and pesticides, and arsenic – is growing at a menacing speed. Sharing of water resources among user-sectors, regions and countries has internal and external dimensions. The upper/lower riparian syndrome operates within countries, especially Pakistan and India, and between countries dependant on shared trans-boundary rivers. South Asia is marked by numerous river basins shared by neighbours. The territories and populations of Afghanistan, Bangladesh, Bhutan, Nepal, and Pakistan are situated within international basins. Pakistan and India, and India and Bangladesh have signed agreements in 1960 and 1996 respectively, on the sharing of the Indus and the Ganga river systems. However, the implementation of the agreements needs to be greatly improved by placing greater emphasis on joint integrated-management of the water resources through a basin-based approach. The most serious adverse impact of climate change in South Asia is the likely reduction in the quantity of water caused by the recession of the HKH glaciers and by the disruption of monsoon winds. The vulnerability of the two main sources of water – the glaciers and the

monsoons – to climate change necessitates actions at the national level and cooperation at the regional level, especially among Pakistan, India, Bangladesh, Nepal and China. South Asian countries need to jointly evolve and implement integrated water-resourcemanagement policies at domestic level and establish cooperative arrangements with neighbours based on basin-wide joint management of shared river water and aquifers as well as cross-border river pollution. The location of sources of major South Asian rivers in Tibet and the reports of Chinese hydro-power generation projects make it necessary to engage China in water-related dialogue.

Pollution Almost all South Asian countries face rapidly growing health hazards associated with indoor and outdoor air and water pollution caused by extensive use of biomass for energy, poor sanitation and waste management, exposure to lead and other chemical pollutants. South Asian nations need to adopt effective pollution control measures in urban and rural areas and negotiate and implement trans-boundary air and water pollution abatement measures at regional level such as the Male Declaration on Trans-boundary Air Pollution.

Bio-Diversity Loss South Asia hosts an enormous wealth of biodiversity, with the HKH belt alone being home to some 25,000 plant and animal species. Diverse species abound in Sri Lanka, the Sunderbans, Eastern Himalayan regions in Nepal, Northeast India and Bhutan and the Western and Eastern Ghats. However, this globally significant wealth faces growing threats posed by human population growth and urbanisation leading to habitat loss for other species, deforestation, mining, poaching, invasive species, and pollution. Ten per cent of India’s flora and fauna – some not found anywhere else – are on lists of threatened species. South Asian countries need to frame comprehensive national biodiversity plans drawing upon the knowledge generated by global networks such as the CGIAR centres and policy guidelines evolved under the auspices of the UN Biological Diversity Convention. They also need to effectively develop and implement the South Asia Regional Seas Programme and the Biodiversity Corridors Initiative for Migratory Birds. Further, the scores of protected areas must be managed more effectively. A South Asia Biodiversity Conservation agreement would spur, among other things, a more detailed and credible assessment and delineation of protected areas, including trans-boundary protected zones, and would also facilitate cooperation and collaboration.

Degradation of River and Marine Resources Population growth, especially in coastal regions, unsustainable and unregulated exploitation, and pollution from land-based resources threaten the rich fisheries and other marine resources of South Asia. The South Asia Regional Seas Programme can play a vital role in promoting cooperation for protecting the marine resources.

Energy South Asia currently uses only 5.9 per cent of the global energy resources, excluding extensive use of non-commercial energy such as wood, animal waste and other biomass which meet nearly half of the energy needs in the region. However, rapid economic growth, especially in India, and growing population have increased demand for commercial energy. At present, South Asia accounts for 6-7 per cent of the global green house gas (GHG) emissions but these are destined to go up. Already, increased international pressure is being brought to bear on India and other South Asian countries for agreeing to mandatory cuts in their GHG emissions and preventing an increase in the emissions. This means that South Asian countries would have to step up efforts for promoting energy efficiency, on the one hand, and developing clean, renewable resources of energy, on the other. A clean energy revolution is urgently needed and will necessitate cooperation at bilateral and regional levels. The intensifying debate on energy within South Asia has identified a number of initiatives such as a SAARC Energy Charter on the model of the European Energy charter, the development of a South Asia Energy Market as also a regional electricity grid and transboundary gas pipelines, a regional centre for promoting energy efficiency and capacity building with regard to renewable energy sources.

Climate Change As pointed out in the Fourth Assessment Report of the IPCC (Intergovernmental Panel on Climate Change) in 2007, South Asia is likely to be one of the regions that will be a major casualty of all the negative impacts of climate change such as reduced availability of water due to reduced snow-melt in the HKH glaciers; erratic pattern of the monsoon rains; reduced agricultural yields due to higher temperatures that lead to an increased thirst of crops and plants; an increase in the number, frequency, duration, and intensity of extreme events such as droughts and floods, tsunamis and hurricanes, windstorms; sea level rise that leads to intrusion and salinity of soil and underground aquifers in the coastal regions; an increase in tropical diseases due to higher temperatures. The reduction in the availability of water will 5

threaten the food-, drinking water- and energy-security of the region. The negative impacts of climate change have already been evidenced by recurring floods in Pakistan and prolonged droughts in India. Crop yields have also registered decline. South Asian countries have been actively participating in the annual meetings of the UNFCCC and other global fora for promoting cooperation to address the multifaceted challenges of climate change. They have led the efforts to set up the Green Climate Fund to help poor countries adapt to the inevitable effects of climate change and also adapt to mechanisms for transfer and deployment of climate-friendly technologies and capacitydevelopment. SAARC countries have prepared climate change policies, strategies and plans of action and integrated climate change imperatives in their socio-economic planning and decision-making. They have also established institutions to address climate change-related issues. There is urgent need of, and enormous potential for, bilateral and regional cooperation on climate change, ranging from joint monitoring of the HKH glaciers, the monsoons, river flows, extreme-weather forecasting, disaster management, adaptation to climate change impact on agriculture and livestock, water management, sea level rise, and the health sector.

The Imperative of Regional Cooperation Since the 1972 UN Conference on Human Security held in Stockholm and the UN Conference on Environment and Development, held in Rio in 1992, and the signing of dozens of global and regional conventions and protocols on environment in which South Asian countries actively participated, there has been a remarkable growth in environment protection activities in South Asian countries. These include:  

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Establishment of full-fledged Ministries of Environment Preparation of environmental policies and strategies and action plans on environmental topics such as climate change, the ozone layer, desertification, air pollution, hazardous waste, chemical safety, land-based and marine protection areas, forest management, water resource management, energy conservation and efficiency, development of renewable sources of energy etc. Promulgation of environmental laws and regulations at various levels of government Emergence of environmental NGOs and civil society organisations Increased media coverage of environmental issues Preparation of state of environment reports/studies by governments, IGOs, NGOs and scientific communities Academic courses on environment in colleges and universities

Public discourse on regional cooperation under the auspices of SAARC and regional offices of UN and other multilateral agencies – which was hitherto limited to political, economic and cultural spheres – has been broadened to include calls for increased cooperation and collaboration for addressing environmental challenges. There is growing number of networks of NGOs and civil society organisations promoting cooperation at official and non-official levels. It is now increasingly recognised that the objectives of poverty eradication and sustainable development and food-, water- and energy-security in South Asia cannot be achieved in the absence of cooperation at the regional level. Recognition of the need for regional cooperation on environmental issues has led to the establishment of the South Asia Environmental Cooperation Programme in 1982; and greater attention is being paid to environmental concerns by SAARC at ministerial and summit levels.

Initiatives to Promote Cooperation on Environment at Regional Level Three inter-governmental organisations are notable in the context of regional cooperation on environmental issues in South Asia. These are (i) the South Asian Association for Regional Cooperation (SAARC) (ii) the South Asia Cooperative Environment Programme (SACEP); and (iii) the South Asia Regional Seas Programme.

SAARC Envisaged as “a political organisation” and established in 1985, SAARC has during the past two and a half decades paid increasing attention to environmental concerns and challenges. Since 1987, references to environmental issues have figured in the speeches made and declarations issues by SAARC Summits. Since the late 1980s, Ministers of Environment have held over a dozen meetings, including a meeting in 1997 which adopted the first SAARC Environment Action Plan, the meeting in 2005 in the wake of the Asian Tsunami which led to the consideration of a regional disaster cooperation framework, and the meeting in 2008 at which a Declaration and an Action Plan on Climate Change were adopted ahead of the 2009 climate change meeting in Copenhagen. The 16th SAARC Summit hosted by Bhutan in April 2010 had, as its main theme, the topic of Climate Change and issued a statement on climate change. The broad-based SAARC Convention on Environment was signed at the Summit and has since been ratified by most member-states. An expert-level Technical Committee on Environment was set up in 1992 and 7

an inter-governmental Expert Group on climate change was set up at the 16th Summit in Thimphu. In pursuance of the 1997 and 2008 plans of action, a number of SAARC centres have been established, including the SAARC Forestry Centre in Thimpu, the SAARC Disaster Management Centre in New Delhi, the SAARC Meteorological Research Centre in Dhaka, and the SAARC Costal Management Centre in Maldives. The Dhaka Climate Change Action Plan had identified seven thematic areas for consultation and cooperation. These include mitigation; adaptation; technology transfer; finance and investment; education- and awareness- enhancement, management of climate change impacts and risks; and capacity building for intergovernmental negotiations.

SACEP The South Asia Cooperative Environment Programme (SACEP) was set up by the Ministers of Environment of the SAARC member-countries. Its secretariat is located in Colombo (Sri Lanka) which, in addition to implementing the SACEP Work Plan, also administers the South Asia Regional Seas Programme and several other regional programmes. SACEPâ&#x20AC;&#x2122;s objectives include promotion of mutually beneficial cooperation in priority areas of environment, promotion of exchange of knowledge and expertise, and formulation, financing and implementation of environmental projects.

South Asia Regional Seas Programme The South Asia Regional Seas Programme was established, with support from UNEP, in 1982. This initiative focuses on integrated coastal zone management, oil-spill contingency planning, human resource development, and pollution of marine resources caused by landbased activities. A South Asia Regional Seas Action Plan was finalised and adopted in 1995 which will, hopefully, lead to the negotiation of a Regional Seas Convention modelled on the Conventions adopted in other regions. The Action Plan contains proposals on crucial issues such as integrated zone management, development and implementation of national and regional oil-spill contingency plans, and coral reef protection and management.

Recommendations Despite the significant growth of knowledge and awareness of environmental problems and efforts by the South Asian countries to respond to them, the ground situation does not show any significant improvement. As the South Asia Environment Outlook 2009 (SAEO) 8

produced by UNEP and SAARC has reported, SAARC countries face multiple environmental challenges such as high rates of population growth, urbanisation, rampant poverty which is both a cause and a consequence of environmental degradation, growing indoor and outdoor air pollution, reduction in per capita availability of and deterioration in the quality of drinking water, soil degradation, increase in waterborne diseases, degradation of marine resources, increase in the frequency, duration and severity of natural and climate change-related disasters, trans-boundary air- and water-pollution, deforestation and desertification, health hazards caused by unsafe and hazardous chemicals and waste, etc. These challenges entail growing economic, financial and social costs. SAARC countries other than India are unlikely to achieve the environmental goal and benchmarks prescribed by the Millennium Development Goals (MGDs). The escalating degradation of the environment and the ecosystems has been driven mainly by population growth and policy- and institutional-failures. The situation is likely to get worse as the full impacts of climate change become evident. Geographic/topographic/climatic factors, population explosion, critical dependence on agriculture and the sector’s dependence on irrigation, and long coastline make the entire South Asian region, especially the low-lying areas in Bangladesh, Sri Lanka and Maldives particularly vulnerable to the adverse impacts of climate change. At stake is the vital imperative of food-, water- and energy-security, which has implications for the livelihoods of the majority of South Asian people. Clearly, the efforts of South Asian countries at domestic, regional and global levels need to be significantly augmented and strengthened. This will require  

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Renewed political commitment to the protection and development of the environment Environmental imperatives in general and responses to climate change challenges in particular need to be integrated into the overall processes of planning, financing and implementation. None of the South Asian countries has done this so far but significant progress has been made more recently. Ministries of Environment, environmental protection agencies, tribunals, laboratories, R&D institutions urgently need significant strengthening and adequate resources to fulfil their tasks. Monitoring and assessment of overall environmental trends and sector-specific assessments need to be carried out at state, city, town and even village levels. All stakeholders – especially the key economic and commercial sectors – must comply with mandatory reporting on the environmental footprint of their activities and take steps to mitigate the damage. Much greater attention needs to be paid to enhancing the authority and capacity of organisations and institutions established at regional level in pursuance of decisions of SAARC Summits. Additional institutions need to be set up, in order to better address the negative impacts of climate change The relevant areas requiring attention are disaster management, integrated and joint management of shared river basins, energy 9

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conservation and efficiency, development of clean and renewable sources of energy, climate-related health hazards etc. Climate change should be on the agenda of all SAARC Summits which should review the progress achieved and agree on arrangements for better results. The status and profile of Ministers of Environment should be enhanced. Environment Ministers should meet prior to each SAARC Summit to review the state of environment and submit their findings to the Summit. They need to pay greater attention to SACEP and the other regional cooperation arrangements. Effective participation of all stakeholders, especially the private sector and the civil society, is the key to the success of efforts to address the threats posed by climate change and other environmental issues.

SAARC may consider negotiating a comprehensive cooperation agreement with the UN and the European Union on the pattern of the ones signed by ASEAN with a view to maximising the benefits of cooperation with multilateral institutions in line with their cooperation processes.

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ISAS Insights No. 190 – 16 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

The World after Great Power Withdrawals Shahid Javed Burki1 Abstract Will the United States’ pullback from Afghanistan, currently planned to be completed by the end of 2014, deeply affect the world? What would be its impact on the Muslim world, including the Muslim-majority countries of South Asia? These two questions are important for the making of public policy across the world because of the massive changes that are likely to occur once the United States has left the scene. Major large-power pullbacks have in the past led to the birth of new economic and political global orders. There is no reason why the same would not happen again this time.

Introduction: The Past Pullbacks The British pullout from India in 1947 led to a wave of decolonisation in Asia and Africa and ushered in a new world order in which the influence of the old colonial powers was significantly reduced, creating space for the emergence of new quasi-imperial powers, the United States and the Soviet Union. Some newly independent countries chose to align with Washington while 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. During a professional career spanning over half a century, he has held senior positions in Pakistan and at the World Bank. He was Director China Operations at the World Bank from 1987 to 1994 and 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. He can be contacted at sjburki@yahoo.com. The viewed expressed in this paper are those of the author and do not necessarily reflect those of ISAS.

some others preferred to get close to Moscow. Many became members of the non-aligned movement. There were massive changes when the Americans pulled out of Vietnam in 1973. There was considerable irony in what occurred once the United States left that particular scene. The war in Vietnam was fought to contain China and block its advance into the countries to its south and east. The strategy didn’t work. Not only did the American withdrawal lead to the acceleration of China’s rise, China also went on to become the dominant economic power in East Asia. In 1979, the Soviet Union went into Afghanistan to save its southern part from the influence of the rise of Islam in its immediate neighbourhood. It feared that the Islamic revolution in Iran could influence its southern republics that had Muslim majorities. After fighting a losing war for a decade it chose to leave Afghanistan ushering in a chain of events that finally led to its collapse. Not only did the southern states become independent countries, Moscow also lost influence over the nations of Eastern Europe. They pivoted towards the West. It would not be an exaggeration to suggest that by leaving Afghanistan, the United States is likely to set the stage for another global convulsion; another reordering of the world economic and political orders.

The American Pullback from Afghanistan The American decision to leave Afghanistan will have enormous consequences not only for that country’s future but also for those in its neighbourhood. This subject is being studied intensively by three senior scholars at Singapore’s Institute of South Asian Studies2. As Iftekhar Ahmed Chowdhury writes in a recent ISAS paper, “Invading Afghanistan must surely be one of the most difficult undertakings in the annals of warfare. Holding on to it must be even more so. For thousands of years this arid patch of inhospitable territory has been the graveyard of foreign armies.”3 The Soviet Union’s objective was to have a friendly nation on the southern borders of its predominantly Muslim republics; and the United States has wanted to see Afghanistan as a relatively well-governed state that will not fall into the hands of forces hostile to Washington. The process of withdrawal has not been easy for the Americans. One example of its complexity is the “murky” duel between the Afghan and American forces that occurred on 30 September 2012 which left five combatants dead, two Americans and three Afghans, bringing “to 53 the number of coalition forces killed in the so-called insider attacks this year.”4

2 3

The focus is on Afghanistan after America. Iftekhar Ahmed Chowdhury, ’Green on Blue’: Clash of Colours in the Afghan Coalition, ISAS Insights, No. 188, 25 September, 2012. Rod Nordland, “5 dead in murky attack involving U.S. and Afghan troops”, The New York Times, 1 October, 2012, p. A4

America’s Waning Influence in the Muslim World As America pulls out of Afghanistan and pulls back from the Middle East, there is likely to be a serious realignment of political forces in the Muslim world. The groups that have always been suspicious of Washington’s intentions in the area will gain the upper hand. This is already apparent. One example of this new thinking is the speech given at the United Nations General Assembly on 26 September 2012 by Egypt’s President Mohammad Morsi. This address marked his debut as an international statesman. “The obscene [videos and cartoons] that were recently released as a part of an organised campaign against Islamic sanctities are unacceptable” he told the United Nations members. “We reject this. We cannot accept it. We will not allow anyone to do this by word or deed.”5 Without referring to the speech in front of the same forum by US President Barack Obama, the Egyptian President took a stance entirely different from the one adopted by his American counterpart. “Egypt respects freedom of expression [but] not a freedom of expression that targets a specific religion or a specific culture.”6 In his UN address President Obama attempted to balance the American political right’s calls to protect “American exceptionalism” – the belief that America was founded as a nation-state to spread its values across the globe – with the need to be sensitive to the deeply held beliefs in the Muslim world. He called the video “crude and disgusting” and “an insult not only to Muslims but to America as well”. That notwithstanding, he said, some of the response in the Muslim world could not be justified. “The strongest weapon against hateful speech is not repression, it is more speech – the voices of tolerance that rally against bigotry and blasphemy and lift up the values of understanding and mutual respect.” The American President offered a vision for the Muslim world his country had not always followed in that area: “a belief that individuals should be free to determine their own destiny, and live with liberty, dignity, justice, and opportunity” 7. In a widely hailed speech three years ago at Cairo’s Al Azhar University, the premier centre of learning in the Muslim world, President Obama promised a “new beginning in relations between the United States and the world Islam. That beginning has receded into distance. As the political landscape in the Muslim countries gets reshaped, it will produce a reaction in America, especially those on the right of the political spectrum. This became evident in the 5

A day after the Morsi speech, the man believed to be responsible for the production and distribution of the video was arrested and ordered held without bond. He was charged for an unrelated offence: See Brooks Barnes, “Man tied to anti-Islam video held on probation charge”, The New York Times, 28 September 2012, p. A11. The government in Pakistan sought to use the man’s arrest to dampen the anti-American sentiment in the country ahead of the demonstrations planned for Friday 28 September. The demonstrations a week earlier after the Friday prayers had led to the death of two dozen people mostly in the troubled city of Karachi. Quoted in Anne Gearan, “Morsi: Insults to prophet ‘unacceptable’”, The Washington Post, 27 September, 2012, p. A2. President Barack Obama, “Remarks by the President to the UN General Assembly”, 25 September, 2012, www.whitehouse.gov/the press-office/2012/09/25.

commentaries that followed the attack on the United States’ consulate that caused the death of the highly respected American ambassador to Libya, Christopher Stevens. A good example of the reaction can be found in the columns of Charles Krauthammer, one of the known voices in this part of the political world in America. “Obama seems not even to understand what happened”, he wrote in one of his columns. “He responded with a grovelling address to the U.N. General Assembly that contained no less than six denunciations of a crackpot video, while offering cringe-worthy platitudes about the need for governments to live up to the ideals of the United Nations”8. The most significant reordering likely to occur will be in the Middle East and parts of South Asia. The contours of what is likely to emerge in the former have become visible; for the latter, however, there is much that remains undefined. In the Middle East, the West’s relations with the mostly autocratic regimes of the area were articulated by what can be called the “grand bargain”. This had essentially three elements: the West would support the regimes that governed even if they were non-democratic and corrupt as long as they allowed the free flow of oil and free use of area’s water-ways for navigation and did not threaten the Jewish state of Israel. That bargain is no longer valid as a consequence of the Arab Spring of 2011 and the collapse of the longenduring regimes in the Middle East. The new regimes will be much more assertive about what they perceive to be in their interest and in the interest of their citizens. This position was articulated at length by President Morsi in an interview with The New York Times before he set out for New York to attend the United Nations General Assembly. “If you want to judge the performance of the Egyptian people by the standards of German or Chinese or American culture then there is no room for judgment. When the Egyptians decide something, probably it is not appropriate for the U.S. When the Americans decide, this, of course is not appropriate for Egypt.”9

Ensuing Conflict within the Muslim World With Egypt and Turkey, two large Muslim countries, detaching from the United States and becoming less than Washington’s client states, there are now many centres of power scattered around the globe. Each of these will extend its reach as far as those nearby will allow. Egypt will compete with Saudi Arabia to establish an inclusive political order in the Arab world. It will succeed for the reason that time and demography are on its side. The Arab Spring may have started in Tunisia but had its most significant impact in Egypt because of that country’s size. A large and young population was able to demonstrate how the youth could use modern means of 8 9

Charles Krauthammer, “Go large, Mitt”, The Washington Post, 28 September, 2012, p. A21. David D. Kirkpatrick and Steven Erlanger, “Egyptian leader spells out terms for U.S.-Arab ties”, The New York Times, 23 September 2012, pp. 1 and 6

communication to get rid of a political system that had lost its relevance. The old system provided only for the few in the establishment, not for the many in the street. The remaining autocrats in the Middle East may be able to resist, for a while, the dynamics unleashed by the Arab Spring, but they cannot stop the flood from reaching their shores. With the old order dispensed with, it is not certain that its place will be taken by moderate regimes that will be more tolerant of religious diversity. Once again Egypt will set the pattern which the other countries in the Arab world are likely to follow. While the moderate Muslim Brotherhood won the most seats in the Egyptian Parliament and saw one of its leaders become the country’s first elected president, a more radical Islamic movement is challenging the outcome. In an essay titled “the rise of the Salafis”, Bobby Ghosh describes the struggle for influence that is going on at this time in the Muslim world. “The demonstration of Salafi street power set off alarm bells in Muslim countries, nowhere more than in those liberated by the revolutions of 2011, where the fundamentalists seem determined to draw out all other voices in the political conversation…If the democratically elected governments of Egypt, Libya, Tunisia, and Yemen represent the flowering of the Arab Spring, the newly assertive Salafis are its weeds, flourishing in soil fertilized by free expression and poorly tended by weak governments. Many in the region and in Western capitals alike worry that if left unchecked, the Salafis will choke the life out of the new democracies by forcing their puritanical and intolerant brand of Islam on a timorous populace and craven leaders.”10 The change in the non-Arab Muslim world is proceeding more smoothly. It is led by Turkey. Ankara has shown a way to accommodate Islam in the political system and how to keep the military where it should stay – in their barracks. Turkey is likely to become the model for countries such as Pakistan and Bangladesh that too are seeking ways to deal with the issue of Islam in politics and the role of the military in the political order. With America’s fading influence in this part of the world, adjustments to internal pressures will have to follow internal compulsions. For some time to come the countries in the region will be much more nationalistic than accommodating of large power interests.

Conclusion United States is planning on leaving Afghanistan for political reasons. The cost of staying there is becoming too large to bear for a weakened and troubled economy. The Americans see no reason why they should spend so much to achieve a goal their leaders have not succeeded in defining with any clarity. Vietnam was different and even there the American intervention 10

Bobby Ghosh, “The rise of the Salafis” Time, 8 October, 2012, p. 48.

eventually lost domestic support. America went to Vietnam to stop the Communist train to keep on rolling in Asia. There is no such clear-cut objective in Afghanistan once Osama bin Laden was killed. If there is to be a clash with Islam and the Muslim world as postulated by Samuel P. Huntington, Afghanistan is not the place where it will occur. It will not even be in Pakistan the country in which the Americans have the lowest approval rating. It will be in the Middle East. For that clash the withdrawal from Afghanistan sends a message the American right does not want to hear: that the world now has many competing centres of power and America has lost its dominant position. How America reacts to its changed circumstances will have great significance for the way the new world order evolves.

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ISAS Insights No. 191 – 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

Rebalancing-Obama 2.0: India’s Democratic Differential S D Muni1

US President Barack Obama renewed his dedication to the ‘Asia-Pacific rebalancing strategy’ during his successful re-election campaign. The contours of this strategy have started getting into shape with his first post-election foreign visit to the East Asia Summit in Cambodia on 19 November 2012 and his visits to Myanmar and Thailand days earlier. An emerging aspect of this strategy is the deference for democratic partnerships. This deference was visibly and loudly projected during the first-ever US presidential visit to Myanmar where President Obama acknowledged the ongoing democratic reforms there and added that “this remarkable journey has just begun and has much further to go”. This deference for democracy has also been significantly underlined on a relatively quieter but confident note in the declared US “full embrace of the rise of India”. At the Cambodian summit, President Obama, responding to ‘congratulations in person’ from India’s Prime Minister Manmohan Singh, said: “India is a big part of my plans”.2

Professor Sukh Deo Muni is a Visiting Research Professor at the Institute of South Asian Studies (ISAS), an autonomous research institute at the National University of Singapore. He can be contacted at isassdm@nus.edu.sg and sdmuni@gmail.com. The views expressed in this paper are those of the author and do not necessarily reflect those of ISAS. The Times of India (New Delhi) 21 November 2012.

India Focus Addressing a Washington-based US think-tank, the Centre for Strategic and International Studies, on the US “rebalancing strategy” during Obama’s second term and his post-election first foreign visit to the Asia-Pacific region, National Security Adviser Thomas E Donilon identified India as an important emerging nation with which the US was committed to deepen its partnership. He was asked a pointed question, by the US-based Indonesian Ambassador Dino Patti Djalal on the ‘qualitative difference’ between India and China “so that you describe India as a strategic partnership, but China as something else”. In his response, Donilon said: “The relationship with India is obviously rooted in history and…in a shared system of democracy. And it’s a unique relationship that we are building out…it has different aspects to it…With respect to India, we have given a full embrace of India’s rise. The President went to India on a three-day trip…and called for India’s membership in a reformed Security Council. It’s a full embrace of India’s rise as a partner. And again, as two of the most important democracies in the world, it’s an important strategic thrust for us as well”. 3 As for China, he said “we’re trying to build a relationship -- and a complicated relationship, multidimensional relationship that is profoundly important to both nations and to the world, between two systems that are very different”. He further added: “We’re trying to build a relationship between China and the United States against a backdrop of theoreticians who say that this is not possible to do; that history would point you to the inevitability of conflict between a rising power and a status-quo power. We don’t believe that…But there are challenges, obviously. And one of the key things is to be very direct about confronting those conceptual and practical challenges”.4 This was not an isolated or a lonely observation from one of the highest US policy makers. Only a couple of days before this observation, US Secretary of State Hillary Clinton, during her visit to Australia, highlighted India “as an important player in the Indo-Pacific region”. She said: “We’ve made it a strategic priority to support India’s Look East policy and encourage Delhi to play a larger role in Asian institutions and affairs. It’s exciting to see the developments as the world’s largest democracy and a dynamic emerging economy begins to contribute more broadly to the region”. As for China, her comments were: “We look for ways to support the peaceful rise of China, to support China becoming a responsible stakeholder in the international community and hope to see a gradual but consistent opening up of a Chinese society and political system that

The quotations are based on the transcript of Honourable Thomas E. Donilon’s address on 15 November 2012, at the CSIS Statesmen’s Forum. http://csis.org/files/attachments/121511_Donilon_Statesmens_Forum_TS_pdf. (Accessed on 18 November 2012). Ibid.

will more closely give the Chinese people the opportunities that we in the United States and Australia are lucky to take for granted”.5 The ground for greater strategic proximity with India in the face of complex and challenging engagement with a rising China has been in preparation since President Obama’s landmark visit to India in 2010. At that time, perhaps the work in the Obama administration had just begun on conceptualising the “rebalancing strategy”. But it was significant that President Obama, during his visit, described relations with India as the “defining partnership of the 21st century and urged India not only to “Look East” but also to act and engage “East”.6 As the “rebalancing strategy” started unfolding a year back, India was portrayed as a “linchpin” in this strategy by the Secretary of Defence Leon Panetta during his visit to India in June 2012. 7 In the evolving strategic vision of the US for the Asia-Pacific/Indo-Pacific (the latter term is being increasingly used by the top US policy makers) region, a democratic India fits in not only because of its political system but also because of its anchoring location in the Indian Ocean and its “most capable military”.8 The US had a firsthand experience of India’s naval capabilities in the Indian Ocean when its ships were escorted by the Indian Navy through the Malacca Strait to ward off piracy threats in 2002. This was followed by the US and India joining hands with Japan and Australia in responding to the Asian tsunami in December 2004.

Democratic Differential The initiatives to cultivate the democratic differential of the countries in the Asia-Pacific region like India and Myanmar are immensely compatible with the overall objectives of the “rebalancing strategy”. There is a strong and asserted ideological component in the “rebalancing strategy” relating to democracy and human rights. This component is hopefully aimed, besides strategic mobilisation of the like-minded regional countries, to generate internal pressures within China in favour of opening the society, polity and economy. The values of democracy, freedom and human rights are underlined by US diplomats in almost every interaction they have with China. No wonder China is so uneasy and opposed to the “rebalancing strategy”. In the US approach towards a democratic strategic partner like India, two important aspects may be taken note of. One is to reinforce US’ strategic partnership with India bilaterally, including in the field of defence and security. The steps taken in this respect by the Obama administration include 5

7 8

Text of the remarks of Hillary Clinton at the launch of the Perth USAsia Centre at the University of Western Australia, Perth, Australia, on 13 November 2012. http://www.state.gov/secretary/rm/2012/11/200455.htm. (Accessed on 19 November 2012). Details of this visit may be found in “President Obama’s India visit: Substance in Symbolism”, ISAS Brief No. 176. 16 November 2010. Panetta’s address at the Institute for Defence Studies and Analyses, New Delhi on 6 June 2012. Ibid.

upgrading defence relationship with India from the pattern of a buyer-seller to that of a close partnership that includes transfer of technologies and joint-production of equipment. There has also been a qualitative upgrading in the military exercises undertaken by India and the US bilaterally as also in association with other regional countries. A study report authored by Ambassador Karl F Inderfurth and S Amer Latif on “US-India Military Engagement: Steady as They Go” clearly brings out the fact that this partnership is being shaped by the US “rebalancing strategy”. The range of bilateral strategic partnership between India and the US goes far beyond defence cooperation to cover close consultations and possible co-ordination on the questions of Iran’s nuclear proliferation, post-2014 stability and peace in Afghanistan and South Asia, stability and security in the Indian Ocean region and the emerging hot-spots in East and South China Sea. The second dimension of the US strategic initiatives towards India relates to encouraging US in forging closer strategic cooperation with India. Their response to the Asian tsunami was mentioned earlier in this respect. Now a trilateral consultation between the US, Japan and India has been institutionalised. The third round of this trilateral discussion took place in New Delhi in the last week of October 2012 where issues related to maritime security in the Indian Ocean and territorial disputes in South China Sea figured prominently.9 India is also keen to institutionalise another trilateral dialogue with Japan and the Republic of Korea. There was earlier a proposal to have dialogue among the four tsunami-response partners i.e. US, Japan, India and Australia, but the Australian reluctance did not let it materialise. The US is again trying to persuade Australia to have closer strategic partnership with India. Australian Prime Minister Julia Gillard’s visit to India for three days starting 15 October 2012 identified vast areas of strategic and economic cooperation between the two countries that included the sale of Australian uranium to India. During her recent visit to Australia in November 2012, the US Secretary of State Hillary Clinton publicly urged Australia to have closer strategic cooperation with India including naval exercises.10

Obama 2.0 and India Are there signs of greater warmth in Obama 2.0 period towards India? There obviously are. Obama administration has travelled a long distance in its strategic approach towards the two Asian giants: China and India. Soon after assuming office in 2008 President Obama urged China to join the US in fixing security issues in South Asia. His administration also called upon India to engage with Pakistan to resolve the Kashmir question so as to facilitate the non-NATO ally’s 9 10

See report on the subject by Sandeep Dixit in The Hindu (New Delhi) 1 November 2012. Sydney Morning Herald 13 November 2012, http://www.smh.com.au/action/printArticle?id=3793257. (Accessed on 20 November 2012).

contribution in the “global war on terror”. Both these propositions highly offended New Delhi’s sense of regional security in South Asia. From this initial position, the US policy has come to giving “a full embrace of India’s rise” as a global power and looking upon India as a “linchpin” of its “rebalancing strategy”. In contrast, the US alliance relationship with Pakistan stands completely vitiated by a huge trust deficit, and the US is finding it increasingly challenging to navigate its “complex” and “complicated” economic and strategic engagement with China. The shift in the US “rebalancing strategy” in favour of India is likely to gather momentum in Obama 2.0 period, and reasons are not far to seek. Gradually sharpening ideological, economic and strategic divide between the US and an assertively rising China will drive the Obama administration towards firm and dependable support from allies and strategic partners in the Asia-Pacific region. Particularly so as the Chinese challenge to the US leadership and dominance in the region becomes stronger. The main driving force of the “rebalancing strategy” in the AsiaPacific region is to sustain America’s global and regional leadership in times of internal economic drift and external strategic challenges. India’s appeal as a partner for the US will rise due to the former’s ideological synergy with and strategic value for the latter. Even apart from ideological and strategic considerations, a sluggish US economy and its uneasy job market will also continue to nudge Obama 2.0 administration towards India which hopefully will remain attractive for its openness and growth potential as against China’s highly regulated currency and market mechanisms. In India, the Manmohan Singh government’s recently taken bold decisions to go ahead with Foreign Direct Investment (FDI) in the retail and aviation sectors, even in the face of stiff political resistance from the aggregated opposition parties, have not gone without appreciation in Washington’s highest political circles. A note may also be taken of the fact that the small but well-placed Indo-American community has emerged as a strong Obama supporter. A substantial majority of Indo-Americans voted for Obama in the recently held presidential elections in the US particularly in the swing states, enabling him to have a decisive victory. This was despite Obama’s campaign strategy that emphasised against BPO and a stricter immigration regime (raising visa fee for Indian immigrants). The members of Indo-American community also contributed much more to the electoral fund-raising campaigns of Obama than those of his Republican rival. 11 There are reports that a large number of Indo-Americans are expected to join the Obama 2.0 team in key positions in White House, State, Treasury, Defence, and Commerce departments.12 India will continue to be more cautious and less effusive in identifying itself with the “rebalancing strategy” while continuing to put value on its strategic partnership with the US. 11 12

“Indian-Americans open up wallets for Obama; little for Romney”, Business Line, 3 September 2012. “Obama Inducts record Number of India-Americans into his Administration”, Indolink, 19 November 2012, http://www.indolink.com/printArticle.php?scid=147id=111912084143. (Accessed on 20 November 2012).

However, India has been and will continue to be cooperative on substantial aspects of the “rebalancing strategy” where its perceived interests converge with those of the US. After all, a US estranged from its former ally Pakistan and distanced from a rising global power China provides India with a huge strategic space to play upon in the Asia-Pacific region; more so as an increasing number of regional countries look forward to India’s enhanced role. Growing strategic proximity with the US without any alliance commitments does not also come in the way of India’s refurbished non-alignment and penchant for retaining its ‘strategic autonomy’. If seen through a realist power perspective, India’s non-alignment has always been a nuanced and sophisticated balance of power strategy. During the Cold War years, it mobilised the power of the numbers by enlisting newly independent Afro-Asian countries. It then made an immense pragmatic sense in leaning towards a comparatively (with regard to US and Europe) weaker and strategically supportive superpower, the Soviet Union. Now in the post-Cold War world, it makes an equally pragmatic sense to calculatedly side with the supportive, though weakening, US hegemony which is confronting a fast-rising and assertive China.

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ISAS Insights No. 192 â&#x20AC;&#x201C; 4 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

FDI in Multi-brand Retail in India: Signs of New Resolve S Narayan1 In September 2012, the Government of India announced several economic policy reform measures that included a move to allow 51 per cent foreign direct investment (FDI) in multibrand retail. In the same announcement, it relaxed norms for foreign direct investment in the aviation sector, allowing international airlines to invest in domestic peers and cleared a slew of other reform-oriented measures â&#x20AC;&#x201C; an increase of FDI in some broadcasting services. The issue of FDI in retail has attracted considerable political debate. The matter was first proposed by the Government in 2010, but had to be withdrawn because of political opposition. This time, the Government appears to be firm in pushing the policy through. It is possible to adduce several reasons for the determination of the Government. First, the ruling United Progressive Alliance (UPA) Government, and in particular the Congress party, has been battered by allegations of corruption and scams all through 2012, and needs a breather to establish its authority to govern. The criticism in the foreign media and by academics that the Government has been in a state of policy paralysis, which has prevented it from taking even basic measures to improve governance, has hurt its image. 1

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.

The crisis in coal supply for power generation and the poor progress of infrastructure projects have given the impression that executive decisions have come to a halt. On the trade front, the growing current account deficit, as well as the weakening of the rupee, has been seen as warning signals for the economy. The growing fiscal deficit, the inability to control expenditure on subsidies, and a slowing economy have caused international investors and rating agencies to downgrade expectations about the Indian economy. The latest GDP growth figures of 5.3 per cent are lower than the expectations of the Government and the Reserve Bank of India alike, and the persistent inflation is hurting the entire population, especially those with fixed incomes. There was, therefore, a need to induce some confidence about the economy. In the past, the current account deficit was bridged by FDI, inflows into capital markets, and through inward remittances. Of these, the first two had seen a sharp drop in 2010 and 2011. The equity markets were trading 30 per cent below pre-2008 crisis levels, with little appetite for fresh capital issues. FDI was dropping steadily after 2008 and dropped to 40 per cent of the 2011-12 level in the subsequent year. The high fiscal deficit was also crowding out private borrowings. In short, there was need for a correction to infuse external capital into the economy by improving the sentiment in the financial markets and by giving a signal that could restore FDI flows. The reform announcements of September 2012 were an attempt at that. There were other arguments as well. The retail sector in India has been growing at a combined annual growth rate of 6.4 per cent over the period 1998-2010, and is estimated to be worth around Rs. 50,000 crores (US$ 10 billion) in 2010. However, the contribution of organised retail remains low. As against the United States, which has the organised to unorganised ratio of 85:15, in India, it is only 10:90. Organised retail has been growing rapidly and is expected to have a share of 22 per cent before 2017. There are also several consumption-related growth drivers for retail. Indiaâ&#x20AC;&#x2122;s per capita income, in real terms, has doubled between 2000 and 2011, and income levels are expected to triple in nominal terms in the next 20 years. Average real household income has grown at an annual rate of 3.8 per cent from 1985 to 2005. The middle class population as defined at an income level of Rs. 200,000 and above at the 2000- price level is expected to increase to 40 per cent of the population by 2025. Per household consumption expenditure has also doubled in the last decade along with rising income levels. The fast pace of urbanisation is also changing consumption patterns. As per the United Nationsâ&#x20AC;&#x2122; state of the populations report, 40 per cent of Indiaâ&#x20AC;&#x2122;s population is expected to reside in urban agglomerates by 2030. Finally, the demographic pattern of the population, with 60 per cent of the population at 35 years or less, is driving consumption towards more modern, technologically advanced products that are the strength of modern retail outlets. In terms of the share of the various sectors in the retail industry in India, clothing and food have a share of 38.1 per cent and 11.5 per cent respectively, according to the IBEF retail report 2011. 2

As per the Indian Governmentâ&#x20AC;&#x2122;s announced policy, FDI in multi-brand retail is to be allowed only in towns which have a population of more than one million, which restricts the entry to around 35 cities. The minimum amount to be brought in by the foreign player is US$ 100 million; 50 per cent of the total FDI brought in should be invested in back-end infrastructure such as processing, logistics, warehousing and improvements in manufacturing. Fresh agricultural products may be unbranded. FDI in multi-brand retail trading in the form of ecommerce would not be permissible. Asset creation is expected to be done primarily by the foreign player. The advantage, from the Governmentâ&#x20AC;&#x2122;s point of view, is an increased opportunity for employment. It is estimated that organised retail has created over 1.5 million jobs in the period 2005-2009. The quality of employment is also superior to the opportunities in the unorganised sector. The organised sector would make a higher contribution to tax revenues through increased VAT and eventually, GST revenues. From the point of view of customers, they are likely to get better products, lower defective items, increased choice and quality of products, and the availability of global products in local markets. For the farmers, there would be a reduction in the level of intermediaries, improvement in supply chain management, requisite infrastructure in cold chain, warehousing and transportation logistics, technological improvements in crop production, and rational and fair pricing of products. The limitation of applicability to cities with a population of one million or more implies that this would be applicable only to 35 cities in 15 states. These are Andhra Pradesh, Bihar, Delhi, Gujarat, Haryana, Jharkhand, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Punjab, Rajasthan, Tamil Nadu, Uttar Pradesh and West Bengal. It is also stipulated in the policy that State Governments and Union Territories would be free to take their own decisions in regard to the implementation of the policy. In perspective, this policy appears to have several significant positives. It is an executive decision, well within the purview of the executive, with no need for parliamentary approval. First, on the economic side, this would lead to modernisation of retail and investment in technology, logistics and the value chain. Second, there would be opportunities of greater, higher quality of employment. Third, multiplier effects can be had in the domestic economy in the fields of warehousing, transportation and ancillary activities. Fourth, this opens up opportunities for improving the quality of employment in these sectors. Fifth, there is an assurance of greater revenue mobilisation. Sixth, this would lead to more inward capital flows and investments. Against this backdrop, there has been strong opposition to the move and political parties are lined up to oppose the move. One of the members of the UPA, the Trinamool Congress, has walked out of the alliance on this issue, leaving the Government technically in parliamentary minority, though they have the outside support of two major parties from Uttar Pradesh. 3

The opposition puts forth several arguments. First, that unorganised retail in India is run by a large number of small entrepreneurs who serve the immediate neighbourhood, and who would be driven out of business by the advent of large supermarkets. There is evidence that this has happened in some states in the US and in smaller towns in the United Kingdom and Australia. The small stores would not have the technological capability or the financial muscle to compete on equal terms with the large retail chains, and hence would be at a disadvantage. The strength of small retail lies in familiarity with the customer, that enables credit transactions to take place and provides for customer conveniences like small quantities and home delivery, which would not be possible from a large retail chain. Further, the very nature of large retail investment would require large real estate space, requiring transportation and higher transaction volumes. Therefore the concept is elitist, available only to a select few in the higher income ranges, and not of use to the common man, who constitutes of over 50 per cent of the rural and small-town consumers. So runs the argument. Secondly, it is contended that farmers would be at a disadvantage. The large retailers would be in a position to enforce supply contracts that would push farm prices down, thus affecting farmerâ&#x20AC;&#x2122;s incomes. Third, the tendency to stock mass-manufactured goods would lead to more imported goods being on offer, to the disadvantage of local manufacturers. Finally, the smaller retail stores are able to offer employment to even unskilled workers, of whom there are plenty in India. The employment requirement in large multi-brand retail stores would be for the better skilled, thus driving the poorer out of employment. These are some of the other arguments being advanced. Existing traders are lobbying hard with their own state governments against the introduction of FDI in retail. At the same time, large local retailers, who have multi-brand shops, do not also want the international names to come in, as they fear they would not be able to meet the competition. At the level of media, and even at the political level, these arguments are more in the realm of opinions and estimation, and not based on any hard analytical evidence. Firstly, the FDI retail shops would be set up in only 35 towns in the country, thus leaving most of the smaller retail shops untouched. Further, even in the larger urban centres, the requirement of real estate for these large stores is likely to be such that only a small number would be set up in each town. The advent of modern malls and composite shopping centres has not, in the last decade, disturbed local shopping habits or shopping centres. Rather, it has catered to a different class of young, urban consumers who are looking for products that are usually not available at traditional retail stores. It is also difficult to argue that retailing in India does not need to modernise, along with the economy, and that modern warehousing, inventory management and efficient logistics will not be of advantage to the consumer. Finally, it is also curious that there is little objection to multi-brand retail if it is owned by Indian retailers; the objection is only to FDI in retail. Perhaps this is because local large retailers do not want to face international brand competition. It is also 4

curious that there is little objection to FDI in single-brand goods. The fear of mom and pop stores being displaced and branded retail taking over the entire retail segment is perhaps overstated. It is of course possible that the arguments are entirely in the realm of politics. No doubt the strong lobbies of the existing small retailers as well as the established Indian multi-brand retailers are adding to the fervour of the arguments, but the epicentre of the issue appears to be the political scene. Currently, the UPA has lost a major ally in the Lok Sabha, key lower house of national Parliament, and depends on the support of Samajwadi Party and Bahujan Samaj Party, two opposing parties in Uttar Pradesh (against both of whom the Congress fought in the recent state elections). In the upper house, the Rajya Sabha, the Government does not have the numbers for the vote. The ruling alliance, as already mentioned, has been weakened in 2012 by complaints of non-performance and a number of allegations of corruption: it is perhaps natural for the opposition parties to press home their advantage when the UPA is weak. There is little to be achieved as the FDI decision is an executive decision, unlikely to bring down the Government. So, this political tussle would only reveal the combination of political forces and allies in a kind of muscle-flexing for the next General elections, now slated for in 2014 in the normal course. The downside would be that international confidence in governance in India would be further weakened, and in fact, may lead to reluctance to invest in India. It is therefore vital that the Government should sail through these discussions and win a decisive vote in Parliament.

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ISAS Insights No. 193 – 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

India-China Border Parleys: New ‘Signs’ of Walking the Talk P S Suryanarayana1

Abstract The problem-solving mechanism of negotiations between the Special Representatives of India and China over their intractable boundary dispute has stayed course since 2003 when the process was agreed upon. Now, 50 years after the Himalayan war between these two major Asian neighbours, they have reaffirmed commitment to seeking a fair, reasonable, and mutually acceptable settlement of the basic dispute. Right now, there are two simple but significant signals that China and India, increasingly recognised as rising powers on asymmetric trajectories, are beginning to walk the talk. One, the two countries have not allowed a current issue of dissonance to disturb the peace process. Two, they have compiled a report on the progress made in their negotiations so far.

Introduction: Mystique of Progress The importance of being China and India as two rising neighbouring powers is amply reflected in the fact that their proliferating meetings, with or without definitive results, become noteworthy. Emphatically, this observation applies to the latest meeting between the Special Representatives of the two countries – Dai Bingguo of China and Shivshankar Menon of India – in Beijing on 3 December 2012. A degree of masterly vagueness about the exact status of this “informal meeting” – China’s official categorisation – added to the political mystique of this round of dialogue. Since 2003, when India and China set up this mechanism of problem-solving dialogue on their complex border dispute, Special Representatives of the two countries have held 15 rounds of formal negotiations. Instead of being categorically characterised as the 16th round, the latest “informal” talks between Mr Dai and Mr Menon produced a confidential up-to-now progress report on the border negotiations. In a change of metaphor, the two interlocutors came up with an agreed snapshot of the diplomatic strides that India and China have made in regard to the convergences and divergences in the discussions over the boundary dispute since 2003. However, as the two asymmetric countries are inclined to keep their cards-in-play close to the chest, it is futile to guess at this stage the possible end-result of the endeavours of successive Special Representatives on either side.

Stalemate versus Settlement In fact, diplomatic sources conversant with this complex process say that even the Special Representatives themselves will not be in a position to predict the final contours of an eventual agreement, which indeed is hoped for. All that can now be said, with a degree of certainty, is that China and India will enter into a border settlement when both recognise that the cost of not settling the issue outweighs the cost of a continuation of stalemate, sources say. For the present, with Mr Dai slated to shed his Special Representative status by March 2013, in line with the ongoing political transition at the helm in China, his latest meeting with Mr Menon acquired an unusual sense of urgency. Mr Menon, who is also India’s National Security Adviser, stays as the country’s Special Representative for border talks with China.

It is abundantly clear from the latest Dai-Menon talks that Beijing has signalled a policy of continuity towards India. China has now signalled its political will to uphold the Special Representatives process during and after the current transition at the highest echelons of governance in Beijing. In addition, China has once again pledged to maintain peace and stability along the disputed border with India. These two aspects are discernible in the latest statements by Official China on the India issue. Beyond such diplomatic and personnel facts, what must not be overlooked at this stage is the overall trend line of improved China-India political atmospherics even amid signs of some dissonance on certain day-to-day issues. At the highest political echelons of the two countries, there is, for the present at least, a shared preference to try and, if possible, prevent any emerging episode of dissonance from spiralling into a new and intractable row. Political will to stay the course of the overarching bilateral efforts at rapprochement has been emphasised by the leaders of India and China during their frequent meetings on the margins of international conferences. Unsurprisingly in this context, India’s Prime Minister Manmohan Singh and China’s Premier Wen Jiabao re-endorsed the overall bilateral peace process, when they met during the East Asia Summit in Phnom Penh in November 2012.

Three-Stage Process The future-relevant aspect of the Dai-Menon exercise (in early December 2012) is that China and India have now confirmed the points of confidential agreement already reached. As part of a three-stage process, the two sides are now trying to fashion a framework for the final settlement of their Himalayan border dispute. These complicated efforts form the core of the ongoing second stage, the first stage having yielded in 2005 a Sino-Indian accord, or more precisely a mini-accord, on the political and guiding principles for the quest of a final solution. However, with the ongoing second stage likely to be enormously tough by any standard, it is pretty difficult, even for the negotiators themselves, to predict the timing of onset of the third and concluding phase. Cartographic and field-level finessing of an agreed boundary is likely to be undertaken during the future-specific concluding phase. All these broad and general aspects of the Special Representatives process are really common knowledge among seasoned diplomats and expert-observers. Given the highly privileged nature of the Special Representatives process, the matter-of-fact official comments on the latest “informal meeting” in early December 2012 are also no guide to the way forward. Shortly after the latest Dai-Menon meeting, the Chinese Foreign Ministry spokesman Hong Lei said: “Both the Chinese and Indian sides spoke highly of the important 3

progress in China-India relations. The two sides agreed that as the world’s two largest developing countries, China and India face important opportunities and common challenges and enjoy broad prospects for cooperation”.2

A Sweet Must-Do Wish-List For good measure beyond such a no-frills statement, the Chinese spokesman went on to set out a must-do wish-list in equally general terms. “The two countries should enhance political mutual trust, deepen economic cooperation, and boost people-to-people and cultural exchanges in a bid to promote their common development, bolster friendship between the two peoples, and uphold peace of the region and beyond”.3 Such a sweet must-do wish-list is reminiscent of the old Maoera enunciation of first principles in international politics minus, significantly minus, the thunderous polemics of hostility of that period. On the current situation along the disputed Sino-Indian border, the latest version from Official China is replete with positive sound bites: “The border areas between China and India have maintained peace and stability in general for many years. The two countries have reached a lot of common ground on settling the boundary question through consultation in a peaceful and friendly manner and achieved positive progress in the [latest] meeting of Special Representatives for the boundary question”.4 As for the defining characteristics of the Special Representatives process, “China is ready to press ahead with the negotiation on China-India boundary question in the spirit of peace, friendship, equal consultation, mutual respect, and mutual understanding; and [China is ready to] seek a fair, reasonable, and mutually acceptable solution”. 5 Each of these catch-phrases may have lost much of its political lustre through constant usage by countries across the world over long periods. However, these catch-phrases cannot be dismissed as inconsequential in the continuing China-India context of a huge unresolved dispute. China’s commitment to seek a peaceful settlement of the border dispute with India is, therefore, no less resonant than the commitment reflected in the following affirmation by Beijing for peace during the pre-settlement negotiations too: “Pending the final settlement, China is willing to

3 4

Foreign Ministry of the People’s Republic of China, http://www.fmprc.gov.cn/eng/xwfw/s2510/t996129.htm. Accessed on 8 December 2012. ibid. Foreign Ministry of the People’s Republic of China, http://www.fmprc.gov.cn/eng/xwfw/s2510/t994392.htm. Accessed on 8 December 2012. ibid.

work with India to jointly uphold peace and stability in the border areas between China and India”.6 The usage of commonplace words should not detract from the value of this affirmation. Tranquil Stability Long-time observers of the China-India scene will quickly note that the standard phraseology of “peace and tranquillity” along the disputed Sino-Indian border has been replaced by “peace and stability” in this particular statement. However, it is possible to conceive of ‘stability’ as a more easily measurable political attribute than ‘tranquillity’. It can be argued that ‘peace and tranquillity’ will denote a certain sense of serene atmosphere, a hugely qualitative attribute, especially when applied to the situation along a disputed border in truly forbidding climatic conditions. By contrast, ‘peace and stability’ can denote a relatively easy-to-detect state of affairs that is well under the control of both China and India at the same time along their disputed boundary. To recognise such a nuanced distinction between ‘peace and tranquillity’ on one side and ‘peace and stability’ on the other is not to assume that China is resorting to word-play in engaging India. This nuance is not of such importance to Beijing as the importance explicit in the recent shift from ‘peaceful rise’ to ‘peaceful development’ as the banner of China’s internal and external policies with “Chinese characteristics”. On the present course of China’s overall engagement with India, Mr Hong Lei’s comment is noteworthy, although this statement too bristles with hackneyed phraseology. “China-India strategic partnership of cooperation [as in the official nomenclature of this relationship] has maintained a good momentum of sound and stable development, with frequent high-level exchanges, major breakthrough in economic cooperation, and active people-to-people and cultural exchanges. As leaders of China and India [have] said, the world is big enough for their cooperation and common development”.7 To be noted seriously in this maze of fine words is the Chinese official view that conflict between China and India is not inevitable if they cooperate in this “big world” for their shared aspirations of economic development at home. Moreover, China is pleased that a “major breakthrough” has occurred in Sino-Indian economic relations.

6 7

ibid. ibid.

Competition over Core Interests Such a Chinese perspective echoes the views voiced by India’s Ambassador to China, S Jaishankar, in his address and follow-on dialogue at a symposium organised by the Institute of South Asian Studies (ISAS) in Singapore on 23 November 2012.8 Dr Jaishankar spoke of the rising comfort level in the economic interactions between India and China and their political will to make common cause over some global concerns such as climate change. At the same time, he drew attention to the duality of narratives in the Indian discourse on China-India relationship now, half-a-century after they fought a border war in 1962. The Indian narrative flowing from the 1962 war is still focused on the perceived difficulties in the bilateral ties with China. However, the other narrative, driven by economics and global issues, reflects a more sanguine view of the way forward in Sino-Indian engagement. Dr Jaishankar drew attention to a third narrative of Sino-Indian competition as well, citing this as a natural phenomenon in international politics. In this author’s way of thinking, it is such competition over core national interests that lay at the heart of potential dissonance on issues other than the Sino-Indian border that Dai and Menon navigated through in their latest meeting. Significantly, the Dai-Menon meeting in Beijing on 3 December 2012 took place amid potentially disconcerting dissonance on a couple of serious issues of day-to-day importance in the bilateral sphere. However, the two leaders did not allow themselves to be swept off their feet and carried on as if these issues had stirred up no more than a storm in a teacup. Both issues flowed from China’s act of ‘cartographic creativity’ or ‘cartographic aggression’ (depending on the standpoint of the parties concerned) around 22-23 November 2012. China began issuing to its citizens new-look passports with pages carrying indelible watermarkimprints of maps that fully depict Beijing’s land-and-sea territories or ‘claims’ (depending on the standpoint of the parties concerned). These maps show Beijing in possession of those areas of the South China Sea that some of China’s neighbours, all in Southeast Asia, claim as their own.

Talks Not Torpedoed This aspect does not directly impinge on India’s territorial or political sovereignty. However, China was certainly not amused at certain coincidental remarks which the media in India 8

Dr S Jaishankar spoke on ‘India and China: 50 Years After’, at the ISAS Symposium in Singapore on 23 November 2012. ISAS Director Professor Tan Tai Yong chaired the meeting. For details, please see ISAS Special Report 09 – India-China Comfort Level in Economic Affairs: Good News for Asia’s Stability, by P S Suryanarayana, 28 November 2012.

attributed to the Chief of Indian Naval Staff, D K Joshi. Answering Indian media queries, Admiral Joshi was reported to have affirmed that the Indian Navy had trained for and would be willing to deploy forces in the South China Sea in defence of India’s economic interests in that sensitive area. Now, the point to note is that Mr Dai and Mr Menon did not allow their talks to be torpedoed by Adm. Joshi’s reported remarks. It is a different matter altogether whether or not the Special Representatives did discuss this issue behind the scenes and did decide to let it slip off their radar-space for the sake of a future Sino-Indian border settlement. For New Delhi, the reported remarks by Adm. Joshi, formerly Defence Adviser in the High Commission of India in Singapore, pertain to the protection of oil exploration by an Indian entity, ONGC Videsh, in the South China Sea. The exploration is being carried out by this Indian entity for Vietnam, which has a territorial dispute with Beijing in the relevant segment of the South China Sea. Asked to comment on Adm. Joshi’s reported remarks, the Chinese spokesman, Mr Hong Lei, said as follows on 5 December 2012, after the conclusion of the Dai-Menon meeting. “China opposes any unilateral oil and gas exploration activities in disputed areas in South China Sea and hopes relevant countries respect China’s sovereignty and national interests – as well as the efforts of countries within the region to resolve disputes through bilateral negotiations”.9 While China’s message to India on this score is unmistakable, it is equally noteworthy that Beijing has not adopted a strident tone against New Delhi in this statement. In a sense, such a qualitative aspect is in tune with the positive political atmospherics of the latest Dai-Menon meeting. From India’s point of view, a critical aspect of China’s latest ‘cartographic creativity’ or ‘cartographic aggression’ is that Arunachal Pradesh and Aksai Chin are also depicted as part of Chinese territory in the new-look passports. In a quick tit for tat, as it were, Indian Embassy in Beijing has begun issuing visas that depict India’s territorial expanse in all its amplitude, inclusive of areas claimed by China. It is truly a measure of China-India political maturity during their current wave of engagement that such an issue too has not been allowed to rock the DaiMenon meeting in early December 2012.

Subtle Nuance over ‘Noise’ The prime and nuanced signal from the latest round of India-China dialogue on their border dispute, held in an ambience of apparent political maturity on both sides, is that the two countries

Global Times, http://www.globaltimes.cn/DesktopModules/DnnForge%20-%20NewsArticles/Print.as.... Accessed on 8 December 2012.

do not want to be disturbed by external “noise”. Mr Dai did suggest that China and India should not allow their relations to be affected by such “noise”.10 In the absence of a detailed blow-by-blow account of the Dai-Menon conversations in early December 2012, it is not possible to be sure of what would constitute “noise” in the China-India climate of dialogue. Going forward, it will be useful to ascertain whether the possible or potential US factor in the China-India engagement could be sensed by Beijing as the disturbing "noise”. A popular theory is that New Delhi is a possible or potential pawn that the US might deploy suitably against China by bolstering India’s capabilities. At the other end of the spectrum, there is little or no direct evidence, in diplomatic circles at the moment, to indicate that the US and China might together seek to checkmate India’s rise. In the opinion of this author, China and India can indeed ward off “noise” by genuinely upholding their independent preferences for “strategic autonomy” or “independent foreign policy”, an essential attribute of state sovereignty. This certainly is no wisdom from another Planet. And, it will be easier done than said, if state sovereignty is tempered by “the spirit of peace, friendship, equal consultation, mutual respect, and mutual understanding” in the China-India quest for “a fair, reasonable, and mutually acceptable solution”. China has now advocated such principles in this peace process and India is known to reciprocate these sentiments for going forward. So, it is time for these two Asian mega-states, now on the rise asymmetrically, to walk the talk of statesmanship all the way ahead in their border negotiations.

.....

Xinhua | Agencies in Global Times, http://www.globaltimes.cn/DesktopModules/DnnForge%20%20NewsArticles/Print.as.... Accessed on 8 December 2012.

ISAS Insights No. 194 â&#x20AC;&#x201C; 20 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

Political Challenges in Post-War Sri Lanka Jehan Perera1

The centralisation of political power, and failure to devolve power to the ethnic minorities, accentuated the ethnic conflict in Sri Lanka that led to three decades of internal war. Although the war ended in May 2009, more than three and a half years ago, Sri Lanka has yet to make the transition to ethnic reconciliation and to a political solution. As it has been pointed out by scholars in the field, political stability in pluralistic societies is difficult to maintain without internal power-sharing mechanisms or systems of governance which are responsive to the aspirations of ethnic minorities. The monopoly of political power by representatives of the ethnic Sinhalese majority amounting to over 75 per cent of the countryâ&#x20AC;&#x2122;s population was a major contributory factor to the internal war that pitted the government against the Liberation Tigers of Tamil Eelam (LTTE). If Sri Lanka had been provided with a federal constitution at the time of independence from the British in 1948, the Sinhalese and Tamil-speaking leaders might have been able to politically bargain with each other from their power bases at the centre and north-east region respectively. Instead Sri Lanka was provided with a unitary form of government that vested all power at the centre and therefore in the hands of the Sinhalese. But while the Sinhalese are a majority in the 1

Dr Jehan Perera is the Executive Director of the National Peace Council, Sri Lanka. He can be contacted at jehanpc@gmail.com. The views expressed in this paper are those of the author and do not necessarily reflect those of ISAS.

country taken as a whole, the Tamils are a majority in the north and Muslims are a majority in parts of the east of the country. Several serious efforts made by government leaders to work out a solution with the Tamil and Muslim political leaderships failed owing to the inability of the government leadership to obtain the backing of their own party let alone the opposition. After the end of the war and the governmentâ&#x20AC;&#x2122;s military victory over the LTTE, the ethnic minorities remain deeply disenchanted. Political negotiations between the government and elected Tamil representatives are at a standstill. The minorities feel more vulnerable to ethnic majority nationalism and the concentration of power in the hands of political leaders who are from the ethnic majority. At the present time there are two key challenges that Sri Lanka faces. The first is the old challenge of addressing the ethnic conflict. The Lessons Learnt and Reconciliation Commission appointed by the government after the war has stated that the main cause of violence in Sri Lanka was the failure of successive governments to find a solution to the ethnic conflict. The second challenge is to safeguard and strengthen the system of checks and balances. It is not good governance or democracy when the government, however popular, dismantles the system of checks and balances. At present the government is seeking to impeach the Chief Justice and it is no coincidence that the Supreme Court has been acting as a check and balance on the government.

Present Issue The main political issue in Sri Lanka at the present moment is the governmental effort to impeach Chief Justice Shirani Bandaranayake on the grounds of alleged misbehavior. It is also the latest manifestation of governmental desire to exercise undisputed power in the country. President Mahinda Rajapaksa and other top leaders of the government appear to be convinced that centralized decision making that will accelerate economic development is of the greatest importance in implementing their vision for Sri Lanka. They also publicly state that there is a conspiracy to subvert the government in which the main protagonists are the Tamil separatists and a section of the international community which champions human rights causes. Now it also seems that they see the Chief Justice as also being a part of this cabal. The governmentâ&#x20AC;&#x2122;s conflict with the Supreme Court arose after it ruled against the constitutionality of a proposed government law, the Divineguma (Uplifting Lives) bill that sought to vest devolved economic and financial power in relation to community-level development with the central government. But on this occasion, unlike on previous occasions, the Supreme Court stepped in to put a brake. Several parties had filed action before the Supreme 2

Court opposing the legislation on various grounds, including its undermining of devolution of powers to the provincial councils. A Supreme Court bench headed by the Chief Justice decided that the Divineguma bill was not in conformity with the constitution. The draft law has therefore to be passed by a 2/3 majority in Parliament and also has to obtain the approval of the people at a referendum. The legal objection to the Divineguma Bill came primarily from its potential to erode the powers given to the Provincial Councils in terms of the 13th Amendment. From the time they were established by the 13th Amendment in 1987, the Provincial Councils have been an arena of contested power. The system was set up as an outcome of the Indo-Lanka Peace Accord which was in the nature of an unequal treaty signed by the governments of India and Sri Lanka. The Indian promise was to disarm the LTTE and end the ethnic insurgency, while the Sri Lankan promise was to implement the devolution of powers on the Indian model. But neither side was prepared to keep its side of the bargain. Due to the nature of its origins, the Provincial Council system has never been fully empowered by successive governments. The proposed Divineguma law intrudes into areas that have been reserved for the Provincial Councils. On the one hand, many of the powers vested in the provincial councils by the 13th Amendment have been non-functional due to the lack of economic resources and non-devolution of those powers to the provincial councils. Examples would be the central government taking back powers over local level business taxation and the continuing non-devolution of even limited police and land powers. The concern of the government is that the 13th Amendment potentially vests these powers with the Provincial Councils, and an effective provincial administration can indeed demand them in a manner detrimental to the supremacy of the central government.

Centralising Ethos On many occasions, government leaders have proclaimed their admiration for a so-called Asian model of development with specific reference to countries such as China and others in Asia. The first legal step in fulfilling this vision in the post-war period was the passage in 2010 of the 18th Amendment to the Constitution with the Supreme Court giving its assent on the grounds that it did not require a referendum. This restored to the President the full and untrammeled powers of appointment to the highest positions of the state that the 17th Amendment had taken away from the Presidency a decade earlier. It also strengthened the Presidency by doing away with the twoterm limit on office and giving the incumbent President, and those who succeed him, the right to contest presidential elections any number of times.

The 18th Amendment has helped to centralize control over the state machinery by ensuring that all top officers of the state are beholden to the President for having appointed them. The Divineguma bill, on the other hand, deals with the second and third tiers of government. It seeks to take away the powers of the provincial council especially in respect of economic development and vest them with the Economic Development ministry. These two pieces of legislation would give to the government a very powerful hold on political power and economic resources from the top to the bottom of Sri Lankan society. It is therefore not surprising that the government would be very much concerned about the setback to its plans and wish to get rid of the obstacle to them. The Supreme Court ruling on the Divineguma bill presents a major obstacle to the realization of the government’s vision of centralized development in which it has the final decision making power. The character of the government leadership is not to accept a situation in which there is countervailing power that can stand in its path as an equal. Although equality of the executive, legislative and judicial branches of government is a widely accepted principle of constitutional governance in developed democracies, this is not presently the case in Sri Lanka. The government does not appear to be ready to accept the judiciary as a co-equal branch of government that could negate or block initiatives of the executive and legislature, both of which are under the full control of the ruling party. By ruling against the constitutionality of the Divineguma bill the Supreme Court has denied the government the opportunity to further strengthen itself and weaken the 13th Amendment and provincial council system in the indirect manner it has sought. It has forced the government to deal with these matters in a transparent and direct manner, instead of subtly and indirectly. The government’s apprehension is that this type of supervision by the Supreme Court will undermine its grand vision for the development of the country as it sees fit. This may explain why the government feels constrained to impeach the Chief Justice who has been trying to give leadership to principles of governance that is according to the rule of law as laid down in the Constitution.

Unforeseen Problem However, the government’s plan to impeach Chief Justice Shirani Bandaranayake appears to be running into unforeseen problems. The indications are now that the government’s charge sheet against the Chief Justice is not as watertight as the proponents of the impeachment motion had believed. In addition, opposition to the impeachment has come from an unexpected quarter. The influential chief priests of the Buddhist Sangha have expressed their displeasure in a written statement. This has been followed by the Bar Association’s call to the government to reconsider 4

the impeachment coupled with strike action by lawyers. Apart from die-hard government supporters there appears to be little or no public support for the impeachment amongst the intelligentsia. In these circumstances, the government would be concerned about the loss of popular sympathy and the possible fragmentation of its voter base. There is an increasingly widespread feeling within the country that the Chief Justice is being victimized for political reasons. There has been an unprecedented campaign by lawyers against the impeachment which has led to the disruption of the legal system. As a result President Mahinda Rajapaksa, who is renowned for his political pragmatism, appears to be distancing himself from the impeachment process launched by his government. He has indicated that the impeachment was not his idea and he was responding to the petition from Parliament. The President has also stated his intention to appoint an independent committee to advise him on the findings made so far in respect of the charges leveled against the Chief Justice. The President’s acceptance of the need for an independent committee to review the decision of the Parliamentary Select Committee gives substance to the belief that it failed to arrive at a sound and unbiased conclusion. The government may be able to convince itself and the majority of people that what it is doing is right. But in terms of constitutional government, in which checks and balances take a foremost place, and the judiciary’s independence is guaranteed, the country’s democratic system is at risk.

Opposition Failure Despite the pressures on it the Supreme Court appears to be standing firm in upholding its constitutional position. It is hearing petitions against the legality of the impeachment filed by the Bar Association and other petitioners. The Chief Justice herself has filed a petition in the Court of Appeal against the findings of the Parliamentary Select Committee. However, the political position of the government appears to be unassailably strong. It has a 2/3 majority in Parliament and a popular President heading the executive branch of government. The even greater strength of the government is its ability to get a substantial majority of people to agree on its course of action. In terms of using the state and private media, the government voice is much more powerful than any other. Government leaders, exemplified by President Mahinda Rajapaksa, also have an exceptional ability to put across the government’s point of view in a manner that is comprehensible to the masses of people. So far, the political opposition has not mobilized a mass movement of protest against the impeachment. The religious leaders have issued statements critical of the impeachment. But the 5

religious communities have not mobilized themselves for any action. The only group that has taken a public stand against the governmentâ&#x20AC;&#x2122;s actions are members of the legal profession. They have come out protesting. They have gone on strike. But the public protests have not gone beyond that. Whether in Pakistan or Egypt, where powerful governments also took on the judiciary, it was not civic or legal action by themselves that halted those governments. Those powerful governments were forced to step back by mass movements in which tens of thousands of people participated. Those mass movements were led by opposition political parties, which had both leaders and party machineries that were equal to the task. In Sri Lanka, on the other hand, the opposition political leadership has still not taken to the streets. The opposition is not prepared to challenge the government outside of Parliament.

Mobilising Nationalism It is also likely that sometime in the future the government will also take up the issue of the 13th Amendment to the Constitution. So far the government has been able to forestall the threat of any provincial council making demands for itself as it has succeeded in forming the administration of all eight provincial councils to which elections have been held. However, there is one provincial council that comes across as a possible threat to the governmentâ&#x20AC;&#x2122;s domination. This is the Northern Provincial Council, to which elections have yet to be held. The government has been under severe international pressure to hold those elections, as a concrete demonstration of its sincerity in restoring normalcy to the former war zones of the country. Under pressure from the international community, in particular India, President Rajapaksa has promised that these elections will be held by September. As there has been no progress towards a political solution to the ethnic conflict, there is continued polarization between the government and the Tamil ethnic minority. The root causes of the war, the sense of discrimination and deprivation of the Tamils, have not been dealt with the result that the Tamil people in those areas in which they are a majority consistently vote against the government. They are unhappy as there is no political solution after the war that enables them to have even limited powers of self-government. There continues to be a large military presence in the North and East, and the military intrudes into civilian life more than is necessary now that there is no more war or terrorist activity. Given the current levels of estrangement of the Tamil polity from the government it is most unlikely that the government will be able to win an election in the Northern Province. The likely scenario is that the Northern Provincial Council election will be won by the main Tamil 6

opposition party, the Tamil National Alliance (TNA) which has been firm in refusing to enter into any sort of accommodation with the government. In these circumstances, the governmentâ&#x20AC;&#x2122;s concern would be that a TNA victory will invariably lead to a demand for the full powers laid out in the 13th Amendment to be devolved to the Northern Provincial Council. This could spark off similar demands from other provincial councils and would deal a fatal blow to the governmentâ&#x20AC;&#x2122;s plans to keep its centralized powers within its control as at present. In the aftermath of the impeachment debacle the government will surely need another cause that will rally popular support. The strategy it has consistently used to regain lost ground is an appeal to ethnic majority Sinhalese nationalism. The government has shown itself to be sophisticated in offering different sections of the polity what would like to have, so as to keep them quiet on other issues. This may account for the floating of the idea of a 19th Amendment to the constitution that will abolish the scheme of devolution of power contained in the 13th Amendment and in the provincial councils and put in place an alternative structure to ensure a solution to the ethnic problem. The government also has a further reason for pressing on with scrapping or downgrading the provincial council system as soon as an opportunity presents itself. The devolution of power to the Tamil-majority areas feeds into the insecurities of the Sinhalese majority. The desire of the Sinhalese majority to protect the unity of the country will override all other considerations, even those of economics or concerns about systems of checks and balances. The evidence being given by the government that foreign powers and the Tamil Diaspora are plotting to revive the LTTE and divide the country will sustain political support for the government. After the impeachment of the Chief Justice, it will make political sense to the government to reinvigorate the forces of nationalism to sustain its electoral base with the Sinhalese majority. .....