Sea of tomorrow?

On a visit to Australia in the 1980s, the Prime Minister told Tip O’Neill (the Speaker of the House during Ronald Reagan’s presidency), that “…the Mediterranean was the sea of the past, the Atlantic, the sea of the present and the Pacific the sea of tomorrow.”

The prophecy has come true. Pacific Ocean IS the prominent waterway where commercial sea-lanes traverse between the world’s factory, China, and the world’s mall, America.

However, as the bipolar world of the past (US and USSR) has led to the unipolar world (US) presently, a new world-order is taking place in the 21st century. It will be a multipolar world, with competing interests of the US, Russia, China, India and maybe even other countries like Brazil and South Africa.

Nicholas Burns, former undersecretary of state, in a review of a new book by Robert D. Kaplan, Monsoon, says “…the twenty-first-century balance of power in the world will rest, more than anywhere else, on the fortunes of China, India, and the United States in the Indian Ocean.

Mr. Kaplan argues that  “Like the monsoon itself, a cyclical weather system that is both destructive and essential for growth and prosperity, the rise of these countries (including India, Pakistan, China, Indonesia, Burma, Oman, Sri Lanka, Bangladesh, and Tanzania) represents a shift in the global balance that cannot be ignored. The Indian Ocean area will be the true nexus of world power and conflict in the coming years. It is here that the fight for democracy, energy independence, and religious freedom will be lost or won, and it is here that American foreign policy must concentrate if America is to remain dominant in an ever-changing world.

On Fareed Zakaria GPS (aired on 29 August, 2010), Mr. Kaplan summarizes his recent article in Foreign Affairs. The following passages are my reactions mixed in with Mr. Kaplan’s data and analysis:

China is blessed with temperate climate and a vast geography, extending to central Asia westwards, but also has a fifth of humanity to feed and enrich. What has gone unnoticed in the past decade is the rise of China as a seapower. It is coming in competition with India, which is also a rising seapower. China has started to build warm-water ports in Burma, Bangladesh, Sri Lanka and Pakistan. This is seen by many to encircle India in a ‘string of pearls‘ around India. The sea-lanes from the Persian Gulf to China cross the Indian Ocean.

A rising Chinese naval power will bump against the present occupant to its east, the US, which has troop presence in Japan, South Korea and the Philippines. The US also has presence in the Oceania (Guam, Palau, American Samoa, etc.) which will check Chinese expansion into the Pacific. So, China will aim to extend its influence in the Indian Ocean. Also, the rivalry between China and India, commanding the second and third largest global economies by 2025, will spill into the Indian Ocean.

While we cannot ignore China, and should encourage its cooperation, we must also encourage like minded countries lke Japan and India build their naval powers.

Obama has already shown that he understands this equations; Secretary of State Clinton’s first overseas trip was to Indonesia.

This will be the ‘Great Game’ of the 21st century, much like the one between the British and the Russian Empires in the 19th.

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Pakistani floods and aid?

Suffering its worst flood in 80 years, one-fifth of Pakistan is under water. The numbers of people affected are more than by the Indian tsunami in 2004: about 14 million affected, almost 2 million displaced, and over 1600 dead. (Video 1, Video 2)

The flood has also revealed the crisis in the country’s leadership. For one, the civilian government is weak and its writ doesn’t apply to almost half of the state. The real power lies with the armed forces, notably in foreign policy (especially when it comes to India). And yes, there are large pockets where the only authority is the Taliban.

Almost a failed state (number ten in Foreign Policy ‘Failed State Index 2010‘), the latest calamity will further devastate Pakistan’s economy. This is very disconcerting. Our prayers are with the people who are suffering.

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However, the international aid fails to flow. Partly, it is an unease among western donors. The US alone has poured over $10 billion during the last decade, and there is not much to show for it. A lot of the money, given to Pakistan for any reason, finds its way to the Army which builds buildings and purchases weapons for use against its arch-enemy, India. There is no guarantee that the money meant for flood victims will not be similarly misused.

Due to corruption, much of this money goes to enrich individuals, both civilian and military, as well. It appears the donors are wising up to the fact that “Foreign aid might be defined as a transfer from poor people in rich countries to rich people in poor countries.” (Douglas Casey, 1992).

Between this donor reluctance and the poor state of governance in Pakistan, it is a real and present danger that the terrorist organizations will leverage this tragedy to recruit and flourish.

All in all, this is a sad situation. Very sad.

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UPDATE 1: The UN launched a fresh appeal on 11 August for 459 million

UPDATE 2: India offers $5 million flood aid to Pakistan.

UPDATE 3: Taliban has told flood victims to boycott aid from “foreign infidels”


When will we leave Afghanistan?

“…the US army must stay until the Iraqi army is fully ready in 2020.” So says the top US solider in Iraq, Lt. Gen. Babaker Zerbari. He added that the planned withdrawal will create a “problem” and increase instability in Iraq. The US government plans to withdraw its combat troops by the end of August 2010, and to remove all troops by the end of 2011.

This has interesting implications for the US strategy in Afghanistan, where president Obama wants to start troop withdrawal starting July 2011. A year before that deadline, things in the AfPak region are far from stable, unlike in Iraq; this means a slower withdrawal.

Saddam Hussein, undoubtedly, was evil. Nevertheless, Iraq has been a progressive and secular society. It was the only country in the middle-east where one could put up a Christmas tree, and women were not necessitated to don a coverall, not drive or not go to work. While the country was predominantly Muslim, there was a sense of national identity, except for some dissension in the northern province of Kurdistan. Before the US invasion, Iraq had a million-man military, one of the largest in the world at that time.

In contrast, Afghanistan has never really been one nation. Until 1973, when a bloodless coup removed the king Zahir Shah, it was a monarchy. However, this Afghani kingdom only came to be in 1919. Before that it was either a transit for invaders to cross over to India, or was a part of an empire, either Indian or Iranian. During much of the 19th century it was a part of the ‘Great Game‘ between Britain and Russia, which continued even after the Bolshevik Revolution of 1917, ending when they became allies in WWII.

Without a federal authority, there have been several centers of power around the country throughout Afghanistan’s history; all politics is really local here. The populace is used to continual wars as fortunes have shifted. To complicate matters further, there are the majority (about two-thirds) Pashtuns in the east and south, while the minorities of Uzbeks are in the north and those with Persian heritage occupy the west. And they don’t like each other.

When the Soviets invaded, they had almost as much troops (100,000) as we have now (110,000) and were helped by an equal number of Afghan forces. They stayed there about the same time that we have been (almost 10 years), and when they left in 1989, the whole country was in tatters, without any central governance. Today, the situation is no better than it was two decades ago.

In other words, Afghanistan does not have any central command and control, no feeling of national allegiance and no viable armed forces. It does not have the structure or institutions to become a Westphalian nation-state.

If it will take 10 years for us to leave Iraq in toto, we will be in Afghanistan for a long, long time. Gen. David Petraeus, the US commander in Afghanistan, has started to hedge on that deadline, and VP Biden says US troop withdrawal could be limited. Even president Obama stated that “We didn’t say we’d be switching off the lights and closing the door behind us,” in July 2011!

Medical Tourism?

The rising cost of healthcare in the US has led many an employer to pursue the option of ‘medical tourism‘.

It’s not just countries like Australia, but even developing countries like India are attracting a lot of patients to have everything from eye and dental care, to cosmetic and open-heart surgery. These patients are admitted to top hospitals in major metropolitan areas around the country that use cutting-edge technologies to provide world-class care. Not only are they cheaper by 50%-80% – including all costs: airfare, medical bills and lodging, patients are treated like royalty in luxurious accommodations.

The Internet is teeming with sites to inform you and/or have your business. Googling ‘medical tourism gets about 11 million results; ‘medical tourism in India‘ over a million. To sweeten the pot, you can apply some of your savings to go sightseeing; hundreds of ‘medical-tourist agencies‘ offer thousands of packages from which to choose.

However, recent reports of a drug resistant ‘superbug’ (NDM-1) spreading in British hospitals from patients treated abroad have emerged. Three US cases of NDM-1 have been identified between January and July, according to the Wall Street Journal. The US Centers for Disease Control and Prevention said that patients received recent medical care in India.

Let the ‘Bush tax-cuts’ expire?

It is interesting that Alan Greenspan wants all of the Bush tax-cuts to be repealed. This puts him, a self-described ‘Republican libertarian’, to the left of President Obama, who wants that those making less than $250,000 should not experience any tax increase.

Ironically, these tax-cuts had his implicit backing as the Chairman of the Federal Reserve then, although Mr. Greenspan justifies that endorsement because there were “surpluses as far as the eye could see” at that time.

One must understand that these budget surpluses were as a result of a modest tax increase under President Clinton, as well as the ‘pay-go’ rules (which require that tax-cuts or new spending should not add to the federal deficit) adopted as part of the 1990 budget deal between President George H.W. Bush and the Democratic-controlled Congress. When Mr. Clinton left office, the budget had been balanced for the first time in four decades, there was a surplus and the DJIA had increased almost five-fold during his presidency to over 10,000.

Eight years of the ‘second’ President Bush took that flourishing economy and landed it in a tailspin. With a balanced budget and a surplus when he assumed office, the state of the economy was at its worst since the Great Depression. What happened?

Firstly, Mr. Bush enacted across the board tax-cuts in 2001 and 2003, and scrapped the ‘pay-go’ rules with a Republican-controlled Congress. He did this despite the need of increased expenditure required by expanding the government (Homeland Security) and conducting two wars. To hide the financial effects of these wars, their expenses were kept off-budget.

While the current state of economic affairs is more complex to simply explain away with the ‘Bush tax-cuts’, the fact is that the revenue so lost is a major part of the current budget deficit. It is rather paradoxical that Republicans (and some Democrats), who want no budget deficits and are opposing things like the Healthcare Reform for its cost to the Treasury, are wanting these cuts to be extended.

On this, I agree with Mr. Greenspan. All the cuts enacted by Mr. Bush in 2001 and 2003 should be repealed. Further, something should be done to collect taxes from the almost 50% of Americans who pay no tax at all. The allegations that this will hurt small business is simply an eyewash. To help those seriously affected by the current conditions, Congress should extend the unemployment benefits for another year or more, until the economy improves.

One just has to look across the pond where the conservative Prime Minister, Mr. Cameron, is including tax-increases to spending cuts to tame Britain’s budget deficit.

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UPDATE 1: In his piece in Newsweek, Fareed Zakaria makes similar arguments. It is a great read.

UPDATE 2: Two Secretaries of the Treasury appeared on ‘Fareed Zakaria GPS‘ program on CNN on 8 August.

  1. Paul O’Neill, the 72nd Secretary of the Treasury in George W. Bush’s first term, was against the tax cuts and was fired for disagreeing with the President. His reasoning was that the war in Afghanistan and the impending war on Iraq (at that time) does not allow the luxury to have this precipitous decrease in revenue that will ensue. He also argued that the entire tax-code should be reformed; $400 billion go uncollected every year, and $300 billion are spent on collecting taxes.
  2. Robert Rubin, the 70th Secretary of Treasury for both terms of Bill Clinton, agreed that the Bush tax-cuts should not be extended, but for the time being, say two years, those making less than $250,000 should be spared. Mr. Zakaria said that this would cost $250 billion of uncollected taxes. Mr. Rubin wants that the estate taxes should be put it place immediately, since they are none right now. He emphasized that letting the Bush tax-cuts expire would only let the taxes go back to what they were when Mr. Bush took office, and not an actual increase.

I tend to agree with all the recommendations above; I wouldn’t mind giving those making less than $250,000 (98% of all Americans) a temporary break until the economy recovers.

There was also a talk of introducing a consumption tax, like the European VAT (Value Added Tax), during the show. Doing so will provide the government with an alternate source of revenue, without having to raise taxes any further than they would be after the ‘Bush tax-cuts’ repeal and would allow people to be more discretionary with their earned income.

Reap what you sow?

The Pakistani establishment was full of glee in the 1990s, when they were able to deflect the mujahideen, created with the help of money and expertise from the US, which had helped oust the Russians from Afghanistan, to operate in Kashmir. After having lost the war*, which Pakistan declared on India in 1971, the then Prime Minister, Zulfikar Ali Bhutto, declared that it will “bleed India with a thousand cuts”.

Pakistan had deemed that with this ‘proxy’ war it will kill many birds with one stone. It will have deniability of waging a war, and the battle hardened mujahideen will bleed enough of India’s vastly superior armed forces (Pakistan was not yet a nuclear power; it became one in 1998) so they don’t pose a threat to Pakistan. The ensuing mayhem, they felt, would also keep India occupied enough to slow its advance to become a regional superpower. For them, it was a win-win situation.

Pakistan had thought that it could carry on this third-party guerilla warfare forever, or until it is able to wrest Kashmir from India, after having lost three wars it started for this purpose.

However, every action has unintended consequences as well. Nobody foresaw 9/11, and how it would change the whole geo-political dynamic. Pakistan had to make a u-turn in its support for the Afghani Taliban at American behest, and rein it many terrorist outfits that had linkages with al Qaeda and were having international ambitions although they were supposed to operate exclusively in Kashmir.

This created a backlash which progressed rather unchecked. The Pakistani establishment was unable to stem their activities since it had nurtured them for years, and had indoctrinated the population that India is a mortal threat, and that the use of violent methods to achieve goals in the name of Islam are legitimate. Little did they realize that these terrorists will bite the hand that fed them, and create anarchy in the Land of the Pure itself.

There have been reports of another vengeful group emerging in Pakistan, the Ghazi Force. Unlike many other Pakistan-based terror groups, the targets of this band is solely within the country. Suicide bombers have recently attacked a Sufi shrine in Lahore, because these extremists consider the orthodox strain of Islam practiced in Saudi Arabia, Wahabism, as the only true face of the religion. And no surprise, Pakistanis are blaming the US after this shrine attack, because America is “killing muslims” all over the world.


*Mr. Bhutto’s vow was to avenge the re-partition of Pakistan by the creation of Bangladesh. That India’s involvement was mainly because of millions of refugees from ‘East’ Pakistan crossing the border and creating chaos, and that Pakistan had itself declared the war, was summarily forgotten.

It was also overlooked that the one of the  reasons of dissent in that wing of Pakistan was the denial of the ‘West’ Pakistani establishment to honor the election of Mujibur Rehman, an ‘East’ Pakistani whose party had won the majority of seats in the Parliament in the 1971 general election, making him eligible to become the Prime Minister of Pakistan, both ‘East’ and ‘West’.

Another reason was the coercion of the Bengali speaking populace of the ‘East’ to only use Urdu, a North Indian language, as their lingua franca, and systemic assaults of their distinctive culture. The ‘East’ Pakistanis were growing tired of constant intimidation and oppression meted out by the ‘West’.

Apparently, religion (read Islam) was not a strong enough glue to hold them together, as it had been the supposed reason for Partition from India.

These fractures are visible even in the current day Pakistan, where Baluchis and Sindhis rebel against hegemony from Punjabis. One of the four provinces, Punjab is the most populous and dominant, and Punjabis still command the upper echelons of power in the establishment, including the armed forces. These disturbances were ignored until they started happening in Punjab itself, by outfits like the Pakistani Taliban and now the Ghazi Force.

Beauty is in the eye of the beholder?

Pakistanis have been suggesting that the US should talk to the Taliban, otherwise the US strategy will fail, and Mr. Obama seems to agree. The Defense Secrataty, Mr. Gates, believes that you cannot say that one Taliban is good, and the other not good, but agrees with his boss that there is a need to talk to some Taliban commanders.

Pakistan has nurtured the Afghan Taliban since its inception, and in fact the Pakistani military’s secret service, the ISI, created it and helped it take over Afghanistan as a ‘strategic depth’ against India. Although tables turned after 9/11, the Government of Pakistan admits it is reaching out to them at all levels. It is the Pakistani Taliban that Pakistanis want to root out, because they are causing mayhem within their borders; they are the ‘bad’ Taliban, according to them.

I think talking to any Taliban would be a bad idea, and would only foster more terrorism. On the other hand, the US should encourage other countries in the region, like India – which has sunk $1.2 billion so far, to continue to assist in building Afghani infrastructure. After all, Afghanistan needs all the help it can get, especially now that we know that it has over $1 trillion worth of untapped natural reserves.