B.RAMAN
( These comments were sent by me in response to a query from a leading Washington DC-based think tank on Indian perceptions ofPresident-elect Barrack Obama)
There were initial concerns in India over the likely implications to India's national interests during an Obama Presidency. These concernsarose from the following factors:
(a). Obama's initial opposition in the Senate to the Indo-US civilian nuclear co-operation agreement, though he subsequently supported it.
(b). The reportedly active role played by Richard Holbroke and Madeleine Albright in advising him on foreign policy issues during the electioncampaign. Both were seen in India as advocates of a more intrusive role by the US in matters such as a settlement of the Kashmir issue andaddressing the Pakistani concerns over the increasing Indian presence in Afghanistan.
2. The fact that a large number of influential Americans of Indian origin had supported the Bush administration and that many ofthem---except Americans of Indian origin in Chicago--- had switched their support to Hillary Clinton during the primaries also influencedIndian perceptions of Obama.
3. These concerns are likely to be mitigated by reports that Obama is likely to nominate Hillary Clinton as his Secretary of State. She enjoysa positive image in the Indo-American community as well as in India. It is remembered that the Indo-American community played an activerole in her campaign to win the election to the Senate. They remained loyal to her during the entire primary campaign and switched theirsupport to Obama only after she had withdrawn from the race.
4. There were ups and downs in India's relations with the US during the presidency of Bill Clinton. During his first term he was viewed asinsensitive to India's interests and concerns. This perception got strengthened after his negative reaction to India's nuclear tests in 1998.The Kargil military conflict between India and Pakistan in 1999 saw a thawing of the cold vibrations, which had set in between India andthe US. What was seen as his support for India and his criticism of Pakistan for violating the Line of Control (LOC) in Jammu & Kashmir andthe active behind the scene role played by him in pressuring Pakistan to withdraw its troops from Indian territory in the Kargil areacontributed to a change in the Indian perceptions from negative to positive. This change was reflected in the extraordinarily warm welcomehe received during his visit to India in March 2000.
5. Despite this, the Clinton Administration, like other Democratic Administrations that preceded it, thought of India more tactically than strategically.-----more in terms of American business interests in catering to India's large middle class than in terms of the role which Indiacan and ought to play in the Asian---and ultimately global--- stage in the years to come.
6. It goes to the credit of President George Bush and his Secretary of State Condolleezza Rice that they started thinking of India morestrategically than tactically---- as an Asian power on par with China, as a power to be reckoned with and as a power with a tremendouspotential for playing a benign role on the world stage. The remarkable improvement in Indo-US relations under the inspiration of Bush andRice---- adequately reciprocated by Prime Minister Manmohan Singh--- has been a turning point in Indo-US relations since India becameindependent in 1947.
7. Will Obama continue with the Bush-Rice policy of dealing with India strategically and strengthening their relationship or will he revert tothe traditional tactical Democratic reflex? This was the question that bothered many Indian opinion-makers as they heard with concernspeculation about the likelihood of Holbroke or Albright becoming the Secretary of State. There is a sigh of relief over reports of thelikelihood of Hillary Clinton taking over as the Secretary of State. She has enjoyed positive vibrations with influential Indians andIndo-Americans. There is a confidence that Indo-US relations will be safe in her hands.One has to wait and see whether this belief proves tobe correct or mere wishful-thinking.
( 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: seventyone@2gmail.com )
Sunday, November 23, 2008
CHINESE ECONOMY MONITOR----NOTE NO.4
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 "Chinese Economy Monitor" based on open information. This is the fourth in the series---B. Raman)
TWO-YEAR STIMULUS PACKAGE ANNOUNCED
2.China announced on November 9,2008, an economic stimulus programme amounting to US $586 billion to be spent over a period of two years. It described its aims as to bolster domestic demand and help avert a global recession. According to analysts, these figures seemed to include expected expenditute on already on-going projects for which money had already been set aside in the past as well as newly-planned expenditure on new projects to be launched in the coming two years. The announced sum represents about 16% of China's economic output last year, and is roughly equal to the total of all central and local government spending in 2006. New spending of even half that amount would be a substantial addition to the amounts already budgeted for during the current financial year. Most of the allocated amount is proposed to be spent on new housing, new infrastructure, agriculture, health care and social welfare. It also includes a tax deduction for capital spending by companies. China's stimulus package is substantially higher than that of the US ( US $ 168 billion), Japan (US $ 51.5 billion largely in the form of payouts to families and tax reliefs to business companies) and Germany (US $ 29.9 billion mainly tax reliefs and loans). The German package has a four-year duration as against two years in the case of China. The time period in the case of the US and Japan is not known. The Chinese contention is that the best way they could contribute to re-stabilising the global economy is by a substantial increase in expenditure in those sectors such as housing and infrastructure, which would create new jobs at home and, at the same time, maintain a high level of imports of raw materials and other items such as minerals and metals required for this purpose.
While the outlook for China's once-booming economy has rapidly worsened, the country remains comparatively well-placed to deal with a slowdown. The boom years have been well used by China to clean up its banking system, return state enterprises to profitability and shore up government finances. Now the state is putting its significant financial resources -- including a budget that for the moment is still in surplus -- into play to shore up the economy. China's financial system remains largely unscathed by the global credit squeeze, but prospects for the country's continued rapid growth have quickly deteriorated. Export orders from the U.S., Europe and Japan are weakening, causing factories around China to trim work forces or shut down entirely -- leading to unemployment that could undermine popular backing for the Government.Urban consumers are pulling back from China's housing market, causing new construction to collapse to its worst level in a decade. With construction weak, support for other key industries such as cement and steel has declined, and they are cutting output and canceling orders for raw materials -- moves that are being felt by commodities firms around the world. The downward spiral in confidence is likely to depress growth even further. China's leaders "realize this is really about sentiment and confidence, which needs a very fast and strong policy response," said Wang Qing, an economist with Morgan Stanley.Based on recent trends and without a policy response, China could have seen only a GDP growth rate of 5% to 6% next year, according to Mr. Wang. With the stimulus measures that include previous moves to cut interest rates and end caps on bank lending, he said China now has a good chance of achieving a growth rate of 8% to 9% in 2009.
Economists said China's new stimulus plan represents an even more dramatic policy response than China adopted in 1998 during the Asian financial crisis, when Beijing spent heavily to counter a similarly worrisome combination of an external financial crisis and a sharp domestic slowdown."As the global economic and financial crisis has become more severe in the last two months, China must take flexible and prudent macroeconomic policies to resist the negative impact of the international situation and deal with these complicated and ever-changing trends," the State Council said in its statement announcing the package. Another question is how quickly the effects of the stimulus package will be felt in the real economy. While the Government's statement urged local officials to rapidly put new money to work, some lag is unavoidable. And since infrastructure spending has already been growing by about 20% annually for the past couple of decades, there may be physical and logistical limitations to how much spending can be further accelerated.
The Government is presenting the program as an opportunity to do many things that would be worth doing anyway. These include helping companies upgrade to higher-tech equipment, improving irrigation in rural areas, raising pensions and social-security payments, and improving water and waste treatment in cities.
----- Extracted from an article by Andrew Batson in the "Wall Street Journal" of November 10,2008.
PEOPLE'S BANK'S CAUTION
3.In its monetary policy report for the third quarter of the year ending on September 30,2008, the People's Bank of China, the country's central bank, said as follows: "Inflationary pressures had eased alongside falling commodity prices. The Bank will focus on preventing deflation in the short term. It will use open market operations to help increase liquidity and will ensure that adequate credit is available in the financial system to complement the Government's fiscal stimulus policies. Uncertainties in the domestic economy are increasing. The risk of an economic downturn is getting bigger. China's macro-economic controls are facing a more complicated and fast changing situation. Problems in the property sector could spread to other parts of the economy. Monetary policy should prevent deflation in the short term, but prevent inflation in the long run. The current stimulative policies should not sow the seeds of inflation down the road."
----- a Reuters despatch as carried by the "Wall Street Journal" of November 18,2008.
GRIM UNEMPLOYMENT SITUATION
4.Describing the jobs situation as grim, Human Resources and Social Security Minister Yin Weimin told reporters on November 19,2008, that it could worsen from the impact of the unfolding global financial crisis. With company bankruptcies and a slowdown in production creating stresses in labour relations, he said, dealing with labour strife was now his Ministry's top concern. Shortly after unveiling the economic stimulus plan, China is now turning its attention to managing the more intractable social fallout from the downturn ---- growing discontent fuelled by rising unemployment. New measures aimed at easing labour disputes and job losses launched in recent days, coupled with calls from top security officials for the appropriate handling of protests, all point to the fact that maintaining social stability has become one of Beijing's most pressing tasks at hand. The policies range from setting up a fast-track system to nip labour disputes in the bud, providing financial aid to firms to help them retain workers, improving job search services for rural workers and clearing a backlog of sensitive court cases. 'The root cause of unhappiness is unemployment. Without a job it is hard to survive in China because of weak social protection,' said Professor Hu Xingdou, an expert in economics and China issues with the Beijing Institute of Technology. He added: "If leaders want to defuse tensions, they must solve the job problem."
Social Security Vice-Minister Zhang Xiaojian revealed on November 19,2008, that demand for workers in 84 cities across China in the third quarter of this year had fallen by 5.5 per cent - the first third-quarter drop in "many years".China's official urban unemployment rate was currently about 4 per cent, but could hit 4.5 per cent by the year-end. Next year, the rate could climb even higher, Zhang said.Yin identified October as the month when "employment in China began to show the impact of changes in the international economic situation".Up to then, he said, the "employment situation was basically stable". Looking at next year, he said the first quarter would be "more difficult" but expected a turnaround in the second quarter when the effects of the massive stimulus package would become evident.
Even before the current crisis, China's 24 million urban job-seekers outnumbered new jobs two to one. With even fewer jobs next year, the fierce competition among the country's university graduates, for instance, is set to intensify. The number of graduates will rise to 6.1 million next year, up from 5.59 million this year, said Zhang. Rising unemployment among China's 230 million rural labourers - about half of whom toil far from their hometowns - is also a major problem. The authorities are concerned that they could be the biggest source of unrest.
China's official jobless rate does not take into account these unregistered, highly mobile migrant workers. It would be much higher if they were included. Unemployment was most severe in China's southern manufacturing and export hub where thousands of labour-intensive firms which employ migrant labour have collapsed due to weakening external demand, said Yin. Already, there have been isolated protests by workers over unpaid wages at shuttered factories. But of increasing concern for the Chinese Communist Party is the widening scale of unrest and scope of issues that are fuelling public dissatisfaction. In recent weeks, taxi drivers upset over falling incomes have staged strikes in at least three Chinese cities, including Chongqing. Earlier last week, a two-day protest over home demolitions in Gansu province left more than 70 injured.
Yin denied that there were currently any "large-scale retrenchments" or mass movement of jobless migrant workers back to their hometowns, but admitted that the "situation was still developing".
----- Source:- The Straits Times of November 23,2008
5.Yin acknowledged that labor unrest was the Ministry's “top concern,” following recent protests from workers who have lost their jobs and are demanding back wages. According to him, the Government would try to curb labor unrest by solving half of disputes at the grassroots level. A fast-track system to deal with labor disputes will be put in place as well. Yin reiterated that the Government would help enterprises through the crisis to reduce unemployment. He pledged that his Ministry will ensure that employees receive wages due to them in situations where factory closures are inevitable. Industries will also be required to uphold their legal obligations. He added: “The global economic crisis is picking up speed and spreading from developed to developing countries and the effects are becoming more and more pronounced here. Our economy is facing a serious challenge.” \
---- Source Reuters of November 20,2008
6.China announced measures on November 20,2008, aimed at absorbing job losses and staving off civil unrest, amid rising concerns the economic crisis was fuelling long-simmering social tensions across the country.The policies cover a wide range of areas, such as raising compensation for farmers kicked off their land, helping laid-off workers, ensuring police handle protests correctly and clearing a backlog of sensitive court cases."The campaign will help to ease social conflicts, protect the people's legal interests and maintain social stability," Zhou Yongkang, China's top law enforcer, said in detailing the eight-month programme to clear the court cases.China's Communist Party has long been obsessed with social stability, concerned that any type of protest could escalate into a major challenge to its 59-year rule. With China's economy slowing, a series of high-profile protests have erupted recently over job losses and long-standing grievances over the many injustices in Chinese society such as powerful interests taking people's land. Public Security Minister Meng Jianzhu warned police chiefs they "should be aware of the challenge brought by the global financial crisis and try their best to maintain social stability", the official "China Daily" reported. Highlighting the concerns, thousands of people took to the streets this week in northwest China's Gansu province wielding axes, chains and other weapons to confront authorities over a typical "land grab" dispute.Meanwhile, tensions remain high in southern Guangdong province, China's manufacturing heartland, where thousands of manufacturing workers have gathered in recent weeks outside closed-down factories to demand unpaid wages.Social Security Minister Yin Weimin admitted that an expected spike in unemployment was a serious concern for the Government."We have called on all levels of the Human Resources and Social Security Ministry to place priority on the stabilisation of the employment situation as the top task that we must tackle," Yin told reporters.He announced a series of measures to try to stave off unemployment and to help those who have lost their jobs, particularly among the 230 million rural migrant workers who form the backbone of China's struggling export industry.Yin said measures included helping migrants find a job when they come to urban areas and providing extra training for those returning home. The Ministry of Land and Resources, meanwhile, announced it would increase compensation for farmers' land from 2009 "to guarantee the lawful rights of farmers whose land has been taken", in a statement on its website on November 20.Government-backed "land grabs" are a common occurrence in China and have sometimes fuelled violent protests as owners of the properties are forcibly moved away to make way for new developments.These issues were the backdrop to this week's two-day riot in Longnan, Gansu province, which left many people injured.The "land grab" issue was also being addressed as part of the campaign to clear the sensitive court cases announced by Zhou via the official Xinhua news agency.Six types of court cases were listed as priorities to be fast-tracked, including those linked to land disputes, others delayed due to local government interference and ones involving migrant worker payments, Xinhua reported.
---- Source: A despatch of the Agence France Presse (AFP), dated November 20,2008.
IMPACT OF SLOW-DOWN ON ENERGY IMPORTS
7. During October,2008, the import of crude oil increased by 28 per cent as compared to imports during October,2007, kerosene imports increased by 24 per cent and gasoline imports by 5 per cent. As against this, diesel imports declined by 46 per cent, LPG imports declined by 25 per cent, and fuel oil imports declined by 13 per cent. China's petroleum data often show big, unexplained short-term swings. Analysts, therefore, caution against making any assessment on the basis of figures for just one month. Diesel stockpiles appear to have steeply risen before the Olympics. Part of the steep drop in imports of diesel in October could have been the result of the excessive pre-Olympics build-up of stocks. China never publishes data on stocks held in respect of any of the items. However, analysts estimate that diesel stocks in the first nine months of 2008 were more than twice in the same period of 2007. The increase in the import of crude oil during October could indicate that the oil companies are taking advantage of the fall in crude prices to build up their stocks. The Government may also be doing so to build up its strategic reserves. Jiang Jiemin, the head of the China National Petroleum Corporation, has said in a statement put on its web site: " Demand for fuel has fallen sharply since September, pushing up stockpiles of unsold gasoline and diesel. As the global financial crisis and its impact on China's economy deepen, the company's business has also been significantly affected."
---From a report by David Winning and Shai Oster in the "Wall Street Journal" of November 18,2008.
TEXTILE EXPORTS: GROWTH SLOW-DOWN
8.Statistics from the Chinese Customs indicated that during the first nine months of this year, China's textiles and clothing exports touched $136.94 billion, a rise of 8.1% over the same period of 2007. But the growth rate is 11.9 percentage points lower than that of the corresponding period of last year.
------ Source, TV News Channels of November 20,2008.
TOURISTS ARRIVALS DOWN
9.The latest statistics issued by the China National Tourism Administration (CNTA) indicate that in September 2008, there were 1,883,300 international tourists to China, down by 15.10% compared to the same period of last year. This September, China achieved a total of US$ 3.142 billion in tourism foreign exchange earnings, a decrease of 11.36% year-on-year. From January to September this year, the number of international arrivals visiting China went down by 3.53% to 18,352,700; and China's total tourism foreign exchange earnings was US$29.828 billion, a decrease of 3.26% from the same period of last year. According to the analysis of CNTA, due to the series of serious natural disasters and "unexpected incidents" that took place in China this year, the Chinese tourism industry has been affected to a certain degree. Also, the global financial crisis has had an adverse impact on tourism
---- "China Hospitality News" of October 24,2008
ASSESSMENT
My Comments: The Chinese banks and other financial institutions have not been facing any problems till now. The economy has started doing badly as compared to the past double digit growth rates due to a continuing decline in exports, which has particularly affected small and medium scale enterprises. However, it has been doing better than the economies of other countries. The decline in exports in an exports-dependent manufacturing sector has been leading to job losses, which are particularly affecting migrant labour from the rural areas, who had found jobs in the coastal areas. This has already started causing sporadic instances of social unrest. The introduction of economic reforms in China since 1978 was not accompanied by the introduction of appropriate labour reforms to ensure for the workers fair wages, timely payment of wages, protection against arbitrary dismissals and retrenchment and expeditious disposal of labour disputes in a manner that is viewed as fair by the workers. This could aggravate the social tensions at a time of economic decline. The Government has embarked on a two-pronged policy---- a fiscal stimulus package to dramatically step up expenditure on new infrastructure and other projects to create new jobs and modernisation of labour reforms and their strict enforcement. The Government's assessment is that the present decline will continue till June 30 next and even worsen. It is hoping that by then the benefits of the stimulus package will start flowing in and that the new US President Barrack Obama would have succeeded in reversing the melt-down in the US. If (it is a big IF) that happens, things could start looking up again from July. The Government is also embarking on a policy of restructuring the manufacturing sector in order to expand the domestic demand and decrease the present over-dependence on exports. If the Government makes its labour laws more labour friendly than foreign investor-friendly as they are now, China could to some extent lose its attraction to foreign investors as compared to India, which is viewed by many foreign investors as over-friendly to labour. However, the superior state of Chinese infrastructure, which is now sought to be improved even further, will continue to give an advantage to China as compared to India with the woeful state of its infrastructure. (23-11-08)
( 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 have been bringing out a periodic "Chinese Economy Monitor" based on open information. This is the fourth in the series---B. Raman)
TWO-YEAR STIMULUS PACKAGE ANNOUNCED
2.China announced on November 9,2008, an economic stimulus programme amounting to US $586 billion to be spent over a period of two years. It described its aims as to bolster domestic demand and help avert a global recession. According to analysts, these figures seemed to include expected expenditute on already on-going projects for which money had already been set aside in the past as well as newly-planned expenditure on new projects to be launched in the coming two years. The announced sum represents about 16% of China's economic output last year, and is roughly equal to the total of all central and local government spending in 2006. New spending of even half that amount would be a substantial addition to the amounts already budgeted for during the current financial year. Most of the allocated amount is proposed to be spent on new housing, new infrastructure, agriculture, health care and social welfare. It also includes a tax deduction for capital spending by companies. China's stimulus package is substantially higher than that of the US ( US $ 168 billion), Japan (US $ 51.5 billion largely in the form of payouts to families and tax reliefs to business companies) and Germany (US $ 29.9 billion mainly tax reliefs and loans). The German package has a four-year duration as against two years in the case of China. The time period in the case of the US and Japan is not known. The Chinese contention is that the best way they could contribute to re-stabilising the global economy is by a substantial increase in expenditure in those sectors such as housing and infrastructure, which would create new jobs at home and, at the same time, maintain a high level of imports of raw materials and other items such as minerals and metals required for this purpose.
While the outlook for China's once-booming economy has rapidly worsened, the country remains comparatively well-placed to deal with a slowdown. The boom years have been well used by China to clean up its banking system, return state enterprises to profitability and shore up government finances. Now the state is putting its significant financial resources -- including a budget that for the moment is still in surplus -- into play to shore up the economy. China's financial system remains largely unscathed by the global credit squeeze, but prospects for the country's continued rapid growth have quickly deteriorated. Export orders from the U.S., Europe and Japan are weakening, causing factories around China to trim work forces or shut down entirely -- leading to unemployment that could undermine popular backing for the Government.Urban consumers are pulling back from China's housing market, causing new construction to collapse to its worst level in a decade. With construction weak, support for other key industries such as cement and steel has declined, and they are cutting output and canceling orders for raw materials -- moves that are being felt by commodities firms around the world. The downward spiral in confidence is likely to depress growth even further. China's leaders "realize this is really about sentiment and confidence, which needs a very fast and strong policy response," said Wang Qing, an economist with Morgan Stanley.Based on recent trends and without a policy response, China could have seen only a GDP growth rate of 5% to 6% next year, according to Mr. Wang. With the stimulus measures that include previous moves to cut interest rates and end caps on bank lending, he said China now has a good chance of achieving a growth rate of 8% to 9% in 2009.
Economists said China's new stimulus plan represents an even more dramatic policy response than China adopted in 1998 during the Asian financial crisis, when Beijing spent heavily to counter a similarly worrisome combination of an external financial crisis and a sharp domestic slowdown."As the global economic and financial crisis has become more severe in the last two months, China must take flexible and prudent macroeconomic policies to resist the negative impact of the international situation and deal with these complicated and ever-changing trends," the State Council said in its statement announcing the package. Another question is how quickly the effects of the stimulus package will be felt in the real economy. While the Government's statement urged local officials to rapidly put new money to work, some lag is unavoidable. And since infrastructure spending has already been growing by about 20% annually for the past couple of decades, there may be physical and logistical limitations to how much spending can be further accelerated.
The Government is presenting the program as an opportunity to do many things that would be worth doing anyway. These include helping companies upgrade to higher-tech equipment, improving irrigation in rural areas, raising pensions and social-security payments, and improving water and waste treatment in cities.
----- Extracted from an article by Andrew Batson in the "Wall Street Journal" of November 10,2008.
PEOPLE'S BANK'S CAUTION
3.In its monetary policy report for the third quarter of the year ending on September 30,2008, the People's Bank of China, the country's central bank, said as follows: "Inflationary pressures had eased alongside falling commodity prices. The Bank will focus on preventing deflation in the short term. It will use open market operations to help increase liquidity and will ensure that adequate credit is available in the financial system to complement the Government's fiscal stimulus policies. Uncertainties in the domestic economy are increasing. The risk of an economic downturn is getting bigger. China's macro-economic controls are facing a more complicated and fast changing situation. Problems in the property sector could spread to other parts of the economy. Monetary policy should prevent deflation in the short term, but prevent inflation in the long run. The current stimulative policies should not sow the seeds of inflation down the road."
----- a Reuters despatch as carried by the "Wall Street Journal" of November 18,2008.
GRIM UNEMPLOYMENT SITUATION
4.Describing the jobs situation as grim, Human Resources and Social Security Minister Yin Weimin told reporters on November 19,2008, that it could worsen from the impact of the unfolding global financial crisis. With company bankruptcies and a slowdown in production creating stresses in labour relations, he said, dealing with labour strife was now his Ministry's top concern. Shortly after unveiling the economic stimulus plan, China is now turning its attention to managing the more intractable social fallout from the downturn ---- growing discontent fuelled by rising unemployment. New measures aimed at easing labour disputes and job losses launched in recent days, coupled with calls from top security officials for the appropriate handling of protests, all point to the fact that maintaining social stability has become one of Beijing's most pressing tasks at hand. The policies range from setting up a fast-track system to nip labour disputes in the bud, providing financial aid to firms to help them retain workers, improving job search services for rural workers and clearing a backlog of sensitive court cases. 'The root cause of unhappiness is unemployment. Without a job it is hard to survive in China because of weak social protection,' said Professor Hu Xingdou, an expert in economics and China issues with the Beijing Institute of Technology. He added: "If leaders want to defuse tensions, they must solve the job problem."
Social Security Vice-Minister Zhang Xiaojian revealed on November 19,2008, that demand for workers in 84 cities across China in the third quarter of this year had fallen by 5.5 per cent - the first third-quarter drop in "many years".China's official urban unemployment rate was currently about 4 per cent, but could hit 4.5 per cent by the year-end. Next year, the rate could climb even higher, Zhang said.Yin identified October as the month when "employment in China began to show the impact of changes in the international economic situation".Up to then, he said, the "employment situation was basically stable". Looking at next year, he said the first quarter would be "more difficult" but expected a turnaround in the second quarter when the effects of the massive stimulus package would become evident.
Even before the current crisis, China's 24 million urban job-seekers outnumbered new jobs two to one. With even fewer jobs next year, the fierce competition among the country's university graduates, for instance, is set to intensify. The number of graduates will rise to 6.1 million next year, up from 5.59 million this year, said Zhang. Rising unemployment among China's 230 million rural labourers - about half of whom toil far from their hometowns - is also a major problem. The authorities are concerned that they could be the biggest source of unrest.
China's official jobless rate does not take into account these unregistered, highly mobile migrant workers. It would be much higher if they were included. Unemployment was most severe in China's southern manufacturing and export hub where thousands of labour-intensive firms which employ migrant labour have collapsed due to weakening external demand, said Yin. Already, there have been isolated protests by workers over unpaid wages at shuttered factories. But of increasing concern for the Chinese Communist Party is the widening scale of unrest and scope of issues that are fuelling public dissatisfaction. In recent weeks, taxi drivers upset over falling incomes have staged strikes in at least three Chinese cities, including Chongqing. Earlier last week, a two-day protest over home demolitions in Gansu province left more than 70 injured.
Yin denied that there were currently any "large-scale retrenchments" or mass movement of jobless migrant workers back to their hometowns, but admitted that the "situation was still developing".
----- Source:- The Straits Times of November 23,2008
5.Yin acknowledged that labor unrest was the Ministry's “top concern,” following recent protests from workers who have lost their jobs and are demanding back wages. According to him, the Government would try to curb labor unrest by solving half of disputes at the grassroots level. A fast-track system to deal with labor disputes will be put in place as well. Yin reiterated that the Government would help enterprises through the crisis to reduce unemployment. He pledged that his Ministry will ensure that employees receive wages due to them in situations where factory closures are inevitable. Industries will also be required to uphold their legal obligations. He added: “The global economic crisis is picking up speed and spreading from developed to developing countries and the effects are becoming more and more pronounced here. Our economy is facing a serious challenge.” \
---- Source Reuters of November 20,2008
6.China announced measures on November 20,2008, aimed at absorbing job losses and staving off civil unrest, amid rising concerns the economic crisis was fuelling long-simmering social tensions across the country.The policies cover a wide range of areas, such as raising compensation for farmers kicked off their land, helping laid-off workers, ensuring police handle protests correctly and clearing a backlog of sensitive court cases."The campaign will help to ease social conflicts, protect the people's legal interests and maintain social stability," Zhou Yongkang, China's top law enforcer, said in detailing the eight-month programme to clear the court cases.China's Communist Party has long been obsessed with social stability, concerned that any type of protest could escalate into a major challenge to its 59-year rule. With China's economy slowing, a series of high-profile protests have erupted recently over job losses and long-standing grievances over the many injustices in Chinese society such as powerful interests taking people's land. Public Security Minister Meng Jianzhu warned police chiefs they "should be aware of the challenge brought by the global financial crisis and try their best to maintain social stability", the official "China Daily" reported. Highlighting the concerns, thousands of people took to the streets this week in northwest China's Gansu province wielding axes, chains and other weapons to confront authorities over a typical "land grab" dispute.Meanwhile, tensions remain high in southern Guangdong province, China's manufacturing heartland, where thousands of manufacturing workers have gathered in recent weeks outside closed-down factories to demand unpaid wages.Social Security Minister Yin Weimin admitted that an expected spike in unemployment was a serious concern for the Government."We have called on all levels of the Human Resources and Social Security Ministry to place priority on the stabilisation of the employment situation as the top task that we must tackle," Yin told reporters.He announced a series of measures to try to stave off unemployment and to help those who have lost their jobs, particularly among the 230 million rural migrant workers who form the backbone of China's struggling export industry.Yin said measures included helping migrants find a job when they come to urban areas and providing extra training for those returning home. The Ministry of Land and Resources, meanwhile, announced it would increase compensation for farmers' land from 2009 "to guarantee the lawful rights of farmers whose land has been taken", in a statement on its website on November 20.Government-backed "land grabs" are a common occurrence in China and have sometimes fuelled violent protests as owners of the properties are forcibly moved away to make way for new developments.These issues were the backdrop to this week's two-day riot in Longnan, Gansu province, which left many people injured.The "land grab" issue was also being addressed as part of the campaign to clear the sensitive court cases announced by Zhou via the official Xinhua news agency.Six types of court cases were listed as priorities to be fast-tracked, including those linked to land disputes, others delayed due to local government interference and ones involving migrant worker payments, Xinhua reported.
---- Source: A despatch of the Agence France Presse (AFP), dated November 20,2008.
IMPACT OF SLOW-DOWN ON ENERGY IMPORTS
7. During October,2008, the import of crude oil increased by 28 per cent as compared to imports during October,2007, kerosene imports increased by 24 per cent and gasoline imports by 5 per cent. As against this, diesel imports declined by 46 per cent, LPG imports declined by 25 per cent, and fuel oil imports declined by 13 per cent. China's petroleum data often show big, unexplained short-term swings. Analysts, therefore, caution against making any assessment on the basis of figures for just one month. Diesel stockpiles appear to have steeply risen before the Olympics. Part of the steep drop in imports of diesel in October could have been the result of the excessive pre-Olympics build-up of stocks. China never publishes data on stocks held in respect of any of the items. However, analysts estimate that diesel stocks in the first nine months of 2008 were more than twice in the same period of 2007. The increase in the import of crude oil during October could indicate that the oil companies are taking advantage of the fall in crude prices to build up their stocks. The Government may also be doing so to build up its strategic reserves. Jiang Jiemin, the head of the China National Petroleum Corporation, has said in a statement put on its web site: " Demand for fuel has fallen sharply since September, pushing up stockpiles of unsold gasoline and diesel. As the global financial crisis and its impact on China's economy deepen, the company's business has also been significantly affected."
---From a report by David Winning and Shai Oster in the "Wall Street Journal" of November 18,2008.
TEXTILE EXPORTS: GROWTH SLOW-DOWN
8.Statistics from the Chinese Customs indicated that during the first nine months of this year, China's textiles and clothing exports touched $136.94 billion, a rise of 8.1% over the same period of 2007. But the growth rate is 11.9 percentage points lower than that of the corresponding period of last year.
------ Source, TV News Channels of November 20,2008.
TOURISTS ARRIVALS DOWN
9.The latest statistics issued by the China National Tourism Administration (CNTA) indicate that in September 2008, there were 1,883,300 international tourists to China, down by 15.10% compared to the same period of last year. This September, China achieved a total of US$ 3.142 billion in tourism foreign exchange earnings, a decrease of 11.36% year-on-year. From January to September this year, the number of international arrivals visiting China went down by 3.53% to 18,352,700; and China's total tourism foreign exchange earnings was US$29.828 billion, a decrease of 3.26% from the same period of last year. According to the analysis of CNTA, due to the series of serious natural disasters and "unexpected incidents" that took place in China this year, the Chinese tourism industry has been affected to a certain degree. Also, the global financial crisis has had an adverse impact on tourism
---- "China Hospitality News" of October 24,2008
ASSESSMENT
My Comments: The Chinese banks and other financial institutions have not been facing any problems till now. The economy has started doing badly as compared to the past double digit growth rates due to a continuing decline in exports, which has particularly affected small and medium scale enterprises. However, it has been doing better than the economies of other countries. The decline in exports in an exports-dependent manufacturing sector has been leading to job losses, which are particularly affecting migrant labour from the rural areas, who had found jobs in the coastal areas. This has already started causing sporadic instances of social unrest. The introduction of economic reforms in China since 1978 was not accompanied by the introduction of appropriate labour reforms to ensure for the workers fair wages, timely payment of wages, protection against arbitrary dismissals and retrenchment and expeditious disposal of labour disputes in a manner that is viewed as fair by the workers. This could aggravate the social tensions at a time of economic decline. The Government has embarked on a two-pronged policy---- a fiscal stimulus package to dramatically step up expenditure on new infrastructure and other projects to create new jobs and modernisation of labour reforms and their strict enforcement. The Government's assessment is that the present decline will continue till June 30 next and even worsen. It is hoping that by then the benefits of the stimulus package will start flowing in and that the new US President Barrack Obama would have succeeded in reversing the melt-down in the US. If (it is a big IF) that happens, things could start looking up again from July. The Government is also embarking on a policy of restructuring the manufacturing sector in order to expand the domestic demand and decrease the present over-dependence on exports. If the Government makes its labour laws more labour friendly than foreign investor-friendly as they are now, China could to some extent lose its attraction to foreign investors as compared to India, which is viewed by many foreign investors as over-friendly to labour. However, the superior state of Chinese infrastructure, which is now sought to be improved even further, will continue to give an advantage to China as compared to India with the woeful state of its infrastructure. (23-11-08)
( 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, November 21, 2008
ACTIVE DEFENCE OF INDIAN SHIPPING AGAINST SOMALI PIRACY
INTERNATIONAL TERRORISM MONITOR---PAPER NO.470
B.RAMAN
The policy of the Indian Navy in its operations against Somali pirates in the Gulf of Aden area can be characterised as one of active defenceof Indian shipping. That means, protection of Indian commercial ships and foreign ships with a large complement of Indian crew transitingthrough these waters and action in self-defence against pirate boats and ships, which threaten Indian lives and interests and threaten toattack Indian naval ships patrolling the seas in this area. The indications till now are that their role will not be extended to cover activeintervention to free already hijacked ships. If preventive measures fail, the responsibility for getting a hijacked ship released from thecustody of the pirates will be largely that of the company owning the ship.
2. Any active intervention role will require the presence of more ships with more specially-trained commandoes on board. Moreover, if theintervention attempt fails, there could be diplomatic and other complications. It has been reported that the Ministry of Shipping of theGovernment of India is keen that at least four ships of the Navy should be on anti-piracy patrol. The present policy seems to be to have oneship on rotation on permanent anti-piracy patrol. At the most, this may be increased to two if resources and circumstances permit. AdmiralSureesh Mehta, the Chief of the Naval Staff, told the media on November 20, 2008,that the Navy was also considering the option of an aerialrecce of the region. He has also been quoted as saying: "We are considering augmenting our efforts to keep the Indian traffic in the regionsafe.”
3. The Government of India has reasons to be gratified that the successful action of INS Tabar, the frigate presently on patrolling duty, insinking a suspected mothership of the pirates on November 18,2008, has been positively viewed by the countries of the region as well as bythose outside the region. It has also been uniformly hailed by private shipping companies using the Gulf of Aden. It is equally gratifying thatthe Government of Pakistan, which under Pervez Musharraf was opposed to any Indian role in maritime security in this region, has not so farreacted adversely to the proposed permanent presence of one or two Indian naval ships in the waters of this region.
4.Was the US consulted before India decided to deploy INS Tabar in the Gulf of Aden? An answer to this question is not available. It may berecalled that in the past the US had tried to have India's role in maritime security confined to the seas to the East of India. It was opposedto any Indian role in the seas to the West of India out of deference to the sensitivities and concerns of Pakistan.Now, it seems to bereconciled to India's role even if it had not actively encouraged it.
5.Pakistani sources, however, suspect that India would not have taken this initiative without an approving nod from the US and that the USwould not have given this nod without consulting the Government of Pakistan. If it ultimately turns out that the US did consult Pakistan andthat it did not object to the Indian role, this would mark a qualitative change for the better in the perceptions of the present PakistaniGovernment towards India.
6. It is, at the same time, intriguing that the US has not hailed the successful action of INS Tabar as enthusiastically as one would haveexpected it. Official US comments on what is perceived by private shipping companies as the weak response of the US-led coalition to thesurge in piracy in this region have emphasised caution in dealing with the piracy. According to a despatch of the Agence France Presse(AFP), Geoff Morrell, a media spokesperson of the Pentagon, told pressmen in Washington DC on November 19,2008, that a militaryapproach was not the answer to a surge in piracy off the Horn of Africa and said that the shipping companies should do more on their ownto protect their vessels. "You could have all the navies in the world having all their ships out there, you know, it's not going to ever solve thisproblem," he said, and added: "It requires a holistic approach from the international community at sea, ashore, with governance, witheconomic development."
7. According to the AFP, Morrell said that at least 18 ships are currently being held for ransom by Somali pirates, along with 330 crewmembers taken hostage. This year there have been 95 attempted ship seizures by pirates in the Gulf of Aden, 39 of them successful.Notonly has the incidence of piracy increased, but pirates are going farther out in the high seas. He then said: "Trust me, this subject is beingdealt with at the highest levels of this Government.It is a real concern. And we are constantly evaluating what the best approach is.I'm justtrying to get you to think beyond the notion of, 'The answer is strictly kinetics. We've got to board more ships. We've got to fire on morepirates.'
8. Commenting on the hijacking of a Saudi oil supertanker, another Pentagon spokesperson Dana Perino said: "The White House saidPresident George W. Bush had been briefed about the seizure of the Saudi supertanker. Ensuring the safety and well being of the crew is ofparamount importance in preventing or dealing with issues of piracy.And the goal would be to try to help get this ship to safety, secure thecrew, and then work with our international partners to try to alleviate the piracy problem. Washington is working with other members of theSecurity Council right now to work out how to more effectively fight against piracy.It's a very complicated issue. There's a lot ofinternational laws that factor into these efforts."
9. According to the AFP report, Morrell urged that the UN Security Council should vote a resolution that authorizes anti-piracy activities. Hesaid that commercial shipping companies also should stick to safer sea lanes away from shore and invest in protective measures, includingtechnical devices and armed guards."The shipping companies also have an obligation to secure their ships to prevent incidents such thatwe've been seeing at alarming rates over the past several months," he added.
10.The State Department convened a high level group of officials to examine the issue, but Sean McCormack, a spokesperson of the Department, called piracy "an international problem" that the US was not going to solve alone.
11. Do the guarded comments of the Pentagon and the State Department and the absence of appreciative references to the action of INSTabar in US Governmental circles indicate a discomfort over India's unilateral and proactive role? Such guarded comments, however, arenot new. In the past too, the US attitude to its anti-piracy role in the Horn of Africa region lacked clarity and a readiness to act.Caution indealing with the increasing problem of piracy in the Horn of Africa area has been a defining characteristic of the US policy and this is one ofthe reasons which had contributed to the surge in piracy.
12.After launching its military action against Al Qaeda and the Taliban in Afghanistan under Operation Enduring Freedom on October 7,2001,the US took the initiative in setting up a joint naval task force called the Combined Task Force (CTF) 150, with headquarters in Djibouti. ThePakistani Navy was invited to be a member of this Task Force. Musharraf agreed to the Pakistani Navy joining it on condition that the IndianNavy would be kept out. The Task Force is commanded by naval officers from different member countries by rotation. It is presentlycommanded by Commodore Per Bigum Christensen of Denmark. It conducts Maritime Security Operations (MSO) in the Gulf of Aden, the Gulfof Oman, the Arabian Sea, the Red Sea and the Indian Ocean.
13.According to a US Navy website, "the MSO help develop security in the maritime environment, which promotes stability and globalprosperity. These operations complement the counterterrorism and security efforts of regional nations and seek to disrupt violentextremists’ use of the maritime environment as a venue for attack or to transport personnel, weapons or other material." Since its inception,its focus was mainly on anti-smuggling and anti-infiltration tasks----meaning preventing the smuggling and pentration of men and materialto Al Qaeda and the Taliban in Afghanistan and to Al Qaeda in Iraq. Counter-piracy was given a low priority.
14.On August 22,2008, the Task Force established a Maritime Security Patrol Area (MSPA) in support of the International MaritimeOrganization's (IMO) call for international assistance to discourage attacks on commercial vessels transiting the Gulf of Aden. According tostatements issued by the US Navy, the MSPA is a geographic area in the Gulf of Aden utilized by Combined Maritime Forces to focus theirefforts against destabilizing activities. These activities include, but are not limited to: criminal activities, drug smuggling operations thatsupport terrorist and violent extremist organizations and human smuggling. Coalition forces patrol the MSPA, which is not marked or definedby visual navigational means, on a routine basis.Vice-Admiral Bill Gortney, Commander, Combined Maritime Forces, was quoted as saying:"Coalition maritime efforts will give the IMO time to work international efforts that will ultimately lead to a long-term solution." He said thatthe shipping industry must consider hiring security teams for their vessels.
15.Even after the setting-up of the MSPA, the US response to the surge in piracy has been cautious. It has been trying to discourage anyundue expectations from the shipping companies that this probably presaged a more robust role by the US Navy against Somali piracy. Theonly Navies, which have so far shown a readiness to play a robust role are those of France, the UK and India. The reasons for the continuedUS caution are not clear.
16. India's decision to send INS Tabar to the Gulf of Aden to protect Indian shipping was triggered off by the hijacking of a Japanese shipwith largely Indian crew and the emotional criticism by the families of the crew of the seeming Government inaction. It was a tactical movetaken in a hurry without much thought being given to the development of a strategic martime security architecture in the region to protectthe region against piracy as well as maritime terrorism, in concert with other affected countries. The development of such a mechanismneeds attention.
17. The Chinese are as much worried over piracy in this region as we are.A Chinese fishing vessel with a 26-member crew, 17 of themChinese, was hijacked recently by Somali pirates. It is not known whether the vessel is still in the custody of the pirates or has beenreleased. Our support for any Chinese role in a multilateral maritime security mechanism should be made conditional on their supportingIndia's permanent membership of the UN Security Council. (21-11-08)
(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 )
B.RAMAN
The policy of the Indian Navy in its operations against Somali pirates in the Gulf of Aden area can be characterised as one of active defenceof Indian shipping. That means, protection of Indian commercial ships and foreign ships with a large complement of Indian crew transitingthrough these waters and action in self-defence against pirate boats and ships, which threaten Indian lives and interests and threaten toattack Indian naval ships patrolling the seas in this area. The indications till now are that their role will not be extended to cover activeintervention to free already hijacked ships. If preventive measures fail, the responsibility for getting a hijacked ship released from thecustody of the pirates will be largely that of the company owning the ship.
2. Any active intervention role will require the presence of more ships with more specially-trained commandoes on board. Moreover, if theintervention attempt fails, there could be diplomatic and other complications. It has been reported that the Ministry of Shipping of theGovernment of India is keen that at least four ships of the Navy should be on anti-piracy patrol. The present policy seems to be to have oneship on rotation on permanent anti-piracy patrol. At the most, this may be increased to two if resources and circumstances permit. AdmiralSureesh Mehta, the Chief of the Naval Staff, told the media on November 20, 2008,that the Navy was also considering the option of an aerialrecce of the region. He has also been quoted as saying: "We are considering augmenting our efforts to keep the Indian traffic in the regionsafe.”
3. The Government of India has reasons to be gratified that the successful action of INS Tabar, the frigate presently on patrolling duty, insinking a suspected mothership of the pirates on November 18,2008, has been positively viewed by the countries of the region as well as bythose outside the region. It has also been uniformly hailed by private shipping companies using the Gulf of Aden. It is equally gratifying thatthe Government of Pakistan, which under Pervez Musharraf was opposed to any Indian role in maritime security in this region, has not so farreacted adversely to the proposed permanent presence of one or two Indian naval ships in the waters of this region.
4.Was the US consulted before India decided to deploy INS Tabar in the Gulf of Aden? An answer to this question is not available. It may berecalled that in the past the US had tried to have India's role in maritime security confined to the seas to the East of India. It was opposedto any Indian role in the seas to the West of India out of deference to the sensitivities and concerns of Pakistan.Now, it seems to bereconciled to India's role even if it had not actively encouraged it.
5.Pakistani sources, however, suspect that India would not have taken this initiative without an approving nod from the US and that the USwould not have given this nod without consulting the Government of Pakistan. If it ultimately turns out that the US did consult Pakistan andthat it did not object to the Indian role, this would mark a qualitative change for the better in the perceptions of the present PakistaniGovernment towards India.
6. It is, at the same time, intriguing that the US has not hailed the successful action of INS Tabar as enthusiastically as one would haveexpected it. Official US comments on what is perceived by private shipping companies as the weak response of the US-led coalition to thesurge in piracy in this region have emphasised caution in dealing with the piracy. According to a despatch of the Agence France Presse(AFP), Geoff Morrell, a media spokesperson of the Pentagon, told pressmen in Washington DC on November 19,2008, that a militaryapproach was not the answer to a surge in piracy off the Horn of Africa and said that the shipping companies should do more on their ownto protect their vessels. "You could have all the navies in the world having all their ships out there, you know, it's not going to ever solve thisproblem," he said, and added: "It requires a holistic approach from the international community at sea, ashore, with governance, witheconomic development."
7. According to the AFP, Morrell said that at least 18 ships are currently being held for ransom by Somali pirates, along with 330 crewmembers taken hostage. This year there have been 95 attempted ship seizures by pirates in the Gulf of Aden, 39 of them successful.Notonly has the incidence of piracy increased, but pirates are going farther out in the high seas. He then said: "Trust me, this subject is beingdealt with at the highest levels of this Government.It is a real concern. And we are constantly evaluating what the best approach is.I'm justtrying to get you to think beyond the notion of, 'The answer is strictly kinetics. We've got to board more ships. We've got to fire on morepirates.'
8. Commenting on the hijacking of a Saudi oil supertanker, another Pentagon spokesperson Dana Perino said: "The White House saidPresident George W. Bush had been briefed about the seizure of the Saudi supertanker. Ensuring the safety and well being of the crew is ofparamount importance in preventing or dealing with issues of piracy.And the goal would be to try to help get this ship to safety, secure thecrew, and then work with our international partners to try to alleviate the piracy problem. Washington is working with other members of theSecurity Council right now to work out how to more effectively fight against piracy.It's a very complicated issue. There's a lot ofinternational laws that factor into these efforts."
9. According to the AFP report, Morrell urged that the UN Security Council should vote a resolution that authorizes anti-piracy activities. Hesaid that commercial shipping companies also should stick to safer sea lanes away from shore and invest in protective measures, includingtechnical devices and armed guards."The shipping companies also have an obligation to secure their ships to prevent incidents such thatwe've been seeing at alarming rates over the past several months," he added.
10.The State Department convened a high level group of officials to examine the issue, but Sean McCormack, a spokesperson of the Department, called piracy "an international problem" that the US was not going to solve alone.
11. Do the guarded comments of the Pentagon and the State Department and the absence of appreciative references to the action of INSTabar in US Governmental circles indicate a discomfort over India's unilateral and proactive role? Such guarded comments, however, arenot new. In the past too, the US attitude to its anti-piracy role in the Horn of Africa region lacked clarity and a readiness to act.Caution indealing with the increasing problem of piracy in the Horn of Africa area has been a defining characteristic of the US policy and this is one ofthe reasons which had contributed to the surge in piracy.
12.After launching its military action against Al Qaeda and the Taliban in Afghanistan under Operation Enduring Freedom on October 7,2001,the US took the initiative in setting up a joint naval task force called the Combined Task Force (CTF) 150, with headquarters in Djibouti. ThePakistani Navy was invited to be a member of this Task Force. Musharraf agreed to the Pakistani Navy joining it on condition that the IndianNavy would be kept out. The Task Force is commanded by naval officers from different member countries by rotation. It is presentlycommanded by Commodore Per Bigum Christensen of Denmark. It conducts Maritime Security Operations (MSO) in the Gulf of Aden, the Gulfof Oman, the Arabian Sea, the Red Sea and the Indian Ocean.
13.According to a US Navy website, "the MSO help develop security in the maritime environment, which promotes stability and globalprosperity. These operations complement the counterterrorism and security efforts of regional nations and seek to disrupt violentextremists’ use of the maritime environment as a venue for attack or to transport personnel, weapons or other material." Since its inception,its focus was mainly on anti-smuggling and anti-infiltration tasks----meaning preventing the smuggling and pentration of men and materialto Al Qaeda and the Taliban in Afghanistan and to Al Qaeda in Iraq. Counter-piracy was given a low priority.
14.On August 22,2008, the Task Force established a Maritime Security Patrol Area (MSPA) in support of the International MaritimeOrganization's (IMO) call for international assistance to discourage attacks on commercial vessels transiting the Gulf of Aden. According tostatements issued by the US Navy, the MSPA is a geographic area in the Gulf of Aden utilized by Combined Maritime Forces to focus theirefforts against destabilizing activities. These activities include, but are not limited to: criminal activities, drug smuggling operations thatsupport terrorist and violent extremist organizations and human smuggling. Coalition forces patrol the MSPA, which is not marked or definedby visual navigational means, on a routine basis.Vice-Admiral Bill Gortney, Commander, Combined Maritime Forces, was quoted as saying:"Coalition maritime efforts will give the IMO time to work international efforts that will ultimately lead to a long-term solution." He said thatthe shipping industry must consider hiring security teams for their vessels.
15.Even after the setting-up of the MSPA, the US response to the surge in piracy has been cautious. It has been trying to discourage anyundue expectations from the shipping companies that this probably presaged a more robust role by the US Navy against Somali piracy. Theonly Navies, which have so far shown a readiness to play a robust role are those of France, the UK and India. The reasons for the continuedUS caution are not clear.
16. India's decision to send INS Tabar to the Gulf of Aden to protect Indian shipping was triggered off by the hijacking of a Japanese shipwith largely Indian crew and the emotional criticism by the families of the crew of the seeming Government inaction. It was a tactical movetaken in a hurry without much thought being given to the development of a strategic martime security architecture in the region to protectthe region against piracy as well as maritime terrorism, in concert with other affected countries. The development of such a mechanismneeds attention.
17. The Chinese are as much worried over piracy in this region as we are.A Chinese fishing vessel with a 26-member crew, 17 of themChinese, was hijacked recently by Somali pirates. It is not known whether the vessel is still in the custody of the pirates or has beenreleased. Our support for any Chinese role in a multilateral maritime security mechanism should be made conditional on their supportingIndia's permanent membership of the UN Security Council. (21-11-08)
(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 )
Thursday, November 6, 2008
FOR EYES OF PRESIDENT-ELECT OBAMA ONLY
B.RAMAN
(From November 5,2008, President-elect Barrack Obama started receiving from the Director National Intelligence (DNI) a daily brief on thestate of the world the previous day called the President's Daily Brief (PDB). A background note on the PDB carried by the BBC online onNovember 6,2008, is annexed. The CIA would do well to incorporate the following in its PDB to Obama)
-------------------------------
There is amazement ---- and confusion--- in India over reports that one of the first acts of the President will be to appoint Bill Clinton as hisSpecial Envoy on the Kashmir issue to facilitate a settlement between India and Pakistan
2.Well-informed sources in India say that if the President-elect wants to severely damage the developing Indo-US relations he could nothave thought of a better idea than to meddle in Kashmir. So many Americans----Presidents, Presidents-elect and defeatedPresidential-aspirants---- thought they could help in finding a solution to the Kashmir issue and burnt their fingers and damaged Indo-USrelations.
3. This started from Adlai Stevenson, who after losing the election to Gen.Dwight Eisenhower, proceeded to Srinagar ostensibly for ahouseboat holiday on the Dal Lake and tried to meddle in the affairs of the State by suggesting to Sheikh Abdullah, the then Chief Minister ofJammu & Kashmir, that he should seek independence and promised that the US would support him. When the Indian Intelligence Bureauinformed Jawaharlal Nehru, the then Prime Minister, of Stevenson's secret discussions with Abdullah, he sacked Abdullah. Adlai Stevensonbecame persona non grata with the Indian political class and public.
4. When Clinton became the President in 1993 he could not resist the temptation to have a go at settling the Kashmir issue. He chose as hissecret emissary not a distinguished American, but an old college mate of his called Robin Raphael, who was posted as a junior diplomat inthe US Embassy in New Delhi. Her American colleagues in New Delhi used to allege that after Clinton took office, she used to go aroundprojecting herself as if she was a trusted adviser to Clinton, who took her into the State Department.
5. Our Indian sources say that she had two "achievements" to her discredit. She instigated the formation of the Hurriyat , a hotch-potch ofanti-New Delhi Kashmiri personalities, which added to the existing mess. She also encouraged the formation of the Taliban in 1994 with thehelp of her close personal friends Benazir Bhutto, the then Prime Minister, and Asif Ali Zardari, the present President of Pakistan. She evenmet Mullah Mohammad Omar, who subsequently designated himself as the Amir of the Taliban, secretly and sought his help for a project ofthe Unocal for a gas pipeline from Turkmenistan to Pakistan via the Herat area of Afghanistan.
6. According to the sources, her misadventures in Kashmir further damaged Indo-US relations and her godmothering the Taliban inexorablyset in motion the train of events that led to Osama bin Laden shifting from Khartoum to Jalalabad in 1996 and launching from Afghanistanthe terrorist strikes outside the US Embassies in Nairobi and Dar-es-Salaam in August 1998, the attack on USS Cole off Aden inOctober,2000, and the 9/11 terrorist strikes in the US homeland.
7. Our Indian sources say that in the history of Indo-American relations since India became independent in 1947, there have been moreinstances of meddling by Democrats than by Republicans. They feel that Democrats seem to think that they understand sub-continentalaffairs better than anybody in the US and find it difficult to resist the urge to meddle. According to them, that is why Indian security agenciesfeel uncomfortable when the White House has a Democrat as incumbent. They say that if one draws a graph of terrorism in J&K, one wouldfind that it tends to go up when a Democrat is the President.
8.At a time when India and Pakistan are on the road to slowly mending their bilateral relations, Indians are amazed that the President-electoblivious of the past misadventures of the US in the sub-continent should be thinkig of one more. (6-11-08)
(The writer is Additional Secretary (retd), Cabinet Secretariat, Govt. of India, New Delhi, and, presently, Director, Institute For TopicalStrudies, Chennai. E-mail: seventyone2@gmail.com )
ANNEXURE
Eyes only: Obama's spy briefing
By Adam Brookes BBC News, Washington
The President's Daily Brief (PDB) occupies a fabled place in American politics.
It is an ultra-secret compilation of the latest intelligence presented to the President every morning.
And later on Thursday, Barack Obama will start to receive the PDB as president-elect.
Every evening, reports over the years tell us, the PDB is roughed out by intelligence officials.
Its contents tend towards the very topical:
The latest signals intercepts from the National Security Agency in Fort Meade, Maryland
The latest human intelligence relayed to the CIA's case officers by their agents, or to the operatives of the Defense Intelligence Agency
Satellite images garnered by the National Geospatial Intelligence Agency in Bethesda
Perhaps most importantly, the PDB sums up the conclusions about the state of the world as reached by analysts from across some 16 USintelligence agencies.
Dynamic process
The President could not possibly absorb the sum of the information gathered by the huge American intelligence apparatus.
FBI information indicates patterns of suspicious activity in this country consistent with preparations for hijackings or other types of attacks
The PDB must synthesise and distil key conclusions from a mass of data.
So the PDB is a highly selective document. And it must be written very carefully.
Intelligence staff continue to work on it overnight, as fresh reporting comes in.
In the morning the final version is reviewed by the Director for National Intelligence (DNI), or one of his staff.
The current DNI, Mike McConnell, likes to take the PDB to the White House and present it to the President, sources say.
He takes with him staff members who are specialists and can answer questions the President might have.
"It's a dynamic process," says Thomas Blanton, Director of the National Security Archive at George Washington University.
"The President hears what the intelligence people want him to know, and the intelligence people learn what the president is interested in."
There are only a few PDBs - or portions of them - in the public domain. And those are mostly associated with highly controversial topics. George Bush (C) may have passed over PDB warnings of al-Qaeda threats
Here is an extract from a 1998 PDB given to President Clinton. It is often used to illustrate that the US clearly understood the al-Qaedathreat years before President George W Bush took office:
"SUBJECT: Bin Laden Preparing to Hijack US Aircraft and Other Attacks
"Reporting [-] suggests Bin Laden and his allies are preparing for attacks in the US, including an aircraft hijacking to obtain the release ofShaykh 'Umar 'Abd al-Rahman, Ramzi Yousef, and Muhammad Sadiq 'Awda.
"One source quoted a senior member of the Gama'at al-Islamiyya (IG) saying that, as of late October, the IG had completed planning for anoperation in the US on behalf of Bin Laden, but that the operation was on hold.
"A senior Bin Laden operative from Saudi Arabia was to visit IG counterparts in the US soon thereafter to discuss options-perhaps includingan aircraft hijacking."
There is a lot of detail here, and references to individual items of HUMINT (human intelligence), though President Clinton was renowned for his love of just that.
But note the caveats: reports do not "tell", they merely "suggest".
Perhaps the most infamous PDB also concerns al-Qaeda. It went to President Bush on 6 August, 2001 - just over a month before the 11September attacks on New York and Washington.
It contained the headline: "Bin Ladin determined to strike in the US".
It reads: "FBI information indicates patterns of suspicious activity in this country consistent with preparations for hijackings or other typesof attacks."
Extraordinarily prescient? Or vague and unhelpful?
The Silberman-Robb report on US intelligence capabilities of 2005 found "deficiencies" in the PDB. Its authors were scathing. The dailyreports seemed to be "selling" intelligence - in order to keep its customers, or at least the First Customer, interested
They alleged that the format of the Brief and the way in which it was delivered helped inflate the sense of the threat posed by Iraq.
The "river of intelligence that flowed from the CIA to top policy makers over long periods of time" through the PDB was "misleading", said thereport.
"The PDBs… with their attention-grabbing headlines and drumbeat of repetition, left an impression of many corroborating reports where infact there were very few sources", it read.
"The daily reports seemed to be "selling" intelligence - in order to keep its customers, or at least the First Customer, interested."
Since then, there have been changes.
The PDB now looks less like a newsletter, sources say. It may include graphics and photographs.
Gone are those pithy headlines. And it is written in a way to reflect uncertainty or disagreement within the intelligence agencies.
So what might Barack Obama's first PDB have in it?
Well, it is not hard to imagine that there would be an evaluation of Russia's intentions regarding the positioning of its missiles, givenPresident Medvedev's recent belligerent statements.
The latest from the Afghan-Pakistan border, intercepts and photographs from drones which reveal what militants are where, and the plans US intelligence has to target them, perhaps.
And did US warplanes really kill 37 civilians at a wedding party, as the Afghan government alleges?
And plenty more - that we will never know.
(From November 5,2008, President-elect Barrack Obama started receiving from the Director National Intelligence (DNI) a daily brief on thestate of the world the previous day called the President's Daily Brief (PDB). A background note on the PDB carried by the BBC online onNovember 6,2008, is annexed. The CIA would do well to incorporate the following in its PDB to Obama)
-------------------------------
There is amazement ---- and confusion--- in India over reports that one of the first acts of the President will be to appoint Bill Clinton as hisSpecial Envoy on the Kashmir issue to facilitate a settlement between India and Pakistan
2.Well-informed sources in India say that if the President-elect wants to severely damage the developing Indo-US relations he could nothave thought of a better idea than to meddle in Kashmir. So many Americans----Presidents, Presidents-elect and defeatedPresidential-aspirants---- thought they could help in finding a solution to the Kashmir issue and burnt their fingers and damaged Indo-USrelations.
3. This started from Adlai Stevenson, who after losing the election to Gen.Dwight Eisenhower, proceeded to Srinagar ostensibly for ahouseboat holiday on the Dal Lake and tried to meddle in the affairs of the State by suggesting to Sheikh Abdullah, the then Chief Minister ofJammu & Kashmir, that he should seek independence and promised that the US would support him. When the Indian Intelligence Bureauinformed Jawaharlal Nehru, the then Prime Minister, of Stevenson's secret discussions with Abdullah, he sacked Abdullah. Adlai Stevensonbecame persona non grata with the Indian political class and public.
4. When Clinton became the President in 1993 he could not resist the temptation to have a go at settling the Kashmir issue. He chose as hissecret emissary not a distinguished American, but an old college mate of his called Robin Raphael, who was posted as a junior diplomat inthe US Embassy in New Delhi. Her American colleagues in New Delhi used to allege that after Clinton took office, she used to go aroundprojecting herself as if she was a trusted adviser to Clinton, who took her into the State Department.
5. Our Indian sources say that she had two "achievements" to her discredit. She instigated the formation of the Hurriyat , a hotch-potch ofanti-New Delhi Kashmiri personalities, which added to the existing mess. She also encouraged the formation of the Taliban in 1994 with thehelp of her close personal friends Benazir Bhutto, the then Prime Minister, and Asif Ali Zardari, the present President of Pakistan. She evenmet Mullah Mohammad Omar, who subsequently designated himself as the Amir of the Taliban, secretly and sought his help for a project ofthe Unocal for a gas pipeline from Turkmenistan to Pakistan via the Herat area of Afghanistan.
6. According to the sources, her misadventures in Kashmir further damaged Indo-US relations and her godmothering the Taliban inexorablyset in motion the train of events that led to Osama bin Laden shifting from Khartoum to Jalalabad in 1996 and launching from Afghanistanthe terrorist strikes outside the US Embassies in Nairobi and Dar-es-Salaam in August 1998, the attack on USS Cole off Aden inOctober,2000, and the 9/11 terrorist strikes in the US homeland.
7. Our Indian sources say that in the history of Indo-American relations since India became independent in 1947, there have been moreinstances of meddling by Democrats than by Republicans. They feel that Democrats seem to think that they understand sub-continentalaffairs better than anybody in the US and find it difficult to resist the urge to meddle. According to them, that is why Indian security agenciesfeel uncomfortable when the White House has a Democrat as incumbent. They say that if one draws a graph of terrorism in J&K, one wouldfind that it tends to go up when a Democrat is the President.
8.At a time when India and Pakistan are on the road to slowly mending their bilateral relations, Indians are amazed that the President-electoblivious of the past misadventures of the US in the sub-continent should be thinkig of one more. (6-11-08)
(The writer is Additional Secretary (retd), Cabinet Secretariat, Govt. of India, New Delhi, and, presently, Director, Institute For TopicalStrudies, Chennai. E-mail: seventyone2@gmail.com )
ANNEXURE
Eyes only: Obama's spy briefing
By Adam Brookes BBC News, Washington
The President's Daily Brief (PDB) occupies a fabled place in American politics.
It is an ultra-secret compilation of the latest intelligence presented to the President every morning.
And later on Thursday, Barack Obama will start to receive the PDB as president-elect.
Every evening, reports over the years tell us, the PDB is roughed out by intelligence officials.
Its contents tend towards the very topical:
The latest signals intercepts from the National Security Agency in Fort Meade, Maryland
The latest human intelligence relayed to the CIA's case officers by their agents, or to the operatives of the Defense Intelligence Agency
Satellite images garnered by the National Geospatial Intelligence Agency in Bethesda
Perhaps most importantly, the PDB sums up the conclusions about the state of the world as reached by analysts from across some 16 USintelligence agencies.
Dynamic process
The President could not possibly absorb the sum of the information gathered by the huge American intelligence apparatus.
FBI information indicates patterns of suspicious activity in this country consistent with preparations for hijackings or other types of attacks
The PDB must synthesise and distil key conclusions from a mass of data.
So the PDB is a highly selective document. And it must be written very carefully.
Intelligence staff continue to work on it overnight, as fresh reporting comes in.
In the morning the final version is reviewed by the Director for National Intelligence (DNI), or one of his staff.
The current DNI, Mike McConnell, likes to take the PDB to the White House and present it to the President, sources say.
He takes with him staff members who are specialists and can answer questions the President might have.
"It's a dynamic process," says Thomas Blanton, Director of the National Security Archive at George Washington University.
"The President hears what the intelligence people want him to know, and the intelligence people learn what the president is interested in."
There are only a few PDBs - or portions of them - in the public domain. And those are mostly associated with highly controversial topics. George Bush (C) may have passed over PDB warnings of al-Qaeda threats
Here is an extract from a 1998 PDB given to President Clinton. It is often used to illustrate that the US clearly understood the al-Qaedathreat years before President George W Bush took office:
"SUBJECT: Bin Laden Preparing to Hijack US Aircraft and Other Attacks
"Reporting [-] suggests Bin Laden and his allies are preparing for attacks in the US, including an aircraft hijacking to obtain the release ofShaykh 'Umar 'Abd al-Rahman, Ramzi Yousef, and Muhammad Sadiq 'Awda.
"One source quoted a senior member of the Gama'at al-Islamiyya (IG) saying that, as of late October, the IG had completed planning for anoperation in the US on behalf of Bin Laden, but that the operation was on hold.
"A senior Bin Laden operative from Saudi Arabia was to visit IG counterparts in the US soon thereafter to discuss options-perhaps includingan aircraft hijacking."
There is a lot of detail here, and references to individual items of HUMINT (human intelligence), though President Clinton was renowned for his love of just that.
But note the caveats: reports do not "tell", they merely "suggest".
Perhaps the most infamous PDB also concerns al-Qaeda. It went to President Bush on 6 August, 2001 - just over a month before the 11September attacks on New York and Washington.
It contained the headline: "Bin Ladin determined to strike in the US".
It reads: "FBI information indicates patterns of suspicious activity in this country consistent with preparations for hijackings or other typesof attacks."
Extraordinarily prescient? Or vague and unhelpful?
The Silberman-Robb report on US intelligence capabilities of 2005 found "deficiencies" in the PDB. Its authors were scathing. The dailyreports seemed to be "selling" intelligence - in order to keep its customers, or at least the First Customer, interested
They alleged that the format of the Brief and the way in which it was delivered helped inflate the sense of the threat posed by Iraq.
The "river of intelligence that flowed from the CIA to top policy makers over long periods of time" through the PDB was "misleading", said thereport.
"The PDBs… with their attention-grabbing headlines and drumbeat of repetition, left an impression of many corroborating reports where infact there were very few sources", it read.
"The daily reports seemed to be "selling" intelligence - in order to keep its customers, or at least the First Customer, interested."
Since then, there have been changes.
The PDB now looks less like a newsletter, sources say. It may include graphics and photographs.
Gone are those pithy headlines. And it is written in a way to reflect uncertainty or disagreement within the intelligence agencies.
So what might Barack Obama's first PDB have in it?
Well, it is not hard to imagine that there would be an evaluation of Russia's intentions regarding the positioning of its missiles, givenPresident Medvedev's recent belligerent statements.
The latest from the Afghan-Pakistan border, intercepts and photographs from drones which reveal what militants are where, and the plans US intelligence has to target them, perhaps.
And did US warplanes really kill 37 civilians at a wedding party, as the Afghan government alleges?
And plenty more - that we will never know.
Tuesday, November 4, 2008
OBAMA:DANGERS OF INDO-PAK RE-HYPHENATION
B.RAMAN
The Presidential campaign is over. The transition drill has begun. Senator Barrack Obama will take over as the President only on January 20 next, but his immense work as the President-elect would have already begun from the moment he left the dais after making the victory speech to his followers and supporters.
2.The Americans call it the period of transition. It is during this period that the President-elect chooses his team of Cabinet members and senior officials, decides on his policy priorities and works out his goals during the first 100 days of his administration and thereafter. Those, who would constitute the hard core of his transition team, would start co-ordinating with the outgoing Bush administration.
3. Senior officials of the US Secret Service, which protects the President and the Vice-President, would have already called on him and set in place the arrangements for his security. Other officials of the Bush Administration would be calling on him and his close advisers to keep them briefed on the actions of the outgoing administration.
4. He will be the President of the US only from January 20, but he will be already entitled from November 5 to a regular briefing by the Director of the Central Intelligence Agency (CIA) and the Director, National Intelligence (DNI) on important developments in the world. The outgoing administration would not take any major decision or initiative or action without keeping him in the picture.
5. Speculation as to who could be his Cabinet members and other senior advisers had already started days before the elections in anticipation of a certain victory by him. In an article on October 26,2008, the “Independent” of the UK put its bet on the following as his possible Cabinet members:
Secretary of State: John Kerry (Senator from Massachusetts), Richard Holbrooke (former UN Ambassador), Bill Richardson (Governor of New Mexico, former UN Ambassador)
Secretary of Defence: Robert Gates (current Pentagon chief), Retd. General Wesley Clark (2004 Democratic Presidential candidate), Chuck Hagel (outgoing Republican Senator from Nebraska)
Treasury Secretary: Laura Tyson (former economic adviser to President Clinton), Timothy Geithner (President, New York Fed), Paul Volcker (former Federal Reserve Chairman)
National Security Adviser: Susan Rice (Obama's top foreign policy adviser), Retd. General Anthony Zinni (former C-in-C, Central Command), Samantha Power (former Obama foreign policy adviser)
Others: Colin Powell, possible foreign policy special envoy/troubleshooter; Hillary Clinton, health care czarina.
6.There could be surprises because he will have a political debt to pay to those who supported him and they may want some of their nominees to be accommodated.
7.India will have no special reasons to be concerned over the possibility of any of the persons mentioned by “Independent” joining the Cabinet, except possibly Holbrooke, whose taking-over as the Secretary of State could lead to a re-hyphenation of Indo-Pakistan relations, bringing back the hyphen, which had been removed by President George Bush and his Secretary of State Condolleeza Rice.
8.Another person of concern to India would be Madeleine Albright, who was Secretary of State under Bill Clinton. Though “Independent” did not mention her, she was reportedly a member of the inner circle which was advising Obama on foreign policy matters during the campaign.
9.India will also put a question mark on Colin Powell, who was particularly not well disposed towards India during the first term of Bush when Powell was the Secretary of State. It was only after he was replaced by Rice as the Secretary of State that Indo-US relations really started moving forward with many initiatives to acknowledge the importance of India as a major power on par with China. Concerns over Pakistani sensitivities ceased to be an inhibiting factor in US policy-making with regard to India. Zinni is an unknown quantity in India. He has many friends in Pakistan’s Armed Forces.
10.It is still 10 weeks before Obama takes over as the President. One does not know how the economies of the US and the rest of the world would move during this period. Till now, the US and the rest of the world have been seeing only the impact of the melt-down on the moneyed class---- banks, stock markets, business companies, people who have the money to dabble in the stock markets and to keep deposits in banks. The world is yet to see the impact on the common man, who is worried only about his day-to-day living and not about stock markets, mutual funds and banks. The impact on the common man would become evident by the time Obama takes over as the President.
11. The common people in the US and the rest of the world will be watching how he deals with the impact on their lives. Understandably, apart from rhetorical statements, Obama was sparse in his policy pronouncements on the economic crisis. His evasion was understandable because he had to take care that any unwise remarks by him did not add to the prevailing nervousness in the market. The economy would occupy a major part of his attention during his first few weeks in office.
12. His pronouncements on India and Pakistan, which were music to the ears of people in India in the initial months of the campaign, became jarring during the closing days of the campaign. In the initial months of his campaign, he praised India and supported the initiatives taken by the Bush administration in relation to India. He was very critical of Pakistan’s inadequate co-operation with the US in the war against Al Qaeda. He also criticized the Bush Administration for giving to Pakistan weapons, which it could use only against India and not against Al Qaeda, under the pretext of strengthening its counter-terrorism capability. He hardly spoke of Indo-Pakistan issues.
13.But as the campaign reached its culmination, he started speaking of the Kashmir issue in a language, which reminded one of the language of the past from the officials of the Clinton Administration. Obama’s entourage and Gen. David H.Petraeus, former Commander of the Multi-National Force in Iraq, who took over as the Commander of the US Central Command on October 31 and is presently on a visit to Pakistan and Afghanistan, have one thing in common---- they listen a lot to the assessments and recommendations of Ahmed Rashid, the Pakistani analyst, who has written extensively on the Taliban and the war against terrorism. In fact, Petraeus has reportedly nominated Ahmed Rashid and Shuja Nawaz, the author of the recently published book on the Pakistan Army called “Crossed Swords”, as members of a brains trust to advise him on a new strategy towards Afghanistan and Pakistan.
14.Ahmed Rashid has been arguing for some months now that the Pakistan Army cannot be expected to co-operate wholeheartedly with the US Armed Forces in the war against Al Qaeda and the Taliban unless there is a forward movement in settling the Kashmir issue and India is pressured to cut down its presence in Afghanistan. There were not many takers for his arguments in the Bush Administration. But they have already started influencing the thinking of many who are close to Obama.
15.Will he exercise pressure on India on the Kashmir issue and its role in Afghanistan after he takes over or will he let his pre-election remarks remain without follow up action? This is a question which should worry Indian policy-makers.
16.Obama’s policy towards China is also likely to be different from that of the Bush Administration. He will continue to strengthen the US’ strategic relations with India, the foundations for which were laid by Bush and Rice, but the sensitivities of China and Pakistan could once again become inhibiting factors in determining the pace and extent of the relationship. He is unlikely to subscribe to the wisdom of building up India as a counter to China. That was the unstated wisdom behind the policies of the Bush Administration towards India.
17.Obama was supportive of the Indo-US Civilian nuclear co-operation Agreement. Many of the non-governmental experts, who were critical of the agreement, have a greater audience for their views in the Democratic Party than in the Republican Party. They would try to see that the Hyde Act is observed in letter and spirit in the implementation of the agreement. If their views prevail, one could see a slow-down in Indo-US co-operation in nuclear matters.
18.Under Bush, Indo-US relations developed like never before because he was a great admirer of India and was convinced of the need to encourage the emergence of India as a major Asian power on par with China. Obama has so far not given any indication of a similar admiration and conviction.
19.Barring John F.Kennedy, other Democratic Presidents were not very positive towards India. They always thought of India tactically and not strategically. Many major initiatives towards India came from Republican Presidents, who held office after Richard Nixon, whose dislike of India---- and particularly Indira Gandhi--- was well-known. There was a new page in Indo-US relations under Bush. This was facilitated by the decline in the influence of some Washington-based think tanks and their academics on policy-making. With the return of a Democrat to the White House, these old academic warriors are already coming out of their eight-year-long hibernation and will try to influence the new President in his thinking and policies. Their views are no different from those of the like of Ahmed Rashid.
20.We should not hesitate to make it clear to the new administration that while we are as keen as before to strengthen our strategic relations with the US, this cannot be at the expense of our vital national interests in matters like Kashmir and Afghanistan. (5-11-08)
(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 )
The Presidential campaign is over. The transition drill has begun. Senator Barrack Obama will take over as the President only on January 20 next, but his immense work as the President-elect would have already begun from the moment he left the dais after making the victory speech to his followers and supporters.
2.The Americans call it the period of transition. It is during this period that the President-elect chooses his team of Cabinet members and senior officials, decides on his policy priorities and works out his goals during the first 100 days of his administration and thereafter. Those, who would constitute the hard core of his transition team, would start co-ordinating with the outgoing Bush administration.
3. Senior officials of the US Secret Service, which protects the President and the Vice-President, would have already called on him and set in place the arrangements for his security. Other officials of the Bush Administration would be calling on him and his close advisers to keep them briefed on the actions of the outgoing administration.
4. He will be the President of the US only from January 20, but he will be already entitled from November 5 to a regular briefing by the Director of the Central Intelligence Agency (CIA) and the Director, National Intelligence (DNI) on important developments in the world. The outgoing administration would not take any major decision or initiative or action without keeping him in the picture.
5. Speculation as to who could be his Cabinet members and other senior advisers had already started days before the elections in anticipation of a certain victory by him. In an article on October 26,2008, the “Independent” of the UK put its bet on the following as his possible Cabinet members:
Secretary of State: John Kerry (Senator from Massachusetts), Richard Holbrooke (former UN Ambassador), Bill Richardson (Governor of New Mexico, former UN Ambassador)
Secretary of Defence: Robert Gates (current Pentagon chief), Retd. General Wesley Clark (2004 Democratic Presidential candidate), Chuck Hagel (outgoing Republican Senator from Nebraska)
Treasury Secretary: Laura Tyson (former economic adviser to President Clinton), Timothy Geithner (President, New York Fed), Paul Volcker (former Federal Reserve Chairman)
National Security Adviser: Susan Rice (Obama's top foreign policy adviser), Retd. General Anthony Zinni (former C-in-C, Central Command), Samantha Power (former Obama foreign policy adviser)
Others: Colin Powell, possible foreign policy special envoy/troubleshooter; Hillary Clinton, health care czarina.
6.There could be surprises because he will have a political debt to pay to those who supported him and they may want some of their nominees to be accommodated.
7.India will have no special reasons to be concerned over the possibility of any of the persons mentioned by “Independent” joining the Cabinet, except possibly Holbrooke, whose taking-over as the Secretary of State could lead to a re-hyphenation of Indo-Pakistan relations, bringing back the hyphen, which had been removed by President George Bush and his Secretary of State Condolleeza Rice.
8.Another person of concern to India would be Madeleine Albright, who was Secretary of State under Bill Clinton. Though “Independent” did not mention her, she was reportedly a member of the inner circle which was advising Obama on foreign policy matters during the campaign.
9.India will also put a question mark on Colin Powell, who was particularly not well disposed towards India during the first term of Bush when Powell was the Secretary of State. It was only after he was replaced by Rice as the Secretary of State that Indo-US relations really started moving forward with many initiatives to acknowledge the importance of India as a major power on par with China. Concerns over Pakistani sensitivities ceased to be an inhibiting factor in US policy-making with regard to India. Zinni is an unknown quantity in India. He has many friends in Pakistan’s Armed Forces.
10.It is still 10 weeks before Obama takes over as the President. One does not know how the economies of the US and the rest of the world would move during this period. Till now, the US and the rest of the world have been seeing only the impact of the melt-down on the moneyed class---- banks, stock markets, business companies, people who have the money to dabble in the stock markets and to keep deposits in banks. The world is yet to see the impact on the common man, who is worried only about his day-to-day living and not about stock markets, mutual funds and banks. The impact on the common man would become evident by the time Obama takes over as the President.
11. The common people in the US and the rest of the world will be watching how he deals with the impact on their lives. Understandably, apart from rhetorical statements, Obama was sparse in his policy pronouncements on the economic crisis. His evasion was understandable because he had to take care that any unwise remarks by him did not add to the prevailing nervousness in the market. The economy would occupy a major part of his attention during his first few weeks in office.
12. His pronouncements on India and Pakistan, which were music to the ears of people in India in the initial months of the campaign, became jarring during the closing days of the campaign. In the initial months of his campaign, he praised India and supported the initiatives taken by the Bush administration in relation to India. He was very critical of Pakistan’s inadequate co-operation with the US in the war against Al Qaeda. He also criticized the Bush Administration for giving to Pakistan weapons, which it could use only against India and not against Al Qaeda, under the pretext of strengthening its counter-terrorism capability. He hardly spoke of Indo-Pakistan issues.
13.But as the campaign reached its culmination, he started speaking of the Kashmir issue in a language, which reminded one of the language of the past from the officials of the Clinton Administration. Obama’s entourage and Gen. David H.Petraeus, former Commander of the Multi-National Force in Iraq, who took over as the Commander of the US Central Command on October 31 and is presently on a visit to Pakistan and Afghanistan, have one thing in common---- they listen a lot to the assessments and recommendations of Ahmed Rashid, the Pakistani analyst, who has written extensively on the Taliban and the war against terrorism. In fact, Petraeus has reportedly nominated Ahmed Rashid and Shuja Nawaz, the author of the recently published book on the Pakistan Army called “Crossed Swords”, as members of a brains trust to advise him on a new strategy towards Afghanistan and Pakistan.
14.Ahmed Rashid has been arguing for some months now that the Pakistan Army cannot be expected to co-operate wholeheartedly with the US Armed Forces in the war against Al Qaeda and the Taliban unless there is a forward movement in settling the Kashmir issue and India is pressured to cut down its presence in Afghanistan. There were not many takers for his arguments in the Bush Administration. But they have already started influencing the thinking of many who are close to Obama.
15.Will he exercise pressure on India on the Kashmir issue and its role in Afghanistan after he takes over or will he let his pre-election remarks remain without follow up action? This is a question which should worry Indian policy-makers.
16.Obama’s policy towards China is also likely to be different from that of the Bush Administration. He will continue to strengthen the US’ strategic relations with India, the foundations for which were laid by Bush and Rice, but the sensitivities of China and Pakistan could once again become inhibiting factors in determining the pace and extent of the relationship. He is unlikely to subscribe to the wisdom of building up India as a counter to China. That was the unstated wisdom behind the policies of the Bush Administration towards India.
17.Obama was supportive of the Indo-US Civilian nuclear co-operation Agreement. Many of the non-governmental experts, who were critical of the agreement, have a greater audience for their views in the Democratic Party than in the Republican Party. They would try to see that the Hyde Act is observed in letter and spirit in the implementation of the agreement. If their views prevail, one could see a slow-down in Indo-US co-operation in nuclear matters.
18.Under Bush, Indo-US relations developed like never before because he was a great admirer of India and was convinced of the need to encourage the emergence of India as a major Asian power on par with China. Obama has so far not given any indication of a similar admiration and conviction.
19.Barring John F.Kennedy, other Democratic Presidents were not very positive towards India. They always thought of India tactically and not strategically. Many major initiatives towards India came from Republican Presidents, who held office after Richard Nixon, whose dislike of India---- and particularly Indira Gandhi--- was well-known. There was a new page in Indo-US relations under Bush. This was facilitated by the decline in the influence of some Washington-based think tanks and their academics on policy-making. With the return of a Democrat to the White House, these old academic warriors are already coming out of their eight-year-long hibernation and will try to influence the new President in his thinking and policies. Their views are no different from those of the like of Ahmed Rashid.
20.We should not hesitate to make it clear to the new administration that while we are as keen as before to strengthen our strategic relations with the US, this cannot be at the expense of our vital national interests in matters like Kashmir and Afghanistan. (5-11-08)
(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 )
CHINESE ECONOMY MONITOR--- NOTE NO.3
B.RAMAN
( What will be the impact of the global financial and economic melt-down on the Chinese economy? This question should be of interest to theother countries of the South and the South-East Asian region. If the Chinese economy is badly affected, they too are likely to feel thenegative consequences of the down-turn in the Chinese economy. Keeping this in view, we have been bringing out a periodic "ChineseEconomy Monitor" based on open information. This is the third in the series---B. Raman)
CONFIDENCE IN THE ECONOMY, THE NEED OF THE HOUR, SAYS WEN
Summing up the discussions at the Asia-Europe Meeting Summit held in Beijing, Prime Minister Wen Jiabao told the media on October 24,2008, as follows: "We will discuss with world leaders on measures to cope with the financial crisis in a pragmatic and cooperative manner.Ithink what we should do to cope with the crisis can be summarized as confidence, cooperation and responsibility.We are very glad to seethat many countries have taken measures that have initially proved effective. But this is not enough given the current situation, and moreneeds to be done.The stability of financial market is key to stabilizing the whole economy. The first important message that the two-daysummit has conveyed is firm confidence, and I think confidence is the source of power to overcome difficulties."
---- Source Xinhua
2.Liu He, Deputy Director of the Office of the Central Leading Group on Finance and Economy Work, told the "China Daily" on October24,2008, as follows: "The worsening global economic situation makes it difficult for China to predict its growth for next year.How fastChina's economy will grow next year is uncertain. To a large extent, the rate will be decided by the external situation.This year, GDP isestimated to grow at 9.4 or 9.5 per cent, down from 10.6 per cent last year.However, the impact of the current financial turbulence on oureconomy is much less than in the rest of the world. China can use the downturn as an opportunity to restructure its economy, which hasrelied heavily on government investment, foreign trade and low-cost technology over the past years. When the economy is experiencing fastgrowth, companies are unwilling to upgrade their technologies.The slowdown gives such firms the opportunity to enhance their competitiveedge through better technologies."
----Source "China Daily"
ELECTRONIC EXPORTS CONTINUE TO GROW, BUT LESS RAPIDLY
3.China's trade in electronic and information products increased during the first eight months of 2008, but the growth rate of both exportsand imports decreased.Electronic and information products constitute the largest single item in terms of value in China's exportbasket.About two-thirds of the exports come from wholly foreign -owned manufacturing units in China----mainly from Japan, South Korea,Hong Kong and Taiwan--- 16 per cent from joint ventures and the remaining 18 per cent from wholly Chinese-owned companies. Theseproducts include mobile phones, fax machines, TV sets, computers, digital cameras and the like.During the first eight months of this year,the total value of the exports of these items was about US $ 338.62 billion , an increase of 22.53 per cent as compared to thecorresponding period of 2007. The growth rate during the same period in 2007 as compared to 2006 was 24.53 per cent. Thus, the exportgrowth rate decreased by two per centage points, but it is still high. China imported $ 246.81 billion worth of electronic and informationproducts from January to August, up 15.45 per cent as compared to the corresponding period of 2007. However, the growth rate was five per cent lower than last year. The imports include whole products imported for sale to the Chinese consumers as well as parts imported forassembly and re-export.Trade surplus of electronic and information products increased by 46.7 per cent to US $91.81 billion , accountingfor 60.4 percent of China's total trade surplus. China exported $4.12 billion worth of software in the first five months of 2008, up 45 percent over the corresponding period of 2007.Software exports surged from $720 million in 2001 to $10.24 billion in 2007. (My comments: Thetotal value of India's software exports is around US $ 40 billion per annum.)
-------Source: Xinhua
FOREIGN EXCHANGE RESERVES CONTINUE TO BULGE; YUAN ASSETS PREFERRED TO DOLLAR & EURO
4.The People's Bank of China, which is China's central bank, reported on October 13,2008, that the country's foreign exchange reservessurged to 1.9056 trillion U.S. dollars through September. The figure was up by 32.92 per cent as compared to the first nine months of 2007.Foreign exchange reserves grew by 47.7 per cent during the first nine months of 2007 as compared to the corresponding period of 2006.Thus, the growth rate has dropped by 14.8 per cent.China overtook Japan to become the world's largest holder of forex reserves inFebruary 2006. Till June,2008, the foreign exchange reserves were growing by 35.73 per cent. This came down to 32.92 per cent bySeptember-end,2008. During the first three quarters of 2008, China's trade surplus decreased by 2.6 per cent year-on-year to 180.9 billionU.S. dollars. There was a flow of 377.3 billion U.S. dollars to the forex reserves in the first three quarters. In September, the reserve build-upexpanded by 21.4 billion U.S. dollars, compared with rises of 36 billion U.S. dollars and 39 billion U.S. dollars in July and August, respectively.The monthly increase was averaged at 41.9 billion U.S. dollars in the first nine months, still higher than an average 38.5 billion U.S. dollarsrecorded last year. The average monthly increase for the third quarter alone was 32 billion U.S. dollars, and higher than marketexpectations. The country's trade surplus had been expanding by more than 27 billion U.S. dollars each month in the third quarter, whichalso overran market expectations. Tan Yaling, a China International Economic Relations Society economist, said the growth in forexreserves also indicated a growing interest in yuan assets as a haven for investment amid the global turmoil. "Under the current financialcrisis that originated in the United States and with the euro also softening, China's yuan-denominated assets appear relatively safer andcreated an influx of foreign investment, which also contributed to the growth in the third quarter." Zhang Bin, a Chinese Academy of SocialSciences researcher, said the U.S. financial crisis had a limited impact on the country's huge forex reserves, as the forex supervisor haddiversified the holdings so as to avert some risks. Through September, the M2 -- a broad measure of money supply, which covers cash incirculation plus all deposits -- grew by 15.29 per cent from a year ago to 45.29 trillion yuan (6.7 trillion U.S. dollars). The M2 growth was 0.71percentage points lower than the previous month. The figure had fallen for the fourth consecutive month as the government's tighteningmeasures started to take hold. Tightening policies, including several interest rate hikes, since the end of last year, adopted to fight soaringinflation and overheating risks, however, had recently been replaced by two rate cuts in less than a month. Such moves were taken to boostthe domestic economy amid worries over the deepening global financial crisis. Through September, the narrow measure of money supply,M1, was up 9.43 percent to 15.57 trillion yuan, again lower than the 11.48 percent rise in August.The central bank report also claimed thatthe country's financial system remained stable. Outstanding local currency loans expanded 14.48 percent to 29.65 trillion yuan. The growthwas 0.19 percentage points higher than the previous month. Outstanding loans in foreign currencies, however, rose 30.86 percent to 269.2billion U.S. dollars, compared with a gain of 37.84 percent in August. The report said local-currency deposits were up 18.79 percent to 45.49trillion yuan, while foreign-currency deposits grew 9.37 percent to 174.2 billion U.S. dollars. Local-currency transactions on the inter-bankmarket reached 9.49 trillion yuan last month. Average daily transactions were 451.9 billion yuan, up 17 percent year on year.
---- Source Xinhua
ASSESSMENT
5.My comments: While the toy industry is in a state of serious crisis due to a steep fall in demands from the US, the electronic and information products industries, which contribute nearly 60 per cent of China's trade surplus, continue to do well. There has been a declinein orders as compared to 2007, but not very high. However, if this decline expands in the coming months, that could add to the difficultiesfaced. The foreign exchange reserves continue to bulge despite a slight drop in trade surplus.The fall in the flow of reserves due to a slightdrop in trade surplus has been compensated by a flow of money from foreign investors, who prefer yuan-denominated assets to US dollar and Euro denominated ones.One does not know how much of China's foreign exchange reserves has been invested in the US Treasury bonds. If these bonds lose in value as a result of the melt-down in the US, that could aggravate the difficulties. The Chinese leaders and officials are projecting a picture of confidence that they will be able to keep their economy stable. Whether their confidence is justified or not would beevident only by January. Presently, the electronic and information products and textiles industries are doing well on the basis of the exportorders received before the melt-down started in the West. What inpact the melt-down has on post-September orders would be evident onlyby January. The present Chinese worry is over the spectre of unemployment as the export orders come down. How healthy is their banking system? An answer to this question is not yet available.
(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 )
( What will be the impact of the global financial and economic melt-down on the Chinese economy? This question should be of interest to theother countries of the South and the South-East Asian region. If the Chinese economy is badly affected, they too are likely to feel thenegative consequences of the down-turn in the Chinese economy. Keeping this in view, we have been bringing out a periodic "ChineseEconomy Monitor" based on open information. This is the third in the series---B. Raman)
CONFIDENCE IN THE ECONOMY, THE NEED OF THE HOUR, SAYS WEN
Summing up the discussions at the Asia-Europe Meeting Summit held in Beijing, Prime Minister Wen Jiabao told the media on October 24,2008, as follows: "We will discuss with world leaders on measures to cope with the financial crisis in a pragmatic and cooperative manner.Ithink what we should do to cope with the crisis can be summarized as confidence, cooperation and responsibility.We are very glad to seethat many countries have taken measures that have initially proved effective. But this is not enough given the current situation, and moreneeds to be done.The stability of financial market is key to stabilizing the whole economy. The first important message that the two-daysummit has conveyed is firm confidence, and I think confidence is the source of power to overcome difficulties."
---- Source Xinhua
2.Liu He, Deputy Director of the Office of the Central Leading Group on Finance and Economy Work, told the "China Daily" on October24,2008, as follows: "The worsening global economic situation makes it difficult for China to predict its growth for next year.How fastChina's economy will grow next year is uncertain. To a large extent, the rate will be decided by the external situation.This year, GDP isestimated to grow at 9.4 or 9.5 per cent, down from 10.6 per cent last year.However, the impact of the current financial turbulence on oureconomy is much less than in the rest of the world. China can use the downturn as an opportunity to restructure its economy, which hasrelied heavily on government investment, foreign trade and low-cost technology over the past years. When the economy is experiencing fastgrowth, companies are unwilling to upgrade their technologies.The slowdown gives such firms the opportunity to enhance their competitiveedge through better technologies."
----Source "China Daily"
ELECTRONIC EXPORTS CONTINUE TO GROW, BUT LESS RAPIDLY
3.China's trade in electronic and information products increased during the first eight months of 2008, but the growth rate of both exportsand imports decreased.Electronic and information products constitute the largest single item in terms of value in China's exportbasket.About two-thirds of the exports come from wholly foreign -owned manufacturing units in China----mainly from Japan, South Korea,Hong Kong and Taiwan--- 16 per cent from joint ventures and the remaining 18 per cent from wholly Chinese-owned companies. Theseproducts include mobile phones, fax machines, TV sets, computers, digital cameras and the like.During the first eight months of this year,the total value of the exports of these items was about US $ 338.62 billion , an increase of 22.53 per cent as compared to thecorresponding period of 2007. The growth rate during the same period in 2007 as compared to 2006 was 24.53 per cent. Thus, the exportgrowth rate decreased by two per centage points, but it is still high. China imported $ 246.81 billion worth of electronic and informationproducts from January to August, up 15.45 per cent as compared to the corresponding period of 2007. However, the growth rate was five per cent lower than last year. The imports include whole products imported for sale to the Chinese consumers as well as parts imported forassembly and re-export.Trade surplus of electronic and information products increased by 46.7 per cent to US $91.81 billion , accountingfor 60.4 percent of China's total trade surplus. China exported $4.12 billion worth of software in the first five months of 2008, up 45 percent over the corresponding period of 2007.Software exports surged from $720 million in 2001 to $10.24 billion in 2007. (My comments: Thetotal value of India's software exports is around US $ 40 billion per annum.)
-------Source: Xinhua
FOREIGN EXCHANGE RESERVES CONTINUE TO BULGE; YUAN ASSETS PREFERRED TO DOLLAR & EURO
4.The People's Bank of China, which is China's central bank, reported on October 13,2008, that the country's foreign exchange reservessurged to 1.9056 trillion U.S. dollars through September. The figure was up by 32.92 per cent as compared to the first nine months of 2007.Foreign exchange reserves grew by 47.7 per cent during the first nine months of 2007 as compared to the corresponding period of 2006.Thus, the growth rate has dropped by 14.8 per cent.China overtook Japan to become the world's largest holder of forex reserves inFebruary 2006. Till June,2008, the foreign exchange reserves were growing by 35.73 per cent. This came down to 32.92 per cent bySeptember-end,2008. During the first three quarters of 2008, China's trade surplus decreased by 2.6 per cent year-on-year to 180.9 billionU.S. dollars. There was a flow of 377.3 billion U.S. dollars to the forex reserves in the first three quarters. In September, the reserve build-upexpanded by 21.4 billion U.S. dollars, compared with rises of 36 billion U.S. dollars and 39 billion U.S. dollars in July and August, respectively.The monthly increase was averaged at 41.9 billion U.S. dollars in the first nine months, still higher than an average 38.5 billion U.S. dollarsrecorded last year. The average monthly increase for the third quarter alone was 32 billion U.S. dollars, and higher than marketexpectations. The country's trade surplus had been expanding by more than 27 billion U.S. dollars each month in the third quarter, whichalso overran market expectations. Tan Yaling, a China International Economic Relations Society economist, said the growth in forexreserves also indicated a growing interest in yuan assets as a haven for investment amid the global turmoil. "Under the current financialcrisis that originated in the United States and with the euro also softening, China's yuan-denominated assets appear relatively safer andcreated an influx of foreign investment, which also contributed to the growth in the third quarter." Zhang Bin, a Chinese Academy of SocialSciences researcher, said the U.S. financial crisis had a limited impact on the country's huge forex reserves, as the forex supervisor haddiversified the holdings so as to avert some risks. Through September, the M2 -- a broad measure of money supply, which covers cash incirculation plus all deposits -- grew by 15.29 per cent from a year ago to 45.29 trillion yuan (6.7 trillion U.S. dollars). The M2 growth was 0.71percentage points lower than the previous month. The figure had fallen for the fourth consecutive month as the government's tighteningmeasures started to take hold. Tightening policies, including several interest rate hikes, since the end of last year, adopted to fight soaringinflation and overheating risks, however, had recently been replaced by two rate cuts in less than a month. Such moves were taken to boostthe domestic economy amid worries over the deepening global financial crisis. Through September, the narrow measure of money supply,M1, was up 9.43 percent to 15.57 trillion yuan, again lower than the 11.48 percent rise in August.The central bank report also claimed thatthe country's financial system remained stable. Outstanding local currency loans expanded 14.48 percent to 29.65 trillion yuan. The growthwas 0.19 percentage points higher than the previous month. Outstanding loans in foreign currencies, however, rose 30.86 percent to 269.2billion U.S. dollars, compared with a gain of 37.84 percent in August. The report said local-currency deposits were up 18.79 percent to 45.49trillion yuan, while foreign-currency deposits grew 9.37 percent to 174.2 billion U.S. dollars. Local-currency transactions on the inter-bankmarket reached 9.49 trillion yuan last month. Average daily transactions were 451.9 billion yuan, up 17 percent year on year.
---- Source Xinhua
ASSESSMENT
5.My comments: While the toy industry is in a state of serious crisis due to a steep fall in demands from the US, the electronic and information products industries, which contribute nearly 60 per cent of China's trade surplus, continue to do well. There has been a declinein orders as compared to 2007, but not very high. However, if this decline expands in the coming months, that could add to the difficultiesfaced. The foreign exchange reserves continue to bulge despite a slight drop in trade surplus.The fall in the flow of reserves due to a slightdrop in trade surplus has been compensated by a flow of money from foreign investors, who prefer yuan-denominated assets to US dollar and Euro denominated ones.One does not know how much of China's foreign exchange reserves has been invested in the US Treasury bonds. If these bonds lose in value as a result of the melt-down in the US, that could aggravate the difficulties. The Chinese leaders and officials are projecting a picture of confidence that they will be able to keep their economy stable. Whether their confidence is justified or not would beevident only by January. Presently, the electronic and information products and textiles industries are doing well on the basis of the exportorders received before the melt-down started in the West. What inpact the melt-down has on post-September orders would be evident onlyby January. The present Chinese worry is over the spectre of unemployment as the export orders come down. How healthy is their banking system? An answer to this question is not yet available.
(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 )
Monday, November 3, 2008
TIBET: 'STATUS QUO PLUS' AS AN OPTION?
B.RAMAN
There is a note of increasing dejection in the post-Olympics statements and comments of His Holiness the Dalai Lama and his spokesmenregarding the future of Tibet. His hopes that in the wake of the protest demonstrations in Tibet in March,2008, the international communitywill step up pressure on Beijing to reach an accommodation with him have been belied. The restrained post-March 2008 reactions of theinternational community have shown that the economic links of the West with China have become so strong that the West is not prepared torisk this linkage by over-focussing on the Tibet issue to the annoyance of China. Apart from proforma expressions of reverence for HisHoliness and of support for the improvement of human rights in Tibet, the West is disinclined to do anything more. It has come to therealisation that it won't be desirable to exploit Tibet as a card against China.
2.This disinclination to exercise undue pressure on China on the Tibet issue is likely to increase further as the West's dependence onChinese co-operation for re-stabilising the global economy increases. Despite the spectre of large-scale unemployment due to decrease inexports to the West, the Chinese economy is still in a stable state. Its foreign exchange reserves ( touching US $ 2 trillion ) have not sufferedany major depletion so far despite the decrease in export orders from the West. China has major worries over the possibility of social unrestin the southern coastal provinces, which would be the worst affected by any recession in the West, but in spite of this, its leaders realisethat the global financial and economic crisis provides it with an opportunity to play a benign role in helping out the Western powers andthereby earning political and strategic dividends. At a time when the West is looking up to China to help it out in this hour of crisis, it is evenmore unlikely than in the past to exploit the Tibetan issue.
3. The coming to power of a Maoist-led Government in Nepal has already affected the political and operational manoeuvrability of theTibetan exiles in that country, who were playing an important role in keeping the anti-Beijing forces alive and active in Tibet. It is likely to befurther affected as the Maoists consolidate their position further.
4.It is this realisation which seems to be behind the note of increasing dejection in the comments and statements of His Holiness and hisspokesmen. He continues to be critical of China and accuses it of bad faith by being not serious in its talks with his representatives on thefuture of Tibet. He has been saying that he does not expect any forward movement in the latest round of talks for which his representativeshave gone to China.
5. He has realised that the time has come for a major re-think of the policies hitherto followed by his Government-in-exile based inDharamshala in India in consultation with the representatives of the Tibetan diaspora and with the international well-wishers of the Tibetanmovement. He has convened two meetings for this purpose.
6.Tenzin Taklha, a spokesman of His Holiness, was quoted as saying on October 27,2008, as follows: " The Dalai Lama is considering amajor policy shift towards China following a complete lack of progress in talks on Tibetan autonomy with Beijing.All options would be on thetable at a meeting scheduled next month of exiled Tibetan leaders involved in the campaign for greater autonomy for their Himalayanhomeland. The only non-negotiable aspect is that the movement will still be non-violent. Everyone is agreed on that.He (the Dalai Lama) has lost hope in trying to reach a solution with the present Chinese leadership which is simply not willing to address the issues.His Holinessfeels that other options have to be considered, and this will be done at the meeting in November.There is no immediate prospect of the Dalai Lama going into retirement. Despite the current sense of frustration, an eighth round of talks with Beijing was expected to go aheadas scheduled this week. Whatever happens we have to keep the door to dialogue open."
7.The Dalai Lama, who is currently on a week-long visit to Japan at the invitation of local Buddhist organisations, stated as follows at apress conference in Tokyo on November 3: "The drive for greater autonomy for Tibet has ended in failure. The Tibetans should be open toall options in negotiations with Beijing. My trust in the Chinese Government has become thinner, thinner, thinner. Suppression (in Tibet) isincreasing and I cannot pretend that everything is OK.I have to accept failure. Meantime among Tibetans in recent years, our approachfailed to bring positive change inside Tibet, so criticism has also increased. So there is no other alternative than to ask people."
8.He said he would be calling a meeting later this month among Tibetans to decide on their future strategy towards the ChineseGovernment. The first meeting to be held in Dharamshala, on November 17, will involve exiled Tibetan communities. This will be followed byanother in New Delhi that will convene international supporters including lawmakers and former foreign ministers. It is not clear whetherthis meeting will also be in November.
9.He added: "I don't know what will happen.Their minds should be open to explore all different options... and not fixated on oneissue.Hopefully their discussions will not be emotional, but intelligent and carefully thought out."
10. The Dalai Lama has refused to indicate whether he would give any advice to the forthcoming meeting. His movement originally called for Tibetan independence. When it realised that independence was no longer a feasible option, he modified their objective as a middlepath----meaning autonomy for Tibet on the lines of the status given to Hong Kong. The Chinese, who have already closely integrated Tibetwith the rest of China and changed its demographic composition by settling a large number of Han Chinese in the region, are not prepared todiscuss any change in the political and administrative status quo. From the stand taken by them at the seven rounds of talks with the DalaiLama's representatives till now, it is clear that , firstly, they are not prepared to allow any political role for His Holiness and, secondly, whilethey are prepared to give him a limited religious role over the Buddhists in Tibet, they are not prepared to recognise any successor to theDalai Lama in whose selection the Chinese Government and the Communist administration in Lhasa had not played aleading role.
11. With the Dalai Lama now openly admitting the failure of his middle path policy, only two options remain:
Either revert to the previous option of independence. This is what the younger elements in the Tibetan Youth Congress (TYC) will want. They have always been critical of the Dalai Lama's advocacy of a middle path.The independence option had not worked in the past and is unlikely to be feasible in future even if the TYC is prepared to take to violence for this purpose. Moreover, the international community is unlikely to support any violent upheaval in Tibet unless it starts viewing China as a major threat to international peace and security. Such a contingency is very remote.
Or come to terms with the status quo in Tibet with some concessions--- that is, a kind of 'status quo plus' policy. Such concessions could be in respect of the restoration of the full religious authority of the Dalai Lama and his successor with no political role and a Chinese commitment that the successor to His Holiness would be chosen in accordance with the Tibetan Buddhist traditions with no interference by the Chinese Communist Party and State. It is doubtful whether either the TYC or China would accept this option. The Chinese might be prepared to accept the restoration of the religious role of the present Dalai Lama subject to some restrictions, but they are determined that the successor of His Holiness would be chosen by the Communist Party and the Tibetan Government with the co-operation of theTibetan Buddhists, but with no role for the diaspora.
12.The forthcoming meeting will have to take a painful decision on the future of the Tibetan movement. It is difficult to foresee at present what that decision will be. However, it is unfortunately clear that the options of His Holiness and his followers are getting narrowed down.(3-11-08)
(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 )
There is a note of increasing dejection in the post-Olympics statements and comments of His Holiness the Dalai Lama and his spokesmenregarding the future of Tibet. His hopes that in the wake of the protest demonstrations in Tibet in March,2008, the international communitywill step up pressure on Beijing to reach an accommodation with him have been belied. The restrained post-March 2008 reactions of theinternational community have shown that the economic links of the West with China have become so strong that the West is not prepared torisk this linkage by over-focussing on the Tibet issue to the annoyance of China. Apart from proforma expressions of reverence for HisHoliness and of support for the improvement of human rights in Tibet, the West is disinclined to do anything more. It has come to therealisation that it won't be desirable to exploit Tibet as a card against China.
2.This disinclination to exercise undue pressure on China on the Tibet issue is likely to increase further as the West's dependence onChinese co-operation for re-stabilising the global economy increases. Despite the spectre of large-scale unemployment due to decrease inexports to the West, the Chinese economy is still in a stable state. Its foreign exchange reserves ( touching US $ 2 trillion ) have not sufferedany major depletion so far despite the decrease in export orders from the West. China has major worries over the possibility of social unrestin the southern coastal provinces, which would be the worst affected by any recession in the West, but in spite of this, its leaders realisethat the global financial and economic crisis provides it with an opportunity to play a benign role in helping out the Western powers andthereby earning political and strategic dividends. At a time when the West is looking up to China to help it out in this hour of crisis, it is evenmore unlikely than in the past to exploit the Tibetan issue.
3. The coming to power of a Maoist-led Government in Nepal has already affected the political and operational manoeuvrability of theTibetan exiles in that country, who were playing an important role in keeping the anti-Beijing forces alive and active in Tibet. It is likely to befurther affected as the Maoists consolidate their position further.
4.It is this realisation which seems to be behind the note of increasing dejection in the comments and statements of His Holiness and hisspokesmen. He continues to be critical of China and accuses it of bad faith by being not serious in its talks with his representatives on thefuture of Tibet. He has been saying that he does not expect any forward movement in the latest round of talks for which his representativeshave gone to China.
5. He has realised that the time has come for a major re-think of the policies hitherto followed by his Government-in-exile based inDharamshala in India in consultation with the representatives of the Tibetan diaspora and with the international well-wishers of the Tibetanmovement. He has convened two meetings for this purpose.
6.Tenzin Taklha, a spokesman of His Holiness, was quoted as saying on October 27,2008, as follows: " The Dalai Lama is considering amajor policy shift towards China following a complete lack of progress in talks on Tibetan autonomy with Beijing.All options would be on thetable at a meeting scheduled next month of exiled Tibetan leaders involved in the campaign for greater autonomy for their Himalayanhomeland. The only non-negotiable aspect is that the movement will still be non-violent. Everyone is agreed on that.He (the Dalai Lama) has lost hope in trying to reach a solution with the present Chinese leadership which is simply not willing to address the issues.His Holinessfeels that other options have to be considered, and this will be done at the meeting in November.There is no immediate prospect of the Dalai Lama going into retirement. Despite the current sense of frustration, an eighth round of talks with Beijing was expected to go aheadas scheduled this week. Whatever happens we have to keep the door to dialogue open."
7.The Dalai Lama, who is currently on a week-long visit to Japan at the invitation of local Buddhist organisations, stated as follows at apress conference in Tokyo on November 3: "The drive for greater autonomy for Tibet has ended in failure. The Tibetans should be open toall options in negotiations with Beijing. My trust in the Chinese Government has become thinner, thinner, thinner. Suppression (in Tibet) isincreasing and I cannot pretend that everything is OK.I have to accept failure. Meantime among Tibetans in recent years, our approachfailed to bring positive change inside Tibet, so criticism has also increased. So there is no other alternative than to ask people."
8.He said he would be calling a meeting later this month among Tibetans to decide on their future strategy towards the ChineseGovernment. The first meeting to be held in Dharamshala, on November 17, will involve exiled Tibetan communities. This will be followed byanother in New Delhi that will convene international supporters including lawmakers and former foreign ministers. It is not clear whetherthis meeting will also be in November.
9.He added: "I don't know what will happen.Their minds should be open to explore all different options... and not fixated on oneissue.Hopefully their discussions will not be emotional, but intelligent and carefully thought out."
10. The Dalai Lama has refused to indicate whether he would give any advice to the forthcoming meeting. His movement originally called for Tibetan independence. When it realised that independence was no longer a feasible option, he modified their objective as a middlepath----meaning autonomy for Tibet on the lines of the status given to Hong Kong. The Chinese, who have already closely integrated Tibetwith the rest of China and changed its demographic composition by settling a large number of Han Chinese in the region, are not prepared todiscuss any change in the political and administrative status quo. From the stand taken by them at the seven rounds of talks with the DalaiLama's representatives till now, it is clear that , firstly, they are not prepared to allow any political role for His Holiness and, secondly, whilethey are prepared to give him a limited religious role over the Buddhists in Tibet, they are not prepared to recognise any successor to theDalai Lama in whose selection the Chinese Government and the Communist administration in Lhasa had not played aleading role.
11. With the Dalai Lama now openly admitting the failure of his middle path policy, only two options remain:
Either revert to the previous option of independence. This is what the younger elements in the Tibetan Youth Congress (TYC) will want. They have always been critical of the Dalai Lama's advocacy of a middle path.The independence option had not worked in the past and is unlikely to be feasible in future even if the TYC is prepared to take to violence for this purpose. Moreover, the international community is unlikely to support any violent upheaval in Tibet unless it starts viewing China as a major threat to international peace and security. Such a contingency is very remote.
Or come to terms with the status quo in Tibet with some concessions--- that is, a kind of 'status quo plus' policy. Such concessions could be in respect of the restoration of the full religious authority of the Dalai Lama and his successor with no political role and a Chinese commitment that the successor to His Holiness would be chosen in accordance with the Tibetan Buddhist traditions with no interference by the Chinese Communist Party and State. It is doubtful whether either the TYC or China would accept this option. The Chinese might be prepared to accept the restoration of the religious role of the present Dalai Lama subject to some restrictions, but they are determined that the successor of His Holiness would be chosen by the Communist Party and the Tibetan Government with the co-operation of theTibetan Buddhists, but with no role for the diaspora.
12.The forthcoming meeting will have to take a painful decision on the future of the Tibetan movement. It is difficult to foresee at present what that decision will be. However, it is unfortunately clear that the options of His Holiness and his followers are getting narrowed down.(3-11-08)
(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 )
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