India's new "Detroit"

WSJ story on “new Detroit” arising in Chennai, a major metro in India’s south.  Hyundai, Ford, Nissan/Renault, Mercedes are all there, cranking vehicles.

They are spending billions of dollars to make Chennai one of the world’s biggest hubs of small cars for export as well as for increasingly affluent Indians. Soon, the city will turn out cloe to 1.5 million autos a year, more than any one U.S. state made last year.

Car-parts suppliers also are placing big bets on the city, formerly known as Madras . . .

Totally natural:  automobile (French word) begins in Europe, is perfected in mass manufacturing in the US, and now shifts to Asia.

This is simply the successful expansion of globalization, and we all win when there are more consumers with more income to spend.

India’s economy grows 9% this year—so very Chinese.

Yes, higher labor costs eventually come to pass here too, but the upward swing in production will be profound and last for quite a stretch.

India: not so happy with Iranian sanctions

Petroleum Secretary S. SundareshanWSJ story about India’s top energy official complaining that new US-engineered sanctions on Iran’s oil & gas industry would prevent India’s desired strategy of making investments there.  Simultaneously, India has revived talks with Tehran about the long-proposed gas pipeline from Iran to India through Pakistan.

Of course, the sanctions ask far more of the East than the West, because the latter has extensive energy connectivity while the former is seeking to ramp up their own at high speed, and, as far as India is concerned, close-by Iran is THE obvious choice.

As the chart shows, India’s crude imports of oil have come close to doubling since just 2007, so one imagines all the low-hanging fruit has been plucked in terms of investments, making Iran all that much more attractive as a target.

And remember that, when talking nuclear sanctions, this is an India that went down the same path prior—despite much hand-wringing in the West, so no surprise that the Indians feel no particular need to freak out about Iran’s obvious ambitions.

The unique practices die once the isolation ends and connectivity rules

NYT story on how polyandry (a wife shared by two or more men) dies out rather rapidly in remote, northern India, once the connectivity of globalization ends its isolation--and presumably the restrictions that led to the practice.

Details:

Now 70 and a widow who is still married— one of her husbands is dead — Ms. Devi is a ghost of another time, one of a shrinking handful of people who still live in families here that follow the ancient practice of polyandry. In the remote villages of this Himalayan valley, polyandry, the practice of multiple men marrying one wife, was for centuries a practical solution to a set of geographic, economic and meteorological problems.

People here survived off small farms hewed from the mountainsides at an altitude of 11,000 feet, and dividing property among several sons would leave each with too little land to feed a family. A harsh mountain winter ends the short planting season abruptly. The margin between starvation and survival is slender.

“We used to work and eat,” Ms. Devi said, her face etched by decades of blistering winters, her fingers thick from summers of tilling the soil. “There was no time for anything else. When three brothers share one lady, they all come back to one house. They share everything.”

Polyandry has been practiced here for centuries, but in a single generation it has all but vanished. That is a remarkably swift development in a country where social change, despite rapid economic growth, leaping technological advances and the relentless march of globalization, happens with aching slowness, if at all.

After centuries of static isolation, so much has changed here in the Lahaul Valley in the past half-century — first roads and cars, then telephones and satellite television dishes, and now cellphones and broadband Internet connections — that a complete social revolution has taken place. Not one of Ms. Devi’s five children lives in a polyandrous family.

“Times have changed,” Ms. Devi said. “Now nobody marries like this.”

You see this all the time with connectivity.  Think of the Mormons with polygamy in isolated Utah, until they want to join the United States for real and they decide to ditch the practice, with the usual hardcores holding on.  Same will happen with female circumcision in places like Kurdistan as it opens up to globalization.

Time and again, "sacred traditions" are ditched because they either no longer are necessary or because they hold you back in your interactions with the larger world.

I wave such cultural distinctiveness a fond farewell.

The India-China rivalry in south Asia

FT full-page analysis by James Lamont that depicts India worrying that its economic clout in South Asia isn't translating effectively into local influence in the face of rising Chinese efforts to do the same.

Nepal is depicted as a potential flashpoint, a la the short but bloody 1962 war between China and India in the Himalayas.

India doesn't even have a rail link with its neighbor, we are told.

By comparison, China – Asia’s other great emerging economic power – has made huge efforts to improve relations with its neighbours during the past decade, settling a number long-running border disputes, making large investments in infrastructure and offering preferential trade terms.

Tensions between China and some of its neighbours have increased, however, especially over what some countries see as Beijing’s increasingly assertive approach to territorial disputes in the South China Sea.

A lack of regional cohesion will put the area at an economic disadvantage to the more dynamic markets of east Asia.

It also poses big security risks for India, most importantly from China, in what is likely to become a tussle for regional dominance in the coming decades. Ashok Mehta, a retired general and respected security analyst, says that if China one day controlled the heights of the Himalayas in Nepal, it would have no need of a nuclear arsenal trained on India. He views the country as a strategic linchpin whose loss would cost New Delhi dearly.

I will admit, this is the one bilat in the world that worries me WRT great-power war potential, and it all involves the very relativistic fears of falling behind.

The weird thing is, it's India that is racing ahead economically in south Asia, far faster than its neighbors, who, in turn, are more welcoming to Chinese economic penetration as a balancing function.

India, it would seem, needs to borrow a page from Turkey's foreign policy of "zero problems with its neighbors."

India's pharma industry grows up

NYT story on how India's pharma industry is both moving up the ranks and consolidating its position as a low-cost manufacturer. The development recalls Andy Grove's arguments about losing manufacturing and thereby losing the long-term innovation edge. This piece gives you the sense of how hard--if not impossible--it will be to stem such losses in existing mature industries, which says we do best to follow his advice in new industries.

The gist of the piece:

India’s drug industry — on track to grow about 13 percent this year, to just over $24 billion — was once notorious for making cheap knockoffs of Western medicines and selling them in developing countries. But India, seasoned in the basics of medicine making, is now starting to take on a more mainstream role in the global drug industry, as a result of recent strengthening of patent law here and cost pressures on name-brand drug makers in the West.

And while the Indian industry has had quality-control problems, it nonetheless benefits from growing wariness about the reliability of ingredients from that other historically low-cost drug provider — China. The United States is India’s top export customer for drugs.

India is becoming a “base for manufacturing for the global market,” said Ajay G. Piramal, the chairman of Piramal Healthcare, a drug maker based in Mumbai. Eventually, in Mr. Piramal’s perhaps overly optimistic forecast, only the very first and very last steps of the business — molecular drug discovery and marketing — will be run by the West’s global drug giants.

Those companies “don’t create much value” in the steps in between, he said.

It is not only Indian executives, though, who are bullish about the pharmaceuticalsindustry here. Analysts, research groups and consultants have been making similar predictions in recent months.

Big pharmaceutical companies have come calling, too. This year, Mr. Piramal sold his generic drug business to Abbott Laboratories for $3.7 billion, the latest in a string of takeovers and joint ventures here.

Like China, India seeks to move up production chains as rapidly as possible:

The shift to pharmaceuticals is part of a subtle, broader shift in the Indian economy. Moving beyond less sophisticated, outsourced services like telephone call centers, India has been advancing up the business value chain, particularly in law and medical diagnostics. Now it is showing a flair for manufacturing, particularly in goods demanding high-skill production and superlow prices.

Which says we have no alternative but to do the same.

WPR's The New Rules: U.S. Must Expand its Pool of Allies in Afghanistan

 

With his recent selections of Gens. David Petraeus and James Mattis for command in Afghanistan and Central Command respectively, President Barack Obama signals his understanding that his previously established deadline of mid-2011 to begin drawing down combat troops in the “good war” cannot be met.  The two were co-architects of the military’s renewed embrace of both counterinsurgency operations and the associated nation-building project that by necessity goes along with it. Neither flag officer can be expected to preside over a Vietnam-like exit that once again puts troubled and untrustworthy Pakistan in charge of Afghanistan’s fate.

Read the rest of the column at World Politics Review.

The changing face--and pocketbook--of India

pic here

FT story on how the rise of India's middle class changes the nature of charity in that country.

First glimpse I got was with the Christmas Tsunamis of 2004, when giving by the public outpaced government aid--a very positive sign.

Story details how Oxfam now raises money inside India for Indian operations.

For decades, international charities such as Oxfam, Care International and Save the Children raised money in the industrialized world--the US, Europe and Japan--to provide basic social services to the poor in remote corners of the developing world which dysfunctional local governments failed to reach.  Yet today, global charities are tapping large emerging markets' own increasingly prosperous middle classes--and their successful local companies--to address the deep-rooted poverty and profound social challenges these up and coming middle-income countries still face.

As this paradigm goes, shift happens.

As charities move from basic services to more complex goals like mitigating the effects of climate change, more local buy-in is essential, so this change is for the better.

Professionalizing the Indian political scene?

 WAPO story on parliamentary bill in India to raise salaries of members, a contentious subject anywhere in the world but more so in India, due to the Gandhi ideal.

Politicians have an image problem in the world's largest democracy. They are blamed for everything -- airline crashes, poverty, terrorism, hunger, cricket scandals. They are lampooned in movies, stand-up comic routines and street plays. In opinion polls, they often rank lowest as youth icons and highest as those viewed most corrupt.

Many Indians cling to the image of a frugal and bare-chested Mahatma Gandhi as the epitome of a politician, even as the burgeoning middle class experiences new wealth and conspicuous consumption.

So when a committee of federal lawmakers submitted a proposal last month seeking a fivefold pay increase, people were shocked. They bashed the idea in tweets, around the dinner table and on TV. Some even praised the British, whose members of Parliament recently decided to trim their salaries in these uncertain economic times.

Indian lawmakers currently take home about $372 a month, an amount most say is embarrassingly low. If the raise goes through, they would make about $1,860 a month -- a little less than the average IT graduate makes fresh out of college in the big city.

"We cannot forever be stuck in Gandhi's image from the freedom movement. In comparison, people think we are all corrupt crooks looting the nation," said Sanjay Nirupam, a Congress Party lawmaker from Mumbai, who wrote a recent op-ed in the Indian Express newspaper arguing for a raise.

Nirupam calls himself a "professional politician," a near-blasphemous term in India.

"My expenses are enormous. About 200 people come to see me every day. I have to offer them all at least a cup of tea, or they will abuse me and call me a miserly politician," Nirupam said. "Most of Mumbai's politicians own beer bars to supplement their incomes."

But in a country where about 300 million people earn less than $1 a day, the thought of a politician enjoying a meal in a five-star hotel or traveling in luxury cars still rankles the masses.

Independent studies show that parliamentary members tend to see their incomes rise substantially once in office, but it ain't because of their salaries, so one side of the argument says you need to pay them better to make them less dependent on lobbyists, etc.

"There is a lot of hypocrisy among Indians. They want young professionals to enter politics, but do not want them to be paid well," said M.R. Madhavan, head of research at the PRS Legislative Research, a group that tracks parliamentary practices.

But not all members of Parliament want more money.

Lawmakers from Communist parties, many of whom live in modest apartments and often carpool to work, told the prime minister that they do not want a big raise.

"The idea of leaders giving themselves a raise is inappropriate. There should be an independent body to decide this," said D. Raja, a lawmaker from the Communist Party of India. "The raise should not appear to be exorbitant in the present economic conditions. Only then people will understand."

Sounds like reasonable advice.

Every country on the rise faces this moment:  when you need to make politics a more honorable and worthy profession.  When Teddy Roosevelt told his rich family that he planned to go into politics, they were aghast at the potential family shame. Politics was then considered such a low and corrupt business, a situation that resurfaced with the Boomer era.  

Why?  Just like back in the late 19th century, this is an era of expanding business empires and rapid frontier integration--just on a global scale this time. So the most "worthy" career tracks are to be found in those realms, not politics. 

But as we enter into a period of great consolidation, when all that natural populist anger must be channeled into useful political progressivism, that's got to change.  And it's got to change especially in rising pillars like India.

All this expansion of globalization means we head into an era of many new rules, and making those rules happen has to be considered an honorable profession.

Do as I say, not as I do

Economist piece on China’s proposed sale of nuclear reactors to Pakistan, the argument being it will only intensify a nuclear rivalry.

Our problem:  by winning an exemption from the Non-Proliferation Treaty for India under Bush-Cheney, we’re now not in the position to do anything about China’s supplier relationship with Pakistan.

America argued that India had a spotless non-proliferation record (it doesn’t) and that brining it into the non-proliferation “mainstream” could only bolster global anti-proliferation efforts (it didn’t).  The deal incensed not just China and Pakistan but many others . . .

What particularly riles outsiders is that American did not get anything much out of India in return . . . India has since designated some of its reactors as civilian, and open to inspection, but other still churn out spent fuel richly laden with weapons-usable plutonium . . .

Pakistan suffers no such uranium shortage and is determined to match India . . .

China is trying a legalistic defence of the sale of the third and fourth reactors at Chasma.  But its real point is this:  if America can bend the rules for India, then China can break them for Pakistan.

Pakistan hopes that it will eventually get a deal like India’s.

I personally would describe such a scenario as just this side of crazy-town, but I wouldn’t rule it out either.  Some in the Obama administration are said to favor this, to win Islamabad’s help on the Taliban.  You just know how such a deal would work out:  nice show from Pakistan as they continue to build nuclear devices and buy fighter jets—or pretty much what the Pakistanis have done to us since 9/11 triggered the great money flow.

Again, I choose India every single time I can in this equation—not to hedge against China but simply to do the right thing.

Or we continue to pretend we can make two fake countries (Af-Pak) become real ones, stiffing New Delhi in the process.

Obama seems to be traveling down that second path, and I think we’ll all regret it soon enough.

Pakistan's active terror inside Afghanistan to stem Indian influence

NYT story simply makes clear what's been suspected by damn near everybody--and known by plenty--up to now:

A Pakistani-based militant group identified with attacks on Indian targets has expanded its operations in Afghanistan, inflicting casualties on Afghans and Indians alike, setting up training camps, and adding new volatility to relations between India and Pakistan.

The group, Lashkar-e-Taiba, is believed to have planned or executed three major attacks against Indian government employees and private workers in Afghanistan in recent months, according to Afghan and international intelligence officers and diplomats here. It continues to track Indian development workers and others for possible attack, they said.

Lashkar was behind the synchronized attacks on several civilian targets in Mumbai, India, in 2008, in which at least 163 people were killed. Its inroads in Afghanistan provide a fresh indication of its growing ambitions to confront India even beyond the disputed territory of Kashmir, for which Pakistan’s military and intelligence services created the group as a proxy force decades ago.

Officially, Pakistan says it no longer supports or finances the group. But Lashkar’s expanded activities in Afghanistan, particularly against Indian targets, prompt suspicions that it has become one of Pakistan’s proxies to counteract India’s influence in the country.

They provide yet another indicator of the extent to which Pakistani militants are working to shape the outcome of the Afghan war as the July 2011 deadline approaches to begin withdrawing American troops.

Recently retired Pakistani military officials are known to have directed the Mumbai attacks, and some Lashkar members have said only a thin line separates the group from its longtime bosses in the Pakistan security establishment.

How such behavior separates Pakistan from Iran is beyond me. They've got the bomb and they shared it indiscriminately for cash. They actively support terror groups that target our troops and our allies in a next-door war zone.  Worse, they take our money--and lots of it--to do it.

I bet Pakistan would love to see us get embroiled with Iran, but frankly, one of the reasons why I'm adamantly opposed to such logic is my sense that we eventually mix it up with Pakistan directly.

Because when the next 9/11 happens, that is where we will trace it to.

I choose India.

Chart of the day: Kashmir fatalities

From WSJ story on Indians considering limits on use of military force.  Accompanying picture looks right out of Israel’s intifada database:  rock-throwing young males wearing bandanas to hide their faces.

 What attracted me to the chart:  the tremendous drop in fatalities of all sorts (militants, security forces, civs) since the dangerous peak in 2001, which almost lead to war.  About 4500 deaths that year, and then the drop to maybe 250 in 2009, or a decline of virtually 95%.

But, of course, we know this must be a lie, because warfare and casualties are rising the world over!  I know this because, on the back-office Wikipedia page where the authors of my bio argue over my ideas, one person wrote that my whole Core-Gap stuff is bunk because conflicts around the world are growing in number and intensity.  And you know that must be true, because it’s on Wikipedia.

Civilian deaths last year were less than 100—a historic low, so yeah, I guess it makes sense to rein in the troops a bit.

Chart of the day: % Indian population living on less than $1.25/day

From WSJ story where India is considering whether or not to liberalize its welfare rolls by lowering the threshold definition of poverty.

But what caught my eye here is the clear trend.  We can argue about what the cut-off for welfare should be, but it gets hard to make the case that globalization and marketization has impoverished Indians.

The long pole in the tent of markets' emergence

India: "When's that train coming?"

NYT story with the usual gripe for emerging markets:  external infrastructure better than internal.

S. K. Sahai’s firm ships containers 2,400 nautical miles from Singapore to a port here in four or five days. But it typically takes more than two weeks to make the next leg of the journey, 870 miles by rail to New Delhi.

For most of that time the containers idle at the Jawaharlal Nehru Port near Mumbai because railway terminals, trains and tracks are severely backlogged all along the route. Counting storage and rail freight fees, Mr. Sahai estimates the cost of moving goods from Mumbai to Delhi at up to $840 per container — or about three times as much as getting the containers to India from Singapore.The problem is presented as a symptom of democracy, in contrast with China's authoritarian ability to build networks on demand.

Old story:  dictators good at building networks, but democracies/markets better at running them.

The more Pakistan goes after the frontier extremists, the more they seem to penetrate Pakistan's interior

The victims of terrorists bury their dead

Economist story that argues the extremists are growing strong in the more advanced areas of Pakistan--in effect, spilling out of the frontier into what most would consider to be Pakistan proper.

Vibe: the more the Pakistan military/security forces go after the extremists (Pak/Pashtun Taliban, Afghan Taliban in refuge, al Qaeda & other militants) in the FATA and NW Frontier Province, the more those groups retaliate by spreading eastward and southward into previously stable areas--returning the favor, so to speak.

Corollary argument is that whenever the same happens, radical elements are driven over border into Afghanistan, something that, as a rule, Islamabad is okay with, because it prefers Pashtun dominance in the north (the "strategic depth" argument).

Upshot being, this is why Islamabad in general likes to take a hands-off approach to the FATA and NW province: the hornet's nest stirred up is bad for Pakistan's usually more stable areas.

Story highlights a recent gunmen attack on the Ahmadis in Lahore.  They are a religious minority often persecuted as heretics by fundamentalist Muslims.  Over 90 were killed, and the shocking events retriggered a debate about how pervasive the Taliban are across the country as a whole.  Gov says there ain't no such thing as Punjabi Taliban, but local police in Lahore argue otherwise, saying they were behind recent Ahmadi assault.

There have always been Sunni Muslim extremist outfits in the settled areas, typically banned yet tolerated (and even supported by Pakistan's ISI [Inter-Services Intelligence]), especially if they proved useful vis-a-vis India in the Kashmir "olive-tree" fight (like the most publicized player, Lashkar-e-Taiba, responsible for the 2008 Mumbai assault).  Conventional wisdom has long said that these groups were distinct from the Taliban in the NW; now many are saying that's no longer true. More and more these groups decry the "foreign domination" of the US, so everything seems to be increasingly mushed together in that nasty "stew" you keep hearing about.

Conclusion of piece:  the more the US pushes Islamabad to work the Taliban issue in the NW, the more likely we end up pushing them to address militants throughout the country.  In short, either a comprehensive element or the usual whack-a-mole selectivity on Islamabad's part will become too apparent to hide from all interested parties.

This analysis falls in with the arguments you see more and more in the community that our focus in South Asia should be Pakistan, not Afghanistan.  That dovetails with my choose-India-first arguments.

Inevitably, I think this is how events are funneled. 

First rule of commitment: if you have to say it, it ain't there

Wash Times piece by way of WPR's Media Roundup.

The gist:

The Obama administration is deeply committed to its relationship with India despite concerns to the contrary, a senior State Department official said on Tuesday.

William J. Burns, under secretary of state for political affairs, tackled a prevalent belief in India that the Obama administration is less committed to a relationship with India than his predecessor, George W. Bush.

Mr. Burns, who previously served in the Bush administration, said there was bipartisan commitment in Washington to the U.S.-India relationship.

My, what a vessel and what a message.  You just know it has to be true.

The Obama mistake is choosing Pakistan over India

Reuters wire piece via Our Man in Kabul.

The gist:

The Obama administration is grappling with how to balance India's role in Afghanistan as arch-rival Pakistan also jostles for influence there ahead of Washington's planned troop withdrawal to start in mid-2011.

U.S. strategy in Afghanistan is set to be included on the agenda in U.S.-India talks this week in Washington -- with Delhi seeking clarity over rival Pakistan's role, particularly in reconciliation plans with the Taliban.

The Obama administration has so far sent mixed signals over the kind of role it wants India to play in Afghanistan, leaving an impression at times, say experts, that Pakistan's strategic interests could have more weight.

"I don't think this (U.S.) administration or the previous one knows how to balance our legitimate interests in both Pakistan and India effectively," said Christine Fair, assistant professor at Georgetown University and a South Asia expert.

While U.S. diplomats have praised the $1.3 billion India has pumped into reconstruction work in Afghanistan since 2001, military commanders have voiced concern that muscle-flexing by India could provoke Pakistan and stir up regional tensions.

"Increasing Indian influence in Afghanistan is likely to exacerbate regional tensions and encourage Pakistani countermeasures in Afghanistan or India," wrote U.S. General Stanley McChrystal, who is in charge of U.S. and NATO forces in Afghanistan, in a leaked assessment of the war last September.

The implication of McChrystal's view, said expert Lisa Curtis, was that India's approach was not viewed as helpful and Pakistan's strategic interests were more in play.

"That sent the wrong signal," said Curtis. "The U.S. should instead positively reinforce the political and economic activities of engagement by India (in Afghanistan)," added Curtis, who is with the Heritage Foundation.

"The idea that we would somehow ask India ... to draw back from Afghanistan to placate Pakistan which is still harboring Afghan Taliban leadership is very short-sighted and frankly makes no strategic sense," said Curtis.

Couldn't agree more with the Heritage Foundation:  our long-term bet has to be on India, because it will fuel globalization's advance and consolidation in South Asia--pure and simple.  You dance with them that brung ya.

Giving into Pakistan on the Taliban/Pashtun role in/control over Afghanistan is to buy yourself repeat visits. India represents a more dangerous path, no doubt, and a harder one.

But it's a permanent fix because it includes some solution on Kashmir.

We need India going forward.  Do not forget that under any circumstances.

Naxalism: killing it softly

Photo: PTI

Raghu Raman in a LiveMint opinion piece.

The realization sinks in:

The recent series of Naxal attacks highlight the paradox of the internal security in India. Unlike virtually any other country in the world, we face daunting security challenges while being presented with extraordinary economic development opportunities. Our globally acknowledged growth story is marred by a very real and present danger in the form of Naxal militancy and fundamentalist terrorism, which are two distinct show-stoppers if not dealt with a sense of determined and sustained urgency. The sheer scale of the challenge, however, poses the fundamental question of whether we should be thinking of incorporating new stakeholders into the campaign.

Taking a page from the US operations in Iraq—where an overwhelmingly powerful army crushed the existing regime, only to find itself struggling to manage the ensuing peace process—brings a realization that perhaps a transition phase is imperative between phases of conflict and prosperity. But managing a conflict and facilitating prosperity require very different skill sets.

Then almost a recitation of my slide that highlights the differences between the Leviathan and SysAdmin sides of the house:

As Thomas Barnett, adviser to the Pentagon, points out, the strategic purpose of security forces hinges on menacing and punitive response to events threatening national security. By their very nature, such a response is focused on rapid, and, if necessary, violent degradation of opposing forces. In our case, these would be operations against the Naxal militants. The emphasis is on speed of operations, often unilateral in nature, using a young force whose core training is in destructive operations.

Building prosperity, however, requires different mind and skill sets. This calls for non-threatening, long-term, continuous and economically self-sustaining operations. It focuses on capacity-building rather than capturing power centres. This has to be a deliberate, multilateral and inclusive set of activities carried out by a mature body of people. People who can spot growth opportunities and empower the affected districts to create an environment that is preventive to militancy, rather than punitive towards it.

Piece then explores the native skills that India already has with regard to entrepreneurship.

Then an argument that India's Core MUST integrate its Gap areas, for its own economic reasons:

The question for companies is not whether there is a return on investment in such projects. It is about whether they can afford not to get involved. There is clearly a limit to the growth potential in “secure” zones.  When one-third of India’s land mass is in the grip of some form of disturbance, it is only a matter of time before economic growth of the private sector starts hitting a ceiling. Moreover, it is also only a matter of time before militancy from the hinterland spills over into urban “secure” areas.

The challenge for the private sector is to reorganize its business paradigm to specifically target disturbed areas. The numbers work in its favour. Almost all such areas have only a fractional militant composition. Eventually majority of the local population will rally around income generating opportunities. Because militancy by itself cannot generate sustained income. Income brings access to communication facilities such as mobile phones and television, resulting in knowledge and aspiration. Militants focus on disrupting communication networks precisely for this reason.

Almost a perfect microcosm of my global arguments on a national basis.

Grafting an old fight on a new fear: jihadists chase fads too

WAPO story by way of WPR's Media Roundup on how a jihadist leader in Pakistan is stoking fears on India's upstream control of rivers.

Gist:

The latest standoff between India and Pakistan features familiar elements: perceived Indian injustices, calls to arms by Pakistani extremists. But this dispute centers on something different: water.

Militant organizations traditionally focused on liberating Indian-held Kashmir have adopted water as a rallying cry, accusing India of strangling upstream rivers to desiccate downstream farms in Pakistan's dry agricultural heartland. This spring, a religious leader suspected of links to the 2008 Mumbai attacks led a protest here of thousands of farmers driving tractors and carrying signs warning: "Water Flows or Blood." The cleric, Hafiz Sayeed, recently told worshipers that India was guilty of "water terrorism."

India and Pakistan have pledged to improve relations. But Sayeed's water rhetoric, echoed in shrill headlines on both sides of the border, encapsulates two issues that threaten those fragile peace efforts -- an Indian dam project on the shared Indus River and Pakistan's reluctance to crack down on Sayeed.

It also signals the expanding ambitions of Punjab-based militant groups such as the banned Lashkar-i-Taiba, founded by Sayeed, through an issue that touches millions who live off Pakistan's increasingly arid land.

Pakistan's water supply is dwindling because of climate change, outdated farming techniques and an exploding population. Now Pakistan says India is exacerbating its woes by violating the treaty that for 50 years has governed use of water originating in Kashmir.

India denies the charge, and its ambassador to Pakistan recently called the water theft allegations "preposterous." International water experts say that there is little evidence India is diverting water from Pakistan but that Pakistan is right to feel vulnerable because its water is downstream of India's.

The underlying reality is that there's no real evidence for the charge, but plenty of circumstantial conspiracy-style "evidence" and a triggering event/perception of climate change to fuel local fears.  The jihadis are drawn to any potential cause celebre.  Why?  To control through disconnection requires you blame the world for all your woes.

The real truth:

Politics aside, experts say, Pakistan's water situation is reaching crisis proportions. As the population has grown over six decades, per-capita water availability has dropped by more than two-thirds. About 90 percent of the water is used for agriculture, making it an economic lifeline but leaving little for human consumption.

Inefficient irrigation and drainage techniques have degraded soil and worsened shortages, forcing many small farmers to pump for groundwater. A severe electricity crisis means most rely on diesel-powered pumps, but fuel prices are rising, said M. Ibrahim Mughal, head of Agri Forum, a farmers' advocacy group.

So you ask yourself:  does Pakistan suffer from too little globalization (my diagnosis) or too much (the jihadis' charge at its most generalized level)?

None of these problems are insurmountable, but population growth plus outdated ag practices equals a disaster that must be blamed on outsiders.

Downside analysis of telecoms in India

FT full-page analysis by Joe Leahy, who's always good.

The start:

In late 2007, an elated Arun Sarin, then chief executive officer of Vodafone, was enthusing in a swanky Barcelona hotel about his latest acquisition – Hutchison Essar, India’s third largest mobile operator.

The UK-based multinational had just paid nearly $11bn (€8.8bn; £7.6bn) for a 67 per cent stake in the group, gaining with one move a front row position in the fastest-growing large telecommunications market.

“We are going to learn as much from India as we are going to take to India,” Mr Sarin, who was born and raised in the country, told the Financial Times in an interview. “Prices there are two-and-a-half US cents a minute, and they make a 35 per cent margin. How do you do that?”

Mr Sarin could not have envisaged it but just two-and-a-half years later, Indian tariffs have collapsed to less than one US cent per minute. Rather than a positive learning experience, the country has provided a hard lesson for Vodafone.

Everybody is just squeaking by in this suddenly fiercely competitive environment, including giant Bharti Airtel. But nobody can ignore the potential: 20m new subscribers per month and a total market expected to reach--get this!--1.1BILLION! by 2015.

Key difference with China:  India welcomes foreign ownership.

The big problem:  paucity of bandwidth, so spotty coverage and service bedevils the industry.  "Incumbent operators claim the situation has been worsened by the government’s decision to sell spectrum cheaply to newcomers and not auction it to the highest bidder."

More scope:

For India, this mobile phone expansion has significance beyond the immediate telecoms industry. It has been touted as the biggest – some say only – spectacular infrastructure success yet, a beacon of what can be achieved in a country that needs to build $1,000bn worth of roads, power plants, ports and airports over the next five years if it is to realise its dream of being a leading global economic power.

The telecoms revolution has also become one of the country’s primary drivers of development. Millions of urban poor and farmers, from Calcutta rickshaw pullers to Himalayan yak herders, now carry mobile phones. The improved communications enables them to do more business and gives them better access to services, such as healthcare. Every 10 percentage point increase in mobile penetration produces 0.81 per cent economic growth, according to a 2009 World Bank study.

“It’s an infrastructure rollout of a magnitude that has not been seen in the global economy for a long time,” says one former senior industry executive. He says the biggest operators in India in the past 12 months have installed as much network as Germany did in the past 15 years. “It’s something that vastly exceeds the rolling out of electricity, or the rolling out of highways in the 1950s in the United States.”

The great obstacle, as usual, are the rules:

But the regulatory system that gave rise to this expansion now finds itself accused of trying to kill the goose that laid the golden egg. Analysts accuse the government of implementing a series of policy switches in the past two-and-a-half years that have led to an influx of new entrants and a scarcity of spectrum – the precious airwaves on which mobile calls are transmitted. In the communications technology era, spectrum is the new black gold, in short supply all over the world but particularly in India, where the defence ministry still controls many frequencies.

The level of international criticism of India’s telecoms policy regime is worrying for a government that prides itself on its ability to court foreign investors at high-profile gatherings such as the World Economic Forum in Davos. One investment research company referred New Delhi’s recent policy actions as “regulatory basketcasery”. In a note on Vodafone, Bernstein Research said: “If you were looking for emerging market exposure to mobile growth, India was probably not a great choice.” The country, it added, “is a competitive mess, and its regulation grows more capricious and nonsensical by the day”.

Such charges are vehemently denied by regulators . . .

Yet no one can dispute that the sector is overcrowded. Some argue that its problems date back to January 2008, when the government sold eight new mobile service licences bundled with spectrum at 2001 prices on a first-come, first-served basis rather than through a bidding process. This sale is now being investigated for allegations of “serious irregularities” ...

The awarding of so many licences ushered in an era of competition even more intense than that witnessed by Mr Sarin. Many of the newcomers sold large stakes to cash-rich foreign operators . . .

As the new entrants and their international partners began operating, a vicious price war set in. Call prices declined rapidly. Telenor’s local unit, Uninor, recently announced a plan that offers calls for as little as Rs0.20 per minute.

Consumers have welcomed the price war but it has had a catastrophic effect on revenue in the industry. Among large operators, average monthly revenue per user as of March 31 fell up to 37.9 per cent compared with a year earlier, according to Macquarie Securities.

Even as the price war bit into profits, the government launched its long-delayed auction of spectrum for third generation mobile services, which allow subscribers access to the internet on their phones. The auction process was lauded as fair and open but some operators complained that the fact that there were only three pan-India allocations on offer to 15 operators drove up prices artificially. The cost of an allocation soared to more than $3.6bn – about 75 per cent more than the highest analyst estimates before the sale ...

Leading operators such as Vodafone and Bharti balked at paying the full cost of a pan-India allocation, and instead ended up with a patchwork of networks in the more important regions. Even in the areas they did win, the allocation was not enough to offer a meaningful increase in the advanced data services typical of 3G, such as internet television and video-conferencing.

“Operators have paid a huge amount of money ostensibly for 3G purposes but in reality this will be used to fill the gaps on 2G networks,” said Rahul Matthan of Trilegal, an Indian law firm.

For India, this could be a blow. The country’s internet penetration, which the most optimistic estimates put at about 70m users, is one of the lowest among the world’s fast-growing emerging markets.

Given the difficulty of building ground-based infrastructure because of high population density, efficient implementation of 3G might have offered India the chance to leapfrog into the internet age. For the government, short-term gains from the sale of resources such as spectrum have to be balanced against the need to create incentives for investment in communications. World Bank calculations show that increasing broadband penetration generates economic growth to an even greater extent than mobile penetration.

Many experts argue that consolidation is the only long-term solution. Existing rules seriously curb mergers and acquisitions. 

Tumultuous boom-and-bust days of network/biz empire-building.  Fascinating to watch and impossible for all these companies not to engage.

Remember the pot of gold that lies at the end of this rainbow: the ability to process all the biz intell that flows through these mobiles.

Excellent piece.  Serious education.  I can't ever see a future where I'm not subscribing to FT.

Fascinating piece by Matt Armstrong in WPR on next-generation UN peacekeeping

 The starting premise intrigues:

A subtle evolution of United Nations peacekeeping operations is underway. If the first of these missions kept an agreed-upon peace, and later missions sought to make peace, several countries now use these operations to advance their foreign and economic policy agendas, and raise their global profile. This shift, selective as it is to date, may potentially raise the standard of conduct in U.N. peacekeeping operations increasingly fraught with charges of criminal behavior, corruption, lack of accountability, and general ineffectiveness. However, there are significant downsides to this approach. 

China, Brazil and India are thereupon presented for being "well-positioned to leverage this new facet of peacekeeping."

Some cool background precedes the country analyses, to include the factoid that, "Since 2001, more than half of all U.N. peacekeeping forces have come from seven countries: Pakistan, Bangladesh, India, Nigeria, Jordan, Nepal and Ghana."  Body-intensive operations, occurring at heightened frequency, means the UN ends up turning to cheaper militaries--in every sense--that are rich in numbers.

Africa, we are told, is China's primary target for public diplomacy through peacekeeping.  I myself have been surprised, whenever I met with Chinese military officers, how many of them have done time on the continent. It is really viewed as a prime operational experience.  True to form, the Chinese provide purely SysAdmin troops (docs, police, observers, engineers) and no combat-capable personnel.  China explicitly explains its expanding role as filling the vacuum created by the decline of Western military participation in such peacekeeping ops.  

As natural as the day is long to me.  You go with the frontier integrators of the age--not last century's version.

Brazil is presented as seeking more peacekeeping roles as part of its long campaign to win a permanent seat in the UN Security Council, although the geographic purview of its participation remains tight on LATAM.

India, a long-time supplier of peacekeepers, is presented as lacking the tight strategic focus of China--as in, it's not yet sure what it wants to become as a great power.

Conclusion:  mostly upside for the UN with some danger that rising great powers will pick only their preferred missions.

Smart piece.