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ISAS Brief No. 263 – 8 January 2013 469A Bukit Timah Road #07-01, Tower Block, Singapore 259770 Tel: 6516 6179 / 6516 4239 Fax: 6776 7505 / 6314 5447 Email: isassec@nus.edu.sg Website: www.isas.nus.edu.sg

Direct Cash Transfer of Subsidies: A Game-Changer for India? Amitendu Palit1

From 1 January 2013, India rolled out the much-hyped direct cash transfer of subsidies scheme. Widely tipped as a ‘game-changer’, the scheme is being heavily discussed for both its economic and political significance. Economically, it is expected to be a significant reform measure for improving distribution of subsidies by eliminating ‘leakages’ from the existing system of transfer in kind. Politically, the ruling Congress hopes to capitalise on the scheme’s spirit of ‘Aapka Paisa, Aapke Haath’ (‘Your money in your hands’) by publicising it is as a move pioneered by the Congress party for putting money directly in the hands of people. The scheme was expected to roll out in 51 districts across 16 states of the country, covering almost 30 social welfare programmes of several central ministries. The latter include various ongoing programmes of the Ministries of Social Justice, Human Resource Development, Minority Welfare, Women & Child Development, Health & Family Welfare, Labour & Employment. But it has taken off on a much moderate scale. It is currently running in only 20 districts and covering subsidies for seven existing programmes pertaining mostly to student scholarships and stipends. By March 2013, however, the government plans to extend the scheme to the remaining identified districts and include more programmes.

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Dr Amitendu Palit is Head (Partnerships & Programmes) and Visiting Senior Research Fellow at the Institute of South Asian Studies (ISAS) at the National University of Singapore. He can be contacted at isasap@nus.edu.sg. The views expressed in this paper are those of the author and do not necessarily reflect those of ISAS.


‘Aadhar’ and Bank Account The limited beginning of the scheme highlights the operational difficulties of administering it. It has two essential pre-requisites. The beneficiaries must have a unique identity number, christened ‘Aadhar’. These numbers are being issued by the Unique Identification Authority of India (UIDAI). After identifying the beneficiaries from the UIDAI platform, the scheme aims to deposit money directly into their bank accounts. The second requirement therefore is the possession of a bank account. Beneficiaries of the scheme must have both the ‘Aadhar’ identity and the bank account. Having one of the two will not help. Having both also is not going to help immediately since bank accounts will have to be ‘Aadhar’-enabled for facilitating transfer of cash. The main operational challenge is connecting the issued ‘Aadhar’ identity numbers to the bank accounts of the ‘Aadhar’ holders. Only bank branches equipped with Core Banking Solutions (CBS) are capable of doing so. The future progress of the scheme will be a function of the pace at which bank branches, particularly in rural areas, implement the CBS. It will also depend on the speed with which ‘Aadhar’ identity numbers are issued across the country.

Benefitting the Poor? The scheme is not targeted exclusively towards the poor or the below-poverty-line (BPL) population of the country. ‘Aadhar’ identities are being issued across all income groups and are not confined to the BPL. Indeed, given that possession of both ‘Aadhar’ and a bank account is necessary for benefitting from the scheme, it is more likely that the non-poor segments will be the greater beneficiaries of the scheme, at least during its initial phase. The non-poor segments have more bank accounts than their poor counterparts. India’s limited financial inclusion has ensured that most poor in the country, particularly in rural areas, do not have access to formal banking facilities. The non-poor are also able to satisfy the documentation requirements of ‘Aadhar’ faster than the poor. The scheme might create difficulties for the poor and those left out of it in another respect. It is expected to have an inflationary impact similar to the rural employment guarantee scheme, MGNREGA. Cash deposited into bank accounts of beneficiaries would be partly spent and saved. The spending would generate a fresh cycle of expenditure in the economy leading to some increase in prices. The early inflationary impact of MGNREGA was not entirely unwelcome, since it came at a time (2008-2009) when the economy was looking for demanddriven stimulus for revival following the slowdown inflicted by the global economic crisis. The current bout of fresh inflation might not be welcome given the already high consumer prices. Finally, the impact of the scheme on the poor might be even more limited, because cash transfers are not covering the government’s biggest subsidies – food, fertilizer and petroleum. 2


Monthly rations of food and kerosene will continue to be distributed to poor households in kind through fair price shops. Leakages from the public distribution system in these respects will also continue the way they do now.

Where Goes the Cash? The government’s great enthusiasm in flagging off the scheme is on account of its potential to reduce leakages. Direct transfers would connect the subsidy-disbursing agencies to the beneficiaries. It would eliminate intermediaries, reduce corruption and ensure properly targeted distribution of subsidies. In the process, it should not only ensure that the beneficiary receives the full quantum of the subsidy but should also reduce the overall subsidy burden of the government by minimising distribution costs. Theoretically, the scheme is capable of generating these benefits. There is, however, a different problem which might create complications. Subsidies delivered in kind cannot be used for any other purpose. Cash transfers are not so. Cash subsidies for student stipends deposited into bank accounts might end up being spent on purposes entirely different from education. There would be similar problems if the scheme in future is extended to food subsidies. There is little possibility of the scheme incorporating features for ensuring the usage of subsidies for specific and desired purposes only. In this respect, while the scheme can choke leakages, it might fail to achieve the basic objective of having subsidies in the first place.

Political Game-Changer ? The political ramifications of the scheme were evident when the Election Commission expressed its unhappiness over the announcement of its rolling out few weeks before the Gujarat assembly elections in December 2012. A politically and morally battered Congress is banking upon the scheme for weaving electoral magic. Congress leader Rahul Gandhi’s conviction that the scheme can win elections for his party if successfully implemented is a clear indication that the party will not spare any efforts to widen its scope during this year and in the run-up to the next Parliamentary elections. For the Congress, the scheme marks fulfilment of a promise made before the 2009 elections. It expects the scheme to be as politically powerful as the MGNREGA. After the latter, the cash transfer scheme would be the Congress’s most ambitious effort in promoting inclusive growth. The scheme will reduce the clout of local politicians with their constituencies, irrespective of the parties to which they belong, since beneficiaries of subsidies under different schemes often had to seek their interventions in availing the support. Direct transfers would reduce this possibility. While local Congress politicians would try to champion this as proof of the party’s overwhelming concern for the common man, opposition politicians 3


would need to think of other ways for countering the strategy. By introducing the scheme, the Congress also hopes to curb some of the flak it received for market-friendly controversial reforms, such as foreign direct investment in retail and correcting petroleum subsidies, which were touted as anti-people by the opposition parties and some allies. Much would depend on how deep and wide the cash transfers can become within this year. With around 200,000 beneficiaries and seven ongoing schemes, they are too limited in scope right now to make any visible political impact. Faster issue of ‘Aadhars’ and tying them up with bank accounts is critical, as is coordination with various central government ministries for channelling their subsidies as cash. Ultimately, it is administrative and operational efficiency that will determine the scheme’s emergence as a political game-changer. Doubts remain strong in this regard as operational and administrative efficiency in implementing schemes has hardly been a conspicuous virtue of the current government.

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ISAS Brief No. 264 –17 January 2013 469A Bukit Timah Road #07-01, Tower Block, Singapore 259770 Tel: 6516 6179 / 6516 4239 Fax: 6776 7505 / 6314 5447 Email: isassec@nus.edu.sg Website: www.isas.nus.edu.sg

India-Pakistan Peace Process: The Risk of a Breakdown C Raja Mohan1 The barbaric beheading of an Indian solider earlier this month, allegedly by the Pakistan Army on the Line of Control that separates the two countries in the disputed frontier of Jammu & Kashmir, appears to have breached the barrier of Delhi’s tolerance. As public outrage spreads in India and the political clamour from the opposition parties for retribution acquires rare intensity, the usually stoic Prime Minister Manmohan Singh has chosen to end his silence. Speaking to reporters on the margins of an Indian Army function on 15 January 2013, the Prime Minister declared that “after this dastardly act, there cannot be business as usual with Pakistan”. Dr Singh also demanded that the perpetrators of this outrage must be brought to book by the Government of Pakistan. The Prime Minister’s remarks were amplified by India’s External Affairs Minister Salman Khurshid on the same day. Commenting on Pakistan’s “brazen denial” of the Indian charges, he said Islamabad would be ill-advised to conclude that “the lack of a proper response from the Government of Pakistan to our repeated demarches on this incident will be ignored and that bilateral relations could be unaffected”. That these were not empty words became clear when India put on hold at the very last minute the implementation of ‘visa on arrival’ scheme for senior citizens from Pakistan at the AttariWagah border in the Punjab. 1

Dr C Raja Mohan is a Visiting Research Professor at the Institute of South Asian Studies (ISAS), an autonomous research institute at the National University of Singapore. He is also a Distinguished Fellow at Observer Research Foundation, New Delhi (India). He can be contacted at isascrm@nus.edu.sg. The views expressed in this paper are those of the author and do not necessarily reflect those of ISAS.


Reports from Delhi also suggest that the Government of India has weighed in to curtail sporting contact in hockey and women’s cricket. It has also reportedly postponed bilateral talks on trade and commercial cooperation. Coming from the current government in Delhi, these measures are indeed serious and signal Delhi’s willingness to risk a potential breakdown of the peace process in demanding an end to Pakistan Army’s provocations on the Line of Control. As Mr Khurshid put it, “actions by the Pakistan Army, which are in contravention of all norms of international conduct, not only constitute a grave provocation but lead us to draw appropriate conclusions about Pakistan’s seriousness in pursuing normalisation of relations with India.” Pakistan’s Foreign Minister Hina Rabbani Khar denied all Indian charges, expressed deep disappointment at the Indian reaction and voiced Islamabad’s hopes to sustain the wideranging dialogue with India.

Gathering Military Tension Current indicators, however, point to the danger of a significant discontinuity in the IndiaPakistan peace process that had begun to look promising in 2012. The impact of the gathering military tension is likely to go well beyond the bilateral relations and affect the internal dynamics in both countries as well as the situation in Afghanistan, where the United States is preparing to end its combat role. For nearly nine years, Dr Singh has persisted with a serious effort to normalise relations with Pakistan despite the frequent terrorist attacks in India that undermined the support for the peace process among the Indian political class as well as the public. After the outrageous attacks, planned and executed from across the border in Pakistan, on Mumbai at the end of November 2008, Dr Singh resisted calls for military escalation and within a year sought to revive the dialogue with Pakistan. The efforts of Dr Singh seemed to pay off, as he successfully negotiated two consequential agreements with the civilian government in Pakistan led by President Asif Ali Zardari last year. One was an agreement to liberalise the hugely restrictive visa regime between the two countries. The agreement was signed during the visit of Pakistan’s Interior Minister Rehman Malik to Delhi in December 2012. Equally important was the finalisation of a road map to establish normal trade relations between the two countries. Under the agreement, Pakistan was to give most-favoured-nation status to India. Delhi, which had given a similar status to Pakistan in 1996, agreed to remove non-tariff barriers against exports from Pakistan. If the prospects for trade liberalisation and easier people-to-people contact generated much enthusiasm on both sides of the border, the rapid escalation of military tensions in the New Year has cast of a pall of gloom. 2


Over the last decade, terrorist incidents in India were the principal threats to the IndiaPakistan peace process. Few expected military tensions on the border might derail it. A ceasefire had been in place since the end of 2003. Despite occasional accusations of violation from both sides, the ceasefire seemed to be a relatively stable arrangement. The ceasefire had indeed helped the two countries to move away from recurrent military crises that rocked bilateral relations from the late 1980s to the early 2000s. Delhi could productively focus on expanding cooperation with Islamabad. For Pakistan, which began to face serious security threats on its western borders, the ceasefire helped shift its armed forces away from the traditional military challenge on its eastern borders with India.

Political Crises in Pakistan In Pakistan, the tensions with India have coincided with a series of domestic political crises. These include the mounting extremist attacks on Pakistan’s minorities, including the large Shia population, and a populist campaign to oust the civilian government before it completes its full tenure and orders fresh elections, due this year. As a Canadian-Pakistani cleric Muhammad Tahir-ul Qadri brought thousands of people into Islamabad this week demanding the resignation of the Zardari government and the dissolution of elected assemblies, the Supreme Court ordered the arrest of Prime Minister Raja Pervez Ashraf in a corruption case relating to his earlier charge as Minister of Power. Supporters of Mr Ashraf have accused the Army, which has long ruled Pakistan, of trying to destabilise the civilian government in collaboration with the higher judiciary and through the promotion of Mr Qadri. While the Army Headquarters in Rawalpindi has denied these allegations, there is a profound sense of foreboding among Pakistan’s civilian leaders. While a crisis seems less imminent in India, the tensions on the border with Pakistan are feeding into a terribly competitive posturing among the ruling Congress and the opposition parties. A major terrorist incident at this juncture could quickly turn up the heat on Dr Singh to take muscular actions against Pakistan. Many analysts in India are convinced that the provocations of the Pakistan Army are intimately linked to the improvement in the US-Pakistan relations in the last few months. They suggest that Washington’s reliance on Rawalpindi to facilitate a smooth exit for American troops from Afghanistan and bring the Taliban to the negotiating table has emboldened the Pakistan Army. The argument concludes that renewed confrontation with India would allow Rawalpindi to re-emerge as the arbiter of Pakistan’s domestic politics. Whether this perception is accurate or not, the tension between India and Pakistan is bound to complicate the political dynamic in Afghanistan. Whichever way one looks at it, the Ides of January 2013 have begun to deepen the crisis in South Asia.

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ISAS Brief No. 265 – 21 January 2013 469A Bukit Timah Road #07-01, Tower Block, Singapore 259770 Tel: 6516 6179 / 6516 4239 Fax: 6776 7505 / 6314 5447 Email: isassec@nus.edu.sg Website: www.isas.nus.edu.sg

Qadri, the Charismatic Cleric: A Creator of Chaos or a Champion of a Cause? Iftekhar Ahmed Chowdhury1

Introduction For half a week in January 2013, many eyes in South Asia, and in much of the world, were focused on a maverick Mullah in Pakistan by the name of Muhammad Tahir-ul Qadri. Many saw him, and still do, as a harbinger of change. A Pakistani combination of India’s Anna Hazare and Iran’s Ayatollah Khomeini, he appeared suddenly like a comet on that nation’s political horizon, summoning up the largest crowd ever gathered in that challenged country’s capital, Islamabad, and nearly toppled the government. Just as suddenly, he melted away as did those myriads of followers who braved the rain and cold at his bidding. Pakistan’s version of Xenophon’s ‘March of the Ten Thousand’ was over for now. But not without having left an indelible imprint on its political fabric, demonstrating that people’s power still mattered in a system that, through most of its history, has been dominated by the proverbial uniformed ‘man on horseback’ or the military. Qadri appeared for a time to render the streets of Islamabad chaotic. But those gathered around him saw his actions as reflecting a cause: not just for restoring honesty in governance but seeking to do that by using as the tool the tolerant, syncretistic, and Sufistic face of Islam which represents Pakistan’s values, urgings and ethos much more than that fierce, fundamentalist, and Salafist version that has been relentlessly battering the Pakistani nation, exhausting it, and sharpening the public’s yearning for a positive change. 1

Dr Iftekhar Ahmed Chowdhury is Senior Research Fellow at the Institute of South Asian Studies (ISAS), an autonomous research institute at the National University of Singapore. He is a former Foreign Advisor (Foreign Minister) of Bangladesh, and he can be contacted at isasiac@nus.edu.sg. The views expressed in this paper are those of the author and do not necessarily reflect those of ISAS.


The Cleric with a Cause Who is this cleric, Qadri, and what is he about? At 62, his role in Pakistani civic life had not been significant until now. A scholar, he taught constitutional law at the University of the Punjab, founded and chaired the Minhaj ul Quran International, an organisation that boasts of having established a number of academic institutions, and for a brief while served as a legislator. Disillusioned generally with Pakistan, he went away to Canada, whose citizenship too he holds, to a meteoric return to Pakistan’s political firmament in November 2012. Pakistan by then was reeling from enormous problems, of terrorism, corruption, misgovernance, an economy on the verge of collapse, the judiciary and the executive locked in a deadly duel and an army with a reputation for intervention getting increasingly impatient. Pakistan’s great, and perhaps only asset, was its strategic importance, but it was already drawing much too heavily upon it. The popularity of President Asif Ali Zardari’s government of the Pakistan People’s Party (PPP) was at its nadir, and the opposition, Nawaz Sharif’s Pakistan Muslim League (PML-N) was no exciting alternative. A rising star was Imran Khan, the former cricketing hero, whose flamboyance was attractive to the crowds, but deemed an insufficient credential to head government. At such a moment, Qadri had chosen to return home, the right man, at the right time, at the right place. He used his firebrand style to quickly take his message to the people. It was one that resonates with most Pakistanis today. He is a ‘good Muslim’, a scholar, and one who over the past years had slowly built up a reputation of tolerance, moderation and anti-fundamentalism, representing the syncretistic Barelvi School rather than the more extremist Deobandis in terms of sub-continental Islamic leanings. In 2006 he issued a 600page fatwa against terrorism, totally rejecting it under “any excuse or pretext”. He travelled to India in 2012, and delivered a message of peace to admiring audiences, stating that “terrorism has no place in Islam”. He urged that both India and Pakistan reduce their defence expenditures and spend the savings for the benefit of the poor. Then in December 2012 he returned to Pakistan after seven years in Canada, and almost immediately began his campaign for a “democratic revolution”. In mid-January 2013, he led cheering crowds in a ‘Long March to Islamabad’. In a country where 70 per cent of legislators pay no income-tax, he declared, convincingly to the massed populace, that “our lawmakers are the lawbreakers”. The centre of Islamabad became “Tahir Square’’ resembling Cairo’s “Tahrir Square”. It seemed Pakistan’s Arab spring moment had arrived.

Demands and Response Qadri placed a list of demands. The Government must resign immediately. It was to be followed by a caretaker regime that would initiate a series of reforms to cleanse the political system prior to elections (which implied a postponement of the polls). It was to be set up in 2


consultation with the judiciary and the military. This was akin to the “Bangladesh model” followed in that country between 2007 and 2009. It was suggested that Qadri, backed by the Judges and Army, was attempting a “soft coup”. Many thought the Army was switching support from Imran Khan to who now seemed to be a more plausible player (the Army of course denied extending any such support to either). With or without Army’s support, Qadri was now invincible. Interior Minister Rehman Malik mulled over possible forced intervention to break-up the crowds, but Zardari, wisely, urged calm and offered to negotiate. The tough talks that followed yielded fruitful results. The government of Zardari, which had dodged a bullet, heaved a sigh of relief. So did, interestingly, Pakistan’s major opposition parties. Neither Nawaz Sharif nor Imran Khan was prepared to countenance the possibility of any delay in elections, which Qadri’s initial pre-agreement demands had implied. They both were somewhat heady from the smell of possible electoral triumphs, though the Qadri phenomenon now injects some seeds of doubt into this. In any case Qadri has taken considerable wind out of the opposition’s sails.

The Islamabad Agreement The agreement followed five hours of intense negotiations between Qadri and an 11-member government team. It was signed by Qadri and Prime Minister Raja Pervez Ashraf among others. Significantly it recognised a key role for Qadri’s party, Pakistan Awami Tehreek (PAT). This party and the government “in complete consensus” would propose names of two “honest and impartial” persons for appointment as Caretaker Prime Minister, with the Parliament being dissolved on 16 March 2013 and polls taking place within 90 days. Changes in the Election Commission would be discussed between the government and PAT on 27 January 2013. The proposed electoral reforms would take into account Qadri’s demands. Cases registered during Qadri’s protest movement were to be withdrawn, and there were to be no “acts of victimisation and vendetta”. Thereafter Qadri asked his followers to go home, which they did. On the face of it, for Qadri, it did not look like a great victory. The government, for instance, had remained intact, and the elections agreed upon were due to take place any way. But Qadri’s aim was perhaps not necessarily to extract the maximal demands, which he used effectively as negotiating chips. He had managed to catapult his own political party (even more than Nawaz Sharif’s or Imran Khan’s ) as the principal interlocutor of the ruling PPP as far as the caretaker government was concerned, including with regard to the appointment of its prime minister. Far more importantly, his moderate Sufistic Islamic force had recaptured the ground from the Al-Qaeda type extremists. He still had to confront allegations of military backing. Where else, it was asked, would he have got the funds and such organisational wherewithal at such short notice. Even if it were so, it was a positive achievement that a 3


massive crisis was averted (for by then the judiciary and executive were jousting fiercely) without a shot being fired in anger! Also any need for a direct military intervention was obviated, and a non-military option to cut the Gordian knot was found (The appropriate time for an Army take-over would have been now, rather than after the post-election assumption of office by a new government with a fresh mandate).

Regional Ramifications The events of January 2013 also had positive ramifications for the Muslims of both India and Bangladesh, the other predominantly Islamic country in South Asia, albeit with a penchant for moderation (Islamism has never been a preponderant factor in Bangladeshi politics, where faith has drawn upon other value-systems as reflected, for instance in the deep veneration for the Sufi Saint Hazrat Shahjalal of Sylhet, much like Khwaja Moinuddin Chishti of Ajmer, Shahbaz Kalander of Sind, and Hazrat Data Ganj Baksh of Lahore. Qadri seems to be a hyphen that links them all). Qadri emphasised the power of the tolerant face of his and their religion over and above any violent response to the supposed ‘threats of Islam being in danger’ as advocated by many extremists. As his movement was taking place, there had been shootings across the Line of Control in Jammu and Kashmir between India and Pakistan. Politicians are apt to use such occasions to whip up populist and jingoistic support, but Qadri was remarkable in the calm he displayed. Also in Bangladesh, where a political imbroglio is brewing, the Qadri phenomenon would be studied for lessons to be drawn from it. What exactly, we are still unaware of. So, Pakistanis had braced themselves for the few days of chaos in Islamabad in the hope that out of it would emerge the dancing star! It may be a tad unclear as of now if that has actually happened, but the messianic role of Qadri would render him a serious candidate for Thomas Carlyle’s pantheon of ‘heroes’!

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ISAS Brief No. 266 – 24 January 2013 469A Bukit Timah Road #07-01, Tower Block, Singapore 259770 Tel: 6516 6179 / 6516 4239 Fax: 6776 7505 / 6314 5447 Email: isassec@nus.edu.sg Website: www.isas.nus.edu.sg

The Delhi Rape Protests: Observations on Middle Class Activism in India Ronojoy Sen1

The year 2012 was indelibly tainted in India by the horrific gang rape in New Delhi and the death of the 23-year-old victim in a Singapore hospital. The images that remain with us in the early days of the New Year, however, are of the protests that shook Delhi and other metropolitan cities in end-December 2012. Even as the perpetrators of the rape are tried, it is perhaps an appropriate time to assess the nature of the protests and the ones similar to them over the past two years, and what they say about India‘s civil society. What can be said with some degree of certainty is that the recent protests, primarily in the heart of Lutyens‘ Delhi and scattered across parts of urban India, were mostly spontaneous and voluntary. The women and men — many of them college students — who gathered in various parts of India were mobilised by a sense of outrage, social media tools and word of mouth. What did however play a role was round-the-clock television coverage which enabled the number of protesters to multiply during the two weeks leading up to the New Year. If we leave aside some fringe elements of political outfits who attempted to hijack the protests, there were no political parties orchestrating the demonstrations. Indeed, politicians were conspicuously absent from the protests.

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Dr Ronojoy Sen is Visiting Senior Research Fellow at the Institute of South Asian Studies (ISAS), an autonomous research institute at the National University of Singapore. He can be contacted at isasrs@nus.edu.sg. The views expressed in this paper are those of the author and do not necessarily reflect those of ISAS.


Comparison with the Anti-Corruption Protests Plenty has been said by both the government and commentators about the intemperate demands — castration for rapists and executing them summarily being just two of them — raised by the protesters. It would be hasty, however, to dismiss the protests as either anarchic or media-driven. At the same time it would be wrongheaded to view them as a serious challenge to the government and the established political order. It makes much more sense to see them as part of a continuum with the anti-corruption protests led by Anna Hazare. A striking similarity between the crowds milling around the Ramlila grounds during Hazare‘s 13-day fast in 2011 and the protesters in Raisina Hill was the number of middle class people who had turned up. As was the constant presence of television cameras. Of course, there were significant differences too between the protests. The first, and obvious, one was the lack of a focal organisation or figure in the protests over the rape. The men and women who flocked to Raisina Hill or took part in candlelit vigils across the country did so out of a sense of outrage at the heinous nature of the crime and the apathy of the state. In sharp contrast, Hazare and his now-disbanded team had a well-oiled and well-funded campaign which pulled out all stops to attract crowds and to put pressure on the government. Second, the issue that animated Hazare‘s agitation — corruption — was possibly more amenable to a long-term political mobilisation. So much so that a section of Hazare‘s team has now formed a political party under the leadership of Arvind Kejriwal, who was incidentally present during the protests over the rape but kept a low profile.

Composition of the Protesters What do the recent protests then say about Indian democracy? Is the ―new politics‖, to borrow a term from John Harriss and others, of people voluntarily taking to the streets to protest wrongs or government inaction restricted to the middle classes? It would certainly seem so going by the composition of the protesters who gathered in Delhi and other cities. One of the participants in the protests wrote in an article, ―While the awakening of the students and the educated youth has been rightly applauded, one has to ponder over the class dimension of the phenomenon and about the chasm that lies between India Gate and the slum habitat.‖2

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Prachee Sinha, ‗Run with Gender, Hunt with Class‘, Economic and Political Weekly (26 January 2013).

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These are also the same people who seem to have little faith in government institutions and the political class. This is in contrast to the poor – or the members of ―political society‖3 as Partha Chatterjee calls them – who still seem to have much more faith in the political system and political parties to solve its problems. As opposed to scholars like Pradeep Chhibber who believe ―associational life‖4 is weak in India, Harriss finds it to be vibrant in an urban setting. Harriss, however, says that many civil society organisations keep their distance from the concerns of the poor. As he points out, ―There is strong evidence showing that while middle class people in India have withdrawn increasingly from electoral politics, poorer people are remarkably active participants…‖5 This isn‘t a recent trend either. Historically in India voting has been lowest in rich, urban constituencies as opposed to a much higher turnout during election in poorer, rural areas. What we have seen over the past year and half is greater participation in protests by the middle class. These have usually sprung up around certain figures or moments and have been transient. But despite the shortcomings they have been able, considerably aided by the media, to exert significant pressure on the government to respond to some of their demands. In the case of the anti-corruption agitation, the government agreed to the formation of a Lokpal (anti-corruption ombudsman) incorporating many of the suggestions made by Hazare‘s team. Over a year later, however, the Lokpal Bill has still to be legislated. In the instance of the rape case the government has promised to make laws more stringent and speed up the judicial process. The Delhi rape case trial has been moved to a fast-track court. A commission headed by former Chief Justice of India, J S Verma, has submitted its report on changes to existing law. It is of course too early to say if and to what extent the law will be amended and to what effect. Barrington Moore in a seminal work had once argued that without a middle class there would be no democracy.6 India has bucked this theory with the middle class traditionally playing a marginal role in electoral politics. That is why political parties have usually ignored the middle class and its concerns. Rahul Gandhi‘s call at the recent Congress party‘s session in Jaipur to address the needs of an ―impatient India‖ is an exception, prompted by the recent protests. But if India‘s substantial and growing middle class is to now play a greater role it must go beyond street protests. To effect real change, it must shed its suspicion of politics and engage meaningfully with it. ...... 3

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Partha Chatterjee, The Politics of the Governed: Reflections on Popular Politics in Most of the World (New Delhi: Permanent Black, 2004). Pradeep K. Chhibber, Democracy without Associations: Transformation of the Party System and Social Changes in India (Ann Arbor: The University of Michigan Press, 1999). John Harriss, ‗Antinomies of Empowerment: Observations on Civil Society, Politics and Urban Governance in India‘, Economic and Political Weekly, 30 June 2006. Barrington Moore, Social Origins of Dictatorship and Democracy: Lord and Peasant in the Making of the Modern World (Boston: Beacon Press, 1966).

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ISAS Brief No. 267 – 24 January 2013 469A Bukit Timah Road #07-01, Tower Block, Singapore 259770 Tel: 6516 6179 / 6516 4239 Fax: 6776 7505 / 6314 5447 Email: isassec@nus.edu.sg Website: www.isas.nus.edu.sg

New Focus on Stable China-India Ties P S Suryanarayana1

Future-Oriented Defence Talks China and India have held “forward looking” defence talks in “a friendly and cooperative atmosphere”2 in Beijing in the first half of January 2013. Truly significant is the fact that these talks took place amid signs of new belligerence across the Pakistan-India Line of Control (LOC) in Jammu and Kashmir. Indeed, the Sino-Indian meeting in Beijing on 14 January 2013 served as a counterpoint to the cross-LOC flare-up. Relevant to this reading is the fact that Pakistan counts on China as an “all-weather friend”. India, the other country in focus in this cross-LOC flare-up, is one of China‟s mega-state neighbours but not one of Beijing‟s designated “all-weather friends”. In this perspective, the latest signs of Sino-Indian bonhomie on matters of defence cooperation do not strengthen or weaken because of any abatement of cross-LOC tensions after midJanuary 2013.

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Mr P S Suryanarayana is Editor (Current Affairs) at the Institute of South Asian Studies (ISAS), an autonomous research institute at the National University of Singapore. He can be contacted at isaspss@nus.edu.sg. The views expressed in this paper are those of the author and do not necessarily reflect those of ISAS. India and China hold Third Annual Defence Dialogue, Press Information Bureau, Government of India, Ministry of Defence (14-January-2013), http://pib.nic.in/newsite/PrintRelease.aspx. Accessed on 16 January 2013.


It is, therefore, possible to view the meeting between Xu Qiliang, Vice-Chairman of China‟s powerful Central Military Commission, and India‟s Defence Secretary, Shashikant Sharma, in Beijing at this time as being noteworthy on two inter-related counts. One, China has made highly positive comments on its latest defence talks with India at a time of new military tensions across the LOC. This aspect will not amuse Pakistan even if there is no need for alarm bells in Islamabad over these new signs of upswing in Sino-Indian engagement on military matters. For Pakistan, the bottom line in this context is that a substantive Sino-Indian military pact or tie-up is unthinkable at present and in the immediate future. However, the second but important aspect of Sino-Indian defence dialogue is that the incoming Chinese leaders are beginning to view India as a serious player, if not a decisive force, to reckon with in their worldview.

Xi Jinping’s Letter to Manmohan Singh Xi Jinping, the new General Secretary of the long-governing Communist Party of China (CPC), has sent a letter to India‟s Prime Minister Manmohan Singh, signalling Beijing‟s continuing interest in engaging India in a mutually beneficial fashion. Mr Xi‟s letter was personally delivered to Dr Singh by Dai Bingguo, China‟s State Councillor, in New Delhi on 10 January 2013. Mr Dai was in New Delhi for a meeting of BRICS High Representatives for Security Issues. (BRICS is a rapidly evolving forum that brings together Brazil, Russia, India, China, and South Africa in a possible but not-yet-definitive inter-continental power bloc.) Mr Xi‟s letter to Dr Singh, coincidentally delivered ahead of the latest China-India defence talks in Beijing in mid-January 2013, is emphatic in tone and tenor. Mr Xi has reaffirmed an often-voiced China-India high sentiment of recent years. In this, his letter echoes Hu Jintao, who recently made way for Mr Xi as the CPC‟s helmsman and will soon transfer power to him as China‟s President. The new Chinese leader has assured Dr Singh that “the world has enough space for China and India to achieve common development, and the world also needs their common development”.3 Such high sentiment, in almost exactly the same words, has been the staple of Sino-Indian exchanges in recent years. Important, however, is that Mr Xi has accepted this diplomatic thesis and expanded it as a “need” of the entire world. If nothing else, such an assertion by China‟s new leader reflects his acknowledgment of India as a key interlocutor into the future. Otherwise, there is no reason why he should have sent this letter at all when he is not yet formally at the helm of state affairs in China. In line with such an interpretation, the Xi-letter is emphatic, too, on two other inter-related aspects of

3

Dai Bingguo, „China and India Should Explore a Way of Maintaining Friendly Coexistence‟, Foreign Ministry of People‟s Republic of China (11 January 2013), http://www.fmprc.gov.cn/eng/zxxx/t1005099.shtml. Accessed on 16 January 2013.

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Sino-Indian bilateral ties. One, it has been stated that “China-India relations have maintained stable development in the past few years, which has brought about substantial benefits to the two countries and the two peoples”. Add to this the second key aspect in this sub-text: Mr Xi‟s pledge that “China [under his rule] will, as it has been doing [already], attach great importance to developing relations with India, and [China] expects to carry out close cooperation with India to create a brighter future of their bilateral relations”.4

Cynicism about ‘Soft Diplomacy’ Inevitably, cynics and sceptics will seek to dismiss Mr Xi‟s letter to Dr Singh, the first from the new Chinese leader, as either wishful rhetoric or wilful attempt to mislead India on China‟s „real intentions‟ of arresting India‟s rise. Such cynicism and scepticism can be traced to the legacy of Indian interpretations about how China „hoodwinked‟ India in the 1950s, in the run-up to the 1962 Himalayan war between them, through the soft diplomacy of Five Principles of Peaceful Coexistence. Nonetheless, it is possible to advance a strong counter-narrative against the scenario of either India or China or both seeing a ghost in every shadow of doubt about each other‟s „real intentions‟ into the future. Such a counter-narrative can be built upon the foundation of a current reality. It is perhaps unwise, certainly difficult, to dismiss this reality which was outlined by Mr Dai in his meeting with Dr Singh in New Delhi on 10 January 2013. Mr Dai said that “in the past 10 years, China and India have seen great development in their bilateral relations. The two countries have efficiently controlled their disputes and differences [–] and have pushed forward [the] development of bilateral relations, while gradually finding a pragmatic way of maintaining friendly relationship of coexistence between them”.5 Regardless of whether India and China have been “efficient” in controlling their disputes in the past decade, it is true that the two countries have not gravitated towards a serious military clash. Any such clash might have turned the clock back on their incremental bilateral diplomacy and blooming trade ties. Bilateral trade is more favourable to China right now, while the diplomatic engagement is not one-sided. Moreover, there is ample evidence that India and China have “gradually” moved towards a “pragmatic” state of “coexistence”. Surely, the current state of Sino-Indian “coexistence” does not match the heady (and eventually, failed) rhetoric of yore about „Hindi-Chini bhai-bhai‟ („India-China fraternal affinity‟). In recent years, serious differences have indeed arisen now and then over issues ranging from maps of the two countries to Beijing‟s differential treatment of certain categories of Indians for the purpose of issuing Chinese visas. However, there has been no decisive or irreversible lurch towards the kind of bilateral bitterness which first silenced the 4 5

ibid ibid

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„Hindi-Chini bhai-bhai‟ crescendo and then preceded, punctuated, and followed the 1962 border war between the two countries.

Phase of Detente and Deterrence It is, at the same time, arguable that the ongoing phase in Sino-Indian relations is one of detente and deterrence. The present phase has been made possible by a series of sequential developments: (1) a diplomatic breakthrough in India‟s relations with nuclear-armed China in the waning years of the Cold War, (2) a series of follow-up bilateral confidence-building measures, (3) India‟s nuclear arms tests of 1998, (4) the definitive rise of China as a spacefaring economic powerhouse with potential for a global political profile, and (5) a more-orless parallel but very-much-slower rise of India, too, as a space-age economic power with potential for a global political role. The driving logic of these sequential and parallel developments and their impact on China-India relationship fall outside the purview of the limited focus of this paper: the cordiality of their latest defence talks at a time of military tensions between New Delhi and Islamabad. The latest China-India Annual Defence Dialogue, held in Beijing on 14 January 2013, was co-chaired by Qi Jianguo, Deputy Chief of General Staff of the Chinese People‟s Liberation Army, and Mr Sharma, India‟s Defence Secretary. The two sides agreed to strengthen military ties6 in such primary areas as bilateral exchanges and joint exercises7. General Qi Jianguo emphasised that “the development of relations between the Chinese and Indian militaries is an important symbol of in-depth cooperation between the two countries”. As a preface, the Chinese military leader said: “China-India relations are one of China‟s most important foreign relations. China sincerely hopes to establish a strategic partnership 8 [with India]”. The possibility of a big picture should not be missed for the dense details of important but hackneyed words that were deployed in the diplomatic interaction between these defence officials and between Mr Sharma and General Xu Qiliang in Beijing in mid-January 2013. Moreover, the possibility of a big picture is discernible in the significant but commonplace words deployed in Mr Xi‟s earlier letter to Dr Singh and in Mr Dai‟s message to Dr Singh on 10 January 2013.

6

7

8

China‟s Ministry of National Defence, Xinhua (14 January 2013), http://eng.mod.gov.cn/MilitaryExchanges/2013-01/15/content_4427661.htm. Accessed on 16 January 2013. India and China hold Third Annual Defence Dialogue, Press Information Bureau, Government of India, Ministry of Defence (14 January 2013), http://pib.nic.in/newsite/PrintRelease.aspx. Accessed on 16 January 2013. China‟s Ministry of National Defence, China Military Online, (15 January 2013), http://eng.mod.gov.cn/MilitaryExchanges/2013-01/15/content_4427869.htm. Accessed on 16 January 2013.

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Taken together, the big picture of possibilities in Sino-Indian ties, going forward, can be portrayed as follows: The incoming Chinese leaders have expressed their preference for “developing relations with India” in a “stable” fashion. Such intent has gained credence because of the latest Sino-Indian defence talks at the time of heightened military tensions between China‟s close friend, Pakistan, and India. In the period ahead, these new signs of a Sino-Indian search for stability in bilateral ties will come under the scanner. ......

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ISAS Brief No. 268 – 22 February 2013 469A Bukit Timah Road #07-01, Tower Block, Singapore 259770 Tel: 6516 6179 / 6516 4239 Fax: 6776 7505 / 6314 5447 Email: isassec@nus.edu.sg Website: www.isas.nus.edu.sg

State Elections in Northeast India Laldinkima Sailo1

A series of state assembly elections will precede the next general election in India where the current term of the Lok Sabha (lower House of Parliament) is set to last until 31 May 2014. In 2013, at least eight states will hold legislative assembly elections. In Northeast India, the states of Tripura, Meghalaya and Nagaland are now going to the polls. Each of these three states has a 60-member assembly. Tripura went to the polls on 14 February while the electorate in Meghalaya and Nagaland will vote on 23 February. In India, state elections are often seen as the barometer of the mood of electorate towards national parties in the context of their likely fortunes in a countrywide general election. Over the years, however, the voting patterns in general elections have not always followed the assembly election trends. By-elections will also be held in Mizoram (23 February) and Assam (24 February) to fill the assembly seats that have fallen vacant. Besides these elections in the Northeast, by-elections will be held in Uttar Pradesh, West Bengal and Punjab on 23 February; and in Bihar and Maharashtra on 24 February. Results of the current round of elections will be announced on 28 February.

1

Mr Laldinkima Sailo is Research Associate at the Institute of South Asian Studies (ISAS), an autonomous research institute at the National University of Singapore. He can be contacted at isasls@nus.edu.sg. The views expressed in this paper are those of the author and do not necessarily reflect those of ISAS.


Tripura Tripura saw a massive voter turnout of 93.57 per cent on the polling day, 14 February; and, barring a few incidents, the voting went off peacefully. In the last elections in 2008, the state saw a turnout of 91.22 per cent. The Left Front government led by Manik Sarkar of the Communist Party of India (Marxist) – CPI (M) – is expected to win again, with Sarkar likely to get a fourth term as Chief Minister Should this happen, Tripura, as the lone state to stay with the Left at present, will be crucial to the party in keeping up the morale of its cadre. Sarkar’s image as a clean administrator (also portrayed by critics as the poorest Chief Minister in India) has been a great advantage for the party. Besides Sarkar and his cabinet colleagues, those in the fray include the former chief minister and veteran Congress leader, Samir Ranjan Barman; his son and the Pradesh Congress chief, Sudip Roy Barman; the opposition leader, Ratan Lal Nath; and the Indigenous Nationalist Party of Tripura (INPT) president, Bijoy Kumar Hrangkhawl. The Congress is contesting 48 seats and its alliance partners INPT 11 and National Conference of Tripura (NCT) one. The Bharatiya Janata Party (BJP), which has never won a seat in Tripura, has fielded 20 candidates. The CPI (M) has gone to the electorate taking credit for ending the four-decade-old insurgency in the state and ensuring peace and communal harmony. The party has also highlighted the 15 awards it received from the Centre for successful implementation of various schemes. The Congress-INPT-NCT alliance, on the other hand, is projecting the "bad governance" of the Manik Sarkar-led government as a poll issue, alleging that despite the availability of central funds, employees, the unemployed and farmers remained deprived during the 20-year Left Front rule. The alliance has also focused on allegations of corruption and nepotism among party leaders and partisan behaviour by the government. Further, Congress claimed that insurgency was tamed because of the attractive rehabilitation package offered by the Centre and the favourable action of Sheikh Hasina’s government in Bangladesh which launched a crackdown on the Indian insurgent groups operating from there. Prominent leaders who campaigned in the run-up to the election include Congress VicePresident Rahul Gandhi, Union Minister Deepa Das Munshi, Arunachal Pradesh Chief Minister Nabam Tuki, Union Finance Minister P Chidambaram, CPI-M leaders Prakash Karat, Sitaram Yechury, Surya Kanta Mishra and Brinda Karat.

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Of the 3,041 booths, 409 were identified as very sensitive (A+), 535 as very sensitive (A) and 726 as sensitive. Altogether 250 companies of central paramilitary forces have been deployed in the state to maintain law and order. The Border Security Force has sealed the 856 km border with Bangladesh and deployed additional forces to prevent infiltration. This has however, reportedly, disturbed border trade but is expected to return to normal once the election process is over.

Meghalaya Meghalaya, which has seen a very high turnover of Chief Ministers over the last many years, is generally expected to return the Congress to power. The incumbent Chief Minister Mukul Sangma of the Congress has been at the helm since April 2010. Journalists and civil society activists have lamented the inability of political parties to raise major issues affecting the state during their campaigns. Rather, electoral outcome is expected to be determined mostly by the emotional bonds between the voters and individual candidates. The state faces enormous social and environmental challenges due to massive coal- and limestone-mining; and there is a perception that the ‘deteriorating’ law and order situation must receive greater attention. Several media reports have also raised concerns about the exponential growth of the assets of politicians in the state. According to the Meghalaya Election Watch (MEW), a non-governmental organisation, the assets of 111 candidates grew at an astonishing 252 per cent. MEW noted the average assets of these 111 politicians, worth Rs 66.20 lakhs in 2008, rose to Rs.2.33 crore in the course of five years – average growth of Rs 1.66 crore. P A Sangma, former Lok Sabha Speaker and former Chief Minister of the state, who unsuccessfully contested the presidential election against Pranab Mukherjee last year, has since launched a party, the National People’s Party (NPP). But he is expected to have a limited impact on the fortunes of the Congress. He is expected to win a handful of seats in his stronghold, the Garo hills. Should there be a fractured mandate, he could however end up playing kingmaker along with other regional players like the United Democratic Party (UDP). In the last elections in 2008, when Sangma led the state unit of the Nationalist Congress Party (NCP), the party bagged 15 seats from across the state. Having allied with the BJP-led National Democratic Alliance (NDA) over the presidential election, Sangma may be looking to play a bigger role in the 2014 Lok Sabha polls and is said to be pinning his hopes on an NDA victory in the general election.

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Besides the Congress among the national parties, the BJP has fielded nine candidates while the Nationalist Congress Party (NCP) has fielded 21 candidates.

Nagaland In Nagaland, which has seen unrest for the last six decades, security has been a crucial issue during the electoral campaign. As many as 180 additional companies of the central paramilitary forces have been asked to supplement the two battalions of Central Reserve Police Force, 26,000 police personnel, 9,000 village guards and more than 2,000 home guards already in the state. In a state reported to be flush with money during elections, expenditure monitoring has been beefed up. Observers and flying squads – each comprising a magistrate, a police officer and a videographer – have been deployed in all the districts. The powerful Nagaland Baptist Church Council (NBCC) has called for a 'clean election' and issued 13 guidelines that included an appeal to the people not to falsify the date of birth in order to register as voters. Other guidelines included: “keeping only one voter identity card, honouring individual right and freedom of choice and exercise one's wisdom to vote for godfearing, principled and capable candidates”. The main contest here is between the current ruling Naga People’s Front (NPF) led by Chief Minister Neiphiu Rio – which has a pre-poll alliance with the BJP and JD-U under the banner of Democratic Alliance of Nagaland (DAN) – and the Congress on the other side. Rio is seeking a third term as Chief Minister. The main campaign issues are economic development and the finding of a solution to the Naga problem. The Congress has alleged that despite the Central government allocating adequate funds to the state, the benefits have not reached the people. Prominent in the manifestoes of the political parties are the issues of youth empowerment and the promise of job opportunities for the young. While the peace talks are ongoing, the powerful apex body of Naga traditional organisations, the Naga Hoho, had asked for a deferment of the elections and urged that a settlement be reached first. Last year, all 60 legislators, cutting across parties, had conveyed their willingness to step down to pave way for a political solution if it helped. The Naga Hoho is of the view that the political negotiations are at a critical juncture and that elections would derail and delay the process. Some star campaigners of BJP to visit Nagaland were Rajnath Singh, Sushma Swaraj, Nitin Gadkari and Varun Gandhi. From the Congress, Sonia Gandhi, Rahul Gandhi, AICC general

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secretary in-charge of Nagaland, Luizinho Faleiro, senior leader Ambika Soni and Arunachal Pradesh Chief Minister Nabam Tuki have held rallies. While analysts expect Rio to get a third term, he does face anti-incumbency sentiments. And, the Congress, led by I. Imkong and a line-up of stalwarts like Legislative Party Leader Tokheho Yepthomi and former Chief Minister S C Jamir, will likely try and pull out all the stops. These three Northeast states together account for only five seats in the Lok Sabha, India’s powerful lower house of Parliament, but these state election campaigns have been fierce. For the regional parties, the assembly elections are the really big contests as they are unlikely to make an impact at the national stage even if they win the Lok Sabha seats from their states. So, the stakes for them are high indeed during the assembly elections. Interesting indeed is the amount of interest evinced and effort made by the national parties in these elections, with a record number of central leaders holding rallies across the three states. This is perhaps a sign that the national parties hope to boost the morale of their cadre for the next national general election through a good showing at the state levels in the first place.

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ISAS Brief No. 269 – 25 February 2013 469A Bukit Timah Road #07-01, Tower Block, Singapore 259770 Tel: 6516 6179 / 6516 4239 Fax: 6776 7505 / 6314 5447 Email: isassec@nus.edu.sg Website: www.isas.nus.edu.sg

Asia and Obama’s New Trade Initiative Shahid Javed Burki1

Abstract The United States, under President Barack Obama, has taken the initiative to revive an old idea: to create a free trade area encompassing the European Union and the United States. According to the timeline accepted on both sides of the Atlantic, negotiations aimed at creating such a bloc will begin in late-spring of this year and conclude in two years. José Manuel Barroso, President of the European Commission, described this effort as a “gamechanger”. This will unite two trading partners that account for nearly half of the world economic output and 30 per cent of world trade. The stock of shared investment adds up to $3.5 trillion. “Together, we will form the largest trade zone in the world…It is a boost to our economies that does not cost a cent of taxpayer money,” he said. 2 If the returns on the creation of the trading bloc are so large and the cost so little, why has this idea taken so long to mature? If such a trading bloc does emerge how will it impact Asia? This paper attempts to answer these two questions.

1

Mr Shahid Javed Burki is Visiting Senior Research Fellow at the Institute of South Asian Studies (ISAS), an autonomous research institute at the National University of Singapore. He can be contacted at sjburki@yahoo.com. The views expressed in this paper are those of the author and do not necessarily reflect those of ISAS. During a professional career spanning over half a century, Mr Burki has held a number of senior positions in Pakistan and at the World Bank. He was the Director of China Operations at the World Bank from 1987 to 1994 and the Vice President of Latin America and the Caribbean Region at the World Bank from 1994 to 1999. On leave of absence from the Bank he was Pakistan’s Finance Minister, 1996-97.

2

Quoted in Joshua Chaffin and James Politi, “US and EU set deadline of ‘game-changing’ trade pact”, Financial Times, 14 February, 2013, p. 1.


Introduction One sentence in President Barack Obama’s State of the Union address on 12 February 2013 took almost 20 years to write. In a speech that lasted more than an hour, a minute or two were devoted to the hope that the European Union and the United States would finally agree to a broad trade agreement that would remove some of the hurdles that remained. “And tonight, I’m announcing that we will launch talks on a comprehensive Transatlantic Trade and Investment Partnership with the European Union – because trade that is fair and free across the Atlantic supports millions of good-paying American jobs”, said the US President.3 Those in the administration who worked on the speech told the press that the sentence was a lastminute insert, put there after a working group of the European Union and the United States sent recommendations to Washington on the morning of the day the speech was delivered. The working group’s report also provided some indication of the economic benefits that would result if an agreement were reached. It could add about 0.5 per cent to national income on either side of the Atlantic. This would double the rate of growth expected in Europe in the next five years and substantially increase that of the United States.

Why Now? There are two reasons why the idea of a comprehensive trade deal between the United States and the European Union began finally to attract the attention of the policymakers on both sides of the Atlantic. The first was the rising prominence of Asia in the global economy. It did not escape the notice of Washington and Brussels that trade was by far the most important driver of economic growth in Asia. This was not the case only in East Asia but was also true for India which was now witnessing an expansion in its international trade much faster than the rate of growth in its GDP. The Asians had adopted an incremental approach, starting first with the Association of Southeast Asian Nations (ASEAN) and then adding more countries to that bloc of nations. They were initially prompted by the United States to come together for security reasons. The ASEAN was meant to contain the Chinese influence in Southeast Asia. There is some irony in the fact that China, although not an ASEAN member, is now part of the expanding ASEAN arrangement. There are now various “ASEAN-plus” arrangements that are likely to converge into a large free trade area. Asia had been at work diligently to create a free-trade area that might encompass the entire continent. But political differences such as those among the South Asian nations stand in the way of creating a pan-Asian trading bloc. There is no effort at the moment aimed at bringing the ASEAN and SAFTA (or, South Asian) arrangements together into a large and comprehensive arrangement. The second reason for the revival of hope in creating a large trans-Atlantic trading bloc was the sluggishness of the economies on both sides of the ocean.

3

www.whitehouse.gov/the-press-office, 13 February 2013.

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As indicated above, significant increases can be expected in the national products of both Europe and the United States as a result of a trans-Atlantic trading bloc.

Likely Consequences for Asia President Obama has been working on creating a larger trans-Pacific trade group. Before getting to the sentence in his State of the Union address quoted above, he referred to another effort in which his administration is involved. “To boost American exports, support American jobs and level the playing field in the growing markets of Asia, we intend to complete negotiations on a Trans-Pacific Partnership”, he told his audience.4 This attempt is to create a large bloc of the nations on either side of the Pacific. However China is excluded from TPP. It appears that America’s strategy is to box China in from both sides in order to compel it to play on a level field. Western policymakers believe that if Beijing were confronted with trade and market access issues it may be less inclined to throw its military weight around. The idea of a trade pact with Europe that would go beyond the lowering of tariffs was raised first by President Bill Clinton after the North American Free Trade Area deal that squeaked through the US Senate by just one vote. President Clinton had to work hard to overcome the opposition of the labour unions in his country who feared that jobs would be lost to the lowwage Mexican economy. In the case of TPP, there are no such fears since all the economies that will be involved in this deal are high-wage ones. The benefits from a free trade area that stretches across the Atlantic will come from both the lowered tariffs and rationalised regulatory systems. Tariffs now average about three per cent but the volume of trade between Europe and the United States totalled $646 billion of merchandise in 2012. For a flow as large as this even a three per cent decline will produce considerable benefits. Potentially more important than reducing tariffs to zero – the central aim of all regional arrangements – would be an agreement to harmonise regulations on products like food, cars, toys and pharmaceuticals. According to the German Association of the Automobile Industry, “harmonising safety features would save several hundred dollars per automobile”. There is considerable enthusiasm in both Europe and the United States about concluding a comprehensive deal. According to Karel De Gucht, the European Commissioner for Trade, the deal “will have a worldwide impact”. 5 As the Financial Times wrote in an editorial following the speech by the American President, “even as it becomes commonplace to think the future belongs to the emerging world, the old economic powers can still pack a punch. The ambitious decision by the US and the EU to launch trade liberalisation talks promises a prize whose political value is even greater than its considerable economic benefits”. One important political consequence will be the message it will send to Asia’s rising economic 4 5

Ibid. Nicholas Kulish and Jackie Calmes, ���Obama bid for trade pact with Europe stirs hope”, The New York Times, 14 February, 2013, pp. A1 and A14.

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powers. “The message – that the West remains a pole of attraction able to set terms for global economic interaction – will not be missed, least of all by China already feeling excluded from the Trans-Pacific Partnership, the US’s other less promising big trade project”. 6 As one analyst suggests, the emphasis on forging a trade alliance among the world’s older economies is not simply because the economic rewards will be impressive. “The advanced nations are losing ground to the rising states. The flow of power to the East and the South puts a question-mark over the relevance of the West”. The challenge the West faces is not just economic. “The economics are a means to an end. The reward is the advance of the liberal political order that has recently seemed to be on the retreat”.7

Difficulties at Stake The aim is to have the agreement negotiated within two years, before the expiry of the term of the current European Commission. The reason why it will take time to work out the deal is that some of the likely resistance of strong vested interests on both sides of the Atlantic will have to be overcome. Several of these are deeply entrenched in the culture and politics of the two continents. The European farming community would not like to see its sector exposed to the more competitive agriculture system in the United States. The Europeans are also deeply concerned about the possible health effects of genetically modified crops common in the United States. Both sides have their own systems of drug and health appliances’ certification. Various environmental regulations will also need to be harmonised. There is, in other words, a great deal of work to be done. But the incentive is there. The proposed work with the European Union is a major move by the United States aimed in part to counter the growing influence of Asia on the global economy.

Conclusion What we are witnessing at this time is a retreat from a multilateral trading order into the one that will have three major associations among nations, each setting its rules. As economic power and dynamism moves to the “rest”, the older economies that dominated the world for more than two centuries are fighting back by defining their terms for the conduct of trade among nations. Not only that, they will try and impose their own way of producing goods and marketing services to all parts of the globe. Ideally this should have been done in the context of a multilateral system. This was the reason why the Doha round of negotiations was launched almost a decade ago. That did not go anywhere since for the first time in multilateral trade discussions, the Asian economies asserted themselves. They tried hard to free up trade in products and services in which they had a clear advantage over the older 6 7

Financial Times, editorial, “A challenge worthy of US and Europe”, 14 February, 2013, p. 8. Philip Stevens, “Transatlantic free trade promises a bigger prize”, Financial Times, 15 February, 2013, p. 11.

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economies. This was not acceptable to the latter group of countries. They are responding by creating their own trading blocs from which the larger Asian economies will be excluded.

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ISAS Brief No. 270 – 21 March 2013 469A Bukit Timah Road #07-01, Tower Block, Singapore 259770 Tel: 6516 6179 / 6516 4239 Fax: 6776 7505 / 6314 5447 Email: isassec@nus.edu.sg Website: www.isas.nus.edu.sg

Sri Lanka at the UNHRC: Will it be Useful for Sri Lankans? Gloria Spittel1

If at first you do not succeed, keep trying — this adage is befitting of the relationship between Sri Lanka and the United Nations Human Rights Council (UNHRC). All that is left to be seen (again) is who ‘wins’ the latest round now, and if ‘winning’ actually means anything to either side.

Battling with the ‘Against-Us’ Mentality Sri Lanka’s appearances at the UNHRC sessions since the military defeat of the Liberation Tigers of Tamil Eelam (LTTE) in 2009 and the adoption of the United Nations Resolution (A/HRC/19/L.2/Rev1) on Sri Lanka during the 19th session gave rise to the notion of Sri Lanka being unfairly singled out or bullied. The prime mover of the resolution, the United States of America, and its main supporter, India which has over time involved itself in the conflict in Sri Lanka, are perceived by segments of the Sri Lankan population as the big bullies acting on behalf of and in tandem with those conspiring against Sri Lanka. Some sections of the Sri Lankan people believe this, albeit under the influence of politicians. Much to the disappointment of many Sri Lankan politicians, mainly in the ruling coalition, Colombo’s military victory against the terrorist LTTE in 2009 was not met with unreserved 1

Ms Gloria Spittel is Research Associate at the Institute of South Asian Studies (ISAS), an autonomous research institute at the National University of Singapore. She can be contacted at isasgloria@nus.edu.sg. The views expressed in this paper are those of the author and do not necessarily reflect those of ISAS.


congratulations in the international arena. Allegations of violations of international human rights and international humanitarian law, especially during the final stages of the war, abounded – raised mainly by some interested parties in several international quarters. Those who raise these concerns locally are usually branded by the Government of Sri Lanka (GSL) as lackeys receiving funding from Sponsors abroad. The GSL saw this as a vicious conspiracy to tarnish the image of Sri Lanka and as a pathway to the formation of an independent state of ‘Tamil Eelam’, i.e. the division of Sri Lanka. The GSL officials found a receptive audience as it raised doubts over the genuineness of the international community’s call for accountability. An audience made up of those opposed to separatism, and those who nurture a ‘minority complex’ amongst the majority Sinhalese population. The perceived threats to Buddhism and the Sinhalese language constitute the basis for such sentiments. This state of affairs is easily exploited and continuously bolstered by politicians seeking votes and power. It is in this background that the international pressure on the GSL for accountability and the establishment of the rule of law, especially through the UNHRC, should be viewed.

Human Rights for All: Right? So, how should the international community, or at least those interested in accountability and the establishment of the rule of law as also a just society for all, operate in the face of such suspicions in Sri Lanka? A no-brainer answer is that the international community should pay equal attention to the rights of all communities in Sri Lanka. Is this not an obvious answer? The international community has voiced concerns over two important events in Sri Lanka in 2013. First, the impeachment of Chief Justice Dr Shirani A Bandaranayake in January 2013: the process adopted for the impeachment was met with opposition from civil society, from the law-and-justice fraternity, and from ordinary citizens. The Chief Justice was ousted by the Sri Lankan Parliament in a process and procedure that was widely seen as rushed and botched. There is now a situation of two Chiefs of Justice; arguably the de-jure Chief Justice and a de-facto Chief Justice in Mohan Peiris. With lawsuits on the impeachment still unsettled, the matter is anything but done and dusted. In itself, the procedure by which the Chief Justice was impeached sparked a sputtering debate on the need for constitutional reform. Secondly, the shooting of the ‘Sunday Leader’ journalist Faraz Shauketaly came to be highlighted as an example of the continuing deprivation of human rights, intolerance for dissent and the unsafe environment for journalists and journalism in Sri Lanka. Yet, many concerned about accountability in Sri Lanka overlooked the issue of the mass grave that was uncovered in the Matale district in the Central Province. Over 150 human remains recovered from the grave are presumed to indicate a massacre of members of the previously-militant Janatha Vimukthi Perumuna (JVP), dating back to the insurrections of 1971 or the late-1980s. The JVP has demanded investigations to unearth the truth about this 2


mass grave, while the Asian Legal Resource Centre (ALRC), a regional non-governmental organisation headquartered in Hong Kong, along with its sister organisation, the Asian Human Rights Commission (AHRC), has called on the UN to aid in the inquiries. There is general silence from the international community on what should be considered the most damaging (in terms of inter-communal harmony) and ugliest turn in events since the end of the war – the wave of anti-Muslim protests led by an organisation called the Bodu Bala Sena – a minority of extremists Buddhists cloaked in conspiracy theories and misinformation. While Sri Lanka is yet again at the UNHRC, its populace is distracted by such options as supporting the claims of the extremist Buddhist organisation Bodu Bala Sena or refuting these through online campaigns mainly though new media portals such as twitter, Facebook and blogs. Here at least, the people, left to their own devices, are focused on grass-root engagement in addressing these two issues. Who knows what level of engagement the Sri Lankans may have harnessed at home, if there had been no perceived victimisation by the international community on the issue of the rights of the country’s Tamil minority. There is perhaps no domestic matter in Sri Lanka that the international community can ignore, given its indirect involvement especially in the aftermath of the war with the LTTE and the political environment since. If the international community wants to involve itself in the upholding of human rights in Sri Lanka and in its national reconciliation, it must seriously address the perception among the majority community in Sri Lanka that only a segment of the population, namely the minority Tamil community, is supported.

The Current Political Environment In a recent report, the International Crisis Group2 paints a picture of authoritarian rule in Sri Lanka, of which the impeached Chief Justice Dr Bandaranayake is perceived to have played a role by signing into effect the 18th Amendment to the Constitution, which scrapped term limits for the presidency amongst other instruments for the control and centralisation of power. The report also talks of a weakened political opposition, for which members of the main opposition United National Party (UNP) need accept responsibility given the disunity amongst its senior members. Furthermore, as per the ICG report, Sri Lanka’s turn to authoritarianism can only be righted by intervention of the international community. In its executive summary, recommendations are demarcated to all of the world and the government of Sri Lanka but not to the people of Sri Lanka. Does this imply that the people in Sri Lanka cannot and will not solve their issues or does it imply a limit to what the ICG believes it can suggest? If these recommendations from an international source are considered paternalistic, there is little to imply that the suggestions will be taken positively by the people in Sri Lanka. Any perceived meddling in the political apparatus (regardless of how corrupt and dysfunctional) may be counterintuitive, giving that the government may see itself as the victim and given that the international community is seen as wanting a regime change. 2

International Crisis Group

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What did the previous UNHRC resolution achieve in the form of actual reconciliation via the implementation of the Lessons Learnt and Reconciliation Commission’s recommendations? Government reports and figures were drafted, published, and now presented by Minister Mahinda Samarasinghe during his opening speech at the UNHRC, stating that action on the LLRC recommendations was in progress. However, the ground situation in Sri Lanka remains strikingly similar to that in 2012. In fact, it could be said, the situation may have worsened since April 2012 when a mosque in Dambulla was attacked. This raises doubt whether reconciliation is only for the Tamil and Sinhalese populations of the country and not for all its inhabitants. It is perhaps this lack of momentum and tangible change that has spurred the second resolution which reiterates the need to implement the recommendations of the LLRC and the report of the Office of the United Nations High Commissioner for Human Rights (2013). In the latest draft, the resolution alludes to the religious tensions preoccupying the attention of local population but the one line inclusion appears obligatory. The resolution also notes the High Commissioner Navi Pillay’s call for a credible independent international investigation into alleged violations of human rights but stops short of urging such an investigation. In sum, the resolution reiterates the need for the GSL to strengthen justice and democracy through reconciliation for all Sri Lankans in a similar manner as the resolution in 2012. The first resolution hardly managed to change the situation in Sri Lanka. It appears its main purpose was to give rise to this second (and probably subsequent resolutions) to hold the government to its word; will this strategy work? How does the international community punish the government for non-compliance/ or a lackadaisical effort with reference to the first resolution? International sanctions/actions/interventions or a boycott of the Commonwealth Heads of Government Meeting in November 2013; will these measures adversely affect the government or the people? The resolution adopted in 2012 was preceded by numerous public protest marches in Sri Lanka against the motion. This was in stark contrast to the absence of these in 2013. Yet, there are other reasons why there may not be fervent public outcry at the new resolution, of which contributing factors could be a preoccupation with the impeachment of justice Dr Bandaranayake, the extremist anti-Muslim vitriol of the Bodu Bala Sena and the burgeoning cost of living. Of course, with the increasing number of times that Sri Lanka has being discussed at the UNHRC since 2009, there might be a sense of fatigue too.

Can Sri Lanka Self-Reconcile? If the resolution adopted becomes the premise for an international investigation, at this juncture given the divisions in the Sri Lankan polity, it is unlikely to be accepted and eventually unlikely to promote reconciliation among the people. A call for investigations must come from the people of Sri Lanka, regardless of how many years if not decades away that call may be. Further, this call should reflect the need for closure for all communities who 4


have suffered through all of Sri Lanka’s conflicts since independence in 1948, not a just single phase of the longest conflict In Sri Lanka. It simply cannot be imposed, as unjust and cold as it sounds, on those requiring closure and as fantastical it may sound to those familiar with the political environment in Sri Lanka. In his opening remarks Minister Mahinda Samarasinghe, besides citing a litany of statistics and resorting to oft-repeated rhetoric, stated Sri Lanka needs more time. He is not wrong in this assertion. The country does need more time for reconciliation among the people, but with such a powerful government capable of tabling and passing legislation within a matter of days, time is not an element in establishing stable foundations on which reconciliation and justice can be built. The role the international community has to play in Sri Lanka’s post-war reconciliation and recovery is murky. It cannot be relegated to that of advising a stubborn government, or to imposing sanctions that would hurt the people more and (which would eventually) play into the hands of the government. What can the international community do? Sri Lanka today is still a divided populace but these divisions are not only between the Tamils and the Sinhalese. The divisions exist not only between ethnicities, but also across social classes and religions too. They are exacerbated, because the dividends in terms of household income have not materialised as expected with the end of the war. In a twisted manner, Sri Lanka’s preoccupation with fighting a war has now given way to concerns almost normal to the rest of the South Asian region; religious, social class tensions and income disparity. Yet, these are not acceptable to segments of the populace. The messages of tolerance, of peace that have appeared on new media sites deserve support, recognition and dissemination. However in the same way that the LTTE was not defeated without the help of the international community, post-war reconciliation and recovery will not be possible without engagement from the international community. If the international community is to be effective, it should not go the way the Tamil Nadu Government has. Petty political mileage-gaining overtures in Tamil Nadu will do little for the Sri Lankan Tamils, whose voices along with the rest of the populace are hardly heard. These voices will only be heard when the people of Sri Lanka raise them against the policies of the government. The tricky part for the international community is in supporting those voices. Clearly there has to be involvement, but that needs to happen at the level of all communities. Supporting institutions that promote justice and democracy in Sri Lanka and increase awareness of these subjects in Sri Lanka, while easier said than done, could be a possible avenue. The antagonistic tactics thrown at the GSL have not worked, instead these have emboldened the government. If a Sri Lanka that is just and fair to all of its communities is to be built, the people have to be at the centre of that solution, else just as the war lasted 30 years, the post-war years will drag on too.

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ISAS Brief No. 271 – 26 March 2013 469A Bukit Timah Road #07-01, Tower Block, Singapore 259770 Tel: 6516 6179 / 6516 4239 Fax: 6776 7505 / 6314 5447 Email: isassec@nus.edu.sg Website: www.isas.nus.edu.sg

Chittagong Port – Prospects for Revival Ishraq Ahmed1

The Chittagong port, as the largest port in Bangladesh, is the lifeline of the country’s economy. Considering the growth prospects of Bangladesh, the port is expected to handle increasing volumes of traded goods. While Chittagong port has undergone noticeable improvements in handling containers and optimising the use of facilities, further investment and development need to be undertaken for it to become a national hub and an economic gateway to southeast Asia.

Overview The Chittagong division itself is situated in the south of Bangladesh, with the port located near the Bay of Bengal. This location has important implications not only for Bangladesh but also for the development of landlocked countries in south Asia such as Bhutan and Nepal, besides northeast India. The use of the port by Nepal and Bhutan is contingent upon the transit agreement with India, while the proposed Chinese investment to further develop the port as a commercial outlet for Yunnan in southwest China may have both strategic and commercial intentions to it.

1

Mr Ishraq Ahmed is Research Associate at the Institute of South Asian Studies (ISAS), an autonomous research institute at the National University of Singapore. He can be contacted at isasishr@nus.edu.sg. The views expressed in this paper are those of the author and do not necessarily reflect those of ISAS.


Given the importance of Chittagong as the second largest city after Dhaka and despite the presence of a major seaport, the city’s contribution to the country’s economy has not been considerable. Of Bangladesh’s total GDP, only a slice of about US$ 25.5 billion as of 2010, is attributed to Chittagong; and this has been the case in spite of the dominance of industrial activities in the city and other adjoining areas. However, a significant portion of the country’s sea-borne trade goes through Chittagong port (92 per cent), while the remainder is handled by Mongla port in southwest Bangladesh. The export items consist mainly of garments, knitwear, frozen food, jute and jute products, leather, tea, frozen food among others. In 2011, trade worth US$ 60 billion went through Chittagong. Given the steady growth of the economy and trade over the years, the volumes of containers handled have experienced consistent growth as well. The capacity of the port to hold containers and cargo has increased, with 1.39 million TEUs (twenty-foot equivalent unit) and 43 million tons respectively being handled in 2011. This represents an increase from managing only 870,000 TEUs of containers and 27 million tons of cargo in 2006.2 A sizeable increase in the capacity of the port can be attributed to the automation of various port activities and the allowing of private berth operators to manage containers and cargo. This has led to reduced congestion in the docks, a reduction in average turnaround times for ships and an increase in the volume of trade with the rest of the world.

Challenges Although the Chittagong port has exhibited improvements in efficiency and capacity to handle import and export of goods over the years, Bangladesh’s increasing economic integration and prospects of growth in the globalised world hinge on how the port can develop into a world-class facility. For instance, although the average turnaround time for ships has been brought down to around two-and-a-half days at the moment, exporters assert that it can go down further and meet global standards. Compared to turnaround times of 12 hours and 10 hours in Singapore and Hong Kong respectively, Chittagong clearly needs to increase the competitiveness of its port, it is said. The connectivity of Chittagong port to the hinterland and further into Bangladesh is robust, at least on paper, because of a network of railways, roads and inland waterways. A significant volume of cargo is cleared by road (75 per cent), with around 10 per cent and 15 per cent being transported via rail and river respectively.3 An overdependence on transporting cargoes by road creates significant problems with respect to clearing containerised cargoes quickly; the railway network is underutilised. The maintenance of the Dhaka-Chittagong highway – the major highway in Bangladesh, further branching out to the rest of the country – is poor. The road network around the port city is dilapidated leading to severe gridlocks on the highway and causing delays and backlog of goods in the port. This has consequences for 2 3

Port Statistics, Chittagong Port Authority Ibid

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businesses that rely on imported inputs and capital equipment. Most significantly, both exporters and importers have to incur a major portion of their costs as ports and terminal handling charges. For Bangladeshi traders, the exporting of a standard container of goods costs US$ 450 as port charges out of a total of US$ 1025, while importers have to pay around US$ 650 out of a total of US$ 1430. 4 The associated costs of exporting and importing through Chittagong port are quite prohibitive and thus act as another bottleneck in easing trade. While infrastructure development in the port has been prioritised by the government, Chittagong is expected to handle an increasing traffic of ships and cater to the related business activities of the region in the near future. If the figures on managing containers, cargoes and the number of vessels docking at Chittagong are any indication, the port will have to further increase its capacity to meet the demand and cope with the rising operational costs. The number of vessels has increased at a decreasing rate, leading to concerns that the port is being stretched to its capacity again, and further expansion and up-gradation are required to handle more international vessels. Furthermore, Chittagong will find it increasingly difficult to handle container vessels beyond a certain size from East Asia, North America and Europe. The average size of vessels that the port can accommodate is around 2500 TEUs to 3000 TEUs, while the modern-day container vessels range from 5000 TEUs to 18,000 TEUs. Chittagong is far too small for the new-generation ships to dock at. The challenge for the port is to keep investing ahead of the global progress in raising the capacities of container vessels. This is something very difficult for Chittagong port at the moment, considering the enormous investment requirements. The inability of Chittagong port to handle new-generation ships would mean that shipping and other ancillary businesses would be less keen to base themselves in the city and invest. This in turn will lead to missed opportunities in trade and revenue.

Opportunities Despite the numerous constraints of the Chittagong port, there is still immense potential for further development. Keeping the expansion of shipping capacity in mind and with a view to reducing dependency on the port city, the government has approved the construction of the country’s first deep-sea port on Sonadia Island near Cox’s Bazar district. The port is expected to address Chittagong’s inability to host large ships of more than 188 meters in length. The first phase of constructing the deep-sea port has been estimated to cost about US$ 2.24 billion and is expected to handle large ships. However, the expected date of completion is around the year 2020, and only the short listing of consultants and builders has been done. In reality, the construction time could be longer than anticipated, given due processes and the bureaucratic procedures that are required for such a major project. The government has not been able to woo potential investors yet. In addition, little or no communication and port infrastructure exists around Sonadia, and the necessary infrastructure will have to be built. The UAE has 4

Doing Business 2013, The World Bank

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recently expressed interest to build the seaport, along with establishing the rail inland container depot (ICD) and container freight station. The Dubai-based DP World, the world’s third largest port operator, had conveyed keenness to invest between US$ 3 billion and US$ 4 billion for the Sonadia port. 5 The proposed building of ICD, along with developing communications around Sonadia for greater connectivity inland, should at least address the issue of poor infrastructure in and around the area. However, this increased attention on Chittagong and Sonadia ports may not last long, given the moves for the completion of a deep-sea port at Kyaukphyu in neighbouring Myanmar. The feasibility of constructing the Sonadia deep-sea port now merits even more urgency – Bangladesh will have to construct the port soon and compete with Kyaukphyu lest it loses out on shipping revenues. Private foreign investment in the Sonadia and Chittagong ports is imperative. In the short to medium-term, Chittagong offers great scope for investment in upgrading port facilities. Singapore can consider investing on lines similar to the lead taken by Overseas Port Management (OPM) to expand Yemen’s port of Aden in a US$ 450 million deal in 2007 – among a consortium of firms, OPM invested around US$ 23 million. In order to attract more private sector investment, the berth operations in Chittagong port can be leased out to companies to handle containers and cargo. This is also expected to streamline the port operations – profit-seeking private companies will be cautious of delays in handling cargoes that hurt their businesses. Furthermore, Bangladesh can stand to earn millions of dollars by leasing its port facilities to other countries.6 Increased up-gradation of the Chittagong port can also lead to positive spill-over effects in industrial activities in the adjacent areas. The heavy industrial activities in the dry docks, oil refinery, steel mills, power plants, chemical plants, textile factories, fertilizer factories, among others, may become more lucrative; they will enjoy greater access to foreign markets and investment. With improved facilities and greater prospects for manufacturing units, multinational companies may be induced to invest in sectors located in or near Chittagong. Several industrial units and commercial centres have already established themselves around the port, so a foreign company may not have to build the structure/s from scratch. Furthermore, plenty of land around Chittagong is still available for future expansion of industrial activities. Prospective multinational companies can take advantage of this.

Conclusion The Bangladesh economy can be stimulated further if the physical facilities at Chittagong port are developed for increased trade facilitation. There is sufficient scope to handle increasing volumes of trade and to integrate Chittagong with the economies of Southeast Asian countries. The shipping route is potentially lucrative not only for Bangladesh’s present5 6

“Is a deep-sea port now in the making?” The Financial Express, 21 February 2013 “Bangladesh pins hope on Chittagong port”, BBC, 3 September 2012

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day commercial and industrial activities, but also for international cargo-handling and manufacturing companies. With intensive development can come increased economic activity in the port and this is expected to attract firms dealing with financial services ranging from shipping insurance to export credit among others. The outlook for resurgence in Chittagong port is very encouraging, but it will take some bold vision, which has been long overdue, from the policy makers to truly seize the initiative. .....

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ISAS Brief No. 272 – 27 March 2013 469A Bukit Timah Road #07-01, Tower Block, Singapore 259770 Tel: 6516 6179 / 6516 4239 Fax: 6776 7505 / 6314 5447 Email: isassec@nus.edu.sg Website: www.isas.nus.edu.sg

Pakistan Prepares for Polls: Dilemmas of its Democracy Iftekhar Ahmed Chowdhury1

However unlikely it might have seemed from time to time, Pakistan’s forward movement along the path of democracy now appears to be inexorable. It has demonstrated the perfect example of the very British art of ‘muddling through’. Elements of uncertainty still remain, as they always do in a game of cricket that its people take to as duck to water. But barring an act of God, elections will take place on 11 May 2013. For the first time in its history an elected civilian government has completed its full term in office and a peaceful transfer of power, or a continuation of the same, is widely expected. The mechanism for the holding of elections, the system of ‘caretaker government’, has indeed worked better in Pakistan than the country it was borrowed from, Bangladesh. Ironically, it has since been discarded in the latter, whose politics now seem to be mired in a sea of uncertainty. But Pakistan has managed to use the model perhaps more effectively, and even sharpen and hone it to suit its own peculiar circumstances. In Pakistan, Balochistan is a troubled province that also has a raging insurgency, which has not received too many sops from the nation in the past. Now it has been given one, in that that the new Caretaker Prime Minister is from there. He is a retired Judge, or Justice, as members of benches of Higher Courts are called in these parts. In no other political system does a country’s Election Commission act as an electoral college; but in Pakistan, where 1

Dr Iftekhar Ahmed Chowdhury is Senior Research Fellow at the Institute of South Asian Studies (ISAS), an autonomous research institute at the National University of Singapore. He is a former Foreign Advisor (Foreign Minister) of Bangladesh, and he can be contacted at isasiac@nus.edu.sg. The views expressed in this paper are those of the author and do not necessarily reflect those of ISAS.


some things are very different from those of most other places, the task of electing the Prime Minister fell upon this body, which did so by choosing Justice (Retired) Mir Hazar Khoso four votes to one. Khoso is 84 years old, but in this region, advanced age is not a bar to but has a premium for holding high office, despite, very often, the mounting medical bills of its leadership. His formal boss will be the comparatively youthful, President Asif Ali Zardari (also, Chair of the Pakistan People’s Party) who at 58, is looking to another five-year term as President (though his cardiac-related trips to Dubai have been somewhat frequent, unless some of these are, as is suspected, more politics-related!) Overall, Zardari might appear to the voter the better of a none-too-tempting bargain, though a recent report, if true, may dent PPP’s prospects. It is that his son, Bilawal Bhutto (the nominal Co-Chair of the party) has left Pakistan in a huff over a tiff with his father and aunt, Faryal Talpur, over PPP policies. At 24, the loss of Bilawal may not be an enormous blow, but he was tasked to buttress support among the youth. Also, in a party where the ‘Bhutto’ name is hugely important, it must be remembered that while Bilawal is blood-linked to the Bhutto family, Zardari is only connected by marriage! In Pakistan, political leaders do not live up Easy Street. Still, to re-phrase Lord Acton, even in Pakistan power attracts and absolute power attracts absolutely! So, unsurprisingly there are many others anxious to oust Zardari and his PPP. Among them is the irrepressible Pervez Musharraf, the former military ruler, back home at long last from his self-imposed exile abroad. His reception upon return was not the same that greeted the prodigal son in the Biblical tale, but was very tepid. His best friends, the Americans, seemed to have also let go of him, with the American Ambassador saying that as far as the US is concerned it is the Pakistanis who are to choose their next government. To the rational observer, it will seem like merely stating the obvious, but in Pakistan the hidden hand of America in all major things is feared, often with reason. Musharraf may thus be left with the lesson that the only way for him to capture power was, as he indeed had, through the barrel of a gun and not through the ballot box. Zardari’s arch rival, Mian Nawaz Sharif, and his Pakistan Muslim League (Nawaz) are waiting to give battle. He and his brother Shahbaz run Punjab, Pakistan’s most populous province whose Chief Minister Shahbaz is; but the brothers are learning the hard way that Pakistan is much more than Punjab than they had thought. The PML(N) is conservative, strong in urban centres, but possibly not strong enough to catapult them into power at the centre. The other major contender is the former cricketing hero, Imran Khan, who has recently drawn large crowds, but his wicket gets sticky when people seek to assess his political maturity to lead this volatile country. He is stridently anti-American, which is not necessarily a political ‘minus’ in Pakistan. He does not appear to have much else in the form of fresh ideas in foreign policy, particularly with regard to key issues like relations with India or Afghanistan. His type of ‘welfarism’ smacks somewhat of the ‘Islamic socialism’ of the PPP which is a political passé in Pakistan.

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The Army has so far remained withdrawn from the domestic political milieu. It has quite a task on its hands fighting extremism on a daily basis. At this time it cannot risk soiling its hands with ‘dirty’ politics, for popularity is its oxygen for survival. Come November it will have a change of guard, as General Ashfaq Kayani, the current Chief of Staff, is due to retire. In Pakistan, for an Army Chief to fade away into civilian life, without an attempt at supreme political power, is not unknown, but nevertheless remarkable. For now at least, the dilemmas of its democracy have been put to rest. The process of elimination, therefore, tends to point to a return to office of Zardari’s PPP, all allegations of corruption notwithstanding, and yet it is too hazardous a guess in a country where the churning of politics is often as swift as the swirl of the waters of the Indus!

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ISAS Brief No. 273 – 27 March 2013 469A Bukit Timah Road #07-01, Tower Block, Singapore 259770 Tel: 6516 6179 / 6516 4239 Fax: 6776 7505 / 6314 5447 Email: isassec@nus.edu.sg Website: www.isas.nus.edu.sg

The New Great Game in Asia Shahid Javed Burki1

Abstract The previous great game was played in one part of Asia and the players were form Europe. Britain and Russia worked hard to gain influence over Afghanistan and other Central Asian countries. London wished to install a puppet regime in Kabul to protect the northwest flank of its Indian Empire. Moscow, indulging in its perennial quest to gain access to a body of warm water, saw Afghanistan along with the northwest parts of British India offering one way of achieving this goal. Rudyard Kipling called it a “great game” since the contestants chose not to fight but to manoeuvre in a not very crowded field. Two different contestants are playing the new game. There are some major differences too. This time, the entire Asian continent is in play and one of the contestants is not from within the area. This paper examines how the two new teams of policy makers in Beijing and Washington are entering the contest and outlines some of the problems they face.

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Mr Shahid Javed Burki is Visiting Senior Research Fellow at the Institute of South Asian Studies (ISAS), an autonomous research institute at the National University of Singapore. He can be contacted at sjburki@yahoo.com. The views expressed in this paper are those of the author and do not necessarily reflect those of ISAS. During a professional career spanning over half a century, Mr Burki has held a number of senior positions in Pakistan and at the World Bank. He was the Director of China Operations at the World Bank from 1987 to 1994 and the Vice President of Latin America and the Caribbean Region at the World Bank from 1994 to 1999. On leave of absence from the Bank he was Pakistan‟s Finance Minister, 1996-97.


Introduction When large powers compete for influence in the same geographic area, it becomes difficult to distinguish between cause and effect. The United States‟ “strategic pivot” to Asia was seen as a way to counter the growing presence of China in that continent. Beijing saw most of Asia as its backwater, and implied a variant of the Monroe Doctrine in defining its relations with most countries in the region. But the Monroe Doctrine analogy was not entirely accurate. When, under the Monroe Doctrine, the United States let it be known that it would not tolerate the strategic presence of the countries that were not from the Western Hemisphere, it was sending a clear signal to the European powers to stay out of Latin America. However, in defining its relations with the rest of Asia, China has to recognise that the United States has been present in the continent for many decades. It shed a lot of blood and spent a great deal of resources to prevent the countries of the region from overwhelming other Asian states. In the Second World War, it won a decisive victory over Japan. It was less successful in the Vietnam War when it attempted to stop the Indo-China peninsula from opting for communism. It did not succeed in its stated objective and Vietnam and Laos came under the influence of communist political philosophy. In the field of economics, however, it was much more successful. Now, almost half a century after it pulled out of Vietnam in a humiliating way, that country has become one of America‟s most important trading partners in Asia.

The New American Team Even when states don‟t clearly identify their foreign policy preferences, much can be discerned from the inclination and beliefs of the people placed in important policy-making positions. For his second term, President Barack Obama dispensed with the “team of rivals” that he assembled for his first four years in office. In 2009, when he was sworn in for his first term, he was relatively raw in foreign affairs. He turned to those more experienced in this field. He brought in Joe Biden as Vice President and Hillary Clinton as Secretary of State. For the second term, and feeling more secure, he has turned to a team of the “like-minded”, a group that is inclined to recognise the US as a diminishing economic power in a relative sense. This team will be prepared to work with the rising economies, in particular those in Asia. The new Obama team is entering the great Asian game without a strategy. As Michael Gerson who wrote speeches for President George W. Bush put it in a newspaper article, “declining national influence is a choice and America seems to be making it”. 2 In democracies elections are supposed to settle the direction of policy the elected leaders are 2

Michael Gerson, “Creating a global vacuum”, The Washington Post, 19 March 2013, p. A13.

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supposed to take. That has not happened in the United States. While the election of 6 November 2012 gave Barack Obama another term in office, the defeated Republican Party did not lose all influence. It still controlled the lower house in Congress where decisions about government spending are made. The party is dominated by the leaders who are determined to reduce the size of the government even if it means downsizing the military. The same wing of the party also wants America to remain the dominant player in international affairs. That cannot happen with a weak government supported by a weakening military. As result of what is called “sequestration” – forced reductions in government expenditures in a number of areas – the Pentagon is working on shrinking the Marine Corps by 25 per cent; reducing the size of the Army by 143,000 soldiers; and reducing the pace of modernisation, training and readiness. With only a mild interest in international politics and with his sights set on such domestic issues as health care, education, and innovation, the president has assembled a team that will help him to focus more on the mounting problems at home than protecting it interests abroad.

The New Chinese Team There is a major change in policy players in China as well. Beijing has completed its decennial political transition by installing a new team to guide it in both domestic and international affairs. Xi Jinping the new president has indicated that he will be active in the making of foreign policy, leaving most of domestic policymaking to Li Keqiang, the new prime minister. In his first press conference as prime minister, Li focused almost entirely on domestic matters, pledging to curb the power of bureaucrats, rein in government spending and provide a more level field for private enterprise, both domestic and foreign, in the world‟s second largest economy. According to the Financial Times, “in another hopeful sign for global investors, Mr Li singled out the state-dominated railway, energy and financial sectors as areas where Beijing would allow private capital to „enter more smoothly and effectively‟”. 3 However, he did not underestimate the task before him. “Reform is about curbing government power. It is a self-imposed revolution. It will require real sacrifice, and it will be painful, like cutting the wrist. But this is necessary for development and demanded by people”. In his own address, President Xi promised to pursue “great renaissance for the Chinese nation”. 4 Supporting the president will be Yang Jiechi who served as foreign minister under the outgoing President Hu Jintao. He is stepping up as state councillor, making him China‟s chief diplomat. In his previous assignment he pushed a hard line in approaching the United States. “Asia-Pacific issues should be discussed and dealt with by countries of the region themselves”, he said at a news conference on the eve of the National People‟s Congress that

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Jamil Anderlini, “China PM vows to cut red tape”, Financial Times, 18 March, 2013, p. 2. Quoted in William Wan, “Great renaissance for China”, The Washington Post, 18 March 2013, p. A8.

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endorsed these personnel changes. 5 The meaning was clear: Beijing would like to see Washington stay out of the region or, at least, not force its point of view and interests on Asian nations. Wang Yi is the new foreign minister who was China‟s ambassador to Tokyo from 2004 to 2007. He was also the leading Chinese presence in the six-nation talks led by his country in discussions with North Korea about the latter‟s nuclear weapons programme. Before being elevated to the new position he was in charge of Taiwan affairs in the State Council. Wang has specialised in Asian affairs, another indication that, for China, Asia will become the main focus of policymaking. The new ambassador to the United States will be Cui Tiankai who knows Washington well, having studied at the Johns Hopkins School of Advanced International Studies. This team is likely to focus on three aspects of China‟s relations with the rest of Asia. It will like to add substance to the various forums that exist to discuss Asian affairs. In doing so it will build on some of the forums and arrangements it shares with several of its neighbours to cement relations with them while reducing the influence of the United States. Its focus will be on the countries in Central Asia and on Pakistan, Sri Lanka and Myanmar. It will seek to increase its presence in the Association of Southeast Asian Nations (ASEAN) with which it has already negotiated an arrangement. Beijing will promote trade with other Asian countries. The former foreign minister announced in the press conference held before the National People‟s Congress that China‟s trade with Asia had reached US$ 1.2 trillion in 2012, surpassing its trade with the United States and Europe. But international commerce will also include trade in arms. As the Stockholm International Peace Research Institute noted in its recent report, China now is the fifth largest arms exporter after the United States, Russia, Germany and France. It has earned that place by outranking Britain. Chinese arms exports rose 162 per cent between 2008 and 2012. About 75 per cent of its military sales go to four neighbours and near-neighbours: Pakistan, Myanmar, Bangladesh, and Iran. Venezuela accounts for five per cent of total sales. In other words Beijing has reached out two nations – Iran and Venezuela – Washington has a policy of not helping. Pressing Beijing‟s claims on the various islands in the East and South China Seas will be the third plank in China‟s focus on Asia. The new national security team has experience in East Asian affairs and is likely to focus on relations with Japan. Beijing has noted with interest and also with some apprehension the cordiality that marked the recent visit to the White House by Japan‟s new Prime Minister Shinzo Abe. Both China and the United States are playing in the Asian filed while steadily losing respect and popularity among the countries in the continent. After seeing a sharp improvement in the world‟s perception of America when Barack Obama started his first term, the trend has been pointing downwards since then. This is particularly the case for some of the countries in Asia. In Pakistan, for instance, almost three-fourths of the people surveyed by Gallup and Pew

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Jane Perlez, “China names new team to secure its place in Asia and face U.S. competition”, The New York Times, 17 March, 2013, p. 15.

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Research Center have an unfavourable view of the United States. China has not fared much better. According to David Shambaugh, a China expert, “while pockets of positive views regarding China can be found around the world, public surveys from Pew Center‟s Global Attitudes Project and the BBC reveal that China‟s image ranges between mixed and poor. And the negative view is expanding: for almost a decade, European public opinion toward China has been the most negative in the world, but that is now matched in America and Asia”.6

Conclusion With two new teams in place in Washington and Beijing and with both countries identifying Asia as the primary area of concern and opportunity, we will see in the years ahead a great deal of great-power activity in Asia. Most of this activity will be in the area of international commerce. 7 Each capital is already attempting to exclude the other from the many arrangements that are being put in place to manage international trade. President Obama is working on two initiatives that don‟t include China. In 2012 he launched the Trans-Pacific Partnership Initiative. In early 2013, he proposed a great trans-Atlantic alliance with the aim of creating a free-trade area, with the United States and the European Union as the two partners. Even though both countries will be primarily focused on managing the faltering domestic economies, Asia will loom large when they turn their attention to areas beyond their borders.

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David Shambaugh, “Falling out of love with China”, The New York Times, 19 March, 2013, p. A23. For a discussion of this aspect of Beijing-Washington relations, see Shahid Javed Burki, “Asia and Obama‟s New Trade Initiative”, ISAS Brief No. 269, 25 February, 2013.

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ISAS Brief No. 274 – 28 March 2013 469A Bukit Timah Road #07-01, Tower Block, Singapore 259770 Tel: 6516 6179 / 6516 4239 Fax: 6776 7505 / 6314 5447 Email: isassec@nus.edu.sg Website: www.isas.nus.edu.sg

Afghanistan’s Economic Transition: Path to Long-Term Stability 1

Shanthie Mariet D'Souza

Abstract Much of the discourse on inteqal (transition) in Afghanistan has focused on the numbers and capacities of the Afghan security sector tasked to repulse insurgent onslaughts. Civilian capacity building, economic opportunities, trade, transit and investment that would potentially change the narrative of Afghanistan from being an aid-dependent state to a selfsustaining economy, has received much less attention. As Afghanistan traverses a challenging path, the economic component will be critical to shore up Afghanistan’s institutional capacities and bring in long-term stability.

The inteqal process assumes that Afghanistan will remain an aid-dependent state, in need of international financial assistance to sustain its economy, security and development initiatives for at least another decade. However, the dwindling financial assistance to Afghanistan has given rise to concerns about the international commitment beyond 2014. Contrary to Afghan 1

Dr Shanthie Mariet D‟Souza is a Research Fellow at the Institute of South Asian Studies (ISAS), an autonomous research institute at the National University of Singapore. She can be contacted at isassmd@nus.edu.sg. The views expressed in this paper are those of the author and do not necessarily reflect those of ISAS. The author‟s views and findings are based on her interactions, discussions and interviews with serving and former ministers, potential presidential contenders, government officials, members of think tanks, international organisations, non-governmental organisations, women‟s groups, entrepreneurs and local people during her field visits to Afghanistan between May 2007 and July 2012.


government's November 2011 estimate2, it requires US$120 billion (at the rate of US$10 billion per year) in aid in the post-2014 period, through 2025. At the Tokyo summit in July 2012, however, international community promised to give a meagre US$16 billion through 2015 to build its economy and make necessary reforms. Even the development aid from US, the largest donor, has dropped from US$3.5 billion in 2010 to about US$2 billion in 2011. Aid to support democracy, governance and civil society dropped by more than 50 per cent and from US$231 million to US$93 million and the allocation of support for "rule of law" dropped from $43 million to $16 million.3 In 2012, the World Bank warned that such a drop in aid-giving “could lead to major macroeconomic instability and serious socioeconomic consequences.” The full impact of the shrinkage on Afghanistan‟s economic growth, fiscal sustainability and service delivery will probably not be felt until after 2014. However, it is imperative to shore up Afghan state efforts to compensate for such shrinkage of external support, by way of exploring avenues for revenue generation, trade, foreign investment and development of indigenous economic base. Each of these is a huge challenge given Afghanistan's current state of economic growth. The World Bank‟s 2012 “Doing Business” report ranked Afghanistan at 168 in a list of 185 economies for the ease of doing business4, a decline of six positions from the 2011 ranking. While the second Bonn conference on „Afghanistan and the International Community: From Transition to the Transformation Decade‟ held in December 2011 set an extended period of international assistance, 2014-24 and termed it the „transformational decade‟, the contours of international assistance and engagement remain highly unclear. A series of international conferences seems to miss the crucial point that stabilising Afghanistan by devising quick-fix solutions and setting arbitrary timelines do not meet the needs on the ground. A successful transition is contingent on the continued, albeit slow, growth in the administrative capacity of government ministries, and on improvements in local governance, civil service, development and employment opportunities at the provincial and district level. With the intensification of the search for the Afghan „end-game‟, a regional consensus by forging greater cooperation is seen as a way out of the imbroglio.5 One way of building a 2

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Towards a Self-Sustaining Afghanistan, An Economic Transition Strategy, Speech of President Hamid Karzai, Bonn Conference, Government of the Islamic Republic of Afghanistan, 29 November 2011, http://www.auswaertigesamt.de/cae/servlet/contentblob/604482/publicationFile/162938/Economic_Side_Event_Towards_a_Self_Sus taining_Afghanistan.pdf. Accessed on 24 March 2013. Julian Borger, „Afghanistan conference promises support after troop withdrawal‟, The Guardian, 5 December 2011, http://www.guardian.co.uk/world/2011/dec/05/afghanistan-conference-support-troopwithdrawal. Accessed on 21 March 2013. Doing Business, World Bank, June 2012, http://www.doingbusiness.org/rankings. Accessed on 23 March 2013. Haroun Mir, „Is Regional Consensus on Afghanistan Possible?‟ in Shanthie Mariet D‟Souza (ed.) Afghanistan in Transition: Beyond 2014? (New Delhi: Pentagon Press, 2012).

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cooperative regional architecture is through greater trade and transit, investment opportunities, including energy pipelines. The Istanbul Conference for Afghanistan: Security and Cooperation in the Heart of Asia, held on 2 November 2011, provided a new agenda for regional cooperation, by emphasising on a regionally owned process led by Afghanistan, with support and collaboration from its near and extended neighbours which would make this effort „sustainable and irreversible‟ in the long-term.6

Attempts have also been made to link the prospect of Afghan's self-reliant economic future to its resource potential. The discovery of huge reserves of minerals and natural gas has raised hopes of possibility of revenue generation, foreign investment and employment opportunities. To what extent these strategies can overcome the need to bring in security remains to be seen.

The Afghanistan International Investment Conference of 30 November 2010 held in Dubai and the Brussels Euro Mines Conference of 26 October 2011, aimed at promoting economic investment in Afghanistan, made valuable recommendations, but they essentially put the onus for investment on actions to be initiated by Afghanistan. The 28 June 2012 Delhi Summit, taking into consideration the realities and needs on the ground, explored near-term and longterm possibilities in the current environment and at the same time, sought a mechanism to address the needs of foreign and private sector investors and the government of Afghanistan. This is reflective in the efforts geared to catalyse investment decisions and forge crosscountry and international partnerships to promote cooperation and greater collective confidence.

The long-term economic benefits, revenue and employment opportunities arising out of investment, trade and transit would help build „constituencies of peace‟. The TurkmenistanAfghanistan-Pakistan-India (TAPI) pipeline is another regional collaborative venture that has enormous potential of bringing in economic dividends through mutually beneficial regional cooperation. The forging of a greater stake and regional commitment to rebuilding Afghanistan through economic opportunities, foreign investment and transit potential – by capitalising on Afghanistan‟s location, energy and mineral resources in a mutually interdependent regional framework – could pave the way out of the stability-instability paradox.

Despondency, however, would be premature. A unified vision and effort of putting Afghans in the lead for rebuilding their state and society, which remains the missing link in the decade-long international engagement in Afghanistan, needs priority emphasis. It is critical to set realistic timetables on drawdown based on conditions on the ground. Shoring up the state‟s capacities and institutions before the drawdown date of 2014 through long-term

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Author‟s interview with Javed Ludin, Deputy Foreign Minister, Government of Afghanistan, Kabul, 30 June 2012.

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international commitment, provision of economic opportunities and greater regional integration would remain the key to achieving durable peace and stability in Afghanistan.

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ISAS Brief No. 275 – 5 April 2013 469A Bukit Timah Road #07-01, Tower Block, Singapore 259770 Tel: 6516 6179 / 6516 4239 Fax: 6776 7505 / 6314 5447 Email: isassec@nus.edu.sg Website: www.isas.nus.edu.sg

The Political Elevation of Narendra Modi Ronojoy Sen1

A little over two months ago, on 22 January 2013, the President of the Bharatiya Janata Party (BJP), Nitin Gadkari, who was under a cloud of corruption allegations, was hustled out to make way for a party veteran and former party chief, Rajnath Singh. It was during Singh’s earlier tenure as president of India’s main opposition party from 2005-2009 that Gujarat Chief Minister Narendra Modi was dropped from the BJP’s Parliamentary Board, the party’s apex decision-making body. One of the reasons given then for the dropping of Modi was that there was a conflict of interest between being a state chief minister as well as being on the panel to select election candidates. The real reason, many felt, was that some senior BJP leaders had felt threatened by Modi. But this time around, Singh really had no choice but to re-induct Modi into the party’s parliamentary board. Ever since Modi won re-election as Chief Minister of Gujarat for a third term in end-2012, the BJP’s rank and file have been clamouring for Modi to be projected as the party’s prime ministerial candidate in the next general elections scheduled for 2014. It seems, however, the decision to bring back Modi to the BJP’s Parliamentary Board was not entirely unanimous. There is evidence to suggest that there were some within the BJP who were wary of the appointment of Modi in the fear of being upstaged. But the mood among the party cadre was such that Modi’s induction was a certainty. This was not only because of his remarkable electoral success in Gujarat but more due to the recognition that Modi is the party’s most popular and saleable face. Significantly Modi’s ascendancy was reflected in 1

Dr Ronojoy Sen is Visiting Senior Research Fellow at the Institute of South Asian Studies (ISAS), an autonomous research institute at the National University of Singapore. He can be contacted at isasrs@nus.edu.sg. The views expressed in this paper are those of the author and do not necessarily reflect those of ISAS.


other appointments. Modi’s confidant and former Gujarat Home Minister, Amit Shah, who is facing criminal charges, was appointed party general secretary. There are at least two other general secretaries who are believed to have held on to their post due to Modi’s backing. The BJP President, who himself is no mass leader, has had to play a careful balancing act so as to not upset the different factions within the party. The veteran leader and former Deputy Prime Minister, L K Advani, and the Leader of the Opposition in the Lok Sabha (Lower House of Parliament), Sushma Swaraj, have got some of their candidates in. But what is noteworthy is the induction of new blood, with 32 of the 51 in the party’s new line-up of office-bearers being fresh faces. The big question of course is to what extent does Modi’s elevation in the party hierarchy boost his chances of becoming the party’s prime ministerial candidate for the next general election? While the BJP is not going to name a candidate for prime minister in a hurry, there is little doubt that the party has now given its seal of approval for Modi to move from the state to the national level. This can only fuel the ambition of Modi to aspire for the candidacy for PM. Modi is well aware that he is by far the most popular national leader in the BJP, and he has been positioning himself as prime-minister material, though without ever publicly saying so, over the past few months. At the two-yearly ‘Vibrant Gujarat’ summit held in January 2013, he was the toast of India’s corporate captains, including Ratan Tata, Mukesh Ambani and Anand Mahindra. This of course was not something new, as Modi has traditionally been a favourite of corporate India. A striking feature of the summit, however, was the attendance of a number of delegates from the United States, Britain, Canada and Japan. Many foreign governments, including the US, that were wary of associating with Modi after the 2002 riots in Gujarat have now softened their line. A month later, Modi was at the noted Shri Ram College of Commerce in Delhi talking to a packed audience of students about his vision for India and winning brownie points. There is little doubt that none of the prime ministerial contenders within the BJP can match Modi in terms of popularity. Advani’s moment has passed while Sushma Swaraj and the party’s Leader of the Opposition in the Rajya Sabha (Upper House), Arun Jaitley, are not mass leaders. Indeed recent national surveys have shown Modi to be the most popular candidate for India’s next prime minister with a quarter of voters backing him. The Congress’ Rahul Gandhi is a distant second. That does not, however, mean that Modi is a shoo-in for the BJP’s prime ministerial candidate. Besides his rivals within the BJP who are apprehensive of his ability to singlehandedly grab the limelight, the Rashtriya Swayamsevak Sangh (RSS), the ideological brains trust of the BJP, is wary of the larger-than-life persona of Modi which could threaten to swamp the Sangh parivar (the saffron brotherhood comprising the BJP, RSS and likeminded Hindu nationalist organisations). The shadow of the Gujarat riots of course continues to hang over Modi. A large number of Muslims still do not trust him, making him a difficult candidate to manage a coalition government which is what general elections inevitably throw 2


up in India these days. A case in point is BJP’s ally in Bihar, Nitish Kumar, for whom Muslims are a crucial part of his electoral math. Finally, there are doubts as to how far Modi’s charisma will travel beyond the Hindi-speaking belt. Modi’s elevation is significant in that he has forced his way back to the BJP’s top decisionmaking body. He will also play a much greater role in the party’s national politics. The next few months, beginning with the tricky Karnataka polls in early May, will give an indication of Modi’s popularity outside his comfort zone.

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ISAS Brief No. 276 – 11 April 2013 469A Bukit Timah Road #07-01, Tower Block, Singapore 259770 Tel: 6516 6179 / 6516 4239 Fax: 6776 7505 / 6314 5447 Email: isassec@nus.edu.sg Website: www.isas.nus.edu.sg

Politics in Pakistan: The Judge and the General Iftekhar Ahmed Chowdhury1

Introduction There is never a dearth of excitement in Pakistani politics. This extends to even the period of the brief caretaker regime, which lasts for around three months, and whose sole objective is to hold national elections. This is a model borrowed from Bangladesh. To be fair, Pakistan has managed to use it more effectively than the country it drew upon, which has since discarded it. But the political turmoil in Bangladesh is evidence that it has not been able to replace it with any workable mechanism on which all sides have consensus. It is important to agree on the method of holding elections in societies where political differences can and do often take violent forms. In Pakistan, this hurdle of an agreed method has at least been cleared. Pakistani caretaker governments are often low-key. This is not to say that the business of governance is not carried out. The Army continues to be locked in a severe conflict with the Taliban in the frontiers of Khyber Pakhtunkhwa. The sectarian activists are continuing with their bombings of largely innocents. In a polity, so seemingly ungovernable, it is surprising how many people are attracted by the prospects of power (or perhaps its lucrative lure). The Pakistan People’s Party (PPP), the outgoing ruling party of President Asif Ali Zardari, will be fighting Nawaz Sharif’s Pakistan Muslim League, the presumptive front runner, with its back to the wall. Other hopefuls include the former cricketing star, Imran Khan (leading his 1

Dr Iftekhar Ahmed Chowdhury is Senior Research Fellow at the Institute of South Asian Studies (ISAS), an autonomous research institute at the National University of Singapore. He is a former Foreign Advisor (Foreign Minister) of Bangladesh, and he can be contacted at isasiac@nus.edu.sg. The views expressed in this paper are those of the author and do not necessarily reflect those of ISAS.


Tehreek-e-Insaf), though it is hugely doubtful if the heartthrob he creates among fans is sufficient to catapult him into office. But he will win some seats, and could be kingmaker if he would join either Nawaz Sharif or Zardari, but he has said he would not. In a way it could be positive in that he could provide Pakistan with a strong and effective parliamentary opposition. As of now, the secular parties appear to be a bit on the back-foot, with the rightwing ones, such as the PML (Nawaz) profiting from the burgeoning religiosity that appears to be, though ever so gradually, enveloping that society.

Piety Test for Polls Elections are due on 11 May and preparations to hold them are afoot. This time the candidates are having to cross the hurdle of piety test more than on any other occasion before. Election officials are taking the constitutional clauses that call for members of legislatures to be ‘good and pious’ very seriously. Those who pray five times a day are preferred over those who don’t. The former Foreign Minister, Hina Rabbani Khar, is reportedly having to produce her marriage certificate. Ayaz Amir, the journalist, found his electoral application rejected for having referred in his writings to the ‘holy waters of Scotland’ (alcohol consumption is an absolute no-no, at least publicly, in Pakistani political circles, though in the drawing rooms of the upper reaches it is said to be available in abundance) which the fiercely chaste election officials correctly assumed to be neither ‘holy’ nor ‘water’ (and in Pakistan, more likely to be ‘local’ or desi than from Scotland). But the biggest surprise awaited the returned military ruler, Pervez Musharraf. His reception back home, after a self-imposed exile of over four years, was far more tepid than the homecoming of the Biblical prodigal son. Few fattened calves were slaughtered in celebration! He called his new party All Pakistan Muslim League, not at all being innovative about the name (in Pakistan, generals who have been presidents have tended to name their parties ‘Muslim League’ hoping to derive a modicum of legitimacy from the linkage, if in name only, to the political platform of the Father of the Nation Quaid-e-Azam Mohammad Ali Jinnah). While the government had more or less ignored the general’s return; not so his nemesis, Chief Justice of the Supreme Court, Iftikhar Muhammad Chaudhry.

The Silly Season In Pakistan, if the generals have been active in politics, the judges have not lagged far behind (Indeed, the Prime Minister of the caretaker government is a judge). In the past the judiciary had, time and again, left its imprint on Pakistani politics. Even the Army had used it to justify seizure of power (A case in point is the famous ‘Dosso versus State’ ruling in 1959 that accorded the seal of approval to Field Marshal Ayub Khan’s Martial Law, and whose findings were based on Kelson’s theory of legal positivism). The judges suddenly framed charges of treason against Musharraf, and also blocked his departure from the country. This 2


could be potentially dangerous. A charge of treason carries with it the death sentence, and in this country there has been precedence of former heads of government confronting dire consequences of judicial retribution. This has provided unforeseen excitement in these somewhat politically staid pre-election weeks (bit like the English ‘silly season’ when parliament is not in session). The military will not be overly concerned with Musharraf’s fate. First, if the policy decision is not to interfere in politics, why begin with Musharraf, whose popularity obviously is nothing much to write home about. Second, it is said that the advice the military had proffered him was not to return at all. He remains a constant reminder to the public of military intervention. And third, his pro-American predilections are not shared by today’s Pakistani Army. So the military would probably have liked this old soldier to fade away.

Conclusion Still, the trial of a former Chief of Army Staff in a civilian court could be perceived as a bit of loss of face for the military. Then, there is Musharraf’s Saudi Arabian backing. For instance, it is rumoured that the Saudis have hinted to Nawaz Sharif that a steel mill and a shopping mall in Jeddah that the latter is said to own could suffer legal complications should Musharraf be ‘harmed’. It is also quite possible that Musharraf may win for himself a seat in Parliament from Chitral. So the ideal solution to the imbroglio would be to send a strong message that the judiciary in Pakistan now takes an unbending position against extra-constitutional military interventions, and then, in the end, to let Musharraf go. But, even then, a rational outcome of any political crisis in Pakistan is not always an absolute certainty. So, one can never tell! Musharraf has, in the past, claimed courage in terms of a major personal attribute ‘In the Line of Fire’ (title of his autobiography). We are perhaps about to see soon if his return was a courageous act, or merely a foolhardy one.

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ISAS Brief No. 277 – 8 May 2013 469A Bukit Timah Road #07-01, Tower Block, Singapore 259770 Tel: 6516 6179 / 6516 4239 Fax: 6776 7505 / 6314 5447 Email: isassec@nus.edu.sg Website: www.isas.nus.edu.sg

Pakistan Goes to Polls: Imran Khan’s Tumble and the Youth Surge Shahid Javed Burki1

The unexpected has happened as Pakistan prepares to hold the next general election on 11 May 2013. Early in the evening of 7 May, Imran Khan, the rising star in Pakistani politics, suffered a fall in Gulberg, Lahore, a high-income constituency in the capital of the country’s Punjab province. He fell while being lifted by a forklift on to a speaking platform. First carried on people’s arms to his Sports Utility Vehicle and then transferred to an ambulance, Khan was eventually taken to Shaukat Khanum Hospital. He was attended there by a team of senior doctors. They used CT scans and X-Rays to determine the extent of injuries he had suffered. He did not have fractures in his skull but one of his vertebrae was damaged. He was advised that any physical activity for several weeks would not be possible. His political rivals sent messages of sympathy and offered prayers for his full and rapid recovery. President Asif Ali Zardari sent flowers to his bedside. Mian Nawaz Sharif of the Pakistan Muslim League 1

Mr Shahid Javed Burki is Visiting Senior Research Fellow at the Institute of South Asian Studies (ISAS), an autonomous research institute at the National University of Singapore. He can be contacted at sjburki@yahoo.com. The views expressed in this paper are those of the author and do not necessarily reflect those of ISAS. During a professional career spanning over half a century, Mr Burki has held a number of senior positions in Pakistan and at the World Bank. He was the Director of China Operations at the World Bank from 1987 to 1994 and the Vice President of Latin America and the Caribbean Region at the World Bank from 1994 to 1999. On leave of absence from the Bank he was Pakistan’s Finance Minister, 1996-97.


(Nawaz), or PML(N), suspended his campaign for a day. The hospital where Khan was treated and kept under observation was built by him in honour of his mother, Shaukat Khanum, who had died of cancer at an early age. It offers free care to the poor and stands as a symbol of a politician’s commitment to citizens’ welfare. The hospital is now seen once again as a reminder to the country’s youth of what this leader could do for them if they were to hand him the reins of power in the elections on 11 May.

A Political Force His injuries sent a shock wave through the ranks of his supporters – mostly young people who had turned this 60-year-old hero of the cricket world into a forceful politician. His associates announced that all his planned political engagements in the city of Lahore had been cancelled. It is unlikely that he will hit the campaign trail again before the election. Only time will tell how this accident will affect the elections results. There could by a sympathy vote, with more people than originally expected going to the polls now. We will know for sure what the impact of Imran Khan’s tumble from the speaker’s platform was, after the elections are held and detailed data are made available by the Election Commission. The electoral mood seemed to be moving in his direction when the accident happened. The author’s discussions with several senior leaders of the traditional parties showed their anxiety. Imran Khan’s hectic pre-election campaigning and the response he was getting were unsettling the established parties. While the first-past-the-post electoral system might still win them many seats in the national and provincial assemblies, they were no longer sure how the youth would react if the election results did not reflect the enthusiasm they had for their man, Imran Khan, and his party, the Pakistan Tehreek-e-Insaf (PTI). The experience of 1977 was not forgotten when a massive victory by Zulfikar Ali Bhutto’s Pakistan People’s Party (PPP) brought people out onto the streets. The people had expected a close result. Bhutto was removed from office and the military took over power. By now, the Pakistani youth has also seen the power of the street in the Arab Spring of 2011 and are not likely to let an opportunity they see for bringing about change simply slip. Pakistan will now be electing 272 Members of the National Assembly and numerous others as members of the four provincial assemblies. The exact turn-out will be known after the results are tabulated and released by the Election Commission. Given the enormous interest generated by the latest national and provincial polls, it is expected that the turn-out will be higher than that in 2008, the last time a general election was held. It is also expected that there will be a larger proportion of young voters casting ballot this time. Many of them will be voting for the first time and their preferences will have a significant impact on the result.

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Pakistan, with 190 million people, has one of the youngest populations among all countries. The median age is only 22 years which means that 95 million people are below that age. Slightly more than 60 per cent of Pakistan’s population is below the age of 30 years. A significant number of them will be voting for the first time. It is the electorate’s relative youth that makes the 2013 election particularly significant not only for Pakistan but for other countries in the Muslim world. All these countries have young populations and their political activism will change the political landscape of this part of the world. This will occur because of the political, economic and social preferences of these cohorts. What does the youth want to result from the latest elections in Pakistan?

A Youth Agenda for Change It is clear from the way the young have participated in the preparations for the elections that they have several clear preferences. They want a government that is answerable not only to the elected parliament but also under a system of accountability that would ensure high-quality of governance. While aware of the fact that ‘petty corruption’ is entrenched in the Pakistani economic and social systems, they wish to see an end to ‘rent-seeking’ at high levels. They want Pakistan to pull back from the edge of economic abyss at which it has been standing for the last several years. They want the country’s economy to match the growth rates of other South Asian states. They want the government to attend to the basic needs of the people. They want to bring such disaffected regions as Baluchistan and south Punjab into the mainstream of Pakistani politics and economics. They want the military out of politics. Most of them want a clear separation between religion and the affairs of the state. And they want the country to fashion its external relations in a way that suits its interests rather than those of the world’s large powers. How has the country’s electorate arrived at this stage in the evolution of its thinking on economic, political and social issues? The May 2013 elections constitute a major step forward for the evolution of Pakistan’s political order. It has firmly established a party-based political system in which the three mainstream organisations will have national rather than regional presence. The Pakistan People’s Party, the Pakistan Muslim League (Nawaz) and Imran Khan’s Pakistan Tehreek-e-Insaf may have strong provincial roots or roots in newly-politicised groups – the PPP in rural Sindh, the PML(N) in urban Punjab, the PTI among the youth in the urban areas across the country. But these three parties have assiduously attempted to create a national presence for themselves. This will make it easier to make national economic and social policies. The strong challenge from the Islamic extremist groups has cost hundreds of people their lives but these groups have not succeeded either in disturbing the political process or in convincing a large segment of the population that liberal democracy is not meant for a country such as

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Pakistan. A large turn-out of voters on 11 May will confirm the belief of the vast segment of the population that participatory democracy is the only way forward. It is the political activism of the youth that encouraged – perhaps even forced – the main political parties to lay out in some detail as to how they will govern if they are given the reins of power by the people. Such detailed manifesto-making is a new development in Pakistan’s still underdeveloped political culture. What can be an even greater departure from the norm are the signs that the people – in particular those operating outside the assemblies – will hold the parties responsible for the promises they have made to get the people’s vote. It has been argued by many that what counts in Pakistan are links with members of the communities to which the candidates belong. This makes the elected representatives highly focused on very narrow community interests. The May 2013 elections are likely to break away from that tradition; and starting with the more developed parts of the country, the performance of parties will begin to mean more than community (baradri) alliances. The youth surge will ensure that the governments that take power at the federal level as well as in the provinces (after the current election) pay attention to the areas that are of real concern to the younger activists. The pressure from the youth will also alter Pakistan’s external orientation. An insecure generation or two of leaders sought security from a deep association with the United States. This move was led by military men who wanted to build the armed forces to balance rival India’s continuously increasing strength. Moving in that direction, they had turned their back on South Asia and its regional history and culture. Another group of leaders had gone to Saudi Arabia to cleanse the Pakistani Islam by adopting the one practiced in some parts of the Arab world. Salafism was to replace Sufism. Imran Khan has argued against both moves and promised to build a “naya” (new) Pakistan on the country’s own soil. Regardless of whether the latest elections will give Khan a prominent seat at the policymaking table, the youth surge he has catalysed will bring about fundamental changes. The centre of gravity in the political system has moved from the old-and-tried to the young-and-the-aspiring. Imran Khan’s tumble will only add to the pace of change. .....

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ISAS Brief No. 278 – 10 May 2013 469A Bukit Timah Road #07-01, Tower Block, Singapore 259770 Tel: 6516 6179 / 6516 4239 Fax: 6776 7505 / 6314 5447 Email: isassec@nus.edu.sg Website: www.isas.nus.edu.sg

Pakistan Elections 2013: Some Countdown Reflections Riaz Hassan1 On Saturday 11 May 2013, 82 million Pakistanis would be eligible to vote in the general election to elect 272 members of national parliament. In most modern countries well-crafted opinion polls can now reasonably accurately predict the outcome of elections. But this is not so in the case of Pakistan. There are two main reasons for this. First, according to the latest voting-intention survey, only 50 per cent of eligible voters are likely to vote for one of 4,670 candidates contesting the election. Secondly, in most modern countries, voting behaviour is determined by three Ps: party, policy, personality. In Pakistan voting behaviour is largely determined by personality of the candidate and his/her party. In a layered society like Pakistan, personality is often the proxy for ethnic, tribal and sectarian affiliations. Notwithstanding these factors, is it possible to identify a broad contour of the election outcome? In the following, I attempt to do that. Given the dominant role of personality, the main actors in the forthcoming elections are: Nawaz Sharif of Pakistan Muslim League (Nawaz) or PML(N), Imran Khan of Pakistan Tehreek-e-Insaf (PTI) and Asif Ali Zardari of Pakistan People’s Party (PPP). The other actors belong to regional Muttahida Quami Movement (MQM) in urban Sindh, Awami National Party (ANP), Jamat-e-Islami (JI) and Jamiat Ulema-e-Pakistan in Khyber Pakhtunkhwa (KPK) and urban Sindh. As far as name-recognition goes, Nawaz Sharif, Imran Khan and Asif Ali Zardari have national profiles. Analysis of their support bases (in this context) shows that Sharif, at 66 per cent, has the highest favourable ratings, followed by Khan at 60 per cent. Zardari is viewed by a whopping 83 per cent Pakistanis unfavourably. These perceptions are translated into support for their respective parties. At the national level, Sharif and his PML(N) are supported by 41 per cent, 1

Professor Riaz Hassan is Visiting Research Professor at the Institute of South Asian Studies (ISAS), an autonomous research institute at the National University of Singapore. He can be contacted at isasriaz@nus.edu.sg and riaz.hassan@flinders.edu.au. The views expressed in this paper are those of the author and do not necessarily reflect those of ISAS.


PPP by17 per cent and PTI by 14 per cent Pakistanis (All these estimate have a margin of error between +/- three to five per cent). Their support also has important regional base. PML(N) has the highest support in Punjab and moderate-to-low in KPK. The PPP has the highest support base in inner Sindh and moderate-to-low support in urban Sindh and south Punjab; and PTI has the highest support base in KPK and moderate-to-low in urban Sindh, north and western Punjab. MQM’s main support base is in urban Sindh, while JUP and JI have moderate support bases in KPK. If this support base translates into actual votes on 11 May, then PML(N) is likely to end up with the largest number of parliamentary seats compared to the other parties. My analysis of these trends suggests that PML(N) will get between 112 to 120 seats, PPP between 54 to 60 and PTI between 50 to 70 seats in the national parliament. The other seats will be divided between MQM with probably 15 to 18 seats and ANK, Jamiat Ulema-e-Islam (JUI) and JI with 12-15 seats. The situation in Baluchistan is very unsettled and it is difficult to know the likely distribution in that province which has 14 seats. Beside the name-recognition factor, support for PML(N) is based on its effective governance of Punjab, the largest Pakistani province, over the past five years. This is most visible in improvements of roads and urban infrastructure, which should deliver good election dividends for the party. The PPP will lose support because of its appalling failure in addressing economic, energy and security issues as the ruling party over the past five years and also the universal disapproval of its political face: President Zardari. It will maintain some electoral presence in south Punjab because of its support among the Shias and its alliance with leading landlords and the Pir families. In rural Sindh it will be supported as a Sindhi party because of its affiliation with the Bhuttos.

Imran Khan Factor! PTI has emerged as the ‘unknown factor’ in this election because of the surging popularity of its leader Imran Khan. He is a nationally revered cricketing hero. His popularity has been augmented by his trenchant criticisms of Pakistani government and leaders and by his passion for the country’s future. These have resonated among Pakistanis, especially the young, and lifted his profile and the political fortunes of PTI. The leadership of PML(N) is very concerned about Imran Khan’s rising political fortunes, as it is likely to dilute its political capital. The opinion polls show that PTI will get support in central and northern Punjab, KPK and Karachi by attracting the wavering PPP and PML(N) supporters, especially the young. On the minus side PTI is facing problems in KPK where a vicious campaign led by the JUI leader Maulana Fazal-ur-Rahman is underway against Imran Khan who is accused of having ‘Jewish connection’. This has been outlined by Australian political scientist Samina Yasmeen in an article on 8 May. Imran Khan is accused of having links with ‘Jewish lobby’, implying that PTI is getting financial support from the Goldsmith family of Imran Khan’s ex-wife. The aim of this campaign is to undermine Imran Khan’s credibility as a Pakistani leader. There is no evidence that this campaign is affecting Imran Khan’s and PTI’s standing elsewhere, because the mainstream national media has not bought into it. In the Punjab, however, PTI’s credibility is challenged for its not having any political capital to show. It is plausible that Imran Khan’s accident and injuries on 7 May, requiring his hospitalisation, will attract sympathy vote. But even before the accident, his popularity was not increasing; and importantly 28 per cent of Pakistanis in the latest Pew survey reported they ‘did not know’


him. This was the highest “don’t know” response among the three main leaders. These factors further make it difficult to assess Imran Khan’s and PTI’s likely impact on the election outcome. It is highly improbable that PTI will get more than the seats I have mentioned above. It is also unlikely that PTI will get a majority in the provincial assembly of KPK as predicted by some analysts. Thus the most likely outcome of the election will be a hung parliament, with PML(N) with most seats but not an outright majority, followed by smaller number of seats for PTI, PPP and MQM and other regional parties. This will mean a coalition government led by PML(N) with two other parties, one of which may be PTI, because unlike MQM, PPP and ANP, PTI has openly campaigned for the establishment of an Islamic welfare state which is compatible with the conservative, Islamist and anti-US rhetoric of PML(N). Such a prospect will create a real dilemma for Imran Khan, as he has persistently rejected the idea of joining a coalition with the existing political parties. The end result may not be a stable political situation but it will reflect the social and political realities of modern Pakistan.

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ISAS Brief No. 279 – 13 May 2013 469A Bukit Timah Road #07-01, Tower Block, Singapore 259770 Tel: 6516 6179 / 6516 4239 Fax: 6776 7505 / 6314 5447 Email: isassec@nus.edu.sg Website: www.isas.nus.edu.sg

The Reincarnation of Nawaz Sharif: Pakistan’s Deepening Democracy1 Iftekhar Ahmed Chowdhury2

Introduction Barring an act of God, Nawaz Sharif is poised to become Pakistan’s Prime Minister for the third time round. Each reincarnation implies changes, and so will this one. We are likely to see in him a seasoned politician, chastened by experience, matured over time and also hardened by adversity. His Pakistan Muslim League (Nawaz) [PML(N)] has won sufficient number of seats of the 272 elected to form government, albeit with the support of some eager independents. There are 70 more seats in the Lower House of the Parliament, reserved for women and minorities, which will be proportionately divided among the parties elected, which means PML(N) will walk away with the major share. He has already held out the olive branch to all others in the political landscape, including the ‘old-new kid on the block’ Imran Khan and his Tehreek-e-Insaf, who is second in the pecking order of winners. In doing so, Nawaz Sharif has displayed much wisdom and sagacity; for the party worst off in the polls, the Pakistan People’s Party (PPP) of Asif Ali Zardari, still has a 1

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This Brief is the first in a planned series of ISAS papers focused on Pakistan and its historic opportunity at this time. Dr Iftekhar Ahmed Chowdhury is Senior Research Fellow at the Institute of South Asian Studies (ISAS), an autonomous research institute at the National University of Singapore. He is a former Foreign Advisor (Foreign Minister) of Bangladesh, and he can be contacted at isasiac@nus.edu.sg. The views expressed in this paper are those of the author and do not necessarily reflect those of ISAS.


majority in the Senate and should it wish to, can queer the pitch for Nawaz with regard to major legislations. The situation may not be altogether bad because this will entail the need for cooperation and understanding across the broad political spectrum, which might have positive ramifications for Pakistan’s divisive politics.

Priorities Perhaps more than the principal victor, Nawaz Sharif, it is the people of Pakistan who deserve to be congratulated on this historic election. They turned up at the polling booth in droves, over 60 per cent of the electorate, the highest numbers, it is said, since 1970, the last elections before the breakup of the country and the de-linkage with Bangladesh. By their enthusiasm the voters were demonstrating incredible physical courage and also commitment to democracy, for they were braving the very real Taliban threats. The Taliban had declared the elections ‘un-Islamic’, vowed to disrupt them, and targeted the more secular parties with their bombing spree. This list included the PPP, and excluded the parties of Nawaz Sharif and Imran Khan; but even if the PPP could have campaigned unimpeded, they were unlikely to win. Thus Pakistanis showed a huge appetite, and desire, for a return to normalcy, and democratic norms and values. A logical corollary is that Nawaz Sharif will take this into account, and focus on the people’s immediate needs. So his top priorities are likely to be domestic. Four issues come to mind: First, energy shortages; Pakistanis have been suffering severe power-cuts, sometimes 18-20 hours a day, adversely impacting not just urban life, but also industry and rural agriculture; second inflation, hovering between 11 per cent and 25 per cent in an economy that appears to be in a free-fall; third corruption, currently eroding the very foundations of society: And fourth, insurgency, not just of the Taliban and religious Salafist extremists, but also in the troubled province of Balochistan. These are no mean tasks and Nawaz Sharif’s capabilities will be severely tested. But one must bear in mind the PML(N), led by his brother Shahbaz Sharif, has been able to deliver reasonably good governance in the Punjab, Pakistan’s largest province which they have been ruling, and the Punjab has amply rewarded them in the polls through an overwhelming number of votes.

Managing the Military It is true that a modicum of mistrust has pervaded the relationship between Nawaz Sharif and the military in the past. Nonetheless, it is also true his closeness to a former military ruler, General Zia-ul-Haq had led some to see him as almost a protégé of the dictator. But he and yet another military strongman Pervez Musharraf were at daggers drawn. Indeed it was Musharraf who had dislodged him in a military coup fourteen years ago, and treated him shoddily forcing upon him exile to Saudi Arabia. It will require a Christ-like disposition on the part of Nawaz Sharif to forgive Musharraf – a quality which, even with all the goodness


he appears to have mustered, he may not be capable of; but Musharraf is no longer a factor in Pakistani politics and if not forgiven, can be safely ignored. Happily over the years both Nawaz Sharif and the military have matured, and they are likely to be out of each other’s hair. Moreover, during the last several years the Army has displayed pronounced proclivities in favour of non-interference in politics. To make a point of commitment to democracy, the Chief of Staff General Ashfaq Kayani went to vote in ceremonial regalia, rather than mail his, as army chiefs in the past were wont to do. Of course, the military will claim its share of national resources, which it is likely to be given, and a say on matters of security and foreign policy, which could be a subject of some negotiations with the civilian government, and in which Nawaz Sharif’s mettle is likely to be tested.

The Rise and Fall of Imran Khan Doubtless, Imran Khan’s rise has been meteoric, though not sufficient to be catapulted into federal governance. He had hoped to do better. His physical fall off a forklift during a rally, and consequent hospitalisation, made global news and earned him considerable national sympathy, some of which may have been translated into votes. But his Tehreek-e-Insaf has done well enough to form government in the frontier region of Khyber Pakhtunkhwa. There Imran has bested the arguably more secular Awami National Party. The Taliban has shown a kind of favouritism with Imran that can be both his strength and weakness. Imran Khan has a strong dislike for US drones, which he has trenchantly criticised, but he and Nawaz Sharif will have to agree on the best method to counter the insurgency in the province and in the tribal areas bordering Afghanistan.

Nawaz’s Relations with the West and India Undeniably, the fact that Nawaz Sharif had publicly postured against the so-called US ‘War on terror’ also helped buttress his electoral position. He was able to successfully tap on the palpable and widespread public sentiments in Pakistan in this regard. But to be able to work with the West is a necessity for Pakistan; and as necessity is the mother of invention, modus vivendi with the US and the West would have to be invented. Given the plans of US-NATO withdrawal from Afghanistan in 2014, non-cooperation between Pakistan and the West is not an option. Indeed Nawaz Sharif’s good working relations with the Taliban can be an asset. But it can also rapidly become a liability, if it emboldens the insurgents in Afghanistan, because there is actually no firewall separating the Taliban in these two countries. What divides them are but lines in the sand or rocks. With regard to India, Nawaz Sharif must endeavour to alter the current ‘India narrative’ in Pakistan, and stop viewing India as an existential threat. The Pakistani military has been publicly saying for some time that the primary perceived enemy is not India, but the


insurgents. If the military is serious, this could be a huge shift. India will also need to take initiatives, and Prime Minister Manmohan Singh’s prompt message of congratulations to Nawaz Sharif was a good start. One reasonable way forward is to address the smaller issues first, that is the ‘low hanging fruits’, thus creating an appropriate atmosphere for tackling larger issues in due course. That is to say the ‘K’ word (Kashmir!) should not be allowed to overshadow everything, though this is not in any way to limit its importance.

Conclusion The world cheers Pakistan’s deepening democracy. The weight on Nawaz Sharif’s shoulders is heavy. But he is well-equipped to carry it, and should he require so, support from outside to discharge his responsibilities should and will be forth coming. People who had said Pakistan is tethering on the verge of a ‘failed State’ may well be proved wrong. Only time will tell!

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ISAS Brief No. 280 – 15 May 2013 469A Bukit Timah Road #07-01, Tower Block, Singapore 259770 Tel: 6516 6179 / 6516 4239 Fax: 6776 7505 / 6314 5447 Email: isassec@nus.edu.sg Website: www.isas.nus.edu.sg

Mixed Fortunes for the Congress Ronojoy Sen1

The headlines in a national Indian daily on 9 May 2013 — ‘Ecstasy in Karnataka, Agony in SC’ — summed up the Congress party’s plight quite accurately. The good news for the Congress was a convincing electoral victory in the Assembly elections in the southern state of Karnataka; the bad news, however, was the Supreme Court’s scathing criticism of the Congress-led federal government for interfering in the enquiry by the Central Bureau of Investigation (CBI), India’s federal investigating agency, into a coal scam which surfaced in 2012. The two contradictory events say something about the current state of Indian politics and also provide pointers to the clutch of state elections due later in 2013 as well as the general elections in 2014. The Congress was able to fashion its victory in Karnataka due to voter disgust with the incumbent Bharatiya Janata Party (BJP) state government which was awash in corruption scandals and had also suffered a split. Ironically, the voters in Karnataka decided to give the Congress the mandate to govern the state for five years despite the same party being battered by corruption scandals at the national level.

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Dr Ronojoy Sen is Visiting Senior Research Fellow at the Institute of South Asian Studies (ISAS), an autonomous research institute at the National University of Singapore. He can be contacted at isasrs@nus.edu.sg. The views expressed in this paper are those of the author and do not necessarily reflect those of ISAS.


The Karnataka Verdict This seemingly puzzling voter behaviour validates a claim by some political scientists that people not only vote on local issues in state elections, but also tend to vote for parties who they believe are likely to provide a stable government. This was earlier shown in Uttar Pradesh in the 2012 elections where voters rejected the national parties, which are relative lightweights in the state, to give an overwhelming mandate to a regional outfit, the Samajwadi Party, in the hope of a stable government. In the case of Karnataka the only real regional alternative was the Janata Dal (Secular), led by the father and son duo of former Prime Minister H D Deve Gowda and H D Kumaraswamy, which was identified with instability having had a history of bringing down coalition governments. Of course, there were other local factors that helped the Congress win 121 out of 224 seats in Karnataka. The governing BJP, which ended with 40 seats — down 70 seats from the 2008 elections — was significantly hurt by a breakaway party, the Karnataka Janata Paksha (KJP), floated by former Karnataka Chief Minister B S Yeddyurappa in end-2012. Though the KJP won only six seats it garnered nearly 10 per cent of the votes cutting heavily into the BJP’s support base. No election in India is complete without caste arithmetic. In Karnataka’s case, Yeddyurappa, who belongs to the Lingayat community (roughly 15 per cent of the state’s population and the largest community in 73 constituencies), drew his caste brethren away from the BJP. Yet another small breakaway party, the Badavara Shramikara Raitara (BSR) Congress, led by a former BJP minister B Sriramulu, won 2.7 per cent of the votes and hurt the BJP in the part of the state that borders Andhra Pradesh. The JD(S) might not have done as well as expected but it still managed to win marginally more votes than the 2008 elections and ended up with 40 seats, 12 more than in 2008. The nature of the Karnataka verdict, however, means that the Congress cannot take it for granted that it will repeat its performance in the state in the general elections. A minor sideshow was the Rahul Gandhi versus Narendra Modi contest in Karnataka since both campaigned in the state. While Rahul campaigned in eight districts and Modi in five, neither can be said to have really influenced the results. But where Rahul might have played a role is the unusually smooth election of Siddaramaiah as Karnataka Chief Minister after the election verdict. Unlike the usual protracted struggle over choosing between a strong regional leader and someone backed by the Congress high command, in this instance, the Chief Minister was chosen by the newly-elected party legislators through secret ballot. In the process, another front-runner, Union Labour Minister and Gandhi family loyalist Mallikarjun Kharge, was passed over. Coming after the appointment of another strong Congress regional leader, Virbhadra Singh, in 2012 as the Chief Minister of Himachal Pradesh, it might mark the return in the party to a policy of backing satraps with a mass base.


Resignations in Delhi If the anti-corruption sentiments in Karnataka played out well for the Congress, corruption and impropriety cast its long shadow in Delhi. Two days after the Karnataka verdict and the rap in the knuckles from the Supreme Court, the Congress on 10 May belatedly asked the federal Law Minister, Ashwani Kumar, who was under the scanner for his purported role in changing the CBI status report on the coal scam, to resign. Gone too was Railway Minister, Pawan Kumar Bansal, whose nephew has been arrested for allegedly taking a bribe for an appointment in the rail ministry. However, the delay in the Congress’ decision and the feeling that it came only when the party was forced to has further dented its image. The Parliament’s Budget session was a casualty of the Congress’ inability to respond effectively. Both Houses of Parliament were repeatedly disrupted over the above-mentioned issues and was eventually adjourned sine die on 8 May, resulting in several important legislations not getting passed. Moreover, the Prime Minister Manmohan Singh in particular has come off poorly from the episode. There are many who believe that the PM should have taken a decisive stand on asking the two tainted ministers to step down as soon as the scandals broke out. There is also a perception that the decision to ask the two ministers to quit was taken after significant pressure from members of the federal Cabinet and Congress president Sonia Gandhi herself. Singh has usually been seen as an honest Prime Minister who is saddled with corrupt colleagues. But this image has taken a beating because of his indecisiveness and inability to rein in corruption. Besides, Singh himself was Coal Minister between 2006 and 2009, a period which is being investigated by the CBI. The Congress was able to overcome these handicaps in Karnataka because of strong antiincumbent sentiments against the BJP. It will, however, find it much harder going in the elections coming up later in the year in several states, including Delhi, Rajasthan, Madhya Pradesh and Chhattisgarh. The same holds true for the general elections due in 2014 where, if the Karnataka elections are any indication, corruption and governance will weigh heavily on the voter’s mind. .....


ISAS Brief No. 281 – 17 May 2013 469A Bukit Timah Road #07-01, Tower Block, Singapore 259770 Tel: 6516 6179 / 6516 4239 Fax: 6776 7505 / 6314 5447 Email: isassec@nus.edu.sg Website: www.isas.nus.edu.sg

Post-poll Pakistan’s Economic Priorities1 Shahid Javed Burki2

The Pakistani electorate has given Mian Nawaz Sharif a commanding lead in the newlyelected National Assembly and a clear majority in the Punjab provincial assembly. In South Asian politics, incumbency is rarely rewarded. The fact that the Pakistan People’s Party suffered a humiliating defeat is in keeping with this trend. The party was punished for its poor economic performance and even more for its very poor governance. Under its care, Pakistan not only saw the economy move into a long-term growth recession. It also led to Pakistan being labelled as one of the most corrupt countries on earth. But the anti-incumbency factor did not apply to the province of Punjab, where the government, led by the Pakistan Muslim League (Nawaz) [PML(N)] and Mr Sharif’s brother, was given an even larger mandate. The electorate approved of what the party did for the province. The voters also recognised that, even though the federal government was not supportive of the provincial administration, the PML(N) ran the Punjab economy to their satisfaction. The rate of growth in the province was about the same as that of Pakistan. This was not surprising, since Punjab accounts for 60 per cent of the country’s population and about the same proportion of the national GDP (Gross Domestic Product). That

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This Brief is the second in a series of ISAS papers focused on Pakistan and its historic opportunity at this time. Mr Shahid Javed Burki is Visiting Senior Research Fellow at the Institute of South Asian Studies (ISAS), an autonomous research institute at the National University of Singapore. He can be contacted at sjburki@yahoo.com. The views expressed in this paper are those of the author and do not necessarily reflect those of ISAS. During a professional career spanning over half a century, Mr Burki has held a number of senior positions in Pakistan and at the World Bank. He was the Director of China Operations at the World Bank from 1987 to 1994 and the Vice President of Latin America and the Caribbean Region at the World Bank from 1994 to 1999. On leave of absence from the Bank he was Pakistan’s Finance Minister, 1996-97.

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notwithstanding, the citizens in Punjab reckoned that the PML(N) administration cared for the people’s welfare. The same could not be said for the PPP-led government in Islamabad. The electorate accepted the claim of the likely third-term prime minister that Pakistan had sailed into a perfect storm as result of the poor handling of the economy by the PPP-led government in Islamabad. The voters bought this message and put the messenger back into the office he had occupied twice before. In the 1990s, Nawaz Sharif was twice elected as prime minister. In 1993 he and his administration were dismissed by President Ghulam Ishaq Khan for poorly managing the national economy. The then president could do that by using a provision inserted in the Constitution by his predecessor, President Zia-ul-Haq, the third military man to become the head of state. In 1999, Sharif was removed from office by the military after he made a clumsy attempt to fire the Chief of Army Staff, General Pervez Musharraf. Now, Mr Sharif returns to office, more secure about his job. The Constitution has been cleansed of the changes made by the military rulers. The president no longer has the constitutional authority to dismiss the prime minister and dissolve the national assembly. The military, aware that the Pakistani street and the assertive judiciary will not countenance another intervention in politics, is likely to stay away from the political stage. Sharif is expected to move – and move quickly – in four areas: steer the economy out of the stormy waters in which it was left by the government headed by President Asif Ali Zardari; deal with the growing problem of domestic terrorism; continue with the development of the political order so that it gains the support of all regions and segments of society; and repair relations with the outside world. At this moment economics should be at the centre of public policy making. There is a strong relationship between political and economic development, a fact recognised belatedly by economists. A well-developed political system helps economic grow and provides for all segments of society. Sharif appears to have recognised this. The first few moves he has made after winning the elections are aimed at introducing collaborative rather than contentious politics. On 13 May 2013, two days after scoring a decisive electoral victory, he called on Imran Khan who remained in hospital, recovering from the accident he had suffered a few days before the election. According to Salman Masood of The New York Times, “regardless of the final tally expected later this week, Mr. Khan’s Tehreek-e-Insaf party will become a significant player on the political scene, controlling the regional government of a major province. Considering the challenges ahead, Mr. Sharif buried the hatchet and brought flowers”. Addressing the press after a conversation with the Pakistan Tehreek-e-Insaf leader, Sharif said: “Today we have made peace. He [Imran Khan] was receptive and acknowledged my gesture”.3 The PTI will lead the provincial administration of the province of Khyber-Pakhtunkhwa and will be in a position to play a critical role in bringing peace to the province which is home to various Taliban groups, including the powerful Tehrik-e-Taliban Pakistan (TTP), which has carried out a number of operations in the country, most of them directed at the security 3

Salman Masood, “As Pakistan’s likely premier, Sharif offers truce and flowers”, The Global Edition of the New York Times, 16 May, 2013, p. 3.

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establishment. The TTP also organised a bloody campaign to discourage voters from participating in the electoral process. It supports the Haqqani Group, which operates from sanctuaries in Pakistan’s North Waziristan tribal agency and has been effective in stalling the American efforts to establish Kabul’s control over the Afghan provinces bordering Pakistan. The TTP and the Haqqanis could disrupt the process of America’s withdrawal from Afghanistan. The United States is planning to pull out US$ 60 billion worth of equipment in the next 18 months as it ceases its operations in Afghanistan. Having some kind of agreement with these extremist organisations is, therefore, critical for America’s withdrawal and the future of Afghanistan. It will also help to bring security and stability to Pakistan which is necessary for any programme of economic revival. The markets are expecting the prospective Sharif government to move quickly in improving the management of the economy. On the first trading day after the election, the KSE-100 index rose by a staggering 329 points, reaching a record of 20,245. On the following day, it added another 230 points to reach 20,475. The signal from the market was clear: it expected quick action from the likely new government, exuding confidence that the new policy makers would prove equal to the task. By choosing a person to lead the Ministry of Finance before making any other appointment to the cabinet, the prime-minister-to-be has indicated the importance he is attaching to economic affairs. As the first priority, the new administration should aim to build the confidence of the community of investors, both domestic and foreign, in the country’s economy. As economists have argued for long, confidence about the future is an important determinant of economic performance. Before the elections, investor-confidence had plummeted to the point that the share of national income that was ploughed back into the economy reached the lowest level in the past five decades. Little capital was being invested in Pakistan by foreign entities. In fact, some of the firms that had been present in the country for a long time began to unwind their operations and move out. Domestic investors had also lost faith in the economy’s future. There was anecdotal evidence about capital flight from the country. Instead of risking their capital in domestic ventures, potential investors were prepared to accept much lower returns by placing their money abroad. The fact that the Pakistani rupee had been sinking in value, as against foreign currencies, also created an incentive for keeping savings outside the country. Restoring investor’s confidence, therefore, should be the new government���s highest priority. This raises the obvious question: how should this is done? The first issue the new policy makers will have to address concerns the management of foreign reserves. Pakistan owes large amounts of money to the International Monetary Fund. There has been a steady decline in the reserves available to the country to pay for the difference between export earnings and import expenditures and to service foreign loans. The latter includes the scheduled payments to the Fund. One solution will be to return to the IMF and ask for it to finance a new programme aimed at stabilising the economy.

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The programme will have to be supported with a flow of IMF money which is more than what is owed to the institution. It must also provide enough financial resources to keep the country solvent for at least a couple of years. This means a programme of the same size that was signed with the Fund in 2008. Would the IMF be prepared to do this, given Pakistan’s past record? The country has signed on to many Fund programmes but completed only a few. Before entering into another programme, the Fund will ask for the implementation of what in its language are called “prior actions”. These will undoubtedly include a significant reduction in the fiscal deficit, which in turn would require major changes in tax policy and the system of tax collection; withdrawal of many subsidies that put a large burden on the government’s budget; reform of power tariffs; and reduction of the large deficits incurred by several stateowned enterprises. It is only after these actions have been taken, that the IMF staff will be able to take a new programme to its Board of Directors which will look at it with great scepticism. Such a heavy dose of structural medicine may not be possible for a new administration to swallow as it settles to govern for the next few years. It would involve sacrifices by a number of entrenched groups which will not be prepared to withdraw from the economic space that was created for them by the previous government. Some deft political management will be needed, a process that has begun with the Sharif-Khan meeting. The new leaders are looking for bilateral financial support from some of the country’s friends including China, Saudi Arabia and the United States. This would provide some breathing time before a more enduring programme of support can be put together. The approach would be to take a few months to develop a programme of its own before Islamabad returns to the Fund. This could happen by the end of the year.

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ISAS Brief No. 282 – 21 May 2013 469A Bukit Timah Road #07-01, Tower Block, Singapore 259770 Tel: 6516 6179 / 6516 4239 Fax: 6776 7505 / 6314 5447 Email: isassec@nus.edu.sg Website: www.isas.nus.edu.sg

Bangladesh’s Growth Enablers1 Ishraq Ahmed2

The Bangladesh economy has experienced sustained growth over the last three decades, but it has only been since the economic policy reforms of the 1990s that economic growth truly accelerated. The reforms bore fruition – the second half of this decade witnessed the growth in gross domestic product (GDP) exceeding six per cent annually – and the growth performance has kept pace with that of other countries in South Asia. The economies of South Asia are currently among the fastest-growing regions in the world. The four major economies – India, Pakistan, Bangladesh and Sri Lanka – achieved growth rates exceeding five per cent in the 2000s, with Bangladesh outperforming both Pakistan and Sri Lanka.3 Various factors have contributed to Bangladesh’s improved growth performance over the years, most of which can be attributed to increased exports of manufacturing goods, particularly ready-made garments, increased remittances from abroad, relative macroeconomic stability, financial integration and deepening. This paper highlights some of the other factors that have propelled Bangladesh’s recent growth. Aspects such as labour productivity and national savings will merit attention in this regard.

1 2

3

A phrase coined by the World Bank in its recent report on Bangladesh. Mr Ishraq Ahmed is Research Associate at the Institute of South Asian Studies (ISAS), an autonomous research institute at the National University of Singapore. He can be contacted at isasishr@nus.edu.sg. The views expressed in this paper are those of the author and do not necessarily reflect those of ISAS. Bangladesh: Towards Accelerated, Inclusive and Sustainable Growth – Opportunities and Challenges, The World Bank (2012).


Overview About one-fifth of the erstwhile East Pakistan economy was destroyed during the Liberation War of 1971. Severe disruptions brought about by the war and the various dysfunctions already present in the economy left Bangladesh on a lower growth trajectory – the country only regained the output levels of the pre-liberation period in the late-1970s. The economy accelerated sharply from 1990s onwards – between 1990 and 2010, Bangladesh’s nominal GDP (in US dollars) tripled to around $100 billion (Figure 1). This expansion in output can be attributed to the post-1990s policy reforms of opening up the economy and to the increasing contribution of the services and industrial sectors to the economy. The first half of the 1980s was beset by low and, in some years, even declining output. The latter half of the decade exhibited a gradual increase in output but it was not until the political transition to a democratically elected government in 1991 that the economy took off. A simple trend equation reveals that between the period 1980 to 2010, Bangladesh underwent two distinct growth phases. The trend growth rate for the period 1980 to 2010 was around 4.7 per cent per annum. Even though reforms started prior to the 1990s, the economy achieved greater momentum post-1990 – the annual growth rate between 1990 and 2011 was about 5.3 per cent compared to 3.6 per cent between 1980 and 1989. Evidently the economy was on a quicker arc after 1990 – the economic policies after 1990 could have resulted in adding 1.7 percentage points to growth annually. An improved macroeconomic performance following the “crisis-driven reforms” 4 of 19901993 and the commitment to further economic liberalisation by successive governments enabled output to accelerate. Exports and imports have increased substantially as well and that has positively impacted growth. Bangladesh’s trade has increased substantially and is linked with the ready-made garments (RMGs) industry in recent years. The establishment of the industry arose from comparative advantage and has since been the focus of export-led industrialisation in Bangladesh, which has led to further economic growth in Bangladesh.

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Economic Growth in Bangladesh: Experience and Policy Priorities, Jyoti Rahman and Asif Yusuf (undated).


Figure 1 – Nominal GDP (1980 – 2010) 110 100 Nominal GDP (US$)

90 80 70 60 50 40 30 20 10 0

Source: IMF, World Economic Outlook

Key Drivers of Growth While the increased RMG exports, financial integration, rapid industrialisation and the proliferation of private sector activies have been credited with accelerating growth in Bangladesh, analysis has revealed the equal importance of TFP growth to labour productivity and hence economic growth.5 Labour productivity, defined as total output in the economy per worker, is an indicator that measures how much output is produced in a given amount of time. In addition, it gives a measure of the relative efficiency with which inputs – in this case, labour – are used to produce output. An increase in labour productivity is also indicative of the workforce and firms in a country becoming more competitive. Bangladesh has exhibited some notable changes in labour productivity over the years (Figure 2). Productivity displayed negative growth in the 1980s and declined drastically during that decade. The period from 1990s onwards witnessed a steady rise in productivity, which corresponds to increasing national output. This increase in productivity can be attributed to capital deepening – the increase in capital stock per worker. Workers have been endowed with more machines and equipment, which changes the nature of production by making the production process relatively more capital-intensive, thus boosting labour productivity and increasing output. The inception and subsequent success of the light manufacturing industry, particularly the RMG sector, is a case in point. Large number of workers have been equipped with equipment which have contributed to increasing volumes of garments being produced. Other sectors such as pharmaceuticals, jute, ceramics, electronics and footwear are the upcoming sectors and these sectors are expected to entail more capital in the production process, further increasing labour productivity. In addition, workforce productivity has increased due to the 5

The World Bank (2012).


efficient use of capital and labour inputs in the production process – this is the multifactor productivity growth which arises from the joint effects of factors such as technology, economies of scale and changes in the production structure. Other aspects that may not feature in the productivity calculation are the impacts of improved health, nutrition and education. The impact of improved welfare on workforce productivity in Bangladesh cannot be easily overlooked. The country has undergone steady improvements in social indicators; enhanced access to these services have been revealed to have direct effects on labour productivity and hence earning capacities of individuals. Figure 2 – Labour Productivity changes (1981 to 2011) 8

Labour Productivity (% changes)

6 4 2 0 -2 -4 -6 -8 -10 -12 -14

Source: Economist Intelligence Unit (EIU) Gross national savings have increased steadily as well, thanks to a rapid rise in domestic savings rate over the last two decades and strong inflow of remittances (Figure 3). The national savings rate in Bangladesh is estimated to be the same as the South Asian average and that of the low-income countries.6 It has been established in the literature that countries with high savings rate for long periods tend to experience sustained economic growth and Bangladesh has been no exception to this. Periods of economic growth have broadly been in line with increases in savings rate. In accordance with the neoclassical growth theory, an increase in national savings rate has driven growth forward in Bangladesh. However, national savings rate has stagnated somewhat over the last few years and hovered around 25 per cent of GDP. In addition, Bangladesh’s less-than-ideal investment climate means that a sufficient portion of the national savings has not been absorbed/utilised and the country has been unable to attract foreign savings in the process. Very weak growth in private investment and declining public investments have resulted in domestic savings not being harnessed.7

6 7

Ibid. Ibid.


Figure 3 – National savings, productivity and GDP growth Labor productivity

GDP growth

Savings rate

15 10 5 0 2010

2008

2006

2004

2002

2000

1998

1996

1994

1992

1990

1988

1986

1984

1982

1980 -5 -10 -15

Source: Economist Intelligence Unit (EIU)

Even though national savings and labour productivity have exhibited the same movements as GDP growth in Bangladesh, does this mean that they have contributed to the positive growth developments over the years? Some simple regressions do reveal that savings rate and productivity increases have had an impact on growth. Over the past three decades, both changes in labour productivity and national savings rate have had a positive impact on the growth rate of national output and the estimates are statistically significant. Growth in worker productivity and national savings rate has contributed 0.09 and 0.08 percentage points to Bangladesh’s GDP growth respectively, resulting in a net addition of 0.17 percentage points. When the growth performance is broken up into two phases – 1980 to 1989 and 1990 to 2011 – the results differ. The pre-liberalisation period revealed no statistically significant impact of labour productivity growth and national savings on GDP growth, while the latter period shows a strong positive impact of the variables on growth. It was only after the 1990s that both worker productivity and national savings rate displayed rapid increases; with labour productivity, having undergone declines in the past decade, has only now approached a positive growth territory. Other associated reforms in the capital and financial markets had also put Bangladesh on the platform towards rising growth. Although the regressions did not include other key determinants, the point of this exercise was to provide a prima facie view of the effect of productivity and national savings on Bangladesh’s economic growth. It is important to note that one factor alone cannot really determine this growth surge and both national savings and labour productivity are interrelated. This capital deepening has been made possible by the increasing national savings rate. The increase in capital stock for


workers has led to increased output and hence productivity. Such capital deepening in both agriculture and industry has played an important role.8

Policy Implications and the Way Forward Increasing investment in physical and human capital, along with efforts to further increase labour force participation and worker skills through schooling, will enhance productivity growth. The average years of schooling is currently 5.8 years and is expected to increase to 6.3 years by 2021, while Bangladesh’s labour force is estimated to grow at 3.2 per cent per year till 2015. In light of the recent collapse of the factory building which resulted in the death of over 1000 workers, the manufacturing sector may have to contend with some negative publicity. The notion is that Bangladesh will lose the competitive edge it has in offering cheap labour if some of the major multinational clothing retailers do pull out. However competitiveness in the RMG sector and the manufacturing sector overall, can be sustained and even enhanced if the country manages to increase its worker productivity – low-priced labour is not the only way through which Bangladesh can maintain its competitiveness. Furthermore, to generate savings, the savings institutions in Bangladesh with long-term liabilities can become a major source of financing. These factors along with significant developments in the manufacturing and service sectors point to a promising horizon for increased growth in Bangladesh. However the recent political instability and violence threaten to derail Bangladesh’s prospects. Good economic policies and a conducive economic structure will not suffice; the institutions of property rights, justice and governance have appeared to exhibit a precipitious decline and will be inimical to growth in the long run. Bangladesh’s growth performance has been robust in spite of weak governance and unstable political conditions – however, when confrontational politics pushes Bangladesh to the brink, further economic progress will be challenged.

8

Ibid.


ISAS Brief No. 283 – 6 June 2013 469A Bukit Timah Road #07-01, Tower Block, Singapore 259770 Tel: 6516 6179 / 6516 4239 Fax: 6776 7505 / 6314 5447 Email: isassec@nus.edu.sg Website: www.isas.nus.edu.sg

China Reinforces the Bridge to Pakistan Sajjad Ashraf1 The two-day visit of new Chinese Premier Li Keqiang to Pakistan (22-23 May) took place during extraordinary times of political transition, following the 11 May general election, from one civilian government to another – the first such change in Pakistan’s troubled political history. In addition to the substance, the visit was significant as part of the first overseas tour by the new Chinese Premier and as the first by a foreign leader after the elections in Pakistan. Setting the tone in a pre-visit interview to a Chinese magazine, Mr Li used a new term “iron brother” for Pakistan. As Pakistan's closest ally, demonstrating "all-weather friendship," China has risen to Pakistan’s support in difficult times. Given the special nature of this relationship, the visit to Pakistan during its political transition allowed the Chinese leader to talk to both the then outgoing and incoming leadership in Pakistan. Perhaps, no two countries could have had such a high-level visit under such circumstances. Premier Li was given a head of state welcome with JF-17 Thunder fighter jets, jointly produced by Pakistan and China, escorting his plane as it entered Pakistani air space. 1

Mr Sajjad Ashraf is Consultant at the Institute of South Asian Studies (ISAS), an autonomous research institute at the National University of Singapore (NUS). He is also an Adjunct Professor at the Lee Kuan Yew School of Public Policy at the NUS, and a Visiting Senior Research Fellow at the Institute of Southeast Asian Studies, Singapore. He was Pakistan’s High Commissioner to Singapore 2004-2008. He can be contacted at sashraf1947@gmail.com. The views expressed in this paper are those of the author and do not necessarily reflect those of ISAS.


Welcomed with a 21-gun salute and much beyond the normal protocol, Pakistan’s President and the then Caretaker Prime Minister received him at the airport. Nawaz Sharif, Pakistan’s prime-minister-in-waiting (as he then was), in a separate meeting with the Chinese Premier, specifically asked China to provide civil nuclear technology. (Mr Sharif assumed office on 5 June). Persuading China to sign a deal akin to what the United States signed with India is one of Pakistan’s policy goals now.

Robust Military Ties Underscoring strong military relationship, the Chinese Premier separately met the top leadership of the Pakistani military. Some reports suggest that the Chinese Premier expressed concern over the Uighur militants allegedly operating from Pakistan’s northwest – some of whom are said to be involved in terrorist activities. Several agreements and memoranda of understanding, some with not much headline-appeal, were signed during the visit. These related to cooperation in economy, science and technology, upper atmospheric communications and boundary management, maritime science and technology. More importantly however, China and Pakistan agreed to jointly work on “a giant economic corridor that would not only enhance China's strategic significance but would also help in restoring peace and stability to Asia", said Mr Li, addressing a joint news conference with President Asif Ali Zardari in Islamabad, at the conclusion of the two-day visit. The proposed Pak-China economic corridor linking Gwadar Port with Xinjiang – the western province – and other parts of China will involve both road and rail links, with both fibre optic and oil pipelines for boosting energy, trade and transport between the two countries. Initially investing over US$ 20 billion, creating a ‘Special Economic Zone’ in Xinjiang, China is keen to have another trade outlet to the Indian Ocean. This will increase the strategic interdependency between China and Pakistan. The economic corridor agreement came in the wake of handover of the Gwadar port to the China Overseas Port Holding Company, after a pullout by Port of Singapore Authority. This was formally done during the Chinese Premier’s visit. The Chinese have reportedly agreed to put in another US$ 900 million into developing the port and making it fully operational. With Iran-Pakistan gas pipeline passing through Gwadar, its possible extension to western China, and with goods transit time reduced to three to four days, Pakistan-China collaboration is set to go up in the medium and long-term.

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“The development of China cannot be separated from the friendship with Pakistan”, the Chinese Premier maintained while addressing Pakistan’s Senate, the upper house of parliament. The Chinese control of Gwadar exposes Pakistan to the charge of allowing a Chinese naval base in its ‘string of pearls’ strategy in the Indian Ocean. It would become another point of concern for Indian and other strategic thinkers. Many critics argue that Mr Li’s choosing of India as the first stop in his first overseas tour as Chinese Premier, spending three days there against two in Pakistan, signifies a slow but visible shift in China’s foreign policy. His visit to Pakistan was therefore, meant to “to avoid slapping Islamabad in the face completely”, wrote a Pakistani newspaper, Express Tribune. China-India business relations are gaining pace. Bilateral trade between the two is more than US$ 66 billion now, which the two want to take past US$100 billion by 2015. Aiming to increase the share of manufacturing in its economy from 16 to 25 per cent by 2022, India is openly seeking Chinese investments. With surplus money and comparative advantages of investing in India, the Chinese investments are sure to go up. “We are one-third of world’s total population and our interactions attract the world. Without doubt, China-India relations are most important global relations,” said Mr Li during his visit to India. While China denies that burgeoning engagement with India is at Pakistan’s expense, Islamabad should be concerned at the growing interdependency between China and India. Critics also point out that contrary to Chinese relations with India, China’s commercial relationship with Pakistan is “colonial in nature”. In a balance of trade heavily tilted in China’s favour, Pakistan buys electronic equipment and machinery and exports cotton yarn to China. The Chinese business investments in Pakistan during 2000-2012 have been a meagre US$ 0.8 billion out US$29 billion that China invested overseas during this period, according to the Express Tribune. True, this could reflect pure business strategy due to unsettled conditions in Pakistan; it does not account for Chinese infrastructure and defence collaboration with Pakistan. Many Pakistani analysts, however, believe that India-US civil nuclear deal is of far reaching implication for the delicate balance of power and stability in the region. This should be sufficient for a convergence of Pakistan’s and China’s interests in the longer-term.

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A Shadow over Strong Bedrock The bedrock of China-Pakistan relations, based upon strategic and security considerations, therefore, remains strong. China, already helping Pakistan to build two nuclear power units at Chashma by brushing aside objections from the Nuclear Suppliers Group, is reportedly adding two more. Mr Li listed cooperation in power generation as a priority between the two countries. At a different level, the joint development of JF 17 Thunder, the next generation strike aircraft, is on course. China must be deeply worried at the unsettling developments within Pakistan, which are not entirely of Pakistan’s making. Pakistan’s radicalisation, in response to perpetual war in Afghanistan, its connections with global ‘jihad’, troubles with India, and how the world looks at Pakistan are questions casting a shadow over China-Pakistan relations. Surely, China does not want a North Korea on the south-western fringes of its borders also. To sustain and grow this relationship Pakistan’s domestic stability therefore becomes critical. The onus is now on Pakistan to remain relevant for China in this changing global environment. China however, continues to be deeply interested in longer-term strategic cooperation with Pakistan where there is a convergence between the two. Notwithstanding the critics, Mr Li's trip to Pakistan was meant, in his own words, to "open a new chapter in bilateral ties, chart a new course for practical cooperation and thus lift their traditional friendship to a new height". During Henry Kissinger’s trip to China in 1971, when he secretly flew out of Pakistan, changing the direction of global politics, the late Chinese Premier Zhou Enlai reportedly advised him, “Do not forget the bridge you have used, you may have to use it again”. China is applying that advice to itself. .....

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ISAS Brief No. 284 – 6 June 2013 469A Bukit Timah Road #07-01, Tower Block, Singapore 259770 Tel: 6516 6179 / 6516 4239 Fax: 6776 7505 / 6314 5447 Email: isassec@nus.edu.sg Website: www.isas.nus.edu.sg

Decoding India-Japan and Sino-Pak Talks P S Suryanarayana1 Abstract The transparent scale-up of India’s defence cooperation with Japan, evident during their latest summit, shows that New Delhi can deploy a diplomatic, not military, card with reference to China at this stage. Equally important are the signs that China has not given up its Pakistan card in regard to India even in the new context of an unusual paradox in SinoIndian ambience. These aspects have come into focus in the just-concluded cameos of strategic forays by China in South Asia and India in East Asia.

The efficacy of inter-state diplomacy is determined by the timing of national initiatives and their intended messages. By this test, there was a coded signal for China from the Japan-India summit in Tokyo on 29 May 2013. Earlier, there was a different but clear message for India from the Sino-Pakistan talks in Islamabad on 23 May. By design or default, the previously-postponed Japan-India summit was held in Tokyo at this time, within days after Chinese Premier Li Keqiang’s recent talks in India and Pakistan. Japanese Prime Minister Shinzo Abe and his Indian counterpart Manmohan Singh have announced a conspicuous scale-up of bilateral defence cooperation. Briefing Indian journalists who travelled with Dr Singh, India’s Foreign Secretary Ranjan Mathai said: “India and Japan have agreed to institutionalise bilateral naval exercises, to conduct them regularly and with increased frequency. The Japanese Government has offered to sell the US-2 amphibious aircraft to India. ... This is one of the few occasions where Japan has offered to 1

Mr P S Suryanarayana is Editor (Current Affairs) at the Institute of South Asian Studies (ISAS), an autonomous research institute at the National University of Singapore. He can be contacted at isaspss@nus.edu.sg. The views expressed in this paper are those of the author and do not necessarily reflect those of ISAS.


sell such dual use equipment with both military and civilian applications to a foreign country. ...this is an aircraft with extraordinary capabilities of landing even in fairly high seas where waves are quite high, and has a very, very, long range”.2

Dual-Use Aircraft Emphasising that the dual-use plane was one specific aspect of the now-strengthened JapanIndia Strategic and Global Partnership, Mr Mathai further amplified: “What we have agreed to is a setting up of a Joint Working Group to examine the potential of this aircraft, the possibilities of whether it can be used, whether it should be manufactured jointly. ... This is a very new proposal which has come to us. ... [The aircraft] is a technological achievement. So, we [the Indian side] would certainly like to look at it”.3 The amplification is designed to convey that the likely amphibious aircraft deal poses no threat to China, whose neighbours both Japan and India are. However, the relevant signal from India is that it has now acquired a virtual Japan-card to deploy with reference to China in diplomatic (not certainly military) terms at this stage. The scene for such a conclusion was set by Mr Abe who told Dr Singh over dinner on 29 May: “You remember that I spoke of the Confluence of the Two Seas (Pacific and Indian Oceans) in 2007 at the Indian Parliament. I am of a belief that it is the task for the maritime democracies to safeguard our vast oceans”.4 In this new context, it will be a huge stretch of the imagination to argue that New Delhi’s Tokyo-card of this kind can match China’s Pakistan-card that has been in play with regard to India for long. In fact, Mr Li’s journey to Islamabad from New Delhi on 22 May – at a time of political transition there – is proof of the new Chinese leadership’s extraordinary display of trust in Pakistan.

Economic Core and Strategic Value While in New Delhi, Mr Li did indicate China’s willingness to address India’s “concerns” on a reciprocal basis. Moreover, he virtually re-stoked happy memories of a one-time SinoIndian bonding. However, travelling to Islamabad within hours thereafter, he spoke of diversifying the time-tested Sino-Pakistani “all-weather friendship”. This message is not lost on New Delhi, whose relations with Islamabad are still determined by, among other factors, Pakistan’s enduring reliance on Beijing (and on Washington now and then, not to mention Saudi Arabia at a different level). Interestingly, though, some 2

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Ministry of External Affairs, Government of India: http://www.mea.gov.in/in-focusarticle.htm?21760/Transcript+of+Media+Briefing+by... Ibid. Japanese Prime Minister’s website: http://www.kantei.go.jp/foreign/96_abe/statement/201305/2 9india_e.html

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analysts in Pakistan have begun to speculate differently, because of the bonhomie that Mr Li has exuded towards India despite the recent Sino-Indian border standoff that took several weeks to resolve (even without a fire-fight). The strand of speculation is that the value of Pakistan to China will diminish in proportion to the rise in cordiality and convergence of interests in the newly-changing Sino-Indian equation. On balance, however, there is no hard evidence on the ground to suggest that China is giving up on Pakistan. Indeed, Pakistan’s powerful military leaders and civilian leader Nawaz Sharif, who became Prime Minister for a third time on 5 June, were privy to China’s latest offer of help for two projects of strategic importance in the widest sense of the term. One of these projects is the upgrading of the Karakorum Highway in the pivotal India-PakistanChina tri-junction. The other project is Pakistan-China Economic Corridor that will link the underdeveloped Chinese provinces to the southern Pakistani port of Gwadar, which Beijing acquired recently. It is easy to discern that these two projects, with economic core, are China’s potential assets for possible purposes in its equation with India, in the widest strategic sense. To recognise this is to presuppose the durability of China-Pakistan “all-weather friendship” – not to discount Pakistan’s sense of sovereignty.

No Zero-Sum Calculus Conceived in these terms, the latest flurry of diplomacy in eastern and southern Asia – involving India and Japan at one corner of the spectrum and the Chinese Premier’s talks in New Delhi and Islamabad at another – is no run-of-the-mill stuff. At the same time, it will be off the mark to see these moves as old-style zero-sum games. India’s growing new links with Japan in China’s eastern neighbourhood do not match the escalating intensity of Beijing’s ties with Islamabad in New Delhi’s western neighbourhood. There is another diplomatic caveat too. The Sino-Indian relationship today is passing through a sensitive moment of truth and opportunity. It is an unusual paradox that the China-India ambience is now defined by positive signals over the seemingly-uncertain intentions of each side towards the other into the future. Equally emphatic is the fact that the current SinoIndian equation, while being very delicate in nature, is not as fragile as the contemporary China-Japan relationship. In these circumstances, the growing warmth in Japan-India ties is something that China is expected to take serious note of, without necessarily losing sleep over that. These cameos of China in South Asia and India in East Asia show that the two countries are making new strategic forays into each other’s core neighbourhood while trying to rebalance the basic Sino-Indian equation.

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ISAS Brief No. 285 – 7 June 2013 469A Bukit Timah Road #07-01, Tower Block, Singapore 259770 Tel: 6516 6179 / 6516 4239 Fax: 6776 7505 / 6314 5447 Email: isassec@nus.edu.sg Website: www.isas.nus.edu.sg

War-head Worries: Asia’s Expanding Nuclear Arsenals Iftekhar Ahmed Chowdhury1

For some time, nuclear arsenals all across the world have been the focus of global policy makers‟ attention. The Stockholm International Peace Research Institute (SIPRI) has come up with a report on 3 June 2013, which has stressed that nuclear arsenals of the Asian countries – such as China, India, and Pakistan – are expanding while the older nuclear-weapon states, such as the United States and Russia are scaling down theirs. It has described this phenomenon as “disturbing” given that peace in Asia is still “fragile”, that “decades old suspicions linger, and economic integration has not been followed up with political integration”. The implied criticism of the Asian states is a trifle unfair, to say the least. The “scaling down” referred to is the reduction from 10,000 to 8,500 nuclear war-heads on the part of Russia, and from 8,000 to 7,700 on the part of the United States. In comparison, the existing figure for China, viewed as a strategic competitor of the US, is a mere 250, though up from 240 in 2012. For India, a far more significant player on the global scene today than either France or the United Kingdom, the numbers are stated to be 90 to 110, as compared to 300 of France and 225 of the UK. Pakistan, which seeks a deterrent vis-à-vis India, is said to have around 100 and 120 war-heads, less than half of the UK‟s and around one-third of France‟s. Israel presumably has 80, compared to none for its Arab rivals. It is true that peace in Asia is “fragile”, and that here “decades old suspicions linger, and economic integration has not been followed up with political integration”. But those facts 1

Dr Iftekhar Ahmed Chowdhury is Senior Research Fellow at the Institute of South Asian Studies (ISAS), an autonomous research institute at the National University of Singapore. He is a former Foreign Advisor (Foreign Minister) of Bangladesh, and he can be contacted at isasiac@nus.edu.sg. The views expressed in this paper are those of the author and do not necessarily reflect those of ISAS.

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also apply anywhere else in the world. The mutual suspicions between the US and Russia, though far less than during the Cold War period, have not withered away, and Europe, often held up as the model of political organisation, has not been able to match its economic integration with the political, and there is absolutely no certainty that it will be able to. Also, it is not the growth in number of weapons alone that is destabilising. The modernising of the arsenals, adding of greater precision, can be equally upsetting to the nuclear equilibrium. This is happening in the case of the older nuclear-weapon states. By rendering the ordnance more sophisticated, and the targeting more precise, the propensity for use is enhanced. For instance if one is able to take out only a specific „hard‟ military target, one is more liable to use it, than if the only option is the capability to strike „soft‟ targets like cities, that would inflict an unacceptable level of damage on the opponent, widening the chances of a total retaliation. In fact greater „targetability‟ could make „nuclear war-fighting‟ or „limited nuclear warfare‟ conceptually possible, a most disconcerting thought. Indeed that was the sum and substance of the „Schlesinger- doctrine‟, named after its enunciator, a past US Secretary of Defense, which has happily gone out of vogue, but can always be revived, particularly as newer strategic situations evolve or arise. One must also bear in mind that advanced nuclear-weapon states can afford to manage their arsenals without testing through higher technology such as „stock-pile engineering‟. Also they can disarm, with the ability to rearm quickly should the need arise, and put a dismantled war-head back in place. A newer nuclear-weapon state is more likely to cling on to what it has. Management of nuclear stockpiles can be very challenging, and those that have given up existing stockpiles such as South Africa or some central Asian republics have done so only partly out of pristinely noble motives! Unfortunately nuclear-weapon proliferation has its own incontrovertible logic and inexorable dynamics. The level at which perceived deterrence with a protagonist is achieved tends to be forever rising. Also, since deterrence includes the capacity to absorb a „first-strike‟ and then to be able to respond in kind – the so-called „second strike capability‟ – there is always the need to be able to conceal weapons so that they cannot all be acquired as targets and destroyed in one-go. This would mean the building of stronger, deeper, and dispersed storage silos, as much hidden as possible! Better still, the shifting of war-heads into submarines (increasing the requirement of nuclear-capable craft of this kind) which are less able to be targeted. So proliferation, in different forms, is a continuum that goes on and on! Meanwhile, at the only inter-governmental forum mandated to negotiate on non-proliferation issues, the Geneva-based Conference on Disarmament (CD), discussions on the Fissile Materials Cut-off Treaty (FMCT) are being held up due to Pakistan‟s opposition (for any decision, consensus is necessary). Pakistan argues that the cutting off of supplies would discriminate against it, as India would continue to receive such materials through bilateral agreements with members of the Nuclear Suppliers Group. Even with the caveat that such

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procurements could only be used for civil purposes, Pakistan apprehends that it would release Indiaâ€&#x;s existing stockpiles for weapons-production. The most important fact to bear in mind is that all nuclear weapons are equally dangerous and unsafe in all hands that hold them, the old nuclear-weapon states or the newer ones. Partial disarmament, or scaling down, is no answer and no option for complete and total disarmament. The axiom about nuclear weapons has been that if some have them, others will want them also. In the decades to come, there will be systemic changes across the globe, some segments of it will rise and others will go into decline. The rising powers will want to match their burgeoning clout with appropriate strategic capabilities, and so long as nuclear weapons remain a marker of importance, they will tend to seek them. So, it is for those that are strong today to take the lead in this, so that the strong tomorrow will see no need for it. This is truly the gauntlet that the leaders of the contemporary world must pick up.

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ISAS Brief No. 286 – 7 June 2013 469A Bukit Timah Road #07-01, Tower Block, Singapore 259770 Tel: 6516 6179 / 6516 4239 Fax: 6776 7505 / 6314 5447 Email: isassec@nus.edu.sg Website: www.isas.nus.edu.sg

A ‘New’ Pakistan: Implications for Indo-Pak Relations Sinderpal Singh1

Pakistan’s recently concluded general elections scored an important first. It was the first time that power had been transferred from one civilian government to another via popular elections. This has generated a predictable amount of optimism amongst certain sections, both within and outside Pakistan, about Pakistan and for its relations with the outside world. One of the keenest observers of Pakistan’s recent elections was India. In the aftermath of the 2008 Mumbai attacks, India’s relations with Pakistan have plummeted to a historical low. Pakistan’s general elections provided an opportunity for India’s political leaders to reassess the potential to improve this bilateral relationship. The victory of Nawaz Sharif’s Pakistan Muslim League – Nawaz, PML(N), in these elections was greeted with a mixture of both optimism and caution by India’s political class. Despite the widespread optimism about a ‘new’ era in Pakistani politics, Sharif is anything but new to Pakistani politics. This is his third term as prime minister and his earlier two stints betray a mixed record at best in terms of relations with India. For this term, the prospects are similarly mixed for bilateral relations. Three major factors will determine the extent to which these elections will usher in a new, less hostile, phase in India-Pakistan relations.

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Dr Sinderpal Singh is Research Fellow at the Institute of South Asian Studies (ISAS), an autonomous research institute at the National University of Singapore. He can be contacted at isassss@nus.edu.sg. The views expressed in this paper are those of the author and do not necessarily reflect those of ISAS.

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Sharif and the Military The first and possibly the most important factor will be Sharif’s relationship with the military in Pakistan. Sharif’s unceremonious removal from power by the military during his previous stint as prime minister is a stark reminder of the task ahead. In this respect, Sharif and his party will have to decide, quite quickly, whether to try the ex-President, Pervez Musharraf, for treason. Doing so might very possibly infuriate the military establishment as well as potentially implicate other senior military and civilian figures during the course of a trial. Allowing Musharraf to go into exile as part of a Saudi Arabia- or United States-brokered deal might give the impression of Sharif taking the high ground and possibly heal, to a limited extent, his rift with the military. This has potentially important implications for relations with India, especially since several retired senior military commanders in Pakistan have denounced Musharraf’s role in the Kargil conflict with India. With the military’s support for his version of events that led to Kargil, Sharif might win some important goodwill in India. By getting off on the right foot with military, he could also start to demonstrate his ability to deliver on the issue of cross-border terrorism vis-à-vis India. The prospects of Sharif gaining full control over the Pakistani military are limited, to say the least, but an improvement in the civilian-military relationship in comparison to his last tenure will definitely give India’s political leadership some hope of less hostile relations between the two states.

Extremism Issue The second factor will be Sharif’s ability to deal with the rising levels of Islamic extremism within Pakistan. The PML(N)’s own links with organisations with a strong anti-India agenda like the Lashkar-e-Taiba and the Sipah-e-Sahaba are a major cause of concern in India. In this respect, while Sharif has promised to restrain the activities of Hafiz Saeed (leader of the Lashkar-e-Taiba and alleged mastermind of the 2008 Mumbai attacks), it is not clear how consistently Sharif will carry out this undertaking. More ominously, Saeed has repeated his warning to Pakistan’s newly elected leadership not to renew friendly ties with India. The fact that this warning came on the eve of Sharif’s swearing-in as prime minister once again renewed Indian anxieties about Sharif’s ability and willingness to prevent Saeed from negatively impacting bilateral relations. There has also been no indication from Sharif about if and how he intends to expedite the trial of those implicated in the 2008 Mumbai attacks. More broadly, there are doubts in India about Sharif, the seasoned politician, being able to resist the temptation to cosy up to such anti-India elements in Pakistan in specific circumstances to consolidate his own political legitimacy domestically. This is especially so since the PML(N)’s margin of victory has not given it the kind of overwhelming mandate which will allow it to ignore such political compulsions from time to time.

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Indo-Pak Trade The third factor is improving economic ties with India. The first likely positive development will be Sharif operationalising the previous cabinet’s approval to accord India the Most Favoured Nation (MFN) status. Broadly, Sharif, from his previous tenure, is viewed as being pro-business and will thus encourage closer economic ties between the two countries. However, for economic ties to deepen, influential voices within Pakistan believe that India’s complex web of non-tariff barriers needs to be eased. Such appeals need to be understood within the context of the large bilateral trade imbalance in India’s favour. A veteran politician like Sharif will be aware that pushing for greater trade liberalisation cannot be done in a political vacuum and domestic constituencies in Pakistan need to be assuaged in such a project. In this regard, Sharif might look to India’s leaders for upfront concessions which he can leverage domestically to push for closer trade and broader economic links with India. Recent events indicate that India’s leaders appreciate this imperative. The Indian government announced that it will send a delegation to Lahore on 9 June to discuss an Indian offer to supply natural gas to Pakistan through a pipeline that currently extends till Jalandhar. Indian officials have indicated that they are willing to extend the pipeline to the Wagah border, from where Pakistan can extend it to users within the country. One other economic link that has been under discussion for some time is a trade and transit agreement that will allow India to dispatch goods through Pakistan to Afghanistan via the Wagah border. This agreement, which India is very keen to sign, will bring significant economic benefits to Pakistan, boosting the latter’s revenue and its wider economy. The prospects of Sharif finalising this agreement, though, are slim. This would require a considerable shift in Pakistani strategic thinking. At the moment, conventional wisdom in Pakistan views such a potential agreement as an instrument for India to expand its economic and political influence into Afghanistan and further into central Asia, with perceived deeply negative implications for Pakistan’s own interests in this sub-region. In terms of the prospects for bilateral relations, the third tenure of Nawaz Sharif has commenced relatively well. The rhetoric from both him and India’s political leaders is fairly reassuring. The visit of Manmohan Singh’s special envoy, S K Lambah, to Lahore to meet Sharif after his electoral victory demonstrated the eagerness of the Indian government to improve bilateral relations with Pakistan’s new administration. It was also significant that they discussed the possibility of restarting the stalled composite dialogue. It revealed that an improvement in bilateral relations during Sharif’s tenure would need to involve progress on a varied number of issues, the three most significant of which have been sketched out above.

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ISAS Brief No. 287 – 14 June 2013 469A Bukit Timah Road #07-01, Tower Block, Singapore 259770 Tel: 6516 6179 / 6516 4239 Fax: 6776 7505 / 6314 5447 Email: isassec@nus.edu.sg Website: www.isas.nus.edu.sg

The Sliding Rupee: Crisis or Opportunity? Amitendu Palit1 The Indian Rupee’s (INR) sudden slide has created panic in the business and policy circles. The major concerns are over whether the almost free-fall will adversely affect the Current Account Deficit (CAD) and inflation. There are also concerns over whether a depreciating rupee will increase the fiscal deficit by increasing expenditure on subsidies and jeopardise the repayment schedule for external commercial borrowings (ECBs). The Indian government has been putting up a brave face assuaging the market, investors and industry about the volatility being short-lived. The Finance Ministry and the Reserve Bank of India (RBI) appear largely unruffled by the episode. Till now, the RBI has not made any major interventions to shore up the rupee by selling US dollars in the open market, except a minor exercise on 11 June 2013. The Finance Ministry, on the other hand, appears confident about the rupee stabilising over the next two-three months. How drastic has been the fall? On 11 June 2013, the rupee dropped to 58.92 against the US dollar (USD) before pulling back a bit. Exactly a year ago, on 11 June 2012, the rupee was at 55.24 against the USD. The year-on-year decline marked an annual depreciation of 6.7 per cent. The fall, however, has not been gradual. Rupee had fallen to a low of 57.21 against the USD on 27 June 2012. It had steadily recovered thereafter to climb to 51.61 against the USD on 5 October 2012. After remaining range-bound at 52.0-54.0 against the USD for more than

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Dr Amitendu Palit is Head (Partnerships & Programmes) and Senior Research Fellow at the Institute of South Asian Studies (ISAS), an autonomous research institute at the National University of Singapore. He can be contacted at isasap@nus.edu.sg. The views expressed in this paper are those of the author and do not necessarily reflect those of ISAS.

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six months, it weakened to 55.03 on 20 May 2013. Since then, the drop has been rather sharp over the last three weeks. While much of the hue and cry has been over the rupee’s fall against the USD, it has depreciated by an almost equal amount (6.8 per cent) against the Euro and to a greater extent against the UK pound (12.0 per cent) during the last one year. Surprisingly, however, it has appreciated by 13.6 per cent against the Japanese Yen during the same period. Indeed, looked at against a basket of major currencies as revealed by the RBI’s nominal effective exchange rate (NEER) indices (both 36-country and 6-country), the depreciations during May 2012May 2013 are almost minimal.2 This might explain why the Government and the RBI are not unduly agitated over the development. Nonetheless, a sharply sliding rupee does have its downsides particularly if the fall continues unabated. Most of the concerns expressed in this regard are valid. India’s already high CAD (at 6.7 per cent of GDP in the third quarter of 2012-13) can widen further due to a weakening rupee. This can happen with imports becoming more expensive, particularly crude oil imports, which will accentuate the trade deficit. Inflation can be another casualty apart from the CAD. If the Government refuses to ‘pass through’ higher import prices to domestic consumers by increasing subsidies (fuel and fertiliser), the rather delicate fiscal deficit will come under more pressure. A weakening rupee will also increase debt service obligations and make repayment of ECBs more expensive for corporates. A closer look at the factors pulling down the rupee points to changes in the US dollar as a proximate trigger. The 7.0 per cent depreciation in the value of the INR against the USD since 20 May 2013 has been provoked by an appreciating dollar. With macroeconomic data from the US showing signs of recovery, US bonds have suddenly recovered their attractiveness. This has prompted the FIIs to pull out funds from emerging market economies for investing in US bonds. In markets like India, this has led to a sudden shortage in supply of dollars making them dearer with respect to the local currency. Future signals from the Fed suggesting a gradual withdrawal from an expansive monetary policy might strengthen the dollar even more. While the dollar has acted as the trigger, the large volatility in rupee also reflects the macroeconomic imbalance building up in the external sectors of the Indian and other emerging market economies through the high CADs. The Rand (South Africa), Real (Brazil) and the Rupiah (Indonesia) have depreciated almost as much as the rupee in the last few weeks, along with the Mexican and Chilean pesos. Most of these economies have CADs

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Indices of Real Effective Exchange Rate (REER) and Nominal Effective Exchange Rate (NEER) for the Indian Rupee; Monthly Bulletin, Reserve Bank of India, Mumbai, India, June 2013; rbidocs.rbi.org.in/rdocs/Bulletin/PDFs/36T_BUL100613F.pdf (Accessed on 11 June 2013)

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higher than 5.0 per cent of their GDPs.3 These high-CAD emerging markets are more susceptible to currency volatility since financing the CADs requires large doses of dollardenominated capital inflows. Once these inflows reduce, excess demand for dollars for bridging the CAD makes dollars scarcer and sharply increases their value against local currencies. India is a typical example. Import compression can help in the above situation by reducing the demand for dollars. Unfortunately the two strongest imports pumping India’s trade and current account deficits – oil and gold – appear unstoppable. Crude oil is a necessity and cannot be compressed. Higher customs duties discouraging crude oil imports will be a retrograde measure given the high domestic demand. The Government has increased customs duties on gold with the hope that it will reduce gold imports. But given the insatiable appetite for gold in India, the measure might end up in only increasing retail gold prices and encouraging smuggling. Should the Government therefore wait and watch the rupee dip further? In a sense, the room for manoeuvre is limited given that direct intervention by the RBI through sale of dollars is only a stop-gap arrangement. Foreign exchange reserves of around US$ 290 billion are not a huge pile for supporting continuous market intervention. The cure probably lies in measures for addressing the burgeoning CAD. One of the suggestions doing the rounds is issue of tax-free NRI (Non-Resident Indian) bonds. These bonds, similar to the India Millennium Deposits (IMD) issued by the State Bank of India (SBI) in 2000,4 can attract non-reversible capital flows from the diaspora for financing the CAD, increase the supply of dollars in the economy and arrest the slide in the rupee. But while these bonds are attractive options for NRIs given their high coupon rates and arbitrage opportunities, the RBI and other Indian banks might not be too keen on them, as the foreign exchange outgo at the time of their redemption might be rather substantial. What policy makers would be hoping is for the FIIs to retain faith in the Indian economy and remain net buyers of Indian equities to ensure regular inflow of dollars. That, however, cannot happen in vacuum and would require some policy action. If NRI bonds take time to be finalised, the Government can always contemplate more concessions in FDI by raising ceilings on long-term foreign investment in specific sectors such as telecom and insurance. The RBI also can affirm its faith in the country’s long term-growth outlook by cutting interest rates for reviving investment, instead of refraining from doing on the ground of a falling rupee increasing inflation. The depreciating rupee is also an opportunity for several exporters to increase their overseas business and policy measures for encouraging exports is another feasible option. 3

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‘Bernanke Sneezes, Rupee gets the flu’, Sajjid Chinoy, The Financial Express, 12 June 2013; http://epaper.financialexpress.com/124612/Indian-Express/12-June-2013#page/8/2 (Accessed on 12 June 2013) The five-year foreign currency deposits issued for NRIs in dollar, pound sterling and euro had fixed rates of interests. They were preceded by the Resurgent India Bonds and India Development Bonds issued in 1998 and 1991 respectively.

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The sliding rupee does not require hitting the panic button. But the right buttons have to be hit for re-attracting capital at a time when it is deserting emerging markets like India. By choosing the right buttons, the Indian policy makers can convert the falling rupee into an opportunity for cutting CAD and restoring the somewhat precarious health of India’s external sector. . . . . .

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ISAS Brief No. 288 – 11 July 2013 469A Bukit Timah Road #07-01, Tower Block, Singapore 259770 Tel: 6516 6179 / 6516 4239 Fax: 6776 7505 / 6314 5447 Email: isassec@nus.edu.sg Website: www.isas.nus.edu.sg

China’s Gwadar Pearl The port acquisition and implications for India Christabel Neo1

As several Asian nations, large and littoral, rise to counterbalance the Western powers, it is imperative for the global community to examine the geopolitics of the larger Asian region that has yet to find a sustainable framework for cooperation. When dissecting Asia’s geopolitical landscape, perhaps the most recurrent theme is China’s ‘String of Pearls’ strategy and its significance in the Sino-Indian strategic quandary. Since it was coined, nearly a decade ago, in a Booz Allen report for the Pentagon to describe the perceived encirclement of India in the Indian Ocean Region (IOR), the phrase has often been used to depict the precariousness of the competition between the two aspiring hegemons, wherein almost every decision made by either country can be viewed as a potential threat by its counterpart. Most recently, the ‘String of Pearls’ garnered renewed attention through Pakistan’s official transfer of operational rights of the deep-sea Gwadar port in its Baluchistan province to the state-run China Overseas Port Holding Company. Dubbed as the crowning jewel in the string, Gwadar’s geographic advantages – a mere 400 kilometres away from the Straits of Hormuz – certainly suggest the possibility of investing it with great strategic and military importance. In the light of the Chinese proposal to the United States Pacific Fleet Commander in 2009 that “the Indian Ocean should be recognised as a Chinese sphere of influence”, 2 it is possible to understand the frayed nerves of Indian officials. Yet, it remains to be seen whether the ‘String 1

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Ms Christabel Neo has worked as an Intern at the Institute of South Asian Studies (ISAS), an autonomous research institute at the National University of Singapore. The views expressed in this paper are those of the author and do not necessarily reflect those of ISAS. The Pakisan Thorn in China-India-U.S. Relations, Harsh V. Pant


of Pearls’, and specifically the acquisition of Gwadar port, is a genuine strategic plan aimed at undermining India’s maritime security in the IOR. This also begs the question of veracity of the portrayal of India as a helpless victim in a maritime region that is after all, its traditional stronghold.

The Strategic Perspective If utilised for purely economic ends, Gwadar port would provide greater energy security in oil-shipping for China, posing little challenge to India’s dominance of the IOR. However, the visceral fear is that there is no clear distinction between economic and strategic motives, and that a gradual militarisation of the port could allow China to affirm a significant naval presence in the IOR. In the event of a conflict, the usage of the port and adjacent airstrip as a base for air, surface and sub-surface fleets, can enable China to interdict Indian tankers and obstruct the delivery of essential supplies. In this respect, Pakistan is believed to have made known its intention to develop Gwadar with military projection capabilities – through repeated requests to China to build the port as a naval base. While the focus is on undertakings by the Pakistani Navy, it does not preclude the possible usage of the base by the Chinese People’s Liberation Army Navy (PLAN) forces. Furthermore, the long-standing Sino-Pakistani alliance has created a level of trust that can facilitate inter-operability between the two navies, particularly vis-à-vis India. Indeed, Gwadar as a full-fledged Chinese offshore naval base is a daunting prophecy; but, to temper the reaction at this initial stage, it is also crucial to assess the likelihood of such a development, and the timeframe in which it might occur. At this juncture, it is useful to apply Alfred Thayer Mahan’s criteria for appraising the value of a prospective naval station. The criteria distil three factors, namely situation, meaning “the proximity to important sea lanes or chokepoints”; strength, meaning “its natural defences or capacity to be fortified”; and its resources, meaning its ability to supply itself from the port’s environs through land or maritime transport. 3 There is little doubt about the highly strategic situation of Gwadar, due to its close proximity to the important Straits of Hormuz chokepoint, and its general location in the IOR which has a high density of the world’s oil-shipping traffic. Given China’s geographical location, Gwadar presents access to the Indian Ocean through Pakistan, and a favourable alternative for the China-bound tankers to offload Persian Gulf oil without having to navigate through East Asian waters. Despite its definite situational advantages, Gwadar port leaves much to be desired in its strength and resources. It has no natural defences – the topography of the district is that of a narrow peninsula protruding from Pakistan’s southwest coast, making it an easy target for air or missile strikes; and while there is capacity for fortification, there has been little progress 3

Gwadar and the “String of Pearls”, James R. Holmes

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thus far. The PLAN also has a relatively limited experience and expertise in offshore force projection, which needs to be improved before such expertise can be put to use at Gwadar. Although external threats always weigh in heavily on strategic decision-making, Beijing may perhaps be interested in a secure and stable internal situation in both Pakistan and China. The threats to Gwadar are both from within and without. To supply the port with resources, there have been plans to connect the Karakoram Highway to Gwadar over land, as well as lay oil and gas pipelines linking the port to China’s restive Xinjiang province. Yet, these are cast with many uncertainties as Baluchistan is troubled by insurgency and separatism. This has obstructed development in the past, when the Chinese withdrew grand plans for oil refineries, citing security reasons. Development of the region is also further hindered by the cautious and “hard-nosed” business approach that Beijing has adopted. It had previously demonstrated reluctance to be engaged in Gwadar in order to avoid raising hackles in New Delhi and Washington as well as over concerns of stability in Baluchistan. Now that it has made the decision to acquire the Gwadar port, it remains unclear how far and how rapidly the Chinese would see its development through, given the current socio-political circumstances. While this is not evidence to conclude that Gwadar has no strategic value, its military potential is greatly constrained in the short-term.

The Economic Perspective In contrast to the ‘String of Pearls’ theory, China’s narrative tends to paint its Indian Ocean policy in “broader economic and maritime security-related terms”. 4 For an extensive period of time, India and the US have held sway over the most salient shipping lanes, posing a ‘Malacca Strait’ dilemma for China. Currently, shipping vessels carrying cargo bound for western China have to travel through a long and costly route in East Asian maritime territory, and then the goods are transported thousands of miles on land to their destination. This is especially so for oil tankers, which rely heavily on US-patrolled Malacca Strait routes from the Gulf. As such, the Chinese foresee using Gwadar as a docking point for their tankers, which would afford them greater control over their shipping activities and energy security. On the strategic front, Beijing is likely to retain a largely economic outlook on the IOR rather than a military one. This is because of its need to meet rising energy demands, which are contingent on seaborne supplies from foreign nations. As with all other great powers in the region, there is a powerful incentive to maintain stability at sea to protect China’s economic interests.

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China’s String of Pearls and India’s Enduring Tactical Advantage, Iskander Rehman

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What can India do? In response to China’s access to the supposed pearls of Chittagong, Hambantota and Marao Atoll, India has no lack of options. New Delhi has already expressed interest in Iran’s Chah Bahar port, and moving forward, can explore its connections with other countries like Maldives, Mauritius and Seychelles. Still, India should divorce itself from the innate sense of vulnerability that is at times misleading, because of America’s and India’s firm grasp over China’s energy jugular. The reports of conflicting statements by India’s External Affairs Minister and Defence Minister as to whether Gwadar is “a serious matter of concern” indicate general confusion in New Delhi. This is not only advantageous to Beijing, which can leverage on this lack of a clear direction to further its national interests rapidly, but also tends to exaggerate fears and therefore encourage unnecessary action. Instead, there is need to assess the true extent to which China’s actions are a threat to India. To this end, it is important to keep in mind that, regardless of Beijing’s growing ambitions, India will, in conflict situations, have the trump card of force concentration in the IOR.

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ISAS Brief No. 289 – 16 July 2013 469A Bukit Timah Road #07-01, Tower Block, Singapore 259770 Tel: 6516 6179 / 6516 4239 Fax: 6776 7505 / 6314 5447 Email: isassec@nus.edu.sg Website: www.isas.nus.edu.sg

Indian Rupee: Tortuous Travails S Narayan1

The recent numbers of the index of industrial production (IIP) and the consumer price index (CPI) in India have been the cause for some serious concern. The IIP and CPI numbers suggest that even as growth is decelerating, inflation is actually accelerating. Specifically for the IIP, the index declined by 1.6 per cent relative to May 2012, sharply below consensus estimates as there was an anticipation for small positive gains. This, if any, is an early indication that growth projections for the current year will be scaled downwards from their already modest levels. Concurrently, consumer inflation has accelerated at 9.9 per cent over June 2012, about half a percentage point higher than the previous month. Food prices largely contributed to this increase. While it was non–cereals in the earlier occasion that caused this inflationary pressure, this time, prices of cereals have increased almost by 18 per cent. 15 July 2013 figures of wholesale price index (WPI) indicated a worsening of inflationary pressures to 4.86%. Reuters reported a drop in industrial production figures (as evident in Exhibit 1), coupled with a volatile WPI inflation. High cost of funds coupled with pressure on net interest margins will constrain the efforts of the Reserve Bank of India (RBI) to reduce interest rates at the next monetary policy review on 30 July 2013.

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Dr S Narayan is Head of Research and Visiting Senior Research Fellow, Institute of South Asian Studies (ISAS), an autonomous institute in the National University of Singapore (NUS). The author can be reached at isassn@nus.edu.sg. The views expressed are those of the author and do not necessarily reflect those of the institute.


Policy uncertainty and global headwinds add to the predicament. The rupee has been under severe pressure due to high inflation, burgeoning current account deficit and high gold imports. Emerging market currencies across the world have depreciated as debt outflows have increased following the US Federal Reserve's suggestion that its asset purchases might be tapered down in September. The US Federal Reserve is adding $85 billion per month to the system under its Quantitative Easing (QE) programme. Any tapering of QE will reduce the amount of money flowing into emerging economies. The persistent underperformance of the EU zone has led to the exit of euro investors into dollars, thus raising the dollar demand. The Indian debt market has seen an exodus of $ 3.3 billion dollars of debt capital since 21 May 2013, accelerating the rupee's fall. As foreign institutional investors (FIIs) have a relatively small share in the Indian bond market, the outflow has had a relatively low impact. In the last two weeks, FIIs have pulled out close to Rs. 8500 crores from the financial markets. In addition to this official flow, markets are also awash with rumours of huge informal flows through the grey market as rupee accumulations inevitably seek safe dollar denominated positions. The corporate sentiment that general elections is likely to happen earlier than later, has accelerated informal outflows of accumulated money to safe havens overseas. On Monday 15 July, the Reserve Bank of India moved swiftly to contain short-term volatility of the rupee to curtail excess rupee liquidity. This has presumably caused the chase for dollars. In a statement issued late on Monday, the RBI noted “The exchange rate pressure also evidences that the demand for the foreign currency has increased vis-Ă -vis that of the

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rupee in part because of the improving domestic liquidity situation� 2 . The RBI said that countries with large current account deficit like India have been affected due to market perception of likely tapering of US quantitative easing despite their own relatively promising economic fundamentals. The measures announced include hiking the Marginal Standing Facility (MSF) and the Bank rate by 200bps to 10.25% with immediate effect3. From 17 July, the RBI has set a limit on overall overnight borrowing under liquidity adjustment facility (LAF) to Rs75,000 crore. This is 1% of net demand and time liabilities.4 The average LAF in July stood at Rs45,000 but snorted to Rs92,000 crore on Monday. Perhaps the RBI suspects LAF money is being used to punt in the rupee. Also, in an unusual move, the RBI announced that it will sell government bonds worth Rs12000 crore via open market operations (OMOs) on July 18 to suck out liquidity. Rupee has depreciated by 8% since the first statement made by the US Federal Reserve in May. The rupee recorded an all-time low of 61.21 per dollar last week. The combination of poor IIP figures, persistent inflationary pressures and current account deficit have weakened the rupee, at a time when the dollar has strengthened. Improvements in the expectations of growth in the US, the federal stance of reducing QE and perhaps tightening interest rates, as well as the continuing concerns of the EU, have contributed to the strengthening of the dollar in global markets. The currencies of all major emerging markets have been falling and in the case of India, the poor performance of the economy has exacerbated the situation. It is interesting to note that while RBI has taken prompt measures to curb liquidity and volatility, there is little action from Government on fiscal controls and more absurdly the sheer absence of any articulation of even a short-term strategy to remedy the situation. The second quarter results for several Indian companies listed in the exchanges have been dismal. In all, this has led to declining investor sentiment for Indian financial instruments. Albeit, investors with greater risk appetite could take advantage of the interest rate arbitrage that is still available between US/Singapore rates and Indian rates. Even with the rupee depreciation fully accounted for, one cannot discount positive returns. This trend would continue in the short-term into the medium term. The price point for the rupee in the long-term is likely to hover between 56 and 59 to the dollar. Self-correction, presumably with measures from RBI will set in, if it falls below this price line. Once the elections are over, monetary stability is likely to return. In the short run, the rupee is likely to 2

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RBI clamps down on liquidity to curb Rs swings. Parnika Sokhi. 16 July 2013. 16 July 2013. http://www.dnaindia.com/money/1861609/report-rbi-clamps-down-on-liquidity-to-curb-rs-swings The MSF is a window that banks resort to when they fall short of the mandatory Statutory Liquidity Ratio (SLR) of 23% to borrow funds from the repo window. But banks have been running SLRs 300-400 basis points more than the mandated 23% due to risk aversion among banks and a lack of corporate demand for loans. MSF can be availed of at a penal rate of 100bps above the repo rate. This margin has been increased to 300bps by RBI on Monday. The repo rate stands at 7.25% currently. But MSF has not been availed of since May this year. Sensex slumps as RBI announces measures to arrest rupee’s fall. Capital Market-Live News. 16 July 2013. 16 July 2013. http://www.business-standard.com/article/news-cm/sensex-slumps-as-rbi-announcesmeasures-to-arrest-rupee-s-fall-113071600193_1.html

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be weak. This could be further aggravated by increases in energy prices as India depends significantly on imports of oil and even coal. There has been a belated realisation that people were hoarding gold against inflation. Consequently, there were measures imposed on investment in gold and a ban on the sale of gold ingots and primary gold by dealers. Supply controls by themselves will not curb demand as investors are seeking refuge against inflation with the purchase of gold. A reduction in gold demand, stability in energy prices, coupled with some moderation in food inflation after the rabi harvest, is likely to reduce pressure on the rupee.

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ISAS Brief No. 290 – 26 July 2013 469A Bukit Timah Road #07-01, Tower Block, Singapore 259770 Tel: 6516 6179 / 6516 4239 Fax: 6776 7505 / 6314 5447 Email: isassec@nus.edu.sg Website: www.isas.nus.edu.sg

Indian Economy, Amartya Sen and Jagdish Bhagwati Amitendu Palit1

India’s two most-celebrated economists – Nobel Laureate Amartya Sen, Professor of Economics and Philosophy at Harvard University, and Jagdish Bhagwati, Professor of Economics and Law at Columbia University – have been exchanging sharp notes and views on what ails the Indian economy and what should be its ideal recipe for success. While Sen and Bhagwati have held markedly different positions for several years on the right economic model for India, the recent spat has assumed rather bitter proportions with the chattering classes and intelligentsia also getting horizontally split. What was initially being visualised as a cerebral duel between the two renowned and respected economists with India as the case in the point, and was being portrayed as the 21st century parallel of the celebrated ‘confrontation’ between John Maynard Keynes and Friedrich August von Hayek during the Great Depression in the 1930s, has begun raking up dirt through personal insinuations and political colouring. Despite being liberal neo-classical economists, Sen and Bhagwati’s views on economic growth and development have been poles apart. A strong supporter of the state playing a leading role in funding and providing public goods, Sen has persistently argued for augmenting capacities in primary education and healthcare. For him, these should be higher priorities than a pervasive focus on raising economic growth in a populous developing 1

Dr Amitendu Palit is Head (Partnerships & Programmes) and Senior Research Fellow at the Institute of South Asian Studies (ISAS), an autonomous research institute at the National University of Singapore. He can be contacted at isasap@nus.edu.sg. The views expressed in this paper are those of the author and do not necessarily reflect those of ISAS.

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country like India, which is characterised by large gaps between growth and development outcomes. By no means, however, has Sen ever discarded economic growth. Rather, he has held the view that strong healthcare and education and greater public investment in public goods will only make growth more stable and durable. He cites China as a relevant example, while also pointing out the robust economic performance of the Indian state of Kerala in recent years, as an illustration of the strong causality between strides taken in human development and improvement in living standards. Bhagwati, on the other hand, is unabashedly laissez faire. A staunch critic of a large role of the state in influencing economic transactions, he has vociferously argued for free and fair markets. Being a trade economist, as opposed to Sen’s firm grounding in development economics, Bhagwati has been a champion of free trade and unregulated markets. He has been particularly worried over the current dip in India’s economic growth and has expressed concern over India losing its international clout along with a decline in its rate of economic growth. Criticising India’s restrictive and growth-retarding monetary policy, Bhagwati has been perturbed over the lack of economic reforms in recent years and its adverse impact on economic growth. It is tempting to simplify the Sen-Bhagwati debate as the quintessential intellectual division in opinion over whether countries should pursue economic growth as the ‘means to an end’ or as ‘an end’ in itself. Such simplification is erroneous and uncalled for. At an academic and intellectual level, the debate does have shades of the Keynes-Hayek contest. As great scholars and respected economists of modern times, their debate highlights the differences that exist between prominent thinkers on their visions of economic models and development strategies and the role of state and non-state actors. It would have been fine had the implications of the debate remained confined to academics. Unfortunately, it has begun getting interpreted in a far more perverse sense. Sen’s endorsement of the recently unveiled food security programme of the Government of India and various other initiatives such as the National Rural Employment Guarantee Act (NREGA) aimed at increasing social security and making growth more inclusive, has been taken as his tacit endorsement of the views and visions of the Congress-led UPA (United Progressive Alliance) Government. His reservations about Gujarat’s performance on social development indicators and disapproval of the state’s incumbent Chief Minister Narendra Modi’s possible elevation as India’s future Prime Minister have strengthened these impressions. There have been howls of protests over his remarks with one angry BJP (Bharatiya Janata Party) Member of Parliament going to the extent of demanding that Sen be stripped of ‘Bharat Ratna’ – the highest civilian award conferred by the Government of India on an individual. Ironically, Sen was awarded the Bharat Ratna in 1999, when the BJP-led NDA (National Democratic Alliance) Government was in power with Mr Atal Behari Vajpayee as the Prime Minister. While those keen on sensationalising the debate are waiting to pitch Bhagwati as anti-Sen and therefore anti-Congress and pro-BJP, Bhagwati has not resorted to such posturing. Indeed, he 2


was one of the earliest to champion economic reforms in India and Dr Manmohan Singh’s policies when, along another celebrated economist Professor T N Srinivasan, he wrote a paper published by the Ministry of Finance on the urgency and importance of India’s economic reforms. He has made no bones about the long association that he has had with India’s current Prime Minister. The Sen-Bhagwati debate has also diverted some attention from one of the most significant statistics made available on the Indian economy in recent times: the sharp decline in poverty reported by the Planning Commission. According to the Commission, poverty has declined from 37.2 per cent in 2004-05 to 21.9 per cent in 2011-12.2 The decline indicates an annual average reduction of more than two percentage points during the period mentioned. While the reduction of poverty itself has received less attention, more discussed are the possible factors precipitating the decline. Those arguing in favour of economic growth and aligning with Bhagwati are explaining the decline as a result of the ‘trickle down’ effect produced by high growth. Those inclined otherwise are taking the ‘Sen’ line and pointing to the role of inclusive growth programmes undertaken by the UPA, particularly NREGA, as the major triggers for reducing poverty. None of the views are entirely correct however. The first group will find it difficult to explain how ‘trickle down’ persisted despite the Indian economy dropping to a lower growth trajectory from 2008 onward. And the second group will find it hard to justify why – if NREGA and social inclusion programmes directed at the rural segments have indeed been the factors – urban poverty has declined almost as fast as rural poverty despite there not being NREGA-like programmes for the urban poor; and why rural poverty still remains much higher than urban poverty. Moving beyond the rhetoric, it is perhaps wiser to accept that Sen and Bhagwati represent two major strands of thought in the contemporary development discourse on the Indian economy: the more inclusive, greater state-driven, rights-based approach as opposed to the liberal deregulated market-oriented approach. The two are unlikely to converge. Rather than making the two great scholars look like arch enemies going for each other’s throats, it is better to accept that both espouse the same ‘end’: a healthy and prosperous Indian economy, albeit through different means.

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Press Note on Poverty Estimates, Planning Commission, Government of India, July 2013; http://planningcommission.nic.in/news/pre_pov2307.pdf (Accessed on 25 July 2013)

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ISAS Brief No. 291 – 26 July 2013 469A Bukit Timah Road #07-01, Tower Block, Singapore 259770 Tel: 6516 6179 / 6516 4239 Fax: 6776 7505 / 6314 5447 Email: isassec@nus.edu.sg Website: www.isas.nus.edu.sg

Afghan Peace Talks and the Changing Character of Taliban Insurgency Shanthie Mariet D'Souza1

Abstract The June 2013 opening of a Taliban office in Doha raised fresh hopes of a negotiated settlement of the Afghan imbroglio among certain quarters. That the process ended in a deadlock underlined the fact that the intent and negotiating positions of the parties in conflict remain the least understood. Why do the Taliban, willing to hold out an olive branch to the United States, continue to carry out such gruesome attacks inside Afghanistan? Is this a serious attempt by the United States to broker peace in Afghanistan or a desperate measure to extricate itself from the conflict theatre? Answers to these questions, to a large extent, define the complexities of the search for peace and stability in the war-torn country. It also bares the element of futility of talks, dialogue, negotiations with the extremists especially when the conditions and the time are not ripe for such peacemaking initiatives.

Introduction The Doha talks, which were initiated with the 18 June opening of a Taliban office in the Qatar capital, stand more or less abandoned. The development hardly comes as a surprise 1

Dr Shanthie Mariet D’Souza is Research Fellow at the Institute of South Asian Studies (ISAS), an autonomous research institute at the National University of Singapore. She can be contacted at isassmd@nus.edu.sg. The views expressed in this paper are those of the author and do not necessarily reflect those of ISAS.


especially when the American President Barack Obama had described it as "an important first step toward reconciliation"2 and the other parties in the negotiations – the Afghan government and the Taliban – had differing perceptions on the peace process. While Afghan President Hamid Karzai was infuriated with the attempt of the Taliban to gain legitimacy by placing their name plaque and flying their flag at the office in Doha, the Taliban took credit for a rocket attack that killed four US soldiers near Bagram air base on the same day. 3 Even as the Taliban representatives in Doha continued to declare their intent to carry the peace process forward, on 25 June, the insurgents launched an early-morning well-coordinated attack on the Afghan presidential palace in Kabul. Three security guards were killed in the attack including the eight suicide attackers who came in land cruisers and tried to enter the fortified palace. Taliban subsequently claimed responsibility for the violence, citing the Central Intelligence Agency (CIA) facility, the nearby presidential palace and the adjoining Ministry of Defence as the intended targets in their spring offensive. Conventional explanations behind this ‘talk and fight’4 strategy of the Taliban assume the insurgency to be monolithic, consisting of cadres owing allegiance to the same ideology, and more importantly, the same leadership and organisation. Going by this assumption, these attacks have a demonstrative effect and provide an additional leverage of negotiating from a ‘position of strength’.5 Further, the attacks signify the strengthening of the Taliban narrative of driving away the foreigners (infidels) and a deep sense of disdain towards the prevailing state of affairs and a 'puppet' regime supported by them. However, such explanations could be misleading.

Af-Pak Strategy and the Changing Character of Insurgency Since the December 2009 rollout of the Af-Pak strategy6 by President Obama, with greater emphasis on ‘kill or capture’, a large number of Taliban leaders and fighters have been

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"Taliban attack US base in Afghanistan after talks offer", BBC (19 June 2013), http://www.bbc.co.uk/news/world-asia-22963576. Accessed on 23 June 2013. “Taliban attack US base in Afghanistan after talks offer”, BBC, (19 June 2013), http://www.bbc.co.uk/news/world-asia-22963576. Accessed on 20 June 2013. While one arm of the insurgency is fighting, the other is involved in talks – use of a dual strategy of demonstration of strength, of being the superior party in the negotiations (targeting and driving away foreigners) and at the same time gaining space and time to regroup and rearm, is an indication of the emerging differences and divisions within the insurgency (moderates and the hardliners). "Taliban’s dual strategy: Fight and talk peace", Today (26 June 2013), http://www.todayonline.com/talibans-dual-strategyfight-and-talk-peace. Accessed on 27 June 2013. The ripeness theory suggests that efforts of the US-led coalition to achieve a position of strength are not conducive to negotiations, as these are usually facilitated by a perceived ‘mutually hurting stalemate’, in which none of the parties believes it can escalate to victory. Matt Waldman & Thomas Ruttig, “Peace Offerings: Theories of conflict resolution and their applicability to Afghanistan”, Afghan Analysts Network, 2011, http://www.operationspaix.net/DATA/DOCUMENT/4360~v~Peace_Offerings__Theories_of_Conflict_Res olution_and_Their_Applicability_to_Afghanistan.pdf. Accessed on 25 June 2013. Jesse Lee, "A New Strategy for Afghanistan and Pakistan", (27 March 2009), http://www.whitehouse.gov/blog/09/03/27/A-New-Strategy-for-Afghanistan-and-Pakistan. Accessed on 25 June 2013.


neutralised.7 At one level, many of these killed are considered to belong to the insurgency's pro-talks and moderate faction. Their replacements, however, have been more radical leaders and foreign fighters who are perceived to be less amenable to talks. A direct fall-out of this has been an increase in the levels of competition for power and influence within the various shuras (council) of the insurgency, especially between the Quetta Shura Taliban (QST) and the Peshawar Shura Taliban (PST). The QST consists of clerical and traditional emirate leadership wielding political power. The PST, on the other hand, has evolved into a more centralised command and control structure (military commission based shadow government framework), with young and educated recruits, greater financial resources, and close links with the Pakistani security establishment.8 Since 2012, with the increase in the infighting and the near-absence of a unified leadership provided by periodic statements by the Taliban’s supreme leader Mullah Mohammed Omar9, there has been a gradual erosion of power within the QST, with the PST wresting greater power and control of the insurgency. As a result, within Afghanistan, the old Taliban command structure remains active in the southern heartland. However, the east and the north are witnessing the increase in activities and influence of the factions aligned more closely to the PST and the Haqqani network. The encirclement of and grip over Kabul and other population centres and along arterial roads, apart from efforts to infiltrate and occupy peripheral areas and Pashtun-dominated pockets in the north – Balkh, Sar-e Pul and Samangan from the west (Faryab, Herat and Badghis) and east (Badakhshan), have increased.

Doha Office and the Challenges of Talking to Taliban The opening of the office has given the Taliban an address to communicate with the outside world. Probing into the intent and influence of the group that has come out in support of the peace talks, however, portrays a different picture. The Taliban-led insurgency is no longer a monolithic organisation. Since 2001, the insurgency functions as an amorphous organisation comprising of loosely aligned motley of anti-government elements, followers of Gulbuddin Hekmatyar’s radical Hizb-i-Islami (HIG), the Haqqani network, Al Qaeda and its affiliates, religious clerics, narcotic traffickers, smugglers, armed groups, unemployed youths and alienated men in Afghanistan; and tribal fighters in Pakistan’s tribal areas. The transformed character of the insurgency, combined 7

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Bill Roggio, "ISAF captures Taliban facilitator behind insider attack in Paktia", Long War Journal (1 November 2012), http://www.longwarjournal.org/threatmatrix/archives/2012/11/isaf_captures_taliban_facilita.php Accessed on 25 June 2013. The military commission model is also actually better suited to running a traditional, low-intensity campaign based on guerrilla operations, which does not necessarily seek territorial control. Claudio Franco, “The evolving Taleban: Changes in the insurgency’s DNA”, Afghan Analyst Network, Kabul (19 may 2013), http://www.afghanistan-analysts.org/the-evolving-taleban-changes-in-the-insurgencys-dna. Accessed on 21 June 2013. Mullah Omar has not been seen in public in years. On rare occasions, a message is issued in his name but he never appears in front of his followers. For all the world knows, the self-styled Commander of the Faithful may be dead, mad or incapacitated. Bruce Riedel, "The Doha portent", Indian Express (3 July 2013), http://www.indianexpress.com/news/the-doha-portent/1136806/0. Accessed on 25 July 2013.


with its tactics of alliance-building and network-centric mode of operations, in the last decade, is instructive. The decentralised nature of the insurgency has helped to quickly replace neutralised leaders and foot soldiers and withstand the enemy (US and Afghan governments) attempts at fracturing, splintering, co-opting the insurgents. The rapidly changing character of the insurgency, on the other hand, has introduced an overwhelming amount of ambiguity into the peace processes. For example, the HIG has adopted a dual strategy of being a part of the government and at the same time maintaining its fighting potential, thus retaining a tremendous ‘spoiler effect’. The unsettled question therefore is regarding the intent and type of the Taliban in the Qatar office. Who do they represent and what influence do these ‘agents of peace’ have with the leaders of the factions who continue to indulge in violence? The Taliban peaceniks in Doha are said to represent the pro-talks section of the insurgency.10 In the past, the Pakistani military establishment had restrained them from initiating direct talks with the Afghan government. Mullah Baradar remains in captivity since 2010.11 In 2011, the hard-line section of the Taliban carried out an attack on Agha Jan Motasim, a member of the QST, in the city of Karachi. Motasim had advocated the need for the group’s negotiations and eventual participation in Afghanistan’s mainstream political process.

The Road Ahead What has brought about this turnaround? Has the conflict level reached a ‘hurting stalemate’ or is the time for talks used to build on the other arms of the insurgency?? The bringing in of one section of the insurgency to the negotiating table would provide some temporary respite to the establishment from intense pressure from the US (increased drone attacks and unilateral operations) and may well result in some additional pecuniary benefits and bargaining space including getting concessions on the Haqqani network. At the same time, it would help in splitting the linkages between the Afghan and Pakistani Taliban. It would, however, do little to address the continuation of the conflict by a more centrally controlled, trained and well-funded lethal insurgency of the PST. The recent attempts at peace talks could thus be an exercise in futility, when the sphere of influence and the control of insurgency are shifting to the PST.

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For biographical details on the representation of the Taliban, see Kate Clark, The Taleban in Qatar (2): Biographies – core and constellation, Afghan Analysts Network, Kabul, 24 June 2013, http://www.afghanistan-analysts.org/the-taleban-in-qatar-2-biographies-core-and-constellation-amendedwith-more-details. Accessed on 20 July 2013. Mullah Abdul Ghani Baradar is a co-founder of the Taliban movement in Afghanistan. The deputy of Mullah Mohammed Omar and leader of the militant Quetta Shura in Pakistan, Baradar was largely seen as the de facto leader of the Taliban till 2009 and was reported to be in charge of all long-term strategic military planning for the Taliban in southern Afghanistan. He was captured in Pakistan by a team of Inter-Services Intelligence (ISI) and Central Intelligence Agency (CIA) in February 2010 and has been held at an unknown location inside Pakistan. "Taliban commander Mullah Baradar 'seized in Pakistan'", BBC (16 February 2010), http://news.bbc.co.uk/2/hi/south_asia/8517375.stm. Accessed on 23 July 2013.


Providing legitimacy by talking or even weaning one section of a rather-irrelevant faction of the insurgency will not provide the space or conditions to co-opt or neutralise the lethal component of the insurgency. The process of peace talks and negotiations, labelled as a crucial step for a peace settlement, would not end the perpetual cycle of violence in the AfPak region. With no declaration of a ceasefire and with the pre-conditions for talks becoming the end-points of a process-based outcome, there is no clear vision of the end-goal of such peace initiatives. Critics for long have alleged that the negotiation process with the Taliban is yet another attempt to find a quick fix-solution to the enduring problem and, for the Western nations, a desperate measure to extricate them from the present imbroglio. History has important lessons. Peace talks and negotiations with insurgent groups, when initiated in unilateral and uncoordinated manner, carry the danger of refuelling conflicts and throwing countries into greater chaos and instability.

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ISAS Brief No. 292 – 2 August 2013 469A Bukit Timah Road #07-01, Tower Block, Singapore 259770 Tel: 6516 6179 / 6516 4239 Fax: 6776 7505 / 6314 5447 Email: isassec@nus.edu.sg Website: www.isas.nus.edu.sg

Pakistan Elects a New President Shahid Javed Burki1

Abstract With the election, on 30 July 2013, of Mamnoon Hussain as Pakistan’s next President, the country has completed the formal aspects of the transition to a democratic order. It has taken the country almost 66 years to reach this stage. As laid down in the Constitution of 1973, full executive authority is now in the hands of the prime minister who is responsible to the elected national assembly and will not hold power at the pleasure of the president. With the transition now complete, will the third-time Prime Minister, Nawaz Sharif, succeed in pulling the country out of the deep abyss into which it has fallen? Only time will provide a full answer to this question.

Having won a decisive victory in the general election on 11 May 2013 and having been sworn into office on 5 June, Mian Mohammad Nawaz Sharif settled the matter of the presidency on 30 July. This office had acquired great importance in Pakistan’s political evolution. Sharif had problems with the men who had occupied this office during his first two terms as Prime Minister – in 1990-93 and 1997-99. He was anxious that this time around the 1

Mr Shahid Javed Burki is Visiting Senior Research Fellow at the Institute of South Asian Studies (ISAS), an autonomous research institute at the National University of Singapore. He can be contacted at sjburki@yahoo.com. The views expressed in this paper are those of the author and do not necessarily reflect those of ISAS. During a professional career spanning over half a century, Mr Burki has held a number of senior positions in Pakistan and at the World Bank. He was the Director of China Operations at the World Bank from 1987 to 1994 and the Vice President of Latin America and the Caribbean Region at the World Bank from 1994 to 1999. On leave of absence from the Bank he was Pakistan’s Finance Minister, 1996-97.


man (or woman) elected to this office will not stand in the way of the prime minister and the elected assembly. With that objective in view, he and his party chose Mamnoon Hussain, a relatively low-profile member of the Pakistan Muslim League (Nawaz), as their candidate for the presidency. Hussain, born in 1940, had migrated to Pakistan in 1947. The family settled in Karachi, Pakistan’s first capital, as did most Urdu-speaking migrants who left India and moved to Pakistan. Graduating from Karachi’s Institute of Business Administration, he went into the textile business, setting up a spinning unit in his adopted city. He did well in business but also tried his hand in politics. He joined the Pakistan Muslim League rather than the Muttahida Qaumi Mahaz. The MQM was the preferred political group for the refugee community who called themselves the muhajirs. In June 1999, Nawaz Sharif, then into his second term as Prime Minister, appointed Hussain as the Governor of Sindh province. But he had to leave that office four months later when Sharif was removed by the military. In 2002, Hussain was given the PML-N ticket to fight for a seat in the National Assembly but lost by a wide margin to a candidate put up by the MQM. His loyalty to the PML-N rather than the MQM won him Sharif’s support. There was abundant political logic in Hussain’s nomination by Sharif and the PML-N. Karachi, one of the world’s largest cities, had, over the years, become an exceptionally violent place. The reason was a combination of demography, politics and economics. Over the last six decades, successive waves of migration had led to an explosion in the city’s size; its population had increased forty-fold since 1947 when it was chosen as the capital of the new state of Pakistan. The partition of British India displaced millions of Muslims from the provinces with Muslim minorities. A significant number of them, whose language was Urdu and who had the skills to staff the offices in the new government, headed towards Karachi. A construction boom began in Karachi to accommodate the new government and house its workers. This led to another wave of migration, this time bringing in construction workers from north Punjab, the province of Khyber-Pakhtunkhwa and Azad Kashmir. The two wars in Afghanistan and the way they spilled over into Pakistan displaced hundreds of thousands of people. A large number of them headed towards Karachi, finding refuge in the city’s Pakhtun colonies. These three communities of fresh arrivals competed with the city’s original population for political and economic space. Pakistan’s roller-coaster political development meant that the institutional infrastructure needed for aggregating these diverse interests did not take shape. Violence became the mode of expression for the members of these competing communities. Mamnoon Hussain, by bringing Karachi’s voice into the corridors of power in Islamabad, may be able to come to Karachi’s rescue. He is a member of the Muhajir community with a business background. And, until his election as President on 30 July, he was a member of the Punjab-dominated PML-N. This diverse background could help in Pakistan’s efforts to steer an exceptionally diverse city to settle down.


In the 30-July election – brought forward by a week to accommodate those members of the electoral college who wished to travel to Mecca to observe the closing days of the month of Ramadan – Mamnoon Hussain won an easy victory, securing 432 votes, needing only 263 to win. The electoral college for the presidential office is made up of the national parliament’s two houses – the Senate and the National Assembly – and the four provincial assemblies. The moment his election was made official by Fakhruddin G Ebrahim, the Chief Election Commissioner (CEC), Hussain resigned from the PML-N, keeping his promise that he would be an apolitical head of the Pakistani state. Unlike his predecessor, Asif Ali Zardari, he will serve the nation and not a political party. In spite of the passage of the Eighteenth Amendment to the Constitution that made the prime minister the country’s chief executive, Zardari had continued to wield almost total executive authority. He was able to do that since he had assumed control of the Pakistan’s People’s Party, the PPP, after the death of his wife on 27 December 2007. Benazir Bhutto was assassinated after she addressed an election rally in Rawalpindi. Zardari moved quickly to establish his control over the PPP, appointing himself and his son, Bilawal Bhutto Zardari, as the party’s co-chairmen. There was one unexpected development in the current move towards the establishment of a fully democratic order as represented by the latest presidential election. A day after the election, Chief Election Commissioner Ebrahim submitted his resignation to President Zardari, arguing that, while his term would have ended in 2017, he was of the view that he should step aside so that a new CEC could begin the process of preparing the country for the next general election. This must be held before the spring of 2018. “In my humble opinion, the newly elected members of Parliament should have the opportunity to forge new consensus and choose a new Chief Election Commissioner. This will also allow the next Chief Election Commissioner sufficient time and opportunity to prepare and lead the Election Commission for the general elections of 2018”, Ebrahim wrote in his letter of resignation to President Zardari whose own term runs out in September 2013. With Hussain’s election, Pakistan has completed the process of political transition to a democratic order in which the chief executive is responsible to an assembly elected by the people. Nawaz Sharif can now turn to his long “to do” list.

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ISAS Brief No. 293 – 20 August 2013 469A Bukit Timah Road #07-01, Tower Block, Singapore 259770 Tel: 6516 6179 / 6516 4239 Fax: 6776 7505 / 6314 5447 Email: isassec@nus.edu.sg Website: www.isas.nus.edu.sg

China’s ‘Look-West’ Policy: A New Link with Pakistan Shahid Javed Burki1 Abstract For a number of reasons, the structure as well as the future of the Asian economy has begun to be transformed. Some of the old assumptions no longer hold. The West’s rapid demographic transition is changing the pattern of demand which would mean that exports to the old industrialised countries will no longer be the main driver of Asia’s economic progress. There are other developments taking place that will also profoundly affect Asia’s future. One of them, examined in this paper, is the China-Pakistan Economic Corridor which is at the centre of what can be called China’s ‘Look-West’ Policy.

Beijing’s way of doing business is to plan long-term – testing on a limited scale the assumptions on which a given plan is based, and then implementing it. This approach was evident in the way Deng Xiaoping began to open the Chinese economy when he returned to power. He began his programme in 1979. The first step was to hand back small plots of land to the families who had 1

Mr Shahid Javed Burki is Visiting Senior Research Fellow at the Institute of South Asian Studies (ISAS), an autonomous research institute at the National University of Singapore. He can be contacted at sjburki@yahoo.com. The views expressed in this paper are those of the author and do not necessarily reflect those of ISAS. During a professional career spanning over half a century, Mr Burki has held a number of senior positions in Pakistan and at the World Bank. He was the Director of China Operations at the World Bank from 1987 to 1994 and the Vice President of Latin America and the Caribbean Region at the World Bank from 1994 to 1999. On leave of absence from the Bank he was Pakistan’s Finance Minister, 1996-97.


owned them before they were collectivised. This was first done in the province of Sichuan. When the output from the privatised plots inevitably increased and the farmers’ incomes expanded sharply, farming communities were allowed to invest in small “town and village” enterprises. Later the TVEs were permitted to organise joint ventures with foreign investors. This was initially done in the special economic zones that were set up along the country’s east coast. This step-by-step approach laid the foundation for China’s remarkable industrialisation. Over the last 30 years manufacturing output in the country has increased at an outstanding rate of 17 per cent a year. The size of the industrial sector is now 256 times larger than what it was when Deng launched his reform programme.

Genesis of Karakoram Highway Much the same approach is being applied to what can be called China’s ‘Look-West’ policy. The remarkable expansion of the country’s industrial base made it hungry for resources. Realising that a great deal of what it needed was to be found in the countries and regions on its western side, Beijing began to look in that direction. This look-to-the west was used as a tool for both diplomatic and economic policies. China’s first effort in that area was made in 1986 when the Soviet Union and the United States were engaged in fighting each other through their proxies in Afghanistan. It began to build the 600-km long highway – the Karakoram Highway, or KKH – that connected Kashgar in China’s Xinjiang Autonomous Region with the Pakistani region in the northeast. This was not to be just one development project aimed at opening up Pakistan’s backward and hard-to-reach areas in the northeast. It was one part of a long-term strategy developed by Beijing – the ‘Look-West’ policy. The author has had some exposure to this line of thinking in China during one of the dozens of visits he made to the country. During one of these visits he called on Zhu Rongji, then the Premier of China. The senior Chinese official, while discussing China’s development and the leadership’s plans for the future, pointed to a wall behind his desk. There was a large map of China. He said that China was different from the other geographically-large countries in that it was open to the sea only on one side, to the country’s east. It was landlocked on the other three sides. “We want to open to the west and use your country to help us develop a corridor for trade and tourism”. That conversation took place in Beijing in 1993 when the KKH had already been built. In fact the author, then working as the Director of World Bank’s China Operations, had taken a World Bank mission to Xinjiang using that route. Having opened its own western part and Pakistan’s northeast areas, China began to explore the possibility of turning an expanded and improved KKH into a major corridor. A great deal was achieved recently, during Pakistan’s Prime Minister Nawaz Sharif’s first visit to a foreign country, namely China, after taking over at the helm for the third time. He met Xi Jinping, 2


China’s new President and Li Keqiang, the new Premier. One of the more important results of the visit that began on 3 July 2013, less than a month after Sharif was sworn in as prime minister, was the signing of a “memorandum of understanding” aimed at developing a 2000-km “ChinaPakistan Economic Corridor” (CPEC). This will connect the port of Gwadar in Pakistan with the industrial and energy areas in Xinjiang. Gwadar was also built with Chinese assistance. However, since the port is located in Pakistan’s restive province of Baluchistan and was often the target of terrorist activities, development work did not proceed according to plans. The Baluchistan Liberation Army, a separatist group, has been especially active in the area. Despite threats by the secessionist groups such as the BLA, both China and Pakistan have kept their attention focused on improving communication links between the two countries. In 2011, Pakistan invited China to build a naval base at Gwadar; but Beijing, fearing a possible adverse reaction from Washington, did not respond openly. This does not mean that the idea has been shelved. Initially the management of the port was entrusted to the Singapore Port Authority but on 30 January 2013 the contract for running the port was awarded to a Chinese state-owned company. This move, along with the signing of the Iran-Pakistan Gas Pipeline (IPP) deal, was one of the last major decisions taken by the government headed by President Asif Ali Zardari. Zardari, in fact, took an active and personal interest in developing close ties with China, visiting it a dozen times during his five years as Pakistan’s President.

Ambitious Plans for Sino-Pak Corridor Both China and Pakistan have ambitious plans for the CPEC. There are plans to build a railway line that will run along the KKH. Plans also include using the KKH space to build gas and oil pipelines in the corridor. The two countries have agreed to develop entirely new industrial cities along the corridor. If the IPP agreement results in connecting the gas-producing regions in Iran with major centres of consumption in Pakistan, this could open up opportunities for other countries in the region. For instance, the IPP could be linked with the China-Pakistan pipeline. Energy-starved China has set its eyes on accessing the energy resources of the Middle East. According to one assessment, oil and gas pipelines “would be a major alternative route that cuts distance and time from the present long and slow 8,000-km route by ship from the Persian Gulf through the Malacca Strait to the eastern seaboard of China”. In this development “there are benefits for both the Gulf States as well as parts of Africa, where China is very active, and Asia”.2 Economic benefits will be huge. China’s growing appetite for energy has meant a sharp increase in the value of its trade with the region. Trade with the United Arab Emirates alone has grown 15-fold since 2000 to reach US$ 37 billion. Much of this is carried in container ships or 2

William Engdahl, Pakistan to become the new ‘major terror ground’in just six months, http://rt.com/opedge/pakistan-terrorism-separatism-economy-272, accessed on 14 August 2013

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oil tankers. It is expected to reach US$100 billion by 2015. A trade corridor of the type that is contemplated between China and Pakistan will divert a significant part of this trade to the land route. China’s reach to Africa has been well noted by both economic and foreign policy analysts. It has also drawn the attention of the governments of the West, in particular the United States. The CPEC will provide another way for China to access the mineral wealth of the African continent. China also has interest in accessing Afghanistan’s vast mineral wealth estimated by a study carried out by the Pentagon in the United States at US$1 trillion. According to several reports published in the United States including in The New York Times, “the United States has discovered nearly US$1 trillion in untapped mineral deposits in Afghanistan, far beyond any previously known reserves and large enough to fundamentally alter the Afghan economy… the previously unknown deposits – including huge veins of iron, cobalt, gold and critical industrial metals like lithium – are so big and include so many minerals that are essential to modern industry that Afghanistan could eventually be transformed into one of the most important mining centers in the world”.3 The deposits of lithium in Ghazni province are so large that they could turn the country into the world’s largest producer of this important industrial metal, surpassing Bolivia. China has already begun to exploit some of the copper reserves in Afghanistan. It won the bid to develop the copper deposits at Aynak in Logar province. It will do more if peace returns to the country. The minerals in raw or processed forms when obtained from landlocked places such as Afghanistan are more cheaply transported to the points of their use by land corridors such as the planned CPEC. If India agrees to become a part of these routes of communication, what we are looking at is a major transformation of the Asian economy. India could link up with both IPP and CPEC. The latter provides a cheaper form of transport than some of those that are presently used. What is afoot is a major but still-not-fully understood transformation of the Asian economy.

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3

James Risen, “U.S. identifies vast mineral riches in Afghanistan”, The New York Times, 13 June, 2010, p. A1.

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ISAS Brief No. 294 – 20 August 2013 469A Bukit Timah Road #07-01, Tower Block, Singapore 259770 Tel: 6516 6179 / 6516 4239 Fax: 6776 7505 / 6314 5447 Email: isassec@nus.edu.sg Website: www.isas.nus.edu.sg

Pakistan’s Water Woes Sajjad Ashraf1

While energy shortages, economic stagnation, terrorism, and religious intolerance remain in the spotlight – water shortages, warns the South Asia scholar Anatol Lieven, “present the greatest future threat to the viability of Pakistan as a state and a society”.2 Regrettably, the Pakistani discourse on the subject remains in a state of delusion and thus misdirected. Pakistan’s per capita water availability has declined from 5,000 cubic meters (m3) in the 1950s to less than 1,500 m3 in 2009, according to a Woodrow Wilson Center report published that year. Pakistan is expected to become water-scarce (the designation of a country with annual water availability below 1,000 m3 per capita) by 2035; though some experts project that this may happen by 2020, if not earlier, adds the report.3 Currently Pakistan provides about 1,000 m3 of water per capita – about the level of Ethiopia and Libya. The United Nations is expected to downgrade Pakistan from 'water stressed' to 'water scarce' country by 2030. At this rate of depletion by 2025, Pakistan’s water shortfall could be five times the amount of water that can presently be stored in the existing reservoirs. 1

2

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Mr Sajjad Ashraf is Consultant at the Institute of South Asian Studies (ISAS), an autonomous research institute at the National University of Singapore (NUS). He is also an Adjunct Professor at the Lee Kuan Yew School of Public Policy at the NUS, and an Associate Fellow at the Institute of Southeast Asian Studies, Singapore. He was Pakistan’s High Commissioner to Singapore 2004-2008. He can be contacted at sashraf1947@gmail.com. The views expressed in this paper are those of the author and do not necessarily reflect those of ISAS. Woodrow Wilson International Center for Scholars, Asia Program, Washington D.C.: Running on Empty: Pakistan’s Water Crises, edited by Michael Kugelman and Robert M. Hathaway, 2009, p 5. Ibid p.5


“The country is heading towards acute water crises”,4 confirms Qamar-uz-Zaman, who served as head of Pakistan Meteorological Department for several years. Given Pakistan’s increasing scarcity of water and the mutual proclivity to blame the other, concluded a 2009 CIA report, “the likelihood of conflict between India and Pakistan over shared river resources is expected to increase”.5 “No specific evidence [is] brought forth so far that India is actually obstructing the flow or is diverting the waters”,6 concedes Ahmer Bilal Soofi, the former caretaker law minister. And yet, Pakistani media and politicians blame India for controlling the flow of water to the detriment of Pakistan. Such a course merely blinds the policy makers and the public to the impending crisis that is of Pakistan’s own making and to which there is a no short-term solution.

Indo-Pak Indus Treaty Paradoxically, India and Pakistan resolved the contentious water issue in 1961 through the Indus Water Treaty in only 14 years. Pakistan’s own four provinces took 44 years after independence to sign the Water Apportionment Accord in 1991. Notwithstanding the Accord, water remains a highly contentious issue, effectively stalling the building of any new reservoirs in the last 40 years. Most disturbingly Pakistan’s politicians are oblivious to the fast-depleting resource. Senior bureaucracy, cocooned in its comforts, is unmindful of the gathering storm, leaving the field open to chauvinistic and often misleading rhetoric in Pakistan’s dime-a-dozen talk shows. Historically, with plenty of water shaping the wastage culture, its management and distribution have always been an important but a neglected process in much of Pakistan. Punjab – the land of five rivers, comprising of 62 per cent of Pakistan, leads in this waste culture. There are several reasons for this reduced water availability in Pakistan, some of which are admittedly natural. Pakistan’s population is ballooning. Climate change is making glacial water supply uncertain. Reduced snowmelts lead to less water in the system sometimes. Rainwater is wasted for lack of catchment and storage reservoirs – water that could be stored for future usage. Illegal logging and removal of forest cover have denuded Pakistan’s rangelands, thus causing annual flash floods that result in heavy collateral damage. 4 5

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The Dawn 31 July 2012. Khaleeq Kiani – Pakistan may face water crises, warn experts. IPRI Journal XII No.1, Winter 2012. Khalid Chandio – Water Scarcity: Pakistan and Regional Perspective, p.135 The Dawn 20 February 2010, Ahmer Bilal Soofi – Water war with India?

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In addition to the waste, Pakistan is also contaminating its water, which reduces its usability. Untreated industrial and domestic effluent is being discharged into rivers; while [because of] unregulated use, pesticides from farms find their way into streams and ground water. Pakistan’s existing water storage infrastructure is ageing and is unable to cope with the rising demand. The holding capacity of the three main dams, constructed during 1960s and 1970s, has declined by a third due to sedimentation, effectively wiping out one dam. This leaves Pakistan with water storage capacity of just about 30 days, while India can store for about 200 days. Plans for building new storage dams have fallen prey to narrow provincial chauvinism. Pakistan is estimated to lose 13 million cusecs of water every year into the sea. 7 Some experts, especially from Sindh province, argue that much of this flow is necessary to prevent saline seawater intrusion into the land. This seawater encroachment damages land otherwise suitable for agriculture up to 100 km inland during periods of reduced river flow.8

Water-Use Patterns While water availability has declined, the way Pakistanis use water has not, resulting in largescale depletion and degradation of the resource base. Life-style changes and the increasing numbers in domestic helpers are adding to the wastage. People, who do not pay, waste water by leaving taps running for laundry, washing outdoor areas, car washing, showering and dishwashing. Industrial pollutants and household waste released into water channels contaminate water. The household usage is now almost all on fixed-charge basis – meaning excessive wastage. A regulatory framework to prevent water wastage is non-existent. When the developing world, on average, uses 70 to 75 per cent of its water for agriculture, Pakistan uses nearly 90 per cent, according to a 2010 Woodrow Wilson Center report. With barely 10 per cent left for drinking, household usage, sanitation and industrial purposes, no wonder that a third of the people in the country do not even have access to safe drinking water. From within its usage for agriculture Pakistan wastes two-third of its water by following archaic agricultural practices, says Dr. Qamar-uz-Zaman former head of Pakistan’s meteorological services. Since many influential landowners are also powerful politicians benefitting from the status quo, they resist all attempts to change – only to maintain some of

7

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IPRI Journal XII No.1, Winter 2012. Khalid Chandio – Water Scarcity: Pakistan and Regional Perspective, p.133 Proceedings, International Conference on “Sindh, the Water Issue and the Future of Pakistan”, The World Sindhi Institute, Washington, DC, 9 November 2002 – An Overview of the History and Impacts of the Water Issue in Pakistan - Altaf A. Memon, Ph.D.

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the lowest productivity rates in the world per unit of water and per unit of land. Improving the efficiency of usage for agriculture cannot be over-emphasised. Recovering only 24 per cent of its annual overhaul and maintenance (O&M) cost Pakistan’s canal water irrigation system is financially unsustainable. The rest of the money for O&M comes in subsidies, disclosed a Planning Commission report.9 This low cost to the user breeds wastage and thus is a national loss. Pakistan’s poor policy-choices include underinvestment in basic infrastructure. Excessive use of water in agriculture and wastage has exacerbated a bad water situation which has reached alarming levels. With availability falling Pakistan’s water scarcity is a ticking time bomb. Pakistan needs to add storage capacity, prevent water wastage and devise better methods of management of this increasingly-scarce resource. The situation, if not tackled on war-footing, will affect agricultural production, industry and exacerbate inter-provincial disharmony in Pakistan. The shortages will adversely affect relations with India – in this case the upper riparian state with which relations, at best, are based upon mistrust. Perhaps India and the world community could come forward in the interest of regional harmony and help Pakistan prepare for this looming crisis.

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The Dawn, Planning Commission warns of a water crisis, Javed Mirza, 30 June 2012

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ISAS Brief No. 295 – 4 September 2013 469A Bukit Timah Road #07-01, Tower Block, Singapore 259770 Tel: 6516 6179 / 6516 4239 Fax: 6776 7505 / 6314 5447 Email: isassec@nus.edu.sg Website: www.isas.nus.edu.sg

A New Strategy to Revive India’s Economic Growth Shahid Javed Burki1

Abstract The author joins the debate on what has caused the Indian economy to stumble over the last few months and what can the policy makers do to revive growth in a way that it can be sustained over time. It can be argued that the economy’s wounds are self-inflicted. In the author’s view, India’s policy makers – not just those who currently hold the reins of power but also those who come after them – must bring about a fundamental change in the Indian economic strategy.

Bad News about the Economy Bad news has come out of New Delhi in recent days. On 30 August 2013, the Government released a report on the performance of the economy for the quarter ending 30 June. The Government waited until the stock and financial markets were closed to announce that the economy expanded by 4.4 per cent, well below the economists’ projection of 4.8 per cent. Manufacturing and mining were hit the hardest. That the authorities waited until the close of the markets to release this news was another indication of their nervousness. That the policy makers are extremely anxious and fear the reaction of the market had the opposite effect. It further eroded confidence; and, as economists have pointed out for years, nothing hurts the 1

Mr Shahid Javed Burki is Visiting Senior Research Fellow at the Institute of South Asian Studies (ISAS), an autonomous research institute at the National University of Singapore. He can be contacted at sjburki@yahoo.com. The views expressed in this paper are those of the author and do not necessarily reflect those of ISAS. During a professional career spanning over half a century, Mr Burki has held a number of senior positions in Pakistan and at the World Bank. He was the Director of China Operations at the World Bank from 1987 to 1994 and the Vice President of Latin America and the Caribbean Region at the World Bank from 1994 to 1999. On leave of absence from the Bank he was Pakistan’s Finance Minister, 1996-97.


economy more than loss of confidence. The real challenge before the policy makers is to restore faith in the economy’s future particularly in the foreign markets. This is important for India because the country, unlike the miracle economies of East Asia, depends on external capital flows to finance its fairly large current account deficit. In recent months most of these flows were short-term, destined towards the capital markets. This type of flow is very susceptible to the way the markets read the economy.

Mistakes in Handling the Weakening Economy In dealing with the crisis the policy makers have made two major mistakes. They have decided that they must worry more about the rate of inflation that, according to their reading, remains stubbornly high. To bring it down they have decided to use monetary policy to curb demand. This Friedman-like approach was taken because of lack of confidence that the managers of fiscal policy in New Delhi will be able to use their powers to affect demand. But this approach begs two important questions. Is the rate of inflation really high and should the monetary policy go in the direction in which it is proceeding? The answers to both questions are “no”. The monetary authorities focus more on the consumer price index, the CPI, to fashion their policy response. They don’t use the Gross Domestic Product (GDP)-deflator since it appears with a time lag. Those who manage the monetary policy don’t like to wait for too long before they act. The CPI and the GDP-deflator usually move in tandem, unless some sector in the totality of national product sees a significant increase in its value-add. This has happened in recent times when the contribution of agriculture, expressed in nominal terms, far exceeded its contribution to GDP. This divergence was caused by a significant increase in the Government’s procurement prices. The increase in the prices of the commodities, in administering which the Government plays an important role, was mostly resorted to for political rather than economic reasons. This pumping of money into the rural economy caused prices of food items to rise and contributed to the increase in CPI and resulted in the policy makers becoming nervous. Their anxiety led to the tightening of domestic money supply. This response to the economic crisis was the opposite of what should have been done. India needs more investment in the economy rather than less. Given the strains on the fiscal side, a Keynesian approach cannot be adopted. The real option is to stay with monetary management to fine-tune the economy. While this was happening, the authorities responsible for budgetary matters entered the picture but on the wrong side. They became Keynesian but for the wrong reason. They announced a massive increase in the programme to subsidise food for the poor, knowing full well that a significant amount of the resources thus spent would not reach the poor, the intended targets of the programme. If the authorities are aware of this – and there is no reason why they should not be, since research books in India are full of studies that have come to this conclusion – the real reason may well be that those in power want to keep on their side the real beneficiaries. Those who really benefit from the supply of subsidised food are the 2


tens of thousands of people responsible for handling it. They are probably an important voting bloc in a highly competitive political system. This is a highly cynical interpretation of this otherwise inexplicable move. The day the Indian Parliament approved the revised food subsidy programme the capital markets sank. They recognised that this was a massive mistake made by the managers of a troubled economy.

Move towards Low-Wage Manufacturing There is one fundamental fact about the Indian growth story that must not be lost sight of as the policy makers now as well those who will assume power after the next elections address the problems that have surfaced in the economy. Unlike most other rapidly developing economies, India’s growth spurt was not caused by a low-wage manufacturing sector producing for the export markets. It was the consequence of the remarkable performance of the information technology (IT) sector over the last decade and a half. With this sector, the Indians have begun to dominate some parts of the computing world. The success of this sector was followed by that of some other high-tech enterprises. India is now a world leader in the pharmaceutical industry and has captured a significant part of the generic drug market. These sectors powered the rest of the economy but in a limited sense. The main beneficiaries were the highly trained scientists who manned these sectors. Their earnings rose but their demand for goods, commodities and services was markedly different from the demand for items consumed by the masses. The multiplier associated with these sectors was small and restricted to the overall impact of the sectors in which they worked. For India to be able to sustain a high rate of growth over decades, not just over a few years, it will have to develop an economy where the engine of growth comes from the activities that employ low-wage workers. In other words, the country should follow the model pursued with such success by the “miracle economies� of East Asia. There is an opportunity for doing that, since the manufacturing centres in East Asia have begun to see significant increases in their wage bases. The manufacturers who went to East Asia because of its low wages are now looking for other places. India could become the new destination.

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ISAS Brief No. 296 – 14 October 2013 469A Bukit Timah Road #07-01, Tower Block, Singapore 259770 Tel: 6516 6179 / 6516 4239 Fax: 6776 7505 / 6314 5447 Email: isassec@nus.edu.sg Website: www.isas.nus.edu.sg

Pakistan: Politics of Promises, Perils and Progress Iftekhar Ahmed Chowdhury1

Mian Nawaz Sharif was swept into power in May 2013 on a mandate that contained a slew of promises. These included addressing in all seriousness the problems of terrorism, economy, energy and relations with key relevant powers. It was no surprise that Nawaz, and his Pakistan Muslim League (PML) should have won the polls in a canter because of the rampant corruption and woeful mismanagement of governance during the preceding rule of the Pakistan People’s Party (PPP). The fact that the transition was peaceful, democratic and smooth – the first-time-ever a civilian government transferring power to another – signalled the dawning of a new and positive era in Pakistan’s politics. Nawaz played his politics deftly. He allowed the party of a tactical ally but potential threat, Imran Khan’s Tehreek-e-Insaf, to form government in the province of Khyber Pakhtunkhwa. The same was the story with Balochistan. This reflected a commitment to democratic values. Of course he retained his brother and principal adviser Shahbaz Sharif as the Chief Minister of Punjab, the largest and the most prosperous of provinces and the sword arm of Pakistan. This action drew some flak from ethical purists, but Nawaz calculated that the risk to the impeccability of political reputation was worthwhile to keep Punjab under total control. Politics is after all about retaining power, and not always giving it away. But that is exactly the risk he seems to be running in dealing with the Taliban and the terrorists. His detractors are accusing him of giving away power, or at least military 1

Dr Iftekhar Ahmed Chowdhury is Principal Research Fellow at the Institute of South Asian Studies (ISAS), an autonomous research institute at the National University of Singapore. He is a former Foreign Advisor (Foreign Minister) of Bangladesh, and he can be contacted at isasiac@nus.edu.sg. The views expressed in this paper are those of the author and do not necessarily reflect those of ISAS.


advantage to them. The Taliban had mellowed slightly and generally welcomed Nawaz’s offer of talks, but they soon became divided on the issue and a series of bombings was unleashed. This lent grist to the mill of the military, particularly the Army Chief General Ashfaq Kayani, who was never to be confused with Florence Nightingale vis-à-vis the extremists (though he and the Army, particularly its all-powerful intelligence branch had empathy for the Afghan Taliban). Should the gulf between Nawaz and the military widen on this, this could become a cause for some concern. Nawaz will bear this in mind while choosing Kayani’s successor in November. He has sought to unite the major political parties at a recent conference in order to be able to forge a common position against terrorists. What is critically needed is a comprehensive strategy to deal with the terrorists, some kind of what in military parlance is known as a Single Integrated Operational Plan (SIOP).

A Muddle-Through The economy is muddling through, and the IMF has just approved a US$ 6.2 billion bail-out. But the economic fundamentals must be put right to ensure sustainability of development. So, though market has turned around, it is not yet time to celebrate. Some power-plant dues have been cleared, and the punishing hours of load-shedding have been reduced, but not eliminated, and the threat of return to those unsavoury days lingers. Nawaz has rightly focused on infrastructure, roads, rails, ports and pipelines. He went to China, not in quest of knowledge as Islam bids its believers to do, but in search of energy. The port Gwadar is to be land-linked to China. The burgeoning understanding between the US and Iran may help remove some impediments from completing the Iranian gas pipeline. Otherwise the project would have fallen foul of US-imposed sanctions on Iran. Issues with India are far from being resolved, but Nawaz and India’s Prime Minister Manmohan Singh have at least met, and we see the glimmer of rapport. But on both sides there are ‘nay-sayers’ and every cross-border incident contains the seed of disruption of ties; but at least for now, positive signals are emanating from high political offices in both Delhi and Islamabad. For India and Pakistan this is no mean progress. Of course the litmus test will be if the Bharatiya Janata Party was to lead government in Delhi following the upcoming elections, but Nawaz is not keen to meet trouble half-way. Also with the US some of the past misunderstandings are now behind. US President Barack Obama is expected to receive Nawaz soon in Washington. Enhanced understanding between the two protagonists, at times friends and at other times foes but on paper always allies, is essential if Afghanistan is to see a modicum of stability at anytime in the future.

‘Reconciliation’ Mantra In all his approaches Nawaz seems to have chosen to be ‘reconciliatory’. He prefers to accommodate rather than give affront. There is a broad sense prevailing in the public mind that his heart is in the right place, and he is genuine in his endeavours. Only time will tell if 2


this tactic makes for political wisdom. There will be perils and pitfalls on the way to substantive progress, but those who want Pakistan to succeed will draw comfort from the fact that this reincarnation of Nawaz as Prime Minister shows a more savvy, seasoned and surefooted politician in power, if not always in total control.

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ISAS Brief No. 297 – 14 October 2013 469A Bukit Timah Road #07-01, Tower Block, Singapore 259770 Tel: 6516 6179 / 6516 4239 Fax: 6776 7505 / 6314 5447 Email: isassec@nus.edu.sg Website: www.isas.nus.edu.sg

US Government Shutdown and the South Asian Diaspora Shahid Javed Burki1 At first sight it may seem a bit of a stretch to link the United States Government’s shutdown with the size of the South Asian Diaspora in America. But the connection between the two becomes clear once it is noted that the right-wing of the Republican Party has taken a long step towards exhibiting its distaste for immigration. It was when the country was more receptive to receiving foreigners that the South Asians built large communities in various parts of United States. The South Asians benefitted particularly from this openness since they brought into America the skills that the “natives” did not have in the needed quantity. There are now about 6-8 million people of South Asian origin living in North America. Since most of the South Asian immigrants are highly qualified and are working in the occupations that pay well, their per capita income is 20 per cent higher than the overall American average – or US$ 60,000. The American income per head is slightly more than US$ 50,000. In other words the total South Asia Diaspora income in America is about US$ 400 billion. This is equivalent to about one-fifth of the total national income of the sub-continent. With such high incomes the Diaspora has begun to contribute significantly to the development of the countries they left behind when they moved to America. In so far as new migration is concerned there are two contributing factors working in opposite directions. For much of today’s rich world there will be significant decline in the rate of fertility resulting in reductions in the size of its population. On the other hand most 1

Mr Shahid Javed Burki is Visiting Senior Research Fellow at the Institute of South Asian Studies (ISAS), an autonomous research institute at the National University of Singapore. He can be contacted at sjburki@yahoo.com. The views expressed in this paper are those of the author and do not necessarily reflect those of ISAS. During a professional career spanning over half a century, Mr Burki has held a number of senior positions in Pakistan and at the World Bank. He was the Director of China Operations at the World Bank from 1987 to 1994 and the Vice President of Latin America and the Caribbean Region at the World Bank from 1994 to 1999. On leave of absence from the Bank, he was Pakistan’s Finance Minister, 1996-97.


developing nations in Asia and Africa will continue to see large increases in their populations. Some global demographic balancing would be of advantage to both groups of countries. Poor countries will benefit from an increase in the size of their Diasporas in several different ways. For instance, a significant amount of the remittances that flow back from the Diasporas to the countries of their origin will help to alleviate poverty by adding to the incomes of the poorer segments of the population. Rich countries will be rewarded by a slowdown in the aging of their populations with the infusion of young people by way of immigration from the developing world. But there is an opposing factor: the growing antiimmigration sentiment in many rich countries. In his new book Exodus, the economist Paul Collier addresses the question: how much new migration is beneficial and for whom? 2

‘Unabsorbed Diasporas’ Argument He answers the question from three perspectives: the migrants themselves, the countries of their origin, and the countries to which they move. The migrants clearly benefit. If they do not, they would go back home. After they move, the migrants’ “productivity rockets upwards”, writes Collier, because they are “escaping from countries with dysfunctional social models”. However, he believes that continued mass immigration threatens the cultural cohesion of rich countries. A large unabsorbed Diaspora may cling to the cultural norms that made its country of origin dysfunctional and spread them to the host country. Collier, writing from Britain, must have had in mind the perverse behaviour of some of the Muslim youth in his country. They failed to assimilate host-country values even after the Muslim Diasporas were several generations old. Some members of these communities resent the culture of the adopted land so much that they have used violence as a form of expression. What about the countries that have received large numbers of migrants? These include Britain, Canada, the United States and the oil-exporting nations of the Middle East. All these have large South Asian Diasporas. Collier believes that they have benefited from past immigration, but will probably suffer if it continues unchecked. According to a review of the Collier book by The Economist, “furthermore when a society becomes too heterogeneous, its people may be unwilling to pay for a generous welfare state. Support for redistribution dwindles if tax payers think the benefits will be for people unlike them”.3

US Right’s Obsession For a good example of this kind of response we may look no further than the shutdown of the US government on 1 October 2013, the start of that country’s new fiscal year. The American political right is obsessed with what it sees as the cost to the society resulting from the welfare demands of the new class of immigrants. This is the class that will benefit from the 2 3

Paul Collier, Exodus: How Migration is Changing Our World, Oxford University Press, London, 2013. The Economist, “Migration: The Mobile Masses”, 28 September 2013.

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Affordable Care Act, also known as Obamacare. The right sees it as a giant welfare programme for the poor who can’t afford health insurance unless it is subsidised by the state. In light of developments such as these it may no longer be possible for the worker-surplus countries to send many more people to today’s rich world. If those who oppose large-scale immigration were prepared to go to the extent of shutting down their government, it is clear that the “welcome” mat the United States had put out at the many entry-points at which foreigners came into the country is being removed. This means that the South Asian Diaspora will no longer grow as fast as it has done in the past three decades. Given that as the likely outcome, will the South Asian Diaspora continue to contribute to the sub-continent’s economic, political and social development? The answer is ‘yes’, even if no additional large-scale migration takes place from South Asia. The current South Asian Diaspora, even with no addition to its numbers through migration, will continue to grow at the rate of at least 1.5 per cent a year – the rate of natural increase corresponding to that in what were once their homelands. And, their economic base estimated by the author in an earlier ISAS work at US$ 1.3 trillion,4 will continue to increase but at a slower rate since the new South Asian migrants heading towards the US will be fewer now. However, individual immigrant incomes in the host countries will increase as the members of the Diaspora move up the economic scale in their adopted countries. Their impact on the countries they have left behind will continue to increase but certainly not as rapidly as before the US political right acted with such anti-immigration sentiment.

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Shahid Javed Burki, “South Asian Diasporas: Agents of Change in a Poorly Integrated World”, ISAS Special Report No. 03, 19 July 2011.

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ISAS Brief No. 298 – 6 November 2013 469A Bukit Timah Road #07-01, Tower Block, Singapore 259770 Tel: 6516 6179 / 6516 4239 Fax: 6776 7505 / 6314 5447 Email: isassec@nus.edu.sg Website: www.isas.nus.edu.sg

Dilemma of Drones: Peace Prospects in Pieces Iftekhar Ahmed Chowdhury1

The recent US Drone attack that made bull’s eye and killed the target, the Taliban chief in Pakistan, Hakimullah Mehsud, also caused a huge collateral damage. An unintended consequence was a return to the doldrums of the tricky and unstable US-Pakistan relations, which was slowly but surely being restored by painstaking efforts on the parts of both Washington and Islamabad. The newly-elected Pakistani Prime Minister Nawaz Sharif had travelled to the United States, and following his interaction with the American leadership, a thaw in the relations between the two sides was discernible. Sharif had just obtained the assurances of a US$ 6.6 billion bail-out from the International Monetary Fund for his country’s stalled economy. The US also committed itself to disburse US$ 300 million to Pakistani hands, as a tranche of the US$ 1.6 billion in military assistance promised but held back by the Congress. Indeed the US and Pakistan were endeavouring to put behind them the soured relations that seemed to forever haunt the ties between these two formal allies, and make a fresh start, just on the eve of the planned US withdrawal from Afghanistan in 2014 when bilateral cooperation would be critical.

1

Dr Iftekhar Ahmed Chowdhury is Principal Research Fellow at the Institute of South Asian Studies (ISAS), an autonomous research institute at the National University of Singapore. He is a former Foreign Advisor (Foreign Minister) of Bangladesh, and he can be contacted at isasiac@nus.edu.sg. The views expressed in this paper are those of the author and do not necessarily reflect those of ISAS.


It is not that Pakistani authorities are shedding any tears for the Taliban leader. He is no Florence Nightingale in their eyes. He has been responsible for many Pakistani deaths, some counts total 1,200 this year alone, and the Pakistanis had made no objection to the bounty of US$ 5 million that the Americans had put on his head.

Row over Timing of Attack But the problem was with the timing of the attack in North Waziristan. It came just when the Pakistani government was about to initiate a dialogue with the Tehreek-e-Taliban Pakistan, as this loose assortment of extremist elements is called. The reaction from the Taliban was swift. It immediately called off the talks and vowed revenge. Their targets would not be confined to Americans, and the Pakistanis are well aware of this fact. Unsurprisingly, the Pakistan Foreign Office called in the US Ambassador, Richard Olson, to register protest. Information Minister Pervez Rashid said that the US had “tried to attack the peace talks with this drone”, but he added, though it was uncertain how this would be done, “we would not let them fail”. Interior Minister Chaudhry Nisar Ali Khan was more strident: “[It] is not just the killing of one person, it is the death of all peace efforts”, he bemoaned, accusing the US of “scuttling the talks” and gravely warning that “every aspect of USPakistan relations would be reviewed”. Nawaz Sharif himself, just having urged restraint on US President Barack Obama with regard to drones during their talks at the White House, described such attacks as “counterproductive to [Pakistan’s] peace efforts”. The US response, to Pakistanis, must have seemed irritatingly routine. “Negotiations with the TTP is an internal matter for Pakistan”, a US official said, adding: “More broadly, the US and Pakistan continue to have a vital, shared strategic interest in ending extremist violence so as to build a more prosperous, stable and peaceful region. We have an on-going dialogue with Pakistan regarding all aspects of the relationship and our shared interests, including security and counterterrorism cooperation, and we work together to address each other’s concerns”.

Impact on Pak-US Ties It is this rosy picture of bilateral ties that stands threatened. Public opinion is important for Nawaz Sharif, and in Pakistan it is now swinging against America. The US and Pakistan would need close cooperation as the US troop draw-down from Afghanistan ensues, but this is now rendered difficult. Much will depend on the ultimate position of Imran Khan, whose Party, the Tehreek-e-Insaf, is in alliance with Sharif’s Pakistan Muslim League and forms government in Khyber Pakhtunkhwa, the province where the incident occurred and which borders Afghanistan. Imran Khan had always opposed drone strikes, and now has demanded that US access to Afghanistan through Pakistan be blocked (as was done when 24 Pakistani soldiers were killed in a fray with Americans two years ago). Should Imran Khan persist with 2


this position, he could create major problems for the United States as also Nawaz Sharif. For now he has said: “We will not let [NATO] supplies pass even if we have to sacrifice our government”. It may seem somewhat extreme, but Imran has been known to carry out his threats. The head of the Taliban is like that of the hydra in the Greek legends: when one is cut off another quickly takes its place. Hakimullah himself was quickly chosen when his predecessor Baitullah Mehsud was killed, also by a drone attack, some years ago. This time round the Taliban seem to have temporarily agreed on Asmatullah Shaheen, the head of the executive council, as the interim leader. There may be a bit of a rift with regard to the choice of the permanent leader. Some Taliban groups support Mullah Fazlullah of Swat, the hard-liner whose followers shot the teenage girl Malala Yusufzai, and yet some others back Khan Said Sajna, seen as more of a moderate and more-pro-talks. But for all one knows, the difference may be like as between tweedledum and tweedledee. Right now, both Islamabad and Washington are in bit of a quandary as to what to do. Their best bet is perhaps to hope and pray that this too shall pass! The government might be accused of doing a bit of ‘public posturing’, but the incident could have, in the eye of the public, turned a villain into a victim, and once again unleashed another spate of antiAmericanism in the Pakistani polity. That would bode ill for both sides.

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ISAS Brief No. 299 - 11 November 2013 469A Bukit Timah Road #07-01, Tower Block, Singapore 259770 Tel: 6516 6179 / 6516 4239 Fax: 6776 7505 / 6314 5447 Email: isassec@nus.edu.sg Website: www.isas.nus.edu.sg

Northeast India and Southeast Asia: Creating Tourism Synergy Laldinkima Sailo1

In the last one year several tourism officials from Assam and the other Northeast states of India have benefitted from the Singapore Cooperation Programme, in capacity building, and received training that involves a range of tourism management skills. This highlights the range of opportunities that exist for synergy between Singapore and other Southeast Asian countries, on one side, and Northeast India, on the other. While the obvious complementary aspect is provided by tourists from Southeast Asia as consumers looking for new destinations which Northeast India provides, the development of such cooperation mechanisms opens new opportunities that can have significant impact for the region as a whole. Indeed, lessons can be drawn from Southeast Asian nations like Thailand and Singapore that have achieved a high measure of success in developing their tourism industry. The opportunity to benefit from capacity-building programmes and for learning from those who have achieved some success augurs particularly well for Northeast India which has seen increased investments in the tourism sector as well as burgeoning foreign tourist inflows into the region. Despite the low base, several Northeast states have seen increased tourist arrivals, and in the latest figures available for the year ending 2012, the growth rate of foreign tourist arrivals overshadowed domestic tourist arrivals. Manipur and Tripura saw an increase of

1

Mr Laldinkima Sailo is Research Assistant at the Institute of South Asian Studies (ISAS), an autonomous research institute at the National University of Singapore. He can be contacted at isasls@nus.edu.sg. The views expressed in this paper are those of the author and do not necessarily reflect those of ISAS.


about 30 per cent for foreign tourists in the same period.2 As of January 2011, the restriction on foreign tourists into the region (requirement for a Protected Area Permit) was relaxed and there is a view that this led to an increase in tourist arrivals into the region. Table: Domestic and foreign Tourist Visits to Northeast India States during 2011-2012 State

2011 Domestic 233227

2012 Domestic 317243

Foreign Foreign Arunachal 4753 5135 Pradesh Assam 4339485 16400 4511407 17543 Manipur 134505 578 134541 749 Meghalaya 667504 4803 680254 5313 Mizoram 62174 658 64249 744 Nagaland 25391 2080 35915 2489 Sikkim 552453 23602 558538 26489 Tripura 359515 6046 361786 7840 Source: Website of Ministry of Tourism, Govt of India.

Growth Rate Domestic Foreign 36.02 8.04 3.96 0.03 1.91 3.34 41.45 1.10 0.63

6.97 29.58 10.62 13.07 19.66 12.23 29.67

Meanwhile, the state governments as well as the central Tourism Ministry have made efforts to develop infrastructure to give a boost to the industry. All states of the Northeast have increased their tourism budgets with a focus on creating more infrastructure facilities – particularly transport connectivity – as well as increasing rooms available for tourists. Initiatives like Nagaland’s Hornbill Festival have gained considerable traction within India and abroad while those like Mizoram’s Anthurium Festival have shown potential. Nearly 13 per cent of the central Tourism Ministry’s budget was spent in the Northeast in the last year and in September 2013, New Delhi announced a Central Finance Assistance of over Rs 123 million for various tourist projects3 including development of eco-friendly walkways, landscaping, beautification projects, development of more accommodations, eateries as well as up-gradation of signage and hoardings to make it easier for tourists to get information once they are in the region. Funds have also been earmarked for the development of eco-adventure and cultural tourism in the region. Hunli region in Assam and Kuhuboto in Nagaland were identified as areas where these aspects of tourism will be promoted as pilot projects. Yet, the single biggest portion of the recently disbursed funds was earmarked for the development of Tawang in Arunachal Pradesh that will form a part of the Buddhist tourist circuit. Besides the increase in demand for eco- adventure, and cultural tourism, the development of a Buddhist circuit that encompasses locations across India, Bhutan, Sri Lanka, Myanmar, Thailand and other Southeast Asian destination is one of the most promising sectors for the entire region. Within India, the World Bank is to provide funds for 2

3

Domestic and Foreign Tourist Visits to States/UTs during 2011–2012, Ministry of Tourism, Govt. of India, http://tourism.gov.in/writereaddata/CMSPagePicture/file/marketresearch/New/2012%20Data.pdf Accessed 27/09/2013. ‘Financial aid to boost North-East tourism sector’ (2013, September 8), The Hindu, http://www.thehindu.com/todays-paper/tp-national/financial-aid-to-boost-northeast-tourismsector/article5105839.ece. Accessed 27/09/2013.

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the development of major centres on the Buddhist circuit including in Sarnath, Kushinagar and Shraswati as these are projects which can also be used as pro-poor development projects that will generate increased revenues for the states.4 ASEAN member countries have already been working on the development of Buddhist circuits within their own countries, on a bilateral basis and at the regional level, including taking it up with India. The idea of marketing ASEAN and India as an integrated circuit was endorsed at the ASEAN Tourism Ministers Meeting way back in 2008 and is seen as an area of enormous potential. This is also an area for which Myanmar has significant opportunities and has rightly taken a lead in bringing its neighbours together.5 The Tourism Authority of Thailand (TAT) has taken initiatives to join hands with Myanmar in developing tourist infrastructure. A well-planned tourism industry that will usher in economic development, create jobs and provide additional source of revenues is particularly significant for Northeast India and Myanmar. Within India, research has shown that tourism creates more employment (compared to other sectors) for every Rs 100 spent. According to the World Travel and Tourism Council, the global travel and tourism industry is substantially bigger than industries such as the automotive manufacturing sector. 6 This is also true for countries such as China and the United Kingdom where it contributes much more to the GDP than the said sector. In terms of employment, after education, travel and tourism sector is the top job-creator; with an average of 50 jobs generated by US$ 1 million in spend, this is twice as many jobs as created by financial services, communications and auto manufacturing. Within the region, for Thailand which hopes to generate US$ 38 billion from the tourism industry in the current year, a 2006 study7 reveals that any change in tourism trends can have substantial impact on the economy. Tourism benefits all household classes in terms of an increase in consumption, utility, and income. The study also notes that a tourism boom stimulates demand for public services like piped water service, which can increase existing water subsidy, but if operators are charged for this service, the additional revenue can be channelled for pro-poor and development projects to benefit those affected by tourism. Even as Northeast India and Myanmar are at the nascent stage of developing their tourism industry, the opportunity to learn from regional experience and from the integration of sustainable practices is a benefit they need to take advantage of.

4

5

6 7

‘World Bank team discusses tourism development’ (2013, August 8), The Times of India, http://articles.timesofindia.indiatimes.com/2013-08-08/varanasi/41201175_1_tourism-development-tourismprojects-buddhist-circuit. Accessed 27/09/2013. ‘Thai and Myanmar agree on Buddhist circuit’ (2009, February 24), TTR Weekly. http://www.ttrweekly.com/site/2009/02/thai-and-myanmar-agree-on-buddhist-circuit/. Accessed 27/09/2013. World Travel and Tourism Council (WTTC) website. http://www.wttc.org/. Accessed 27/09/2013. Wattanakuljarus, A. (2006). ‘The Nationwide Economic and Environmental Impacts of Tourism: A Computable General Equilibrium Approach for Thailand’. A dissertation submitted for the degree of Doctor of Philosophy of the University of Wisconsin-Madison, USA.

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The ability to replicate the success of the tourism sector, as seen in Northeast India, Myanmar and elsewhere in Southeast Asia, is also of immense benefit to the larger region. Besides the gains that arise in terms of economic development, the development of these two regions can also lead to the bridging of the gap between the already-existing tourist infrastructure in India (outside of its Northeast) and that in Southeast Asia, which in turn enhances their own attractiveness. Apart from the provision of funds that need to be generated with the support of multilateral organisations and governments, the private sector in India and the ASEAN countries needs to look at opportunities to invest in the many commercially viable projects. Governments, tour operators, industry associations and researchers need to collaborate to understand the type of expectations that consumers from the region and outside of the region have and also to enhance planning and development processes. And, given that no tourism initiative can succeed without human capacity, be it in terms of planning or in generating tourist experiences, the need to develop human capacity alongside the development of infrastructure becomes crucial. The adoption of best practices from the region can accelerate the development and leveraging of benefits arising out of the tourism industry. The sharing of skills and knowledge by those who have achieved a level of success and the availing of such provisions by those who need such skills will go a long way in realising and sustaining the success of the vision set out by the tourism ministers of the region.

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ISAS Brief No. 300 – 15 November 2013 469A Bukit Timah Road #07-01, Tower Block, Singapore 259770 Tel: 6516 6179 / 6516 4239 Fax: 6776 7505 / 6314 5447 Email: isassec@nus.edu.sg Website: www.isas.nus.edu.sg

Elections in Chhattisgarh: Maoists, Turnout, NOTA and Clues for India Robin Jeffrey and Ronojoy Sen1

A crucial Indian election season began on 11 November 2013 with the first round of polling in a state where rural insurgency has claimed hundreds of lives in the past ten years and where “Maoist” groups control large, remote tracts. To conduct polling on 11 November in 18 constituencies in the southern portion of Chhattisgarh state, the authorities deployed more than 25,000 central para-military police in addition to state forces. Four other states — Madhya Pradesh, Rajasthan, Mizoram and Delhi — go to the polls over this month and next; and national elections must be held before May 2014. The temptation to see these five state elections as an indicator of things to come in the national polls has some justification. The declared prime ministerial candidate of the opposition Bharatiya Janata Party and Chief Minister of Gujarat, Narendra Modi, has thrown himself into the state campaigning. Modi has been in national-campaign mode for most of this year. His own Gujarat government has been hosting huge national conferences on key issues of development such as urbanisation and rural improvement. To invited guests from all over

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Professor Robin Jeffrey is Visiting Research Professor at the Institute of South Asian Studies (ISAS), an autonomous research institute at the National University of Singapore (NUS). He can be contacted at isasrbj@nus.edu.sg and robin.jeffrey514@gmail.com. Dr Ronojoy Sen is Senior Research Fellow at ISAS and the Asia Research Institute (ARI) at NUS. He can be contacted at isasrs@nus.edu.sg. Opinions expressed in this paper, based on research by the authors, do not necessarily reflect the views of ISAS.

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India, sometimes totalling 5,000 people, Modi has shown off his excellent Hindi oratory in lengthy speeches outlining the achievements of his state and his vision of the future. The current state elections will give a hint of how far Modi’s style resonates in the rest of the country. Will people come to hear him out of genuine curiosity or only for a free meal and a bus ride? Some argue that Modi began his run too early and will run out of steam before May. Others note that his opponents are now vigorously disputing that there is a “Modi bandwagon”. In India, as in most countries, when politicians proclaim vigorously that something isn’t happening, it is often because it is.

The Maoist Zone and Voter Turnout Chhattisgarh is a very special case. Created as a state only in the year 2000, it stretches along the rugged eastern spine of India. It has become home to the Communist Party of India (Maoist), which has built no-go areas and in May this year massacred state leaders of the Congress Party. In April 2010, they killed 76 para-military police personnel in a well-planned ambush. Whether people in the 18 constituencies in the heart of this zone would vote at all was questionable since the locals fear both the police and the Maoists. The Maoists had instructed people to boycott the elections. The conflict in the southern part of the state was the reason why the Election Commission decided on two polling days with only 18 constituencies at play in the first instalment. Those 18 constituencies were flooded with security forces. The fears of a low voter turnout, however, proved unfounded with the Election Commission estimating that a record 72 per cent polling was recorded in the Maoisthit constituencies in the first phase. This was up 11 per cent from the turnout in the area in the 2008 polls. The question of voter turnout is a fascinating one. Of the five states going to the polls New Delhi, the national capital with more middle-class people among its 10.7 million voters than any place in the country, recorded the lowest turnout in the last state elections — only 58 per cent of eligible voters bothered to vote. Chhattisgarh, at the very bottom of the Indian league table of development and urbanisation (23rd out of 23 major states in a recent development report), had a voter turnout of 71 per cent. Voters will have a new option in these elections: the chance to vote for NOTA. NOTA is None of the Above, and this option will be offered, along with the other candidates and their symbols, on each of the more than 20,000 Electronic Voting Machines deployed for the election. What happens if NOTA tops the poll has not yet been made clear. This is the first time NOTA has been an option. The state of Chhattisgarh was created to recognise a region’s distinctive topography and population. It has the largest proportion of Scheduled Tribes (STs) of any Indian state outside of the small, ethnically distinctive states of the northeast. Nearly one-third of its 21 million 2


people belong to “tribal” groups that lie outside the Hindu traditions and caste system of most of India, and 29 of the 90 seats in the state Assembly are reserved for STs. Protected by mosquitoes, poverty and difficult terrain, the inhabitants were largely left alone by the British, their predecessors and even the government of post-independence India! The latter, however, made constitutional provision for affirmative action for Scheduled Tribes “reservation” in Indian terms. Jobs in government undertakings, places in educational institutions and seats in elected bodies are reserved for STs.

The Electoral Contests In the past twenty years, however, Chhattisgarh’s long-preserved mineral riches have sailed onto the radar of Indian industrialists and economists. The state is the country’s largest coal producer and sits on large reserves of iron ore and bauxite. Isolated but self-sufficient people have collided with expanding industrial needs. The CPI (Maoist) has portrayed itself as a force protecting innocent people from ravaging capitalism. The BJP and Chief Minister Raman Singh have governed the state since 2003. Indeed, Chhattisgarh has become a bastion of the BJP, which won nine of its 10 seats in the national parliament (Lok Sabha) in 2009. An ayurvedic medical practitioner and a lifetime member of the Rashtriya Swayamsevak Sangh (RSS), Raman Singh is scarcely a household name across India. In Chhattisgarh, however, he is the best known political identity, a reputation carefully cultivated through popular measures such as rice for the poor at Rs 2 a kilo (USD 0.04). He’s known as “Chawal Wale Baba” (the Rice Leader), not a bad reputation to have in a state where most of the electorate is classified as being below the poverty line. The first phase of polling will decide Singh’s fate in the Rajnandgaon constituency where he is considered a shoo-in for victory. In the first phase, Dantewada, a hotbed of Maoist activity, was the site of another high-profile contest. The Congress has put up as its candidate the wife of Mahendra Karma, the man responsible for the Salwa Judum (a controversial and bloody movement of anti-Maoist vigilantes begun in 2005 and later declared illegal by the Indian Supreme Court ) and brutally killed in the May ambush this year. The consensus, however, is that the Congress has failed to capitalise on the breakdown of law and order in southern Chhattisgarh and a possible sympathy wave in its favour. Fingers have been pointed at the wheelchair-bound former Congress chief minister of the state, Ajit Jogi, for creating disunity within the party. Recent reports suggest though that Jogi, whose son Amit Jogi is contesting from Marwahi constituency, has patched up with the Congress at Rahul Gandhi’s behest. While most seats will see a straight contest between the BJP and Congress, in some a third player, the Chhattisgarh Swabhiman Manch, might pull a few votes. The second round of voting for Chhattisgarh’s remaining 72 seats in safer parts of the state will be on 19 November. Chhattisgarh’s capital Raipur will be going to polls in the second 3


phase. The BJP is on a strong wicket here with five of the seven constituencies in Raipur held by the party. The situation looks unlikely to change in this election though in two constituencies – Raipur North and Raipur South – the Congress has strong candidates including one sitting legislator. The counting will happen only on 8 December, along with counting in the other four states going to the polls. All the opinion polls have forecast a BJP victory in Chhattisgarh though the margins of victory differ significantly. A survey carried out by CVoter for the TimesNow channel has predicted a close contest with the Congress winning 41 seats compared to the BJP’s 46. Another survey carried out by the respected Centre for the Study of Developing Societies forecasts a rout of the Congress with the party winning between 16 and 24 seats and the BJP increasing its tally to above 60 seats. Going by the opinion polls Raman Singh is likely to be back as Chief Minister for a third term.

Table 1: Chhattisgarh Population, 2011 census Electors, 2013 Literacy, 2011 Polling stations Electors per polling station Scheduled Tribe pop. Scheduled Caste pop. Urban pop.

20.8 million 16.8 million 71 per cent 21,400 800 31 per cent 11 per cent 23 per cent

Table 2: Chhattisgarh elections, 2003 and 2008 2003 Seats in legislature 90 Won by BJP 50 Won by Congress 37 Voter turnout % 71 Seats reserved for Scheduled 29 Tribes Seats reserved for Scheduled 10 Castes

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2008 90 50 38 71 29 10


ISAS Brief No. 301 – 15 November 2013 469A Bukit Timah Road #07-01, Tower Block, Singapore 259770 Tel: 6516 6179 / 6516 4239 Fax: 6776 7505 / 6314 5447 Email: isassec@nus.edu.sg Website: www.isas.nus.edu.sg

Pakistan’s New Taliban Challenge Shahid Javed Burki1

Abstract The Tehreek-e-Taliban Pakistan (TTP) has a new line-up of leaders in place, filling the gap created by the killing of the old leadership in an American drone attack. This shift will have major consequences for Pakistan, including in regard to the difficulties with the peace process that has been sanctioned by an All Parties Conference and is being pursued by Prime Minister Nawaz Sharif. The TTP leadership change is taking place when the Pakistan Army is about to induct a new chief who will replace General Ashfaq Kayani and as the pace of American withdrawal from Afghanistan picks up. This paper examines the significance of a new group taking over the command of the TTP.

Pakistani Taliban has a New Leader On 7 November 2013, the Tehreek-e-Taliban Pakistan (TTP) announced the appointment of Mullah Fazlullah as its Emir (chief), a position that had become vacant as a result of the death 1

Mr Shahid Javed Burki is Visiting Senior Research Fellow at the Institute of South Asian Studies (ISAS), an autonomous research institute at the National University of Singapore. He can be contacted at sjburki@yahoo.com. Opinions expressed in this paper, based on research by the author, do not necessarily reflect the views of ISAS. During a professional career spanning over half a century, Mr Burki has held a number of senior positions in Pakistan and at the World Bank. He was the Director of China Operations at the World Bank from 1987 to 1994 and the Vice President of Latin America and the Caribbean Region at the World Bank from 1994 to 1999. On leave of absence from the Bank, he was Pakistan’s Finance Minister, 1996-97.

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on 1 November of Hakimullah Mehsud in an American drone attack. The announcement was made by Shahidullah Shahid, the TTP spokesman, who said that the decision was taken by the group’s 17-member governing council. The council met at an undisclosed location in North Waziristan tribal agency and deliberated for six days. Fazlullah will have full operational and tactical responsibility for the group. According to Declan Walsh of The New York Times, the Taliban also appointed Khalid Haqqani, “a little-known commander from a rural district near Peshawar, as the deputy commander, effectively signaling a shift in the Taliban leadership from the tribal belt to neighboring Khyber-Pakhtunkhwa Province”. A former security official speculated that “Fazlullah had been chosen to avert a rift between rival Mehsud factions inside the Taliban”.2 These appointments are significant for several reasons. Fazlullah will be the first leader of TTP who does not hail from Waziristan’s Mehsud tribe. The first two leaders – Baitullah Mehsud and Hakimullah Mehsud – belonged to a feared tribe. Both were killed by drone strikes ordered by the Americans. The new leader belongs to Swat district which is a “settled district” in the province of Khyber-Pakhtunkhwa. Districts are regarded as settled if the laws of Pakistan apply to them, which is not the case with the tribal agencies. Fazlullah grew up in Mingora, the district’s main city, and gained reputation for extreme ruthlessness. By choosing a person who no longer resides in Pakistan but has created a safe-haven in Afghanistan for himself and his followers, the Taliban are perhaps looking at their situation after December 2014 when the United States completes the withdrawal of its combat troops from Afghanistan. It is interesting that the second position also went to an outsider. The second significance of the TTP’s appointment of Fazlullah is that the group is turning for leadership to a militant who is not in favour of negotiating peace with the Pakistani state. In choosing a figure, who some analysts describe as Pakistan’s most feared man, the TTP was sending a signal that shook Islamabad. As outlined by TTP spokesman Shahid, “the Taliban’s goal was to signal that its insurgency against the government will continue, despite Prime Minister Nawaz Sharif’s efforts to engage the group in peace talks”.3 It is also significant – the third reason for the worry in Pakistan – that Fazlullah has picked on the security forces as his preferred targets. In many public statements he has made it clear that he regards the Pakistan Army as the real enemy. He often cites many instances of why the army in Pakistan should be the main focus of Taliban’s operations. These include not only the army’s operation in Swat but also the fact that in 2007 the-then President, Pervez Musharraf, had ordered the army commandos to clear the Lal Masjid in Islamabad of the militants who had taken residence in that institution.

2

3

Declan Walsh, “Pakistani Taliban pick hard-liner as leader, imperiling proposed peace talks”, The New York Times, 8 November, 2013, p. A4. Tim Craig and Haq Nawaz Khan, “Pakistani Taliban appoints feared commander as leader”, The Washington Post, 8 November 2013, p. A10.

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New Leader’s Background Soon after the fall of the Taliban regime in Kabul, Fazlullah led a group of thousands of young men from Swat to fight the Americans. He returned to Swat in 2002 after losing hundreds of his followers. Back in his home district he helped build a madrassa or religious school and launched a radio station to broadcast his messages and collect donations. The use of this medium of communication earned him the name of ‘Mullah Radio’. In his radio sermons he picked up the message of Sufi Muhammad, the founder of Tanzim Nifaz Shariat-i-Mohammadi (Organisation for the Enforcement of Mohammad’s Laws), became Sufi’s devoted follower and married his daughter. In 2007 he merged his organisation with the TTP thus extending the latter’s reach beyond the Waziristan tribal agencies. In 2009 he invited the TTP into Swat and took over most of the district, briefly enforcing the Islamic law in the area. While in virtual control of Swat, Fazlullah showed what his father-in-law’s organisation intended and what it considered to be Prophet Mohammad’s laws. Fazlullah banned the education of women; music and any other form of entertainment; enforced quick justice, using such punishments as the cutting of the hands of those accused of theft and stoning of adulterers; and strict dress codes for men and women. Fazlullah’s brief success created a deep sense of anxiety not only in Pakistan but also in the West. Hillary Clinton, then the United States Secretary of State, said that the take-over of Swat meant that Pakistan was faced with an “existential threat”. Islamabad decided to act. The government headed by the-then President, Asif Ali Zardari, ordered the army to clear Swat district of all militants. This was done relatively quickly. However, Fazlullah and his men escaped into eastern Afghanistan and created a sanctuary for themselves in that area of the neighbouring country. It was from there that the militant ordered the execution of Malala Yusufzai, the teenager-girl from Swat who had spoken out against Taliban’s attempts to prevent girls from going to school. The girl was seriously hurt but she survived and has gone on to spread her message from Britain where she was treated and where she took asylum. In early-October 2013, Fazlullah asserted responsibility for killing a 2-star general of the Pakistan Army and two other personnel in a roadside bombing near the border with Afghanistan.

Signals from the New Taliban Leader Prime Minister Sharif’s focus on first negotiating with the Taliban before using force, if necessary, to bring them under the state’s control has puzzled several analysts. According to The Economist, “Mr. Sharif’s people insist that the prime minister is all too aware of the futility of talks. (Not least of the challenges, the TTP is a loose alliance of around 30, often bickering groups.) But, they say, Mr. Sharif has to show that he has exhausted all the peaceful options before he can take on the jihadists with force”.4 However, Sharif may not have to 4

The Economist, “Pakistan’s militants: Bee sting”, 9 November, 2013, p. 45.

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follow this strategy. With the TTP under a new leadership, Islamabad cannot expect to negotiate a settlement with the dissident elements. Mullah Fazlullah has a record of entering into deals with the authorities to buy time to consolidate his own position. This is what he did in Swat when he entered into two arrangements with the government but reneged once he thought that he was in an advantageous position to impose his will on the citizenry. Among Pakistan’s political leadership, the person who is likely to be most affected is Imran Khan whose party, the Pakistan Tehreek-e-Insaf (PTI), leads the government in the province of Khyber-Pakhtunkhwa. The settled part of the province has now become the area from which the new TTP leadership has emerged. This will pose a problem for the PTI which, under Khan’s leadership, has been a strong proponent of negotiations with the Taliban. Another question concerns the posture the Pakistan Army is likely to adopt under the new commander to be appointed by the civilian leadership to replace General Kayani who will complete his two terms in office by the end of November 2013. All in all, the death of Hakimullah Mehsud and his replacement by Mullah Fazlullah may prove to be a gamechanger in addressing Pakistan’s Taliban problem.

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ISAS Brief No. 302 – 15 November 2013 469A Bukit Timah Road #07-01, Tower Block, Singapore 259770 Tel: 6516 6179 / 6516 4239 Fax: 6776 7505 / 6314 5447 Email: isassec@nus.edu.sg Website: www.isas.nus.edu.sg

Focus on Policies and Personalities in Mizoram Assembly Elections 2013 Laldinkima Sailo1 Even as the Congress faces strong anti-incumbency factors in Rajasthan and Delhi and an uphill climb in Chhattisgarh and Madhya Pradesh states in India, retaining Mizoram has become a matter of greater importance to the party. The results of the assembly elections to be held in these five states in November and December 2013 will be crucial in determining the tone of the General Election that will follow a few months later. On 25 November, as many as 686,000 electors will exercise their franchise to elect the new 40member State Assembly in Mizoram, where the Congress government headed by Mr Lalthanhawla is seeking to retain power. Thirty nine of the constituencies in Mizoram are reserved for Scheduled Tribes. In 2008, the Congress swept to power with an overwhelming majority, riding on the back of anti-incumbency as also the alleged rampant corruption of the Mizo National Front (MNF) government and by promising the revival of the New Land Use Policy (NLUP), a direct cash transfer scheme aimed at village farmers to develop self-sufficiency in agriculture while diversifying their income through allied activities such as poultry farming.

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Mr Laldinkima Sailo is Research Assistant at the Institute of South Asian Studies (ISAS), an autonomous research institute at the National University of Singapore. He can be contacted at isasls@nus.edu.sg. Opinions expressed in this paper, based on research by the author, do not necessarily reflect the views of ISAS.

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Table: Mizoram Assembly Election Results 1998, 2003 and 2008. Party

1998 Votes (% votes) Total Votes: 337,938

1998 Seats

2003 Votes ( % votes) Total Votes: 418,113

2003 Seats

Indian 100,608 6 125,690 (30.06 12 National (29.77%) %) Congress (INC) Mizo 84,444 21 132,507 21 National (24.99%) (31.69%) Front (MNF) Mizoram 69.078 12 67,576 3 People’s (20.44%) (16.16%) Conference (MPC) Zoram 31,190 0 61,466 2 Nationalist (9.23%)# (14.70%) Party (ZNP) Source: Compiled from the website of the Chief Electoral Officer, Mizoram.

2008 Votes (% votes) Total Votes: 611,618

2008 Seats

195,614 (38.89%)

32

154,132 (30.65%)

3

52,222 (10.38%)

2

51,403 (10.22%)

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# Then known as Mizo National Front (Nationalist)

Electoral Issues While the NLUP has achieved some measure of success, the going may not be easy for the Congress as it is already facing strong anti-incumbent sentiments. There are allegations of corruption and the MNF has forged an alliance with the Mizoram People’s Conference (MPC) and the Mara Democratic Front (MDF), with the latter two joining as junior partners. The last time when the MNF and MPC worked together in 1998 as equal partners, they won 33 of the 40 seats but the alliance was short-lived as the MNF gained enough seats to form the government on its own. The fourth main party, the Zoram Nationalist Party (ZNP) headed by Mr Lalduhawma has decided to go on its own. In an effort to negate any advantage that the Congress might reap from the NLUP, the three regional parties have announced their intention to replicate the success of the NLUP should they come to power and promised to add on to it. The main opposition party, the MNF has announced what it calls a Socio-Economic Development Programme (SEDP), which “aims to make Mizoram economically self-sufficient in agriculture and power”. Party president and former

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Chief Minister Mr Zoramthanga added that the SEDP incorporates certain points from the ‘Six Basic Needs’, the 30-year-old policy of Brig T Sailo’s party, MPC, which remained unfulfilled.2 The MPC itself, now headed by Brig T Sailo’s son and retired civil servant Mr Lalhmangaiha Sailo, has reiterated its commitment to work towards the fulfilment of the ‘Six Basic Needs’ programme and ensure self-sufficiency in the generation of power. In addition, the MPC has added a ‘Social Security Policy’ to its manifesto which will help small farmers carry their produce to the market, provide price support to farmers and ensure adequate health and nutrition cover for families with young children. The ZNP, the only party which has reservations about the idea of cash transfer schemes, has also echoed similar support policies in the form of an Immediate Economic Package (IEP) and an Urban Poor Package (UPP), both aimed at providing market access to the poor in the rural areas and helping the urban poor to gain meaningful employment through technical education, respectively. All the parties also make tall promises aimed at harnessing the youth of the state. The development of sport infrastructure, educational reforms and the use of information technology in governance feature prominently in their manifestoes. Despite the rise in unemployment, including large number of unemployed graduates, political parties have not been able to articulate clear plans on how they will create jobs. The regional parties also espouse strong Mizo nationalist ideologies and promise to safeguard cultural practices and keep immigration in check. Except for the Congress, which has announced its policy preference towards the abolition of illegal border trade in favour of formal trade along the Myanmar and Bangladesh borders, the other parties have not paid much attention to this issue.

Law and Order Elections that will be held in over 1,126 polling stations across the state are expected to be largely peaceful with only 94 stations designated as ‘Critical’ and under special watch. Mizoram, which is the only state in India to have completed the process of issuing identity cards, benefits from the active involvement of the church and civil society, under the umbrella of the Mizoram People’s Forum, which has issued guidelines that political parties and candidates are expected to adhere to. Besides ensuring that the parties stick to the Election Commission of India Model Code of Conduct, MPF conducts public meetings and rallies for the parties, negotiates with them to ensure that they minimise costs in the setting up of election offices and refrain from the use of 2

‘Mizo National Front Unveils economic blueprint’, 19 June 2013. The Shillong Times. http://www.theshillongtimes.com/2013/06/19/mizo-national-front-unveils-economic-blueprint/. Accessed on 5 November 2013.

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language that may disrupt the peace of society. The MPF also keeps a check on the use of money and discourages door-to-door campaigning. Voter turnout in Mizoram is usually high with the last one election registering 74%.

Leadership As is true for many parts of India, elections in Mizoram centre on personalities, and much attention has been focused on the leaders of the political parties. Two extensive surveys were carried out by the Mizoram University and a local news channel, Zotalk. A majority of those who responded preferred Mr Lalduhawma of the ZNP for Chief Minister but most respondents felt it would be either the Congress or the MNF that would come back to power. The main reason given for the preference for Mr Lalduhawma was that he is an untested leader who is able to articulate a better vision and take the youth with him. There was however a feeling that his party lacks a team of leadership that could help him in governing the state. Mr Zoramthanga of the MNF and Mr Lalthanhawla of the Congress also remain popular choices for Chief Minister, and their parties are seen as having a better chance of winning to form the government. For Mr Zoramthanga, a former guerrilla leader, a win would mean a third term as Chief Minister, whereas for Mr Lalthanhawla, who is known to be in the good books of the Congress President, Ms Sonia Gandhi, it could be a record fifth term at the helm of the state government. Mr Lalhmangaiha Sailo of the MPC who joined politics more recently is relatively unknown yet. What is however clear from the opinion polls is that there is a desire for change, particularly for new leadership, but a seeming lack of choice. The Congress has fielded all 32 sitting legislators again and Mr Lalthanhawla will stand from two constituencies. Mr Lalduhawma will also contest for two seats. Other prominent candidates include sitting Rajya Sabha MP Lalhmgingliana of the MNF, former Home Minister Mr Tawnluia of the MNF and former Speakers Mr Lalchamliana of the MNF and Dr Kenneth Chawngliana of the MPC. The Congress and the MNF have fielded one woman candidate each.

Conclusion Meanwhile, a month ago, ten regional parties of the Northeast including the Asom Gana Parishad, the Naga People’s Front — the ruling party in Nagaland — and the MNF met and resolved to form a new political front — the North-East Regional Political Front (NERPF) — to work together to safeguard the “territorial, cultural, social, political and economic rights of the people of the region and to continuously strive to protect the distinctive identifies of the ethnic tribes and of all the people of the region”. The grouping adopted a resolution seeking a fresh look 4


at Centre-State relations.3 This development is clearly a collective strategy among the regional parties, with the General Election 2014 on their minds. In Mizoram, these elections are significant as it is the first time that the proliferation of new media has allowed for the participation of a large section of society, including the youth who are active and keen to be part of the political process. However, the Mizo society, which has strong cultural codes, is still struggling to negotiate with the youth in creating space for them to take part in the political process and assume leadership positions. Nevertheless, even as the old guard struggles to stay at the top, the young Mizos have raised some pressing questions and lamented the inability of the present set of politicians to articulate a clear vision for the state and their lack of determination and capacity to take them to the next level of development and change. Votes will be counted on 9 December, (Monday), a day after the results are announced in the four other states that are going to polls now. This is to ensure that there is no disruption of church services in the Christian-majority state.

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‘ Ten north-east parties float regional front’, 21 October 2013, http://www.thehindu.com/news/national/other-states/ten-northeast-parties-float-regionalfront/article5255125.ece. Accessed on 5 November 2013.

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The

Hindu,


ISAS Brief No. 303 – 27 November 2013 469A Bukit Timah Road #07-01, Tower Block, Singapore 259770 Tel: 6516 6179 / 6516 4239 Fax: 6776 7505 / 6314 5447 Email: isassec@nus.edu.sg Website: www.isas.nus.edu.sg

Madhya Pradesh State Polls in India: ‘Anti-Incumbency’ No Longer Applies? Ronojoy Sen and Robin Jeffrey1

Elections in Madhya Pradesh (MP), one of the five Indian states going to the polls in November and December 2013, test conventional wisdom about Indian state elections – that governments seldom get re-elected. “The anti-incumbency factor” has been a commonplace of Indian electoral analysis for thirty years. But over the past few years, incumbents with healthy records in office are winning re-election. Madhya Pradesh’s Chief Minister from 2003, Shivraj Singh Chouhan from the Bharatiya Janata Party (BJP), is one of them, appearing reasonably well-placed to win a third term as the state went to the polls on 25 November. If opinion polls are to be believed, Chouhan, young by Indian political standards at 54, could very well succeed in joining the likes of Narendra Modi, Sheila Dikshit, Naveen Patnaik and Tarun Gogoi as a three-time chief minister. Surveys indicate that the BJP’s share in the 230-seat state Assembly may fall from its tally of 143 in 2008. But that might still not be enough for the Congress, which won 71 seats in the last election, to wrest power. Two factors appear to explain why the “anti-incumbency factor” is no longer a plausible guide to the outcome of state elections. First, voters in Indian states have experienced significant social development in the past generation, and as a consequence, voters may have acquired greater independence and readiness to make judgements for themselves. Literacy in 1

Dr Ronojoy Sen is Senior Research Fellow at the Institute of South Asian Studies (ISAS), an autonomous research institute at the National University of Singapore (NUS), and at the Asia Research Institute (ARI) at NUS. He can be contacted at isasrs@nus.edu.sg. Professor Robin Jeffrey is Visiting Research Professor at ISAS. He can be contacted at isasrbj@nus.edu.sg and robin.jeffrey514@gmail.com. Opinions expressed in this paper, based on research by the authors, do not necessarily reflect the views of ISAS.

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MP, for example, went from 45 per cent a generation ago to more than 70 per cent today. Similarly, women voters have increased from 560 per 1,000 men in the 1960s to 800 per 1,000 men in recent elections. Some of the more popular initiatives implemented by the BJP, such as the Ladli Laxmi and Kanyadaan, have been targeted at women, and there have been others, like a free pilgrimage scheme, that may have appealed especially to women. Voters, it appears, will endorse governments that have delivered at least some of the goods.

The Secret of Re-election Earlier, analysts believed that a great many voters were guided simply by the instruction of social superiors and by affiliation to religion or caste. But that could be changing, at least in some contexts. A survey commissioned in Madhya Pradesh by the Election Commission of India and conducted by the Madhya Pradesh Directorate of Economics and Statistics across all the 230 constituencies found that an overwhelming majority of voters intended to vote on the basis of the quality of candidates and not on grounds of caste and religion. That leads to the second element in the ability of state governments to get re-elected: an effective Chief Minister who strives for achievements and makes sure he or she gets credit for them. In Madhya Pradesh, this means Chouhan. A member of the Rashtriya Swayamsevak Sangh since boyhood, Chouhan comes from a rural, farming background but has a university degree. He has been in and around politics from his teenage years and is said to have been imprisoned briefly for opposition to Indira Gandhi’s “emergency” in 1975-7. Chouhan’s government has acquired a reputation for delivering services to significant numbers of people. As industrialist Anand Mahindra, speaking at the South Asian Diaspora Convention in Singapore organised by ISAS on 21 and 22 November 2013, pointed out, Madhya Pradesh has shown exceptional initiative in getting investments. Mahindra recalled that, unlike many chief ministers, Chouhan came to visit him at his office to encourage setting up of a factory, something that very few Indian CMs would do. Another remarkable example lay in the fact that by 2016 the Madhya Pradesh State Electricity Board might be one of the few state-run electricity boards to turn a profit. Most such boards drown in unpaid dues and red ink. Chouhan has sometimes been touted as a future prime minister, particularly by factions of the BJP who oppose Gujarat’s Chief Minister, Narendra Modi. Chouhan, however, proclaims that his interests lie in Madhya Pradesh and has maintained a modest national profile. In his home state, however, he is confident and widely known. He claimed he would easily win his own seat in the 2013 elections.

The Congress Strategy The Congress Party, one of whose influential national secretaries, Digvijay Singh, was a Chief Minister of Madhya Pradesh for ten years from 1993-2003, lost its hold in the state in

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the first decade of the twenty-first century. In these 2013 elections, the party’s opponents accused it of desperation – exemplified in a number of constituencies by its running of bogus candidates with the same names as those of the BJP incumbents. The hope – likely forlorn – was to confuse voters and reduce the BJP’s tally. Indications, however, were that if such tactics worked once upon a time, they no longer were effective. The Congress tried to create momentum by drafting Jyotiraditya Scindia, scion of the Gwalior princely family and a central minister, to head its campaign. While this might have improved the position of the Congress, it was unlikely to be enough to unseat the BJP. At least three factions within the Congress – aligned with Digvijay Singh, central minister Kamal Nath and former central minister Suresh Pachauri – diffused the party’s efforts when they needed focus and unity if the party were to do well. The Digvijay Singh camp signalled an unmistakable presence by getting his son, Jaivardhan, nominated on the Congress ticket from the family stronghold in Raghogarh. And the late induction of Scindia into campaigning may have simply worsened the diffusion of effort. Madhya Pradesh has 230 constituencies, more than 36 million enrolled voters and 54,000 polling stations. As Indians become ever more connected, elections are won by identifying one’s supporters and ensuring they vote. (Voting is not compulsory, but turnout in 2008 was nearly 70 per cent of the electorate). To get sympathisers to vote requires organisation down to the level of the 54,000 polling stations. With mobile phones everywhere, an effective political machine can be kept informed, instructed and motivated. An incumbent government has advantages in being able to offer various forms of subtle support to party workers. Here, too, Chouhan’s BJP, in spite of internal jealousies and factional clashes, has advantages that its opponents seemed incapable of matching.

Conclusion On 25 November, around 71 per cent of the electorate turned out to vote, which was marginally higher than the voting percentage of around 69 in 2008. State election results do not always prove a reliable predictor of elections to the national parliament, which are due before June next year. In the 2009 general elections, the Congress did reasonably well, winning 12 of MP’s 29 seats; the BJP won 16; one went to the Bahujan Samaj Party. In an era where large numbers of motivated and connected workers seem essential to win elections, a sympathetic state government may have more means at its disposal to sweeten the lives of operatives. A weak showing by the Congress in the state elections could augur ill for its prospects in the national poll.

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Table 1: Madhya Pradesh Population, 2011 census Electors, 2013 Literacy, 2011 Polling stations Electors per polling station Scheduled Tribe pop. Scheduled Caste pop. Sex ratio (females per 1,000 males) Urban population

72,600,000 46,457,724 70.6 53,896 860 15,316,784 11,342,320 930 20,060,000 (28%)

Table 2: Madhya Pradesh Elections, 2003 and 2008 Seats in national parliament Seats in state assembly Won by BJP Won by Congress Voter turnout % Seats reserved for Scheduled Tribes Seats reserved for Scheduled Castes

2003 29 230 173 38 67.3 47

2008 29 230 143 71 69.8 47

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ISAS Brief No. 304 – 28 November 2013 469A Bukit Timah Road #07-01, Tower Block, Singapore 259770 Tel: 6516 6179 / 6516 4239 Fax: 6776 7505 / 6314 5447 Email: isassec@nus.edu.sg Website: www.isas.nus.edu.sg

Bangladesh: Unfolding Drama of Deadly Politics Iftekhar Ahmed Chowdhury1

On 25 November the Chief Election Commissioner of Bangladesh, Kazi Rakibuddin Ahmad, announced the election schedule for the nation’s 10th Parliament. The polls, he stated, are to be held on 5 January 2014. He urged calm on both contending sides, the Awami League (AL)-led government of Sheikh Hasina and the Bangladesh Nationalist Party (BNP)-led opposition of Khaleda Zia. The bitterness of their rivalry has been legendary. The politicians’ disregard for his appeal was instantaneous. The BNP which had earlier warned that it would react to such an announcement with a siege of the capital Dhaka was true to its word. So was the government which had vowed to put down any unruly behaviour with an iron hand. The unsurprising result was a spiralling violence with no end to it in sight. In this, the religious right-wing Jamaat-e-Islami was on hand, fighting with its back to the wall as many of its leaders are in condemned cells, awaiting execution ordered by the war-crimes trial court. There is a backdrop to this formidably daunting political landscape of Bangladesh. The AL and the BNP have been at loggerheads for months. The AL has used its overwhelming parliamentary majority to scrap the system of caretaker government which has held elections in Bangladesh over the last decade-and-a- half. The BNP wants it back, fearing that polls held under the AL watch would be rigged. Minimally, it wants Hasina to step down and hand over the post of prime minister to someone else. Hasina is loath to oblige. Both leaders have a relationship that would make Kilkenny cats appear as chums. A recent telephone conversation between the two, the first such, as has been reported, in over two decades, reflected their intense mutual acrimony. 1

Dr Iftekhar Ahmed Chowdhury is Principal Research Fellow at the Institute of South Asian Studies (ISAS), an autonomous research institute at the National University of Singapore. He is a former Foreign Advisor (Foreign Minister) of Bangladesh, and he can be contacted at isasiac@nus.edu.sg. Opinions expressed in this paper, based on research by the author, do not necessarily reflect the views of ISAS.


However in an attempt to make her position a little more palatable, Hasina tempered a bit with the composition of her cabinet. She dropped some old ministers, and chose some new ones. The new ones were mostly from within her original political alliance. She, at least at a stated level, extended an invitation to the BNP to join this poll-time ‘multi-party’ government in order to render it ‘all-party’ (in line with her promise), but the BNP’s rejection of her overture was prompt and peremptory. (Though, it could be complicating if the BNP accepted the offer, and proposed the inclusion as an interim Minister of the London-based Tarique Rahman, Khaleda’s son and heir-apparent, as some elements in the media wondered). Hasina found a surprise partner in former President Hussain Mohammed Ershad, to bring whom down in 1991, Hasina and Khaleda had, most ironically, waged a common struggle. Ershad, who had earlier been a trenchant critic of Hasina, would have had his credibility take a huge hit, had he not already built a reputation for saying one thing and doing quite another. An interesting emerging feature is the potential role of the President, Advocate Abdul Hamid. Normally he is a figurehead who only acts on the prime minister’s advice. This constitutional constraint notwithstanding, Khaleda called on him with a formal delegation urging his intervention. This was followed by similar visit on him by six prominent citizens, led by Kamal Hussain, an internationally acclaimed lawyer who is also credited with being one of the original proponents of the Constitution. They stated to him that a ‘non-inclusive’ election on 5 January, without the BNP, would not be credible, and would not end the turmoil. A point arises: would someone of the legal accomplishment of Kamal Hussain see the President, if the latter’s hands were truly tied? At least one thing is established, The President, who is viewed as the guardian of the Republic, can obviously be a conduit between the two opposing camps. This could be heartening, given the total lack of such contact, with positive potentials for the future, though as of now, the President is not known, at least publicly, to take any initiative. Is he the one needed to cut the proverbial Gordian Knot? In the meantime amidst the destructive fury his announcement caused in the opposition quarters, the Chief Election Commissioner stepped back somewhat within twenty-four hours, and declared that, should the protagonists reach an agreement the schedule could be adjusted. The Parliament’s tenure completes on 24 January 2014, when the body becomes automatically dissolved, and the Constitution requires that polls be held within 90 days of such dissolution. The CEC could take advantage of this provision to move the date from 5 January to anytime before 24 April. Obviously he would do it if there is an understanding between the two major parties, or if he feels such an agreement is just beyond the rim of the saucer, and a postponement would thus facilitate it. Diplomats, as they are wont to often do in Bangladesh politics, sometimes to the chagrin of some sections of the public opinion, waded in on this occasion also. Most concerned are of course, the Indians, the immediate neighbours, and the Americans, who have global strategic interests which include Bangladesh and the Bay of Bengal. The Indians are reportedly comfortable with the Awami League, but have also been carefully nurturing links with the BNP just in case. The Americans are in the forefront of pressing for an ‘inclusive election’ (which in current political parlance means the participation of the BNP), and several ranking visitors from Washington have recently met both sides in Dhaka to underscore this. The same 2


is the case with the European Union. The Chinese traditionally had maintained a ‘panchsheel’ distance [of non-interference], but this time the Ambassador broke silence to support political amity. The Saudis are said to be close to Jamaat, but fight shy of public utterances. So is Bangladesh hurtling towards a train-wreck? Despite the obvious negative politics, Bangladesh has many positive sides to it as well. The World Bank has, therefore, spoken of a ‘Bangladesh paradox’. Economically, it has grown steadily at around 5.5 per cent to six per cent for years. It is the world’s second largest garment exporter earning over US$19 billion in this trade. Its performance in social indices is often better than India’s in some sectors. Its vibrant civil society has been the source of many ideas, including many connected to poverty alleviation. The majority of its 160 million people practise Islam of a syncretic kind. In ways, therefore, Bangladesh can be a model for many in the developing world to emulate. It would be a great pity, were that country be allowed to slide into anarchy. The responsibility to prevent this from happening, to avert the train-wreck, rests squarely on the shoulder of the Bangladeshi people. Bangladesh possesses vast intellectual resources. Of what use would these be if they cannot be pressed into the nation’s service when it needs them most? The nation’s greatest challenge is to make tolerance and reason exciting. The Bangladeshis have the capacity to be able to do it. But they may need their hands to be held by the international community, including the United Nations.

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ISAS Brief No. 305 – 3 December 2013 469A Bukit Timah Road #07-01, Tower Block, Singapore 259770 Tel: 6516 6179 / 6516 4239 Fax: 6776 7505 / 6314 5447 Email: isassec@nus.edu.sg Website: www.isas.nus.edu.sg

Rajasthan Elections in India: A Mix of Royalty and Caste Equations Ronojoy Sen1 If anti-incumbency has shown a decline in some Indian states, in others it still remains a persistent trend. Rajasthan, which went to the polls on 1 December 2013, is one of them. For the past two decades the incumbent government has been voted out in every election. The current Congress government, led by Chief Minister Ashok Gehlot, faces an uphill task in bucking this trend. The voter turnout, according to latest figures, was nearly 73 per cent which was up significantly from 66 per cent in the last elections held in 2008. While the pre-election opinion poll conducted by the Centre for the Study of Developing Societies predicted a handsome victory for the Bharatiya Janata Party (BJP), winning around 120 of the 200 seats up for vote, in reality the contest could turn out to be closer. The Gehlot government has been generous with populist schemes, including free medicines in government hospitals and pensions for the old and destitute. In fact, according to an analyst, Rajasthan now has more “freebies” than any other state. It also became one of the first states to implement the National Food Security Act though it might be too early to assess its impact.

The Raje Effect Congress, however, faces an opposition BJP which has been re-energised by the presence of Vasundhara Raje who was the state’s CM from 2003-2008 before Gehlot. Following the 2009 1

Dr Ronojoy Sen is Senior Research Fellow at the Institute of South Asian Studies (ISAS), an autonomous research institute at the National University of Singapore (NUS), and at the Asia Research Institute (ARI) at NUS. He can be contacted at isasrs@nus.edu.sg. Opinions expressed in this paper, based on research by the author, do not necessarily reflect the views of ISAS.

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general elections, where the BJP did poorly in Rajasthan, Raje fell out with the BJP leadership and kept a low profile. But she was brought back by the BJP high command in 2013 to head the party’s campaign in the belief that no one else has Raje’s charisma. In contrast, Gehlot is not known to be an eloquent speaker by any stretch of the imagination. Rajasthan will also be a test for Gujarat Chief Minister and prime ministerial aspirant, Narendra Modi, who has been busy campaigning in the state. The future of Modi will preoccupy commentators until the national general elections in 2014, and Modi’s role in state elections will be analysed like astrological conjunctions. Solid indications of a “Modi factor” will be hard to discern in most states, but Rajasthan provides a more significant test than other states. Since Gujarat is a neighbouring state of Rajasthan, Modi’s impact will be under that much more scrutiny than more distant parts of India. The Congress, on the other hand, suffers from an abundance of leaders many of whom do not see eye to eye. Besides Gehlot himself, the other Congress leaders active in the campaign were central minister C P Joshi, who was heading the party campaign, and two young ministers from Rajasthan, Jeetendra Singh, from Alwar’s royal family, and Sachin Pilot, a Gujjar and the deceased Congress leader Rajesh Pilot’s son. Part of Raje’s stature comes from her blue blood which carries much more weight in Rajasthan than anywhere else in India. A member of the royal Scindia family from Gwalior she is the daughter of Vijayraje Scindia, one of the founders of the Jan Sangh, the organisation which spawned the BJP. Raje’s Rajasthan connection comes from her marriage into the Jat royal family of Dholpur in the eastern part of the state. Though she has long been separated from her husband, her electoral career goes back to 1985 when she won her first election from Dholpur in the 1985 Assembly polls. Since then she has steadily risen up the political ladder. Indeed there are no shortages of former royals in Rajasthan politics. One of the more prominent ones this time is Diya Kumari of the Jaipur royal family contesting on a BJP ticket from Sawai Madhopur, home to the famous Ranthambore tiger reserve. The Congress is rightly accused of dynastic politics. But in the BJP there is no dearth of sons of famous fathers contesting elections in Rajasthan. BJP leader Jaswant Singh’s son, Manavendra Singh, a former MP, is contesting from Sheo; and estranged Congress leader Natwar Singh’s son, Jagat Singh, is the BJP’s candidate in Kaman.

The Caste Factor Royalty is, however, no passport for guaranteed electoral success as the caste equations in Rajasthan are equally potent. Many of the erstwhile royals belong to the Rajput sub-caste, which though powerful is not that numerically significant in the state. There are several lower castes and tribes who hold the key to electoral success in Rajasthan. For instance, Diya Kumari’s opponent in Sawai Madhopur is Kirodilal Meena, a BJP rebel and member of the influential Meena tribe (classified as a Scheduled Tribe by the government) which constitutes 12 per cent of Rajasthan’s population. Instead of floating his own party, Kirodilal has joined 2


the National People’s Party, formed by P A Sangma, a politician from the Northeast and a former Speaker of the Lok Sabha, Lower House of India’s Parliament. Kirodilal has put up candidates for as many as 133 seats and hopes to do well in the 30-odd seats where the Meenas are dominant. Though he might not win too many seats he could well prove to be a spoiler for the BJP. Then there are also the Jats and Bishnois, who make up roughly 18 per cent of Rajasthan’s population. The Jats were conferred Other Backward Class (OBC) status, which gives them quotas in government jobs and educational institutions, during Prime Minister A B Vajpayee’s tenure. The other caste group which will play a role in the electoral calculations are the Gujjars, constituting five per cent of the state’s population, who have periodically paralysed Rajasthan over the past few years demanding Scheduled Tribe status which the Meenas enjoy. Though they have been unable to achieve their demand, the state government did give them five per cent reservation in government jobs under a “special backward class” category, which has now been challenged in court. This is in addition to the OBC status that the Gujjars in Rajasthan already enjoy. The Gujjars and the leader of their agitation, K S Bainsla, are likely to back the Congress this time around. All the above factors make Rajasthan a fascinating contest and one that might not be as onesided as opinion polls are predicting.

Table 1: Rajasthan Population, 2011 census Electors, 2013 Literacy, 2011 Polling stations Electors per polling station Scheduled Tribe pop. Scheduled Caste pop. Sex ratio (females per 1,000 males) Urban population

68,548,000 40,608,000 67% 45,334 900 9,239,000 (13.5%) 12,223,000 (17.8%) 928 25%

Table 2: Rajasthan Elections, 2003 and 2008-9 2003 Seats in national parliament 25 Won by Congress 4 Won by BJP 21 Seats in state assembly 200 Won by BJP 120 Won by Congress 56 Voter turnout 67% 3

2008-09 25 20 4 200 78 96 66%


Seats reserved for Scheduled 25 Tribes Seats reserved for Scheduled 34 Castes

25 34

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ISAS Brief No. 306 – 6 December 2013 469A Bukit Timah Road #07-01, Tower Block, Singapore 259770 Tel: 6516 6179 / 6516 4239 Fax: 6776 7505 / 6314 5447 Email: isassec@nus.edu.sg Website: www.isas.nus.edu.sg

Delhi Elections in India: Middle Class Anger and New Political Equations Ronojoy Sen1

Delhi, when compared to other Indian states, might be insignificant in its size. After all the state of Delhi (which was till recently a Union Territory), shorn of the parts of Uttar Pradesh and Haryana that make up the sprawling National Capital region, is only 1,500 square miles and has 70 Assembly seats and 7 seats in the national Parliament. But by virtue of being India’s capital, elections in Delhi command much more attention than those in the Indian states that are far larger. Delhi has 11.5 million registered voters; the whole of Australia has only 14 million.

The Aam Aadmi Party This time the interest in Delhi’s polls, held on 4 December 2013, was higher than usual due to the presence of a new political entity, the Aam Aadmi (which in Hindi means the common man) Party (AAP). Indeed, Delhi recorded a turnout of 67 per cent, more than 10 per cent higher than the turnout in the state polls held in 2003 and 2008, showing the heightened interest generated in the polls. The AAP, which really grew out of the anti-corruption movement headed by activist Anna Hazare in 2011, has made the Delhi elections much more difficult to call than usual. Hazare has retired to his village in Maharashtra and has nothing to 1

Dr Ronojoy Sen is Senior Research Fellow at the Institute of South Asian Studies (ISAS), an autonomous research institute at the National University of Singapore (NUS), and at the Asia Research Institute (ARI) at NUS. He can be contacted at isasrs@nus.edu.sg. Opinions expressed in this paper, based on research by the authors, do not necessarily reflect the views of ISAS.

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do with the AAP; he has even claimed that the AAP is unfairly using his name. But the AAP, led by Hazare’s one-time fellow-traveller Arvind Kejriwal, had generated the maximum buzz in the run-up to the polls. Whether this will translate into votes, and more importantly seats, will only be known on 8 December when the results are announced. The AAP, however, has not been shy of predicting great things for itself. Noted political scientist, Yogendra Yadav, who is also a member of and strategist for AAP, has forecast that his party will win 32 per cent of the votes topping both the Congress and the BJP. Other polls have pegged the AAP much lower, with one predicting that it might win as many as 20 seats, which itself would be an extraordinary achievement for a new party. While Yadav is known for his election analyses, his prediction, even if exaggerated, has its logic. If the AAP did not project itself as a serious player, voters would feel that they were wasting their vote on the party. The AAP’s strategy seemed to have worked, with a significant spike, according to the Election Commission, in the turnout of young voters who are the most likely segment to vote against mainstream parties. While the AAP has suffered from lack of organisation and quality candidates, both not so surprising for a young party, it has partly made up by for this by its high visibility. There is little doubt that some of the middle class and underclass anger at mainstream political parties and widespread corruption will benefit the AAP. Conversations in Delhi on Election Day revealed that many undecided voters, both from the middle class and the poorer sections, have decided to give the AAP a try. But whether that will translate into seats is a moot question. There is an earlier example of the Loksatta Party formed in 2006 in Andhra Pradesh on an anti-corruption platform by a former bureaucrat. While it had some support in Hyderabad, it won only one seat in the last Andhra Pradesh Assembly polls. AAP will of course do much better, not only because of the prevailing mood among the middle classes but also because of the intense media coverage that they have got.

The fate of the BJP and Congress Enough said about the AAP. What about the ruling Congress and the opposition BJP, conventionally the two main contenders in Delhi? Some opinion polls have predicted that the BJP will scrape through and form the government. The BJP has reposed its faith in Harsh Vardhan as its chief ministerial candidate, much to the chagrin of Vijay Goel who fancied his chances for the CM’s chair. While outwardly dissension has not been allowed to boil over, it seems there is discontent within the party which might affect its chances. A greater problem for the BJP would be the AAP possibly cutting into some of the anti-incumbency votes which might damage the BJP’s prospects. Most opinion polls have predicted that the Congress will do badly and fall short of a majority. Sheila Dikshit, the three-time Chief Minister of Delhi, has been badly singed by the anti-rape agitation of 2012 and the general perception of breakdown of law and order. In addition, the corruption scandals that have engulfed the central government have affected the Delhi Congress because of its location in the country’s capital. Factionalism, which is the bane of 2


the Congress everywhere, is very much present in Delhi too. There are local Congress leaders like central minister Ajay Maken who have openly shown their dislike of Dikshit and expressed their chief ministerial ambitions. Indeed, Dikshit faces a tough electoral contest in her own constituency of New Delhi where she is pitted against AAP’s Kejriwal and BJP’s Vijender Gupta. The other player in Delhi is the Bahujan Samaj Party (BSP) which won a significant 14 per cent of the votes in the 2008 elections. But this time around its campaigning has been low key with its party chief, Mayawati, who was voted out of power in Uttar Pradesh in 2012 not making too many appearances in Delhi. The BSP’s vote bank is the Dalits and lower castes who make up a significant number of the working class population of the city. The 12 seats reserved for Scheduled Castes are by no means the taken-for-granted preserve of the BSP. Which way Dalits vote might be a deciding factor in providing one of the main players with the necessary edge to form government. Whatever the election result, the Delhi election will be a referendum on whether new political parties can do well at least in urban settings. This has become increasingly important as India becomes more urbanised. A host of exit polls, done after the elections, have predicted a good showing by the AAP ranging from six to an improbable 31 seats. All of them are united in the prediction that Congress will suffer severe reverses with the maximum seats forecast for the party being 24. The exit polls predict that the BJP will gain at the Congress’ expense but might fall short of a simple majority. The AAP, with a handful of seats, could then hold the key to formation of the next government. That might turn out to be a hung House since the AAP has been formed on the plank of opposition to the mainstream parties and would find it ideologically difficult to align with either the BJP or the Congress. In the meantime, most exit polls have forecast that the BJP will win in the three states of Rajasthan, Madhya Pradesh and Chhattisgarh for which the results will also be announced on 8 December. But clearly Delhi will be the one result to watch out for because of its uncertainty and novel mix of politics.

3


Table 1: National Capital Territory of Delhi Population, 2011 census

16,753,000

Electors, 2013

11,507,000

Literacy, 2011

86%

Polling stations

11,763

Electors per polling station

980

Scheduled Tribe pop.

<1%

Scheduled Caste pop.

2,812,000 (17%)

Sex ratio (females per 1,000 866 males) Urban population

97%

Table 2: National Capital Territory of Delhi, Elections, 2003-4 and 2008-09 2003-04

2008-9

7

7

Won by Congress

6

7

Won by BJP

1

0

Seats in state assembly

70

70

Won by BJP

20

23

Won by Congress

47

43

Voter turnout

53.4%

57.6%

Seats in national parliament

Seats reserved for Scheduled 0 Tribes

0

Seats reserved for Scheduled 12 Castes

12

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ISAS Brief No. 307 – 6 December 2013 469A Bukit Timah Road #07-01, Tower Block, Singapore 259770 Tel: 6516 6179 / 6516 4239 Fax: 6776 7505 / 6314 5447 Email: isassec@nus.edu.sg Website: www.isas.nus.edu.sg

Reining in the Military in Pakistan Shahid Javed Burki 1

Abstract Three recent developments in Pakistan have taken its evolving political order forward. They will concentrate executive authority in the hands of the elected representatives of the people rather than dispersing it around in the hands of various competing institutions that are vying to establish their own control over the political system. In addition to the revival of the civilian political establishment, this process has been facilitated by two other forces – the street and the press. This paper provides an overview of these developments.

The New Army Chief On 27 November 2013, two days before General Ashfaq Kayani was set to retire from his powerful position as Pakistan’s Chief of Army Staff (COAS), the country’s president announced the name of his successor. As required by the Constitution, the president was acting on the advice of the prime minister. The man Prime Minister Nawaz Sharif chose was not among those who were favoured by the military establishment. Lt Gen Raheel Sharif (no relation of the prime minister), the person who received his four-star rank on 29 November and became the army commander, had not served in any of the positions that were supposed 1

Mr Shahid Javed Burki is Visiting Senior Research Fellow at the Institute of South Asian Studies (ISAS), an autonomous research institute at the National University of Singapore. He can be contacted at sjburki@yahoo.com. Opinions expressed in this paper, based on research by the author, do not necessarily reflect the views of ISAS. During a professional career spanning over half a century, Mr Burki has held a number of senior positions in Pakistan and at the World Bank. He was the Director of China Operations at the World Bank from 1987 to 1994 and the Vice President of Latin America and the Caribbean Region at the World Bank from 1994 to 1999. On leave of absence from the Bank, he was Pakistan’s Finance Minister, 1996-97.


to prepare a military leader for the top job. Unlike General Kayani, he had not been the commander of operations in the army headquarters or the head of the Inter-Services Intelligence (ISI), Pakistan’s premier spy agency. General Kayani favoured Lt Gen Rashid Mahmood who was appointed instead to the largely ceremonial position of Chairman of the Joint Chiefs of Staff Committee. General Kayani had proposed the names of Mahmood and another three-star general Haroon Aslam as his candidates to succeed him.

Case of Treason against Musharraf A few days before the prime minister revealed his choice for the person to command the army, he requested the Supreme Court to appoint a three-member panel of judges serving in the provincial courts. The panel was to investigate whether the former military ruler General Pervez Musharraf had committed acts of “high treason” against the state during his long tenure (1999-2008) as president. This is the prime minister’s second move to tame the powerful military. The former president could have been tried for two acts – the October 1999 coup against an elected government and the November 2007 suspension of the Constitution. The latter move placed the country under a state of emergency. This decision was taken to remove dozens of senior judges from the Supreme Court and the provincial high courts. The judges had issued a number of orders against some of the decisions taken by the Musharraf administration. Iftikhar Muhammad Chaudhry, Chief Justice of the Supreme Court, had refused to resign when pressured to do so in March 2007 by the military president. He was removed nonetheless, resulting in mass street protests led by the legal community that lasted for more than a year. This was Pakistan’s “Arab Spring” that took place four years before the eruption in Tunis and Cairo. The movement eventually led to the return of democracy in the county and the departure of President Musharraf. By appointing a special court to try former President Musharraf for suspending the Constitution, the Sharif government is sending a strong signal to the military – in particular to its senior commanders – that they are not above the country’s basic law, the Constitution. General Musharraf is to be tried under Article 6 of the Constitution according to which “any person who abrogates or subverts or suspends or holds in abeyance the Constitution by the use of force shall be guilty of high treason”. Parliament has defined high treason as a capital offence.

New Chief Justice of Supreme Court The third move Prime Minister Nawaz Sharif took, on the same day as the appointment of General Sharif as COAS, was to announce that Justice Tassaduq Hussain Jillani, the mostsenior judge in the Supreme Court, would succeed Justice Iftikhar Chaudhry who would reach the age of mandatory retirement on 11 December 2013. Justice Jillani would serve for 2


only seven months before he also retires. By establishing the seniority rule for appointing the Chief Justice of the Supreme Court, the prime minister is depoliticising the process. Under Chief Justice Chaudhry, the Supreme Court has acquired total autonomy and had no problem going against the decisions of the government if it felt that they were in violation of the Constitution. The court took special interest in strengthening the system of accountability in the country.

Political Order in the Muslim World These three moves will help develop a political system in which civilian authorities will have control over the military. It will also restore balance between the government’s three branches – the executive, the judiciary, and the legislature. This effort is similar to those underway in several other large Muslim states but with less success. In Bangladesh, the executive – in its case the prime minister – is engaged in an effort to monopolise all power. The judiciary does the executive’s bidding while the legislature, if the present plans succeed, will be totally dominated by the prime minister’s political party. The military is watching these developments with some apprehension but does not seem to have the will to move in and install a caretaker government as it did in 2007. Then a neutral administration made up of technocrats brought political peace and governed for two years. However, this cooling-off period did not result in the evolution of a stable order as is happening now in Pakistan. In Egypt the military and the followers of an elected president, the deposed men in uniform, are still engaged in street battles. The opposition to the Islamic party that won the election and installed one of its members as president has not been able to create a political organisation that can challenge the Islamic party within an accepted political framework. In Turkey, while there is a well-established Constitution, the opposition is also not organised in the form of a political party that has broad public support. Pakistan – with reasonably well-developed political parties that now compete in regularly scheduled elections and within the legislature, with a Constitution that an autonomous judiciary is able to protect, and with a military that appears to have accepted civilian control – may offer a model other large Muslim states could emulate.

Pakistan’s Political Development It has taken Pakistan time to reach the present reasonably comfortable stage in its political evolution. That this process is being guided by Mian Mohammad Nawaz Sharif is surprising, since his political ascent was overseen by two military men – President Zia-ul Haq who was Pakistan’s third military ruler and governed for eleven years (1977-88) and General Ghulam Gilani Khan, Governor of Punjab province. However, once Sharif rose to the position of prime minister, he began to distance himself from the military. His attempt to establish civilian control over the military began as soon as he gained political power. In 1990 after 3


winning a decisive victory over the rival Pakistan People’s Party, he was invited to become prime minister at the head of government led by his Pakistan Muslim League (Nawaz). However, after being inducted into office he found that much of the executive authority was still in the hands of the president and the COAS. In fact, the prime minister was the junior partner in an arrangement that came to be called the “troika” in Pakistan. In the matters pertaining to national security all major decisions were taken by the presidency or the army headquarters. The term “national security” was interpreted broadly. It meant the development of Pakistan’s nuclear arsenal as well as the amount of budgetary resources committed to the military. It also meant relations with China, India, the United States as well as the formulation and conduct of Pakistan’s Afghan policy. Thus constrained, Sharif became increasingly frustrated and began to use the bully-pulpit to gain power for himself. His final act of defiance was in late June 1993 when he turned on President Ghulam Ishaq Khan and announced in a television address that he would not allow the presidency or the military to interfere in his work as prime minister. This declaration came as a surprise to the other members of the troika who, it was to be revealed later in a case filed in the Supreme Court, had funded Sharif’s party to help it win the elections of 1990. In the “Asghar Khan” case the court reached the conclusion that Sharif had received monetary and other forms of assistance, with help provided by Lt Gen Asad Durrani, Director General ISI on the orders of General Aslam Beg, the COAS. The Supreme Court ordered the government to fully investigate the case. However, with this fact not in public view, the duo within the troika hit back and dismissed the prime minister. President Ghulam Ishaq Khan used the authority he had acquired through the amendment inserted into the Constitution by General Zia-ul Haq, his predecessor.

Conclusion Given this as the background, the question remains whether the latest moves by Nawaz Sharif, now in his third term as prime minister, will succeed and the military will come under the full control of the civilian authority. The relationship will be tested by the way Pakistan deals with Afghanistan, India and the United States. Also of considerable importance is how much space the military will be prepared to yield to the civilian government over the country’s nuclear arsenal and its development.

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ISAS Brief No. 308 – 6 December 2013 469A Bukit Timah Road #07-01, Tower Block, Singapore 259770 Tel: 6516 6179 / 6516 4239 Fax: 6776 7505 / 6314 5447 Email: isassec@nus.edu.sg Website: www.isas.nus.edu.sg

India woos its Northeast: Development and Diplomacy Factors Laldinkima Sailo1

India’s President Pranab Mukherjee made a three-day visit to Arunachal Pradesh and Nagaland in the country’s Northeast region. In Arunachal Pradesh he attended the convocation ceremony at the Rajiv Gandhi University, and addressed the Legislative Assembly. He graced the celebration of the 50th anniversary of Nagaland’s statehood and inaugurated the 10-day long Hornbill Festival. The visit is significant in three aspects, re-asserting India’s sovereignty over Arunachal Pradesh, reiterating Northeast’s centrality to India’s ‘Look-East’ Policy, and giving credence to the idea that development as a way of securitising border areas is a policy that New Delhi is seriously mulling over. Since he assumed office in July 2012, President Mukherjee has visited the Northeast several times including three trips to Assam, two each to Nagaland and Sikkim, and one each to Manipur, Meghalaya, Tripura and Arunachal Pradesh. He is yet to visit Mizoram. On his trips to the Northeast, the President has said, “My frequent visits to this region reflect its strategic importance and the role it can play in the building of a strong and powerful India”.2

1

2

Mr Laldinkima Sailo is Research Assistant at the Institute of South Asian Studies (ISAS), an autonomous research institute at the National University of Singapore. He can be contacted at isasls@nus.edu.sg. Opinions expressed in this paper, based on research by the author, do not necessarily reflect the views of ISAS. ‘North-east can strengthen India: Pranab’ (2013, December 2), The Hindu, http://www.thehindu.com/news/national/northeast-can-strengthen-india-pranab/article5411381.ece. Accessed 03/12/2013.


Arunachal Pradesh: China Factor In his address to the Arunachal Pradesh Assembly, Mr Mukherjee said, “Arunachal Pradesh is an integral and important part of the North East region of India and a core stakeholder in India’s Look East foreign policy”. Driving home the point of Indian influence and connections of civilisation, he cited ancient Indian texts – the Puranic literature – to emphasise Arunachal's importance. "It is believed that here, Sage Parashuram washed away his sins, Sage Vyasa meditated, King Bhishmaka founded his kingdom and Lord Krishna married his consort Rukmini. Arunachal is also home to the 400 year old Tawang Monastery and the birth place of the sixth Dalai Lama, Tsangyang Gyatso”.3 Reacting to the Indian President’s visit to Arunachal Pradesh, China urged India not to aggravate problems on the border shared by the two nations. China's official news agency, Xinhua, quoted Qin Gang, a spokesperson of the country's Ministry of Foreign Affairs, as saying, “We hope that India will proceed along with China, protecting our broad relationship, and will not take any measures that could complicate the problem, and together we can protect peace and security in the border regions".4 The Xinhua article went on to add that “The so-called "Arunachal Pradesh" was established largely on the three areas of China's– Tibet – Monyul, Loyul and Lower Tsayul currently under Indian illegal occupation. These three areas, located between the illegal "McMahon Line" and the traditional customary boundary between China and India, have always been Chinese territory. In 1914, the colonialists secretly contrived the illegal "McMahon Line" in an attempt to incorporate into India the above-mentioned three areas of Chinese territory. None of the successive Chinese governments have ever recognized this line”. This has however been considered a milder response in comparison to China’s reaction to earlier visit by India’s Prime Minister Manmohan Singh to the state in 2009. The Chinese government had then said it was “deeply upset” and “strongly dissatisfied” that “an Indian leader went to the disputed area despite our grave concerns.”5 Both sides have been working to maintain peace and stability along the border. With several mechanisms – including a border defence cooperation agreement – in place, there is greater confidence that the two countries will find a modus vivendi if not a solution to the dispute over Arunachal Pradesh. One media report claiming access to foreign ministry documents on border

3

4

5

SPEECH BY THE PRESIDENT OF INDIA, SHRI PRANAB MUKHERJEE TO THE MEMBERS OF ARUNACHAL PRADESH LEGISLATIVE ASSEMBLY. The President of India Website. http://presidentofindia.nic.in/sp291113-1.html. Accessed 03/12/2013 ‘China urges India not to complicate border issue’ (2013, November 30), Xinhuanet, http://news.xinhuanet.com/english/china/2013-11/30/c_132931034.htm. Accessed 03/12/2013. ‘China’s muted response’ (2013, November 29), The Hindu, http://www.thehindu.com/news/international/worl d/china-reacts-with-calm-to-pranabs-arunachal-visit/article5405082.ece. Accessed 03/12/2013.

2


negotiations, reported that India has signalled its readiness to let its Aksai Chin region remain in Chinese hands in exchange for recognition of Arunachal Pradesh as part of its territory.6

Infrastructure, Security and ‘Look-East’ Policy The Northeast has been a latter addition to the ambit of India’s ‘Look-East’ Policy, and the development of the region as an integral part of India’s attempts to forge closer ties with Southeast Asia has been stressed in recent times. President Mukherjee has said that Arunachal Pradesh and the Northeast constitute “….a core stakeholder in India’s Look East foreign policy… The north east of India provides a natural bridge between us and South East Asia. India must find its destiny by linking itself more and more with its Asian partners and the rest of the world”.7 He added that the Centre and the state governments should together rapidly build infrastructure linkages and connectivity with the rest of India as well as Southeast Asia. While calling for speeding up efforts to harness the business and trade potential of the Northeast, he spoke of the challenge for the state and the central governments to complete and commission all the hydroelectric projects which could bring huge economic benefits to the region. A sense of urgency to develop hydroelectric projects, particularly in Arunachal Pradesh is also a sign of an attempt by India to appropriate the right of first-use in respect of the rivers that traverse across the disputed China-India border. As such, the development of infrastructure to bolster the security of India’s Northeast region as well as matching the development initiatives in Arunachal Pradesh with China’s developments efforts in Tibet on the other side has been an ongoing effort. According to an Indian analyst, the 1,447 extremely backward villages situated along the state’s border with China, Myanmar and Bhutan compare poorly with the rapid pace of development in Tibet on the other side of the Sino-Indian border.8 During Dr Manmohan Singh’s visit in 2009, a number of development projects were announced, and these include a 1,840 kilometre Trans-Arunachal Pradesh two-lane highway from Tawang to Mahadevpur; water supply projects for Itanagar and Naharlagun, and a daily helicopter services between Guwahati in Assam and Tawang in Arunachal Pradesh. Apart from India’s concerns related to Beijing’s strategy in the border region, New Delhi needs to pay

6

7

8

‘India 'ready to let China keep Aksai Chin' if neighbour country drops claim to Arunachal Pradesh’ (2013, November 28), Mail Online India, http://www.dailymail.co.uk/indiahome/indianews/article-2515187/Indiaready-let-China-Aksai-Chin-neighbour-country-drops-claim-Arunachal-Pradesh.html. Accessed 03/12/2013. SPEECH BY THE PRESIDENT OF INDIA, SHRI PRANAB MUKHERJEE TO THE MEMBERS OF ARUNACHAL PRADESH LEGISLATIVE ASSEMBLY. The President of India Website. http://presidentofindia.nic.in/sp291113-1.html. Accessed 03/12/2013 M. Amarjeet Singh, ‘Dr. Manmohan Singh’s Message on Arunachal Pradesh’. IDSA Comment. March 2008. http://www.idsa.in/idsastrategiccomments/DrManmohanSinghsMessageonArunachalPradesh_MASingh_040308 . Accessed 03/12/2013.

3


attention to the possible discontent among the local populations, who have access to kinsmen on the other side of the border, and tend to compare the infrastructures on both sides. In a bid to win over the people of the region and allay security concerns of the people, President Mukherjee quoted former President Sarvepalli Radhakrishnan who had said, while inaugurating the state of Nagaland, that the government must capture the hearts and minds of the people. In Nagaland, Mr Mukherjee called upon the people to “work towards establishing and maintaining a peaceful environment”, appealing to them to put behind them the dark days of violence and conflict. While President Mukherjee’s high profile visit signals an increased and sustained interest in the region by New Delhi, it is also seen, somewhat sceptically, as a reinforcement of the rhetoric that has increasingly come to dominate New Delhi’s policy towards the Northeast, in fact as yet another lip service. Besides the intention to develop the said infrastructure, there are local concerns which need the attention of the centre. In Arunachal Pradesh, the opposition People's Party of Arunachal (PPA) submitted a memorandum, urging the centre to arrange for an early deportation of illegal Chakma and Hajong settlers from the state. And in Nagaland, Chief Minister Neiphiu Rio made mention of the unfulfilled promises of the 16-point agreement,9 the basis on which the state was formed in 1960.10 Given the closer scrutiny that the region has received over the years due to its geo-strategic significance, New Delhi will have to do more on the ground to show its seriousness about the development plans.

......

9

10

The 16 Point Agreement between the Government of India and the Naga People’s Convention. UN Peacemaker website, http://peacemaker.un.org/sites/peacemaker.un.org/files/IN_600726_The%20sixteen%20point%20Agreement_0.p df. Accessed 03/12/2013. ‘North-east can strengthen India: Pranab’ (2013, December 2), The Hindu, http://www.thehindu.com/news/national/northeast-can-strengthen-india-pranab/article5411381.ece. Accessed 03/12/2013.

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ISAS Brief No. 310 – 12 December 2013 469A Bukit Timah Road #07-01, Tower Block, Singapore 259770 Tel: 6516 6179 / 6516 4239 Fax: 6776 7505 / 6314 5447 Email: isassec@nus.edu.sg Website: www.isas.nus.edu.sg

Testing the Air: China’s Defence-Move Rajeev Ranjan Chaturvedy1 The steady procession of Chinese ‘pressure tactics’ to push its claims on disputed territories is strengthening the hands of new leadership in Beijing. The leadership’s assertiveness is evident in recent announcements regarding China’s controversial new air defence zone. This initiative suggests that President Xi Jinping supports an ‘aggressive Chinese display of force’ to assert his country’s claims in its territorial disputes. On 23 November 2013, China declared the creation of an air defence identification zone (ADIZ) over the East China Sea, which has magnified concerns among neighbours and added apprehensions regarding the Chinese approach towards territorial and maritime disputes. Undoubtedly, such moves from Beijing are fuelling insecurity, and escalating political tensions in the Asia-Pacific region. An ADIZ is a section of international airspace over which a country declares its right to identify aircraft, in the interest of national security and to protect itself from potential foreign threat. Thus, the Chinese ADIZ over the East China Sea implies that aircraft passing over the disputed islands in that region must inform China in advance of their flight plans. According to a Chinese Defence Ministry spokesperson, this “is a necessary measure taken by China in exercising its self-defence right ... It is not directed against any specific country or target. It does not affect the freedom of over-flight in the related airspace”. In fact, an announcement of ADIZ is not a new phenomenon and is non-threatening in principle. Several countries, including the United States, Japan, and South Korea have such zones. Nevertheless, it is considered a matter of concern because the Chinese ADIZ overlaps 1

Mr Rajeev Ranjan Chaturvedy is Research Associate at the Institute of South Asian Studies (ISAS), an autonomous research institute at the National University of Singapore. He can be contacted at isasrrc@nus.edu.sg. Opinions expressed in this paper, based on research by the author, do not necessarily reflect the views of ISAS.


with others including the Japanese and Korean ADIZ. Indeed, the declaration of ADIZ over contested territory is seen to be the first of its kind, and, therefore, it is a bone of contention. China’s assertiveness and perceived proclivity to unilaterally seek to change the status quo of disputed territories have escalated tensions, impinging upon peace and security in the region. The issue here is: why did China take such a measure? There could be a number of reasons for that. Amidst increasing domestic challenges and rising nationalism, President Xi Jinping seeks to consolidate his power and strengthen his authority. There are enough ‘tensions’ within the Communist Party of China, between the party and society, and between the country and its neighbourhood. Mr Xi has a difficult task keeping the party’s diverse factions together and interest groups contented. In addition, there is reportedly great discontent among people because of economic disparity and suppressed freedom of expression. A majority of people are said to feel that they do not get their reasonable share because they do not have their fair say. There is a proliferation of a variety of protests in China. So, the Chinese leadership seeks a unifying cause with which to divert the attention of its people. It is important to note that China has previously employed violence in its territorial disputes with neighbours when it perceived neighbours as attempting to profit from the country’s internal difficulties. Further, China has preferred to use violence to prevent a weakening of its position in any dispute or in regional relations and has rarely compromised on territorial issues that have strategic consequences. Hence, this could be a possible way for Mr Xi to reinforce his authority. Meanwhile, the People’s Liberation Army’s influence over policy and its traditionally and relatively hard-line policy positions mean that the new leadership’s ability to control the military will be a key to these disputes. Chinese President Xi Jinping has solid military experience and credentials, but it is not clear yet if he sees things from the military’s point of view, thereby amplifying PLA influence in the policymaking machinery. Another reason for taking such a step could be China’s willingness to establish parity with Japan which has an ADIZ. China feels it has a right to an ADIZ to protect its sovereignty over both its territory as well as its claimed maritime spaces. By doing so, China attempts to underline its keenness to control the disputed islands. Yet another reason could be about China’s immense maritime security challenges vis-a-vis its neighbours and the United States. Many in China are apprehensive of the US security and strategic cooperation in the region. Hence, the announcement of the ADIZ could be an endeavour to test the US resolve in regional security. In response to the Chinese announcement, Washington, Tokyo and Seoul sent military or paramilitary planes into the zone in defiance of Beijing’s rules, while the US reiterated its security pact with Japan. While the US has now advised its passenger airlines to follow the rules of the Chinese ADIZ, Japan and Korea have refused to do so. 2


As of now, there is a mismatch between the Chinese announcements and actions. Chinese PLA Air Force Major General Qiao Liang had stated that any aircraft violating the ADIZ would be shot down by the Chinese military. But China was much more measured and toneddown in its response to such violations. Even so, any ‘provocative action’ by China with regard to its territorial disputes needs attention. The difference between Chinese words and actions makes neighbours apprehensive of its intentions. Beijing’s test-drives in contested waters deserve careful appraisal to prevent miscalculations that could undermine peace, security and prosperity in the region.

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Briefs 2013