By Maia Otarashvili*

Continuous political stagnation in Europe’s east is a part of everyday life there it seems. But sometimes that stagnation gives way to a full on crisis: often having something to do with corruption and/or the lack of political compromise. Thus it comes as no surprise that Moldova and Romania are in the midst of political crises yet again.

It was less than a year ago that Moldova and Romania made important positive strides towards achieving greater stability and democratic consolidation. Romania elected a new president who was promising a change of pace from the scandal-ridden political scene. Severe political infighting between President Traian Basescu and Prime Minister Victor Ponta had become a normal occurrence, frequently bringing the country to a political standstill. At the same time, to the east of Romania, its friendly neighbor and longtime ally Moldova withstood major Russian pressures as Moldovans made a pro-Western choice, giving three pro-EU parties an opportunity to form an effective coalition government. However, both countries are currently facing political crises—Moldova more so than Romania—that continue to challenge their hopes for democratic consolidation and political stability.

Romania’s Prime Minister Wrapped in Corruption Scandal

How healthy is Romania’s democracy

This past fall Romania made important strides towards consolidating its democracy. (Freedom House, for instance, currently rates Romania as a semi-consolidated democracy—see ratings table below.) But while Romania is a member of the EU it is not a member of the Schengen area nor of the Eurozone. And thus still has a long way to go before it achieves deeper and more comprehensive EU integration. In November 2014 Klaus Iohannis emerged the winner of Romania’s presidential elections with 54.5 percent of the votes. Iohannis is an ethnic German and a former mayor of Sibiu, a well-off town in the region of Transylvania. A member of the center-right bloc via the Christian Liberal Alliance, he brings a proven track record of success in economic reform and development to the table—two things for which Romania is currently desperate. Iohannis’ pre-election campaign was based on a promise of a “normal Romania,” free of the lies and scandals that the previous government of rivals—President Basescu and Prime Minister Victor Ponta—was characterized by.

Ponta did run for President in 2014 and it was expected that had he won he would have reoriented Romania more closely towards Russia and China, following in the footsteps of Hungary’s controversial Prime Minister Viktor Orban. In addition, his political career has been connected to plenty of scandals in Romania—including his attempts to impeach President Basescu in 2012.

Romania

Now Ponta finds himself involved in another scandal, but this time he is at the center of it: he finds himself in the midst of being investigated for charges of money-laundering, forgery, and tax evasion. This new scandal in Romania’s politics has also revealed that Ponta and Iohannis aren’t exactly going to be playing nice. President Iohannis has called for Ponta’s resignation, but Ponta continues to claim innocence. Moreover, earlier in June the Romanian senate voted by a large majority against lifting Ponta’s immunity so that criminal investigation could take place. It is clear that Ponta continues to enjoy the support of the parliament, where his own Social Democratic Party occupies the greatest amount of seats. President Iohannis criticized this move, stating “it is conclusive proof of huge irresponsibility and defiance towards the public, because the majority MPs are obstructing justice and will destroy the parliament as an institution, harming the image of Romania, in order to save one person.” The president added: “I furthermore consider the key to getting out of this situation is the resignation of Mr. Victor Ponta as prime minister.”

While President Iohannis may be keeping his promises and working hard towards driving Romania towards normalization, Ponta, with his strong hold over the parliament, is bound to complicate things for him in the near future. Thus despite Iohannis’s best intentions, Romania is far from achieving normalcy any time soon.

Another Corruption Scandal for Moldova

To add insult to injury, the Moldovan central bank recently discovered that one eighth of Moldova’s GDP, or $1 billion, has disappeared from Moldova’s banks. It turns out that in November 2014, the county’s three biggest banks gave out mysterious loans worth almost $1billion. The deals went sour and “the Government was forced to throw $870 million worth of emergency loans at the lenders to save them from bankruptcy.” The Business Insider called it one of Europe’s worst ever banking crises.

Moldova’s Chiril Gaburici. Photo by Kodru, Wikipedia Commons.

The newly appointed Prime Minister Chiril Gaburici has harshly criticized the state prosecutors and the Central Bank chief, who have so far failed to properly investigate the case. As angry Moldovans protested in the streets, Gaburici called for the resignation of these individuals. However, in turn, he found himself being questioned by the state prosecutors over his suspicious school certificates. Gaburici announced his resignation on June 12th, stating that he is not a politician and is unwilling to deal with political maneuvering. State prosecutors have now opened a case against him over the forgery of school documents to gain entry to higher educational establishments.

As the political scandal unfolded, a previously scheduled International Monetary Fund visit had to be cancelled. The IMF visit was crucial for Moldova’s financial stability—as it appears impossible for the country to dodge a looming bankruptcy without substantial help from the IMF.

With the backdrop of this major scandal, Moldova carried out its local elections on June 14^th. The disheartening events resulted in a low voter turnout—49 percent. However, as a surprise to many observers, 25 municipalities voted for pro-Western parties, and 7 municipalities elected pro-Russian candidates. While the results were in favor of the pro-Western parties, they will have to form a coalition in order to carry out effective policies.

Moldova’s Politics: A broken political system or successful practice of political pluralism?

Moldova

Among its fellow hybrid regimes in the EU’s east (e.g., Georgia and Ukraine), Moldova has been the frontrunner in terms of EU integration. Georgia and Ukraine were denied a visa-free regime with the EU at the Eastern Partnership Summit in Riga this past May due to their failure to meet the conditions set out by the EU Association Agreement that they signed in 2013. Moldova, on the other hand, has been enjoying the benefits of EU visa liberalization since spring 2014. While Moldova is just as impoverished as Georgia and Ukraine, its European path is much more certain and even inevitable. This is not to say that the threat that Russia poses on Moldova isn’t existential. However, if one must find exactly what is keeping Moldova from (1) joining its close ally Romania and becoming a member of the EU and (2) achieving economic stability and democratic consolidation, one must look no further than Moldova’s domestic political scene.

Can Russia really be blamed when the Moldovan pro-Western parties have proven to be so feckless, unreliable and unwilling to compromise? The failure of Moldova’s pro-EU parties to stand united in pursuing Moldova’s European-integration agenda continues to create endless political stagnation. Additionally, the rampant corruption is a major factor in handicapping Moldova’s political system. The frequent collapses of weak coalition governments and the endless resignations of leaders over corruption scandals are leaving the voters frustrated to the point of being pushed into the arms of the pro-Russian parties. Once the president accepts Gaburici’s resignation, the minority government will have to somehow gather support for a new nominee. If this fails, another parliamentary election may be in order, and it is likely that the disheartened Moldovans may not give the pro-Western parties yet another chance. This could in turn spiral Moldova’s domestic political climate out of control, and should the country willingly end up in the Russian orbit, there is very little the EU could do about it.

On the other hand, this seemingly diseased political system in Moldova has kept the country from experiencing any sort of authoritarian backsliding, in a region marred by democratic erosion. While Moldova’s democracy may not be consolidated, its system of political pluralism has managed to maintain the balance of power so far. It has been a very long time since we’ve seen any signs of rising authoritarianism in Moldova. In 2012 Georgia experienced the first ever peaceful transfer of power from Mikheil Saakashvili’s United National Movement to Bidzina Ivanishvili’s Georgian Dream Coalition. This was a remarkable milestone for Georgia. Previously, since its independence all transfers of power had either been forced or as the result of popular uprisings. Meanwhile in Ukraine’s modern history it only experienced a peaceful transfer of power once—and even that one instance turned out to be detrimental to the country’s democratic aspirations, as it brought President Yanukovych in power. All other transfers of power in Ukraine’s recent past have been a result of popular uprisings.

By contrast, since independence Moldova’s semi-parliamentary system has worked effectively, allowing continuous peaceful transfers of power. While this has not secured democratic consolidation for Moldova, it has prevented the over-concentration of power in any single individual’s hands. Arguably, out of the three hybrid regimes, Moldova is the least likely to become an authoritarian or even semi-authoritarian state in the foreseeable future. In sum, all Moldova needs to achieve stability and prosperity is to get out of its own way.

How does Moldova measure up with its fellow Hybrid states?

About the author:
*Maia Otarashvili is a Research Fellow and Program Coordinator for FPRI’s Project on Democratic Transitions. She holds an M.A. in Globalization, Development and Transition from the University of Westminster in London, with emphasis on post-authoritarian transitions.

Source:
This article was published by FPRI.

The post Romania And Moldova In Political Crises Yet Again – Analysis appeared first on Eurasia Review.

By Nick Gonzalez*

Those who follow top trending Twitter topics in Mexico will likely find the hashtag #UberSeQueda (“Uber is sticking around”). In the streets of Mexico City, however, many will hear a different message — “¡Fuera Uber!” (“Uber Get Out!”). The pioneering transit service has run into trouble with the city’s traditional taxi unions, which represent 140,000 cabs, the largest fleet of registrants in the world. In response to what they deem unfair competition, union activists have taken to vigilante justice to demonstrate their discontent. Uber drivers have been subject to an arsenal of tactics: slashed tires, scratched cars, baseball bats to the windows, smashed mirrors, and physical beatings.[1] As the violence escalates, the question remains as to how the government should respond to Uber’s operations in the city.

Uber has no doubt transformed the rider experience and the driver payout structure by capitalizing on its technological benefits. The San Francisco-based company expanded its service to Mexico City back in 2013, at the time acclaiming that its residents are “living in a new Mexico,” and that the city “is finally becoming the cosmopolitan destination it has always wanted to be.”[2] Uber now has more than 300,000 users and several thousand drivers in its Mexico market, offering cheaper fares than taxis.[3] Ease of access, functionality, and a generally sound business model have changed the rules of the already crowded taxi market. Users have the option of digital receipts through their smartphone app, as opposed to inefficient paper transactions. Thus, there are fewer opportunities for extortion, theft, or disputes over unpaid fares. Uber drivers also undergo stringent criminal background checks and drug screenings, which is not the case for “pirate” taxis, who sidestep any regulatory requirements due to lack of active enforcement by the city government. One drawback, however, is that Uber employs surge pricing, whereby an algorithm determines the demand at peak hours of the day to create new supply of cars on the road, shift supply to areas of higher demand, as well as reduce the demand for cars through the disincentive of higher prices.[4] For patrons in Mexico City, the most populated metropolitan area, this may be an inconvenience, though it has not stopped them from using the service. However, for the established providers of transit services, Uber is an unlawful enterprise that needs to be regulated.

Response from Organized Labor

Licensed taxi cab drivers are not standing by silently. On May 25, they organized a strike to denounce their online rival and to demand a repeal of a mandate to paint their cars the authorized colors of pink and white. Main thoroughfares were blocked, while riot police barricaded certain locations to prevent access to the Zócalo, the political and cultural center of the city. At the heart of the protest was Uber’s alleged illegality. Whereas taxi drivers have to obtain proper licenses, rent space for taxi stands, and insure themselves, the company is exempt in this respect. Taxi drivers argue that Uber circumvents the rules by avoiding the city’s unwieldy bureaucracy, and that only those who pay government concessions are allowed to drive customers.[5] Yet, it is unclear how the courts will interpret Uber’s status within the law: either they are protected as a private chauffeur service or considered unlawful “pirate” taxis.

Much of the discontent stems from the fact that Uber is a foreign entity operating in Mexico. The $40 billion dollar start-up largely evades Mexico City’s tax rules and regulations to which taxi companies are subject. Meanwhile, a percentage of the profits makes its way back to the United States. The implications are familiar. A common topic of debate is to what degree a foreign company is obligated to civic accountability and local laws. Uber has faced criticism in this regard, both in Mexico City and in cities around the world. Over five years, the company has reached 3,000 employees globally and at least 1 million driver partners. It now operates in 58 countries and 311 cities, which include major urban centers such as Paris, Manila, and Delhi, where disputes have also erupted.[6] In December of 2014, a mercantile court judge in Spain ordered the service to cease all operations in the country.[7] On May 26, an Italian court banned unlicensed car-sharing services such as Uber. The company was given 15 weeks to comply with the ruling or face a fine of 20,000 euros for each day that compliance was delayed.[8] The arguments in these cases were unambiguous. Any taxi operating without a license as a commercial activity enjoys an unfair advantage, and should be prohibited accordingly. However, Mexico has yet to implement policy short of an outright ban.

Policy Implications and the Search for Alternatives

Many have looked to government officials for answers. The union advocates for a level playing field for its workers. Though transport officials promised to consider regulation of online taxi services, Mexico City mayor Miguel Ángel Mancera said there would be no arrests of Uber or Cabify drivers, who are deemed third-party contractors instead of “employees.”[9] After receiving legal complaints from the taxi operators, Secretary of Mobility Rufino León Tovar suggested requiring Uber drivers pay for a permit, though he praised the service for giving the people of the city “a perception of great security.”[10] However, as backlash against Uber has mounted, criticism of the government’s response, or lack thereof, has also grown. Taxi drivers have threatened to stop paying fees for licenses and insurance if there is no regulation. According to Ignacio Rodríguez, spokesman for the Organized Taxi Drivers of Mexico City, this would amount to an annual loss of 82 million pesos, or $5.3 million, from the treasury.[11]

What perhaps worries authorities most is the escalating violence on behalf of the unions. Esteban Meza, head of the Unified Movement of Social Organizations, representing about 13,000 cab drivers, told Mexico’s El Universal, “We are tracking these colleagues and hunting them [Uber drivers] down.”[12] Meza clarified that Uber operators would simply be handed to authorities and not exposed to physical violence, though the reality suggests otherwise. These new targets must keep a low profile for fear of reprisal. Any sign of Uber affiliation could be an invitation for aggrieved cabbies. Uber driver David García told Time Magazine, “They attacked a colleague by a taxi stand. They smashed all his windows and beat him.” Even so, García continues driving for the weekly remunerative return of 2,300 pesos, about $150.[13] As a result, drivers wear more casual street clothes, use tinted windows, hide their dashboard cellphones, or avoid hotspots where previous attacks have occurred, all to appear as normal drivers.[14]

Mexico is no stranger to violence and uncivil retribution, whether through organized crime or independent action. As cited in a previous COHA analysis, the Mexican National Human Rights Commission reported: “In Mexico, where just eight of every 100 crimes committed are reported and only 1 percent of crimes are investigated by prosecutors, this allows 99 percent of crimes to go unpunished.”[15] There is never a justification for the kind of extra-legal measures taken by select union members, especially when it can potentially be resolved through the courts. However, the public must not let the actions of a few deter them from hearing the cause of the many.

Despite these forms of intimidation, Uber continues to promote the use and expansion of its service. They welcomed the publicity garnered from the May 25 protests as a way to attract new subscribers. As a result, the company offered its users two free trips up to 150 pesos, about $10 each.[16] It has become clear that the two sides are unyielding in their struggle for existence—one, a hallmark of the city’s transit network; the other, a foreign entrepreneurial venture poised to solve its biggest transportation problems. However, success has both its merits and demerits. Uber provides the commuter a degree of safety not afforded through regular taxis. It uses convenient technology and is made relatively affordable. However, on labor grounds, it squeezes out local business by bypassing the prerequisites to operating a taxi in the city. In the eyes of the union, there is also the charge of elitism, with the service catering to middle class and upper class patrons. Yet if there is no targeted effort on behalf of policymakers to discontinue Uber’s operations entirely, city officials can take steps to regulate the service (i.e. requiring the purchase of permits) as to level the playing field. In fact, there are forces already at work in California’s courts that may be doing their bidding. California’s Labor Commission ruled on June 17 that an Uber driver is an “employee” as opposed to a “contractor,” a decision that could push up costs for the ride-sharing service and hurt its valuation.[17] What this would mean for Mexico City, and indeed for cities around the world, is that commuters will have less incentive to use the Uber app, giving taxi drivers a greater chance to compete. Meanwhile, however, the traditional taxi services themselves must take initiatives to adapt to a changing system of transportation.

A viable alternative to stay competitive is to modernize through apps and improve the overall standards of registered vehicles. Mexico City’s medallion cabs have frequently been associated with poor maintenance and cases of assault. Meanwhile, Uber drivers have the incentive to preserve the physical upkeep and cleanliness of their car through the driver rating system and the requirement that they must own a newer model of car to operate. This contrast in aesthetics may push commuters away from the traditional service and fuel the ire of traditional taxi drivers. Some urge that if these drivers are concerned about declining profits, they should simply make the transition into Uber. However, many who want to switch into the online taxi system do not have the capital to purchase cars that meet Uber’s requirements. The answer to this problem may be in upgraded cabs that offer a comfortable, efficient, and reliable riding experience. To finance such upgrades, Mexico City’s government could use the funds acquired from Uber’s purchase of permits as well as the additional tax revenue garnered from greater oversight of the company by the city.

Conclusion

The commuting public of Mexico City deserves a mode of transit that is safe and affordable. It is in the interest of elected officials to tailor any legislation to this end, in principle and in fact. However, they need to guarantee that any competition and its business practices, especially for foreign companies, are fair and admissible under legal and regulatory guidelines. This includes creating a level playing field between Uber and the traditional taxi unions so as to require standardized concessions for permits and the procurement of proper licenses. Though Uber has brought social benefits in the form of public safety, it does not disguise the fact that it is a foreign company displacing a Mexican transit system. Taxi drivers have depended on a reliable stream of patrons for their livelihood, yet must now vie for that same market against a “neutral technological platform” for independent drivers. If Uber is regulated as a result of current roundtable talks in Mexico, however, and the California Labor Commission’s decision is accepted on a broad basis, taxi drivers will be able to compete.

In the same vein, street-hail taxis must offer the technological amenities and vehicle requirements of online taxi services to regain the public’s trust and attract customers. Innovation and security must be valued from both the taxi drivers and the local government. Of chief importance is to prevent and monitor outbreaks of vigilante attacks in a country already plagued by unrestrained violence. The people of Mexico City, whether hailing from the slums or the suburbs, argue that they warrant the best possible experience en route from point A to point B.

*Nick Gonzalez, Research Associate at the Council on Hemispheric Affairs

Notes:
[1] Grillo, Ioan. “Uber Driver Hunted Down in Mexico as Taxi Unions Fight Online Competition.” Time, Last modified June 10, 2015. http://time.com/3915705/uber-mexico-dispute/.

[2] “Uber Has Launched In Mexico City!” Uber Newsroom, Last modified August 2, 2013. http://newsroom.uber.com/mexico-city/es/2013/08/uber-has-launched-in-mexico-city/.

[3] Partlow, Joshua. “Mexico City cabbies are getting physical with Uber.” Washington Post, Last modified June 8, 2015. http://www.washingtonpost.com/world/the_americas/mexico-city-cabbies-are-getting-physical-with-uber/2015/06/07/55b7ba3a-094a-11e5-951e-8e15090d64ae_story.html.

[4] Diakopoulos, Nicholas. “How Uber surge pricing really works.” Washington Post, Last modified April 17, 2015. http://www.washingtonpost.com/blogs/wonkblog/wp/2015/04/17/how-uber-surge-pricing-really-works/.

[5] “Mexico City cabbies are getting physical with Uber.”

[6] Carson, Biz. “More than 1 million people have now worked as an Uber driver.” Business Insider, Last modified June 4, 2015. http://www.businessinsider.in/More-than-1-million-people-have-now-worked-as-an-Uber-driver/articleshow/47535918.cms.

[7] Corona, Sonia. “Mexico City Cabbies come to blows with Uber ride-share driver.” El Pais, Last modified March 31, 2015. http://elpais.com/elpais/2015/03/31/inenglish/1427799499_399233.html.

[8] “Italian court bans unlicensed taxi services like Uber.” Reuters, Last modified May 26, 2015. http://www.reuters.com/article/2015/05/26/us-italy-uber-idUSKBN0OB1FQ20150526.

[9] “Uber Driver Hunted Down in Mexico as Taxi Unions Fight Online Competition.”

[10] “Mexico City cabbies are getting physical with Uber.”

[11] Lee, Brianna. “Uber Backlash In Mexico Heightens As Taxi Union Warns It May Stop Paying Fees.” International Business Times, Last modified June 12, 2015. http://www.ibtimes.com/uber-backlash-mexico-heightens-taxi-union-warns-it-may-stop-paying-fees-1965064.

[12] Fernández, Emilio. “Taxistas de Edomex amagan con ‘cazar’ unidades de Uber.” El Universal, Last modified May 28, 2015. http://www.eluniversal.com.mx/ciudad-metropoli/2015/taxistas-de-edomex-amagan-con-39cazar-39-unidades-de-uber-1103233.html.

[13] “Uber Driver Hunted Down in Mexico as Taxi Unions Fight Online Competition.”

[14] “Mexico City cabbies are getting physical with Uber.”

[15] “Mexican rights body says disappearances, murders soared in last six years,” Fox News Latino, Last modified November 22, 2012. For reports in Spanish on human rights violations in Mexico, see the website for Comisión Nacional de los Derechos Humanos México at http://www.cndh.org.mx/.

[16] Iliff, Laurence. “Mexico City Cabbies Block Streets to Protest Against Uber.” The Wall Street Journal, Last modified May 25, 2015. http://www.wsj.com/articles/mexico-city-cabbies-block-streets-to-protest-against-uber-1432593861

[17] De Haldevang, Max. “Uber says open to being regulated in massive Mexico City market.” Reuters, Last modified June 17, 2015. http://www.reuters.com/article/2015/06/17/us-mexico-transportation-idUSKBN0OX2XP20150617.

The post In The Courts And In The Streets: Uber In Mexico City – Analysis appeared first on Eurasia Review.

By Michael McDonald

In the pantheon of American culture, no event is more iconic and distinctly American than the Super Bowl. Like all things American, the Super Bowl is huge, expensive, and a source of incredible passion for fans. Just running a 30-second commercial to the more than 100 million people that watch the game costs nearly $5 million.

So how much electricity and energy go into putting on the Super Bowl?

There are lots of components here, but the biggest indisputable three are TVs used to watch the game, lighting and possibly climate control in a stadium, and fuel used in traveling to the game (by car or plane).

Worldwide, roughly 30 million televisions watched the five-hour extravaganza, assuming a little over five people per Super Bowl party. The average TV uses around 100 watt-hours. Plasma TVs use more electricity, and presumably people watch the Super Bowl on the biggest brightest TV they have available, so maybe the average TV watching the Super Bowl actually uses more like 125 watt-hours. To sum it up, the average TV would use 1.25 kWh, thus the 30 million households around the world watching the game would use 37.5 million kilowatt hours of electricity or 37.5 GWh; add in the 30 million households additional 1.25 kWh for fridges, lighting etc. and that’s another 37.5GWh. The total comes to a staggering 75GWh! At an average price across the country of about $0.11 per kwh, that works out to a total cost of roughly $8,250,000.

TVs: 75 GWh or $8.25 million

On the football stadium itself, there is a lot of debate and no clear answers. Stadiums use pretty efficient lighting, and certainly air conditioning is not likely to be an issue in the dead of winter. So using the low end of estimates, an average stadium might use 10MW of energy for five hours, or roughly 50 MWh for the game. Compared to the TV use, that’s not a lot, but of course, there are roughly 80,000 people in a stadium watching a game versus hundreds of millions around the world watching. Stadiums are industrial users of power, so they won’t pay standard power rates, but for the sake of simplicity, assuming an average of $0.11 per Kwh again leads to a total cost of $5,500.

Stadium: 50 MWh or $5,500

Finally, transporting 80,000 people to a stadium is going to use some energy. The amount of energy varies based on where the stadium is and where the people are coming from of course. Stadiums are roughly equally spread out across the U.S., while people are not. Given the size of the country (about 3,000 miles across), the average person going to the game probably flies around 1,500 miles or about 2 hours of peak aircraft time. A Boeing 747 carries 500 people and uses 280 MWh for a 2 hour flight. That means about 45 GWh of power for the 160 planes needed to ferry 80,000 people to the stadium. Aircraft, of course, run on jet fuel and at current prices, that fuel will cost around $100,000 for each of those 160 flights or $16 million.

Travel: 280 MWh or $16 million

Overall, the Super Bowl costs almost $25 million in energy every year – quite a bill for one football game. It also requires nearly 75.5 GWh of energy, almost twice the equivalent amount of electricity that the entire country of Morocco can generate over the same five-hour period (given their 6.8 GW of capacity that existed in 2012).

The takeaway here is that the Super Bowl is huge and more expensive for America, and perhaps the environment, than most people realize. Still, the Super Bowl has quite a ways to go before it catches up in size and cost to the World Cup.

The post How Much Energy Does The Super Bowl Use? – Analysis appeared first on Eurasia Review.

The Greek adjustment programme failed. This column argues that the problem lay in the programme’s design. By focusing on deficit reductions and the wrong type of reform, it failed to build up the only thing that could provide the basis for debt repayment – namely a dynamic, export-oriented productive base. A broader reform agenda that creates hope would be accepted by Greeks and it would make eventual repayment more likely. The need for some patience in reaching the final destination of this journey should no longer be an excuse for not taking the first step.

By Michalis Haliassos*

In May 2010, the IMF approved a program of 26 billion SDR (about 26 times the Greek quota) despite stating that “risks regarding debt sustainability are undeniably high”. To do so, the IMF amended its “exceptional access framework” by introducing an extra factor: a high risk of international systemic spillovers.

In 2014, the IMF program review stated that debt sustainability “remains a serious concern”. If one looks at the 2010 projections and targets and compares them to data available in 2015, only the deficit-to-GDP ratio behaviour conforms to the original targets (Orphanides, 2015).

• Real GDP has been consistently below the target throughout the crisis, and massively so by 2015;
• Unemployment is about 25% instead of 13%; and
• The debt-to-GDP ratio is about 175% instead of 140% partly because of the disappointing performance of GDP.

Political upheaval and the Greek “red lines”

At the same time, growing popular dissatisfaction with the economic performance of the country and the specific measures implemented has forced a massive transformation of the political landscape in Greece. In the elections held in early 2015, the traditionally strong New Democracy and Pasok parties lost significant part of their power, while a previously small coalition of left-wing groups (Syriza), together with the right-wing party of Independent Greeks, secured more than enough seats to form a government. What brought the two ideologically different parties together was an outright rejection of the “Memorandum”, or loan terms accompanying the support program from the IMF, the Commission, and the ECB (the “Troika”). Further testimony to the protest is the rise of the nationalist party “Golden Dawn” to third position, despite intense investigations of possible criminal activities.

The fact that protest rather than a comparison of well-articulated reform agendas was the key factor in the recent elections has now created an explosive situation. The promise of protest against the past failures has led the Greek government to adopt a very tough negotiation stance with lots of “red lines” that cannot be crossed. The EU reacted with stronger insistence on fulfilling budgetary targets and previous promises. As a result, Greece’s exit from the Eurozone (and possibly from the EU) is being actively considered.

What is really needed: A dynamic, export-oriented productive base

I argue that both sides in this negotiation have failed to focus on the key to fixing the Greek economy in a way that would allow repayment of the debt. The only thing that could provide the basis for debt repayment is a dynamic, export-oriented productive base. This has not been achieved six years into the crisis, and it is even more unlikely to be achieved outside the Eurozone and the EU.

My basic argument is that the adjustment program provided too much ‘stick’ and hardly any ‘carrot’ to the Greek population.

• It focused on measures to reduce the deficit, such as cuts in public expenditure, layoffs of public employees, increases in taxes and introduction of new taxes (notably on illiquid real estate), as well as on cuts in public (and eventually in private) sector salaries and pensions.
• The measures to improve competitiveness and create jobs were internal deflation, reductions in the minimum wage, simplification of layoffs and weakening of trade union bargaining strength.
• The product market measures focused on opening access to specific professions, causing lengthy and politically costly confrontations.

All these looked like ‘stick’.

The ‘carrots’ would be:

• Easing the starting and running of a business;
• Raising investor protection;
• Improving the efficiency of the legal system;
• Linking research to innovation;
• Promoting universities as investment in human capital but also as a potential export industry for Greece; and
• Offering the prospect of higher wages linked to quality and productivity.

These were never presented to the Greek people, even as targets for the medium run.

Yet, the key problem is that the country lacks a broad productive base that could allow export-led growth and import substitution. Both negotiating sides have missed this key point, if not in theory then in negotiating practice. Given this focus in the implementation of the programme, even if not in its design, the programmes economic and political failures are unsurprising.

• The lesson to be drawn is not that Greece is the laggard of the Eurozone that cannot make it and has to get out, but instead that Greece is a country where huge improvement margins have not yet been exploited.

Several of these margins will be illustrated below. It will be a failure of the creditors, but above all of Greek politicians if Greece’s potential for debt repayment and sustainable growth is missed because of a failure to develop a dynamic, innovative, quality-focused productive sector.

By reducing reform pressure and possibilities for the transfer of best international practices, Grexit will become self-fulfilling. After exiting, Greece will be seen to be incapable of reform and production, thus justifying the decision to remove Greece from the Eurozone. Yet a great opportunity will have been missed.

The origins of the fiscal crisis and the lack of a broad productive base

The fiscal crisis in Greece – unlike those in Ireland or Spain – originated in the public sector rather than in the banks.

• The roots of the problem of an inflated and largely unproductive public sector arguably go back in history, all the way to the civil war immediately following the end of World War II.

Communists lost in the civil war, and left-of-centre citizens were effectively and often officially banned from entering public sector jobs. The requirement to be neither leftist nor a sympathizer of the left was formalized through a “certificate of political beliefs” that was often included in the necessary credentials for appointment.

Following restoration of democracy in 1974 and entry to the European Community in 1981, the opportunity arose for a more inclusive approach to public sector appointments. It seems to have been missed by Socialists who came to power and proceeded to interpret public sector appointments as ‘compensation’ for past injustice. This interpretation was a recipe for decoupling public sector appointments from meritocracy, efficiency, and productivity.

• Public sector employees were appointed in large numbers, initially at low pay, without monitoring and meaningful evaluation, and without well-defined objectives.
• Regardless of its own objectives, the right wing opposition had little choice but to follow suit.

The result was a bloated public sector, with employee evaluations that were all “excellent”, horizontal structures for wages and salaries, and lack of incentives to exercise effort and engage in creative thinking about how to improve service to the public and the economy.

The setup of politically motivated appointments was conducive also to the establishment of a clientel-ist state, which allocated funds for public projects on the basis of support to the party rather than on efficiency criteria. Over time, this focus resulted in shrinkage of private sector activities that could not elicit public contracts and exploit party loyalty.

In this way, the Greek private sector gradually became dependent on government funding, instead of orienting itself to export demand and international competition.

• By 2012, one third of Greek exported goods revenues were coming from refined petroleum, obviously with a huge imported input of crude petroleum.
• The next component (packaged medicaments) was one tenth as important in terms of revenue, and it was followed closely by aluminium plating and non-fillet fresh fish.

Not only the composition but also the overall size of foreign trade is very small, even by comparison to other crisis countries. It amounts to about 12% of GDP in Greece, while in Portugal, for example, it amounts to about one third of GDP.

Such a deficient export base cannot yield the quantity expansion necessary for a cost reduction (implemented through internal deflation or even through an exchange rate depreciation upon leaving the euro) to launch an export-led recovery and sustainable growth. This point is often missed by those who advocate exiting the euro in order to improve export revenues and promote import substitution.

• Unlike the tourist services sector – which could benefit from increased cost competitiveness – there is not much of an export sector in Greece that could support an export-led recovery.

Establishing the right conditions for promoting development of such a sector should be the top priority.

The failure of the adjustment programme

A rational approach to dealing with a fiscal crisis is to combine measures that reduce the budget deficit and tidy up finances with other reforms that create prospects for sustainable growth of the taxable base and development of debt repayment potential.

Dealing with a fiscal crisis involves a standard package of curtailing and streamlining public expenditures (possibly through public sector layoffs and cuts in salaries) and increasing tax rates and the size of the tax base (possibly by introducing new types of taxes, such as a real estate tax). The latter should include measures to boost competitiveness, foster entrepreneurship and innovation, and to educate, retain, and attract human capital. Competitiveness can be boosted in different ways, aimed at lowering unit labour cost but also producer prices. This can include cuts in salaries and wages, product market reforms to reduce mark-ups, and labour market reforms to increase flexibility of labour adjustments and link compensation to productivity.

Fiscal-contraction measures are for the most part unpopular, as they typically involve cuts in disposable income and sometimes loss of employment. Supply-side reforms are potentially more varied. Some confront worker or industrialist privileges and can provoke resistance and political unrest. Others are so visibly linked to job creation, improvements in human capital, and promise for the future that they should be easy to defend and could indeed elicit the support of the population at large.

The big failure of the adjustment programme is clear:

• So far, it focused on implementing all the deficit-reduction measures and a range of reforms that generate massive opposition by the public, while failing to stress and implement reforms that would boost entrepreneurship, create jobs, promote quality, and inspire confidence among consumers, investors, and especially young people at early stages in their careers.

The adjustment programme was too slow to improve ease of starting a business (as measured by the World Bank), and failed to ease in any significant way the running of a business, improve investor protection and contract enforcement, or link research, innovation, and entrepreneurship.

This combination of ‘all stick but no carrot’ is responsible for the poor economic outcome and for the lack of political support for the adjustment programme, with one reinforcing the other and leading to today’s impasse.

The failure of supply-side reforms and the wide margins

In this section, I document the poor state of various indicators on the supply-side, almost six years after the start of the fiscal crisis in October of 2009. Although this reflects failure of the adjustment programme to produce better outcomes, it also helps to point out that large margins of improvement do exist and could be exploited through proper reforms in the future.

It is important not to miss this ‘half-empty, half-full’ feature of the data provided. The pessimistic view that nothing can ever change needs to be set against an optimistic view that a lot can be gained with even small but well thought out adjustments. These require, however, the political will of the Greek government and the cooperation and understanding of international partners.

We already have an example of what can be accomplished with rather small corrections. Between 2013 and 2014, in only a single year, Greece improved its rank in the ‘ease of starting a business’ index of the World Bank by 111 places (from 147 to 36). The changes had to do with the required procedures to start a new business, and they were accomplished in one year. However, they took about 4 years to be decided and implemented through the system. This is discouraging, especially given the obvious political appeal of implementing policies that create new jobs and favour good ideas and prospects for the future.

Despite this successful reform, Greece still ranks 72nd in ease of running a business in 2014, having advanced by only 17 positions relative to 2013, despite the massive improvement in the ease of starting a business which enters the index. This lack of progress is also reflected in the opinions of business leaders, captured in the Global Competitiveness Report of 2013-14. These leaders state that the most problematic factors for doing business in Greece include an inefficient government bureaucracy, tax regulations, policy instability, and tax rules, in addition to limited access to financing.

The 2014 Ease of Doing Business Report points further to the poor state of investor protection through the legal system. The average number of days required for contract enforcement through the legal system in Greece is reported to be 1300, while the OECD average is only 539. The potential importance of this factor can be seen from the responses of German financial sector practitioners to the Centre for Financial Studies (CFS) Index Survey of April 2014: 89.8% of German practitioners regarded “legal security” as a “very important” factor for considering investment in any of the southern European crisis countries. This is the factor most widely considered to be important, by a wide margin. The second one (human capital/good educational system) is mentioned as being important by 62.3% of the respondents.

Beyond investor protection, legal security, and ease of doing business, a further important factor is corruption as perceived by potential and actual investors. Transparency International constructs a “Corruption Perceptions Index” for about 175 countries. Greece and Italy share 69th place in increasing level of corruption, but Greece’s score has fallen to this place over the past three years (2012-2014). This new position is shared by Brazil, Bulgaria, Romania, Senegal, and Swaziland, which form the peer group of countries in the eyes of potential investors.

In the 2014-15 Global Competitiveness Report of the World Economic Forum, Greece is ranked 81st out of 144 countries, with a Global Competitiveness Index of 4.0 out of a maximum of 7.0. While it exhibits relatively small distance from the top when it comes to health and primary education, infrastructure, higher education and training, technological readiness, and market size, Greece fares dismally in innovation, financial market development, macroeconomic environment, and institutions. Its peer group in this ranking consists of Guatemala, Algeria, and Uruguay (ranked right above Greece) and Moldova, Iran, and El Salvador (ranked right below). Moreover, Greece’s competitiveness trend is completely flat, not showing signs of improvement during the implementation of the adjustment programme.

A lot is made of the need for internal deflation (cuts in salaries and wages) in order to boost competitiveness under a common currency that prevents devaluations. Indeed, the political difficulties in lowering salaries and wages are often cited as major arguments for a (temporary or permanent) exit from the Eurozone. The ECB publishes a Harmonized Competitiveness Index based on unit labour costs, i.e. the costs paid to labour for producing one unit of output on average. This index is highly relevant for assessing the role of labour costs in overall competitiveness, as it measures how competitive unit labour costs of a country are relative to the other Eurozone countries, but also relative to major countries trading with them.

The change in the index relative to 1999QI shows that, indeed, Greece had experienced one of the greatest losses in unit labour cost competitiveness by the start of the crisis (2009Q4), second to Ireland among the crisis countries. However, already by 2011Q4, Greece ranked third in the Eurozone in terms of improvement in unit labour cost competitiveness, still experiencing a small drop after Germany and Austria that were the only ones experiencing an improvement. By 2012Q2, Greece was not only registering an improvement in unit labour cost competitiveness but had surpassed Austria. By 2013Q3, Greece was the undisputed second to the Champion (Germany), with a highly significant improvement in unit labour cost competitiveness.¹

In a recession, unit labour cost figures tend to improve partly through an improvement in competitiveness due to ‘cleansing’ (or elimination) of inefficient industries and companies. As a matter of fact, Greece exhibited a drop in productivity as the crisis worsened, but the cuts in wages were so large as to overcome even this productivity drop.

The sizeable improvements in unit labour cost competitiveness were due to the massive drops in wages and salaries in Greece, which kept being insisted upon by the Troika and by various economists worldwide with a view to improving price competitiveness of Greek exports and import substitutes. Yet, if one looks at the price competitiveness indicators, these did not reflect the improvements in unit labour cost competitiveness. This is because massive wage and salary cuts were implemented before and instead of any serious attempt at implementing reforms that would improve the supply-side indicators reported above.

Given the lack of reforms in product markets, bureaucratic structures, and legal framework and institutions, it is hardly surprising that Greece was the slowest country to rebound in terms of volume of exports of goods following the 2009 crisis among all crisis countries, as well as relative to the average of EU28. Indeed, it is on a much flatter adjustment path than all those, according to the 2014 Adjustment Programme Report of the European Commission. If one looks at the reported volume of exports of services, the situation is even worse: Greece was only at 80% of the 2008 volume by 2014, quite below all other countries examined and without the clear upward trend exhibited by Ireland, Spain, Portugal, and EU28 since 2009. It is also not surprising that most of the improvement in the Greek balance of trade came from reduction in imports rather than from improvements in exports over the period.

The assault on the liquidity buffer

The simultaneous drop in wages, rise in unemployment, rise in VAT, and introduction of real estate taxes constituted a heavy assault on the limited liquidity of Greek households, and was associated with a significant increase in non-performing loans.

The Household Finances and Consumption Survey, coordinated by the ECB but collected by each individual central bank, was first released in March 2013 and reflected data for Greece collected (by coincidence) over the three-month period right before the start of the fiscal crisis. If one considers total assets of each household and computes what percentage of those are financial assets, one finds that Greek households exhibited, on average, the lowest such ratio even before the start of the crisis (of the order of 7%). The average of the 15 Eurozone countries surveyed was of the order of 16%, with Germany exceeding 20%, and Belgium and the Netherlands exceeding 25%.

Looking at the composition of household financial wealth, Greek households had the highest share in bank deposits (slightly more than 80% on average), with Portugal coming second with 70%. Thus, Greek households not only had a rather small liquid buffer, but they were also undiversified in their financial asset holdings. It was this small liquid buffer that was attacked by lower wages and salaries, higher taxes, higher unemployment risk, and increased uncertainty about pensions, and out-of-pocket health expenditures. Moreover, a large part of the increase in taxes concerned real estate taxation. Regardless of its various attractive properties in normal times, this is based on illiquid assets (with a high portfolio share in overall wealth), but it needs to be paid out of the limited and shrinking liquid buffer.

The fraction of non-performing bank loans in overall banks’ loan portfolio, as reported by the World Bank, rose from about 5% in 2008 to about 30% in 2013, indicating that adverse labour market experiences, tax surprises, increased macroeconomic and pension uncertainty were coupled with financial distress on the part of many households and firms.

It is not hard to see how an economic crisis turned into a political crisis and an election shift towards protest parties, regardless of whether they had a well-articulated economic plan to replace the “Memorandum”. This natural tendency, however, was further cultivated, intensified, and exploited by politicians, who drew attention to the negative effects but failed to articulate ways to create jobs and future economic prospects for Greece. Indeed, many politicians focused instead on fostering and accommodating resistance to any reform of the ways that brought Greece to the stage of having to ask for financial assistance in the first place.

What can still be done?

The ways in which the adjustment programme has failed so far to harness the productive potential of the country and to inspire confidence in the future should not be taken as excuses for not undertaking massive reforms. However, these need to focus on creating productive (and debt repayment) potential for the future, and the prospects for access to international markets, financial but also export ones.

The key nexus is finance-entrepreneurship-market demand.

• Working backwards, it makes good economic sense to target export markets as destinations for the products, but also import substitution through quality.

The message of universal internal deflation and horizontal salary cuts is one that discourages those with greater talent and promise for success. Any efficiency wage model can tell us that, if one cuts wages uniformly, one loses the best people who have outside opportunities.

• In developing an export-oriented productive sector, the key message should not be that Greek wages need to fall to the levels of the new entrants to the EU, coming from the former Eastern Europe.

Indeed, German workers face competition from China, but they are not being told to work for the Chinese level of wages. They are told instead that they can earn much more if they produce quality and they manage to justify the difference through the ‘Made in Germany’ label. This is a much more promising message, especially to entrepreneurs and to talented workers and researchers.

Despite a rather poor institutional framework for universities, Greece has pockets of excellence in research that need to be maintained, further nurtured, and linked to industry and applications. Greece’s expenditure on Research and Development as a share of GDP is among the lowest in Europe, under 0.7%, while that for Germany and the Scandinavian countries exceeds 3%. Additionally, the vast majority of such spending in Greece is publicly funded and not undertaken by private companies, a fact that is problematic in a fiscal crisis but quite consistent with the lack of an active productive sector.

It is often argued that pushing R&D spending upwards in peripheral countries is suboptimal and that it undermines labour mobility. There is certainly merit to the argument that R&D should not be wastefully duplicated and that less research-prone countries can always imitate or follow the R&D leaders. Yet, Greece does have a lot of research talent, with several pockets of excellence in its universities and public research centres, and a lot of talent abroad. Ioannidis of Stanford University has estimated that 3% of the highly cited scientists worldwide are Greeks, while the population share of Greece (Greeks) is only 0.15% (0.20%).

The fact that 85% of the highly cited Greek scientists live and work abroad is both testimony to the current lack of institutional framework to attract more to Greece, as well as an indicator of the margins that can be exploited. Indeed, quite apart from developing links of research to innovation, fostering university education can itself have considerable export potential (as evidenced by the success story of the United Kingdom) and it should be among the priorities for export-led growth that need to be considered. Removal of constitutional restrictions to providing private university education should be strongly considered, in combination with strict accreditation procedures for private universities.

Several pockets of excellence in research with potential links to innovation and entrepreneurship have already been identified. The National Council on Research and Technology (ESET for the period 2010-13) published in August 2014 a proposal for a strategic plan 2014-2020, which identified pockets of research excellence after surveying top researchers in Greece. A remarkable set of areas and topics emerged and many of them were difficult to guess a priori.²

A simple, yet powerful, indicator of mismatch between the human capital in the country and the level of R&D expenditure relative to GDP is provided by plotting the population share of scientists and engineers against the R&D share of GDP in 2011 (Press, 2013). Although this follows a more-or-less linear relationship with most countries considered positioned close to the line, Greece appears as a big outlier. Greece has one of the lowest R&D shares but a very high share of scientists/engineers. The Greek R&D share is significantly lower than what other countries with comparable shares of scientists and engineers typically spend.

Dynamic, research-intensive, export-oriented industry needs a lean and efficient public sector to support it, rather than one that hampers its development and productivity by imposing unnecessary bureaucratic impediments. Difficulties in dealing with bureaucracy constitute an important barrier to entry and obstacle to competition that need to be addressed as part of any promising development plan for Greece. Furthermore, optimizing the legal framework with a view to protecting investor rights and contract enforcement is not only deemed crucial by foreign investors and domestic entrepreneurs, but also essential for improving investor confidence and for securing any foreign public funds for investment. Improvements in the legal framework are also very important for resolving the non-performing loan problem in the financial sector (see Haliassos et al., 2015).

Last but not least, establishing sound development policies and ensuring that they do not have adverse social consequences require the presence of active, high-quality economic and social research, independent from industry pressures and party affiliations. Establishment of publicly funded research centres of both types is a priority and not a luxury, especially as they can be designed in a soft form of five-year projects of ‘centres of excellence’. Such calls can be open to universities and existing research centres or groups in the country, in collaboration with centres in the international sphere.

This is a much broader agenda than simply ensuring a target deficit-to-GDP ratio, but one that is necessary to bear fruits and to be accepted by the population at large. While some of the reforms described here will take time to bear fruits, they seem necessary if Greece is ever to get onto a sustainable growth path and avoid its clientel-ist past. The need for some patience in reaching the final destination of this journey should no longer be an excuse for not taking the first step.

About the author:
*Michalis Haliassos
Professor of Macroeconomics and Finance at Goethe University Frankfurt; Director of the Center for Financial Studies (CFS); Director of CEPR Network on Household Finance

References
Centre for Financial Studies (2014), CFS Index Survey Presentation, April.

European Commission (2014), Greece: Adjustment Programme Report.

Forelle C, P Minczeski and E Bentley “Greece’s Debt Due: What Greece Owes and When”, Wall Street Journal online, Updated May 15, 2015.

Haliassos M, G Hardouvelis, M Tsoutsoura and D Vayanos (2015), “Financial Development and Macroeconomic Stability”. Prepared for an MIT Press volume on reforms in Greece, edited by C Meghir, C Pissarides, D Vayanos and N Vettas.

National Council on Research and Technology (ESET, 2010-2013), National Strategic Framework for Research and Innovation, General Secretariat for Research and Education (Greece), August 2014.

Observatory of Economic Complexity website

Orphanides, A. (2015). “The Crisis in the Euro Area: Greece and the ECB”, slides, May.

Press, William H (2013), “Presidential Address”, Science, 15 November.

Transparency International, Corruption Perceptions Index 2012-2014, available online

World Bank, Ease of Doing Business Report 2014, available online

World Economic Forum, Global Competitiveness Report 2013-2014, available online

Footnotes
1 These dates do not represent the exact dates of transition, but arbitrarily chosen dates to indicate the evolution of unit labour cost competitiveness.

2 I mention a few indicatively. In the sector of Energy and Environment, areas with critical mass of excellent researchers included efficient use of energy in buildings, reductions of CO2 emissions, smart grids, treatment of waste water and sold waste, etc. To take another example, the topics for the physical sciences include catalysts, nanostructures, advanced structural materials, graphene, carbon-based nanostructured materials, polymers, colloids and (Nano)composites, etc.

The post Greece: Are We Missing The Reform Opportunity Of The Crisis? – Analysis appeared first on Eurasia Review.

(EurActiv) — Russia and Greece signed a deal Friday for a section of the Turkish Stream pipeline across Greece, and Gazprom announced plans to build two additional stretches to the Nord Stream gas pipeline.

But the Commission said more Russian gas was not needed, and that it would thoroughly scrutinise the new projects for compliance with EU rules.

The visit of Greek Prime Minister Alexis Tsipras to Russia today has brought about the signature of a memorandum for the construction of a section across Greece of the so-called Turkish Stream, or TurkStream pipeline, names the authorities in Athens dislike.

The deal was signed between Russia and Greece’s energy ministers, Alexander Novak, and Panagiotis Lafazanis, for a pipeline with a capacity of 47 billion cubic meters a year (bcm/y).

Construction of the Greek section of the Turkish Stream pipeline will start in 2016 and be completed by 2019. The two countries will have equal shares in the company, Novak was quoted by RT as stating at the International Economic Forum in St. Petersburg on Friday.

Novak said Russia will initially finance the construction of the pipeline, according to Sputnik.

“Our meeting today is a historical meeting… The memorandum expresses the readiness of both sides to bring the south direction of the pipeline to implementation,” Lafazanis reportedly said.

In addition, Gazprom announced that it would build two additional stretches to the Nord Sea pipeline to Germany under the Baltic, with a trio of Western energy companies.

“Since the commissioning of Nord Stream pipeline, Gazprom has been investigating potential extension of this export route. Now we are going to proceed with the implementation of this project together with our partners,” Gazprom Chief Executive Alexei Miller said in a statement.

Gazprom’s partners in the Nord Stream, a major gas supply artery feeding into western Europe, are Anglo-Dutch Shell, Germany’s E.ON, and Austria’s OMV.

Gazprom would own 51% in the project to build stage 3 and 4 of Nord Stream, with capacity of 55 bcm/y, Gazprom spokesman Sergei Kupriyanov said on the sidelines of the St Petersburg meeting.

Russia’s goal is to find new ways to deliver gas to Europe bypassing conflict-stricken Ukraine, and using the pipeline projects to increase its influence in friendly countries such as Greece, Serbia, and Hungary.

Commission reaction

EurActiv asked the European Commission to comment on Russia’s plans. This is the written answer received:

“The European Commission takes note of the announcement by Gazprom, together with OMV, Shell and E.ON, to consider building two further stretches of NordStream pipeline, with an additional capacity of 55 bcm per annum. Furthermore, Gazprom had announced in January 2015 that it would build the Turkstream project, which in addition to a pipeline serving Turkey would include a capacity of 47 bcm to Europe, via Turkey.

“Energy security remains a key priority for the Energy Union. As stated in the Energy Union framework strategy, energy diversification is crucial for ensuring secure and resilient energy supplies to EU citizens and companies. In this context, the European Union is particularly committed to diversification of gas suppliers (countries), counterparties (companies) and routes.

“To ensure this objective, the Commission aims at more interconnected and competitive gas markets in Europe, with projects such as the Southern Gas Corridor, the establishment of liquid gas hubs in the Mediterranean area and LNG being in the centre of this strategy. It should be recalled that work to that effect is also being carried out among others in the framework of CESEC High Level Group and EU LNG and storage strategies.

“The EU is currently importing about one third of its gas from Russia, about half or which currently transits Ukraine. While European domestic production is expected to decrease in the coming decade, existing capacity from Russia is currently only used at around 57%. This shows that current transport routes from Russia to the EU, including through Ukraine, already well exceed the EU’s needs for existing and likely future supplies of pipeline gas from Russia to the EU.

“The European Commission recalls that new pipelines must be built in full compliance with EU legislation and the will be vigilant about the rigorous application of EU law notably in the field of energy, internal market and competition.

“Finally, the European Commission reiterates its position that Ukraine has been a major reliable transit country and provides an economic route for supplies to Europe. In this context, the EU actively supports the efforts of the Ukrainian Government and Naftogas to ensure that this remains the case, in particular the reforms that Ukraine is currently undertaking to ensure full compliance with the EU acquis it has committed to as a member of the Energy Community. The EU therefore believes that it is in the interest of all parties that Ukraine remains an important transit country.”

The post EU Commission Unimpressed By Russia’s Pipeline Offensive appeared first on Eurasia Review.

While much of the world focused last week on whether or not the Federal Reserve was going to raise interest rates, or whether the Greek debt crisis would bring Europe to a crisis, the Permanent Court of Arbitration in The Hague awarded a $50 billion judgment to shareholders of the former oil company Yukos in their case against the Russian government. The governments of Belgium and France moved immediately to freeze Russian state assets in their countries, naturally provoking the anger of the Russian government.

The timing of these actions is quite curious, coming as the Greek crisis in the EU seems to be reaching a tipping point and Greece, having perhaps abandoned the possibility of rapprochement with Europe, has been making overtures to Russia to help bail it out of its mess. And with the IMF’s recent statement pledging its full and unconditional support to Ukraine, it has become even more clear that the IMF and other major multilateral institutions are not blindly technical organizations, but rather are totally subservient lackeys to the foreign policy agenda emanating from Washington. Toe the DC party line and the internationalists will bail you out regardless of how badly you mess up, but if you even think about talking to Russia you will face serious consequences.

The United States government is desperately trying to cling to the notion of a unipolar world, with the United States at its center dictating foreign affairs and monetary policy while its client states dutifully carry out instructions. But the world order is not unipolar, and the existence of Russia and China is a stark reminder of that. For decades, the United States has benefited as the creator and defender of the world’s reserve currency, the dollar. This has enabled Americans to live beyond their means as foreign goods are imported to the US while increasingly-worthless dollars are sent abroad. But is it any wonder after 70-plus years of a depreciating dollar that the rest of the world is rebelling against this massive transfer of wealth?

The Europeans tried to form their own competitor to the dollar, and the resulting euro is collapsing around them as you read this. But the European Union was never considered much of a threat by the United States, existing as it does within Washington’s orbit. Russia and China, on the other hand, pose a far more credible threat to the dollar, as they have both the means and the motivation to form a gold-backed alternative monetary system to compete against the dollar. That is what the US government fears, and that is why President Obama and his Western allies are risking a cataclysmic war by goading Russia with these politically-motivated asset seizures. Having run out of carrots, the US is resorting to the stick.

The US government knows that Russia will not blithely accept Washington’s dictates, yet it still reacts like a petulant child flying into a tantrum whenever Russia dares to exert its sovereignty. The existence of a country that won’t kowtow to Washington’s demands is an unforgivable sin, to be punished with economic sanctions, attempting to freeze Russia out of world financial markets; veiled threats to strip Russia’s hosting of the 2018 World Cup; and now the seizure of Russian state assets.

Thus far the Russian response has been incredibly restrained, but that may not last forever. Continued economic pressure from the West may very well necessitate a Sino-Russian monetary arrangement that will eventually dethrone the dollar. The end result of this needless bullying by the United States will hasten the one thing Washington fears the most: a world monetary system in which the US has no say and the dollar is relegated to playing second fiddle.

This article was published by the RonPaul Institute.

The post Ron Paul: Will Seizure Of Russian Assets Hasten Dollar Decline? – OpEd appeared first on Eurasia Review.

An author and activist, in an essay posted on Psychology Today, blames a culture of ‘anti-intellectualism’ on the violence in the United States. That includes “hate” and “racism.”

Author David Niose starts of by saying that discussions on “racism” and “gun violence” are important but they overlook a key deficiency in American society.

“Decrying racism and gun violence is fine, but for too long America’s social dysfunction has continued to intensify as the nation has ignored a key underlying pathology: anti-intellectualism,” Noise wrote in Psychology Today in a post published on the website.

Niose argues that the country embraces and exalts in ignorance and that national leaders continue to foster this culture and dub anyone using rational debate based on facts and evidence as “elitist.”

“In a country where a sitting congressman told a crowd that evolution and the Big Bang are ‘lies straight from the pit of hell,’ where the chairman of a Senate environmental panel brought a snowball into the chamber as evidence that climate change is a hoax, where almost one in three citizens can’t name the vice president, it is beyond dispute that critical thinking has been abandoned as a cultural value,” Niose writes.

Such anti-intellectualism comes with a “huge price” and is leading us towards a “downfall.”

That very danger is symbolized in the Charleston shooting in which nice black parishioners were killed. Niose makes the case that racism is a symptom of ignorance as is “America’s violent, gun-crazed culture.” Such results would not be so ubiquitous if in a society that placed a greater value on intellectualism.

“Rational public policy, including policies that allow reasonable restraints on gun access, simply isn’t possible without an informed, engaged, and rationally thinking public… critically thinking individuals recognize racism as wrong and undesirable, even if they aren’t yet able to eliminate every morsel of bias from their own psyches or from social institutions.
An anti-intellectual society, however, will have large swaths of people who are motivated by fear, susceptible to tribalism and simplistic explanations, incapable of emotional maturity, and prone to violent solutions.”

Niose also argues that the same issue pushes the unwavering belief in American exceptionalism.

“What else could explain the hyper-patriotism that has many accepting an outlandish notion that America is far superior to the rest of the world? Love of one’s country is fine, but many Americans seem to honestly believe that their country both invented and perfected the idea of freedom, that the quality of life here far surpasses everywhere else in the world.”

“But it doesn’t,” Niose points out that the US places well behind most other developed nations in quality of life rankings, living standards and education, yet it leads in undesirable categories such as having the highest murder rates, violent crimes and incarceration.

The post Author Claims Persistent ‘Anti-Intellectualism’ Reason For American Decline appeared first on Eurasia Review.

Violent blasts hit the Afghan parliament in Kabul this morning, causing general chaos among the legislators. The attack came as Massoom Stanekzai was being sworn in as Defence minister, with national TV live coverage.

According to the local media, the legislators fled to safety, though some were injured by shattered glass from the windows. Taliban sources, who claimed the attack, said that after the first explosions several mujaheddin entered the parliament building, engaging in heavy fighting with the army special forces.

After a pause at the start of the year, Taliban attacks increased over the past months in Kabul. The city, inhabited by 3.5 million really never stabilized after the war that began in 2001 to remove the regime imposed by the Taliban.

The spiral of violence spread after the departure of the majority of foreign forces at the end of last year, and the fall in the past days of Dasht-e-Archi, in Kunduz, in the north, raises doubts on the capacity of Afghan security forces in combating the Taliban.

The post Afghanistan: Taliban Attack Parliament In Kabul appeared first on Eurasia Review.

By Hugo Chene*

On 7 June 2015, China tested its supersonic nuclear delivery vehicle, the Wu-14, for the fourth time in less than 18 months. Beijing appears to be willing to expand its military capacity by quickly developing new military devices. The Wu-14 has been specially designed to cruise at approximately ten times the speed of sound while maintaining accurate manoeuvrability. Yet, reports suggest that current US defence systems may not be able to prevent such a vehicle from delivering warheads because of its unpredictability during flight. Once fielded, the Wu-14 will make China further capable of defending its territorial claims against its neighbours and the US. At 250 warheads, China has a small nuclear arsenal when compared to the US for now; but the Wu-14 may strengthen the People’s Liberation Army’s (PLA) deterrent strategy to protect its claims. Why is Beijing acting in such an aggressive way vis-à-vis the South China Sea (SCS)? Does this test compromise Sino-American relations over the SCS issue?

Paroxysmal China’s Aggressiveness

In a recent naval white paper published on 26 May, the PLA reminded that the SCS is part of its core interest. Considered part of its security environment, Beijing counters all interferences by being aggressive. China wishes to become a major power in Southeast Asia and to seriously compete with the US. Washington has expressed criticisms against China’s SCS policy over the past several months. Early May, the US publicly denounced China for building 2000 acres of artificial islands on Mischief and Fiery Cross reefs. These reefs are part of the Spratly islands, also claimed by the Philippines, Taiwan and Vietnam. Despite external pressures to halt island dredging, China continues to dismiss the opposition. According to Beijing, the islands are part of its sovereignty and that therefore its actions are legitimate and justified.

By behaving aggressively, China asserts that it will not allow the international community to meddle in its sovereignty interests. Unfortunately for the other claimants, the PLA is not going to change their policy towards the SCS, simply because Beijing knows it has the upper hand. Beijing will carry on building artificial islands. Chinese officials turn a deaf ear to critics during conferences by repeating the PLA’s rhetoric. The last Shangri-La Dialogue (SLD), held from 29-31 May, was no exception. China’s Admiral Sun Jianguo ignored criticisms and remained vague to obscure China’s policy regarding the SCS, which was particularly stressful for the other claimants. He stated that China is building over the SCS in order to offer “international public services.” Nonetheless, it’s difficult to believe that Beijing’s efforts to dredge islands are for peaceful motives after the Pentagon displayed pictures of the new Chinese features revealing heavy military devices and a three-kilometre airstrip that can be used by military jets.

China lacks evidence of its sovereignty over the disputed areas and therefore it chose to create it. By dredging new islands, Beijing is creating what military analysts at the Pentagon call “facts on the water.”

A Sino-American showdown bound to be modified

The Wu-14 test was only nuclear deterrence, China, with its smaller nuclear arsenal is trying to assert itself but wants to avoid any conflict that could be detrimental for Beijing’s diplomacy in the region. Beijing’s aggressiveness led Sino-American relations into complicated territory. First, the Commander of U.S. Pacific Command, Adm. Harry Harris, recently warned China that the US reserved the right to decide on whether or not to include China in the 2016 RIMPAC summit.

China established an Air Defence Identification Zone (ADIZ) over the SCS, and on 20 May, Chinese military personnel warned a US P-8 surveillance flight flying over the Spratly islands that it was entering a “military alert zone.” In November 2014, China already declared an ADIZ over a part of the East China Sea and created serious tensions with Japan and the US. Washington is concerned with the SCS dispute and will not allow China to take the lead over other claimants. At the previous SLD, US Secretary of Defence Ashton Carter promised to allocate $425 million for the SCS maritime security. Finally, in the light of the Wu-14 tests, the US has chosen to further develop its defence system against a foreseeable threat.

It would be interesting to see the developments during the seventh US-China Strategic and Economic Dialogue (SED) scheduled for 22-24 June in Washington. This Dialogue provides a unique platform to discuss Chinese assertiveness regarding the SCS. Over the past months, the US and Ashton Carter have been particularly vigorous in their responses against Beijing. In anticipation of the Dialogue, China has already brought down some tensions with their 16 June announcement that Chinese land reclamations in Spratly islands will be over shortly. This decision taken by Beijing reveals China’s valuation of this specific dialogue with Washington.

China undoubtedly hopes to benefit from this announcement by restoring its neighbours’ confidence and easing tensions in the disputed area. However, a definitive assessment of what the future state-of-affairs in the SCS will be may not be possible at this point.

* Hugo Chene
Research Intern, IPCS
E-mail: chene.hugo@gmail.com

The post China’s Wu-14: Racking Tensions In South China Sea – Analysis appeared first on Eurasia Review.

“In the Kinanira area the police attempted to enter homes since 4:00 a.m, but residents resisted. The police began shooting and residents throwing stones. It is urban guerrilla (warfare) in the city”, said a MISNA source from Bujumbura. Tension remains extremely high in the Burundian capital after the government announced the injury of 11 policemen in a grenade attack over the weekend, accusing the protest front against President Pierre Nkurunziza’s bid for a third term.

“On Friday night, from around 10:30pm to 3:00am, shots and grenade explosions could be heard in practically every area of the protest: the government accused the demonstrators, but based on other reconstruction, it was the police that attacked the neighbourhoods. Some sources also indicate that there were some victims, but it is difficult to have confirmation in regard”, added the MISNA source.

“The suburban areas are generally militarized and clashes are a daily occurrence, while in the city center police and troops are less visible”, specified the source. There were attacks also in other areas of the country, but reports in regard are vague. An armed attack with grenades against a bar in Ngozi, birth city of President Nkurunziza, in fact claimed an unspecified number of victims.

The United Nations named the Senegalese Abdoulaye Bathily, the special representative of the UN secretary general in Central Africa, as the new mediator in the crisis. Bathily replaces Said Djinnit, accused in the past weeks by the opposition of being “pro-government”. Perspectives of any dialogue however remain very difficult. “The civil society is attempting to continue the peaceful demonstrations, but there doesn’t appear to be any room: the risk is that the political parties that also have militias could intervene”, concluded the MISNA source.

The post Burundi: Militarized Suburbs And Urban Guerrilla Warfare appeared first on Eurasia Review.

By H K Dua*

Geography has always been a cause of Afghanistan’s troubles. Other countries have used its position on the map to their advantage, played games, great and not so great, along its mountainous terrain. The British and the Russians were engaged in wars in Afghanistan nearly two centuries ago. The Soviet Union invaded it in 1979 only to be defeated by the Mujahideens backed by the United States. Moscow paid the price for its occupation in the collapse of its economy and of the Soviet regime.

In the post 9/11 situation, the US chose to fight the Taliban to destroy Al-Qaida’s sanctuaries in Afghanistan. American troops were there for 13 long years before deciding to go back, suffering from acute battle fatigue and without winning any major goal. Nearly 150,000 lives had been lost in the 13 years of the latest edition of the Afghan war. Practically, the US has by now withdrawn most of its troops from Afghanistan leaving behind a token presence of 9800 troops and a stack of drones to guard its residual interests.

While Afghanistan has been a victim of its geography, Pakistan, on the other hand, has been a gainer because of its location. For Pakistan, its location on the map became a sort of an ATM which it could always draw on. Rather than building the nation, it fell for easy ways, like a good renter. Pakistan has been the United States’ frontline state for years.

Now, when the US has pulled out most of its troops, Pakistan, as is its wont, has again become a frontline state — this time of none else than its all-weather friend, China. To keep it in good humour, Beijing has been giving Pakistan nuclear technology, missiles, submarines, military aircraft and critical weaponry. The all-weather friend has now become a brother in arms and Pakistan a frontline ally across the Korakorum range.

The US pull-out from Afghanistan has created a sort of vacuum in Afghanistan, which the Chinese have been watching with interest. The Chinese are practioners of hard geopolitics and never like to miss an opportunity to advance their interests.

Actually it is Pakistan, which has been eyeing the vacuum left by the US pull-out in Kabul with greedy eyes. What better opportunity for it now than to create a situation when a pro-Pakistan Taliban group can come to acquire a share of power in Kabul! In any case, Islamabad has an old self-proclaimed doctrine of strategic depth, which it wants to invoke in Afghanistan and install a regime convenient for its future needs.

Lately, it has not been using the term strategic depth, but the essence of its policy remains intact. It is not without reason Pakistan continues to provide hospitality to Mullah Omar and the Quetta Shura and the support to Haqqani group and some other Taliban. The links it has been sustaining with different factions of the Taliban have been useful for Pakistan to strike better bargain with the US which has been wanting safe withdrawal from Afghanistan. While Hamid Karzai’s government was trying to negotiate directly with the Taliban, his successor President Ashraf Ghani is more dependent on Pakistan for dealing with the Taliban and stabilising the situation in Afghanistan. No wonder, Ashraf Ghani has even gone in for an agreement between Pakistan’s ISI and Afghan security agency, ignoring his own security chief’s boycott of the signing ceremony. This is no mean gain for Pakistan.

While Pakistan has been making advances to Ashraf Ghani’s new regime, China too has been more active on the Afghanistan front. Ashraf Ghani’s first visit after election was to China. Significantly, two Taliban delegations have recently visited China – one to Beijing and the other to Uramchi, the capital of Xinjiang. Apparently, Chinese interests in the developing situation in Afghanistan is no longer confined to copper mines leased to it by the Karzai government. China’s decision to have direct links with the Taliban groups is also indicative of its concern about jehadi groups’ activities in Xinjiang and western China and Central Asia.

Apparently, Pakistan and China are moving in concert in the future of Af-Pakistan region. Pakistan knows it cannot have its way alone in the strife-torn nation. Hence it will be to its advantage if China, a trusted ally, takes more interest in the Af-Pak region and in Pakistan.

China’s agreeing to build an economic corridor — road, rail and a pipeline through Pakistan to the Gwadar Port in Pakistan — can be seen a part of Pakistan-China joint strategy designed by China to reach near the Persian Gulf. With Pakistan acting as a spearhead, China wants to reduce its dependence on the Malacca Straits in the east.

Pakistan is unmindful of the cost a frontline state is to pay. Like the US, China will use Pakistan’s territory to reach the Persian Gulf to protect its trade routes and oil supplies. It provides China a window to study the emerging situation in the area arising out of ISIS’s attempts to establish a Caliphate. The ISIS is not going to be Beijing’s friend in Western China; and to counter it, Beijing would need Pakistan’s cooperation, and a pro-Pak Taliban regime in Kabul.

To be a frontline state of China, Pakistan, apparently, would be prepared to pay a price in losing some area of autonomy in handling its own foreign policy. It is forgetting that in the affairs of the nations, a frontline state can always become a front paw with little will to move on its own. Pakistan, even in a brother’s embrace, can earn some goodies, but when an embrace becomes too tight, it can make things difficult for any independent action. Pakistan, however, is used to it.

India cannot ignore what is happening in its North-West. Before Prime Minister Narendra Modi embarked on his China visit, New Delhi called the Chinese envoy to protest against the Beijing’s building projects through POK in its thrust to reach the warm waters of the Persian Gulf. The issue may also have figured at his talks in Beijing. But it is not clear what is going to be Indian policy to protect its political, strategic and economic interests in Afghanistan, once the US troops have been completely pulled out by next year. May be the Indian policy-makers will have to sit back and think of ways to ensure that India’s role in Af-Pak region doesn’t become minimal.

*The writer is a Member of Parliament and an Adviser to Observer Research Foundation, Delhi

The post Pakistan: China’s New Frontline State – Analysis appeared first on Eurasia Review.

Donald Trump, the bombastic builder of Trump towers and Trump gambling casinos is moving from his reality TV show to the theater of presidential elections. If he survives the first three months of mass media drubbing him and his notorious affliction of ‘leaving no impulsive opinion behind,’ he’s going to be trouble for the other fifteen or so Republican presidential candidates.

Already the commentators have derided his massive egotitis – he said “I” 195 times in his announcement speech, not counting the 28 times he said “my” or “mine” or the 22 mentions of “me.” But Trump revels in self-promotion and, as one commentator wrote, “plays the media like a harp.”

If he is still campaigning by Labor Day, watch out Republicans! He will be a big nightmare for Republican contenders – from Jeb Bush to Ted Cruz, from John Kasich to Scott Walker. Here are some reasons why:

1. Many American voters love to vote for very rich candidates, whether they are Republicans or Democrats. They believe they can’t be bought. They love business success stories. And being very rich, the media keeps the very rich candidates in the limelight, as do the national polls.
2. He can pay for his own media. Remember billionaire Ross Perot and his purchase of national television to show his charts on deficits. People laughed. But Mr. Perot got 19 million votes in 1992, even after dropping out of the campaign in the summer and being labeled a conspiracy theorist before again becoming a candidate in the fall!
3. Trump regularly and personally attacks the other candidates, which makes for regular news. The other candidates do not like to engage in personal attacks unless under political duress.
4. Trump turns liabilities into assets, including his vaunted forthcoming disclosures of his net worth – he focused on assets, while ignoring many complex liabilities. While Jeb Bush and Mitt Romney before him tried to play down their wealth, Trump insists he’s worth over ten billion dollars. He even ridiculed Bush who announced for president without wearing a suit and tie. To accusations that he has taken public subsidies and eminent domain protections for his giant projects, Trump replies that capital and tax money create jobs and more businesses.
5. Trump will crowd other candidates out from valuable TV, radio (Rush Limbaugh thinks highly of him) and print space. To adjust, they may have to become more flamboyant, further expanding the circus-like atmosphere of the Republican Primaries, while the Democratic Party leaders chortle.
6. Some of Trump’s positions have sizable support among Republican voters. He believes in public works programs on a big scale. He talks jobs, jobs, jobs and says he’s the only one among the candidates, who has been creating jobs. He objects strongly to the trade agreements, including the proposed Trans-Pacific deal now in the news, on the grounds that other countries, such as Japan and China, are superior negotiators and are taking us to the cleaners. He wants to build a tall wall on the Mexican border. He is against Common Core and federalizing education. He warned against invading Iraq in some detail, predicting it would expand Iran’s influence. He is for a strong military and talks about the mistreatment of veterans. He exudes self-confidence and attaches it to American national interests.
7.  Having survived tough, acidic New York journalism for years, he is almost scandal-proof. Attacks from his business and political enemies have helped to immunize the big-time scapper from serious reporting. He feeds off public cynicism about politics.
8.  If the Republican bigwigs try to exclude or humiliate him, Trump has the means to run as an Independent candidate for president – as Mr. Perot essentially did under the banner of his Reform Party. Just the prospect of that added nightmare might induce caution at the top levels of the GOP.
9.  He is not going to run out of money and, unlike his competitors, he doesn’t have to spend any precious campaign time dialing for dollars or making campaign promises. He can hire the smart strategists, speech-writers, election lawyers and primary delegate-seekers.

One hurdle Trump may not be able to surmount is Saturday Night Live (SNL). Lorne Michaels, SNL’s forever producer, uses exaggeration and satire to lampoon politicians. How can he satirize buffoonish satire itself? How can he exaggerate Trump who brags that the master bathroom on his private jet has a 24-karat-gold-plated sink?

The post Ralph Nader: Trump For President? Giving The GOP Nightmares – Analysis appeared first on Eurasia Review.

Seventy-four years ago today, Hitler turned on his ally Stalin and invaded the Soviet Union, an action that continues to echo in the post-Soviet states with Moscow now routinely but falsely accusing Ukraine of having become fascist while Vladimir Putin’s Russia is rapidly on its way to becoming exactly that, according to Vladislav Inozemtsev.

Moscow propagandists routinely assert that Ukraine is “fascist.” But what do they find in Ukraine that justifies this? Nothing. Do the Ukrainians want to “build a ‘Greater Ukraine’ from Kursk to Cracow? No, they dream of joining the European Union and in essence forgetting about their recently acquired sovereignty” (rbcdaily.ru/politics/562949995721381).

“Are political opposition figures [in Ukraine] suppressed?” Hardly. The opposition even defeated the president’s party in the polls, Inozemtsev points out. And “post-Maidan Ukraine lives quite peacefully if you do not take into consideration districts controlled by ‘the separatists.’” It has no interest in expanding its territory.

“Do Ukrainians recall imperial times with tears in their eyes? Hardly: they destroy monuments to the leaders of the totalitarian era and lament the victims of the terror famine and mass repressions.” According to Inozemtsev, he “personally does not see anything fascist not only in Kyiv but even, for example, in Lviv.”

The situation in Moscow is very different, however. There, the screws are being tightened and the opposition is being included from politics. Everywhere “there is the mythologization of the past and its heroization. And as for nationalism, one need only talk about “the ideology of the Russian world.”

The government uses legislation to attack minorities it doesn’t approve of. It combines state power with the capital of the oligarchs. There is “’a vertical’ and a charismatic leader.” In short, there is evidence that Russia is increasingly meeting each and every one of the definitional requirements of fascism.

“What does this mean?” Inozemtsev asks rhetorically. It means this: “if the Russian people wants to be true to the pledges of its greater ancestors, if it is ready to be worthy of the memory of the millions who died, then at a minimum this ‘enormous country’ must reflect on where its current elite is taking it.”

Russia “must not forget that the early fascist institutions became the training ground for that terror which in the second third of the 20^th century swallowed up all of Europe.” It is of course wrong to equate Nazi Germany and the Soviet Union, the Moscow analyst says, “but one should not fail to reflect about how all this began a century ago.”

Moreover, Inozemtsev continues, no one should fail to reflect on “how the first growths of ‘the banality of evil’ are today penetrating the everyday life” of Russians. “To think about this is not a crime,” as some in the Kremlin clearly would prefer, it “but rather a responsibility,” especially on this anniversary.

The post 74 Years After Hitler’s Invasion, Russia Not Ukraine Moving toward Fascism, Inozemtsev Says – OpEd appeared first on Eurasia Review.

By D. S. Rajan*

On June 11, 2015, Zhou Yongkang (73), who formerly held the posts of member of the Chinese Communist Party (CCP)’s 17th Politburo Standing Committee (PBSC) which is the highest decision-making body in China, Secretary of the CCP’s Political and Legal Affairs Commission, which is in charge of China’s security and intelligence apparatus and State Councilor of the PRC government, was sentenced to life for “accepting bribes, abusing power and deliberately disclosing state secrets” by the Intermediate Court in Tianjin. Zhou took bribes of about 130 million Yuan (21.3 million U.S. dollars), leaked five “extremely confidential” documents and one “confidential” document to an unauthorized person identified as Cao Yongzheng, directly contravening of the State Secrets Law, said the court judgment. According to Xinhua (June 11, 2015), as disclosure of state secrets was involved, Zhou’s trial was not open to the public. It added that Zhou pleaded guilty and will not appeal.

2. Interesting is the politician-astrologer nexus which has been seen in ‘communist’ China in the case of Zhou. The Chinese official media have described the ‘unauthorized’ Cao as a Fengshui Master , curer of diseases and fortune teller, close to Zhou’s son Zhou Bin and a host of former senior provincial leaders, now under detention, like Li Chuncheng, who headed the party in Sichuan, and Guo Yongxiang, who was vice governor of that province. [1]
3. Zhou is the highest-ranking former politician to be convicted since the case relating to punishment of Mao Zedong’s wife and other members of the “Gang of Four” witnessed in 1981. Also, this is for the first time a former PBSC member, has been legally punished which, reflects[2] the boldness of the CCP Chief and PRC President Xi Jinping to deviate from the unwritten party regulation (xingbushang chang wei) providing for exemption to serving and retired PBSC members from prosecution.

4. The court verdict lacks many details, but opinions of experts have made charges against Zhou Yongkang more explicit. The following appear notable:

a) “ New Gang of Four”:Zhou , along with Xu Caihou (now deceased) , former vice chairman of the Central Military Commission, Ling Jihua, former aide to President Hu Jintao and former Chingqing party secretary Bo Xilai, who was sentenced to life imprisonment in August 2014 for corruption and abuse of power, are now being described in China as belonging to a “new gang of four” challenging Xi [3].

b) “Factional fight against Xi”: Zhou, Xu and Ling , constituted a faction opposing Xi and their actions were deeply intertwined.[4] Xi’s purge of the three could mark his political plotting against the latter[5]. Zhou along with Bo indulged in “Non-organizational political activities”[6] (Remarks: Such references of a Chinese official daily and supreme court are of interest; they seem to admit that problem with Zhou is political besides concerning discipline violation). Zhou’s activities are attempts to set up a power base in China, alternate to that of Xi Jinping.[7] Zhou picked Bo as the Secretary of Political and Legal Affairs Commission which was a hidden attempt to challenge Xi Jinping’s power. Zhou and Bo conspired to sabotage China’s market reforms and return to the revolutionary era[8].

c) Zhou’s links with foreign intelligence officers: Zhou leaked state secrets on counter terrorism, Uighur activists and nuclear programmes in North Korea and Iran, to chiefs of foreign intelligence agencies whom he met.[9]

5. A net result of Zhou’s downfall will be a boost to Xi Jinping’s further consolidation of his political power; he has already become the supreme leader in China. He is the General Secretary of the CCP, President of the PRC, Chairman of the CCP and State Central Military commissions and head of the newly created National Security Council. He leads many ‘leading central groups’, dealing with important areas such as foreign affairs, financial and economic work, cyber security and information technology, and military reforms. Altogether, Xi occupies a total of 11 top posts in the country’s most powerful leadership bodies. This would mean that all institutions of the party, state council and military are now directly reporting to the PBSC and thus only to Xi. As the Chinese journal Caixin puts it[10], Xi Jinping has become the de facto Chairman of the CCP.

6. Xi may feel the need to maintain and further expand his existing leadership positions in the run up to the next CCP Congress in 2017. Five out of the seven current PBSC members are expected to step down during that occasion, having reached the retirement age of 68 for top leaders. In the absence of potential challenges to his leadership, subsequent to Zhou’s removal from the scene, Xi may find appropriate to move as many of his protégés into the PBSC and Central Committee at that Congress; in this regard, the atmosphere which has arisen from Xi’s ability to use Zhou as a sacrificial pawn to ensuring the success of his anti-corruption campaign, appears a helpful sign.

7. Will Xi’s anti-corruption campaign net more ‘tigers’ now? The answer seems to be uncertain. The praising in the editorial of the CCP’s flagship newspaper[11] to Zhou’s trial by saying that “no matter how much power one holds or how high one’s position, one will surely be severely punished for violating Party discipline and state laws”, signal that there could be no end to Xi’s pursuit of corrupt ‘tigers’. But Zhou’s sentence to life and not conducting a public trial for him, appear relatively lenient treatment indicating Xi’s caution at the moment in the interest of maintaining unity at leadership levels. A factor behind such caution on Xi’s part could be the divisions which may have risen within the CCP as his anti-corruption campaign has chosen loyalists of Jiang Zemin as targets. Domestic reservations on the campaign which began in late 2012 could be another factor. Such reservations have reportedly come from[12] from China’s leaders of previous generations, but still influential, like Jiang Zemin and Hu Jintao. On their part, the Chinese party and state-controlled media[13] have themselves admitted the existence of viewpoints in China that anti-corruption work will hamper the country’s economic development and damage reputation and image of the government. The Central Discipline Inspection Commission website admitted in the last week of February 2015 that some in China are calling for an end to the campaign under fears that it will go too far if continues.

8. What is therefore likely to happen is that the ‘tigers’ (like Ling Jihua, former Aide to President Hu Jintao, General Guo Boxiung, former politburo member and former Vice Chairman of the Central Military Commission, now reportedly suffering from cancer and Li Chuncheng, former deputy party secretary of Sichuan) who have already been reported as detained and brought under the purview of investigation, will be brought to justice as in the case of Zhou Yongkang. One can only speculate on whether or not there could be more high level purges. One thing looks certain; from now on, Xi’s focus could be on catching ‘flies’ at the grassroots level. Confirming this likely scenario has been the comment of a senior CCP official[14] that after the downfall of ‘tigers’, it is “quite natural for the graft bust to funnel down to lower official investigations”. In fact, concentration on curbing lower level corruption has already begun- Sun Hongzhi, vice minister of the State Administration for Industry & Commerce, and Liao Yongyuan, former general manager with China National Petroleum Corporation, have been expelled from the CCP on corruption charges on June 15,2015.

9. India may have reasons to be curious about the conviction of Zhou Yongkang in China.In November 2010; Zhou visited India and met leaders of the Congress, Bharatiya Janata Party and left groups.

10. “Zhou Yongkang may well have been corrupt. His real problem was losing a power struggle” – this quote from the Economist (December 13, 2014) aptly sums up the situation.

*The writer, D. S. Rajan, is Distinguished Fellow, Chennai Centre for China Studies, Chennai, India. Email: dsrajan@gmail.com

[1] http;//English.caixin.com/2014-04-21/ 100668166.html dated april 21, 2014

[2] Willy Lam in his book “Chinese Politics in the Era of Xi Jinping”, Routledge, March 24, 2015

[3]“Xi Dismantles the ‘New Gang of Four’ With Probe of Hu’s Aide”, December 23, 2014, http://www.bloomberg.com/news/articles/2014-12-23/xi-dismantles-china-s-….

[4] former Deputy editor of People’s Daily, Zhou Ruijin, China Digital Times, March 21, 2015

[5] Beijing Youth Daily, as quoted by New York Times, China Digital Times, March 21, 2015.

[6] 2014 Annual Report of the Supreme Court, “China’s Supreme Court uses novel rhetoric in new corruption allegations”, China Daily, USA, quoting Xinhua, March 19, 2015

[7] Liu Dawen, former editor of Hongkong-based political magazine Outpost, Radio Free Asia, March 19 2015).

[8] ifeng.com, a news website run by Hong Kong’s Phoenix TV, January 5, 2015
[9] Sunday Times, UK, “ China’s tyrant spy chief faces death for leaking state secrets”, December 7, 2014 http://www.thesundaytimes.co.uk/sto/news/world_news/Asia/article1492528.ece

[10] “Xi Has Vision to Guide Party to 2049”, Cai Xin, Yang Guangbin, March 16, 2015

[11] Nobody is above the law: People’s Daily, June 11,2015 http://news.xinhuanet.com/english/2015-06/11/c_134318995.htm

[12] The Diplomat, quoting Financial Times, April 4,2014

[13] Caixin, March 11, 2015
[14] Cai Xia, Professor with the Party School of the CCP Central Committee, China Focus: China’s anti-graft drive zooms in on “flies”, English.news.cn, May 27,2015

The post China: Erstwhile Top Party And State leader Zhou Yongkang Sentenced; What Next? – Analysis appeared first on Eurasia Review.

What exactly does it mean for a big Wall Street bank to plead guilty to a serious crime? Right now, practically nothing.

But it will if California’s Santa Cruz County has any say.

First, some background.

Five giant banks – including Wall Street behemoths JPMorgan Chase and Citicorp – recently pleaded guilty to criminal felony charges that they rigged the world’s foreign-currency market for their own profit.

This wasn’t a small heist. We’re talking hundreds of billions of dollars worth of transactions every day.

The banks altered currency prices long enough for the banks to make winning bets before the prices snapped back to what they should have been.

Attorney General Loretta Lynch called it a “brazen display of collusion” that harmed “countless consumers, investors and institutions around the globe — from pension funds to major corporations, and including the banks’ own customers.”

The penalty? The banks have agreed to pay $5.5 billion. That may sound like a big chunk of change, but for a giant bank it’s the cost of doing business. In fact, the banks are likely to deduct the fines from their taxes as business costs.

The banks sound contrite. After all, they can’t have the public believe they’re outright crooks.

It’s “an embarrassment to our firm, and stands in stark contrast to Citi’s values,“ says Citigroup CEO Michael Corbat.

Values? Citigroup’s main value is to make as much money as possible. Corbat himself raked in $13 million last year.

JPMorgan CEO Jamie Dimon calls it “a great disappointment to us,” and says “we demand and expect better of our people.”

Expect better? If recent history is any guide – think of the bank’s notorious “London Whale” a few years ago, and, before that, the wild bets leading to the 2008 bailout – JPMorgan expects exactly this kind of behavior from its people.

Which helped Dimon rake in $20 million last year, as well as a $7.4 million cash bonus.

When real people plead guilty to felonies, they go to jail. But big banks aren’t people despite what the five Republican appointees to the Supreme Court say.

The executives who run these banks aren’t going to jail, either. Apologists say it’s not fair to jail bank executives because they don’t know what their rogue traders are up to.

Yet ex-convicts often suffer consequences beyond jail terms.

In many states they lose their right to vote. They can’t run for office or otherwise participate in the political process.

So why not take away the right of these convicted banks to participate in the political process, at least for some years? That would stop JPMorgan’s Dimon from lobbying Congress to roll back the Dodd-Frank act, as he’s been doing almost non-stop.

Why not also take away their right to pour money into politics? Wall Street banks have been among the biggest contributors to political campaigns. If they’re convicted of a felony, they should be barred from making any political contributions for at least ten years.

Real ex-convicts also have difficulty finding jobs. That’s because, rightly or wrongly, many people don’t want to hire them.

A strong case can be made that employers shouldn’t pay attention to criminal convictions of real people who need a fresh start, especially a job.

But giant banks that have committed felonies are something different. Why shouldn’t depositors and investors consider their past convictions?

Which brings us to Santa Cruz County.

The county’s board of supervisors just voted not to do business for five years with any of the five banks felons.

The county won’t use the banks’ investment services or buy their commercial paper, and will pull its money out of the banks to the extent it can.

“We have a sacred obligation to protect the public’s tax dollars and these banks can’t be trusted. Santa Cruz County should not be involved with those who rigged the world’s biggest financial markets,” says supervisor Ryan Coonerty.

The banks will hardly notice. Santa Cruz County’s portfolio is valued at about $650 million.

But what if every county, city, and state in America followed Santa Cruz County’s example, and held the big banks accountable for their felonies?

What if all of us taxpayers said, in effect, we’re not going to hire these convicted felons to handle our public finances? We don’t trust them.

That would hit these banks directly. They’d lose our business. Which might even cause them to clean up their acts.

There’s hope. Supervisor Coonerty says he’ll be contacting other local jurisdictions across the country, urging them to do what Santa Cruz County is doing.

The post How To Punish Bank Felons – OpEd appeared first on Eurasia Review.

Malaysia raised its level of response over a recent encounter with a Chinese vessel in disputed waters in South China Sea. Does this signify a new norm in Malaysian and other Southeast Asia claimants’ attitudes in engaging China?

By Oh Ei Sun*

In the latest episode in the ongoing territorial disputes in South China Sea, Malaysia will reportedly lodge a formal diplomatic protest with China over the presence of a Chinese Coast Guard vessel near Luconia Shoals, a series of islets and reefs well within Malaysia’s claimed 200-nm exclusive economic zone. The Malaysian Prime Minister, Najib Razak, would “raise the issue directly with Chinese President Xi Jinping”, a cabinet minister, Shahidan Kassim, was quoted as saying.

With China being Malaysia’s largest trading partner and Malaysia China’s largest trading partner in Southeast Asia, Kuala Lumpur is mindful of this fruitful bilateral economic relationship over and above the territorial dispute with China in the South China Sea. This is in stark contrast to the more assertive approaches of two other ASEAN claimants, Vietnam and the Philippines, in their territorial disputes with China. Therefore, the more vocal Malaysian reaction of late to perceived Chinese aggressiveness in the South China Sea seems to suggest an apparent departure from Kuala Lumpur’s previous low-key responses to China’s claims. There are five possible factors for this shift in Malaysian attitude.

Large-scale reclamation

Firstly, over the last year or so, China has engaged in unprecedented large-scale land reclamation in various parts of the South China Sea which it claims. While other claimants have over the years also reclaimed reefs or buttressed submerged features in their respective claimed territories, China has over a short span of time reclaimed much more than all the other claimants combined, buiding artificial islands out of reefs. Inevitably, this raised suspicion among regional and extra-regional parties.

Other claimants, Malaysia included, voiced their concerns in varying tones, some – Vietnam and the Philippines – louder than others, but all proved ineffectual in stopping China’s reclamation activities, no matter how far-flung away from the Chinese mainland. It would appear that Malaysia’s apparent shift in posture was triggered by such Chinese moves to change the “facts on the ground”.

Secondly, intrusions into Malaysia’s claimed waters by China’s official vessels – mostly civilian but occasionally military or para-military (as in the present case) – have increased to a level that has alarmed Kuala Lumpur. These intrusions were raised from previously biennial or annual “customary” visits into “a daily affair” since late last year as claimed by Malaysian naval authorities.

Apparently, every time an incident occurred, the Malaysian side would “shadow” the intruding vessel and lodge a “diplomatic protest” with the Chinese side. Apparently these moves have failed to dissuade China from its serial intrusive activities. The increasing frequency and intensity of these intrusions by Chinese vessels seemed to have prompted Kuala Lumpur to upgrade its protest to the highest level possible – between the top leaders of both countries.

Testing the waters?

Thirdly, as in many other international tussles, the various claimants over the years have employed a range of tactics in advancing their respective claims, ranging from informal caution and diplomatic notice, to armed confrontation and forceful occupation. As China argued that its land reclamation was following precedents by other South China Sea claimants, the Philippines and Vietnam also recently announced in quick succession that they were either organising tourist groups to their disputed maritime features or constructing touristic infrastructure on them. It should not come as a surprise if Malaysia would similarly add yet another front in defending its claims by airing displeasure at the highest level.

Fourthly, the United States’ renewed strategic commitments to the region perhaps have also emboldened some regional claimants in their disputes with China. Late last month, addressing the Shangri-La Dialogue security conference in Singapore, the new American Secretary of Defence Ashton Carter reiterated the US resolve to preserve freedom of passage in the South China Sea even as he censured China for its large-scale land reclamation on the disputed features. In fact, Carter explicitly said that China’s actions were pushing its regional neighbours towards requesting security guarantees by the US.

Carter also pledged more US security resources under the new Southeast Asian Maritime Security Initiatives while inking various defence cooperation agreements with Vietnam a few days later. This series of not-so-subtle security-enhancing rhetoric and actions on the part of the US are of course not lost to the Southeast Asian claimants. It is not surprising that Malaysia upped the ante by pressing harder its South China Sea claims.

Finally, there is also a domestic dimension to Malaysia’s bolder reaction to Chinese intrusion into its territorial waters. Prime Minister Najib is currently embroiled in a political struggle with one of his predecessors, Mahathir Mohamad. He is finding himself in the unenviable position of having to fend off various domestic political salvos from both within and outside the administration. As such, the Malaysian government simply cannot appear to be weak on the international front, especially in defending Malaysia’s South China Sea claims, lest this becomes fodder for further attacks by political rivals.

In the face of all this, there is one positive development arising from this latest South China Sea encounter between China and Malaysia. As Mr Xi and Mr Najib are not scheduled to officially meet anytime soon, Prime Minister Najib’s prospective raising of the latest Malaysian displeasure “directly with” President Xi would suggest that there is a “hotline” or some special direct channels of communication between the two top leaders. This testifies to the overall close and cordial relations between the two countries.

All eyes are now on whether this latest South China Sea incident, currently suggesting a subtle shift in Kuala Lumpur’s position, will actually lead to significant changes in its bilateral relationship with China, or in the collective consensus on the South China Sea among Southeast Asian nations.

*Oh Ei Sun is a Senior Fellow with the S. Rajaratnam School of International Studies (RSIS), Nanyang Technological University, Singapore. An earlier version appeared in Vietnam’s Than Nien newspaper and website.

The post South China Sea Disputes: Malaysia’s Subtle Shift On China? – Analysis appeared first on Eurasia Review.

By Joyeeta Bhattacharjee*

The Bangladesh, Bhutan, India and Nepal multimodal transport agreement (BBINMVA) for easing cross border movement of people and goods signed in Thimphu on June 15 is a welcome step forward to regional integration.

However, it is just a beginning and not a time for jubilation as there is plenty of work pending before the agreement can be actually implemented. Expectation is that the member countries will take the necessary steps to enable early implementation of the agreement.

On June 15 transport ministers of Bangladesh, Bhutan, India and Nepal (BBIN) met in Thimphu to finalise the Motor Vehicles Agreement (MVA) for the Regulation of Passenger, Personal and Cargo Vehicular Traffic between the BBIN countries. Earlier, a draft agreement was agreed by all the four countries in a conference of transport secretaries in February this year at Kolkata. The BBINMVA is designed on the lines of the SAARC MVA, which was set to be signed during the 18th South Asian Association for Regional Cooperation Summit in November 2014 at Kathmandu but was suspended after Pakistan’s objection. This agreement removes all obstacles for movement of vehicles within the member countries. Following this agreement, a vehicle from one country can easily go to another without much hindrance. But vehicles will be allowed to ply only on the stipulated routes and will have to attain specific permits. Also, drivers of these vehicles will have to carry valid passport.

BBIN countries will tend to benefit economically as trade and commerce between them will get a major boost. Intra-regional trade suffered due to poor connectivity. Besides, the BBIN MVA has opened new horizon for business among the member countries, like transport and tourism. Economic interdependence had existed among these countries for centuries as most of the region was one country before partition of British in India in 1947. Partition disrupted the lines of communication, affecting the economy of the region. South Asia today is home to one of the poorest people in the world with significant population living below $1 a day. Also, it is one of the least integrated regions globally.

The BBIN countries deserve credit for taking this move to restore the old linkages. The countries also need appreciation from thinking of something which is regional in approach despite disappointments with the SAARC. Though SAARC was established in 1985 regionalism could not take off in South Asia in the proper sense. Reasons that prevented growth of regionalism in South Asia are: the countries’ zealous protectionist notion of sovereignty and territorial integrity; dispute between India and Pakistan and apprehensions of smaller countries about India. The present agreement shows a change of mindset of the countries towards regionalism.

However, India’s role cannot be overlooked in attaining the present success. Considering India’s huge geographical, political and economic position in South Asia, no regional cooperation will be successful without the country’s cooperation. After the failure of the SAARC MVA to be signed in Kathmandu, Indian Prime Minister Narendra Modi categorically explicated his intention of realising the regional connectivity either within SAARC or outside it. Indeed, BBIN MVA is a major diplomatic victory for India.

To sustain the present momentum countries should work on resolving some of the gaps in the treaty so that it does not face the same fate of the SAARC. The agreement does not give many details about route maps, location of permitted rest or recreation places, tolls and check-posts. For smooth functioning of the agreement, negotiations on these issues need to be concluded at the earliest. Again, the agreement does not talk of issues like fees, service charges and administrative costs and has left it to be resolved bilaterally. Such gaps raises doubts about seriousness of the member countries, and some analysts on the subject suggest that the present agreement is nothing more than a symbolic one.

Meanwhile, the joint statement issued at the meeting of the transport ministers stipulated six months to complete all the negotiations for the protocols and to upgrade the necessary infrastructure for implementation of the agreement. The statement suggests that agreement/protocols could be bilateral, trilateral or quadrilateral. To transport analysts signing of the protocol will be the major challenge.

Again, upgradation of the infrastructure will be a major challenge as it is both time-consuming and expensive. The joint statement indicated that development of the infrastructure will require $8billion worth of investment. The agreement suggests the cost for implementation of the agreement will be borne by the respective countries. Since most of the countries are poor there is apprehension whether they will be ready to spend that amount. Though India is giving assistance in developing infrastructure in the region but it will not be sufficient. Asian Development Bank and World Bank proposed to give $500 million and $1 billion respectively for development of infrastructure, but the money is not enough.

Also, since there is no clarity on the issue of transit, many in Bangladesh feel that the agreement is not in that country’s interest and they are propagating that it will give transit to India indirectly. Transit is a sensitive issue in Bangladesh and there is public resistance against the agreement. Such resistance might create obstacle for realisation of the treaty as government of Bangladesh might not be able to overlook popular opinion for a long time.

BBINMVA is an encouraging development that aims at shared growth and prosperity of the region. For success of the BBINMVA the member countries should remain consistent and resolve the issues on timely basis for fulfilling the vision of prosperity of the region.

*Joyeeta Bhattacharjee is a Fellow at the Observer Research Foundation, New Delhi. She can be reached at editor@spsindia.in

The post BBIN Come Together For Prosperity Of The Region – Analysis appeared first on Eurasia Review.

By Divya Kumar Soti*

Ever since India launched a targeted Special Forces action against two militant camps in Myanmar and announced it, the whole of Pakistani political as well as military establishment is repeating again and again that “Pakistan is not Myanmar” and India should not even think about any such action against Pakistan. Before the nature and actual potency of these threats is examined in a threadbare manner, it will be pertinent to examine how India has been responding in the past to Pakistan’s terror proxies attacking Indian military and civilian targets along the Line of Control and International Border.

India has often responded to asymmetric warfare perpetrated by Pakistani forces through Special Forces action on both sides of LOC. However, objectives and triggers of such response from India have been much different when compared to recent action against terror camps in Myanmar. Cross-border specialized operations by India have been in response to the Pakistani Army-Lashkar-e-Taiba Border Action Teams (BATs) crossing over to the Indian side to either attack Indian posts or ambush Indian patrols (which on certain occasions included beheading of Indian soldiers). All such operations by India have been aimed at restoring Area Domination after unprovoked brutal attacks on its soldiers along the LOC by the Pakistani Army BATs.

Recently Indian Defence Minister Manohar Parrikar said that India is looking at optimal use of Special Forces to quickly neutralize the Pakistani terrorists who infiltrate into India. However, it is to be understood that all such operations are resorted to at tactical level and are not part of a concrete asymmetric warfare doctrine aimed at pre-emption and hot pursuit. India is still to develop such a doctrine.

On the contrary, Pakistani Army BATs and its proxies like Lashkar-e-Taiba (LeT) regularly indulge in such warfare against India where freshly infiltrated terrorists often target Indian Army camps as well as civilians in the wee hours. For instance, on May 25, 2015 one group of Pakistani infiltrators ambushed an Indian patrol in Tangdhar sector killing three soldiers. Another group of infiltrators tried to penetrate into the vicinity of Brigade Camp Area in Tangdhar but was engaged and neutralized by alert soldiers, just 200 meters away from the camp. On certain occasions, Pakistani intruders have tried to carve out a temporary control zone to create a furore and gain publicity with active support from Pakistani BATs. During one such engagement, which lasted for nine days starting September 23, 2013 when the Indian Army engaged infiltrators in Shala Bhata area of Keran Sector, compact batches of Pakistani BATs were pressed into action to engage and round up the outer flanks of the Indian cordon.

However, action by India has never been in the nature of hot pursuit or pre-emption. There is no reported instance where Indian Special Forces have crossed LOC to neutralize terrorist facilities or for hot pursuit of terrorists who retreat to the Pakistani side of LOC after failed infiltration bids.

Within hours of Indian Special Forces destroying National Socialist Council of Nagaland-Khaplang (NSCN-K) camps in Myanmar, paranoid statements from Pakistani side started to come despite the fact that after the strike Government of India has nowhere indicated or mentioned that such operation could be expanded to the western theatre. The only thing underlined by the official statements was that India will not take dastardly acts of terrorism on it soil lying down, and will take whatever action it finds necessary to defend itself. Almost every major politician of Pakistan issued statements on the Indian operation in Myanmar, including Prime Minister Nawaz Sharif; the gist of all of them being that “Pakistan is not Myanmar”. Pakistani Parliament passed unanimous resolutions against perceived Indian “belligerence” and former Pakistani president and Army Chief General Pervez Musharraf went to the extent of issuing nuclear threats as well as “expanding proxy war against India”.

However, what Pakistani leaders say is quite immaterial for the purposes of this game if India actually decides to embark upon playing it. First, coming to the threat of expanding proxy war against India which often comes from people like General Musharraf or is conveyed through Hafiz Saeed rallies, there is no guarantee anyway that Pakistan won’t expand it against India at the opportune moment to further its strategic objectives. In the past, all major terror strikes on Indian soil emanating from Pakistan were launched to take advantage of the geo-political circumstances of the time, to deflect pressures from the international community to act against terror groups destabilizing Afghanistan or to extort concessions from India on the talks table.

So absence of pre-emptive action against terror infrastructure by India will not dissuade the Pakistani military-intelligence establishment and jihadist machinery at its command from repeating something like 26/11 attacks or creating another Indian Mujahideen kind of proxy. Terror nurseries continue to thrive on Pakistani soil and many such conspiracies may already be in the phase of being conceived.

Coming to nuclear blackmail, no matter how many times Pakistan issues nuclear threats, generals in Rawalpindi know very well that nuclear retaliation to a targeted localized Special Forces action by India is an impossibility in real life. It is particularly notable in this regard that any such targeted localized action by India will be hugely short of the much-feared and debated “Cold Start” punishment, thus disarming Pakistan of any excuse of deploying tactical nukes it has been developing and sporting as a deterrent against Cold Start. Another dilemma facing Pakistani military planners in counting any such action by India as “Cold Start” deserving a “tactical nuclear response” from their side is articulation by India of how its nuclear doctrine will play out in such an event.

In April 2013, chairman of India’s National Security Advisory Board, Shyam Saran articulated the Indian position in following words: “A limited nuclear war is a contradiction in terms. Any nuclear exchange, once initiated, would swiftly and inexorably escalate to the strategic level. Pakistan would be prudent not to assume otherwise as it sometimes appears to do, most recently by developing and perhaps deploying theatre nuclear weapons.”

Putting it more plainly Mr. Saran further said: “India will not be the first to use nuclear weapons, but if it is attacked with such weapons, it would engage in nuclear retaliation, which will be massive and designed to inflict unacceptable damage on its adversary. The label on a nuclear weapon used for attacking India, strategic or tactical, is irrelevant from the Indian perspective.”

So no matter how much catchy nuclear threat rhetoric Pakistan generates, it knows very well that any sub-conventional Indian response whether in nature of pre-emption or hot pursuit cannot be responded to by nuclear warfare. At the most Pakistan can respond by BAT actions and organizing of multiple terror attacks against Indian troops. But India is capable of and may very well decide to absorb all that in case of a repeat of 26/11 kind of scenario. However, any successful Indian operation on Pakistani soil may cause huge damage to the Pakistani Army’s domestic image more than the one it suffered after Abbottabad. It is for these reasons Pakistan is sounding so rattled over the Indian operation in Myanmar.

Pakistan needs to understand that it cannot eternally sustain proxy war against India with impunity. Some day a breakeven point will arrive, forcing India to resort to proactive action to dissuade Pakistan from sponsoring terrorist activities. After the Myanmar Operation, Indian Defence Minister Manohar Parrikar acknowledged that the operation has changed the security mindset in the nation. By resorting to retaliatory action against terror groups operating from Myanmar and publicizing it, the Narendra Modi government has knowingly or unknowingly set up a standard of response against terrorism for itself as well as for future governments. Pakistan would do well to understand this.

*Divya Kumar Soti is an independent national security and strategic affairs analyst based in India. He can be contacted at contributions@spsindia.in

The post India’s Myanmar Operation: Why Pakistan Is So Rattled – Analysis appeared first on Eurasia Review.

It has been a little more than two years since the whistleblower Edward Snowden’s first leaks of classified National Security Agency (NSA) documents revealing unchecked mass surveillance practices by the U.S. government, and it is safe to say that we now live in a totally different world.

The core questions first raised by the Snowden leaks – whether or not governments should have power to wiretap and hack citizens without the burden of probable cause and warrants – have not disappeared or been forgotten, like so many other news stories. In fact, privacy advocates just recently celebrated the first tangible political victory with the passage of the USA Freedom Act on June 2, which although an exceedingly modest step, represents the first time in history that Congress has acted to restrain the powers of the NSA.

And we didn’t have to wait long to see a response from the intelligence community. Last week the UK newspaper The Sunday Times published its story “British Spies Betrayed to Russians and Chinese” citing a number of anonymous government sources who claimed Snowden had caused irreparable, far-reaching damage because foreign powers had allegedly “cracked” Snowden’s encrypted document cache. According to the unnamed officials, Snowden has “blood on his hands,” though the article acknowledges there’s no evidence backing it up.

Snowden’s opponents rejoiced – finally here was the proof that the NSA leaks have caused more harm than benefit. One opinion piece published in the German newspaper Bild slammed Snowden for his recklessness, arguing that he “does not fully understand” the scope of what he has revealed, and further, that his discrediting of the U.S. intelligence apparatus has enabled even worse abuses of espionage by less free governments – though I’m not so sure about this leap of logic.

It’s not my place to debate the journalistic standards of the Sunday Times report, though many others have picked it apart, including Glenn Greenwald. Writing at Wired, journalist Bruce Schneier argues that China and Russia likely already had access to this intelligence, and not because of Snowden. The Sunday Times author, Tom Harper, told CNN that he had seen no evidence that the files were breached, that he had no details about how it had been accomplished, nor did he have any information on what files were allegedly accessed, so the story appears rather weak.

That fact is that the U.S. government and its partners in Five Eyes were caught breaking the law and exceeding their authority. We are all victims of this breach of our rights. Now those bringing the counter-argument are making the comparative argument – that it is a lesser crime for governments to break the law, because whistleblowers endanger national security.

But leaving aside for a moment whether or not the story holds water, and leaving aside whatever opinion one might hold towards Snowden, what is particularly troubling about the Sunday Times piece and the ensuing media circus is the timing. We are meant to believe that it is just a “coincidence” that these startling revelations of a major security breach come right on the heels of the scathing report by David Anderson QC, which found GCHQ spying practices “undemocratic, unnecessary, intolerable” and issued a series of recommendations for reform.

Writing in the Guardian, activist Shami Chakrabarti of Liberty saw right through the Home Office PR strategy:

“Low on facts, high on assertions, this flimsy but impeccably timed story gives us a clear idea of where government spin will go in the coming weeks. It uses scare tactics to steer the debate away from Anderson’s considered recommendations – and starts setting the stage for the home secretary’s new investigatory powers bill. In his report, Anderson clearly states no operational case had yet been made for the snooper’s charter. So it is easy to see why the government isn’t keen on people paying too close attention to it.”

The counter-attack against Snowden also cannot be separated from the failure in Congress on behalf of national security hawks to maintain certain provisions of the Patriot Act pertaining to telephone metadata. The new law will also require FISA court proceedings to be declassified for “novel and significant” decisions.

The organized campaign attacking Snowden’s leaks appears to be an attempt to incite a moral panic, pushing a narrative based on fear and insecurity that says these privacy advocates must lay down their claims to rights and allow intelligence agencies the broad powers they need to “save” the public from imagined threats. This is pure survival instinct on behalf of a massive multinational bureaucracy of spy agencies, which, as it feels its reach threatened, makes a push to expand its hold even further.

The attempt to incite panic as a pretext to expand state power has a historical basis referred to as the “strategy of tension,” seen in various iterations in Europe in the 1960s and 1970s. One example was the 1969 bombing of Piazza Fontana by Italian fascists, which the terrorists later admitted was an attempt to provoke the military into declaring a state of emergency and suspending constitutional rights.

In his 1984 book “Portrait of a Black Terrorist,” Stuart Christie described the strategy of tension as an attempt “to manipulate popular feeling … by creating such social disruption and uncertainty that the populace would favour the installation of a strong-arm government pledged to restore order.”

In her book “Putin’s Kleptocracy,” author Karen Dawisha has similarly argued that a strategy of tension was at work during the horrific Vladikavkaz apartment bombings which served as the pretext for the second Chechen war. Dawisha quotes one analysis by Italian journalist Giulietto Chiesa of La Stampa:

“The criminal act was conceived and carried out not simply by a group of criminals. As a rule the question here concerns broad-scale and multiple actions, the goal of which is to sow panic and fear among citizens … Actions of this type have a very powerful political and organizational base. Often, terrorist acts that stem from a ‘strategy of building up tension,’ are the work of the secret service, both foreign but also national. … With a high degree of certitude, one can say that the explosions of bombs killing innocent people are always planned by people with political minds. They are not fanatics; rather they are killers pursuing political goals. One should look around [in Russia] and try to understand who is interested in destabilizing the situation in a country.”

So far, thankfully, we have not seen any demonstrations of violence related to the state’s counter-attack aimed at discrediting Snowden and reversing the meager reforms that are just beginning to take root. But it does however seem likely that in order to achieve their political goal, these spy agencies will increase these sorts of news stories both in quantity as well as urgency, deepening tension and fear, which reduces the public space available for a reasonable debate on how we can improve spying legislation going forward.

The post Edward Snowden And The Strategy Of Tension – OpEd appeared first on Eurasia Review.

Pakistan, a state created in the name of Islam, is today divided along linguistic, ethnic, tribal and sectarian lines. It also claims to be the ‘heart of Asia’, making any observer want to ask, ‘a wounded, bleeding heart?’ While it is beset with domestic issues that directly threaten the well-being of the nation as a whole—unrest in Baluchistan; the on-going military operations in the Federally Administered Tribal Areas (FATA); and the rapidly increasing sectarian violence against minorities—Pakistan is attempting a rather bizarre re-invention of itself as a progressive Muslim nation. This attempt is reliant on the creation of a non-Muslim threat as a rallying point to focus the population away from domestic challenges. Accordingly Pakistan has drummed up the rhetoric of Indian intervention and the hidden hand of the Research & Analysis Wing (RAW), the external intelligence agency of the Indian Government in recent months. This is at best an ostrich-like approach to its own security and the very real threat of disintegration on sectarian and tribal lines.

A General Appraisal

Although Pakistan’s officialdom vehemently and repeatedly denies it, there is no doubt in anyone’s mind that Pakistan uses terrorism in different garbs as a tool of foreign policy, especially in its dealings with India and Afghanistan. Pakistan has always aided, abetted, facilitated and protected terrorists, dividing them into ‘good’ and ‘bad’ terrorists; the good being the groups that toes the line and does its bidding, and the bad being the ones that create inconvenient domestic disturbances. In doing so it has emerged as a master at playing the double game, a duplicity that the Bush administration was unable to fathom in the early days of the ‘war against terrorism’. The Taliban resurgence in Afghanistan, on-going from around 2006, is completely Pakistan supported, being controlled by the Army and ISI through the Frontier Corps. There is no indication that Pakistan wants to, or is attempting to, reign in the active Taliban insurgency in Afghanistan.

The Yemen crisis was a wakeup call for the Pakistani Government and the Army. So far they had adroitly played the nations of the Middle-East to their advantage. However, when the call came from Saudi Arabia for military participation in the Arab coalition, the reality of the situation hit the establishment. Whatever the agony involved, Pakistan had to say a direct ‘no’ to its benefactor for two reasons. First, the sectarian nature of the Yemen conflict made it impossible for the Pakistani Parliament to endorse a Sunni-biased military intervention. Second the Army found that it had no spare capacity to deploy to the Middle-East when they were in the midst of an intense counter-insurgency operation in North Waziristan. After the denial Pakistan has tried desperately to make amends through intense diplomacy, but the pragmatists in government and the Army know that it will not be business as usual anymore with the major nations of the Middle-East. Even so, Pakistan is unwilling to take sides in the increasingly confused politics and developing crises of the Middle-East—the conflict against the Islamic State (IS); the Sunni-Shia sectarian fights; and the Saudi-Iran stand-off.

The current Nawaz Sharif Government is caught in a cleft stick; it needs the support of the military to stay in power while its political support stems from the right-wing, the madrasa establishment. The deteriorating internal security situation has forced the government to accept the upper hand of the military. However, this balancing act cannot be continued for the long-term and there is always the possibility of a popular backlash, contrived by the religious right. Even without a political crisis the drift of the civilian government could continue till the next elections, scheduled for 2018.

There is clear and unambiguous evidence of the emergence of a cleric-criminal nexus functioning against the minorities. A number of militant religious groups have been indirectly state supported since the 1980s and their persecution of the Shia, Christian and Hazara minorities has somewhat discomfited the government. The situation is exacerbated by the lethargy in dispensing justice and the absence of any witness or prosecution protection in terror-related cases that makes people wary of violent extremism within the criminal justice system.

Other than the domestic sectarian violence and terrorist threat, there are two major internal issues that keeps Pakistan in a turmoil—the unrest in Baluchistan and the Army involvement in governing the State.

The Baluchistan Issue

There has been a festering dissident movement demanding greater autonomy in Baluchistan for decades. However, the agitation intensified after the popular Baluch leader, Nawab Akbar Bugti, was killed in a military operation on 26 August 2006. The official government response to the agitation has been based on physical suppression. Baloch dissidents have been killed and dumped on the roadside or have ‘vanished’. It is generally believed that government agencies are behind the killings, although these agencies have resorted to falsification of evidence to show that they were not involved. The Protection of Pakistan Ordnance (PPO) gives the Army a free hand and the power to arrest and detain any ‘suspect’. More worryingly, it gives the Army the authority to shoot anyone committing, or ‘likely to commit’ any terror-related offences.

This gives a carte blanche for the Army to pursue its own agenda in the region; the Frontier Corps, a para-military force, functions outside the law of the Baluch Government.

The Pakistan Supreme Court recognises the extra-judicial killings and have reprimanded the Government, which in turn pleads its inability and helplessness to stop them. Since the beginning of the dissident movement, it is estimated that the Pakistan Army and other government agencies have been responsible for 21,000 persons going ‘missing’. The question of the missing persons in Baluchistan has become sensitive enough for the government agencies to now try and silence the media through a targeted and focused campaign of assassination. By all accounts, 30 journalists have so far been killed. A classic case was the murder of Sabeen Mahmud, a women’s rights activist, in early May this year.

Baluchistan is resource-rich and the largest of Pakistan’s four provinces, although it is sparsely populated with only seven million residents. Despite its vast natural resources, it is also Pakistan’s poorest province. There are a number of Baluch ‘Liberation’ militant formations that are listed by the Baluchistan government as being anti-national and are being targeted as part of a ‘smart and effective security policy’. Along with this, Islamabad has followed a strategy of supporting armed Islamic extremist militant groups that function as proxies of the State in the province. The situation has been purposely aggravated, almost like a smoke screen to cover up the extremely brutal suppression of Baluchi aspirations that is taking place on a daily basis. The tragic cycle of events—the killing of ethnic Baluchi people by the security forces and the retaliatory attacks on non-Baluchi residents—tells a story of Pakistan’s repeated failures.

The Army – In a World of its Own

The Army has been carrying out Operation Zarg-e-Azb in North Waziristan, against the insurgents, since June 2014. The Tehreek-e-Taliban Pakistan (TTP) responded on 16 December 2014 with the infamous attack on the Army Public School in Peshawar in which 132 students were massacred. It is interesting that initially the operation was a unilateral Army decision with very reluctant civilian government support garnered after its commencement. However, the Peshawar school attack by the insurgents made it easier for politicians to support the on-going Army action. The terrorists unwittingly played into the hands of the Army by perpetrating this brutal and sadistic attack on school children.

The Army initiated and ratified a 20-point National Action Plan (NAP) to tackle terror, listing a number of initiatives with very ‘noble’ intent. One of the major initiative was the establishment of the Military Courts to try terrorists, facilitated through amending the Constitution as well as the 1952 Army Act. These courts entail the risk of irreversible miscarriage of justice with no recourse to appeal for the accused, a point that brings into question their legal veracity. There is only fragile support for the Military Courts and a number of religious groups are directly opposed to it. Reading between the lines it can be seen that the democratically elected civilian Government is now incapable of coping with the internal security issues that envelope the nation, especially the dissonance that comes with religious extremism, and has turned to the Army for assistance. The Army has used this situation to entrench its position in the body politic of the nation as an indispensable protector of its sovereignty.

The NAP is supposed to usher in a policy of ‘enlightened moderation’; and recognises the need to regulate the madrasas if the virulent tide of Islamic radicalisation that is sweeping the country is to be controlled and eventually reversed. However, other than the Military Courts that have started to function, the NAP so far seems to be a paper exercise. A lack of political will to follow through with the lofty ideals set out in the Plan is transparently visible. Further, with the ISI itself radicalised to a great extent the NAP is unlikely to bear any tangible result, irrespective of the intentions of the Army.

Currently there is a visible lack of support for liberal activists, who are being targeted at will across the country by the religious extremist elements, the right-wingers. Already embroiled in the Tribal region, the Army is unwilling and perhaps also lacks the capacity to effectively interference in this deteriorating situation. Lip service is all that is available at the moment to the liberal activists. In the latest disturbing development, the IS has made deep inroads in Karachi and some other parts of the nation. They exploit the historical fault lines of the Sunni-Shia rift and stock anti-Shia sentiment to which the State has so far closed its eyes. The anti-Shia sentiment seems to be legitimised by the Sunni Ulama religious organisation that has been State-backed since the 1950s.

Sectarian demagoguery is increasing in the entire nation. In Karachi, the Federal Government has initiated a drive against gangsters and terrorists, since 5 September 2013. The partial success of this drive has had unfortunate consequences in that it has provided increased space for the more radical Islamist fanatics to operate. Pakistan today is dominated by unconstrained religious extremism and the arrival of the IS into the mix increases the threat of sectarian violence exponentially. The politico-army arrangement provides only a tiny shimmer of hope in this darkness. Another fall-out of the military lead in securing the country is that the situation definitely diminishes the strength of civilian institutions, which can have long-term detrimental effects to Pakistan evolving into a truly democratic State. It looks as if the wheel is coming full circle in Pakistan with the relevance of democracy being covertly questioned. The only difference this time is that the Army is content to play the puppet master rather than perform on the centre stage.

Looking at the manner in which the elected Government and the Army is going about trying to secure the nation, it seems that Pakistan does not understand the need to institute radical change—it is still pursuing reckless policies without any thought for the security of the nation, and is being driven purely by religious ideologies and compulsions that have become entrenched in its body politic.

Pakistan – Afghanistan’s Challenge

Afghanistan and Pakistan have historical misunderstandings at the strategic level and continue to nurture them. The new National Unity Government in Afghanistan, led by President Ashraf Ghani, has made overtures to Pakistan to create a conducive atmosphere to usher in peace. An agreement on intelligence sharing has been signed between the ISI and its Afghan counterpart National Directorate of Security (NDS) with the aim of making Pakistan alter its policy towards Afghanistan. This is a simplistic approach from an inexperienced Afghan Government and has already cost the President political support at home. However, there is no getting away from the fact that Pakistan is critical to peace in Afghanistan, since the Taliban is dependent on Pakistan’s support to continue their insurgency. Pakistan’s Afghan policy is purely Army controlled. There is also a viewpoint that over a period of time the Taliban have gradually become more independent, especially after the withdrawal of NATO forces, and therefore, the influence that Pakistan has over their activities is in decline and exaggerated; although this change in the equation is something that cannot be categorically verified.

Almost immediately after signing the agreements, the Afghan President criticised Pakistan for not doing enough to reign in the Taliban who have refused to come to the negotiating table. In all this flurry of activity, of accusations and counter-accusations, a long term vision for peace in Afghanistan is not discernible. The activities are all at the tactical level and the political process that is critical to further peace initiatives at the strategic level cannot be detected. At the moment, the Taliban continue to move across the Durand Line, the de facto border between the two countries, at will in either direction with no effort visible from Pakistan to stop this cross-border incursions. Even China, Pakistan’s all-weather friend, has not been able to persuade it to take effective steps to stop cross border terrorist activities. In this confusing game of decision and indecision, the IS has been making steady inroads into the region.

As in most cases of terrorist activities emanating from its soil, Pakistan has maintained a completely different narrative regarding the Taliban in Afghanistan. Afghanistan had expected Pakistan to ensure that the Taliban would not start their customary ‘Spring Offensive’ this year, but Pakistan has not obliged. The Afghan-Pakistan relationship is fragile, to put it mildly. The distrust continues and last week Afghan lawmakers accused Pakistan of providing refuge to Taliban leaders on their side of the border. In turn Pakistan has resorted to its age old strategy of declaring that it has nothing to do with the Taliban and washing its hands off the entire issue. In comparison the original ‘washer of hands’, Pontius Pilate, would have been put to shame.

Underlying this charade is the fact that Pakistan considers Afghanistan as a contested territory with India, mainly for influence. After the September 11 attacks on the World Trade Centre, Pakistan was acutely aware of the need to keep on the right side of the United States, and accordingly resorted to double-dealing. On the one hand they train, promote and export terror and extremists, while also giving the impression of fighting them. Under these circumstances Pakistan is unlikely to force the Taliban into peace talks. The question however remains—do they have that kind of influence on the Taliban anymore? The double-dealing seems to have so far achieved its purpose, since the US continues to pump in aid to the country, while it continues to train and export terrorists.

The India Factor

Pakistan invariably accuses India for any mishap that takes place inside their country. The proverbial foreign hand is always blamed. So it is no surprise that Pakistan accuses the R&AW, of fomenting trouble in Baluchistan and the tribal areas, although no convincing evidence has been produced. Anti-India propaganda has been an on-going norm in Pakistan for decades and clever media strategies have increased the magnification of the allegations. The Army increases the pitch of the rhetoric whenever there is a need to muddy the waters when it becomes necessary to distract and mislead the domestic public opinion or to thwart foreign policy initiatives from India that is perceived as being against the interests of Pakistan. The recent case of the Army propaganda machine going into overdrive during the Indian Prime Minister’s official visit to China is an illustrative example. The move was meant to scuttle any rapprochement between India and China. An anti-India stance has always been, and continues to be, the one single focus of Pakistan in all aspects of its national interest.

The Blind US and All-seeing Pakistan

The US strategy—if it can be called a strategy—in its dealings with Pakistan has always been based on what the US wants to believe rather than on ground realities. The US wants to believe that Pakistan is trying to defeat and neutralise the Taliban, while in actuality the Taliban could not have withstood the onslaught of the US and its allies and continued as a fighting force without the active support of Pakistan. In Afghanistan the US is fighting the Taliban, who is being supported by Pakistan, who is a US-ally. What is going on here?

There is a long history of US appeasement of Pakistan, while Pakistan has been consistently undermining US interests in the region. Viewed dispassionately, it is not difficult to see that Pakistan is not a ‘problematic’ ally, but a cynical and manipulative nation serving its own purpose and nothing else. The fundamental flaw has been that in 2001 the US believed that Pakistan indeed wanted to be a responsible partner in the ‘war against terror’. In this blind belief, the US reimbursed Pakistan for its contribution to the war and set up the Coalition Support Fund (CSF) to pay for putative Pakistani support for NATO troops in Afghanistan. The CSF has already disbursed around $13 billion to Pakistan. A 2008 US Government Accounting Office report was scathing about Pakistan cheating regarding the accounts of the fund. However, the funds have not been abolished and continues to be used to ‘bribe’ the country to ensure that the Pakistan Army continues to stay and fight the insurgents in the Federally Administered Tribal Area (FATA). Who has ever heard of a nation getting paid by an external government to protect its sovereignty and integrity?

The fact is that Pakistan has been using the US supplied funds to buy arms that are meant to fight a conventional war with India and not an internal counter-insurgency conflict, and the US has turned a blind eye towards this misuse of international funds, provided in good faith. Since the World Trade Centre attacks in 2001 and Pakistan enthusiastically joining the war on terror, the US has transferred a large number of military equipment to Pakistan: One Perry-class frigate; 18 new and four used, nuclear-capable F-16 fighter aircraft; 500 air-to-air missiles; 1,450 2000-pound bombs; 1,600 kits to convert unguided bombs to laser-guided munitions; 2,007 anti-armour missiles; 100 Harpoon anti-ship missiles; seven naval guns; 374 armoured personnel carriers; and 15 uninhabited aerial vehicles. It would seem that the insurgents that the Pakistan Army is fighting in the remote tribal regions have developed extraordinarily potent air, naval and ground force capabilities. At least by US reckoning.

Pakistan has over the years carefully cultivated the perception within the US policy-making establishment that it is ‘too important to be allowed to fail’—built on the often mentioned possibility of nuclear weapons falling into the hands of terrorists, if Pakistan disintegrates as a State. This is playing on the inherent fear in some Western capitals. Further, Pakistan wages a selective war on terrorism, dividing the terrorists into ‘good’ and ‘bad’: the good ones being the groups that follow Pakistan’s instructions and export terrorism into neighbouring countries, principally India and Afghanistan; and the bad ones being the groups that create mayhem within Pakistan itself. It is easy to deduce that the principle tool of foreign policy for Pakistan now is terrorism.

Conclusion

It is time that the international community started to treat Pakistan as what it is—the breeding ground of terrorism. The US has to read the writing on the wall—however blind it may have become in the past 15 years. Accommodation and appeasement has run its course, with disastrous results both for US and its allies, as well as for Pakistan. It is time for the US to initiate a massive overhaul of policy and hold Pakistan to account not only for the enormous amount of wealth that has been poured into the nation, but also for its nefarious activities that have led to death of thousands of US and NATO troops. This policy has to be fully rooted in sober realism and an understanding as well as acceptance that it was US-supplied funds that were directly used to resource the current Pakistani terrorist and nuclear capabilities. Any other course of action will be an affront to the free-thinking people of the world. Pakistan, the land of the pure, is playing a catastrophic game of deceit and is not so pure and innocent as it likes everybody to believe. Even in diplomacy there are certain times when a spade must be called a spade.

*Sanu Kainikara—Canberra-based Military Strategist; Visiting Fellow UNSW; Distinguished Fellow IFRS
First Published 22 June 2014 in Blog www.sanukay.com

The post Pakistan: Stuck In A Cul-De-Sac – Analysis appeared first on Eurasia Review.