Round The World

New Delhi, 18 June 2008

Bush Attends Final EU Summit as President

By Dr. Monika Chansoria

Research Fellow, Centre for Land Warfare Studies, New Delhi

President George W. Bush embarked upon a concluding visit to Europe while in office, so as to attend his eighth and final European Union (EU) Summit near the Slovenian capital of Ljubljana on June 10, 2008.

With a range of significant issues on the agenda, the summit primarily remained focused on discussions regarding the contentious issue of Iran’s nuclear pursuit and climate change.

On a rather reflective note, President Bush said, “My first trip to Europe as President began in Slovenia, and so does my last trip as President to Europe.” The weeklong trans-Atlantic visit included the EU-US summit followed by trips to Germany, Italy, the Vatican, France, and Britain.

International concern on the ongoing turmoil with reference to Tehran’s nuclear programme surfaced yet again at the forefront during the summit with President Bush aiming to convince member states of the EU to apply further effective sanctions against Iran.

This included crucial persuasion by President Bush to take stringent steps to stop the flow of money through Iranian banks, which Washington believes are providing crucial funds towards Iran’s controversial nuclear programme.

While speaking to reporters in Ljubljana, US special envoy to the EU, C. Boyden Gray said, “There are Iranian bank activities that could be curbed, there could be further restrictions in compliance with resolution 1803,” adopted in March by the UN Security Council to beef up measures against Tehran. Furthermore he added, “Both sides must make sure there are no evasions whereby Iranian banks can continue to do business to further this nuclear programme which I think we all agree must be terminated.”

Washington desires the European Union to take measures particularly against the Iranian Melli Bank by discontinuing its branches in Hamburg, London and Paris from operating so as to stop the abuse of the international banking system to support proliferation and terrorism.

Meanwhile, EU foreign policy chief Javier Solana indicated that he would travel to Tehran shortly for talks aimed at convincing Iran to suspend its uranium enrichment activities. However, Solana refused to give in details saying, “We will have several meetings in Tehran with various people and we will see. I am not going to speak now about the contents of the package.”

Reacting to this overture, Iran gave its pre-emptive judgment of the deal that holds out the promise of economic, technological, educational and political rewards—dead on arrival, assuming the offer is conditioned on Iran halting its uranium enrichment, which it is.

The Iranian sentiment was precisely demonstrated in the statement by Iran’s spokesman Gholam Hossein Elham to the official IRNA news agency, “If suspension is included in the package, it won’t be considered at all. The position of the Islamic Republic of Iran is clear. Preconditions can’t be raised for any halt or suspension.”

These statements clearly indicate that the predicament over Tehran’s nuclear quest would continue to remain extremely intense in the coming future.

Even though, Bush and his European counterparts announced in a communiqué that they are prepared to go beyond current United Nations sanctions to pressure Iran not to develop nuclear weapons, what remains rather unclear is how far the Europeans would echo President Bush’s tough rhetoric against Iran.

The communiqué from the US and the 27 nations EU said Iran must undertake a ‘full and verifiable’ suspension of its uranium enrichment programme and must disclose any prior weapons-related work to the International Atomic Energy Agency.

“Now is the time for there to be strong diplomacy. They can either face isolation, or they can have better relations with all of us. We’ll find new sanctions if need be,” Bush said after a meeting, appearing with Slovenian Prime Minister Janez Jansa and European Commission President José Manuel Barroso.

Moving over, the other crucial issue that took center stage at the summit was that of climate change and global warming that has incessantly been a sticking point of US-European relations.

The EU has pledged to slash greenhouse gas emissions by 20 per cent by 2020. Though Washington wishes that any global agreement on climate change should include pledges by fast-growing economies, such as India and China as well.

“I think that there is a growing recognition, not only in the US, but in Europe as well, that in order for a new international climate agreement to be accepted, it’s got to be both environmentally effective and economically sustainable,” Dan Price, Deputy National Security Adviser for international affairs said.

Significantly, amidst towering global oil prices and worrying inflation, Bush expressed concern over the condition of the dollar and promised to stress ‘our nation's commitment to a strong dollar’—with the White House joining in with the Federal Reserve in calling for an end to the dollar’s droop.

Before his arrival in Europe, President Bush gave a statement in Washington on June 9 where he reiterated, “The US economy has continued to grow in the face of unprecedented challenges. We got to keep our economies flexible—both the US economy and European economies need to be flexible in order to deal with today’s challenges.”

Crucially, the waning dollar is turning out to be a major hurdle towards the recovery of the American economy given the high prices of oil and growing inflation.

President Bush’s comments at the White House could well be viewed as a reassurance to the European community that is ever more upset about the condition of the dollar, particularly against the euro. The European leadership has expressed concerns that a weak dollar is hurting their economies in that Europe depends more on exports with a daily trade worth $3 billion with Washington.

All in all, the EU summit was the very last of President Bush’s visit to Europe, while being the President of the United States and understandably, there was not any breaking announcement in the offing. The trip was widely analyzed more as a valedictory one given that President Bush would be making way for America’s new President come January, bringing an end to a presidency that was marked by stern antagonism by many Europeans vis-à-vis the US-led war in Iraq.---INFA

 (Copyright, India News and Feature Alliance)

Round The World

New Delhi, 11 June 2008

Pranab Visits Beijing

TALKS YIELD MIXED RESULTS

By Dr. Monika Chansoria

(School of International Studies, JNU)

External Affairs Minister Pranab Mukherjee concluded a four-day official visit to China last week that witnessed both economic convergences and strategic divergences at the forefront.

Expectedly, the interminable border issue between the two countries was one of the prime subjects on the agenda between Mukherjee and his Chinese counterpart Yang Jiechi, and both Beijing and New Delhi vowed to resolve it through productive means in the future. 

Foreign Minister Yang Jiechi told his visiting Indian counterpart that trade and diplomatic ties would keep improving with cooperation between the two countries, whose combined populations make up a third of humanity. The relationship is “at the best period of development in history and faces important strategic opportunities,” official Xinhua Agency quoted Yang as saying.

In response, Xinhua quoted Mukherjee saying, “We will have to resolve these differences through negotiations in a constructive and forward looking manner. We will have to be patient and realistic. Our boundary is peaceful and we are determined to keep it so. We have evolved mechanisms and have gained experience to maintain peace and tranquility in our border areas. While we may have our differences, we will not let them become obstacles to the broadening and deepening of our relationship.”

However, this optimism may not be read as very well rooted in history given that as many as eleven rounds of talks on settling the dispute have made scarcely negligible progress, since the mechanism of the representatives of both governments was established in 2003. In 2005, both China and India agreed on a set of political principles during the visit of Premier Wen Jiabao to New Delhi to guide both sides in the task of finding a mutually satisfactory solution.

Significantly, according to sources the Chinese leadership brought up the Sikkim issue as one the matters that remain to be settled. However, from New Delhi’s viewpoint, the Sikkim border ‘had already been finalized way back in 1959 and there indeed was no dispute’ on the same.

Apparently, Beijing claims that its border with Sikkim has yet to be demarcated, though New Delhi firmly believes in the contrary. The timing of China bringing up the border issue at talks needs to be carefully scrutinized in that Beijing appears to be playing the Sikkim card tactically with reference to New Delhi and the latter’s firm rebuttal of the said issue makes it amply clear that India is not willing to play into the hands of the Chinese.    

Besides, Beijing claims India’s northeastern state of Arunachal Pradesh while China occupies areas that India considers parts of its Jammu and Kashmir region. In addition, New Delhi said the two sides also agreed to exchange data on seasonal water flows in cross-border rivers including the Brahmaputra, one of Asia’s largest rivers that originate in Tibet.

In a significant speech to students at Peking University, Mukherjee opined, “Today, both our countries require a peaceful external environment. Therefore, we should work together towards peace, security and stability in Asia and beyond. For this, we will need to evolve a security architecture, which takes into account the conditions prevailing in Asia.”

“An open and inclusive architecture, which is flexible enough to accommodate the great diversity, which exists in Asia, is needed. We already have some dialogue forums in place, such as the ARF, the CICA and the SCO, where we are discussing security issues. As two major countries in Asia, India and China should try to work together to evolve a new framework from these basic building blocks,” Mukherjee added.

Moving over, palpably when India and China meet, there are bound to be substantial talks and discussions on the galloping economic ties between the two. And indeed, this held true to the Indian External Affairs Minister’s visit as well.

Crucially, the trade target of $60 billion set by the two countries would be achieved well before 2010. Bilateral trade between the two countries has already risen to nearly $40 billion, thereby making China the largest trading partner of India.

Mukherjee inaugurated the Consulate General of India in Guangzhou city of Guangdong province. It was significant since it is in Guangdong, where China’s first special economic zone (SEZ) was set up. “There is tremendous interest in India to learn from your experiences, including your remarkable success in developing the Special Economic Zones,” Mukherjee said.

Apparently, the Guangdong province accounts for one-third of China’s total foreign trade and runs at the forefront of the country’s economic reforms. Moreover, China has earmarked six SEZs including the entire Hainan province.

Guangdong Governor Huang Huahua stated that the inauguration of the Consulate General of India would open a new chapter of friendly cooperation between Guangdong and India. Trade between the Province and India amounted to $5.9 billion in 2007, an increase of 55 per cent over the previous year.

At home, the Centre has been trying to convince critics of its SEZ policy and has met with little success on the same. The UPA government seems under tremendous pressure from the Left allies to amend its SEZ act and rules.

The Left parties have asked the government to learn from China’s 20 years of experience with SEZs and have highlighted that these SEZs are owned by the government while rehabilitation package is given to displaced farmers including monetary compensation, provision for housing and employment. Furthermore, China has regulated the number of economic zones and set up these zones only on barren land and along coastal areas.

In all certainty, the border dispute dating back to the 1962 war still festers and mistrust between New Delhi and Beijing never seems too far from the exterior. India’s proposal for the new security architecture in Asia also appears frail in the absence of a clear overview coupled with failing to define the aims and objectives of the same.

This is well in contrast to India’s entry into the “quadrilateral initiative,” a new strategic security combine in which it joins as a key member of the security triad of Australia, Japan and the US—an alliance that is being observed closely by Beijing.

In conclusion, the visit of the External Affairs Minister ended on an optimistic note with the economic convergence grabbing much spotlight although the long-standing boundary dispute still remains. What’s more, India would always be keen to keep a close tab on China’s march towards making a bid for regional primacy by virtue of its expanding economic and military clout in Asia and beyond.---INFA

(Copyright, India News and Feature Alliance)

Round The States

New Delhi, 12 June 2008

Nuclear Dimension Of Terror

STATES PUT ON HIGH ALERT

By Insaf

India’s worst fears on terrorism seem to be coming true. The chilling warning was sounded by Prime Minister Manmohan Singh about nuclear technology “falling into the dangerous hands of terrorists” at a conference on nuclear disarmament to mark 20 years of Rajiv Gandhi’s action plan offered in the UN. In fact, an internal 68-page Government report - Contemporary Appraisal of Internal Security Scenario, cautions of no letup in terrorists threats till 2025. Besides, the 13 States already in the deadly tentacles of various extremists groups, it warns against the ISI's plans to keep terrorism alive in Kashmir and the Left-wing extremists increasing belligerence. More. Militancy is all set to rear its ugly head again in Punjab, the Naxalites would increasingly use the Bihar-Nepal border for smuggling arms, ULFA’s reign of terror in Assam would continue and insurgent networks would operate from Bangladesh and use madrasas in West Bengal for terrorist activities.

To counter this major security challenge, the States would need to monitor the influx of illegal migrants from Bangladesh, which has resulted in big demographics changes, sheltered anti-India elements and provided a steady recruitment to jihadi modules. Importantly, the report states that the Bangladeshis would influence up to 20 Assembly seats in Delhi and 25 Lok Sabha seats from West Bengal and Assam where 50 per cent of the population in Bengal’s 24 Parganas district and Assam’s Barpeta are Bangladeshis. Six other Assamese districts are similarly affected. Worse, terror cells in South India are  liaisoning with the underworld in Maharashtra and Gujarat. The ISI’s two covert operations, Operation Topac and Operation Pin Code continue to thrive and the Naxalites have made inroads in UP’s Terai region. 

*                            *                                   *                                               *

Trouble Brews In Darjeeling

The Darjeeling hills are headed for turmoil once again with the Gorkha Janamukti Morcha (GJM) reviving its demand for a separate Gorkhaland and the West Bengal Government arming itself with additional security force. On Monday last, the GJM enforced an indefinite bandh, affecting normal life and forcing thousands of tourists to cut short their holidays in the picturesque hills and adjoining Sikkim. While the GJM blocked the National Highway and resorted to violence, the Chief Minister Buddhadeb Bhattacharjee stopped talks, tripartite or bipartite, until the agitators gave up their demand for a separate State. Instead, Bhattacharjee has offered more autonomy for the Darjeeling Gorkha Hill Council. The ball is back in the GJM’s court which is sticking to its demand for a separate State. Will it succeed again? After having ousted the DGHC Administrator and Gorkhaland architect Subhas Ghising in February last? 

*                               *                                   *                                               *

Fresh Governor Trouble In Goa

After a lull of few months, fresh gubernatorial trouble is brewing in Goa where the BJP has intensified its campaign to demand the recall of State Governor S.C. Jamir. It has now petitioned the President Pratibha Patil by claiming support of over two lakh Goans. Recall, the Governor-BJP fracas started in January last after the Governor had prorogued the Assembly session after the Congress-led State Government, had been reduced to a minority due to the resignation of three Ministers and withdrawal of support by another three MLAs.  It remains to be seen how long the Chief Minister Digamber Kamat can fob off attempts to dethrone him. Already he has survived two coup attempts.

*                         *                                   *                                               *

J&K To Get Own Minority Commission

Jammu & Kashmir is all set to join other States and get its own Minority Commission. Once the Chief Minister gives his assent to the Union Ministry on Minority Affairs asking the strife-torn State to set up the Commission as per the recommendations of the Sacchar Committee on minorities. The new Commission would enable the minorities in the State to avail of the same benefits as their counterparts elsewhere in the country. Interestingly, the minorities in the only Muslim-majority State in the country are Sikhs, Kashmiri Pandits, Jains, Buddhists and Christians. The new Commission intends to mitigate the minority’s political grievances and give a fill-up to development. The Kashmiri Pandits aching to return home, have their fingers crossed.

*                       *                                   *                                               *

Himachal Reaping Power Whirlwind

With good governance being the buzzword for States going to the polls later this year, Himachal is busy reaping the power whirlwind. Thanks to big States rushing to their tiny counterpart to buy power and keep its voters happy. Needless to say, this new ‘connect’ between power, electoral politics and innovation is raking in huge revenues to feed the State’s various infrastructure development schemes. Already the BJP-ruled State has sold 2000 million units of its 632 MW surplus power to rival BSP’s UP, ignoring the bids of Saffron Rajasthan, BJP-SAD’s Punjab and arch foe Congress’ Haryana and Delhi. Given the ‘power dynamics’ of elections, after much pleading Punjab and Rajasthan will get free electricity. Significantly, Himachal has already earned 59 per cent of its annual outlay of Rs.2400 crores. Clearly, the politics of power makes for strange bed fellows and earns big bucks!

*                       *                                   *                                               *

BJP States Better With Jobs

Poor performance in various States could well be another nail in the UPA’s coffin, if one goes by its latest report card on its own flagship programme -- the National Rural Employment Guarantee Scheme (NREG). The BJP-ruled States’ have performed better than most Congress and Left-ruled States. In an exercise undertaken by the Centre to verify implementation of the NREG scheme by State Governments, the BJP’s Rajasthan topped the performance list with 124.71 points. Shockingly, the Congress-ruled Maharashtra, the first State to implement the scheme, was at the bottom. Barring Tripura, which ranked second, Left-ruled West Bengal and Kerala ranked 22 and 11 respectively, behind the Saffron Party’s Himachal Pradesh (ranked third) and Madhya Pradesh (ranked 9^th). With general elections next year, the Congress-led UPA has reason to worry. Or better, it still has time to improve its performance.

*                      *                                   *                                               *

Delhi India’s Crime Capital

Delhi has earned the ignominy of being the country’s crime capital for the fifth consecutive year. Shockingly, the Capital recorded the maximum number of murders in the world and occupies the top slot for almost all other violent crimes, rape, dowry death, and kidnapping, according to the latest report of the Union Home Ministry’s National Crime Records Bureau. Over 53,244 criminal cases, including 467 murders, 581 rapes and 1764 dacoities were registered in 2007. Experts cite lack of resources, police-criminal nexus and slow judicial process as some of the causes for this. Besides, with Delhi becoming a 'mayanagri' of artificial development, there is a huge gap between the rich and the poor. Naturally, when one-third of the population lives in slums in inhuman conditions devoid of any basic amenities crime flourishes. If this is the state of affairs in Delhi, lest said the better of the rest of the country!---INFA

 (Copyright, India News and Feature Alliance)

Economic Highlights

New Delhi 17 June 2008

Petroleum Prices

NO MORE ELECTORAL POLITICS 

By Dr Vinod Mehta

(Former Director, Research, ICSSR)

The hike in the prices of crude is hurting almost all economies of the world, which are heavily dependent on the import of oil and India is one of them. It imports 70 per cent of its requirements. But the domestic selling price of petroleum products has never become a political issue in countries other than in India and a few others. The reason being that we have created such an irrational and complicated structure of prices of petroleum products that even god would not understand.

Most countries that are heavily dependent on oil import are known to raise the prices of petroleum products without any fuss as soon as the prices of crude go up in the international market. Consumers may not like it but they too realize that there is no way out other than increasing the domestic selling price.  Therefore, they either take it in their stride or respond by switching over to smaller cars or use public transport.

There is no economic sense to either produce or procure a product, say, for Rs 100 and sell it for Rs 80.  Someone has to account for the loss of Rs 20. This kind of policy was one of the many reasons, which undid socialism.  The erstwhile socialist countries took pride in holding the price line for decades but never explained how they were able to do it when the production costs had gone up.  It boiled down to subsidies and deficit financing, but in the end their national finances went haywire leading to the demise of socialism.

The Chinese Communist Party saw this folly a long time ago and is seen rapidly building up a market-based economy.  After Deng Zhao Ping went further with  economic reforms, a telling comment came from a Shanghai-based small trader-- that he would like to join the Party after he had earned enough profits from his business and eventually became a capitalist!  Cuba after Castro is too slowly giving up such policies.  The only country left in the world to follow the pricing policies of erstwhile socialist era is North Korea.

India has also been following the “socialist” pricing policy in respect of at least two commodities, namely petroleum products and fertilizers for the past many years.  In the case of petroleum products it is cross subsidy--levy higher taxes on petrol in order to keep the prices of kerosene, cooking gas and diesel low.  As a result the domestic price of petrol is unrealistically high and that of other petroleum products unrealistically low. Since the prices are fixed by the Government in a market economy like India, the oil companies suffer.  In the case of fertilizers the domestic selling price for various kinds of fertilizers is between 30 and 50 per cent of the production cost/import cost, with the government having to take on the burden.

All political parties have accepted this kind of pricing policy for petroleum products and fertilizers only to the extent that they would simply oppose any realistic hike on the grounds that it will hurt the common man, when in opposition, knowing fully well that it could jeopardize the nation’s finances.  If the common man can absorb the hike in the price of milk and vegetables, when he can buy designer wear or visit swanky coffee shops and buy a cup of coffee for Rs 60, why can’t he absorb the hike in the price of petrol if the international price of petrol goes up? Similarly, why can’t the families afford to pay the realistic price of cooking gas?  Any increase in the price of cooking gas finds the media rushing to interview some middle class ladies on the affect on their family budgets. Invariably each one of them is smiling and condemning the price hike.  This scenario has become a stale ritual.  Media never asks these ladies, why they are peeved at the hike in price of cooking gas when they don’t think twice of buying an expensive dress from a boutique or when they go shopping for branded shirts and trousers for their husbands or branded shoes for their?  If all such kind of expenditures does not upset their family budgets, why would some hike in the price of cooking gas or say petrol hurt this budgets?

The pricing of petroleum products regrettably has gone out of the realm of economic logic or common sense in our electoral politics.  It has become a mighty stick to beat the Government in power with.  Thus, when electoral politics and not the market decides the pricing of certain commercial products, it is a sure recipe, for disaster of national finances.  No political party or a coalition will ever gain an upper hand in this kind of pricing policy, only the economy will suffer and so will be the common man, who will be asked to pay more taxes.

It is high time that we get out of this highly convoluted pricing policy of petroleum products once for all.  Take it out from the realm of electoral politics and back in to the realm of economics so that people know what exactly they have to pay for petroleum products as they pay for a number of other products in a market economy.

By holding on to this kind of convoluted pricing policy we are sending wrong signals to consumers, who can afford to use and perhaps waste these precious resources as the Government is willing to share half or the costs with them.  But the consumers should know that the Government will take back its share by either imposing more taxes, or adding service tax or some other commodity tax.

We are also sending wrong signals to the oil cartel that they can raise the price of crude to any extent as the Indian Government will always be willing to absorb the price hike by subsidizing it to its consumer. 

No modern government can escape providing subsidy to its people depending upon the particular needs of its people.  City public transport system in most of the developed countries runs on subsidy.  While any country which is rich can pay subsidy on any number of products, India cannot afford to do so and therefore, it has to be choosy. Our education system, health care services and drinking water needs require more subsidies than perhaps anything else; commercial products certainly not.

Petroleum products are certainly commercial products and should be charged commercial rates.  Let prices rise if the international prices go up and let prices go down if the global prices go down.  It’s time the Government grows out of its role of fixing prices of petroleum products and assume the role of a watchdog so that oil companies do not take the consumer for a ride. –INFA

(Copyright, India News and Feature Alliance)