an rather interesting piece on kashmir by Peter Chalk and Chris Fair of the Rand Corporation.
=======================================
Since the September 11 attacks on the United States, Pakistan has figured
prominently in Washington's global war on terrorism. Responding to a series
of threats and inducements, President General Pervez Musharraf terminated
support for the fundamentalist Taliban regime it had helped create and
foster in Kabul, allowed Pakistani territory and airspace to be used for
Operation Enduring Freedom, and provided important intelligence data to
coalition forces targeting terrorist training camps on Afghan soil.
Pakistan is expected to play a continuing role in Bush's plans to tackle
remaining Taliban and al-Qaeda elements, both on account of its
geostrategic position in Southwest Asia and the fact that the best
information on these entities currently lies with Islamabad's own
Inter-Services Intelligence (ISI) Directorate.
In his recent trip to the United States (September 2002), Musharraf
reiterated his commitment to the war on terrorism and preparedness to
cooperate with the international community in rooting out and destroying
extremist Islamist elements. One area, however, where the president
remained noticeably quiet - and where the US has been conspicuously
reticent in terms of pressuring his regime - is the issue of jihadi
terrorism connected to the disputed Indian-administered province of Jammu
and Kashmir (J&K).
In two widely hailed speeches delivered on January 12 and May 27 this year,
Musharraf variously pledged that all militant infiltration across the Line
of Control (LoC) would end and that there would be no tolerance of
organizations that openly espouse and propagate extremist sentiments. In
addition, he announced the banning of Lashkar-e-Toiba (LeT), the
Jaish-e-Mohammad (JeM) and the Harkat-ul-Mujahideen (HuM) - the three
jihadi outfits at the forefront of terrorist activity in J&K - and moved to
arrest several hundred militants scattered across the country.
Despite these commitments, infiltration across the LoC is presently close
to levels seen this time last year; the leaders of both the LeT and the JeM
remain essentially free to conduct their activities in an unhindered
fashion in Pakistan; asset seizures of proscribed groups have so far netted
no more than a few hundred dollars in most cases; and the bulk of the
militants arrested during the first six months of 2002 have since been
released.
Violence levels in J&K also continue to rise, with both the LeT and the JeM
moving to disrupt the state elections in September-October that ended this
week by systematically targeting candidates (two candidates - Sheikh Abdul
Rahman from the Handwara constituency of northern Kupwara district and Law
Minister and National Conference (NC) candidate from Lolab constituency
Mushtaq Ahmed Lone have been killed thus far), political workers (84 had
already been killed by October 4]) and party rallies. State government
officials have also been attacked, with a particularly serious incident
occurring on September 11 when the J&K Law and Parliamentary Affairs
Minister, Mustaq Ahmed Lone, was assassinated.
In short, extremist Islamist activity and terrorism in J&K is as prominent
as ever - the inspirational and organizational source of which clearly
remains rooted in Pakistan.
To date, the United States has chosen not to forcibly pressure Islamabad on
demonstrably curbing militancy connected to the Kashmir dispute. Although
officials in Washington note that Musharraf is being privately encouraged
to abandon his strategy, they concede that there has been no move to
strongly demarche him over the issue since September 2001, when the global
war on terrorism was first instituted. Indeed, American strategy in the
region increasingly appears to be following a two-tier tract, giving
precedence to operations against al-Qaeda and the Taliban, while
conspicuously delaying firm action to permanently neutralize Kashmiri
militant activity in and from Pakistan. Given president George W Bush's
post-September 11 affirmation that "'you are either with us or against us"
in the war on terrorism, and that there will be no tolerance for those that
willingly eschew the effort against international extremism, Washington's
reticence is deserving of some explanation.
Undoubtedly the key consideration underlying US policy is the belief that
Kashmir is simply not an issue that Musharraf can move decisively on. Not
only does the liberation of the state from "repressive" Indian rule
constitute the essential raison d'etre for the army (not to mention the
crucial justification for the inordinately large percentage of the
country's GDP that the military consumes), it is also something that many
Pakistanis have been brought up to believe constitutes the "marrow" of
national patriotism. Add to this the existence of several thousand armed
jihadis who could just as easily direct their energies against Islamabad as
New Delhi, and an understanding of Washington's perspective begins to
emerge: pushing Musharraf too forcibly on Kashmir risks fatally undermining
a key ally in the war on terrorism and possibly setting up a chain of
events that leads to the institution of a more divided, if not extreme
regime in Pakistan.
How viable and wise, however, is the US position? Ignoring the Kashmir
dispute certainly risks undercutting Washington's relations with India -
the key hegemonic power on the sub-continent and a state that already views
Bush's war on terrorism as one specifically geared toward narrow American
strategic and national interests. As several intelligence analysts remarked
to these two authors, "Why does the US continually ask us about Pakistan's
involvement with terrorism and yet never do anything about it?"
Arguably of more importance is the danger of allowing the emergence of a
new "hotbed" of pan-Islamic extremism for the sake of short term
expediencies. It should be remembered that the groups at the apex of the
conflict in Kashmir - the LeT and the JeM - have always articulated their
objectives in a wider transnational context, with the rhetorical enemy
defined as any state that is perceived to be at odds with their own
idiosyncratic Wahhabist-based ideological interpretation of the world. More
to the point, both of these organizations are known to have forged tactical
and personal linkages with al-Qaeda and may now be moving to facilitate the
logistical relocation of Osama bin Laden's forces, post-Taliban. Securing a
stable, moderate and functional state in Pakistan will be key not only to
stabilizing Afghanistan, India and the general Southwest Asian region but,
more intrinsically, to mitigating the export of the type of unrestrained
extremism that culminated in the September 11 tragedy.
There are also ethical reasons as to why the United States should make
every effort to rehabilitate and "de-jihadize" Pakistan. It is often
forgotten that many of the country's current internal security problems and
seeming dependence on Islamist manpower stem from America's own policy of
exhorting and propagating the international anti-Soviet mujahideen campaign
in Afghanistan. When Washington departed from the region in 1989, it left a
vast underground network for the trafficking of drugs and arms - which have
created huge law and order problems for successive governments in Islamabad
- as well as an extremely sophisticated militant training infrastructure
that has been effectively mobilized for the proxy war in Kashmir.
Rehabilitating Pakistan is, thus, not only a question of national security,
it is also morally incumbent given the US's close association with
fostering instability in this part of Asia. Perhaps the most viable ally
the Bush administration has in furthering this effort is the Pakistani
population itself, which overwhelmingly supports a return to the moderate
path envisioned by the republic's founder, Mohammed Ali Jinnah.
It is essential that the US take these considerations into account in the
current formulation of its policy toward Musharraf. Not doing so is to risk
the emergence of a terrorist operational environment in Pakistan's remote
northern regions that could prove every bit as threatening as the Afghan
conduit that preceded it.
Peter Chalk, senior political analyst, Rand Corporation and Chris Fair,
associate political scientist, Rand Corporation
while i don't know praful bidwai personally, i have a great deal of respect for his intellectual breadth. having said that, there are times, when he, like many other writers i know, go a little over the top. a classic example being the whole issue of privatisation. a friend mailed me this article bidwai wrote. it appeared originally at http://www.thehindu.com (thanks niranjan)
to anyone with even a remote understanding of the economics that govern india, it'll be fairly obvious why the man has got his numbers wrong.
quite clearly, bidwai doesn't believe in adam smith
:-). which is fine really. but he has a take. and it must be published. because like voltaire said: i may not agree with what you say. but i will defend to death your right to say what you want to say.
===================================
Divestment Minister Arun Shourie has with characteristic hyperbole accused his Cabinet colleagues of acting at the behest of 'vested interests.' He wants to return to neo- liberal 'reform' 'with the urgency of a man whose
hair is on fire.' The government is under pressure to demonstrate its 'commitment' to boosting 'investor confidence' by further liberalising foreign investment in insurance and telecom and allowing foreign airlines
to fly domestic routes. This will only compound the original folly!
The decision to postpone oil sell-off was not made not on merits, but on the basis of shifts in power balances. After George Fernandes demanded a
'review' of oil divestment, Shourie got increasingly isolated, although he was backed by powerful corporates like Shell and Reliance. Fernandes won
over Messrs Jaswant Singh (allergic to Reliance), Ram Naik, Pramod Mahajan and Shahnawaz Hussain -- and most important, the RSS, to whom he sold the
'security' angle. In the end, what mattered was the RSS, and Fernandes' bid for the Cabinet's number three position.
Power games apart, there is a compelling economic argument for keeping core-sector PSUs public -- in petroleum, major minerals and metals, electricity, and in services such as railways, water supply and sanitation.
The public sector is not inherently less efficient than private enterprise; it can be reformed and made more profitable and accountable. It can and
should play a pivotal role in directing investment into socially desirable areas. For a developing country like India, with its legacy of unbalanced, uneven development and poverty, the public sector is an irreplaceable instrument.
To start with, it is important to get rid of one basic misconception, namely, that Indian PSUs are typically loss-making, while the private sector is profitable. This is based upon the neo-liberal ideological premise: all that's public is bad and inefficient; all that is private is good and efficient. This voodoo-economics premise flows from dogmatic
assumptions about the 'perfect' working of markets. Given today's crisis of global capitalism, it would be laughable for an economist to make this
assertion. In fact, 'free-market' policies have produced the biggest recession since the Great Depression of 1929.
In India, more than 200 of the 246 Central PSUs are profitable. The bulk of the chronically loss-making PSUs are units like National Textile Corporation and Scooters India, which were milked dry by private
managements, and were nationalised mainly to save jobs. Collectively, the public sector is profitable too. Its profit-after-tax-to-net-worth ratio is
a respectable 8 to 10 per cent and the gross-profits-to-capital ratio is 14 to 16 per cent. The PSUs have raised 60 per cent of their capital from their own resources and given the government a whopping 138 per cent return over the past three years.
By contrast, no fewer than three lakh private sector companies lie sick and closed, including 249,630 small-scale industries. This closure has enormous
public consequences: about Rs 100,000 crores of bank loans remain unpaid.
Many sick PSUs can be revived or profitably sold off. The land owned by NTC mills alone would wipe out their losses. By contrast, most sick private units are dead as dodos.
A case can certainly be made for selling off loss-making PSUs or hotels. But there can be no justification for selling off perfectly profitable,
relatively well-managed, technologically sound PSUs, whose efficiency coefficient is 15 per cent higher than the Indian private sector's. Even stronger is the case against selling off the 50 top PSUs which beat the 50 top private companies in profitability. Yet, the government wants to sack these very PSUs -- after undervaluing their true worth, as recorded in numerous cases by the Comptroller and Auditor General (for instance, by a huge Rs 3,300 crores in the very first sale a decade ago).
Generally, in the world, the public sector has not performed badly-except in countries where governments have themselves failed. During the Golden Age of Capitalism, the West's most sustained 40 years of growth and prosperity, the public sector accounted for 40 per cent or more of GDP.
Even in the US, the West's most private economy, certain infrastructure activities have always been public -- eg: electricity (60 per cent). In Europe, PSUs compete successfully with private companies in fields like banking, automobiles, construction, and oil/gas. In the 'Asian Miracle' economies, it is the state's role, not the market's, that explains fast
growth: indeed, economist Robert Wade famously called his book on East Asia, Governing the Market.
Public services in industrial societies run along non-American models are distinctly superior to those in 'free-market' America. Britain and France
are now discovering the virtues of re-nationalising the railways, water and telecom. Public-funded Airbus Industrie has stood its ground against
Boeing, not the private McDonnell-Douglas.
The argument for keeping PSUs public applies with special force to India's oil companies, including ONGC, Oil India, BPCL, HPCL, and Indian Oil --
incidentally, the first Indian company to make it to the Fortune 500 list.
Oil is a strategically vital, fast-depleting raw material, control over which is critical to economic and political power. Oil has triggered dozens of wars and conflicts -- has anyone heard of a 'chocolate war'? -- including most recently, Suez, the Gulf War, and the New Great Game being played from the Caspian, through Afghanistan, to the Gulf. The US' plans to invade Iraq are inseparable from its oil insecurity. The Rand Corporation recently described Saudi Arabia, the world's largest oil producer, as the
'kernel of evil.' This has impelled America's powerful oil companies -- called the 'Seven Sisters' (the title of Anthony Sampson's classic book on US-dominated international oil oligopolies) -- to gain direct access to Iraq's reserves.
The 'Seven Sisters' cartel (much older than much-maligned OPEC) has fixed prices, rigged contracts and physically liquidated potential rivals/opponents -- in Italy (which tried to establish an indigenous oil
industry bypassing US majors), in Argentina and Kuwait (where the UK and US have fought wars), in Nigeria (where oil interests killed indigenous
activist Ken Saro-Wiwa), in Burma (where forced labour is used to build a pipeline), and in Afghanistan (where Unocol almost succeeded in getting the
US to recognise the Taliban regime).
India is one of the few countries of the world to have created a broad-based indigenous petroleum capacity -- against the global cartel's resistance. Thanks to Jawaharlal Nehru and K D Malaviya's establishment of ONGC, India could produce hundreds of millions of tonnes of oil which, the
Seven Sisters had repeatedly declared, did not exist in exploitable quantities! But for Bombay High's discovery by ONGC, the Indian economy
would have collapsed under the oil convulsions of a quarter-century ago.
Indigenous oil has saved India the equivalent of three times the cumulative FDI flow! It is precisely because of oil's importance that India's policymakers -- then inspired by a long-term vision --nationalised Burmah-Shell, Esso and Caltex after the 1965 and 1971 wars, during which they proved uncooperative. They also created the Oil Coordination Committee, cross-subsidised the Oil Pool, and promoted conservation.
The NDA wants to liquidate the gains from all these painstaking efforts of 45 years. There is, can be, no economic rationale for this. Our oil companies are competitive by international standards. For instance, BPCL, HPCL and Indian Oil have respectively beaten Shell, Esso and Caltex hollow in the sale of lubricants, which was unfairly thrust on them at their own retail outlets. ONGC has won international contracts against MNCs. India's governments have milked public oil companies to finance profligacy, paying them a fifth of the international crude price, interfering with their day-to-day working, and forcing them to sell oilfields discovered by them
(eg: Ravva, Mukta and Panna) to private companies.
The NDA wants to liquidate the oil PSUs altogether. This is a thoroughly misconceived policy, the kind that led former World Bank chief economist and Nobel Laureate Joseph Stiglitz to term privatisation 'robberisation.'
This must be stopped. PSUs in the core sector must be reformed and granted full autonomy. It is also vital that their employees acquire a high stake
in them -- literally, through share-ownership. The Indian citizen has invested huge amounts in the PSUs. They must repay him/her. Selling the PSUs off is absurd -- indeed, obscene, when the objective is to create a bonanza for private tycoons and sell the family silver to pay the butler -- finance the government's revenue deficit.
The Smorgasbord
