Sunday, March 29, 2009



President Barack Obama's new comprehensive Af-Pak strategy unveiled on March 27,2009, to deal with a mix of cancerous problems might impress and enthuse the new Internet generation with which Obama feels comortable, but not Indian professionals in terrorism withtheir feet firmly on the ground in this region. These problems arise from the continuing old Islamic insurgency of the 1980s vintage inAfghanistan, the new post-Lal Masjid raid Islamic insurgency in Pakistan, the continuing jihadi terrorism with many faces--- anti- West, anti-Indian, anti-Afghan, anti-Israeli, anti-Russian, anti-Chinese, anti-infidels and anti-apostates -- from sanctuaries and breeding groundsin Pakistan and the continuing spread of radical ideas justifying the use of terrorism from the madrasas of Pakistan

2. Former President George Bush left for Obama a bleeding stalemate with no end in sight. As a descriptive analysis of the kind of situationin the Af-Pak region inherited by him from Bush, Obama's new strategic broth to which many cooks have contributed, has shown a clearunderstanding of the problems confronting him in this region. Bush and his advisers were not as articulate as Obama and his advisers areand not as word-smart, but they too had come to a similar conclusion though not in as smart a language. Their conclusion was: Pakistan isthe source of the plethora of problems faced in the region and unless and until that source is tackled effectively the bleeding will continue.

3. Obama and his advisers suffer from the same prescriptive deficiency as their predecessors. This deficiency arises from their tendency tomix facts with illusions. The facts were as clear to Bush and his advisers as they are now to Obama and his advisers. These are theexistence in the Pakistani territory of the sanctuaries of Al Qaeda, the Pashtun Taliban and the Punjabi Taliban organisations with theLashkar-e-Toiba (LET) and the Jaish-e-Mohammad (JEM) in the forefront and the role of the Pakistan Army and its Inter-ServicesIntelligence (ISI) in nursing them to serve what they perceive as Pakistan's strategic interests.

4. The prescriptive part of Obama's strategy is as full of illusions as the strategy of Bush was. There is a common root cause for the illusionsof the two Administrations. The root cause is their inability to understand that the Pakistani military-intelligence establishment hasconvinced itself that Pakistan, which had lost its strategic relevance in the immediate aftermath of the end of the cold war,has acquired anew strategic importance.This is thanks to the terrorists of various hues operating from its territory and its nuclear arsenal. The continuedexistence of these terrorists is in its interest.Action against terrorism when unavoidable, support for terrorism when possible. That is itspolicy.It has been using its nuclear arsenal not only in an attempt to intimidate India and deter it from retaliating for terrorist strikes in Indian territory, but also to deter the US and the rest of the West from exercising too much pressure on it to deal with the terroristsanctuaries in its territory.

5.Unless the mind of the Pakistani military and intelligence officers is disabused of this belief and they are made to co-operate with theinternational community in destroying the terrorist infrastructure in its territory, no strategy is going to work in ending jihadi terrorism bredin Pakistan. The major deficiency in the prescriptive analysis of Obama arises from his naive assumption that Pakistan can be made toco-operate more effectively against terrorism through a basket of incentives---- more military and economic assistance, more training, anemphasis on the continuing importance of Pakistan even after the war on terrorism is over etc.

6. Bush too hailed Pakistan as a frontline ally in the war against terrorism and provided it with various lollipops--- over US$ 10 billion inmilitary and economic aid since 9/11, dual-use weapons and equipment which could be used against the terrorists as well as against Indiaand a willingness to close the eyes to Pakistan's sins of commission and omission against India so long as it acted against terrorismdirected at the US. These lollipops failed to make the regime of Pervez Musharraf co-operate sincerely against Al Qaeda and the Taliban.These incentives could not prevent the Neo Taliban of Afghanistan from staging a spectacular come-back from sanctuaries in Pakistan andAl Qaeda and its associates from organising acts of terrorism in different parts of the world.

7. The lessons from the failure of the strategy of Bush were: Firstly, a policy based only on incentives will not work in the case of aninsincere state such as Pakistan. Secondly, a policy which makes a distinction between terrorism directed against the US and terrorismdirected against India and the rest of the world will be ineffectve. Thirdly, the fear of exercising too much pressure on Pakistan lest theState collapse and its nuclear arsenal fall into jihadi hands is exploited by Pakistan to prevent the ultimate success of the war againstterrorism.

8.One was hoping----on the basis of the statements by him during his election campaign--- that Obama would have factored these lessonsinto the formulation of his new strategy. Surprisingly, he has not. The same old policy of incentives and nothing but incentives is sought tobe pursued under the garb of a so-called new strategy. The only new feature is the emphasis on the benchmarks of implementation whichwill determine the continued availability of the incentives to Pakistan at every stage. The only disincentive with which Pakistan has beenconfronted is the risk of the incentives drying up if it is seen as dragging its feet in its co-operation in the fight against terrorism.

9. Obama's strategy ---like the one of his predecessor--- is marked by a fear of punishing Pakistan if it does not change its policy of usingterrorists to advance its own strategic agenda. The reluctance to punish Pakistan if it continues to be insincere in dealing with terrorismoriginating from its territory arises from the fear that too much pressure on Pakistan and a policy of punitive measures might push Pakistaninto the arms of the jihadis or might result in a collapse of the Pakistani State with unpredictable consequences.The US must rid itself ofthis fear and make it clear to Pakistan that, if the worst comes to the worst, the world is prepared to face the eventuality of a failedPakistan. A failed Pakistan may be a disaster for the people of Pakistan, but not necessarily for the rest of the world.

10. It is important to constitute a contact group to work out alternative strategies with incentives as well as disincentives, with rewards as well as punishments. Such a contact group must be only of the victims of terrorism. A contact group, which seeks to bring together thevictims of terrorism as well as the perpetrator, will be a non-starter.

11. Obama's strategy has three components--- a counter-insurgency component for Afghanistan, a counter- terrorism component for use inPakistan and a counter-radicalisation component for use in the entire Af-Pak region. It is a mix of military and political measures. While themilitary measures will be largely implemented by the US and other NATO powers plus Australia, the regional role of countries such as India,China and Iran is sought to be restricted to the political component. They will have no say in the way the military measures areimplemented.

12. The US expectations that the international community will co-operate in implementing the unilaterally worked out US strategy can bebelied because the strategy offers no end in sight to the wave of terrorism of Pakistani origin faced by them. This is particularly true ofIndia. Even though the strategy projects Al Qaeda and its associates operating from sanctuaries in Pakistan as posing a threat to the worldas a whole, its objective is limited to preventing another 9/11 in US territory mounted from this region. It does not pay equal attention to theconcerns of India and other countries. The strategy is, therefore, unlikely to excite professionals in India. (30-3-09)

(The writer is Additional Secretary (retd), Cabinet Secretariat, Govt. of India, New Delhi, and, presently, Director, Institute For TopicalStudies, Chennai. E-mail: )

Tuesday, March 24, 2009



As the potentially provocative observance by the Chinese authorities of March 28 as "the Emancipation of Serfs Day" to mark the 50thanniversary of the end of the rule of His Holiness the Dalai Lama 50 years ago approaches, there are reports of continued unrest from the Qinghai Province, where His Holiness was born, and the Khampa areas of the Sichuan Province. The Khampas were in the forefront of theTibetan upising 50 years ago and the children and the grand-children of those who participated in that uprising have been following in theirfootsteps by continuing to refuse to accept the Chinese rule and to proclaim their loyalty to His Holiness.

2. Tashi Sangpo, a 28-year-old Tibetan monk of the Amdo Golok Ragya monastery in the Gyulgho township ( the Chinese call it Lajong),Machen county, Qinghai, who had been arrested by the Chinese security forces for keeping a picture of His Holiness and a Tibetan flag,escaped from police custody on the afternoon of March 21,2009, and allegedly committed suicide by jumping into the Machu river near thepolice station. When the news of his alleged suicide spread in the Ragya township, a large number of monks from the monastery and otherlocal Tibetans gathered outside the police station and demonstrated against the Chinese rule. They shouted slogans in support of Tibetan independence and calling for the return of His Holiness to Lhasa. While Tibetan sources claimed that about 2000 Tibetans participated inthe demonstration, the State-owned Hsinhua news agency has admitted in its report carried by the "People's Daily" and the "China Daily"that several hundred Tibetans demonstrated.

3. A despatch of the Xinhua disseminated on March 23,2009, stated as follows: " Police have arrested six and 89 others surrendered after ariot in Qinghai province on Saturday, the authorities said yesterday (March 22). Several hundred people, including nearly 100 monks from theRagya Monastery, attacked the police station in Ragya Township of the Tibetan Autonomous Prefecture of Golog on Saturday afternoon. Most of the people dispersed by 5 pm on Saturday and some 30 others were persuaded to leave in the early hours of yesterday. As of 9 amyesterday (March 22), police arrested six participants in the attack and 89 surrendered."

4. While the Chinese authorities have admitted the escape of the monk from police custody, they have not admitted that he committed suicide by jumping into a nearby river. They have accused the monks of the Ragya monastery of spreading rumours of his suicide in order toprovoke a riot.

5. Earlier, Xinhua had reported that "a bomb thrown by terrorists" hit a Government compound in the Ganzi Tibetan Autonomous Prefecturein the Sichuan province on March 16 shortly after midnight. It claimed that no one was injured.The blast took place in the Bogexi township,which is in Batang county.There have also been reports of the Khampas in the Kardze area of the Sichuan province starting what has beendescribed as a civil disobedience movement by refusing to cultivate their farms.

6. The Tibetan Autonomous Region continues to be totally cut off from the rest of the world with no news coming out regarding the situationin the region.

7.On the eve of the observance of the "Emancipation of the Serfs Day". the "People's Daily" of China published on March 23,2009, a signed article by Gyaincain Norbu, whom the Chinese have proclaimed as the 11th Panchen Lama after rejecting and arresting the Panchen Lama chosen by the Dalai Lama in accordance with the Tibetan traditions, in which the Chinese-nominated Panchen Lama appealed to the people in Tibet to support the leadership of the Communist Party of China (CPC) and to strengthen national unity. He wrote: ""As a descendant ofserfs in Old Tibet and the successor to the Panchen Lama Erdeni, I'm very excited as the whole country is celebrating the first Serfs Emancipation Day.Only the CPC could enable serfs in Old Tibet to enjoy dignity as human beings and freedom.As facts showed, Tibet could only achieve today's prosperity and development as well as a more beautiful future under the CPC leadership." (24-3-2009)

(The writer is Additional Secretary (retd), Cabinet Secretariat, Govt of India, New Delhi, and, presently, Director, Institute For Topical Studies,Chennai. He is also associated with the Chennai Centre For China Studies. E-mail: )

Monday, March 23, 2009



As I read the late night communication of the Election Commission to Varun Gandhi, son of Sanjay and Maneka Gandhi and grandson ofIndira Gandhi, and his reply to the Election Commission, I was reminded of the exchange of midnight missives between his illustriousgrandmother and the so-called Syndicate in the Congress before the Presidential elections in the late 1960s in which V.V.Giri, supported byher, was elected and Sanjiva Reddy, supported by the Syndicate, was defeated.

2. Indira Gandhi rightly viewed the machinations of the Syndicate as an attempt to marginalise her in the Congress Party and put a stop toher political aspirations. She fought back ferociously and ultimately prevailed. The Syndicate did not forgive her for this. When the Congresslost the elections after the lifting of the Emergency in 1977, the Syndicate had its moments of revenge. It got Sanjiva Reddy elected as thePresident and sought to humiliate her in every way possible. She ferociously fought back again and returned to power in 1980. Nobodyremembers the Syndicate. Its members have been consigned to the dustbin of history. Everybody remembers Indira Gandhi.

3.A grand-son of Indira Gandhi is now fighting ferociously against what he apparently sees as an attempt by a syndicate of so-calledsecularists to discredit him and crush his political aspirations even before he could take his first firm steps in politics. He has every right tofight. His grand-mother must be watching from heaven her grand-son fighting as ferociously as she did against what he perceives to be thedenial of the right of natural justice to him.

4.The extremely objectionable remarks alleged to have been made by Varun Gandhi during two pre-election meetings in the Philbitconstituency should be strongly condemned by all right-thinking persons as distasteful, irresponsible and unworthy of a political leader if itis established that he did make those remarks.

5. If he had not contested those remarks and, on the contrary, if he had tried to justify them, there would have been no need for a furtherenquiry before condemning him. But he has contested the remarks which he is supposed to have made and he has not justified them. Hehas challenged the genuineness of the tapes and alleged that the tapes have been doctored.

6. In TV interviews, he has given a number of arguments as to why he contended that the tapes had been doctored. Many of his arguments could be dismissed as after-thoughts but not one, namely, his contention that in a tape he is shown as referring to a sister of his whereashe had no sister. If what he says about the contents of the tapes is correct, there is a serious mistake of fact in the remarks which he isshown as making. Where there is such a serious mistake of fact, there is a presumption of innocence in favour of the accused. He has notbeen given the benefit of this presumption.

7. There are certain procedural infirmities in the way the Election Commission has passed its order of March 22,2009, against Varun. Thefirst infirmity arises from the fact that the Commission has passed an ex-parte order without giving Varun an opportunity to appear beforethe Commission and explain his conduct. An ex-parte order is permissible if a person against whom an enquiry is being made was given anopportunity to appear before the enquiry body and explain his conduct, but he did not do so. When a person fails to respond to a summonsto appear before an enquiry body and explain his conduct, he is presumed to be avoiding the due process of the rules or the law. There is anautomatic presumption of guilt against him.

8. All of us, including the distinguished members of the Election Commission, had served as bureaucrats. We had all done our training before we started our career. We had all attended courses in how to hold an enquiry and about the importance of being fair in an enquiry.There are detailed departmental orders in the Govt. of India and the States as to how to hold a fair enquiry. All these orders lay down thatevery person against whom an enquiry is held has a right for a personal hearing before the enquiry officer twice----- before the enquiry startsand again before an adverse ruling is pronounced by the enquiry officer. If Varun Gandhi is to be believed, these dos and don'ts of a fairenquiry were not followed in his case.

9. The second infirmity arises with regard to Varun's contention that the tapes seem to have been doctored. The Election Commission hasheld that it was for him to prove this. How could he have explained to the Commission as to why he thought that the tapes might have beendoctored if he was not given an opportunity for a personal hearing. There are two ways of proving that a tape must have been doctored----forensically or by pointing out serious mistakes of fact in the contents of the tape, which are glaring and could not have been made by him.It would have been but fair that he was given an opportunity to appear before the Commission and explain why he contended that the tapesmust have been doctored.

10.Priyanka Gandhi, another grand-child of Indira Gandhi, has reportedly advised Varun to read and understand the Gita better. She shouldtoo. In fact, all of us, who consider ourselves proud Hindus, should. In the Gita, Lord Krishna advises and convinces Arjun as to why oneshould sometimes fight even against one's kith and kin if there were strong moral grounds for doing so.

11. That is why Indira Gandhi fought ferociously against the Syndicate of the Congress.

12. If Varun thinks that he should emulate his illustrious grand-mother and fight ferociously against what he sees as the unfair attitude ofthe syndicate of so-called secularists against him, he has every right to do so.

13. Incidentally, if Varun is guilty of inciting hatred against the members of another community--- a charge that he denies strongly--- LordKrishna was guilty of inciting hatred among members of the same family. (24-3-09)

(The writer is former Additional Secretary (retd), Cabinet Secretariat, Govt. of India, New Delhi )

Sunday, March 22, 2009



Leon Panetta, who took over as the 19th Director of the Central Intelligence Agency (CIA) on February 13,2009, is presently on his firstoverseas tour. After having visited India from March 18 to 20,2009, he proceeded to Pakistan for discussions with Pakistani Army andintelligence officers and political leaders.

2.Panetta, who chose India for his first overseas visit since assuming office, arrived in New Delhi, along with Peter Burleigh, a 67-year-oldretired American career diplomat, who has been designated as the "Interim Ambassador" of the US to India . It has been reported that hewill act as the Charge d' Affaires (CDA) in the US Embassy in New Delhi till an Ambassador is nominated by President Barack Obama and hisnomination is confirmed by the Senate Foreign Relations Committee.

3. The Obama Administration is understood to have put all major decisions relating to India including political-level bilateral visits at Cabinetlevel and the designation of the new Ambassador on hold till the elections to the Lok Sabha, the lower House of the Indian Parliament, are over and a new Government is in position in New Delhi by May-end. However, this decision would not affect exchange of visits at the seniorlevel of bureaucrats. Moreover, Prime Minister Dr. Manmohan Singh is due to meet President Barrack Obama for the first time in the marginsof the G-20 summit at London next month.

4. Panetta, whose parents had migrated to California from Italy, had served as a member of the House of Representatives from one of theconstituencies of California, from 1977 to 1993. He served as the Chairman of the Budget Committee of the House for the last four years ofhis term in the House. He then became Director of the Office of Management and Budget. From July 1994 to January 1997, he served as theChief of Staff to the then President Bill Clinton.

5. As the White House Chief of Staff, he became close to Bill and Hillary Clinton. It is believed that he stilll maintains this close personalfriendship with the Clintons and that Bill Clinton played a role in the surprise decision of Obama in January last to nominate him as the newDirector of the CIA, despite the fact that the 70-year-old Panetta, who has become the oldest chief of the CIA in its history, has never hadany exposure to professional intelligence work except for three years from 1964 to 66 when he had served as an army intelligence officer.His area expertise is limited to Iraq. He had served as a member of the bipartisan Iraq Study Group set up by the Congress in 1996 to makean independent assessment of the war in Iraq.

6. Obama's nomination of a non-professional with no past exposure to the work of the CIA as the new Director came in for criticism not onlyfrom some retired officers of the US intelligence community, but also from some members of the Congressional Intelligence OversightCommittees. Despite this, his nomination was confirmed and he took over as the new Director. In his first address to the CIA officers aftertaking over, Panetta, who has a keen sense of humour, referred jocularly to references to him in some sections of the media as the oldest Director of the CIA and reportedly pointed out that the dog, which won a popular annual dog show this year, was 10 years old.

7. It is believed that Obama chose him as the Director because of his excellent reputation in the past as a good manager. Knowledgablepeople say that Obama, who is keen to tone up administration and man management in the CIA and rid it of unethical practices in the waragainst terrorism, felt that only an outsider would be able to do it without covering up past unethical practices. Moreover, under GeorgeTenet as the Director during the invasion and occupation of Iraq, the CIA had come in for criticism for avoiding projecting the true groundsituation to President George Bush. It allegedly told Bush and his Vice-President Dick Cheney what they liked to be told and not what theyought to have been told. Panetta is expected to correct the analytical methods of the CIA in order not to let its reports and analyses beinfluenced by the preconceptions of the President.

8. In his first message to the CIA officers, Panetta has been quoted as saying: "When President Obama asked if I would accept thisassignment, he said he wanted someone he could trust, who was independent, and who would call them as he sees them. Throughout my40-year career in government, I have made it a point to speak honestly to my colleagues, my coworkers, my constituents, and my President.I hope that we can speak honestly to each other and to those we serve."

9. Till 2004, the Director of the CIA was also the Director, Central Intelligence, and in that capacity, in addition to running theCIA,co-ordinated the working of the entire intelligence community. In 2004, acting on a recommendation of the National Commission, whichenquired into the 9/11 terrorist strikes, Bush separated the two functions and created a separate and a higher level post of Director NationalIntelligence to handle the work of co-ordination. From the pre-2004 status of the first among equals, Director CIA has now become oneamong equals in the intelligence community. Despite this, he occupies a very high position in policy-making relating to national securityand in that capacity, Panetta will be in the inner core of Obama's advisers.

10. If Obama chose Hillary Clinton, Secretary of State, to pay the first overseas visit at the Cabinet level to Japan, South Korea, Indonesiaand China to underline the importance attached by his administration to this region, it is significant that the first overseas visit of an innercore policy adviser has been to India and Pakistan. This underlines the importance attached by Obama to the US relations with India and tothe importance of Pakistan from the point of the fight against terrorism.

11. It is interesting that the CIA, India's Research & Analysis Wing (R&AW) and Intelligence Bureau (IB) are having new heads who took overduring the course of the last 11 weeks.Rajiv Mathur, a career intelligence officer, took over as the Director of the IB, on January 1,2009, K.C.Verma, as Secretary (R), the head of the R&AW, on February 1,2009, and Panetta as the Director of the CIA on February 13,2009. WhereasPanetta is totally new to the profession, Mathur and Verma have over two decades of exposure to professional intelligence work. Theywould have got going from the moment they took over, but Panetta will take time to get a hang of the operatuional work before he is able toimpart his stamp.

12. It is equally interesting to note that just as Obama nominated Panetta as the chief of the CIA to tone up its man management andadministration and to rid it of unhealthy practices, the Manmohan Singh Government reportedly inducted K.C.Verma from the IB to the R&AWwith a similar objective. There has been as much criticism of the internal functioning of the R&AW as there was of the CIA.

13. One could assess without fear of contradiction that the New Delhi visit of Panetta, who is still to find his feet as an intelligence chief,would have had a much larger political objective for Obama. Firstly, to reassure Indian leaders that the first visit of Hillary Clinton to Chinadoes not mean the downgrading of the US relations with India. Secondly, to reassure India of continued US assistance in the investigationof the 26/11 terrorist strike in Mumbai and continued US pressure on Pakistan to investigate the case seriously and sincerely. Thirdly, toassess the pre-election political scene in India for his President.

14. The nomination of Burleigh as an "interim Ambassador" and CDA and his travelling together with Panetta to New Delhi underline the USinterest in monitoring and assessing the pre-election political scene. The Obama Administration's avoidance of any major policy initiativesand pronouncements with regard to India is motivated by its desire to keep its options open and not to burn in advance its bridges with anydispensation coming to office in New Delhi after the elections. The US has many retired diplomats , who had spent many years of theircareer in the sub-continent. All of them are quite knowledgeable on India--- but each only on some aspects of India.Some are knowledgeableon the Congress Party, some on the BJP and its Hindutva group amd some others, who had served in the sub-continent in the cold waryears, are knowledgeable on the communist parties and their suspected links with the then USSR and China.

15. Burleigh belongs to the third category. He had his first exposure to the sub-continent as a Peace Corps volunteer in Nepal in the early1960s. From the Peace Corps, he gravitated to the State Department and spent some years of his diplomatic career in Nepal, India and SriLanka. As a junior diplomat, he had served in the US Embassy in Colombo from 1968 to 1970 and in New Delhi from 1973 to 1975. He alsoserved as the US Ambassador to Sri Lanka from 1995 to 1997. In one of the web sites of the old Peace Corps volunteers, he had enteredthe following post about himself: "After graduating from Colgate in 1963, I spent two years as a Peace Corps Volunteer in Nepal, then a yearof graduate study in South Asian affairs at the University of Pennsylvania, and another year in Nepal on a student Fulbright grant. On returning from Nepal in 1967, I joined the State Department and was assigned -- you guessed it -- to Sri Lanka, where I was a junior officer trainee until 1970. I learned the language, Sinhala, at that time and, courtesy of Senator Jesse Helms (who, as chairman of the Senate Foreign Relations Committee, held up final confirmation of 35 of us), was able to spend another seven months in 1995 resurrecting that language ability. I use the language a lot, with Buddhist monks and village people in particular. English is widely used in government and the commercial sector of the economy. Between 1970 and December 1995 I served in India, Bahrain and Nepal in positions of increasingseniority, and for the past 13 years I was in Washington in a series of jobs. These included three deputy assistant secretary positions aswell as coordinator for counter-terrorism. The last position carried with it ambassadorial rank, though I was based in Washington. "

16. When he was posted in the US Embassy in New Delhi from 1973 to 75, the Indian communists and anti-US magazines like the "Blitz"used to accuse him of being a CIA officer working under a diplomatic cover. While it is difficult to prove this, it needs to be noted that hehad served as the Counter-Terrorism Co-ordinator in the US State Department in Washington DC in 1991-92. Past holders of this post had aCIA or FBI background,

17. It is intriguing that the Obama Administration should have taken an old cold warrior such as Burleigh out of the circuit of retireddiplomats and sent him to New Delhi to hold the fort in the US Embassy during the pre-poll interregnum. Has he been sent to monitor andassess the chances of the Third Front and the likely impact on India's policy towards the US should the Third Front which has thecommunists as partners come to power? A valid question, but difficult to answer. The Congress (I) and the BJP are known quantities to theState Department and the US wouldn't be unduly concerned if either of them comes to power at the head of a coalition. But the Third Frontwith its Communists is an unknown kettle of fish.

18. Panetta's visit to New Delhi during which he had publicised meetings with P.Chidambram, the Home Minister, in addition to meetingswith M.K.Narayanan, the National Security Adviser,K.C.Verma,and Rajeev Mathur, has been criticised by the Communist Party of India(Marxist).In a statement, the party’s Polit Bureau said this was the first time that the CIA chief was accorded a meeting with the Union HomeMinister. Apart from meeting his intelligence counterparts in India, Panetta was received at the political level, signalling the new status ofthe CIA in India. It added: “The CIA is notorious for its interventions in the political affairs of various countries including destabilisinggovernments considered inimical to U.S. interests.The development is a pointer to how things have changed under the Manmohan SinghGovernment. India is fast becoming like Pakistan where the CIA and the FBI chiefs meet with the Interior Minister and Prime Minister. The role being played by the U.S. security and military agencies in the country and the manner in which the Congress-led Government ispromoting such ties should be a matter of serious concern for all those who wish to protect national sovereignty and the integrity of thecountry’s democratic system."

19.The Indian intelligence has been having a liaison relationship with the CIA since the days of Jawaharlal Nehru. This was handled by theIB till September,1968, and thereafter by the R&AW. Many CIA chiefs had visited India in the past. Their visits used to be graded as topsecret. Their programme in New Delhi used to be restricted to professional discussions with the heads of the IB and the R&AW and acourtesy call on the Prime Minister.

20. This was for security and political reasons. Before international terrorism became a majour source of concern, the securty reasonsmainly related to possible threats to the physical security of the visiting CIA chief from the intelligence agencies of the communistcountries. After the collapse of the USSR and other communist regimes in East Europe and after the normalisation of the US relations withChina, this concern is no longer there. But, since the late 1980s, terrorism has become a major source of concern. CIA officials responsiblefor the security of their Director and their officials posted in India for liaison purposes used to prefer that the visits be kept secret. Indianagencies too preferred secrecy because they were rightly concerned that if the visits were open, jihadi terrorist threats to India and to USnationals and interests in India, including to the US diplomatic and consular missions in India, might increase.

21. This position started changing when Atal Behari Vajpayee was the Prime Minister. The visit of George Tenet, the then Director of theCIA, to India was kept a secret, but the visits of the No.2 to Tenet subsequenly were publicised. L.K.Advani, the then Home Minister, cameto be associated with the visits of CIA officials to New Delhi. Their programmes included a courtesy call on the Home Minister. Not only that,Advani too, during his visit to the US in 2002, reportedly called on Tenet in his office. This caused some eyebrow-raising because while it isnormal for a visiting bureaucrat --- as a CIA Director is---to call on important political leaders of the host country, it is unusual for a seniorpolitical leader ranking No.2 in the Government to call on a bureaucrat of the host country. Pakistani leaders, in their eagerness to cultivatethe US, do it often, but Indian leaders had not done it in the past. There was some unhappiness in sections of the Indian intelligencecommunity that this could downgrade the importance and status of Indian intelligence chiefs in the eyes of their US counterparts. If US intelligence officials have easy access to our senior Ministers, why should they bother about our intelligence chiefs?

22. Panetta's visit to Pakistan is evidently related to the messy political situation there and to the on-going review by the ObamaAdministration of its strategy to counter Al Qaeda and the Taliban. There is a general acceptance among the advisers of Obama that nostrategy can succeed without the co-operation of Pakistan and that, at the same time, exercising too much pressure on Pakistan can provecounter-productive and add to the political instability. The search for a credible policy of carrots (enhanced military and economic aid) andsticks (continuing Predator strikes and threats of more if the Pakistan Army does not act) is still continuing. The CIA plays an important rolein this search. The Predator strikes----over 30 since last September and 6 of them since Obama assumed office---- are handled by the CIA.Obama has not yet taken a policy decision on the recommendation by his advisers to extend the Predator strikes to attack the hide-outs ofthe Neo Taliban of Afghanistan in Balochistan. There has been strong opposition to this extension not only from Pakistani political andmilitary leaders, but also from some US analysts and Congressmen, who fear this could turn messy and add to the political instability inPakistan. If Obama ultimately decides to extend the strikes to Balochistan, the CIA will have to co-ordinate them. One of the purposes ofPanetta's visit will be to make an on-the-spot assessment of the implications before a final decision is taken. (22-3-09)

(The writer is Additional Secretary (retd), Cabinet Secretariat, Govt. of India, New Delhi, and, presently, Director, Institute For TopicalStudies, Chennai. E-mail: )

Thursday, March 19, 2009



The second session of the Second Plenary of the 11th National People's Congress (NPC) of China , which is its Parliament, was held atBeijing from March 3 to 12,2009. There were detailed discussions in the NPC on the state of the nation as reported by Prime Minister WenJiabo and other Ministers. President Hu Jintao, Wen and other important members of the Government and the Chinese Communist Party alsoavailed of the presence in Bejing for the NPC session of Government and party representatives from different provinces to discuss with therepresentatives from each province in the margins of the NPC session the state of the economy in each province. They explained to therepresentatives from the provinces the measures already taken by the Government to deal with the decrease in exports, the closing downof many factories and the consequent increase in unemployment and gave guidance as to how the provinces should deal with the situation.

2. A study of the proceedings of the NPC session and of the discussions in the various interactions held by Hu, Wen and others in themargins of the NPC session indicate that the just-concluded session was largely taken up by issues relating to the economy and internalsecurity. This was indicative of the concern of the Chinese leadership over the likely impact of the economic decline on the internalsecurity situation due to the increase in unemployment and fall in the prices of agricultural accommodities due to a decrease in thepurchasing power of the people.

3. On a rough estimate, a little more than 50 per cent of the discussions was devoted to the state of the economy and about 20 per cent tothe internal security situation, including the situation in Tibet. Only the remaining 30 per cent of the discussions was devoted to otherissues. The work of the Ministry of Public Security, which is responsible for internal security, received much greater attention than the workof other Ministries.

4. It must be said to the credit of the Chinese leaders that they were quite transparent during the discussions in the NPC session as well asin the margins of the NPC session. They frankly admitted the difficulties faced by the economy,without any attempt to cover them up. At thesame time, it was pointed out that the difficulties arose due to the US mismanagement of its financial sector, which has affected andcontinues to affect all global economies for no fault of their leaders. It was explained that the difficuilties faced by China were not due toany mismanagement by its policy-makers. It was also highlighted that the Chinese banks and other financial institutions are in a good stateof health and that China's problems are radiating from the manufacturing sector, which had become over-dependent on the externalmarket---particularly the US market.

5. While there is an understanding of the need for developing the domestioc market, which was neglected till now, the Chinesepolicy-makers do not seem to realise that this is difficult in a time of declining purchasing power of the Chinese families and the consequentdecline in demand. The decline in the purchasing power of the Chinese families is due to about 20 million Chinese, who were gainfullyemployed till November last, losing their jobs and another 7.1 million new entrants to the job market finding it difficult to get a job. TheChinese policy-makers are hoping to create nine million new jobs during 2009 under their stimulus package (US $ 585 billion) announced inNovember last. Even if they succeed in doing so, there will still be about 18 million unemployed left.

6. To transform the vast rural China into a consumer market, producers of automobiles, domestic appliances etc are being encouraged totake their accumulated stocks to the countryside and sell them to the rural people. But when people have less and less money to buy eventheir essential requirements, there are very few takers for such goods in the countryside.

7. The Chinese are juggling with two mutually contradictory objectives. Firstly, how to restructure their manufacturing sector in order toenable it to look more inwards than in the past? Secondly, how to retain China's present share of the global trade, which has enabled it overthe years to earn the money for its military expanasion and modernisaion? For the retention of China's newly-acquired status as a globalpower, it is important for it not to lose its share of the global trade. They have not come out with a satisfactory policy, which could meetboth these objectives.

8. There are two possible sources of social tensions which could have an impact on the internal security situation. The likelihood oftensions arising from the serious unemployment situation has already been noted by experts in China as well as outside. The otherlikelihood of tensions in the rural areas due to the income of the rural families being hit by the fall in commodity prices has not received therequired attention. There has been a lot of focus on the likelihood of urban tensions, but not enough focus on likely rural tensions. A studyof Chinese history would show that successful mass uprisings started from the rural areas.

9. The other question left undiscussed is how the decline in the flow of inputs such as fertilisers to farming would affect China's agriculturalproduction in the short and medium terms. Job security has already become a grave issue. Can food security emerge as an equallyworrisome issue?

10. The Chinese are gratified by the US request as conveyed by Mrs.Hillary Clinton, the US Secretary of State, during her visit to Beijing fromFebruary 20 to 22,2009 that they should continue to invest their foreign exchange reserves in US Treasury Bonds. At the same time, theyhave made it clear that their decision in this matter will be decided by their national requirements. If the stimulus package announced lastNovember does not halt their economic decline, they may have to initiate another stimulus package. To fund it, they may have to dip intotheir foreign exchange reserves.This is not the time to divert more reserves to the US bond market. They have been making this pointrepeatedly even in the past weeks before Hillary Clinton's visit.

11. Briefing the media on the NPC session on March 13,2009, Prime Minister Wen indicated another reason for the Chinese caution on theissue of investing more in the US bonds---- namely, their misgivings about the continued stability of the US dollar. Wen said: " "We lent suchhuge fund to the United States and of course we're concerned about the security of our assets and, to speak truthfully, I am a little bitworried. On the foreign reserves issue, the first consideration is the national interest. But we also have to consider the stability of theoverall international financial system, as the two factors are interlinked. China is indeed the largest creditor of the United States, which isthe world's biggest economy. We are extremely interested in developments in the U.S. economy. We are watching the effect of themeasures taken by the U.S. Government to counter the international financial crisis."

12. US policy-makers have hastened to reassure Beijing about the stability of the US dollar. In a speech at the Brookings Institution inWashington DC on March 13,2009, immediately after Wen's press conference in Beijing, Larence Summers, Obama's top economic advisor inhis capacity as the Director of the National Economic Council (NEC), said: "The U.S. would be sound stewards of the money we invest. This is a commitment that the President has made very clear --we need to be sound stewards of the money we invest."

13. Are the Chinese leaders satisfied by this assurance? One has to wait and see. They would prefer to watch for the impact of Obama'spolicies on the US banking sector before taking any decision on an increase in investments in the US bonds. In November last, the totalvalue of the Chinese holdings of the US Bonds was estimated at US $ 681.9 billion.

14. While studying the remarks of the Chinese leaders during the NPC session, one could detect an under-current of concern that theconservative anti-reform elements in the party and the Government might try to exploit the current difficulties by blaming them not on theUS mismanagement of its banking sector, but on the Chinese policy of economic reforms and globalisation itself. It was repeatedly stressedthat there would be no going back on the reforms and that China should continue to adhere to its policy of opening up its economy. (20-3-09)

(The writer is Additional Secretary(retd), Cabinet Secretariat, Govt. of India, New Delhi, and, presently, Director, Institute For Topical Studies,Chennai. He is also associated with the Chennai Centre For China Studies, E-mail: )

Tuesday, March 17, 2009



In an apparent last-minute, late-night climb-down, President Asif Ali Zardari of Pakistan agreed on March 16,2009, to reinstate as the Chief Justice of the Pakistan Supreme Court Iftikhar Muhammed Chaudhury who was twice removed from office by the then President Pervez Musharraf in March and November,2007. His reinstatement will take effect after the present Pervez Musharraf-appointed Chief Justice Abdul Hameed Dogar reaches the age of superannuation on March 21,2009.

2. There were earlier reports that Zardari was contemplating to give Dogar an extension.The unprecedented support for Iftikhar Muhammed Chaudhury not only from the community of lawyers, but also from large sections of the people mobilized by the Pakistan Muslim League (Nawaz), has forced him to accept the demand for his reinstatement. Pressure from the Army and the US to avoid a violent street confrontation on the issue has also forced his climb-down.

3. The events leading to this climb-down would strengthen the misgivings not only in Pakistan, but also in the US about Zardari’s leadership qualities. He brought this humiliation upon himself by his ill-advised attempts to undermine the political position of Nawaz, his brother Shahbaz Sharif and their PML (N) in Punjab. For this purpose, he allegedly manipulated a ruling by a bench of the Supreme Court consisting of judges appointed by Musharraf disqualifying Nawaz and Shahbaz from holding any elected office. The bench gave the ruling on the ground that Nawaz was a convict in a case filed against him by Musharraf after seizing power in October,1999, and that Shahbaz was a co-accused in a case relating to the death of a person at the hands of the police when he was the Chief Minister of Punjab before the 1999 coup.

4. Allegedly acting on the wrong advice of his cronies, Zardari tried to take advantage of the ruling to have the PML (N) removed from power in Punjab and to have an engineered coalition consisting of his Pakistan People’s Party (PPP) and the PML (Qaide Azam) created by Musharraf in 2002 to defeat the PPP and the PML (N) inducted into power. His attempts, made through Salman Tasheer, the Governor of Punjab, who is a crony of Zardari as well as Musharraf, boomeranged.

5. The fresh agitation by the lawyers for the reinstatement of Chaudhury, the date for which had been announced by them long before the events in Punjab, might not have assumed the dimensions of a people’s revolt against Zardari but for his failed attempt to capture power for his party in the Punjab through engineered defections from the ranks of the PML (N) and back room manipulations with the complicity of some sections of the Musharraf-appointed judiciary.

6. The last elections to the National Assembly held in February,2008, two months after the assassination of Benazir Bhutto, surprisingly showed that the sympathy wave for her was confined to the rural constituencies of Sindh. The PPP failed to do well even in its traditional support bases in southern Punjab, largely inhabited by the Seraikis. The sympathy wave in Punjab was more for Nawaz because of the way he was sought to be humiliated by Musharraf after the coup. The PML (N) won many more seats in Punjab than the PPP. Even the Rawalpindi area, where Benazir was assassinated, voted for the PML (N).

7. The resulting polarization between Sindh, dominated by Altaf Hussain’s Muttahida Qaumi Movement (MQM) and the PPP, and Punjab dominated by the PML (N), set in motion the train of events which ultimately led to the humiliation of Zardari. The action of Zardari in going back on his pre-election commitments made to the PML (N) in matters relating to the reinstatement of the sacked Chief Justice and abolishing, through a constitutional amendment, the powers of the President to dismiss an elected Prime Minister and dissolve the National Assembly exacerbated his personal differences with Nawaz.

8. The old Bhutto loyalists in the PPP, including Yousef Raza Gilani, the Prime Minister, who is a Seraiki, were uncomfortable about the erratic decisions of Zardari on the advice of a small coterie of persons such as Rehman Malik, the Adviser for Internal Security, Salman Taseer and Farook H.Naek, his former lawyer in the corruption cases, whom Zardari made the Minister for Law and then had him elected as the Chairman of the Senate, the upper House of Parliament. The Bhutto loyalists were shocked by his action in choosing Naek for election as the Senate Chairman, overlooking the claims of Raza Rabbani, an old Bhutto loyalist, who was held in great respect in the party. Rabbani resigned in protest from his post of Minister For Inter-Provincial Co-ordination.

9. The people’s uprising on the issue of the reinstatement of the sacked Chief Justice and the growing discontent in his own Party over the way he sought to marginalize old Bhutto loyalists created a situation, where he found himself isolated. The erosion of whatever little support he had in his party and in the country as a whole and the growing unease in the Army and the US over the implications of his policies and actions for the stability of Pakistan and the fight against terrorism created a situation where his humiliating climb-down became inevitable.

10. Unfortunately, Zardari is not known to be a man who learns from his mistakes. He tends to repeat them. Comments by persons close to him show that he and his cronies look upon the concessions made by him not as a climb-down, but as a tactical retreat to avoid a street confrontation, which might have triggered off an intervention by the Army. While he may have no other option but to restore the PML (N) to power in Punjab, he is likely to resist the demand of the PML (N) and others for a constitutional amendment to abolish his powers to dismiss the Prime Minister and dissolve the National Assembly. As he did in the past, he would create an impression as if he is keen to abolish these powers, but is prevented from doing so by the lack of two-thirds support for a constitutional amendment in the National Assembly. What one saw on March 16 was only the end of Act I of the political drama in Pakistan. Act II could start over the issue of the abolition of the special powers of the President.

11. Pakistan is in for a spell of weak and manipulative leadership by a leader without much public support, but trying to survive through political manipulations. This will aggravate the already serious security vacuum in the country and give fresh oxygen to the various terrorist groups operating from the Pakistani territory. At a time when the Barack Obama administration is embarked on formulating a new strategy to end the political and security vacuum in Afghanistan, it is faced with the danger of a similar vacuum in Pakistan.

12. If Pakistani public opinion has to have a say as to who should be its ruler, its choice will be on Nawaz Sharif. After having seen the huge mess created by Zardari within six months of taking over as the President, the Army too would prefer Nawaz despite his attempts in October,1999, to humiliate Pervez Musharraf, his Chief of the Army Staff, by dismissing him while he was abroad and unsuccessfully trying to prevent his return.

13. US thinking will have a say in influencing the Army’s position. Zardari has given the US a free hand in the tribal belt to attack terrorist hide-outs with its fleet of Predator aircraft. Zardari is amenable to US advice on the fight against terrorism. There have even been reports that he and Gen.Ashfaq Pervez Kiyani, his Chief of the Army Staff, have allowed the Central Intelligence Agency, to use bases of the Pakistan Air Force for launching the Predator strikes.

14. It is very likely that if Nawaz comes to power, he may not be as amenable to US requirements as Zardari has been. On more than one occasion, Nawaz has expressed the view that the present terms of the co-operation with the US need to be reconsidered without weakening the over-all fight against Al Qaeda. Zardari owes a huge debt to the US for persuading Musharraf to issue the National Reconciliation Ordinance (NRO) under which the pending cases against him and his wife were withdrawn.

15. Nawaz owes no such debt to the US. He is likely to be more independent and less accommodating with the US. Would the US continue to facilitate the continuance of Zardari in power because he is willing to do its bidding or will it remove itself from the way of Nawaz coming to power, realizing that a stronger and more popular ruler would help US interests strategically than a weak and unpopular ruler who could prove to be detrimental to US interests tactically as well as strategically?

16. On the answers to this question would depend what happens under Act II of the Pakistani drama. A dark horse will be Prime Minister Gilani, who has emerged with an enhanced image from the present crisis by virtue of his having distanced himself from the decisions of Zardari relating to Punjab. If Gilani has to be built up into a more assertive ruler, the special powers of the President have to be abolished. This can be done only if the PML (N) and the Bhutto loyalists in the PPP join hands. The prospects of this happening are rather low now.

17. Pakistani co-operation with India in the investigation of the 26/11 terrorist strikes in Mumbai and in acting against the anti-India terrorist infrastructure in Pakistani territory will be even more uncertain than it has been hitherto. More terrorism against India by groups taking advantage of the huge mess and political and security vacuum in Pakistan is a distinct danger. (17-3-09)

(The writer is Additional Secretary (retd), Cabinet Secretariat, Govt. of India, New Delhi, and, presently, Director, Institute For Topical Studies, Chennai. E-mail: )

Monday, March 16, 2009




Extract from my article dated August 27,2008, titled "After Tricky Mush, Tricky Zardari" at

The US and Musharraf, in their own ways, have been trying to ensure that Zardari is elected (as the President) and Nawaz is marginalised. Like Zardari, the US does not want the reinstatement of Iftikhar Mohammad Chaudhury since he was keen to enquire into the cases of missing Pakistanis, many of whom were informally and illegally handed over by Musharraf to the US intelligence on suspicion that they were having contacts with Al Qaeda. The US feels uncomfortable with Nawaz for the reason that he has been calling for major changes in the policy of co-operation with the US against Al Qaeda and the Taliban followed by Musharraf.

Even though the US does not rate highly Zardari's leadership qualities, it prefers him to Nawaz because of his willingness to maintain Musharraf's policy of co-operation with the US in its so-called war against terrorism in Afghanistan and his perceived amenability to pressure by the US because of its role in persuading Musharraf, when he was the President, to issue the NRO ( National Reconciliation Ordinance). The US is also hopeful that, unlike Nawaz, Zardari will avoid any humiliation of Musharraf and will let him continue to live in Pakistan without fearing any harassment by the Government.

Musharraf has not been inactive since his resignation. According to well-informed MQM sources, he played a role in persuading Altaf Hussain to support Zardari as the President. Musharraf has similarly been trying to persuade the PML (QA---Qaide Azam)) to withdraw its candidate and support Zardari.

After 9/11, the US tried to project Musharraf as its frontline ally in the war against terrorism. He did co-operate, but not whole-heartedly. It is now hoping that if elected as the President, Zardari will co-operate with it without reservations. Zardari is giving the impression that he will. It is most likely that he will turn out to be as insincere as Musharraf. He will give the impression of co-operating while avoiding it in effect.

Extract from my article dated October 9,2008, titled "President Zardari---Forward & Backward" at

While his (Zardari's ) instincts in relation to India seem to be refreshingly different from those of his predecessors----even from those of Benazir who instigated terrorism in Kashmir when she was the Prime Minister---- his grasp of the ground realities in Pakistan is weak. The ground realities are determined by four entrenched mindsets, which have always been opposing any fresh thinking on the relations with India. These entrenched mindsets are those of the Army, the intelligence community, the Foreign Office and sections of the political class with a close nexus to the Army and the intelligence community.

Unless these entrenched mindsets are made to change, new thinking alone, however welcome, will remain just loud-thinking without any follow-up action. To be able to translate any new thinking into action, Zardari has tro stabilise his position as the President, acquire a popular image and acquire the ability to enforce his will on these entrenched mindsets. No previous political leader of Pakistan was able to acquire such an ability and had to ultimately bow to pressure from the Army, the intelligence community and the Foreign Office.

Zardari has been the President hardly for a month and it is too early to say whether he would be able to bring about such a change in the mindsets. India has to keep patience with him without expecting quick policy changes. At the same time, it should not lower its guard till the ultimate reality emerges---- is it refreshingly new or more of the same as seen in the past?

The current position in Pakistan is complicated by the emergence of a fourth important power ---- Al Qaeda. The future of Pakistan is going to be determined by a configuration of four As---Allah, the Army, America and Al Qaeda. The outcome of the fight between the Army and America on the one side and Al Qaeda on the other will determine whether Zardari's tenure will see a change for the better or the worse in Pakistan.

Extract from my article dated February 28,2009, titled " PAKISTAN BACK TO BEING PAKISTAN" at

The US has reasons to be concerned over the developments in Pakistan. There is a trust deficit between it and Nawaz. It continues to back Zardari who has shown himself to be as amenable to US wishes as Musharraf, if not even more. It continues to encourage Gen.Kayani to back Zardari. But Zardari's mishandling of the political situation could come in the way of the US operations against Al Qaeda and the Taliban at a time when the Obama Administration is re-tooling its Afghan strategy

Extract from my article dated March 14,2009, titled "ASIF ALI ZARDARI : WHAT A MESS! " at

No other leader of Pakistan has ever created such a huge political mess in such a short time as President Asif Ali Zardari has. What the late Zulfiquar Ali Bhutto took six years to destroy, Zardari has destroyed in six months as the President----- namely, the credibility of Pakistan as a State, its institutions and its unity as a country and as a people.

( The writer is Additional Secretary (retd), Cabinet Secretariat, Govt. of India, New Delhi, and, presently, Director, Institute For Topical Studies, Chennai. E-Mail: )




Extract from my article dated July 22,2007, titled " PAKISTAN-Musharraf Bruised But Not Beaten" at

Pakistan's judiciary was generally subservient to the executive, whether it was under political or military leadership. Political leaders suchas the late Zulfiquar Ali Bhutto, Mrs.Benazir Bhutto and Mr.Nawaz Sharif were as arbitrary and as ruthless in imposing their will on thejudiciary as Gen.Zia-ul-Haq and Gen.Musharraf were.

It goes to the credit of Chief Justice Iftikhar Muhammad Chaudhry that he broke from this past habit of subservience. Even last year, he hadruled against the manner in which the Executive had privatised the Pakistan Steel Mills. He followed this up by entertaining public interestpetitions from the relatives of dozens of missing persons, many of whom were suspected to have been illegally arrested by theInter-Services Intelligence (ISI) and handed over to the US authorities on suspicion of their being terrorists.

It was his interest in the whereabouts of missing persons-----many of them allegedly in the US detention centre in Guantanamo Bay in Cuba---which set the alarm bells ringing in the offices of Musharraf and the ISI. Added to this was the fear that his repeatedly demonstratedindependence might come in the way of Musharraf getting himself re-elected as the President by the present National Assembly, whoseterm expires later this year, instead of seeking re-election after a new National Assembly has been elected. Musharraf was also afraid thatthe Chief Justice might debar him from giving himself another extension as the COAS when the present one expires in December next.Under Pakistan's electoral laws, a serving government servant cannot contest elections.Musharraf has repeatedly exempted himself fromthis provision in order to hold double charge as a serving COAS and an "elected" President, which is totally unconstitutional.

If the past subservience of the judiciary has been broken, the credit for this should entirely go to the Chief Justice. He refused to beintimidated by Musharraf, Prime Minister Shaukat Aziz and the heads of the Intelligence agencies. His defiance of Musharraf electrified thelawyer community and large sections of the public and he became an iconic figure for those demanding the restoration of democracy andthe exit of Musharraf and the Army from power. Successful defiance of a dictator has an infectious effect. Not only large sections of thepeople, but also many members of the judiciary started defying the executive and the army. Some resigned in solidarity with the ChiefJustice and some others stayed in office and expressed their defiance in other ways. It was this spread of the spirit of defiance to theserving judges of the Supreme Court, which has now resulted in the setting aside of Musharraf's orders suspending the Chief Justice andrestoring him to his high office.

Musharraf found himself with no other alternative, but to accept the verdict in seeming good grace. It is a blow to his prestige, but the blowneed not necessarily be fatal so long as he continues to enjoy the support of the senior officers of the Armed Forces and so long as publicmobilisation against him does not have a snowballing effect. The lawyers and other opponents of Musharraf managed to mobilise largesections of the public by exploiting the iconic figure of a Chief Justice arbitrarily thrown out of his job. With the Chief Justice now back in hisjob, they no longer have an iconic figure out in the streets whose image they can exploit. They now have to look for issues, which they canexploit for keeping the anti-Musharraf crowds mobilised.

(The writer is Additional Secretary (retd), Cabinet Secretariat, Govt. of India, New Delhi, and, presently, Director, Institute For TopicalStudies, Chennai.



Extracts from my article dated November 28,2007, titled "Musharraf Minus the Uniform" available at

Will Kiyani be able to deliver if not bin Laden and Zawahiri at least others such as Mulla Mohammad Omar, the Amir of the Neo Taliban, Baitullah Mehsud, who is the de facto ruler of South Waziristan, and Maulana FM Radio Fazlullah,the de facto ruler of the Swat Valley?

Kiyani comes to office as the COAS (Chief of the Army Staff) with impeccable credentials. He has the distinction of being the first Director-General of the Inter-Services Intelligence (ISI) to be appointed as the COAS since Pakistan became independent in 1947.Ehsanul Haq was also the DG, ISI, before he became the Chairman, Chiefs of Staff Committee. Kiyani is the son of a non-commissioned officer (NCO) of the Army. His humble background as the son of an NCO has endeared him to the junior ranks of the Army. At a time, when there are signs of some demoralisation in the junior ranks fighting against Al Qaeda and other jihadi organisations in the Pashtun belt, high hopes will be placed on him for reversing the process of demoralisation.

Kiyani is also a non-controversial officer, who had in the past not come to notice for any dubious association with the Taliban or Al Qaeda or any of Pakistan's fundamentalist organisations. He was liked by the political leaders, who were attracted by his unassuming nature and humble demeanour. A man of few words, he is quite a contrast to Musharraf, a braggart. His reputation as an apolitical officer went up during the recent controversy over Musharraf's suspension of Chief Justice Iftikhar Mohammad Chaudhury of the Pakistan Supreme Court. Knowledgeable sources said that at the meeting held at Musharraf's office in March, 2007, at which the decision to suspend him was taken, Kiyani was the only person, who kept quiet and did not utter a word either in support of Musharraf's decision or in criticism of the Chief Justice. It was also reported that he kept the ISI out of this unsavoury controversy and that it was the Directorate-General of Military Intelligence and the Intelligence Bureau, which played the leading role in the campaign to denigrate the former Chief Justice, which ultimately boomeranged on Musharraf.

Kiyani, who joined the Pakistan Army in 1970, started his career in the Baloch Regiment as an infantryman. He did not come to public notice till Mrs. Benazir Bhutto, during her first tenure as the Prime Minister (1988-90), chose him as her Deputy Military Secretary. The two have since maintained their personal friendship despite the ups and downs in her political career.

Kiyani is believed to have a wide network of contacts in the US Armed Forces, but he really attracted the attention of the US' political and military leadership at the time of the Indo-Pakistan military confrontation in 2002 after the terrorist attack on the Indian Parliament on December 13, 2001. He was the Director-General, Military Operations (DGMO), at that time and the US was reportedly impressed by the cool manner in which he handled the crisis.

In September 2003, he was appointed the Corps Commander of the X Corps at Rawalpindi. It was the X Corps that had launched the coup of October 1999 which brought Musharraf to power. No military coup in Pakistan could be successful without the X Corps being in the forefront of the coup. All military chiefs chose their most trusted officer to head it. The fact that Musharraf chose him for this key post spoke of his confidence in him as a trustworthy officer, who would do his bidding.

As Corps Commander, Musharraf made him responsible for co-ordinating the investigation into the two attempts to assassinate him in Rawalpindi in December, 2003. Apart from identifying some of the jihadi terrorists responsible for the attempts, Kiyani also managed to establish the involvement of some junior officers of the Army and the Air Force in the attempts and had them arrested.

In October next year, he was appointed the DG of the ISI and once again impressed the US by his success in having Abu Faraj al-Libbi, an al Al Qaeda operative allegedly involved in the attempts to assassinate Musharraf, arrested in the tribal belt. He was immediately handed over to the US without properly interrogating him in connection with the attempts to kill Musharraf. Many Pakistani sources, however, have not accepted the claim of the ISI and that of the US that Abu Faraj was the No.3 of Al Qaeda and had masterminded the attempts to kill Musharraf. Subsequent evidence has not proved their claims.

Even though Kiyani was projected as a highly successful DG of the ISI, facts speak otherwise. It was during his tenure as the DG of the ISI that the Neo Taliban staged a come-back with a bang, the Pakistan Army practically lost control over the Pashtun belt and Al Qaeda established its sanctuaries in Pakistani territory.

The US has strongly backed his elevation as the COAS because of his known loyalty to Musharraf, his friendship with Benazir Bhutto and its hopes that he would improve the morale of the Army and vigorously pursue Al Qaeda & co. Its hopes in him may ultimately be belied just as its hopes in Musharraf were. The US has never been a good judge of Pakistanis and particularly of Pakistani Army officers. Will it be different this time? Let us wait and see.

Since he took over as the Vice-Chief of the Army Staff on October 8, 2007, Kiyani has been co-ordinating the military operations to re-establish the writ of the Government over the Swat Valley. He has not been very successful so far. The tribals of the Swat Valley, ably led by Maulana Fazlullah and backed by Al Qaeda, the Islamic Movement of Uzbekistan (IMU), the Neo Taliban and the Jaish-e-Mohammad (JEM) have been putting up a stiff fight against the Pakistani Army, despite its use of helicopter gunships and heavy artillery. Kiyani's policy of over-relying on helicopter gunships and heavy artillery and avoiding ground confrontations has already come in for criticism in Pakistani military circles. Faced with this criticism, he has only now sent his troops to engage the terrorists in ground confrontations. Kiyani has promised that he would eject the terrorists from the Swat Valley before the elections and re-establish the writ of the state. If he does not succeed, his reputation as the COAS could take a beating.

As the dramatis personae in Islamabad play out the drama, there is a man up there in the tribal north waiting and watching, hoping that Pakistan and its nuclear arsenal would ultimately fall into his hands. His name is Osama bin Laden. He wears no hats and is not part of the triumvirate, but his threatening shadow will continue to hover over Pakistan till Al Qaeda is defeated and neutralised. That is not for tomorrow.

(The writer is Additional Secretary (retd), Cabinet Secretariat, Govt. of India, New Delhi, and, presently, Director, Institute For Topical Studies, Chennai. E-mail:



Two important and emotional ( for the Tibetans) anniversaries have passed off without any reports of violent incidents in theTibetan-inhabited areas of China. These were March 10 which was the 50th anniversary of the Tibetan uprising of 1959, which led to theflight of His Holiness the Dalai Lama to India, and March 14, which was the first anniversary of the violent uprising of last year.

2. There has been no major outbreak of violence this year due to the following reasons. Firstly, the heavy deployment of security forces bythe Chinese authorities in all the Tibetan-inhabited areas. Secondly, a greater sophistication exhibited by the security forces which avoidedover-reaction of the kind seen last year, which added to the anger of the Tibetan residents. Thirdly, the co-operation extended by theMaoist-led Government of Nepal by preventing the large number of Tibetan refugees in Nepal from extending any moral and material supportto their co-religionists in Tibet and helping the Chinese authorities in imposing a virtual iron curtain between the Tibet Autonomous Regionand the rest of the world.

3. The Chinese authorities have suspended all tourist traffic to the Tibet Autonomous Region and banned the visits of foreign journalists tothe region. The only foreign journalist allowed to visit the Region since February this year was N.Ram, the Editor-in-Chief of "The Hindu" of Chennai. However, some foreign journalists, including a correspondent of the "International Herald Tribune", managed to visit theTibetan-inhabited areas of Sichuan and reported on the prevailing atmosphere of resentment in those areas.

4. As a result of this iron curtain around the Tibet Autonomous Region, the only reports coming out of the Region and disseminated to theIndian public are the despatches of the Chinese State-owned Xinhua news agency carried by "The Hindu" without fail. Even the US-StateDepartment funded Radi Free Asia has been handicapped in getting authentic information from the Tibet Autonomous Region. As a result,practically all its broadcasts during this period were about developments in the Tibetan-inhabited areas of Sichuan and Qinghai.

5. There were many incidents of peaceful protests in the Sichuan and Qinghai provinces. These were in the form of processions and publicprayers by the local monks, distribution of anti-Chinese and pro-Dalai Lama leaflets and at least one incident of attempted self-immolation. . The Chinese did not interfere with such protests so long as they remained peaceful. Most of the widespread peaceful protests in theSichuan province were reported from Kardze, Lithang, and Nyagrong counties, all of which fall under the Kardze prefecture.Kardze, whichthe Tibetans call Kham, is the traditional homeland of the Khampas, who rose in revolt against the Chinese in the 1950s. They haveremained bitterly anti-Chinese and strong devotees of His Holiness even today. Last year, while the Chinese were able to quell the uprisingin the Tibetan Autonomous Region within a couple of weeks of its outbreak, the uprising in the Kardze area continued for about twomonths----with Khampas on horse-backs attacking isolated Chinese military posts. The Qinghai province is the birth-place of His Holiness.

6. The observance of these two emotional anniversaries coincided with the annual session of the National People's Congress (NPC) atBeijing from March 3 to 12,2009. Next to the state of the economy, the situation in Tibet received considerable attention. There were manybriefings for the media by Tibetan officials and representatives to the NPC session. President Hu Jintao participated in one of theinteractions in the margins of the NPC session during which he made observations on Tibet. Prime Minister Wen Jiabo also spoke on Tibetwhile briefing the media at the conclusion of the session.

7.Hu said on March 9,2009:"We must reinforce the solid Great Wall for combating separatism and safeguarding national unity, so that Tibet,now basically stable, will enjoy lasting peace and stability.The Tibet authorities should implement the central Government's policies onTibet, focus on development and stability issues, attain an economic great-leap-forward, safeguard national security and social stability,and keep improving people's living standard, in order for them to make new progress in the building of a unified, democratic, prosperous andharmonious socialistic new Tibet. Tibet must stick to the development road with Chinese characteristics and Tibetan features so as tostrengthen the material foundation for the building of a socialistic new Tibet. Tibet should vigorously advance the program of buildingsocialist new villages, develop industries with distinguished features and strengthen ecological and environmental protection. Tibet shouldembark on more projects that will directly result in the improvement of people's life and working conditions, particularly those of farmersand herdsmen.The Government must also give priority to addressing people's immediate needs, so that people of all ethnic groups in Tibetwill be able to share the fruit of development." He avoided any reference to His Holiness.

8.Wen said on March 13,2009:: "The central Government held three talks last year with the Dalai Lama's representatives in response to theirrequest. Such talks can continue as long as the Dalai Lama is sincere, otherwise no substantial results can be made.The Dalai Lama is nota simple religious figure, but a political exile.We have full evidence. The so-called government-in-exile situated in Dharamsala is a de facto,theocratic regime and this illegal government is under direct leadership of the Dalai Lama. He has been traveling around the world and isquite capable of misleading some political figures.Some Western countries are also trying to use him. We should not only listen to what hehas said but also look what he has done.The current stability and development of Tibet has demonstrated that the Chinese centralGovernment has carried out correct policies in the region.The situation in Tibet on the whole is stable. The Tibetan people hope to live andwork in peace and stability.Both China's Constitution and the Law on Ethnic Regional Autonomy safeguard the freedom and rights of peoplein Tibet, particularly in religious belief. The central Government has increased fiscal input to Tibet to accelerate the region's economicdevelopment and to improve the well-being of farmers and herdsmen. The Tibet Autonomous Region will continue following the opening-uppolicy for the sake of its own development."

9. The Dalai Lama and the radical Tibetan Youth Congress (TYC) issued two hard-hitting statements on March 10,2009. In his statement, HisHoliness said:"Quite apart from the current process of Sino-Tibetan dialogue having achieved no concrete results, there has been a brutalcrackdown on the Tibetan protests that have shaken the whole of Tibet since March last year. Therefore, in order to solicit public opinion asto what future course of action we should take, the Special Meeting of Tibetan exiles was convened in November 2008. Efforts were madeto collect suggestions, as far as possible, from the Tibetans in Tibet as well. The outcome of this whole process was that a majority ofTibetans strongly supported the continuation of the Middle-Way policy. Therefore, we are now pursuing this policy with greater confidenceand will continue our efforts towards achieving a meaningful national regional autonomy for all Tibetans. From time immemorial, the Tibetanand Chinese peoples have been neighbours. In future too, we will have to live together. Therefore, it is most important for us to co-exist infriendship with each other. Since the occupation of Tibet, Communist China has been publishing distorted propaganda about Tibet and itspeople. Consequently, there are, among the Chinese populace, very few people who have a true understanding about Tibet. It is, in fact, verydifficult for them to find the truth. There are also ultra-leftist Chinese leaders who have, since last March, been undertaking a hugepropaganda effort with the intention of setting the Tibetan and Chinese peoples apart and creating animosity between them. Sadly, as aresult, a negative impression of Tibetans has arisen in the minds of some of our Chinese brothers and sisters. Therefore, as I haverepeatedly appealed before, I would like once again to urge our Chinese brothers and sisters not to be swayed by such propaganda, but,instead, to try to discover the facts about Tibet impartially, so as to prevent divisions among us. Tibetans should also continue to work forfriendship with the Chinese people. Looking back on 50 years in exile, we have witnessed many ups and downs. However, the fact that theTibet issue is alive and the international community is taking growing interest in it is indeed an achievement. Seen from this perspective, Ihave no doubt that the justice of Tibet's cause will prevail, if we continue to tread the path of truth and non-violence."

10. While the international media,including leading Indian newspapers and TV channels, gave wide publicity to the Dalai Lama's statement,"The Hindu" of Chennai and the Maoist-controlled media of Nepal blacked it out. However, "The Hindu" carried brief extracts from theChinese rejoinder to the statement. The Chinese, through Xinhua, hit out very strongly at the statement. However, Wen, in his press briefing,did not comment on it.

11. While the Chinese took strong note of the statement of His Holiness and ridiculed it, they chose to ignore the statement of the TYC,which had said: "TYC as a national movement with the goal of restoring Tibet’s independence is grounded on historical truth. The ChineseGovernment will not be able to distort this basic truth by propagating against TYC with attempts to label it as a terrorist group. Even underextreme pressure and obstacles directed at TYC by the Chinese Government, we will remain steadfast in our commitment to truth and in ourstruggle for complete independence. It is our promise that we will one day hoist the Tibetan national flag on top of the Potala Palace andour leader, His Holiness the Dalai Lama, will sit on his rightful throne."

12. The Chinese reacted strongly to resolutions on the Tibetan anniversaries moved in the US Congress and in the Europen Parliament.While not hesitating to criticise the Western countries for their interactions with the Dalai Lama, the Chinese have continued to follow apolicy of avoiding any criticism of the Government of India for the activities of His Holiness and his supporters from the Indian territory.While strongly countering the activities of His Holiness and his followers on the ground in the Tibetan-inhabited areas and in the international stage, they do not want this issue to become a bone of contention between India and China. (16-3-09)

(The writer is Additional Secretary (retd), Cabinet Secretariat, Govt. of India, New Delhi, and, presently, Director, Institute For TopicalStudies, Chennai. He is also associated with the Chennai Centre For China Studies. E-mail: )

Friday, March 13, 2009



No other leader of Pakistan has ever created such a huge political mess in such a short time as President Asif Ali Zardari has. What the lateZulfiquar Ali Bhutto took six years to destroy, Zardari has destroyed in six months as the President----- namely, the credibility of Pakistan asa State, its institutions and its unity as a country and as a people.

2. Z.A.Bhutto came to office after the defeat of Pakistan in its war with India in December 1971, with considerable goodwill not only in Pakistan, but also in India. He was the toast of the people of Pakistan and its army after he succeeded in persuading Indira Gandhi, the thenIndian Prime Minister, at the Shimla conference in July,1972, to release and return to Pakistan nearly 90,000 Pakistani prisoners of war, whohad surrendered to the Indian Army at Dhaka at the end of the war.

3. Thereafter, his arbitrary style of governance, his intolerance of opposition and a free media, his jealousy and suspicion of political rivals, his indifference to the grievances of the Balochs and the Pashtuns and his use of ruthless methods against his political opponents resultedin a no-holds-barred confrontation in the streets between him and his opponents. The Army under Gen.Zia-ul-Haq, who had been hand-pickedby Bhutto as the Chief of the Army Staff (COAS) superseding other capable officers senior to Zia because of Bhutto's confidence in Zia'spersonal loyalty to him, moved in to take over power. Zia set in motion the train of events, which led to the execution of Bhutto.

4. It took a little more than two years for the negative traits in Z.A.Bhutto to come to the fore and transform him into a possessed mandetermined to destroy himself. It has taken hardly a few weeks for the negative traits in Zardari to come to the fore----- the same arbitrarystyle of governance, the same intolerance of opposition and a free media, the same jealousy and suspicion of political rivals, the sameindifference to the grievances of the Balochs and the Pashtuns, the same use of ruthless methods against his political opponents, the sameinability to see the writing on the wall.

5. The writing on the wall is there for all to see------ ras-le-bol as the French, who came out in the streets in 1968 shouted. Meaning "fed up".Large sections of the Pakistani society are just fed up with him. But, he doesn't realise this.

6.The rest of the world was not as much concerned over what was happening in Pakistan in the 1970s as it is now. In the 1970s, whenZ.A.Bhutto was ruling, there was no jihadi terrorism, no Al Qaeda, no Taliban, no danger of jihadis getting hold of nuclear material. Only India,being the neighbour, was concerned over the mounting opposition to Z.A.Bhutto.

7. Today, Zardari is the President of a country, which is the spawning ground of all the jihadi terrorist groups of the world which pose athreat to international peace and security. His inability to focus on the fight against terrorism and his playing petty politics against hispolitical opponents at a time when a jihadi tsunami originating from the jihadi epicentre in the Federally-Administered Tribal Areas (FATA) isthreatening to sweep across the country is a matter of concern not just to India, but to the entire world.

8. Instead of realising the gravity of the situation confronting Pakistan as a result of his sins of commission and omission, he seemsdetermined to continue on his path of confrontation with the opposition forces led by Nawaz Sharif, former Prime Minister.Neither friendly,but firm warnings from the US and the UK nor reported expressions of concern by Gen.Ashfaq Pervez Kayani, the COAS, have had anyimpact on Zardari so far. Even if he is prepared to restore the Government headed by the Pakistan Muslim League *(Nawaz) in Punjab,which he removed so arbitrarily, he seems disinclined to make any other compromise in order to defuse the confrontational atmospherebuilding up in the country.

9.If the confrontation continues, will Gen.Kayani take over as Zia did in 1977? As of now, Kayani seems disinclined to take over. He hadseen for himself how unpopular was the military rule under Gen.Pervez Musharraf. He had also seen how he was hailed by the people ofPakistan when he ordered after taking over as the COAS, all army officers in civilian departments to return to the barracks. He knows that ifhe took over he would be seen as no different from Musharraf, Zia, Yahya Khan and Ayub Khan. According to reliable sources close to theArmy, he would like to go down in history, like Gen Abdul Waheed Kakkar and Gen.Jehangir Karamat did, as a well-liked General who couldhave taken over if he had wanted to, but refrained from doing so in the interest of the country.

10. At the same time,he is reported to have made clear to his political masters that he would be constrained to intervene if the confrontationis not defused and the security situation in Pakistan further deteriorates as a result of it.

11. Zardari and his advisers may succeed in thwarting the so-called Long March to Islamabad by the opposition, but this is unlikely to helphim in regaining his credibility and the country's goodwill which he seems to have lost.

12. This may please be read in continuation of my earlier article of February 28,2009, titled "Pakistan: Back to Being Pakistan" at

( The writer is Additional Secretary (retd), Cabinet Secretariat, Govt. of India, New Delhi, and, presently, Director, Institute For Topical Studies, Chennai. E-Mail: )

Thursday, March 12, 2009


B. Raman

(What will be the impact of the global financial and economic melt-down on the Chinese economy? This question should be of interest to theother countries of the South and the South-East Asian region. If the Chinese economy is badly affected, they too are likely to feel thenegative consequences of the down-turn in the Chinese economy. Keeping this in view, we have been bringing out a periodic "ChineseEconomy Monitor" based on open information. This is the sixth in the series)


China's manufacturing sector, which accounts for 43 per cent of its economy, continues to contract, but at a slower pace sinceDecember,2008, after reaching the lowest level in November,2008. While the Chinese authorities have noted with some satisfaction theslowing down of the contraction rate, unless the process of contraction is stopped and reversed, the economic situation marked byincreasing unemployment and decreasing commodity prices due to a fall in demand will continue to deteriorate. How soon the contractionwill stop and expansion will start again will depend on how soon the US and the European Union countries are able to set right theireconomies on which the Chinese manufacturing industries are dependent. In the estimate of the Chinese experts, a change for the better inthe situation is unlikely before the last quarter of this year.The Chinese authorities have been cautioning the people to be prepared for asevere foreign trade situation and a grave unemployment situation this year. There are two major areas of concern to the authorities.Firstly,the number of migrant workers from the rural areas in Central and Western China who have lost their jobs in the previously flourishingcoastal areas and gone back to their home towns and villages, which was earlier estimated at 10 million, has doubled since January,2009.Secondly, one million graduates, who passed out of the universities and other institutes of higher education in 2008, are still without jobs.They are expected to be joined by another 6.11 million graduates by the middle of this year. There is not much scope for finding them jobs inthe urban areas. The authorities are trying to persuade them to go back to the rural areas and work in farms or in the new infrastructureconstruction projects under the stimulus plans announced in November last or start their own small businesses with loans to be given bythe banks. These 7.11 million educated unemployed will be competing for jobs with the 20 million who have lost their jobs in the coastalareas. Apart from investments in the development of rural infrastructure and in projects which will benefit the people, the Government hasalso undertaken sector-wise plans for restructuring and modernising 10 pillar industries on which the manufacturing sector depends.Through various measures to reduce the hardships for the unemployed people and their families and through constant interactions withprovincial leaders and officials and the people, the Government has till now avoided any social unrest due to the increase in unemploymentand fall in earnings due to the decrease in commodity prices. It is to be seen whether it will continue to be able to do so till the economystarts looking up again. The Government has estimated that to prevent a further deterioration, a GDP growth rate of at least eight per cent isa must this year. Its policies and plans are meant to achieve this rate.


China's manufacturing contracted for a fifth month in December,2008.The CLSA China Purchasing Managers' Index stood at a seasonallyadjusted 41.2, compared with a record low of 40.9 in November, CLSA Asia-Pacific Markets said in an emailed statement. A reading below50 reflects a contraction.Manufacturers in industries from metals to toys are reducing production or closing down. The Aluminum Corp ofChina Ltd, the nation's biggest maker of the metal, and the Yunnan Tin Co, the world's largest producer of tin, cut output as prices fell. "Chinese manufacturing was very weak in December," said Eric Fishwick, head of economic research at CLSA in Singapore. "With fiveback-to-back PMIs signaling contraction, the manufacturing sector, which accounts for 43 per cent of the Chinese economy, is close totechnical recession."The output index fell to a record low of 38.6 in December,2008, from 39.2 in November, while the measure of neworders rose to 37 from 36.1. The index of export orders jumped to 33.6 from 28.2, CLSA said. "Chinese manufacturers reduced the size oftheir work forces at the fastest rate recorded by the series to date," the report said. An employment index tracked by CLSA has contractedfor five consecutive months to 45.2 in December.China's economic growth may have slipped to 5.5 per cent last quarter, the weakest pacein at least 15 years, according to Shanghai-based Industrial Bank Co.A drastic slowdown in industrial-output growth is mainly due tocompanies running down excess inventory, central bank Vice-Governor Yi Gang said on Dec 26, 2008. That process may continue until theend of the second quarter, Yi said.Exports fell for the first time in seven years in November, 2008, imports plunged and industrial outputgrew at the slowest pace in almost a decade. The CLSA index, started in 2004, is based on a survey of more than 400 manufacturingcompanies and tracks changes in output, orders, employment, inventories and prices.
---- Agency reports, January 3,2009. CLSA stands for Credit Lyonnais Securities Asia. According to a Dow Jones report of March 2,2009,the CLSA China Purchasing Managers Index rose to 45.1 in February from 42.2 in January.Since falling to a record low of 40.9 in November,the CLSA PMI has risen for three consecutive months, but remains below 50.0, indicating a continued manufacturing contraction. A PMIreading above 50.0 indicates expansion. "Manufacturing activity is still contracting, only at a more moderate pace than at the end of 2008,"said CLSA Head of Economic Research Eric Fishwick. He added: "Despite the bounce in credit data in January the impact on domesticmanufacturing orders so far seems modest: most of the improvement in the PMI new orders index reflects export orders."


2.The Ministry of Human Resources and Social Security (MOHRSS) said on January 19,2009, that China's urban unemployment rate was 4.2per cent at the end of 2008, up 0.2 percentage points year-on-year.As of December 31, 2008, there were 8.86 million urban residentsregistered as jobless, up 560,000 from the end of the third quarter, according to the Ministry spokesman Yin Chengji.Yin said that 11.13million urban jobs were created last year, 11 per cent above the Government target. The slight rise in the jobless rate reflected a slowingeconomy amid the global financial crisis, said Tang Min, Deputy Secretary of the China Development Research Foundation. "The figure looksall right, but the real situation could be much more serious, as migrant workers and newly graduated college students were not included inthe government count," he added. Yuan Gangming of the Center for China in the World Economy of the Tsinghua University described therate as a "sudden rise." He said the 2008 figure was a reversal of the recent years' declines. The urban jobless rate fell for five consecutiveyears, from a high of 4.3 per cent in 2003 to 4 per cent in 2007."The 4.2 per cent rate was already a sharp increase, given that widespreadjob cuts only surfaced in the second half of last year.The unemployment situation was grimmer than shown by the latest figure," he said,noting that migrant workers were not included in the count.Statistics from the MOHRSS showed that 10 million, or about 10 per cent of atotal of 130 million migrant workers, had returned to their rural homes jobless as of December. Starting in the second half of 2008,weakening foreign demand has hit companies in the coastal industrial belts where most migrant workers had been employed. TheGovernment will focus on jobs for college graduates, migrant rural workers and urban residents this year, said Yin.China aims to keep itsregistered jobless rate below 4.6 per cent and provide 9 million new urban jobs during 2009. Yuan estimated that the urban unemploymentfigure could worsen in the first half of this year.
----Xinhua, January 20,2009


3.According to Chen Xiwen, who is in charge of rural planning, about 20 million rural migrants were now out of work -- more than thenumber announced in December,2008.This is an indication that the slowdown in the Chinese economy was intensifying. An average of sixto seven million people leave their rural homes every year to find jobs, on top of the 20 million jobless."According to these calculations,there will be fairly big pressure on employment for around 25 million rural residents," Chen said. The year 2009 could be the "toughest year"since the turn of the century for the development of the countryside, which has fallen behind as Chinese economic reforms have favouredthe cities.
--- AFP, February 2,2009


4.A report issued jointly by the State Council and the Central Committee of the Communist Party of China on Februrary 1,2009, said:"Thedevelopment of agriculture and rural areas in 2009 is of special significance.The biggest potential for boosting domestic demand lies in ruralareas; the foundation for securing steady and relative fast economic growth is based upon agriculture; the toughest work of securing andimproving people's livelihoods stays with farmers." Vice-Premier Hui Liangyu said the same day during an inspection visit to the Anhuiprovince: "Facilitating farmers' employment is an acute and important task in present rural (endeavors).We must strengthen job training forrural labor, hire as many rural migrant workers as possible in construction work and new public-interest posts and proactively support ruralmigrant workers who have returned home to start businesses." The joint report urged central and local government departments to adoptmeasures to create jobs and increase rural incomes. Companies were asked to take on more social responsibilities by giving rural migrantworkers favorable employment treatment.Flexible employment policies and more training opportunities were suggested by the report.Meanwhile, local government departments should increase their investment to provide favorable tax and fee policies to those who lost jobsin cities and expect to find new work in their hometowns, the report said. Agriculture remains the weakest link in the Chinese economy,which has seen a widening gap between cities and the countryside. The document, the sixth of its kind to address rural problems, alsourged authorities to take resolute measures to avoid declining grain production and to ensure the steady expansion of agriculture and ruralstability.
-----Xinhua of February 2,2009


5.Hong Kong's exports by volume in December, 2008. declined by 12.8 per cent as compared to the figures for December,2007. They haddeclined by 7.1 per cent in November,2008, as compared to the figures for November,2007.Excluding Germany, exports to all of Hong Kong'smajor markets dropped, according to the Census and Statistics Department. The latest figures showed that exports to the United Statesdropped by 19.6 per cent by volume in December, 2008, while exports to the mainland slumped by 10.5 per cent. Exports to Japan and theUnited Kingdom fell by 10.2 and 12.5 per cent, respectively. Exports to Germany rose slightly by 1.9 per cent.
----- "Business Weekly of Shanghai Star" of February 17,2009

6.Hong Kong's exports declined by 21.8 per cent in January,2009, as compared to the figures for January,2008. They had declined by 11.4per cent in December,2008, as compared to the figures for December,2007. The Hong Kong Government announced on February 26,2009,that the territory is headed for its first full-year economic contraction since the Asian financial crisis of 1997-98.The export decline was thebiggest since March 1958. Imports fell by 27.1 per cent in January, 2009, as compared to the figures for January,2008. The trade surplusduring January,2009, amounted to US $930 million. John Tsang, the Financial Secretary of the Hong Kong Government, stated on February26,2009, that the city's economy will probably shrink by 2 to 3 per cent in 2009, after a 2.5 per cent expansion in 2008.The GrossDomestic Product contracted by 2.5 per cent in the fourth quarter of 2008 as compared to the fourth quarter of 2007.
---- Reuters as reported in the "China Daily " of February 27,2009.


7.In a series of meetings held at Beijing from January 14 to February 25,2009, the State Council reviewed and approved, in principle, adjustment and stimulus plans for 10 major industries----- namely, automobile, iron and steel, textiles, equipment manufacturing,shipbuilding, electronics and information technology, petrochemicals, light industries, nonferrous metals and logistics. "The selection of these ten key industries was based on two points: the first one is the importance of the industries. These industries have atremendous impact on economic development since all of them are important pillar industries in the Chinese economy, main contributors tothe value of industry output and government revenue, key channels for employment, and are the main industries driving GDP growth. Thesecond point is that these industries have clear problems. Over the past several years, these industries have all demonstrated problemsincluding excessively rapid expansion of production capacity, oversupply, low-level and redundant construction, irrational product mixes,low-end products with heavy energy consumption and serious pollution. Due to a high reliance on exports, they have all been greatlyaffected by the global financial crisis," said David Daokui Li, Director of the Center for China in the World Economy (CCWE) at theTsinghuaUniversity, in an interview with the "People's Daily". The plan for the steel industry, for example, requires that high-energy-consuming andhigh-polluting production facilities are eliminated, and that projects that simply expand production capacity are not to be approved. Theplan for the electronics and information technology industry approves six projects and encourages private capital to enter this sector. Thisis done in the hope of realizing major breakthroughs in scientific and technological projects. Industry integration in textiles, iron and steel,equipment manufacturing and automobile enterprises was also encouraged in the stimulus plans. Some analysts say the plans' primarytargets are still to overcome current hardships. The policies of lowering the automobile purchase tax, "automobiles to the countryside,""home appliances to the countryside" and encouraging boat owners to exchange old boats for new ones underscore the new plans toexpand domestic demand. The policies supporting the establishment of export bases, increasing export credits and reducing export taxrebates, strengthen the idea of stabilizing China's share of the international market. In addition, the policies provide direct support to textileenterprises by raising the export tax rebate by 1 percentage point to encourage exports and secure 20 million jobs in the textiles industry.Efforts to maintain employment rates and boost people's livelihoods are noticeable. Li said: "The idea behind the industry plan policies has acertain degree of continuity from the past. They cannot be viewed simply as short-term economic policies hastily enacted to prevent theeconomy from sliding. The global financial crisis has prompted the Chinese Government to accelerate the introduction of industry stimulusplans, but their purpose and significance go beyond just meeting urgent needs." He further analyzed that the Chinese economy has alwaysbeen large but not strong for four main reasons. First, China's industries are short of core technology, occupy the low ranks of the industrychain, and have low added value. Second, high-energy consumption causes high pollution, which leads to serious energy waste. Third,serious low-level, redundant construction and surplus production make industries heavily dependent on the international market. Fourth,industry clustering remains low and the industry chain is incomplete."From the stimulus plans, we can see the government's highexpectation of industry upgrading and structure optimizing. This can be achieved through phasing out backward productivity, encouragingtechnical innovation, and merging and integration between enterprises. These efforts can help expand the Chinese economy in size andstrength."
----People's Daily Online of February 27,2009


8.Speaking at a forum held on the sidelines of the 19th East China Fair at Shanghai on March 8,2009,Chinese Vice Minister for CommerceZhong Shan said that China would face a "severe" situation in foreign trade this year against the backdrop of the spreading global financialcrisis. "The financial crisis has not bottomed out yet, which may reduce the country's international trade markedly.In addition, tradeprotectionism of some countries might escalate. Therefore, China's foreign trade in 2009 will face a severe situation," he said. China's foreign trade topped 2.56 trillion U.S. dollars in value in 2008, but the year-on-year growth rate dropped below 20 per cent for thefirst time in seven years, according to the General Administration of Customs. The total value was up 17.8 per cent compared with 2007, butthe growth rate was down 5.7 percentage points. The trade surplus stood at 295.47 billion U.S. dollars, up 12.5 per cent, according to theadministration.


9.China's consumer price index (CPI), a main gauge of inflation, fell by 1.6 per cent in February 2009, the National Bureau of Statistics (NBS) announced on March 10,2009.This was the first monthly fall since December 2002, when prices decreased by 0.4 per cent. The producer price index (PPI), which measures inflation at the wholesale level, fell for the third straight month, dropping by 4.5 per centyear-on-year in February, 2009.The NBS said that the February figure did not represent a deflation problem in China, since money supply wasample because of the proactive fiscal policy and the relatively easy monetary policy. "We do face price downward pressure, but that cannotbe translated into a deflation problem," said Zhang Xiaoji, researcher with the Development Research Center of the State Council, agovernment think tank. Su Ning, Vice- Governor of the People's Bank of China (PBOC, the central bank), said on March 10,2009, that deflationwould not occur given the banks' ample liquidity. The NBS said falling international commodity prices, caused by the global economicdownturn, contributed to the domestic price fall. It added that the CPI in the first two months of 2009 dropped by 0.3 per cent from the sameperiod of 2008.The price declines "reflect how severely the economy was affected by the global financial crisis in the second half of lastyear," said Zuo Xiaolei, chief economist with Galaxy Securities. It would not be surprising if prices fell further in the next few months, asboth domestic and overseas demand had fallen since late last year, said Wang Xiaoguang, economist with the National Development andReform Commission. Also, he noted, there was a "commodity price bubble" early last year that persisted until mid-year. China spent yearsstriving to contain inflation and runaway economic growth. But as the global slump began to affect the world's third-largest economy, theGovernment shifted focus to fighting deflation and maintaining growth. Yi Gang, PBOC Vice- Governor, told Xinhua that the central bank hadsufficient tools to fight deflation. He noted the country had not confronted a typical deflationary period, which was characterized bycontracting loans and money supply, a recession and falling prices. To prevent deflation, real loan growth this year was expected to exceed5 trillion yuan (735.3 billion U.S. dollars), Su said while discussing the new price figures. China's money supply rose by 17.8 per cent and18.8 per cent in December, 2008, and January 2009, respectively. New loans hit a record of 1.6 trillion yuan in January, double theyear-earlier figure, and are expected to have grown further in February. Su told Xinhua that China still had plenty of room to maneuverusing monetary policy in the face of the global financial crisis. He said the benchmark deposit and loan interest rates had been reduced fivetimes since September and room for further adjustment was "smaller but still exists." There's also "much room for cutting banks' reserverequirement ratios," which had been reduced four times since September. Zhuang Jian, senior economist with the Asian DevelopmentBank's China resident mission, said declining prices could hurt corporate profit margins and reduce their desire to expand production.Thedeclines are "an indicator of falling confidence amid the economic slowdown," said Ai Hongde, president of the Dongbei University ofFinance and Economics. "The falling prices indicate some industries have excess production, while consumers are unwilling to spend atwill," he said. He suggested the Government should do more to boost personal spending, which should function along with the massiveinvestment plans. Deflationary pressure could ease in the second half of the year if consumption was boosted, he said.Falling pricesprovided an opportunity for the Government to further ease controls on commodity prices, especially those of farm produce.
-----Xinhua report of March 10,2009.


10.During a media briefing at Beijing on March 10,2009, on the sidelines of the current session of the National People's Congress (NPC), theHuman Resources and Social Security Minister Yin Weimin warned of a "grave" unemployment situation in China, but claimed that the Government's measures to boost employment have started showing "initial effect". The number of new workers stood at 690,000 and930,000 in January and February, 2009, as compared to 550,000 and 380,000 in November and December of last year. He said that theGovernment attached priority to helping college graduates find jobs this year. He mentioned a series of measures approved by the StateCouncil in February,2009, including encouraging college graduates to work in the rural areas, at grassroots urban communities, and insmaller enterprises, asking research institutions to recruit university graduates, and stepping up support for graduates starting up their ownbusinesses.He said that the State Council has scrapped residence restrictions in cities, except in the four municipalities of Beijing,Shanghai, Tianjin and Chongqing, to offer graduates broader access for jobs.About 6.11 million college students are due to graduate thisyear, and another one million who graduated last year are still looking for jobs.
------Xinhua of March 10,2009


11.The Chinese General Administration of Customs announced on March 11,2009, that China's exports decreased by 25.7 per cent inFebruary, 2009, as compared to the figures for February,2008. This was the fourth straight monthly fall as global demand shrank, it said.The exports contracted to US $64.90 billion in February.The imports decreased by 24.1 per cent as compared to the figures forFebruary,2008, to US $ 60.54 billion. The combined foreign trade declined by 24.9 per cent to US $ 125.44 billion as compared to the figuresfor February,2008. The trade surplus dropped to US $4.84 billion, less than one-seventh of the figure for January, 2009.
---- Xinhua News Agency release of March 11,2009.


12.China's steel exports reached 1.56 million tons in February, 2009, down 62 per cent as compared to the figures for February,2008. Therewas an 18 per cent decrease as compared to the figures for January,2009. It was the lowest figure of steel exports in the last 52 months. Atthe same time, China imported steel amnounting to 1.09 million tonnes in February,2009, a drop of 14.7 per cent as compared to the figuresfor February,2008.
---"China Securities Journal" as reported in "China Daily " of March 11,2009.

( The writer is Additinal Secretary (retd), Cabinet Secretariat, Govt. of India, New Delhi, and,presently, Director, Institute For Topical Studies,Chennai. He is also associated with the Chennai Centre For China Studies. E-mail: )