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 the
other countries of the South and the South-East Asian region. If the Chinese economy is badly affected, they too are likely to feel the negative 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 second in the series---B.Raman)
INCREASED UNCERTAINTIES, SAYS HU
At the start of the Asia-Europe Meeting (ASEM) Summit in Beijing on October 24,2008, President Hu Jintao of China said: "The fundamentalsof the Chinese economy have not changed. However, the global financial crisis has noticeably increased the uncertainties and factors forinstability in China's economic development.We are now confronted with many difficulties and challenges in our economicendeavours.China must first and foremost run its own affairs well. In the light of the changing domestic and international financial situation,we will make our macroeconomic regulatory measures more proactive, focused and effective and make timely adjustments to ourpolicies.We will vigorously expand domestic demand, especially consumer demand, maintain economic financial stability and the stability ofcapital markets, and continue to promote sound and fast economic and social development."
2.President Hu was reported to have told his Indonesian counterpart during a bilateral meeting on October 23,2008, that the currentfinancial turmoil was "grim.," "The current world economic situation is grim and complicated.The emerging markets and developingcountries are confronted with financial risks, weak foreign demand and mounting inflation," Hu was quoted as saying.
---Source AFP
EMERGENCY FUND OF ASEAN PLUS THREE
3.South Korea, China, Japan and the 10 members of the Association of Southeast Asian Nations (ASEAN), agreed in the margins of theASEM summit on October 24,2008,to create a US$80-billion fund to fight the global economic crisis.The agreement is the first majorcoordinated regional action since the financial turmoil reached full force last month. In announcing the new Asian monetary fund, aspokesman for South Korean President Lee Myung-Bak said the 13 leaders had pledged to work even more closely on economic matters."(They) agreed on the need to strengthen regional cooperation and policy coordination in the face of the global financial crisis," thespokesman said in a statement. The US$80-billion fund would be created by the end of June next year, and be accompanied by anindependent regional financial market surveillance organisation, according to the spokesman. The "ASEAN Plus Three" fund wouldsupersede the Chiang Mai Initiative, which came into being in 2000 in the wake of the 1997/98 East Asian financial crisis to ease mainlybilateral currency swaps. Asian governments had till now mostly limited their intervention to cutting interest rates, guaranteeing bankdeposits and injecting money into the credit markets - without the kind of coordinated action taken by Europe. The initial agreement calledfor South Korea, Japan and China to provide 80 per cent or US$64 billion, with ASEAN members providing the remaining US$16 billion.
-----Source AFP
APPREHENDED JOB LOSSES IN SOUTHERN CHINA---2.7 MILLION BY JANUARY
4.At least 2.7 million factory workers in southern China could lose their jobs as the global economic crisis hits the demand for electronics,toys and clothes, according to industry estimates. Nine thousand of the 45,000 factories in the cities of Guangzhou, Dongguan, andShenzhen are expected to close before the Chinese New Year in late January, the Dongguan City Association of Enterprises with ForeignInvestment estimates. By then, the association expects overseas demand for products from the three manufacturing hubs to have shrunkby 30 per cent, as the knock-on effects of the US housing market collapse and credit crunch filter down to Chinese workers. "I am afraid it isnot going to look good on the Chinese government if the decline of the export-led industries and the unemployment problem continue toworsen," Eddie Leung, the association's President told AFP. Leung, also a member of the Chinese Manufacturers' Association, said theestimate of 2.7 million job losses was conservative, given that many of the larger factories in Guangdong province employ thousands ofworkers. Clement Chan, Chairman of the Federation of Hong Kong Industries, said a quarter of the 70,000 Hong Kong-owned companies insouthern China, 17,500 businesses, could go to the wall by the end of January. Describing the likelihood as a "worst case scenario," hesaid Hong Kong firms in the region employed a total of 10 million workers, but did not want to speculate on the extent of possible job losses.While small and medium-sized factories are especially prone, the threat of lay offs looms just as large over the region's manufacturinggiants, further squeezed by the appreciation of the yuan. Harry To's Mansfield Manufacturing is a classic example of the spectacular growthin China's industrial heartland over the last three decades. To started a metal business from a small room in Hong Kong in 1975. In 1991, hejoined hundreds of other Hong Kong entrepreneurs moving their production across the border into China to take advantage of cheap labourand land. He now employs 8,500 workers in 11 factories in China and Europe. His six factories in Dongguan cover 140,000 square metres. To's company, which is now a subsidiary of Singapore-listed InnoTek Ltd. supplies metal components for cars, plasma televisions, printersand other electrical appliances to Japanese brands including Canon, Toshiba, Epson, Minolta and Fuji-Xerox. Business for the company,among the largest in its field in China, has grown by 40 per cent annually in recent years, but with credit being harder to come by, nomanufacturer is safe, he said. "With banks being so tight on their lending policies now, bringing down a factory overnight has now becomevery easy." All his expansion plans have had to be put on hold. "Some of our long-time Japanese and European clients have asked us to stopproducing for them in the next two to three weeks," he said. "They said they did not want to have too much stock piled up in theirwarehouse as demand continues to dwindle." To recently started building a new 70,000 square metre factory in Dongguan and was planningto hire 2,000 more workers later this year. But now, all work on the unfinished factory has stopped until more orders roll in. "No one wouldexpand their business when the prospects for the entire manufacturing industry look so grim," he said. Instead of hiring more workers, To islooking at cutting 1,000 employees across his operations. But far from being downhearted, he is shifting part of the company's export-ledproduction to developing energy-saving electrical appliances for the domestic market, which he sees as weathering the current financialturmoil. "In the long run, I am confident that mainland Chinese consumers' purchasing power will keep rising as their Western counterpartscontinue to lose out."
----Source AFP
TEXTILE EXPORTS DOWN
5.According to the National Development and Reform Commission, the export delivery value of the Chinese textile industry totaled 435.2billion yuan ($63.56 billion) in the first seven months of this year, up 7.9 per cent year-on-year, but the growth rate was eight percentagepoints lower than the previous year. Industry experts attributed the decline to the appreciation of the yuan and the weakening demand ofmajor consumption countries.Garment exports to the United States, one of the major importers of Chinese garments, increased by only sixper cent in June. The downtrend of Chinese textile exports is expected to last in the short run. Whether it recovers or not would depend onthe trend of the appreciation of the yuan and the US consumption demand. The Ministry of Finance has increased tax rebate rates on sometextile and clothing exports from 11 per cent to 13 per cent from August 1.
----- Shanghai Security News as quoted in the China Daily News
REAL EASTATE: EMERGENCY MEASURES TO PRE-EMPT POSSIBLE CRASH
6.The Chinese Government has intervened vigorously in the real estate market to prevent a possible collapse. Real estate contributes to 10per cent of China's GDP. According to Frank Gong, the analyst of JP Morgan, China's aggressive moves to boost its ailing real estate marketprovide a glimpse of its unrivalled position in coping with the global financial turmoi.The Government announced measures to head off aproperty market crash late October 22,2008, after figures released this week showed third quarter domestic product growth slowed to nineper cent, the lowest since mid-2003. "This is big news and the actions came sooner than expected probably because the third-quartergrowth was worse than expected and the slowdown has proven sharper than the Government expected," Frank Gong said. With highliquidity, 1.9 trillion-dollar foreign exchange reserves and a stable currency, China has the most flexibility in the world to fend off the impactof the global financial crisis, Gong wrote in a research note. Propping up the property market, which accounts for 10 per cent of China'sgross domestic product, was crucial, analysts agreed. "The direction of the residential property market will determine the direction of theChinese economy over the next 18 months," according to Credit Suisse analyst Dong Tao."The new measures reflect the rising anxietyabout growth risks," Dong said. Those measures include lifting the stamp tax on property purchases and value-added tax of land on propertysales as of November, the finance ministry said. The People's Bank of China said minimum deposits and mortgage rates for first-time homebuyers would be slashed starting next week. The "unambiguous all-out support from both central and local level" Governments wassurprising in "both timing and magnitude", Nicole Wong, a Hong Kong-based property analyst with CLSA Research, said. This week'seconomic data provided the most powerful indication yet that even China's so-far invincible economy was not insulated from the globaldownturn, especially as fears of recession grow in the United States and Europe – key markets for Chinese manufactured goods. Since thefigures were released, China has wasted no time in responding to protect housing and exports, key components of its economy thatappeared vulnerable. The property policy decision was announced a day after Beijing said it would increase export tariff rebates on morethan 3,000 items, or a quarter of taxable goods, to shore up its exports. ---Source AFP
SUPERVISION OVER FINANCIAL INSTITUTIONS TIGHTENED FOLLOWING FEARS OF POSSIBLE HUGE LOSSES
7.Beijing is tightening supervision over Chinese financial companies by requiring monthly reports on their foreign currency exposure toensure stability amid the global turmoil.. The new rules, which take effect this month, apply to both domestic and overseas branches ofChinese financial institutions.The State Administration of Foreign Exchange will require reports on foreign exchange assets and liabilitiesfrom institutions including banks, insurers, brokerages and fund management firms as well as the national pension fund and the sovereignwealth fund.Some Chinese financial institutions are feared to have incurred "huge losses" in their foreign exchange assets amid the globalcredit crisis.
---- Shanghai Security News
FEARS FOR THE FUTURE
8.My comments: The Chinese economy is not yet as vulnerable as the Indian economy. The increased vulnerability of the Indian economy isdue to the large flow of foreign money into the stock markets, which are now being withdrawn. The dramatic collapse of the stock marketand the sensational publicity which it receives in the media have a greater psychological impact on public mood.The Chinese exposure tothe vagaries of investors in the stock markets is much less as compared to India. The predominance of investment flows into themanufacturing industries in China and not into the stock markets gives its economy a larger safety net than in the case of India. However,an advantage in the case of India is that the Indian manufacturing industries had paid more attention to the domestic market than theChinese manufacturing industries, which have been flourishing largely on exports to the US and Europe. The decline in export orders couldprove more damaging to the Chinese economy than to the Indian economy because of the failure of the Chinese industries to develop thedomestic market. Industries largely dependent on domestic demand are generally more stable in times of crisis than industries whichbecome over-dependent on the foreign markets. This is the lesson, which the Chinese are learning the hard way. Unfortunately, the Indian ITcompanies and other businesses in the services sector have developed a large dependence on Western orders. They could suffer more thantheir Chinese counterparts as orders from Western financial and other business houses for IT services shrink.In India, the GDP growth ratewas steady,but not spectacular. In China, it was spectauclar for years continuously at more than 10 per cent per annum. As the GDP growthrate and the export growth rate come down to single digits in China, the extra labour employed all these years to sustain the double digitgrowth rate will become redundant adding to the number of jobless. Reports from different sources in Guangdong and Fujian indicate that asa result of the downturn, many Hong Kong and Taiwanese--run businesses have not paid the salaries of their workers for about threemonths and that they may not be able to settle their back wages while retrenching them. This could cause social instability. The crisis hascome at a time when China is confronted with the task of finding alternate jobs for thousands of workers who were brought into Beijing forwork connected with the Olympics in the construction and the hotel sectors. They are now without jobs, with no prospect of getting one inthe near future. (24-10-08)
(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: seventyone2@gmail.com )
Friday, October 24, 2008
Thursday, October 23, 2008
ANTI-MUSLIM REPRISAL TERRORISM?
INTERNATIONAL TERRORISM MONITOR--PAPER NO.460
B.RAMAN
"Some sections of the Muslim community suspected that this attack ----like the other attacks targeting members of their community--- musthave been the responsibility of Hindu extremist elements. There was no basis for their suspicions, but they persist. The only way ofremoving their suspicions is through a thorough investigation and the definitive identification of all those involved. The many missing linksin the investigation of this strike as well as in the terrorist attack on the Mumbai suburban trains should be a cause for concern. Targetedattacks on innocent Muslims by Al Qaeda and other jihadi organizations is nothing new. Such attacks take place often in Iraq, Afghanistanand Pakistan. But, in those countries, the attacks on Muslim civilians are generally due to one of two factors. Either the targeted Muslimsbelonged to a rival sect (Sunni vs Shia or Deobandi vs Barelvi) or rival organization or were perceived as collaborators of the Governmentand hence apostates. None of these factors applied in the case of the Muslims----Indians and Pakistanis--- who were traveling by theSamjotha Express. The conventional wisdom was that the Muslims were now being deliberately targeted by the jihadi organizations in orderto provoke them against the Government and the Hindus. I do not subscribe to this wisdom. It is important to keep an open mind whileinvestigating these targeted attacks on Indian Muslims and one should not jump to the conclusion that the LET or the HUJI must have beeninvolved. We owe it to our Muslims, most of whom have kept away from Al Qaeda and other pan-Islamic organizations, to see that thesecases of targeted attacks on Muslims are thoroughly investigated instead of coming to a facile conclusion that jihadi organizations must bebehind them. "-----My comments on the terrorist strike in the Samjotha Express in my book "Terrorism---Yesterday, Today & Tomorrow"published in June,2008, by the Lancer Publishers of New Delhi (www.lancerpublishers.com )
"While there are grounds for suspecting that the blast of Delhi and those of Agartala might have been carried out by the IM ( IndianMujahideen) and its associates from the Lashkar-e-Toiba (LET) in Delhi and the Harkat-ul-Jihad-al-Islami (HUJI) of Bangladesh in Agartala,the blasts in Modasa and Malegaon seem to stand apart. Though the Gujarat Police are reported to have detained some members of theStudents' Islamic Movement of India (SIMI) during their investigation of the Modasa blast, the Modasa and Malegaon blasts do not carry anyunique signature. More evidence will be required before one could analyse as to who might have been responsible. "----From my article ofOctober 2,2008, titled "Mushrooming Terrorism: Now Agartala" at http://www.southasiaanalysis.org/papers29/paper2866.html
--------------------
In the last three years, we have had at least seven terrorist strikes in different parts of the country in which the perpetrators seemed tohave targeted innocent Muslim civilians. Those seemed to be not indiscriminate attacks on all civilians, but targeted attacks on Muslims.There were two such incidents in Malegaon in Maharashtra and one each in New Delhi, Hyderabad, in the Ajmer Sharif in Rajasthan, in theSamjotha Express to Pakistan and in Modasa in Gujarat.
2. On the basis of the available reports, I had myself stated after five of these strikes---- but not after the Malegaon and Modasa incidents ofSeptember 29,2008--- that they seemed to have been carried out by terrorists belonging to jihadi terrorist organisations. I had also referredto instances of jihadi terrorists deliberately targeting innocent Muslims in many countries in pursuit of their agenda.
3. Some months after the Ajmer Sharif incident, a young Muslim officer of the Indian Police Service (IPS) had met me privately andexpressed his doubts as to whether Muslims would have been involved in these incidents. He strongly believed that no Muslim howeverextremist he might be and to whichever jihadi organisation he belonged would have planted a bomb in or near the Ajmer Sharif.
4.I did not feel convinced, but felt somewhat troubled by what he said. I felt that as a senior (though now retired) officer of the IPS, I owed itto him and other young Muslim officers of the IPS to take note of what he said and re-open my mind. It was in pursuance of this that I madethe above-mentioned observations in my book.
5. Who carried out the pre-September 29,2008, terrorist strikes, which seemed to have mainly targeted innocent Muslims? Where they theacts of the usual jihadi organisations or are they the precursor to acts of reprisal terrorism against members of the Muslim community bysome irrational elements in the Hindu community? These questions, which were already being raised by sections of the public----Muslims aswell as non-Muslims--- even before September 29, have re-surfaced following the publication or dissemination by some sections of the mediaof reports claiming that the Anti-Terrorism Cell (ATS) of the Mumbai Police have detained three Hindus in connection with their investigationinto the recent Malegon blasts. The ATS itself has neither officially denied nor confirmed these reports.
6. The matter is in the initial stages of the investigation. To instil confidence in our Muslim community, the ATS should see that theinvestigation against these Hindus and any others associated with them is carried out thoroughly irrespective of their organisationalaffiliation. Religion is not a mitigating factor in deciding on the culpability of a person suspected of involvement in a criminal act. If they areproved to have participated in the acts of terrorism in Malegain and Modesa, the fact that they are Hindus would not make them any theless criminal or terrorist.
7.Indian criminal laws----the Indian Penal Code, the Indian Evidence Act and the Criminal Procedure Code--- do not talk of the majority or theminorities or even of Indian citizens or foreigners. Their provisions apply to anyone who commits an offence in Indian territory---whether heor she is an Indian national or a foreigner, whatever be his or her religion, language or ethnicity. The arrested persons must be investigatedand proceeded against without worrying about their background or organisational affiliation.
8. Do these arrests strengthen the case for a ban on the Bajrang Dal or any other organisation to which they might have belonged? Or dothey at least call for a characterisation of such orgainsations----even if they be of Hindus---as terrorist organisations? To characterise anorganisation as a terrorist organisation and to take legal action against it ----and not merely against its members---- two types of evidenceare required. Firstly, that its constitution or manifesto advocates the resort to violence amounting to terrorism for achieving its objective.Secondly, that it has been involved in repeated acts of pre-meditated violene which amount to terrorism. One has to wait and see whethersuch evidence surfaces during the investigation. ( 24-10-08)
(The writer is Additional Secretary (retd), Cabinet Secretariat, Govt. of India,New Delhi, and, presently, Director, Institute For Topical Studies,Chennai. E-mail: seventyone2@gmail.com )
B.RAMAN
"Some sections of the Muslim community suspected that this attack ----like the other attacks targeting members of their community--- musthave been the responsibility of Hindu extremist elements. There was no basis for their suspicions, but they persist. The only way ofremoving their suspicions is through a thorough investigation and the definitive identification of all those involved. The many missing linksin the investigation of this strike as well as in the terrorist attack on the Mumbai suburban trains should be a cause for concern. Targetedattacks on innocent Muslims by Al Qaeda and other jihadi organizations is nothing new. Such attacks take place often in Iraq, Afghanistanand Pakistan. But, in those countries, the attacks on Muslim civilians are generally due to one of two factors. Either the targeted Muslimsbelonged to a rival sect (Sunni vs Shia or Deobandi vs Barelvi) or rival organization or were perceived as collaborators of the Governmentand hence apostates. None of these factors applied in the case of the Muslims----Indians and Pakistanis--- who were traveling by theSamjotha Express. The conventional wisdom was that the Muslims were now being deliberately targeted by the jihadi organizations in orderto provoke them against the Government and the Hindus. I do not subscribe to this wisdom. It is important to keep an open mind whileinvestigating these targeted attacks on Indian Muslims and one should not jump to the conclusion that the LET or the HUJI must have beeninvolved. We owe it to our Muslims, most of whom have kept away from Al Qaeda and other pan-Islamic organizations, to see that thesecases of targeted attacks on Muslims are thoroughly investigated instead of coming to a facile conclusion that jihadi organizations must bebehind them. "-----My comments on the terrorist strike in the Samjotha Express in my book "Terrorism---Yesterday, Today & Tomorrow"published in June,2008, by the Lancer Publishers of New Delhi (www.lancerpublishers.com )
"While there are grounds for suspecting that the blast of Delhi and those of Agartala might have been carried out by the IM ( IndianMujahideen) and its associates from the Lashkar-e-Toiba (LET) in Delhi and the Harkat-ul-Jihad-al-Islami (HUJI) of Bangladesh in Agartala,the blasts in Modasa and Malegaon seem to stand apart. Though the Gujarat Police are reported to have detained some members of theStudents' Islamic Movement of India (SIMI) during their investigation of the Modasa blast, the Modasa and Malegaon blasts do not carry anyunique signature. More evidence will be required before one could analyse as to who might have been responsible. "----From my article ofOctober 2,2008, titled "Mushrooming Terrorism: Now Agartala" at http://www.southasiaanalysis.org/papers29/paper2866.html
--------------------
In the last three years, we have had at least seven terrorist strikes in different parts of the country in which the perpetrators seemed tohave targeted innocent Muslim civilians. Those seemed to be not indiscriminate attacks on all civilians, but targeted attacks on Muslims.There were two such incidents in Malegaon in Maharashtra and one each in New Delhi, Hyderabad, in the Ajmer Sharif in Rajasthan, in theSamjotha Express to Pakistan and in Modasa in Gujarat.
2. On the basis of the available reports, I had myself stated after five of these strikes---- but not after the Malegaon and Modasa incidents ofSeptember 29,2008--- that they seemed to have been carried out by terrorists belonging to jihadi terrorist organisations. I had also referredto instances of jihadi terrorists deliberately targeting innocent Muslims in many countries in pursuit of their agenda.
3. Some months after the Ajmer Sharif incident, a young Muslim officer of the Indian Police Service (IPS) had met me privately andexpressed his doubts as to whether Muslims would have been involved in these incidents. He strongly believed that no Muslim howeverextremist he might be and to whichever jihadi organisation he belonged would have planted a bomb in or near the Ajmer Sharif.
4.I did not feel convinced, but felt somewhat troubled by what he said. I felt that as a senior (though now retired) officer of the IPS, I owed itto him and other young Muslim officers of the IPS to take note of what he said and re-open my mind. It was in pursuance of this that I madethe above-mentioned observations in my book.
5. Who carried out the pre-September 29,2008, terrorist strikes, which seemed to have mainly targeted innocent Muslims? Where they theacts of the usual jihadi organisations or are they the precursor to acts of reprisal terrorism against members of the Muslim community bysome irrational elements in the Hindu community? These questions, which were already being raised by sections of the public----Muslims aswell as non-Muslims--- even before September 29, have re-surfaced following the publication or dissemination by some sections of the mediaof reports claiming that the Anti-Terrorism Cell (ATS) of the Mumbai Police have detained three Hindus in connection with their investigationinto the recent Malegon blasts. The ATS itself has neither officially denied nor confirmed these reports.
6. The matter is in the initial stages of the investigation. To instil confidence in our Muslim community, the ATS should see that theinvestigation against these Hindus and any others associated with them is carried out thoroughly irrespective of their organisationalaffiliation. Religion is not a mitigating factor in deciding on the culpability of a person suspected of involvement in a criminal act. If they areproved to have participated in the acts of terrorism in Malegain and Modesa, the fact that they are Hindus would not make them any theless criminal or terrorist.
7.Indian criminal laws----the Indian Penal Code, the Indian Evidence Act and the Criminal Procedure Code--- do not talk of the majority or theminorities or even of Indian citizens or foreigners. Their provisions apply to anyone who commits an offence in Indian territory---whether heor she is an Indian national or a foreigner, whatever be his or her religion, language or ethnicity. The arrested persons must be investigatedand proceeded against without worrying about their background or organisational affiliation.
8. Do these arrests strengthen the case for a ban on the Bajrang Dal or any other organisation to which they might have belonged? Or dothey at least call for a characterisation of such orgainsations----even if they be of Hindus---as terrorist organisations? To characterise anorganisation as a terrorist organisation and to take legal action against it ----and not merely against its members---- two types of evidenceare required. Firstly, that its constitution or manifesto advocates the resort to violence amounting to terrorism for achieving its objective.Secondly, that it has been involved in repeated acts of pre-meditated violene which amount to terrorism. One has to wait and see whethersuch evidence surfaces during the investigation. ( 24-10-08)
(The writer is Additional Secretary (retd), Cabinet Secretariat, Govt. of India,New Delhi, and, presently, Director, Institute For Topical Studies,Chennai. E-mail: seventyone2@gmail.com )
Wednesday, October 22, 2008
CHINESE ECONOMY MONITOR---NOTE 1
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 the other countries of the South and the South-East Asian region. If the Chinese economy is badly affected, they too are likely to feel the negative consequences of the down-turn in the Chinese economy. Keeping this in view, we intend brInging out a periodic "Chinese EconomyMonitor" based on open information. Here goes the first Monitor in the series---B.Raman)
CITIC PACIFIC FACES ENQUIRY
The Securities and Futures Commission (SFC) of Hong Kong announced on October 22,2008, that it has undertaken an enquiry into the affairs of the Citic Pacific, the Hong Kong listed branch of the China International Trust and Investment Corporation, following a report submitted by the Citic Pacific to the Hong Kong Stock Exchange on October 20, allegedly admitting that two of its senior executives had entered into unauthorised foreign exchange forward contracts in Euros and Australian dollars, which have already resulted in a loss of US $104 million, with a possibility of further losses, which could run up to another US $ 200 million. Among those reportedly facing enquiry are a Finance Director of the Company and the daughter of the Chairman of the company, who occupied a senior position in the company. It has been reported that pending the enquiry she has already been demoted. Albert Ho, a member of the Hong Kong Legislative Assembly, has accused the company of concealing this information from the investors. The Citic Pacific has reportedly admitted that it became aware ofthis unauthorised transaction on September 7. According to Ho, the company did not mention this in a circular issued by it to the investors on September 12. The prices of the shares of the company fell by 55 per cent on October 21 and by another 10 per cent on October 22.----Source Agence France Presse (AFP).
TOY INDUSTRY IN A CRISIS
2.Another toy factory in China catering to the US market went bankrupt on October 22 and closed down its production, rendering 900 workers jobless. The toy factory is called the Chong Yik Toy company. It is owned by a Hong Kong businessman and is based in Shenzhen in the Guangdong province. Some of the workers have alleged that they were not paid their salaries for the last four months. Some payments were made to them by the company as well as the local Chinese authorities at the time of the termination of their services. Last week, the Hong Kong listed Smart Union Toys factory in Dongguan in the Guangdong province closed down after terminating the services of 7000 workers. According to the Xinhua news agency, in the first seven months of this year, 3631 small scale enterprises producing toys mainly for the US market have closed down due to a decline in the demand for China-made toys from the US. These enterprises, which have closed down, constituted 52.7 per cent of all toy-making companies in China--- Source "South China Morning Post" and AFP.
SHIPPING COMPANIES FACE DIFFICULTIES
3.After the aviation industry, the shipping industry is facing a crisis due to a decrease in demand for cargo space.Share prices of some major shipping companies, which haul bulk freight such as iron ore, coal and grains, have fallen by 50-70 per cent in the past fewmonths."The global economic slowdown will push some shipping lines into bankruptcy," Marc Faber, a famed investor and editor of the"Gloom Boom & Doom" report, told AFP. Standard & Poor's also said this week that the Asian shipping market has suffered double-digit declines on the US-Asia route in June and July, as well as being hit with higher operating costs. There are reports of idle vessels being putto anchor, and question marks over the many orders for new ships that were placed in brighter times, years ahead of expected completion dates. "Pain levels could be high for companies that agreed to pay 2007 top-dollar prices for dry bulk ships, or who agreed to pay highlong-term charters," said an article in the Far Eastern Economic Review this month. Container shipping was hit first earlier this year as demand for Asian-made goods in the US and Europe dropped off.In a chain reaction, Asian factories manufacturing electronics and consumer items for the US and European markets began lowering output, and the need for raw materials has declined. Container shippers, bulk operators and port authorities across the region are reporting slowdowns. Malaysia's Port Klang said it had been hit by a decline in cargo handling since the start of October, due to a retail downturn and lower vehicle sales in the US and Europe. The Shanghai International Port has said that growth in cargo traffic dropped sharply to 9.9 per cent in the first half of 2008 on the "increasingly grave global economy and trade situation". "Faced with the severe economic situation at home and abroad, the port industry has met with the most complicated operation environment in recent years," it said. Hong Kong, which is sensitive to any drop in demand for toys, gadgets and clothes made in the factory-belt of China's southern Guangdong province, said that after an increase of 6.7 per cent in container traffic in August, growth dropped suddenly in September to just 1.2 per cent. "Given the global gloomy economic outlook, Hong Kong is expected to face a much tougher export trade environment," said Hong Kong Container Terminal Operators Association chairman Alan Lee. In Taiwan's seven harbours, volumes fell 2.23 per cent in the nine months to September, and in southern Kaohsiung city, business was down 1.76 per cent. "We are seeing a rapid decline in the volume of exports," an official with the Japanese Shipowners' Association said of the decline in demand. Shipping rates have been falling to levels s not seen since the Asian financial crisis in 1997-1998.A so-called capesize vessel, most commonly used to carry coal and iron ore, now costs under US $11,000 a day to hire, about half the charge in May. Container shipping lines have said they expect cargo demand on the US-Asia route to fall by as much as eight per cent in 2008. "It's a safe statement that no carrier is operating profitably in the eastbound transpacific market today," said Ron Widdows, chairman of the Transpacific Stabilisation Agreement - a forum of major shipping lines. However, the group said vessels are still running at 90 per cent capacity as firms cut costs by consolidating routes and returning chartered vessels, and take advantage of the downturn to lay up ships for repairs.Widdows said the industry was confident that government efforts to unclog global finance would be effective, restoring confidence and paving the way for a shipping recovery in late 2009.---- Source AFP
CONTAINER TRAFFIC DOWN
4. Shanghai's port, one of the world's busiest, has cut its container traffic target for the year by five per cent, blaming the global financial crisis and an economic slowdown.The Shanghai International Port Group's handling volume is expected to reach 28.5 million twenty-foot equivalent units (TEU), less than its earlier target of 30 million TEU.Lower trade volume due to the weakening global economy, slowing domestic growth and natural disasters in China this year have affected the port's container operations.China's economy expanded by nine per cent in the third quarter, the lowest level in about five years as the global credit crisis put a dent in its booming economy.The port operator's container throughput rose 10.4 per cent from a year earlier to 13.82 million TEU in the first half, sharply slower than the growth in 2007, when throughput jumped 20.4 per cent to 26.2 million TEU.In the first nine months of 2008, container processing in Chinese ports rose 14.9 per cent to 94.5 million TEU, 2.2 per cent lower than the first half, according to Ministry of Transport figures.--- Source "Shanghai Securities News" and AFP.
MOVE FOR FINANCIAL WATCHDOG
5.Japan, China and South Korea will set up an Asian watchdog body to monitor the health of financial institutions in a bid to counter global economic chaos.They hope to have the first meeting in Tokyo next month and also invite other Asian nations including the 10 members ofthe Association of Southeast Asian Nations (ASEAN).It would serve as a regional version of the Financial Stability Forum, a panel that advises the Group of Seven major economies and exchanges information among them.Japan also hopes the meeting would discuss enhancing controls on the financial system.The move came as US and European leaders called for an emergency summit in November to discuss ways to restore the battered global financial sector. Japanese Prime Minister Taro Aso is also sounding out whether the South Korean and Chinese leaders can travel to Japan by the end of the year for an inaugural three-way economic summit. Japanese Government officials declined to comment on the reports. ---Source "Yomiuri Shimbun" and the Kyodo news agency.
REAL ESTATE
6.China will exempt property transactions from stamp tax and value-added tax from November 1 to boost the ailing real estate market, state media reported on October 22, citing the Finance Ministry.
IMPACT ON SINO-INDIAN TRADE
My comment: The down-turn in the Chinese economy is likely to affect Sino-Indian bilateral trade which has galloped to a record US $ 30billion and could affect Indian iron ore producers. Iron ore constitutes about 55 per cent of Indian exports to China. With the Olympics over and with the sluggish real estate market and a suspension of the construction of new factories, the demand for steel in China could come down.(22-10-08)
( 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: seventyone2@gmail.com )
( What will be the impact of the global financial and economic melt-down on the Chinese economy? This question should be of interest to the other countries of the South and the South-East Asian region. If the Chinese economy is badly affected, they too are likely to feel the negative consequences of the down-turn in the Chinese economy. Keeping this in view, we intend brInging out a periodic "Chinese EconomyMonitor" based on open information. Here goes the first Monitor in the series---B.Raman)
CITIC PACIFIC FACES ENQUIRY
The Securities and Futures Commission (SFC) of Hong Kong announced on October 22,2008, that it has undertaken an enquiry into the affairs of the Citic Pacific, the Hong Kong listed branch of the China International Trust and Investment Corporation, following a report submitted by the Citic Pacific to the Hong Kong Stock Exchange on October 20, allegedly admitting that two of its senior executives had entered into unauthorised foreign exchange forward contracts in Euros and Australian dollars, which have already resulted in a loss of US $104 million, with a possibility of further losses, which could run up to another US $ 200 million. Among those reportedly facing enquiry are a Finance Director of the Company and the daughter of the Chairman of the company, who occupied a senior position in the company. It has been reported that pending the enquiry she has already been demoted. Albert Ho, a member of the Hong Kong Legislative Assembly, has accused the company of concealing this information from the investors. The Citic Pacific has reportedly admitted that it became aware ofthis unauthorised transaction on September 7. According to Ho, the company did not mention this in a circular issued by it to the investors on September 12. The prices of the shares of the company fell by 55 per cent on October 21 and by another 10 per cent on October 22.----Source Agence France Presse (AFP).
TOY INDUSTRY IN A CRISIS
2.Another toy factory in China catering to the US market went bankrupt on October 22 and closed down its production, rendering 900 workers jobless. The toy factory is called the Chong Yik Toy company. It is owned by a Hong Kong businessman and is based in Shenzhen in the Guangdong province. Some of the workers have alleged that they were not paid their salaries for the last four months. Some payments were made to them by the company as well as the local Chinese authorities at the time of the termination of their services. Last week, the Hong Kong listed Smart Union Toys factory in Dongguan in the Guangdong province closed down after terminating the services of 7000 workers. According to the Xinhua news agency, in the first seven months of this year, 3631 small scale enterprises producing toys mainly for the US market have closed down due to a decline in the demand for China-made toys from the US. These enterprises, which have closed down, constituted 52.7 per cent of all toy-making companies in China--- Source "South China Morning Post" and AFP.
SHIPPING COMPANIES FACE DIFFICULTIES
3.After the aviation industry, the shipping industry is facing a crisis due to a decrease in demand for cargo space.Share prices of some major shipping companies, which haul bulk freight such as iron ore, coal and grains, have fallen by 50-70 per cent in the past fewmonths."The global economic slowdown will push some shipping lines into bankruptcy," Marc Faber, a famed investor and editor of the"Gloom Boom & Doom" report, told AFP. Standard & Poor's also said this week that the Asian shipping market has suffered double-digit declines on the US-Asia route in June and July, as well as being hit with higher operating costs. There are reports of idle vessels being putto anchor, and question marks over the many orders for new ships that were placed in brighter times, years ahead of expected completion dates. "Pain levels could be high for companies that agreed to pay 2007 top-dollar prices for dry bulk ships, or who agreed to pay highlong-term charters," said an article in the Far Eastern Economic Review this month. Container shipping was hit first earlier this year as demand for Asian-made goods in the US and Europe dropped off.In a chain reaction, Asian factories manufacturing electronics and consumer items for the US and European markets began lowering output, and the need for raw materials has declined. Container shippers, bulk operators and port authorities across the region are reporting slowdowns. Malaysia's Port Klang said it had been hit by a decline in cargo handling since the start of October, due to a retail downturn and lower vehicle sales in the US and Europe. The Shanghai International Port has said that growth in cargo traffic dropped sharply to 9.9 per cent in the first half of 2008 on the "increasingly grave global economy and trade situation". "Faced with the severe economic situation at home and abroad, the port industry has met with the most complicated operation environment in recent years," it said. Hong Kong, which is sensitive to any drop in demand for toys, gadgets and clothes made in the factory-belt of China's southern Guangdong province, said that after an increase of 6.7 per cent in container traffic in August, growth dropped suddenly in September to just 1.2 per cent. "Given the global gloomy economic outlook, Hong Kong is expected to face a much tougher export trade environment," said Hong Kong Container Terminal Operators Association chairman Alan Lee. In Taiwan's seven harbours, volumes fell 2.23 per cent in the nine months to September, and in southern Kaohsiung city, business was down 1.76 per cent. "We are seeing a rapid decline in the volume of exports," an official with the Japanese Shipowners' Association said of the decline in demand. Shipping rates have been falling to levels s not seen since the Asian financial crisis in 1997-1998.A so-called capesize vessel, most commonly used to carry coal and iron ore, now costs under US $11,000 a day to hire, about half the charge in May. Container shipping lines have said they expect cargo demand on the US-Asia route to fall by as much as eight per cent in 2008. "It's a safe statement that no carrier is operating profitably in the eastbound transpacific market today," said Ron Widdows, chairman of the Transpacific Stabilisation Agreement - a forum of major shipping lines. However, the group said vessels are still running at 90 per cent capacity as firms cut costs by consolidating routes and returning chartered vessels, and take advantage of the downturn to lay up ships for repairs.Widdows said the industry was confident that government efforts to unclog global finance would be effective, restoring confidence and paving the way for a shipping recovery in late 2009.---- Source AFP
CONTAINER TRAFFIC DOWN
4. Shanghai's port, one of the world's busiest, has cut its container traffic target for the year by five per cent, blaming the global financial crisis and an economic slowdown.The Shanghai International Port Group's handling volume is expected to reach 28.5 million twenty-foot equivalent units (TEU), less than its earlier target of 30 million TEU.Lower trade volume due to the weakening global economy, slowing domestic growth and natural disasters in China this year have affected the port's container operations.China's economy expanded by nine per cent in the third quarter, the lowest level in about five years as the global credit crisis put a dent in its booming economy.The port operator's container throughput rose 10.4 per cent from a year earlier to 13.82 million TEU in the first half, sharply slower than the growth in 2007, when throughput jumped 20.4 per cent to 26.2 million TEU.In the first nine months of 2008, container processing in Chinese ports rose 14.9 per cent to 94.5 million TEU, 2.2 per cent lower than the first half, according to Ministry of Transport figures.--- Source "Shanghai Securities News" and AFP.
MOVE FOR FINANCIAL WATCHDOG
5.Japan, China and South Korea will set up an Asian watchdog body to monitor the health of financial institutions in a bid to counter global economic chaos.They hope to have the first meeting in Tokyo next month and also invite other Asian nations including the 10 members ofthe Association of Southeast Asian Nations (ASEAN).It would serve as a regional version of the Financial Stability Forum, a panel that advises the Group of Seven major economies and exchanges information among them.Japan also hopes the meeting would discuss enhancing controls on the financial system.The move came as US and European leaders called for an emergency summit in November to discuss ways to restore the battered global financial sector. Japanese Prime Minister Taro Aso is also sounding out whether the South Korean and Chinese leaders can travel to Japan by the end of the year for an inaugural three-way economic summit. Japanese Government officials declined to comment on the reports. ---Source "Yomiuri Shimbun" and the Kyodo news agency.
REAL ESTATE
6.China will exempt property transactions from stamp tax and value-added tax from November 1 to boost the ailing real estate market, state media reported on October 22, citing the Finance Ministry.
IMPACT ON SINO-INDIAN TRADE
My comment: The down-turn in the Chinese economy is likely to affect Sino-Indian bilateral trade which has galloped to a record US $ 30billion and could affect Indian iron ore producers. Iron ore constitutes about 55 per cent of Indian exports to China. With the Olympics over and with the sluggish real estate market and a suspension of the construction of new factories, the demand for steel in China could come down.(22-10-08)
( 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: seventyone2@gmail.com )
Tuesday, October 21, 2008
WHY TAMILNET HAS STOPPED GIVING BATTLEFRONT NEWS?
INTERNATIONAL TERRORISM MONITOR-- PAPER NO. 459
B.RAMAN
The Sri Lankan Army advancing towards Kilinochchi in the Northern Province, where the headquarters of the Liberation Tigers of TamilEelam (LTTE) used to be located, and the LTTE cadres deployed for slowing down the advance have been engaged in a do or die battlesince October 17,2008.
2. While claiming that it continues to maintain its advance despite bad weather, the Sri Lankan Army has admitted that it has alreadysuffered 33 fatalities in the latest phase of the battle that started on October 17 and has been brought to a temporary halt due to rains. In anattempt to explain the slowing down of the operations, the Sri Lankan Army has accused the LTTE of using poisonous gas against thetroops.
3. President Mahinda Rajapaksa has also indirectly admitted the slowing down of the operations. The "Daily News" of Sri Lanka has quotedhim as saying at a function of the National Research Council at Colombo on October 20,2008, as follows: "The battle against terrorism whichwe could convincingly win within a few days, is nevertheless prolonged due to the grave concern and the optimum caution exercised by thehighly disciplined Armed Forces who are fighting under severe constraints, to cause no harm or loss to innocent, civilian human life."
4. Thus, while the Army has attributed the slowing down to the alleged use of poisonous gas by the LTTE, the President has attributed it tothe Army's anxiety to avoid civilian casualties.
5. Intriguingly for the last one week, the pro-LTTE web site www.tamilnet.com, which used to give battle front news in the past, has notdone so. One would have expected it to highlight the Army's admission of having sustained 33 fatalities. It has not done so. For more than aweek now, the Tamilnet has been giving mostly political news regarding developments in Tamil Nadu in support of the Sri Lankan Tamilcause and activities of the Sri Lankan Tamil diaspora abroad. If at all it gives operational news, it is generally about the Eastern Province.
6. While www.puthinam.com, a pro-LTTE Tamil web site, continues to give battlefield news, Tamilnet has not been doing so. The only newsabout the latest round of fighting is to be found in the web site of Puthinam, which claims that the LTTE inflicted heavy casualties on theadvancing army.
7. Why the silence of Tamilnet? One has to look for an answer to this question as the fighting continues. (21-10-08)
(The writer is Additional Secretary (retired), Cabinet Secretariat, Govt. of India, New Delhi, and, presently, Director, Institute For TopicalStudies, Chennai. E-mail: seventyone2@gmail.com )
B.RAMAN
The Sri Lankan Army advancing towards Kilinochchi in the Northern Province, where the headquarters of the Liberation Tigers of TamilEelam (LTTE) used to be located, and the LTTE cadres deployed for slowing down the advance have been engaged in a do or die battlesince October 17,2008.
2. While claiming that it continues to maintain its advance despite bad weather, the Sri Lankan Army has admitted that it has alreadysuffered 33 fatalities in the latest phase of the battle that started on October 17 and has been brought to a temporary halt due to rains. In anattempt to explain the slowing down of the operations, the Sri Lankan Army has accused the LTTE of using poisonous gas against thetroops.
3. President Mahinda Rajapaksa has also indirectly admitted the slowing down of the operations. The "Daily News" of Sri Lanka has quotedhim as saying at a function of the National Research Council at Colombo on October 20,2008, as follows: "The battle against terrorism whichwe could convincingly win within a few days, is nevertheless prolonged due to the grave concern and the optimum caution exercised by thehighly disciplined Armed Forces who are fighting under severe constraints, to cause no harm or loss to innocent, civilian human life."
4. Thus, while the Army has attributed the slowing down to the alleged use of poisonous gas by the LTTE, the President has attributed it tothe Army's anxiety to avoid civilian casualties.
5. Intriguingly for the last one week, the pro-LTTE web site www.tamilnet.com, which used to give battle front news in the past, has notdone so. One would have expected it to highlight the Army's admission of having sustained 33 fatalities. It has not done so. For more than aweek now, the Tamilnet has been giving mostly political news regarding developments in Tamil Nadu in support of the Sri Lankan Tamilcause and activities of the Sri Lankan Tamil diaspora abroad. If at all it gives operational news, it is generally about the Eastern Province.
6. While www.puthinam.com, a pro-LTTE Tamil web site, continues to give battlefield news, Tamilnet has not been doing so. The only newsabout the latest round of fighting is to be found in the web site of Puthinam, which claims that the LTTE inflicted heavy casualties on theadvancing army.
7. Why the silence of Tamilnet? One has to look for an answer to this question as the fighting continues. (21-10-08)
(The writer is Additional Secretary (retired), Cabinet Secretariat, Govt. of India, New Delhi, and, presently, Director, Institute For TopicalStudies, Chennai. E-mail: seventyone2@gmail.com )
Monday, October 20, 2008
KILINOCHCHI: THE SPECTRE OF STALINGRAD
INTERNATIONAL TERRORISM MONITOR---PAPER NO.458
B.RAMAN
The Battle of Stalingrad is considered the bloodiest battle with the largest battlefield casualties in the history of conventional warfare.Under a carefully worked out plan, the Soviet Army inveigled an advancing and over-confident Nazi Army into Stalingrad and then inflictedsevere casualties on the Nazi Army. Many of those Nazi soldiers whom the Soviet Army could not kill were killed by "Gen.Winter". The entireSixth Army of the Nazis was trapped by the Soviet troops with the help of "Gen.Winter" and destroyed.
2. As the battle began on July 17,1942, the Nazi Disinformation machine worked overtime to tell an unsuspecting German people that the fallof Stalingrad and the collapse of the Soviet Army were imminent. The German people waited with bated breath for the news of thefall."Within two days", they were told. Two days became two weeks. Two weeks became two months. Two months became seven months.The battle ended disastrously for the Nazis on February 2, 1943. This marked the beginning of the end of the Nazi dreams in the SecondWorld War.
3. Is one seeing a mini version of Stalingrad in the battle for Kilinochchi, the current headqurters of the Liberation Tigers of Tamil Eelam(LTTE)? It is difficult to say on the basis of the scanty information available from the battle front. From even this scanty information, twothings are clear: Firstly, the Sri Lankan Army, which senses victory against the LTTE, has been doing well, but not as well as it claims to be.Secondly, the LTTE has been doing badly, but not as badly as projected to be by the disinformation machine of the Sri Lankan Army . TheLTTE has shown that there is still a lot of fight left in it---- and a lot of intelligence and innovative thinking.
4. But intelligence and innovatrive thinking alone cannot win wars without resources and the wherewithal. The LTTE is deficient on bothcounts. But it has shown itself to be as resilient as the Taliban in Afghanistan and as fiercely-motivated. In 2003, the Americans thought andclaimed that they had finished the Taliban once and for all. Their facile assumptions proved to be wrong. The Taliban came back----as if ithas risen from its much-proclaimed grave--- and has been moving forward relentlessly. Neither air strikes by the most powerful Air Force inthe world nor heavy artillery strikes by the most powerful Army in the world have been able to stop its advance.Reluctantly, senior NATOmilitary commanders in Afghanistasn have started admitting that the war against the Taliban is unwinnable and that one has to search for apolitical solution with neither victory nor defeat for either side. It has not only become unwinnable unless the Taliban commits some serioustactical mistakes, but is also likely to become increasingly unaffordable thanks to the financial and economic melt-down in the US and therest of the world.
5. The LTTE is calculating that if it can keep fighting against the Sri Lankan Army for some more months, a prolonged war against the LTTEcould become as unwinnable and as unaffordable for the rulers of Sri Lanka as a prolonged war against the Taliban for the NATO powers.The rulers of Sri Lanka are living in a fool's paradise if they think that China and Pakistan would come to their rescue if the Government ofIndia stops assisting them under pressure from public opinion in Tamil Nadu. The Pakistani economy is on the verge of a collapse. Even theChinese were reluctant to help out their time-tested friend as they call Pakistan, as President Asif Ali Zardari found to his dismay when hevisited China recently. The Pakistan Army is reeling under one set-back after another inflicted on it by the Taliban. To think that thePakistan Army would rush to Sri Lanka to spite India would be the height of stupidity.
6. The Chinese, who are increasingly worried over the impact of the recession in the US on their manufacturing industries, which are heavilydependent on the US market, are hugging tight their foreign exchange holdings. They were reluctant to make any definitive commitment of help to Zardari. They are even showing a decline of interest in further developing the Gwadar port project. In a world besetwith the most serious economic crisis it has known since the Great Depression of the 1930s, everybody, including China, is interested insaving every dollar and cent he can. Nobody wants a foreign adventure, which might drain off their depleting resources. If the Sri LankanArmy thinks that China would try to rush in if India stops helping, it is in for a disappointment.
7. The LTTE is calculating that if it can keep fighting against the Sri Lankan Army for some more weeks, "Gen.Monsoon" and"Gen.Recession" could put an end to the pipedreams of the Sri Lankan Army of a definitive victory over the LTTE.
8. Will its calculations prove right or will they be belied? Whatever happens, one thing seems likely---- there is going to be no definitivevictory or no definitive defeat for either side in the on-going war.
9. Annexed is an AFP despatch on the present ground situation in the Kilinochchi area.( 20-10-08)
(The writer is Additional Secretary (retired), 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: seventyone2@gmail.com )
ANNEXURE
Tigers blunt Sri Lanka's drive to capture powerbase
COLOMBO, Oct 20, 2008 (AFP) - Dogged resistance by Tamil Tiger guerrillas appears to have held up a Sri Lankan military offensive in thenorth aimed at smashing the rebels' de facto state, analysts and military sources say.
A bullish government earlier this month said it was poised to capture the Tigers' Kilinochchi powerbase, 330 kilometres (206 miles) north ofColombo.
That drive, however, could take longer than anticipated with the separatist Tigers digging in, an army stretching to defend territory alreadyseized, and poor weather hampering operations, the sources say.
Security forces had banked on a quick fall of Kilinochchi, the Liberation Tigers of Tamil Eelam's (LTTE's) political capital.
In early October the army said it was within two kilometres, but since then there has been little forward movement and monsoon rains havealso slowed the troops' advance.
The increased resistance in recent weeks is in sharp contrast to an earlier LTTE fallback that enabled troops to move rapidly into rebelterritory.
'Troops operating in the south of Kilinochchi are making progress, though they have not shown a rapid progress within the past few days,'said defence analyst Ranil Wijayapala in the state-run Daily News.
He blamed adverse weather, with heavy rains currently lashing the north.
Military sources said increased air attacks have failed to soften up Tiger defences for ground troops to smash through, while the army isstretched.
'With the rapid advance last month, the military is also forced to tie down a lot of soldiers to protect areas newly captured from the Tigers,' amilitary officer who declined to be named said.
'The Tigers won't be able to hold Kilinochchi for too long, but they can delay the fall,' the officer said.
Aid sources who have had rare access to the region say the guerrillas have moved civilians out of Kilinochchi and appeared to be digging inby building new bunkers.
Losing Kilinochchi would be a major blow to the Tigers, who set up the town as capital of their mini-state after taking the area fromgovernment forces 10 years ago.
Sri Lanka's military moved to take the town after their success in driving the Tigers from their eastern strongholds in July last year. Themilitary has been keen to replicate that success in the north.
Previous attempts to take Kilinochchi using large columns of troops failed because Tigers deployed suicide bombers against them,persuading the military to switch to more effective smaller units of special forces.
'The success this time is due to the use of small groups across a broad front,' retired brigadier general Vipul Boteju said.
The military says it has killed about 7,500 Tigers since the start of this year, when the government pulled out of a moribund truce arrangedand put in place by Norwegian peace brokers.
But there is also a heavy cost for the military, reflecting the bitterness of the conflict.
Figures tabled in parliament show 1,099 soldiers were killed in the first nine months of 2008, with September seeing the highest number offatalities -- 200 killed and 997 wounded.
Almost 7,000 soldiers were wounded in the first nine months of the year and 396 civilians were killed.
The guerrillas have not released their casualty estimates but say they are putting up stiff resistance.
The government's 2009 defence budget suggests it is braced for a drawn-out military campaign. Colombo allocated a record 177 billionrupees (1.6 billion dollars) for defence in 2009, up from 166 billion rupees in 2008.
But the Tamil Tigers, who took up arms in 1972 for a separatist homeland, have shown in the past they can turn the tables on the military.
Barely six months after government troops captured the Jaffna peninsula in 1995, the Tigers over-ran a military base in the northeast, killingmore than 1,200 soldiers.
The guerrillas also reversed military gains of the previous 19 months in a matter of five days in November 1999, dislodging the military froma key base at the entrance to the Jaffna peninsula.
B.RAMAN
The Battle of Stalingrad is considered the bloodiest battle with the largest battlefield casualties in the history of conventional warfare.Under a carefully worked out plan, the Soviet Army inveigled an advancing and over-confident Nazi Army into Stalingrad and then inflictedsevere casualties on the Nazi Army. Many of those Nazi soldiers whom the Soviet Army could not kill were killed by "Gen.Winter". The entireSixth Army of the Nazis was trapped by the Soviet troops with the help of "Gen.Winter" and destroyed.
2. As the battle began on July 17,1942, the Nazi Disinformation machine worked overtime to tell an unsuspecting German people that the fallof Stalingrad and the collapse of the Soviet Army were imminent. The German people waited with bated breath for the news of thefall."Within two days", they were told. Two days became two weeks. Two weeks became two months. Two months became seven months.The battle ended disastrously for the Nazis on February 2, 1943. This marked the beginning of the end of the Nazi dreams in the SecondWorld War.
3. Is one seeing a mini version of Stalingrad in the battle for Kilinochchi, the current headqurters of the Liberation Tigers of Tamil Eelam(LTTE)? It is difficult to say on the basis of the scanty information available from the battle front. From even this scanty information, twothings are clear: Firstly, the Sri Lankan Army, which senses victory against the LTTE, has been doing well, but not as well as it claims to be.Secondly, the LTTE has been doing badly, but not as badly as projected to be by the disinformation machine of the Sri Lankan Army . TheLTTE has shown that there is still a lot of fight left in it---- and a lot of intelligence and innovative thinking.
4. But intelligence and innovatrive thinking alone cannot win wars without resources and the wherewithal. The LTTE is deficient on bothcounts. But it has shown itself to be as resilient as the Taliban in Afghanistan and as fiercely-motivated. In 2003, the Americans thought andclaimed that they had finished the Taliban once and for all. Their facile assumptions proved to be wrong. The Taliban came back----as if ithas risen from its much-proclaimed grave--- and has been moving forward relentlessly. Neither air strikes by the most powerful Air Force inthe world nor heavy artillery strikes by the most powerful Army in the world have been able to stop its advance.Reluctantly, senior NATOmilitary commanders in Afghanistasn have started admitting that the war against the Taliban is unwinnable and that one has to search for apolitical solution with neither victory nor defeat for either side. It has not only become unwinnable unless the Taliban commits some serioustactical mistakes, but is also likely to become increasingly unaffordable thanks to the financial and economic melt-down in the US and therest of the world.
5. The LTTE is calculating that if it can keep fighting against the Sri Lankan Army for some more months, a prolonged war against the LTTEcould become as unwinnable and as unaffordable for the rulers of Sri Lanka as a prolonged war against the Taliban for the NATO powers.The rulers of Sri Lanka are living in a fool's paradise if they think that China and Pakistan would come to their rescue if the Government ofIndia stops assisting them under pressure from public opinion in Tamil Nadu. The Pakistani economy is on the verge of a collapse. Even theChinese were reluctant to help out their time-tested friend as they call Pakistan, as President Asif Ali Zardari found to his dismay when hevisited China recently. The Pakistan Army is reeling under one set-back after another inflicted on it by the Taliban. To think that thePakistan Army would rush to Sri Lanka to spite India would be the height of stupidity.
6. The Chinese, who are increasingly worried over the impact of the recession in the US on their manufacturing industries, which are heavilydependent on the US market, are hugging tight their foreign exchange holdings. They were reluctant to make any definitive commitment of help to Zardari. They are even showing a decline of interest in further developing the Gwadar port project. In a world besetwith the most serious economic crisis it has known since the Great Depression of the 1930s, everybody, including China, is interested insaving every dollar and cent he can. Nobody wants a foreign adventure, which might drain off their depleting resources. If the Sri LankanArmy thinks that China would try to rush in if India stops helping, it is in for a disappointment.
7. The LTTE is calculating that if it can keep fighting against the Sri Lankan Army for some more weeks, "Gen.Monsoon" and"Gen.Recession" could put an end to the pipedreams of the Sri Lankan Army of a definitive victory over the LTTE.
8. Will its calculations prove right or will they be belied? Whatever happens, one thing seems likely---- there is going to be no definitivevictory or no definitive defeat for either side in the on-going war.
9. Annexed is an AFP despatch on the present ground situation in the Kilinochchi area.( 20-10-08)
(The writer is Additional Secretary (retired), 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: seventyone2@gmail.com )
ANNEXURE
Tigers blunt Sri Lanka's drive to capture powerbase
COLOMBO, Oct 20, 2008 (AFP) - Dogged resistance by Tamil Tiger guerrillas appears to have held up a Sri Lankan military offensive in thenorth aimed at smashing the rebels' de facto state, analysts and military sources say.
A bullish government earlier this month said it was poised to capture the Tigers' Kilinochchi powerbase, 330 kilometres (206 miles) north ofColombo.
That drive, however, could take longer than anticipated with the separatist Tigers digging in, an army stretching to defend territory alreadyseized, and poor weather hampering operations, the sources say.
Security forces had banked on a quick fall of Kilinochchi, the Liberation Tigers of Tamil Eelam's (LTTE's) political capital.
In early October the army said it was within two kilometres, but since then there has been little forward movement and monsoon rains havealso slowed the troops' advance.
The increased resistance in recent weeks is in sharp contrast to an earlier LTTE fallback that enabled troops to move rapidly into rebelterritory.
'Troops operating in the south of Kilinochchi are making progress, though they have not shown a rapid progress within the past few days,'said defence analyst Ranil Wijayapala in the state-run Daily News.
He blamed adverse weather, with heavy rains currently lashing the north.
Military sources said increased air attacks have failed to soften up Tiger defences for ground troops to smash through, while the army isstretched.
'With the rapid advance last month, the military is also forced to tie down a lot of soldiers to protect areas newly captured from the Tigers,' amilitary officer who declined to be named said.
'The Tigers won't be able to hold Kilinochchi for too long, but they can delay the fall,' the officer said.
Aid sources who have had rare access to the region say the guerrillas have moved civilians out of Kilinochchi and appeared to be digging inby building new bunkers.
Losing Kilinochchi would be a major blow to the Tigers, who set up the town as capital of their mini-state after taking the area fromgovernment forces 10 years ago.
Sri Lanka's military moved to take the town after their success in driving the Tigers from their eastern strongholds in July last year. Themilitary has been keen to replicate that success in the north.
Previous attempts to take Kilinochchi using large columns of troops failed because Tigers deployed suicide bombers against them,persuading the military to switch to more effective smaller units of special forces.
'The success this time is due to the use of small groups across a broad front,' retired brigadier general Vipul Boteju said.
The military says it has killed about 7,500 Tigers since the start of this year, when the government pulled out of a moribund truce arrangedand put in place by Norwegian peace brokers.
But there is also a heavy cost for the military, reflecting the bitterness of the conflict.
Figures tabled in parliament show 1,099 soldiers were killed in the first nine months of 2008, with September seeing the highest number offatalities -- 200 killed and 997 wounded.
Almost 7,000 soldiers were wounded in the first nine months of the year and 396 civilians were killed.
The guerrillas have not released their casualty estimates but say they are putting up stiff resistance.
The government's 2009 defence budget suggests it is braced for a drawn-out military campaign. Colombo allocated a record 177 billionrupees (1.6 billion dollars) for defence in 2009, up from 166 billion rupees in 2008.
But the Tamil Tigers, who took up arms in 1972 for a separatist homeland, have shown in the past they can turn the tables on the military.
Barely six months after government troops captured the Jaffna peninsula in 1995, the Tigers over-ran a military base in the northeast, killingmore than 1,200 soldiers.
The guerrillas also reversed military gains of the previous 19 months in a matter of five days in November 1999, dislodging the military froma key base at the entrance to the Jaffna peninsula.
Saturday, October 18, 2008
INDIA AT LONG LAST WISER TO MARITIME THREATS FROM THE WEST
INTERNATIONAL TERRORISM MONITOR---PAPER NO. 457
B.RAMAN
"Maritime counter-terrorism has received considerable attention in India, but till now the focus has naturally and mostly been on maritimecounter-terrorism and security in the waters off Sri Lanka and in the Malacca Strait. There has been inadequate attention to terrorist threatsof a strategic nature from the seas to the west of India---- whether from the Gulf, the Arabian Sea, the Strait of Hormuz or the Mediterranean. Over 80 per cent of the terrorist organisations with a capability for maritime terrorism operate in the areas and seas to the West of India.Over 90 per cent of successful maritime terrorism strikes have taken place in the areas and seas to the West of India. Israel has been thelargest single victim of maritime terrorism in the Mediterrannean, with nearly 60 strikes by organisations such as the Hamas, the Hizbollah,the Popular Front for the Liberation of Palestine (PFLP) etc. The only two successful strikes and one unsuccessful attempt by Al Qaeda wereoff Aden. Almost our entire energy supplies come from this area. The security of the Malacca Strait has limited relevance for our energysecurity, whereas our entire energy security depends on maritime security in the areas to the West of India. One would have, therefore,expected that the concentration of our maritime counter-terrorism efforts would have been on building a database of capabilities, threatsand risks from the areas and seas to the West of India, adopting a vigorous proactive policy of co-operation with the navies of this regionand developing preventive and termination capabilities, which would have relevance in the areas to the West of India. Unfortunately, this isnot so.The Americans do not want our Navy playing any proactive role in maritime security in the waters to the West of India lest it causeany undue concern in the minds of Pakistan. They, therefore, try to keep our Navy confined to the East and the Malacca Strait. We seem tobe happy to go along with this role. This has to change. It is high time the Indian Navy starts paying more attention to threats of maritimeterrorism that could arise from the West. Presently, the deployment of a large number of naval ships belonging to the US-led coalition hasthwarted any other serious incident of maritime terrorism after the suspected Al Qaeda attack on Limburg in October, 2002 and the attackson oil terminals in Iraq post-April, 2003. We should not leave the protection of our shipping and our energy supplies totally in the hands of theUS-led coalition. We should develop our own capabilities and networking with the countries of the region."
---Extract from my article dated December 28,2005, titled MARITIME COUNTER-TERRORISM: NEED TO LOOK WEST athttp://www.southasiaanalysis.org/papers17/paper1655.html
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"The Malacca Strait is not India's life-line. It is the life-line of China and the ASEAN countries. Our presence in the Malacca Strait tickles ourego and gives us a feeling of being a great power, but it does not help in protecting the lives and property of our citizens and our maritimetrade. The major threats to our maritime security are from the seas to the West of us and not to the East of us. Ninety per cent of our foreigntrade in terms of volume and 77 per cent in terms of value and practically all our energy imports pass through the seas to the West of us.There are more Indian and foreign ships with Indian crew in the seas to the West of us than to the East of us. We should reduce our overpre-occupation with the security of the Malacca Strait and devote more attention to our maritime security in the seas to the West of us."
2. This has been a point repeatedly stressed by me in my presentations on maritime security since 2004. I always found myself in a minorityof one. This was so even in a seminar on South-East Asia held at Vizag earlier this year.
3. After a recent increase in the incidents of piracy off the Somali coast and the hijacking of ships with Indian crew by the pirates, theGovernment of India has at long last been forced to take action to fill up the gaps in our maritime security in the seas to the West of us. Onewould have seen on the CNN-IBN news channel two days ago dramatic scenes of the relatives of the crew of a hijacked ship accusing theGovernment of India of inaction in the face of the threats to the lives of their relatives. Of what consolation to them that our naval ships hadin the past rescued some Japanese and Indonesian seamen in the seas to the East of us when we are not able to fulfill the obligation ofprotecting our mercantile seamen in the seas to the west of us? Today, the danger has arisen in a dramatic manner from pirates. Tomorrow,it could be from Al Qaeda or pro-Al Qaeda terrorist groups.
4.On August 15,2008, Somalian pirates hijacked a Japanese-owned merchant vessel MV Stolt Valor with 18 Indians among the 22 sailorson board. Since then, the 18 Indian crew members are being held hostage at a Somalian port and the shipping company is holdingnegotiations with the pirates for their release. India is not the only country to suffer due to the activities of the pirates in this area. Shipscarrying foodgrains and medicines for the starving people of Somalia have also been the targets of attacks by the pirates.
5. In a recent interview, Josette Sheeran, Executive Director of the UN World Food Programme, said: "Time is running out for Somalia. Asmany as three million people — one-third of the country — live under threat of starvation. Their lifeline is the sea, from which food, medicalsupplies, and other aid arrives. And there lies the problem. Heavily armed bands of modern-day pirates in speedboats are terrorising ships inSomalia’s coastal waters. So far this year they have raided more than 50 vessels, stealing cargos and hijacking ships, from private yachts tooil tankers, and extorting some $100 million a year in ransom. Just a few weeks ago, a Ukrainian freighter carrying heavy weaponry,including tanks, was hijacked. A Greek petrochemical carrier was seized, and another attacked, as was an Iranian oil tanker. These piratescurrently hold more than a dozen ships hostage in Somali ports. Ships laden with tens of thousands of tons of maize, sorghum, split peas,and cooking oil from the United Nations World Food Programme and other international aid organisations must navigate these dangerouswaters. Keeping Somalia’s sea-borne supply line open is imperative. It carries 90 per cent of the humanitarian assistance delivered by theWFP, which in turn supplies nearly 90 per cent of the aid that feeds so many Somalis.These pirate terrorists are not particularly powerful.Estimates put their number at around 1,200. But they are growing increasingly brazen, all the more so when not confronted. Since November 2007, following a series of pirate raids, Canada, the Netherlands, Denmark, and France deployed naval frigates to escortWFP aid ships safely into harbour. Under their protection, not a single ship has come under attack, ensuring the uninterrupted flow ofassistance. Yet despite that clear success, the future is uncertain. The Canadian naval mission ends in late October, and no country hasstepped forward to replace it. Without naval escorts, food aid will not get to Somalia. The WFP has stockpiled sufficient supplies to keeprelief flowing for some days. But once those warehouses are empty, the country and its people will be on their own. I am optimistic thatsome nation will come to the rescue — but we must not risk this happening too late, or not at all. Beyond that, we need a long-term plan. Weat the United Nations are duty-bound to do what compassion and human decency demand of us. Is the world really going to stand by andwatch more children die of starvation? Somalia’s political future is uncertain at best. Yet we need to set to work on a plan for deploying aviable multinational force to help secure peace there, or at the very least sustain its people. There is a clear way to begin. The first step isfor some country or countries to volunteer the naval force needed to preserve Somalia’s humanitarian lifeline. The next is to develop acomprehensive strategy, in conjunction with the UN Security Council, to eliminate piracy in Somali waters. "
6.According to news agency reports, Somali pirates have seized more than 30 ships this year and attacked many more. Most attacks havebeen in the Gulf of Aden between Yemen and north Somalia, a major global sea artery used by about 20,000 vessels a year heading to andfrom Suez, including Gulf oil shipments. The most dramatic incident has been the hijacking of an Ukrainian ship MV Faina carrying 33 tanksbound for an unidentified destination. The Kenyan and Ukrainian authorities have claimed that these tanks are meant for Kenya, but theAmericans seem to suspect that the ship was carrying these tanks for the autonomous government of South Sudan, in possiblecontravention of a UN arms embargo.The pirates ,estimated to be 50 in number, are reportedly demanding a ransom of US $ 20 million forreleasing the ship with its cargo and crew. An American and a Russian naval ships have reached the area, but have refrained fromintervening so far---- probably due to some unconfirmed reports that the ship was also carrying some chemicals.
7.A spokesman for the US Navy's 5th Fleet, Lt Nathan Christensen, has been quoted by news agencies as saying that the USS Howard waswithin 8km (5 miles) of the Ukrainian vessel, but refused to say whether they were preparing to attack the pirates. He said the ship's cargoof battle tanks made it a particularly worrying situation. "We're concerned that this might end up in the wrong hands, such as terrorists orviolent extremists," he said.
8. In the wake of these developments, the Government of India announced on October 16,2008,the deployment with immediate effect of an Indian naval warship with helicopters and marine commandoes on board in the Gulf of Aden to carry out anti-piracy patrols on the routeusually followed by Indian commercial vessels between Salalah ( Oman) and Aden (Yemen). A Government spokesperson said: " Thepresence of the Indian Navy warship in this area will be significant as the Gulf of Aden is a major strategic choke point in the Indian Oceanregion and provides access to the Suez Canal through which a sizable portion of India's trade flows. This anti-piracy patrol will be carriedout in co-ordination with the Directorate-General of Shipping , who will keep Indian flagship vessels informed in case they want to travel inthe Indian Ocean along with the Indian Navy ship. The presence of the Indian Navy in the area will help to protect our seaborne trade andinstil confidence in our seafaring community as well as function as a deterrent for pirates."
9. This statement and other clarifications by the Government spokespersons have highlighted the following:
This is a permanent measure to protect vessels with Indian flags and Indian crew carrying goods for India.
It is not a one-shot measure triggered off by the hijacking of a Japanese ship with Indian crew.
The deployment of more ships for the anti-piracy patrol is not ruled out.
The deployment is not a prelude to intervention by the Indian ship to rescue the Indian crew.
10. While this welcome action will to some extent take care of the protection of Indian commercial ships transiting this area, it does notaddress the problem of controlling and eradicating piracy in this area. India alone will not be able to address this menace. It will have to actjointly with the navies of the US, the United Arab Emirates and other Gulf countries and possibly, one day, even Pakistan. This requirescareful study. There is a need for more and sustained joint anti-piracy patrolling and exercises in this area. (18-10-08)
( The writer is Additional Secretary (retd), Cabinet Secretariat, Govt. of India, New Delhi, and, presently, Director, Institute For Topical Studies, Chennai. E-mail: seventyone2@gmail.com )
B.RAMAN
"Maritime counter-terrorism has received considerable attention in India, but till now the focus has naturally and mostly been on maritimecounter-terrorism and security in the waters off Sri Lanka and in the Malacca Strait. There has been inadequate attention to terrorist threatsof a strategic nature from the seas to the west of India---- whether from the Gulf, the Arabian Sea, the Strait of Hormuz or the Mediterranean. Over 80 per cent of the terrorist organisations with a capability for maritime terrorism operate in the areas and seas to the West of India.Over 90 per cent of successful maritime terrorism strikes have taken place in the areas and seas to the West of India. Israel has been thelargest single victim of maritime terrorism in the Mediterrannean, with nearly 60 strikes by organisations such as the Hamas, the Hizbollah,the Popular Front for the Liberation of Palestine (PFLP) etc. The only two successful strikes and one unsuccessful attempt by Al Qaeda wereoff Aden. Almost our entire energy supplies come from this area. The security of the Malacca Strait has limited relevance for our energysecurity, whereas our entire energy security depends on maritime security in the areas to the West of India. One would have, therefore,expected that the concentration of our maritime counter-terrorism efforts would have been on building a database of capabilities, threatsand risks from the areas and seas to the West of India, adopting a vigorous proactive policy of co-operation with the navies of this regionand developing preventive and termination capabilities, which would have relevance in the areas to the West of India. Unfortunately, this isnot so.The Americans do not want our Navy playing any proactive role in maritime security in the waters to the West of India lest it causeany undue concern in the minds of Pakistan. They, therefore, try to keep our Navy confined to the East and the Malacca Strait. We seem tobe happy to go along with this role. This has to change. It is high time the Indian Navy starts paying more attention to threats of maritimeterrorism that could arise from the West. Presently, the deployment of a large number of naval ships belonging to the US-led coalition hasthwarted any other serious incident of maritime terrorism after the suspected Al Qaeda attack on Limburg in October, 2002 and the attackson oil terminals in Iraq post-April, 2003. We should not leave the protection of our shipping and our energy supplies totally in the hands of theUS-led coalition. We should develop our own capabilities and networking with the countries of the region."
---Extract from my article dated December 28,2005, titled MARITIME COUNTER-TERRORISM: NEED TO LOOK WEST athttp://www.southasiaanalysis.org/papers17/paper1655.html
----------------------
"The Malacca Strait is not India's life-line. It is the life-line of China and the ASEAN countries. Our presence in the Malacca Strait tickles ourego and gives us a feeling of being a great power, but it does not help in protecting the lives and property of our citizens and our maritimetrade. The major threats to our maritime security are from the seas to the West of us and not to the East of us. Ninety per cent of our foreigntrade in terms of volume and 77 per cent in terms of value and practically all our energy imports pass through the seas to the West of us.There are more Indian and foreign ships with Indian crew in the seas to the West of us than to the East of us. We should reduce our overpre-occupation with the security of the Malacca Strait and devote more attention to our maritime security in the seas to the West of us."
2. This has been a point repeatedly stressed by me in my presentations on maritime security since 2004. I always found myself in a minorityof one. This was so even in a seminar on South-East Asia held at Vizag earlier this year.
3. After a recent increase in the incidents of piracy off the Somali coast and the hijacking of ships with Indian crew by the pirates, theGovernment of India has at long last been forced to take action to fill up the gaps in our maritime security in the seas to the West of us. Onewould have seen on the CNN-IBN news channel two days ago dramatic scenes of the relatives of the crew of a hijacked ship accusing theGovernment of India of inaction in the face of the threats to the lives of their relatives. Of what consolation to them that our naval ships hadin the past rescued some Japanese and Indonesian seamen in the seas to the East of us when we are not able to fulfill the obligation ofprotecting our mercantile seamen in the seas to the west of us? Today, the danger has arisen in a dramatic manner from pirates. Tomorrow,it could be from Al Qaeda or pro-Al Qaeda terrorist groups.
4.On August 15,2008, Somalian pirates hijacked a Japanese-owned merchant vessel MV Stolt Valor with 18 Indians among the 22 sailorson board. Since then, the 18 Indian crew members are being held hostage at a Somalian port and the shipping company is holdingnegotiations with the pirates for their release. India is not the only country to suffer due to the activities of the pirates in this area. Shipscarrying foodgrains and medicines for the starving people of Somalia have also been the targets of attacks by the pirates.
5. In a recent interview, Josette Sheeran, Executive Director of the UN World Food Programme, said: "Time is running out for Somalia. Asmany as three million people — one-third of the country — live under threat of starvation. Their lifeline is the sea, from which food, medicalsupplies, and other aid arrives. And there lies the problem. Heavily armed bands of modern-day pirates in speedboats are terrorising ships inSomalia’s coastal waters. So far this year they have raided more than 50 vessels, stealing cargos and hijacking ships, from private yachts tooil tankers, and extorting some $100 million a year in ransom. Just a few weeks ago, a Ukrainian freighter carrying heavy weaponry,including tanks, was hijacked. A Greek petrochemical carrier was seized, and another attacked, as was an Iranian oil tanker. These piratescurrently hold more than a dozen ships hostage in Somali ports. Ships laden with tens of thousands of tons of maize, sorghum, split peas,and cooking oil from the United Nations World Food Programme and other international aid organisations must navigate these dangerouswaters. Keeping Somalia’s sea-borne supply line open is imperative. It carries 90 per cent of the humanitarian assistance delivered by theWFP, which in turn supplies nearly 90 per cent of the aid that feeds so many Somalis.These pirate terrorists are not particularly powerful.Estimates put their number at around 1,200. But they are growing increasingly brazen, all the more so when not confronted. Since November 2007, following a series of pirate raids, Canada, the Netherlands, Denmark, and France deployed naval frigates to escortWFP aid ships safely into harbour. Under their protection, not a single ship has come under attack, ensuring the uninterrupted flow ofassistance. Yet despite that clear success, the future is uncertain. The Canadian naval mission ends in late October, and no country hasstepped forward to replace it. Without naval escorts, food aid will not get to Somalia. The WFP has stockpiled sufficient supplies to keeprelief flowing for some days. But once those warehouses are empty, the country and its people will be on their own. I am optimistic thatsome nation will come to the rescue — but we must not risk this happening too late, or not at all. Beyond that, we need a long-term plan. Weat the United Nations are duty-bound to do what compassion and human decency demand of us. Is the world really going to stand by andwatch more children die of starvation? Somalia’s political future is uncertain at best. Yet we need to set to work on a plan for deploying aviable multinational force to help secure peace there, or at the very least sustain its people. There is a clear way to begin. The first step isfor some country or countries to volunteer the naval force needed to preserve Somalia’s humanitarian lifeline. The next is to develop acomprehensive strategy, in conjunction with the UN Security Council, to eliminate piracy in Somali waters. "
6.According to news agency reports, Somali pirates have seized more than 30 ships this year and attacked many more. Most attacks havebeen in the Gulf of Aden between Yemen and north Somalia, a major global sea artery used by about 20,000 vessels a year heading to andfrom Suez, including Gulf oil shipments. The most dramatic incident has been the hijacking of an Ukrainian ship MV Faina carrying 33 tanksbound for an unidentified destination. The Kenyan and Ukrainian authorities have claimed that these tanks are meant for Kenya, but theAmericans seem to suspect that the ship was carrying these tanks for the autonomous government of South Sudan, in possiblecontravention of a UN arms embargo.The pirates ,estimated to be 50 in number, are reportedly demanding a ransom of US $ 20 million forreleasing the ship with its cargo and crew. An American and a Russian naval ships have reached the area, but have refrained fromintervening so far---- probably due to some unconfirmed reports that the ship was also carrying some chemicals.
7.A spokesman for the US Navy's 5th Fleet, Lt Nathan Christensen, has been quoted by news agencies as saying that the USS Howard waswithin 8km (5 miles) of the Ukrainian vessel, but refused to say whether they were preparing to attack the pirates. He said the ship's cargoof battle tanks made it a particularly worrying situation. "We're concerned that this might end up in the wrong hands, such as terrorists orviolent extremists," he said.
8. In the wake of these developments, the Government of India announced on October 16,2008,the deployment with immediate effect of an Indian naval warship with helicopters and marine commandoes on board in the Gulf of Aden to carry out anti-piracy patrols on the routeusually followed by Indian commercial vessels between Salalah ( Oman) and Aden (Yemen). A Government spokesperson said: " Thepresence of the Indian Navy warship in this area will be significant as the Gulf of Aden is a major strategic choke point in the Indian Oceanregion and provides access to the Suez Canal through which a sizable portion of India's trade flows. This anti-piracy patrol will be carriedout in co-ordination with the Directorate-General of Shipping , who will keep Indian flagship vessels informed in case they want to travel inthe Indian Ocean along with the Indian Navy ship. The presence of the Indian Navy in the area will help to protect our seaborne trade andinstil confidence in our seafaring community as well as function as a deterrent for pirates."
9. This statement and other clarifications by the Government spokespersons have highlighted the following:
This is a permanent measure to protect vessels with Indian flags and Indian crew carrying goods for India.
It is not a one-shot measure triggered off by the hijacking of a Japanese ship with Indian crew.
The deployment of more ships for the anti-piracy patrol is not ruled out.
The deployment is not a prelude to intervention by the Indian ship to rescue the Indian crew.
10. While this welcome action will to some extent take care of the protection of Indian commercial ships transiting this area, it does notaddress the problem of controlling and eradicating piracy in this area. India alone will not be able to address this menace. It will have to actjointly with the navies of the US, the United Arab Emirates and other Gulf countries and possibly, one day, even Pakistan. This requirescareful study. There is a need for more and sustained joint anti-piracy patrolling and exercises in this area. (18-10-08)
( The writer is Additional Secretary (retd), Cabinet Secretariat, Govt. of India, New Delhi, and, presently, Director, Institute For Topical Studies, Chennai. E-mail: seventyone2@gmail.com )
Friday, October 17, 2008
CHINA AVOIDS NSG WAIVER INITIATIVE IN FAVOUR OF PAKISTAN
B.RAMAN
President Asif Ali Zardari of Pakistan, who paid a bilateral visit to China from October 14 to 17,2008, was to return to Pakistan on October17 and go back to Beijing on October 23 to attend the summit of the Asia-Europe Meeting (ASEM) being held in Beijing on October 24 and25,2008. It remains to be seen whether he goes back himself as originally scheduled or deputes Prime Minister Yousef Raza Gilani to attendit.
2. Coinciding with his visit, one of the Chinese engineers kidnapped by the Swat branch of the Tehrik-e-Taliban Pakistan (TTP) on August29,2008, reportedly managed to escape from custody and was picked up by a helicopter of the Pakistan Army before the TTP couldre-capture him. However, the other engineer, who also managed to escape, was reportedly re-captured by the TTP before he could bepicked up by the Pakistan Army.
3. This kidnapping incident, coming in the wake of three other incidents directed against Chinese nationals in Pakistan last year, is learnt tohave figured prominently in the one-to-one discussions of Zardari with important Chinese investors and businessmen during which heinvited them to invest more in Pakistan. Among those who called on him were Ma Zhigeng, Chairman of the NORINCO, Zhang Liansheng,Chairman of the Poly Technologies, Liu Minkang, Chairman, Chinese Banking and Regulatory Authority, and Fan Jixiang, President of the Sinohydro.
4.In an interview to the "People's Daily", Zardari claimed that the Chinese business executives, who met him, had expressed no securityconcerns about Pakistan. “I met with heads of many companies and 99.9 per cent told me how secure they were feeling,” he said. He addedthat though Pakistan had some problems, the Government was giving full attention to address the situation. He also said that he wastrying to convince everyone that terrorism was a regional as well as an international problem and that the international community shouldcome forward as Pakistan could not fight it alone. “We are looking towards the world for cooperation in curbing this menace.”
5. Jin Zheping, the Deputy General Manager of the China International Water and Electricity Corporation (CWE), is reported to have assuredZardari that the CWE would invest $1.7 billion for generating low-cost hydel electricity in Pakistan. A memorandum of understanding hasalready been signed for CWE assistance to one hydel project (the Bhasa dam) and CWE assistance for another (the Kohala dam) is undernegotiation.
6. The visit also saw the announcement of Chinese assistance for launching a telecommunication satellite, named PakSat-1R, for Pakistanin 2011. The assistance will be provided by the China Great Wall Industry Corporation (CGWIC).
7. Among important Chinese leaders whom Zardari met were President Hu Jintao, Prime Minister Wen Jiabao, Jia Qinglin, Chairman of theChinese People’s Political Consultative Conference, and Wu Bannguo, Chairman of the National People's Congress. While the atmosphere ofthe visit and meetings had the usual warmth and friendliness marking China-Pakistan bilateral exchanges, in terms of concrete outcome thevisit was not quite satisfactory from the Pakistani point of view.
8. Zardari was expecting three concrete results relating to an immediate Chinese credit to enable Pakistan meet its payment difficulties andavoid default of its international obligations due early next year, a Chinese initiative to get for Pakistan a waiver of the restrictions onnuclear trade from the Nuclear Suppliers' Group (NSG) similar to the initiative taken by the US to get a waiver for India and a firm declarationof Chinese interest in the three pending proposals for a petrochemical complex in Gwadar and a railway line and a gas pipeline connectingGwadar with the Xinjiang region of China.
9. Briefing the media after Zardari's meeting with Wen Jiabao on October 16, Qin Gang, a spokesperson of the Chinese Foreign Office, said:"As a long friend of Pakistan, China understands it is facing some financial difficulties.We’re ready to support and help Pakistan within ourcapability.” But he did not mention any specific figure of the credit which China would be prepared to extend. China had agreed to provide$500 million in a concessional loan to help Pakistan meet its balance of payment needs in April last.
10.Before Zardari's arrival in Beijing, Masood Khan, Pakistan's Ambassador to China, had claimed that an agreement on civilian nuclearco-operation with China could be reached during the visit. No such agreement figures in the list of agreements signed by the two countriesduring the visit as released by the Xinhua, the Chinese New Agency. (Annexure).
11. It is, however, learnt from reliable sources that while the Chinese reiterated their commitment in principle made to Pervez Musharraf tosupply two more nuclear power stations (Chashmas III and IV ), they avoided any commitment on Pakistan's request for a Chinese initiative to get an NSG waiver. Without such a waiver, Chashmas III and IV would remain non-starters. In view of the expected US opposition to anywaiver till Pakistan allows the International Atomic Energy Agency (IAEA) to have Dr.A.Q.Khan, the Pakistani nuclear scientist, interrogatedby an independent team of investigators on his non-proliferation activities, China is not confident of a waiver in favour of Pakistan till theA.Q. Khan issue is resolved. It reportedly does not want to take any initiative in this matter lest it face an embarrassment if its proposal isrejected by the NSG. The present Government in Pakistan, like the previous Government of Musharraf, is opposed to any IAEA interrogationof Khan. The Chinese are also not very keen on that since Khan knows a lot not only about the proliferation activities of Pakistan, but also ofChina.
12. Farhan Bokhari, the Islamabad correspondent of the CBS News of the US, has reported as follows: "China has privately agreed to followa "step-by-step" approach to fulfilling Pakistan’s aspiration for an expanded nuclear energy program, rather than sign an ambitious civilnuclear program of the kind recently struck between the U.S. and India, senior Pakistani and Western officials said on Thursday (October16). Private discussions are believed to have been held on expanded nuclear cooperation between Pakistan’s president Asif Ali Zardari andChinese leaders during Zardari’s four-day visit to China.A senior Pakistani government official, familiar with discussions between Zardari andChinese officials, claimed Thursday that China had agreed to “consider further nuclear power reactors to fulfill our needs. The relationship(on the nuclear issue) remains intact”. Speaking to CBS News on condition of anonymity, the official added, “there is now a completeunderstanding on our future cooperation”. However, a second Pakistani official who spoke to CBS News on condition of anonymity saidChina is eager to avoid a direct confrontation with the West on its nuclear energy cooperation with Pakistan. “China is not seeking ahead-on clash with anyone. It wants to broaden its relations with Pakistan but without the risk of a stiff U.S. reaction,” said the official. U.S. reluctance to offer a civil nuclear power agreement to Pakistan stems mainly from revelations in 2004 that Abdul Qadeer Khan, thefounder of Pakistan’s nuclear weapons program, traded nuclear secrets and technology with Iran, Libya and North Korea. Khan hasremained effectively under house arrest since then. Requests from the Western officials, notably the U.S., to interview Khan have all beendenied by the Pakistani government."
13. There was no reference to the pending Gwadar proposals during the visit. The bilateral trade between the two countries touched US$7billion last year ($ 30 billion between India and China). It was agreed that the two countries would try to increase it to US$15 billion by2011.(18-10-08)
(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: seventyone2@gmail.com )
ANNEXURE
Text of Pakistan-China joint statement
The following is the text of the joint statement between China and Pakistan issued on October 16, 2008, after the end of the formal talksbetween the leaders of the two countries.
“On the invitation of President Hu Jintao, President Asif Ali Zardari paid a state visit to China on 14-17 October 2008.
President Hu Jintao held talks with President Zardari. Wu Bangguo, Chairman of the Standing Committee of the National People’s Congress,Wen Jiabao, Premier of the State Council, and Jia Qinglin, Chairman of the Chinese People’s Political Consultative Conference, met Zardari respectively.
Talks between the two presidents and Zardari’s meetings with other Chinese state leaders were characterized by traditional warmth,friendship and mutual understanding. The two leaders reached broad agreement on strengthening China-Pakistan strategic partnership of co-operation and on international and regional issues of mutual interest under the new circumstances. The Pakistani president also heldwide-ranging discussions with the leaders of Chinese corporations and financials institutions.
The leaders of the two countries reviewed with satisfaction the growth of China-Pakistan relations over the past 57 years since the twocountries established diplomatic ties. They agreed that the friendship between China and Pakistan has withstood the test of time andpractice, notwithstanding changes in the international, regional and domestic environments.
The all-weather friendship and all-round cooperation have become the distinctive features of China-Pakistan relations.
Both sides agreed that it is essential that the two sides make continuous efforts to strengthen good neighbourly relations and friendship,develop mutually beneficial cooperation and deepen strategic partnership of co-operation between China and Pakistan which serves thefundamental interests of the two peoples and contributes to peace and development in the region.
Both sides agreed that the Treaty of Friendship, Co-operation and Good-neighbourly Relations between the People’s Republic of China andthe Islamic Republic of Pakistan (Treaty) signed in April 2005 is of great historic and immediate significance, laying a solid legal foundationfor the long-term, stable and healthy growth of China-Pakistan relations. Both sides decided to abide by the policies and principlesenshrined in the Treaty, earnestly implement the bilateral legal documents signed since the two countries established diplomatic ties andfurther intensify cooperation in the areas of economy, defence, science and technology, people to people contact, thus constantlyadvancing the China-Pakistan strategic partnership of co-operation.
China stressed that Pakistan is China’s good neighbour, close friend, dear brother and trusted partner. China will continue to viewChina-Pakistan relations from a strategic and long-term perspective, and make joint efforts with Pakistan to lift China-Pakistan Strategicpartnership of co-operation to a new high.
Pakistan stressed that Pakistan-China relationship is the cornerstone of its foreign policy, and friendship with China represents the commondesire of all Pakistani people. Pakistan appreciated the strong support and assistance provided by the Government and people of China toPakistan in its economic development. Pakistan remained committed to continuing its policy of friendship towards China and makingunremitting efforts to promote the healthy and steady growth of relations between the two countries.
Pakistan unequivocally upholds the one-China policy and considers Taiwan as an inseparable part of the People’s Republic of China andsupports all efforts made by the Chinese government to realize national reunification.
China appreciated Pakistan’s long-term and staunch support to China on issues concerning China’s sovereignty and territorial integrity,reaffirmed its support for Pakistan’s effort to uphold its sovereignty, independence and territorial integrity, and appreciated Pakistan’simportant role in promoting regional peace, stability and security and strengthening international counter-terrorism efforts.
Both sides opposed to all forms of terrorism, extremism and separatism, resolved to co-operate with each other to fight theabove-mentioned three forces. China conveyed its complete support to Pakistan’s commitment and efforts to fight terrorism andappreciated the sacrifices made by the government and people of Pakistan in this regard.
The two sides agreed that economic co-operation is an important part in the strategic partnership between the two countries. The twocountries enjoy great economic complementarity and should fully tap the potential and comprehensively deepen mutually beneficial co-operation in the economic field.
Both sides agreed to fast track the implementation of the Five Year Development Programme on Economic Co-operation and make full useof the Free Trade Agreement in Goods and Investment and Pakistan-China Joint Investment Company. In this regard, they agreed toconvene a meeting of Pakistan-China Economic Co-operation Group under the Five Year Development Programme on Economic Co-operationat an early date. They also agreed to hold the next meeting of the Joint Economic Commission at the convenience of both countries.
Both sides agreed to enhance co-operation to further develop and boost Pakistan’s Mineral and Energy sectors as well as broaden financialand banking sector co-operation. They also agreed to further enhance ‘connectivity’ by developing new communication links including fibreoptic links. They agreed to explore the concept of Integrated Border Management, overland trade and development of trans-bordereconomic zones.
Both sides agreed to maintain communication and co-ordination on major international and regional issues to safeguard their commoninterests. Both sides agreed to continue to co-operate closely on issues such as the reform of the United Nations, climate change andenergy and food security to promote world peace and development.
Zardari offered congratulations to the Chinese government and people on the successful hosting of the Beijing Olympic Games and thesuccessful completion of Shenzhou VII’s mission. Hu Jintao congratulated Zardari on his election as the president of Pakistan and thankedPakistan for its valuable assistance in the wake of the devastating earthquake in Wenchuan, China. He also appreciated Pakistan’s supportto ensure the success of the Beijing Olympics and Paralympics Games. Pakistan applauded the outstanding achievements China has madein the 30 years of reform and opening-up and believes that China’s development will contribute to world peace and prosperity.
Zardari invited Hu Jintao to visit Pakistan once again at his convenience. Chinese president thanked Pakistani president for his kind invitation.
Both sides signed the following agreements and memoranda of understandings (MoUs) during the visit:
1. Agreement on economic and technical co-operation between the Government of the Islamic Republic of Pakistan and the Government ofthe People’s Republic of China.
2. Amending protocol to free trade agreement between the Government of the People’s Republic of China and the Government of the IslamicRepublic of Pakistan.
3. Framework Agreement on co-operation in the field of minerals between the national development and reforms committee of the People’sRepublic of China and the Ministry of Petroleum and Natural Resources of Pakistan.
4. MoU on co-operation between the Ministry of Land Resources of the People’s Republic of China and the Ministry of Petroleum and NaturalResources of Pakistan.
5. Agreement on environmental protection co-operation between the Ministry of Environmental Protection of the People’s Republic of Chinaand the Ministry of Environment of Pakistan.
6. Framework agreement for co-operation in the field of radio and television between the state administration of radio, film and television,Government of the People’s Republic of China and the Ministry of Information and Broadcasting, Government of the Islamic Republic ofPakistan.
7. Paksat-1R satellite procurement contract by and between China Great Wall Industry Corporation (CGWIC) and Pakistan Space and UpperAtmosphere Research Commission (SUPARCO).
8. MoU on scientific collaboration in agricultural research and technical co-operation between Chinese Academy of Agricultural Sciencesand Agricultural Research Council of Pakistan.
9. Agreement on properties exchange between the Ministry of Foreign Affairs of the People’s Republic of China and the Ministry of ForeignAffairs of the Islamic Republic of Pakistan.
10. Co-operation agreement between Beijing Museum of Natural History of the People’s Republic of China and the Museum of Natural Historyof the Islamic Republic of Pakistan.
11. MoU on co-operation between the cricket association of the People’s Republic of China and the Cricket Board of the Islamic Republic ofPakistan.
12. MoU regarding the project of x-ray container and vehicle inspection system between NUCTECH Company Limited, Tsinghua University,the Ministry of Education of the Peoples Republic of China and the Ministry of Interior of the Islamic Republic of Pakistan.
President Asif Ali Zardari of Pakistan, who paid a bilateral visit to China from October 14 to 17,2008, was to return to Pakistan on October17 and go back to Beijing on October 23 to attend the summit of the Asia-Europe Meeting (ASEM) being held in Beijing on October 24 and25,2008. It remains to be seen whether he goes back himself as originally scheduled or deputes Prime Minister Yousef Raza Gilani to attendit.
2. Coinciding with his visit, one of the Chinese engineers kidnapped by the Swat branch of the Tehrik-e-Taliban Pakistan (TTP) on August29,2008, reportedly managed to escape from custody and was picked up by a helicopter of the Pakistan Army before the TTP couldre-capture him. However, the other engineer, who also managed to escape, was reportedly re-captured by the TTP before he could bepicked up by the Pakistan Army.
3. This kidnapping incident, coming in the wake of three other incidents directed against Chinese nationals in Pakistan last year, is learnt tohave figured prominently in the one-to-one discussions of Zardari with important Chinese investors and businessmen during which heinvited them to invest more in Pakistan. Among those who called on him were Ma Zhigeng, Chairman of the NORINCO, Zhang Liansheng,Chairman of the Poly Technologies, Liu Minkang, Chairman, Chinese Banking and Regulatory Authority, and Fan Jixiang, President of the Sinohydro.
4.In an interview to the "People's Daily", Zardari claimed that the Chinese business executives, who met him, had expressed no securityconcerns about Pakistan. “I met with heads of many companies and 99.9 per cent told me how secure they were feeling,” he said. He addedthat though Pakistan had some problems, the Government was giving full attention to address the situation. He also said that he wastrying to convince everyone that terrorism was a regional as well as an international problem and that the international community shouldcome forward as Pakistan could not fight it alone. “We are looking towards the world for cooperation in curbing this menace.”
5. Jin Zheping, the Deputy General Manager of the China International Water and Electricity Corporation (CWE), is reported to have assuredZardari that the CWE would invest $1.7 billion for generating low-cost hydel electricity in Pakistan. A memorandum of understanding hasalready been signed for CWE assistance to one hydel project (the Bhasa dam) and CWE assistance for another (the Kohala dam) is undernegotiation.
6. The visit also saw the announcement of Chinese assistance for launching a telecommunication satellite, named PakSat-1R, for Pakistanin 2011. The assistance will be provided by the China Great Wall Industry Corporation (CGWIC).
7. Among important Chinese leaders whom Zardari met were President Hu Jintao, Prime Minister Wen Jiabao, Jia Qinglin, Chairman of theChinese People’s Political Consultative Conference, and Wu Bannguo, Chairman of the National People's Congress. While the atmosphere ofthe visit and meetings had the usual warmth and friendliness marking China-Pakistan bilateral exchanges, in terms of concrete outcome thevisit was not quite satisfactory from the Pakistani point of view.
8. Zardari was expecting three concrete results relating to an immediate Chinese credit to enable Pakistan meet its payment difficulties andavoid default of its international obligations due early next year, a Chinese initiative to get for Pakistan a waiver of the restrictions onnuclear trade from the Nuclear Suppliers' Group (NSG) similar to the initiative taken by the US to get a waiver for India and a firm declarationof Chinese interest in the three pending proposals for a petrochemical complex in Gwadar and a railway line and a gas pipeline connectingGwadar with the Xinjiang region of China.
9. Briefing the media after Zardari's meeting with Wen Jiabao on October 16, Qin Gang, a spokesperson of the Chinese Foreign Office, said:"As a long friend of Pakistan, China understands it is facing some financial difficulties.We’re ready to support and help Pakistan within ourcapability.” But he did not mention any specific figure of the credit which China would be prepared to extend. China had agreed to provide$500 million in a concessional loan to help Pakistan meet its balance of payment needs in April last.
10.Before Zardari's arrival in Beijing, Masood Khan, Pakistan's Ambassador to China, had claimed that an agreement on civilian nuclearco-operation with China could be reached during the visit. No such agreement figures in the list of agreements signed by the two countriesduring the visit as released by the Xinhua, the Chinese New Agency. (Annexure).
11. It is, however, learnt from reliable sources that while the Chinese reiterated their commitment in principle made to Pervez Musharraf tosupply two more nuclear power stations (Chashmas III and IV ), they avoided any commitment on Pakistan's request for a Chinese initiative to get an NSG waiver. Without such a waiver, Chashmas III and IV would remain non-starters. In view of the expected US opposition to anywaiver till Pakistan allows the International Atomic Energy Agency (IAEA) to have Dr.A.Q.Khan, the Pakistani nuclear scientist, interrogatedby an independent team of investigators on his non-proliferation activities, China is not confident of a waiver in favour of Pakistan till theA.Q. Khan issue is resolved. It reportedly does not want to take any initiative in this matter lest it face an embarrassment if its proposal isrejected by the NSG. The present Government in Pakistan, like the previous Government of Musharraf, is opposed to any IAEA interrogationof Khan. The Chinese are also not very keen on that since Khan knows a lot not only about the proliferation activities of Pakistan, but also ofChina.
12. Farhan Bokhari, the Islamabad correspondent of the CBS News of the US, has reported as follows: "China has privately agreed to followa "step-by-step" approach to fulfilling Pakistan’s aspiration for an expanded nuclear energy program, rather than sign an ambitious civilnuclear program of the kind recently struck between the U.S. and India, senior Pakistani and Western officials said on Thursday (October16). Private discussions are believed to have been held on expanded nuclear cooperation between Pakistan’s president Asif Ali Zardari andChinese leaders during Zardari’s four-day visit to China.A senior Pakistani government official, familiar with discussions between Zardari andChinese officials, claimed Thursday that China had agreed to “consider further nuclear power reactors to fulfill our needs. The relationship(on the nuclear issue) remains intact”. Speaking to CBS News on condition of anonymity, the official added, “there is now a completeunderstanding on our future cooperation”. However, a second Pakistani official who spoke to CBS News on condition of anonymity saidChina is eager to avoid a direct confrontation with the West on its nuclear energy cooperation with Pakistan. “China is not seeking ahead-on clash with anyone. It wants to broaden its relations with Pakistan but without the risk of a stiff U.S. reaction,” said the official. U.S. reluctance to offer a civil nuclear power agreement to Pakistan stems mainly from revelations in 2004 that Abdul Qadeer Khan, thefounder of Pakistan’s nuclear weapons program, traded nuclear secrets and technology with Iran, Libya and North Korea. Khan hasremained effectively under house arrest since then. Requests from the Western officials, notably the U.S., to interview Khan have all beendenied by the Pakistani government."
13. There was no reference to the pending Gwadar proposals during the visit. The bilateral trade between the two countries touched US$7billion last year ($ 30 billion between India and China). It was agreed that the two countries would try to increase it to US$15 billion by2011.(18-10-08)
(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: seventyone2@gmail.com )
ANNEXURE
Text of Pakistan-China joint statement
The following is the text of the joint statement between China and Pakistan issued on October 16, 2008, after the end of the formal talksbetween the leaders of the two countries.
“On the invitation of President Hu Jintao, President Asif Ali Zardari paid a state visit to China on 14-17 October 2008.
President Hu Jintao held talks with President Zardari. Wu Bangguo, Chairman of the Standing Committee of the National People’s Congress,Wen Jiabao, Premier of the State Council, and Jia Qinglin, Chairman of the Chinese People’s Political Consultative Conference, met Zardari respectively.
Talks between the two presidents and Zardari’s meetings with other Chinese state leaders were characterized by traditional warmth,friendship and mutual understanding. The two leaders reached broad agreement on strengthening China-Pakistan strategic partnership of co-operation and on international and regional issues of mutual interest under the new circumstances. The Pakistani president also heldwide-ranging discussions with the leaders of Chinese corporations and financials institutions.
The leaders of the two countries reviewed with satisfaction the growth of China-Pakistan relations over the past 57 years since the twocountries established diplomatic ties. They agreed that the friendship between China and Pakistan has withstood the test of time andpractice, notwithstanding changes in the international, regional and domestic environments.
The all-weather friendship and all-round cooperation have become the distinctive features of China-Pakistan relations.
Both sides agreed that it is essential that the two sides make continuous efforts to strengthen good neighbourly relations and friendship,develop mutually beneficial cooperation and deepen strategic partnership of co-operation between China and Pakistan which serves thefundamental interests of the two peoples and contributes to peace and development in the region.
Both sides agreed that the Treaty of Friendship, Co-operation and Good-neighbourly Relations between the People’s Republic of China andthe Islamic Republic of Pakistan (Treaty) signed in April 2005 is of great historic and immediate significance, laying a solid legal foundationfor the long-term, stable and healthy growth of China-Pakistan relations. Both sides decided to abide by the policies and principlesenshrined in the Treaty, earnestly implement the bilateral legal documents signed since the two countries established diplomatic ties andfurther intensify cooperation in the areas of economy, defence, science and technology, people to people contact, thus constantlyadvancing the China-Pakistan strategic partnership of co-operation.
China stressed that Pakistan is China’s good neighbour, close friend, dear brother and trusted partner. China will continue to viewChina-Pakistan relations from a strategic and long-term perspective, and make joint efforts with Pakistan to lift China-Pakistan Strategicpartnership of co-operation to a new high.
Pakistan stressed that Pakistan-China relationship is the cornerstone of its foreign policy, and friendship with China represents the commondesire of all Pakistani people. Pakistan appreciated the strong support and assistance provided by the Government and people of China toPakistan in its economic development. Pakistan remained committed to continuing its policy of friendship towards China and makingunremitting efforts to promote the healthy and steady growth of relations between the two countries.
Pakistan unequivocally upholds the one-China policy and considers Taiwan as an inseparable part of the People’s Republic of China andsupports all efforts made by the Chinese government to realize national reunification.
China appreciated Pakistan’s long-term and staunch support to China on issues concerning China’s sovereignty and territorial integrity,reaffirmed its support for Pakistan’s effort to uphold its sovereignty, independence and territorial integrity, and appreciated Pakistan’simportant role in promoting regional peace, stability and security and strengthening international counter-terrorism efforts.
Both sides opposed to all forms of terrorism, extremism and separatism, resolved to co-operate with each other to fight theabove-mentioned three forces. China conveyed its complete support to Pakistan’s commitment and efforts to fight terrorism andappreciated the sacrifices made by the government and people of Pakistan in this regard.
The two sides agreed that economic co-operation is an important part in the strategic partnership between the two countries. The twocountries enjoy great economic complementarity and should fully tap the potential and comprehensively deepen mutually beneficial co-operation in the economic field.
Both sides agreed to fast track the implementation of the Five Year Development Programme on Economic Co-operation and make full useof the Free Trade Agreement in Goods and Investment and Pakistan-China Joint Investment Company. In this regard, they agreed toconvene a meeting of Pakistan-China Economic Co-operation Group under the Five Year Development Programme on Economic Co-operationat an early date. They also agreed to hold the next meeting of the Joint Economic Commission at the convenience of both countries.
Both sides agreed to enhance co-operation to further develop and boost Pakistan’s Mineral and Energy sectors as well as broaden financialand banking sector co-operation. They also agreed to further enhance ‘connectivity’ by developing new communication links including fibreoptic links. They agreed to explore the concept of Integrated Border Management, overland trade and development of trans-bordereconomic zones.
Both sides agreed to maintain communication and co-ordination on major international and regional issues to safeguard their commoninterests. Both sides agreed to continue to co-operate closely on issues such as the reform of the United Nations, climate change andenergy and food security to promote world peace and development.
Zardari offered congratulations to the Chinese government and people on the successful hosting of the Beijing Olympic Games and thesuccessful completion of Shenzhou VII’s mission. Hu Jintao congratulated Zardari on his election as the president of Pakistan and thankedPakistan for its valuable assistance in the wake of the devastating earthquake in Wenchuan, China. He also appreciated Pakistan’s supportto ensure the success of the Beijing Olympics and Paralympics Games. Pakistan applauded the outstanding achievements China has madein the 30 years of reform and opening-up and believes that China’s development will contribute to world peace and prosperity.
Zardari invited Hu Jintao to visit Pakistan once again at his convenience. Chinese president thanked Pakistani president for his kind invitation.
Both sides signed the following agreements and memoranda of understandings (MoUs) during the visit:
1. Agreement on economic and technical co-operation between the Government of the Islamic Republic of Pakistan and the Government ofthe People’s Republic of China.
2. Amending protocol to free trade agreement between the Government of the People’s Republic of China and the Government of the IslamicRepublic of Pakistan.
3. Framework Agreement on co-operation in the field of minerals between the national development and reforms committee of the People’sRepublic of China and the Ministry of Petroleum and Natural Resources of Pakistan.
4. MoU on co-operation between the Ministry of Land Resources of the People’s Republic of China and the Ministry of Petroleum and NaturalResources of Pakistan.
5. Agreement on environmental protection co-operation between the Ministry of Environmental Protection of the People’s Republic of Chinaand the Ministry of Environment of Pakistan.
6. Framework agreement for co-operation in the field of radio and television between the state administration of radio, film and television,Government of the People’s Republic of China and the Ministry of Information and Broadcasting, Government of the Islamic Republic ofPakistan.
7. Paksat-1R satellite procurement contract by and between China Great Wall Industry Corporation (CGWIC) and Pakistan Space and UpperAtmosphere Research Commission (SUPARCO).
8. MoU on scientific collaboration in agricultural research and technical co-operation between Chinese Academy of Agricultural Sciencesand Agricultural Research Council of Pakistan.
9. Agreement on properties exchange between the Ministry of Foreign Affairs of the People’s Republic of China and the Ministry of ForeignAffairs of the Islamic Republic of Pakistan.
10. Co-operation agreement between Beijing Museum of Natural History of the People’s Republic of China and the Museum of Natural Historyof the Islamic Republic of Pakistan.
11. MoU on co-operation between the cricket association of the People’s Republic of China and the Cricket Board of the Islamic Republic ofPakistan.
12. MoU regarding the project of x-ray container and vehicle inspection system between NUCTECH Company Limited, Tsinghua University,the Ministry of Education of the Peoples Republic of China and the Ministry of Interior of the Islamic Republic of Pakistan.
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