Narendra Modi, Beyond 2012: Practical Considerations

Before I get on with this blog post, let me be very clear and transparent here by stating that I am a staunch supporter of Mr. Narendra Modi. However, this blog post is not about telling skeptics “I told you so” but to ponder on some practical considerations that will play a role in charting Mr. Modi’s future course. It wasn’t a surprise even to the most vehement opponents of Mr. Modi (notably Tehelka and The Times of India) that he would come back to occupy the post of Chief Minister for the third consecutive time in Gandhinagar. His win was a foregone conclusion that was accepted by all. Therefore, in absence of the question of whether the Bharatiya Janta Party would win, the pundits had to pick up on another question. That question being how many seats would the BJP garner in Gujarat. Some speculated whether there would be a prerequisite in terms of number of seats which would absolutely be required for him to be immediately catapulted to the centre in a “national role” for the BJP. This question was simply, in my opinion a rather desperate attempt by especially, the electronic media to fill the airwaves with some topic of discussion in view of the fact that they had no room to discuss and speculate as to who the winning party was going to be. The fact known by most Gujaratis (irrespective of who they vote for) is that Mr. Modi does indeed harbour ambitions for a national role in politics with his eyes set straight on the “throne” of becoming - the Prime Minister. It is believed that it is only a matter of time when he actually “spills the beans” and makes an explicit announcement for his move towards his prime ministerial ambitions. Assuming that “belief” to be correct let me now start pondering on some issues that are likely to crop up in Mr. Modi’s path to national leadership. While I would love to see him sitting in the PMO, there are some pretty tricky hurdles for Mr. Modi to leap over before he even becomes the official and declared face of BJP’s 2014 candidate for Prime Minister. Firstly, Mr. Modi would need to manage and consolidate his position as a prime ministerial candidate within the ranks of the BJP itself. It is widely believed that there is internal opposition to Mr. Modi’s proposed candidature coming from various regional BJP leaderships. Contrary to popular belief, the BJP ruled governments in states such as Madhya Pradesh and Chhatisgarh are doing reasonably well under their local leaderships. It would not be illogical to assume that these arms of the party would like to project someone from within their own ranks for a national role. Admittedly, the chances of that happening are quite low. However, with regional elections coming up in states like Rajasthan and Delhi in 2013 where BJP is the primary opposition to the ruling Congress, the chances of a local leader from these states coming up with national aspirations cannot be ruled out in case of a BJP victory. There is also the big question of whether Mr. Modi would make it past the current top leadership of the BJP for the top spot. Senior leaders like Sushma Swaraj, Arun Jaitley, Ravi Shankar Prasad and the like have been waiting in opposition since 2004 when the BJP lost the general elections to the Congress led UPA, to get a shot at the top spots. Would Mr. Modi make it past these top barons? Only time would tell. Secondly, if Mr. Modi does make it past these hurdles and gets consensus for the prime minister’s job, there would arise the question of his “acceptability” as a PM candidate amongst the BJP’s NDA allies. The NDA kitty consists of other regional parties who are sensitive to their own constituencies to Mr. Modi’s appeal, especially to Muslims. When it comes to Muslims, Mr. Modi is probably the most divisive figure in this country. Whether that image is deserved or not is a completely different story but it is a fact that Mr. Modi’s projection as PM would probably drain several Muslim votes from these allied parties as well as from the BJP itself who would otherwise have voted for them. That is primarily the reason Mr. Modi would be a tough pill to swallow for the allies of the NDA as a PM candidate. Nitish Kumar of Bihar has already made it clear that he wants NDA to promote a “secular” person as PM candidate, clearly a dig at Modi who is perceived by most (I think wrongly) as not secular. Although Mr. Kumar’s government in Bihar would not be possible without BJP support, it is interesting to note that an NDA government at the center without the Mr. Kumar’s JD(U) would be short lived at best. Thirdly, in event of Mr. Modi becoming the prime ministerial candidate for the NDA after surpassing the aforementioned odds, it would be interesting to see how the average Indian voter responds to Mr. Modi’s appeal as a possible PM. It is well documented that a significant of young voters (ages early 20s to mid 30s) and first time young voters (below 20) are positively responsive to Mr. Modi’s appeal as possible future PM. In recent polls and surveys done by mostly pro-Congress publications and channels like India Today and Headline Today, it was shown that Mr. Modi’s image as PM resonates among a large number of India’s young population which incidentally makes up a significantly high number of the voter base come 2014. However, his appeal amongst minorities, especially Muslims remains lackluster at best. The Muslim voter could well prove to be the “swing voter” come 2014 in case “Hindu India” strongly backs the NDA. Fourth and most important (though rarely thought of) is the point of what would be the fate of a central government under Narendra Modi as prime minister. Even if he manages to get the top job, would the BJP have the numbers to sustain a coalition that can complete a full term. Given the current political climate in the country, it is easy to figure out that Indian politics will become more and more concentrated in the states rather than the centre which will devolve into a “quasi-federal” and “semi-weak” centre. Mr. Modi runs things efficiently in Gujarat because he has a 2/3rd majority in the state assembly and can do what he very well pleases to. That would definitely not be the case in the centre even if the BJP manages to get a landslide in 2014. Dependence on smaller allies would compel the BJP to be more receptive of them and heed their demands. It would not be an as efficient show as in today’s Gujarat. It would also be a bit out of character for Mr. Modi who is used to doing things single handedly and rather swiftly. These are in my views some practical considerations that would need to be made by the BJP and Narendra Modi before the 2014 elections. Their collective aim should not be to just get to power, but to retain it for a full term. Can it be done? I have my fingers crossed! Mitul Choksi Ahmedabad, India December 21, 2012

The Trouble Brewing in East Asia

The Indian Prime Minister Manmohan Singh recently visited the Cambodian capital Phnom Penh to attend the meeting of the ASEAN (Association of South East Asain Nations) of which it is an observer along with other observer including China.

The gathering of the “ASEAN+” as I like to call it assumed much more importance than the other jargon filled yawn inducing meetings of this rather successful East Asian trade group. The primary reasons being the current disputes various ASEAN members are having with China over maritime borders claims and the China’s disputes over some islands with Japan.  The aggrieved with which China has maritime border disputes include Vietnam and the Philippines. Vietnam shares a tense history with China in the past over similar disputes whereas the Philippines is clearly wary of the rising Asian juggernaut whose economic and military power have rapidly risen over the past decade and a half. The Philippines and Vietnam also share close relations with China’s geopolitical adversary, the US, which makes this issue even more prickly.

The US perceives China as a soon to be (if not already) rival power that will soon compete against US interests in regions that have been traditional US or western strongholds especially in East Asia and Africa. The ability to dominate East Asian waters assumes critical importance to a world power primarily due to the fact that a substantial amount of world trade passes through these waters. Therefore the ability to dominate such waters would assume critical importance in case of war where a simple blockade would cut off the enemy from essential supplies.

There have been reports in the media recently over the fact there might be significant amounts of recoverable fossil fuel in the South China Sea making it an attractive location for oil companies for offshore drilling. Whether the fossil fuel really exists is a moot point. The ability to dominate the world’s busiest trade routes would provide a much better dividend than a few million barrels of oil could provide any day.

The ongoing dispute over a chain of nearly uninhabited islands in the South China Sea between South Korea, China and Japan are clear indicators of these facts. South Korea and Japan are key American allies with heavy American military presence in both countries. China sees disputes between itself and these two American allies as an American attempt to continue its dominance in East Asia via its proxies.

China, aware of its emerging stature in the world throughout the last decade and half and also its inevitable geopolitical confrontation with America has been doing its bit to prepare itself for all this. The increased focus of China’s armed forces to develop a powerful navy is an obvious byproduct of this process. It has been preparing a large fleet of nuclear powered submarines, frigates, destroyers since the early 2000s. It recently acquired an old Ukranian aircraft carrier which it now has retrofitted and added to its ever increasing naval fleet. China is one of the few countries in the world that possesses the “nuclear triad” viz. the ability to deliver a nuclear attack via land, sea or air.

All these “developments” point to a very troubling and tense geopolitical atmosphere in East Asia and beyond. Globalization has made war the most dreaded and least preferred method of solving a problem. But even if these countries do not go to war, a tense relationship could have significant impacts, not only on themselves but also on all ASEAN members and their non ASEAN neighbours with which they share commercial ties.

A tense relationship would mean the hurting of interests of one member country in another as witnessed by the anti Japanese demonstrations in China over the last few months and similar (if not more subdued) anti Chinese demonstrations in Japan. Sales of Japanese companies like Honda which are otherwise extremely popular in China have nose dived after the island disputes started. Even Japanese factories have been attacked in China, sometimes even with tacit state encouragement.

This was just an example. A string of multilaterally tense relationships in the region do not fare well for the people of these countries considering the fact that a large number of the ASEAN economies are highly interdependent as a result of globalization with supply chains spread across different countries to leverage the benefits accruing from a low tariff environment which in turn leverages cheap labour available in some member countries like Philippines and Vietnam.

Similarly, non ASEAN states which trade heavily with ASEAN states could suffer. Internal conflicts of the ASEAN could in turn affect trade with other countries like India, Russia and even China who trade substantially with member countries. Export dependent economies like Taiwan, could suffer even more than others.

I shudder to think how the world markets would react (with obvious and tremendous negativity) to even a sniff of conflict in the region. The first casualty of a conflict would be global trade as trade routes in the region would suffer having a cascading effect on almost all major world economies. A global financial panic would probably ensue, eroding trillions of dollars of value for a substantial number of  investors in all major stock markets. Commodity prices would increase as fear of war would bring on hoarding of essential commodities by nations anxious of further price rises. This would not bode well for the world at large which is barely getting out of the global financial crisis of 2007-08.

If the US, due to any reason would decide to enter such a conflict, we would surely see a much bigger and global war. That is something which is not at all in world interests.

But the solution to this is very simple (and complex at the same time!). Be Reasonable.

It would be of paramount importance for ASEAN leaders to maintain cool heads. Guns do not need to be involved in solving disputes. There are scant problems that cannot be solved with diplomacy and goodwill. The issues of the South China Sea, its oil and the islands can be solved by serious negotiations by all sides concerned. Neutral members from ASEAN or even outside interlocutors from countries like India, Russia or the EU might broker an agreement to the satisfaction of all sides. As for geopolitical posturing by rival powers, it is frankly inevitable. But there are subtler ways in which to project power than pointing guns at others. America and China can learn something from Japan and India in this case. Japan and India are probably the biggest exporters of “soft power” in the world. Its about time, America and China learned the craft of making that export. Or else, they threaten the world down the path of global conflict or internal decay on the lines of the Soviet Union.

As for India’s role, there are few countries in the world that have the (rather extreme) cool heads of Indian leaders when it comes to any kind of disputes. This cool heads can be leveraged to mediate between disputing sides. Our neutrality on most global issues is mostly frowned upon but comes as an asset when trying to stop a conflict between others. India might be a lot of things but it is certainly not biased on global issues and does not punch above it weight in the global arena. Its time to use such a tense multilateral situation to solidify the former impression and rectify the latter. It would be in our nation’s long term interests and by extension to that of the world as well.

Mitul Choksi
Ahmedabad, India
November 24, 2012

The Need for an Independent Media Regulator

Politics, they say in India, is the worst of all evils. Yet, it is considered to be a necessary evil. Indian democracy though seeming almost always in disarray is one of the biggest reasons for our nation’s physical, intellectual and economic strength. Even the harshest critics of our political system would agree with that. 

What I said about politics above would also be applicable to the Indian media. It is a key pillar of our democracy which is enshrined by the basic right of freedom of speech and freedom of expression. It is a vital organ of a vibrant democracy. But, it too appears to be completely in shambles riddled with more or less the same problems that our government is facing. Infighting, propagation of baseless claims against almost anyone, extreme polarization, bullying in the form of blackmail by what some label as the “media mafia” and “paid” (read corrupt and mostly incorrect) news for select political or business entities. These are some of the myriad sets of problems plaguing the media today. 

What can be done to alleviate these problems? A simple answer to this question in my opinion would be to have a independent media regulator in this country. Now, we do have existing regulators for the media but these regulators are practically arms of Information & Broadcasting (I&B) ministry and therefore are clearly not independent in any sense of the word.

What the media requires is something more on the lines of what the Reserve Bank of India (RBI) is for the banking sector. The RBI is a statutory body established by an act of parliament which is totally independent from the government and free to make its own decisions in relation to its primary objective of regulating the banks and inflation targeting. Yes, I know some would say that even the RBI is not totally independent and is in times in cahoots with the government. But the RBI is the best example of what a media regulator should be based on in terms of operational and strategic independence. 

The regulator also needs to be kept as far as possible from government meddling. If not, it might as well be an arm of the I&B ministry! An advisory board made up of members of civil society like university deans, professors and even retired media personnel to name a few could be nominated to the board in order to ensure that a balanced weight is employed in the selection of various topics as news. This would help stop the sensationalization of certain news directed towards or against some person or entity. This would also help ensure that certain information that is never openly accessed or accepted as being news (whereas it really is news) is brought forward in front of the nation and the world.

An independent media regulator would have checks and balances in place to make sure that “paid news” is only restricted to advertisements and not to to shadow advertisements in the forms of “expose’s”, “stings” and “special features” on some unsuspecting individual, organization, country or party. This is the bane of media today (especially TV) which has led to a strong polarization in the country towards and against certain media outlets which are keen to portray only one side of the story and conveniently neglect the rest of it. Attacks on media personnel on social networks like Twitter and sometimes even on the streets are getting all too common these days and this trend of paid media is one of the primary reasons.

Another aspect that might be curbed via the establishment of an independent media regulator would be the blackmail techniques employed by almost all media houses (print and electronic) to extort money from people from all walks of life in order to publish or not publish certain information that might be detrimental to their social or economic interests. This kind of immoral behaviour has led to the mass media being compared to criminals, prostitutes or worse in fiction and in the independent media.

Just like the Lokpal was meant to be a weapon against corruption and a tool to regulate the activities of politicians, the media regulator would be a check on the mass media of not stepping beyond certain boundaries and remaining and working as desired in the framework of our constitution. 

Special care needs to be taken though of making sure that the regulator does not become a “Big Brother” of sorts and deprive the media of the independence that is regularly requires. The biggest danger of having a media regulator is making sure that it does not get infiltrated or even influenced by politicians or their proxies. If that would happen, then the entire media landscape would change and harp back to the horrible conditions that we find ourselves in today with various media outlets practically being in the pockets of big business and politicians. 

All in all, the regulator’s job would be like a tight balancing act with its duty to balance the media’s coverage and at the same time ensure its independence and unbiased attitude.

Let’s hope that such a day actually comes.

Mitul Choksi
Ahmedabad, India
29-Oct-2012

A Bank of BRICS?

Since the inception of the term “BRIC” nations was invented by a Goldman Sachs employee back in 2003, there has been a lot of hoopla about the rise of the emerging BRIC nations viz. Brazil, Russia, India and China. A new member to this club – South Africa, was added a few years ago to make the club sound even stronger as “BRICS”, the S standing for South Africa.

These nations stand out as different from the other emerging nations primarily because of their rapidly rising populations (except Russia which actually faces a decline), high growth rates as compared to the developed nations and most importantly their newly found economic dynamism. There is no doubt that these five emerging nations have done pretty well for themselves in the first decade of the 21^st century and still continue to do so, albeit at a comparatively slower pace. They also share a more or less similar timing at which they started on this rapid rise. Russia adopted market based capitalism after the fall of its predecessor state – The Soviet Union in 1991, China really picked up its already liberalized market to a pace of progress previously unheard of after the Tiananmen Square massacre of 1989, India let go of its self-imposed shackles after the Balance of Payments crisis of 1991, Brazil re-structured itself after the currency crisis of the early 90s and South Africa was finally accepted back into the international fold after the end of apartheid in 1994.

Despite so many common factors and similar historical incidents shared by these nations and the escalation of their impression as an “emerging” power bloc on the world stage to counter the historical dominance of the western powers the BRICS countries still remain a loose and ragtag sort of coalition of nations brought together by global media hype rather than common interests. This weakness was evident when these countries were unable to come to a consensus on nominating a candidate for the presidency of the World Bank, a position on which America’s hegemony reigns supreme.

At a recent BRICS summit in New Delhi, the BRICS leaders made a call for a new BRICS bank which would aid development in these countries as well as other poor nations of Asia, Africa and Latin America. This announcement rekindled media speculation about the BRICS emerging into a power bloc to counter the west.

In my opinion, this is more wishful thinking than anything else. Let us go a bit deeper into the actuality of this situation and forget the media hype for some time.

First, let us consider the basic definition of a power bloc. A power bloc is basically an association of nations that project their combined political, economic (and in some cases even military) power as a single unifying force in order to achieve a common advantage. By this metric US-NATO and the former Warsaw Pact nations of the Eastern Bloc can be considered to be power blocs. Another property shared by most power blocs is that most nations in these blocs are neighbors or in the same region. Bloc members have intertwined economic interests, similar cultures and very little (if any) internal animosity amongst themselves. Moreover, a power bloc generally has only one (or rarely – two) major power leading the rest. The US-NATO relationship has the USA has the major power and the Warsaw Pact was led by the erstwhile Soviet Union. All these features are clearly absent in the BRICS at this point of time.

I agree that the manifold increases in bilateral trade amongst the BRICS have brought about an unprecedented integration of these economies compared to say 20 years ago. But, the level of integration in terms of economic interests is still not mature enough. Each of these countries has extremely distinct cultures and “ways of life”. Each nation is in geographically diverse regions in the world (even though India and China and China and Russia share common borders they are in distinct geostrategic regions of the world).

With the difference in geostrategic regions come differences in geostrategic and long term interests. For example, Brazil would not be too keen or interested in the solution to the India-Pakistan Kashmir dispute, nor would Russia be too interested in increasing racial harmony between blacks and whites in South Africa.

Another impediment to closer integration would be internal disputes between bloc members. Classic cases within BRICS include the Siachen and Arunachal Pradesh border issues between India and China and the mini Cold War going on between Russia and China about the “Great Game” in Central Asia which has historically been Russia’s backyard but now is slowly becoming China’s. Inevitably, such conflicts of national interests supersede the supranational interests of a BRICS body if it would ever come into existence. China would definitely not be happy (or agree) with India’s application for a loan to build infrastructure in Arunachal Pradesh which China considers its sovereign territory. Issues over Tibet would assume similar proportions on the supranational scene.

At the other end, if these countries do become somewhat idealistic, rise to the challenge and think long term the BRICS Bank could actually become a tremendous step towards development throughout the world and actually have a shot at challenging western dominated global institutions like the World Bank and IMF. The development of such a body would also shoot countries like India and Brazil which (rightly) deserve a permanent berth at the UN Security Council to their goal in the right direction. A BRICS bank would also increase by leaps and bounds the social, political (and even military) integration of these nations on an unprecedented scale. A BRICS bank would also facilitate to shift the dependence of developing nations worldwide from the US Dollars to something like a basket of BRICS currencies.

For all this to happen, disparities in economic conditions have to be reduced to a point where such a structure is actually feasible. Brazil, Russia and South Africa are middle income nations in terms of per capita GDP whereas China and India are middle income countries at best. Brazil and Russia are net commodity exporters whereas India and China import the same commodities in large quantities. Synergies between such situations can also be engineered, but for that to happen a lot of political courage is required on part of all these countries. Sadly, political courage is lacking everywhere these days.

To summarize, conventional wisdom is against the formation of a BRICS bloc or a BRICS bank, but if it indeed does materialize, then we can look forward to a golden era of integration between these countries which ultimately benefits its citizens the most. For nearly 40 percent of the world’s population, that would not be a bad deal.

Mitul Choksi

23-April-2012

An Amateur Economist's Solution to the Euro crisis

It now seems to be every other week that we see a coordinated crash in various stock, currency and commodity markets around the world with various indices ranging from the Nikkei, Dow Jones, Hang Sang and FTSE to the quaint Baltic Dry Index (a shipping index) blinking in red while only occasionally treading towards the greener side. People of all sorts from different trades ranging from stock market "analysts" to self proclaimed investment gurus, pundits and even politicians routinely parade the screens of news and business channels, screaming for their views to be heard on the latest cause of the recent crash.

It turns out, there is a pattern to these market crashes and screaming analysts on TV. They've mostly been about the looming crisis in the 17 member Euro zone. Besides baffling me at times, it also makes me a bit upset on seeing this same pattern keeping on repeating due to reasons as quaint as the Greeks asking for political leeway for making the latest round of cuts to get their next bailout fund of a few billion Euros to the fear of what might happen if the Spanish worker's union call a strike to protest against a small change in their country's horrible labour laws. While analysts and pundits have an opinion on what might happen if the strike lasted too long or what if the Greeks opted for a referendum on some trivial issue, it seems no one has an answer to address the main problem - whether the Euro zone will survive as it is today or eventually break up into some washed up, has been currency union of a few northern European rich countries.

Most analysts, the media and even most governments shudder to even think much less discuss the possibility for an exit of Greece (or by extension Portugal, Ireland and Spain) from the euro zone. The reason for this fear is the perceived chaos resulting from such an exit.

In the event of an exit of even one country from the euro zone I agree, there would be chaos. But the thing to ponder about is whether the chaos and breakup will bring result into a stronger euro zone in the future or herald in a European "financial nuclear winter" that will throw the continent into a decade long depression and the rest of the world into a more severe version of the Great Recession.

Lets be clear on one thing before I get to the core of this post. The trillions of euros worth of financial engineering being tried by the European Central Bank (ECB) to recapitalize European banks and the creation of a European "Super Fund" of roughly Euro 500 Billion to act as a financial firewall in case of a severe financial storm is hardly enough to defend European finance ,if indeed a member country like Greece decided to (or forcibly had to) exit the euro.

As a self proclaimed amateur economist, I have come up with my own little scenario of what it would be like if Greece did indeed exit the euro zone.

• A surprise announcement is made by the Greek government over a weekend about its decision to exit the euro starting the coming Monday.
• A new rate of exchange is declared of the new Greek drachma against the euro. The new exchange rate is devalued immediately against the euro and other major currencies.
• All bank deposits are renominated from euros to the new drachma
• Tight capital controls are introduced to stop the outflow of money outside the country
• The Greeks use existing euro notes rubber stamped as a temporary hard cash equivalent to the new drachma until the new drachma notes are brought into circulation. The rubber stamped euro notes are swiftly phased out
• Strict border checks are imposed to restrict the outflow of unstamped euro notes outside the country
• Banks and financial institutions are given time to update their software in order to phase in to the new drachma

While this plan sounds simplistic enough, it would take a tremendous amount of political courage to implement it. It would also face a lot of challenges once its implementation is started.

• The implementation of this plan will almost immediately lead to severe financial chaos, rise in crime and bankruptcies.
• Legal nightmares will obviously follow
• Entities involved in cross border transactions will face a great deal of uncertainty (read: losses) as the values of their assets and liabilities would severely fluctuate.
• The introduction of a new currency would raise doubts of not only Greece's ability to borrow from the international markets but also severely affect the borrowing capacity of strained euro zone economies like Portugal, Italy, Spain and Ireland.
• A loss of confidence in the euro due to the Greek exit would start a scramble for other relatively "safe" currencies like the US Dollar, Swiss Franc and the Japanese Yen as holders of the euro dump it in favour of these currencies. As most global trade is invoiced in US Dollars, the fluctuation in the dollar's exchange rate could cause severe exchange losses to global exporters and importers sending an already weak global economy into a tailspin.
• The most dangerous outcome of this entire ordeal would be the rise of a new question - Is the euro viable?

That question comes with a whole Pandora's box of its own challenges which are not under the scope of this post. If another country like highly troubled Portugal or Ireland left the euro, then it would certainly be curtains for the euro "as we know it" and the start of a global depression. Whether the euro would survive as a rich country (mainly northern European countries including France, Germany, Netherlands, Belgium Luxembourg, Austria, Finland and eastern European countries including Slovakia and Slovenia) currency union

Its amusing and scary at the same time to think that a country like Greece with 2% of the euro zone's GDP can hold the financial stability of the planet at ransom! It is also a lesson for future economists and planners who fathom of creating a common currency anywhere else in the world. Nevertheless, the danger Greece poses is absolute and true. Lets hope that the analysts, media and governments come to realize that and shake their legs.

Mitul Choksi

April 8, 2012

US-Pakistan: From Friends with Benefits to Frenemies

It has been a tumultuous and turbulent relationship at best. I am referring to the relationship between the United States and Pakistan. Before we get into the current nitty-gritty of the relationship let us take a look back at the history of the US-Pakistan relationship.

The relationship initially started to warm as Pakistan’s arch rival India adopted the socialist model of development and started to lean towards the Soviet bloc while maintaining an official stance of neutrality under the Non Aligned Movement (NAM). This automatically made Pakistan a natural ally of the US in the then prevailing Cold War paradigm. The relationship warmed even more during the 1971 India-Pakistan war which resulted in the secession of East Pakistan to form Bangladesh. The Indians signed a 20 year Treaty of Friendship with the Soviet Union which included all sorts of economic and military assistance between the two countries. The US was naturally alarmed by this treaty and the creation of Bangladesh which it suspected would lead to India’s hegemony in the South Asian region under the aegis of Soviet support.

This US fear was compounded multiple fold in the last 1970s as the Soviet Union invaded Afghanistan with massive force. The Americans fearing a Pakistan sandwiched between a Soviet controlled Afghanistan and Soviet friendly India pulled out all stops and used Pakistan as a springboard to train and finance Islamic mujahideen (Warriors of God) to fight Soviet forces in Afghanistan. During this period from the late 70s to the late 80s till the Soviets left Afghanistan, Pakistan became a staunch American ally reaping tremendous benefits in the form American civilian as well as military aid.

As soon as the Soviets left Afghanistan, the US-Pakistan relationship took a big U-turn and sank to all time low levels as the US pressed sanctions on Pakistan for what it suspected to be experiments and research for getting nuclear weapons. The US knew that Pakistan was working for the development of nuclear weapons but turned a blind eye during the Soviet-Afghan war. This sudden turnabout by the US did not sit well with the Pakistani public in general and led to a fervent rise in anti-Americanism in Pakistan.

Fast Forward 10 years to 2001 and the tragic 9/11 bombings of the World Trade Centre in New York. The US invades Afghanistan and once again needs the help of its ‘old friend’ Pakistan in order to target Taliban and Al-Qaeda targets in neighbouring Afghanistan. Of course, Pakistan lets the US use its military and air bases and other infrastructure including land supply routes for American forces to fight in Afghanistan in lieu of American aid. This time the aid is much more than during the Soviet invasion and runs into billions of dollars in financial and military aid.

Fast Forward another 10 years to 2011. The US has by almost any stretch of imagination failed in reining in Afghanistan (aptly known as the Graveyard of Empires) and transform into a civilized society of the 21^st century. The US has also lost its once immense goodwill and financial clout fighting two wars and crashing its economy in the global financial crisis. Unrelenting unmanned drone attacks by the US in the border areas of Pakistan-Afghanistan has added fuel to the fire of anti-Americanism in Pakistan. A Pew research poll conducted a few months ago showed that only 12% of the Pakistani public held any favourable views of the US. After the drone attack in late November, it seems an even lesser number holds such views.

The Pakistani public is caught between a rock and a hard place. An overwhelming majority hates America and feels that only the army, the bedrock institution responsible for making Pakistan stay in one piece can make things right. It is globally acknowledged that the nominally civilian government is just that –nominal, and can take no concrete decisions on any matter of significance without a nod from the Army HQ in Rawalpindi. The army realizes that no matter what happens, they cannot survive for long without American support in their long term “undeclared war” against giant India which outguns them in all aspects from economic as well as military aspects. The Americans on the other hand know that they don’t stand a chance of getting anywhere their desired targets in Afghanistan without active support from Pakistan.

The recent strike by a NATO drone which killed 24 Pakistani soldiers near the Afghanistan-Pakistan border has infuriated the Pakistani public further and also managed to infuriate the Pakistani administration which replied to the attack by stopping all transit routes for supplies to ISAF forces in Afghanistan. The Pakistani government also ordered the Americans to leave the airbase in Baluchistan province that was used to launch such drone attacks. The US in retaliation has threatened to stop all aid to Pakistan. All this has no doubt made the already deteriorating US-Pakistan relationship an awful mess.

The once Friends with Benefits have now turned to Frenemies. Let us hope that it does not get worse than that.

The Proposed Division of Uttar Pradesh

I have to be honest here. I never thought that Mayawati could do any good to her state or the country when she assumed command as Chief Minister of Uttar Pradesh in 2007. Even though she had achieved a remarkable feat by obtaining a simple majority in the legislative assembly (the first time such a feat was achieved after the Rajiv Gandhi era) I remained skeptical of her.

And until yesterday I carried the same feeling with me. How did my opinion of her change?

Mayawati officially proposed the plan to divide Uttar Pradesh into four smaller states so as to achieve efficiency in basic governance areas like law and order, bureaucracy, public services and similar other avenues in which Uttar Pradesh has been historically backward compared to even other backward states like Rajasthan and Madhya Pradesh. The four states would be named Paschim Pradesh, Poorvanchal, Bundelkhand and Awadh Prant

While some people would look at this announcement with skepticism as it came before a crucial state election in March 2012, I think that this might be the single greatest event in history of Uttar Pradesh since independence.

Why?

It’s quite simple. Uttar Pradesh is the one of the largest and most heavily populated states in India with a population of nearly 20 crore (200 million). With that kind of a figure it has a greater population than the whole of Brazil! Clearly, this makes Uttar Pradesh one hell of a challenge to be managed effectively. The current scenario is proof of that with Uttar Pradesh trailing in almost all development indicators from poverty, unemployment, industrial growth, new investment, crime, women’s education…. The list is endless. It is clear that the sheer size of this state makes it unmanageable coupled with the already comparative backwardness of the state to all other large (and even some smaller) states in the country.

Skeptics of this proposal would no doubt question the timing as this proposal comes in the wake of state elections in Uttar Pradesh due in March 2012. Mayawati and her Bahujan Samaj Party (BSP) evoke a mixed feeling in the state with allegations of corruptions and reverse caste discrimination in the favour of ‘lower’ castes. Her so called ‘grand gestures’ of building large and expensive monuments of herself and her now late former party boss Kanshi Ram at the expense of the state exchequer have attracted allegations against her of creating a caste based (mostly lower caste) Cult of Personality of herself. During her tenure, crime which has always been a serious problem in Uttar Pradesh compared to any other has skyrocketed in certain areas making her draw even more criticism especially from the ‘urban’ types and the liberal media. A strong nexus of crime, political patronage and violence and corruption have scared away most new investment projects from the state in addition to the already existing ones. Infrastructure shortages from horrible roads, a bipolar electric grid and low quality (and in some cases completely nonexistent) public services have done nothing but to abate the flight of investment and industry from the state.

While I agree with that, it does not make a political Einstein to understand what benefits this division will give to the people of Uttar Pradesh and India.

The division would enable the newly created smaller four states to achieve a level of competency in governance and public services which are just not possible in the current single behemoth state. The division would create a lot of new government jobs in the new states as certain institutional structures of government will have to be created for each state. The most important benefit to the national scene will be the disproportionate power that Uttar Pradesh has always had since independence. The power of strongly influencing politics at the Central Government with 80 Lok Sabha seats. This disproportionate power has always led to the saying that “The road to Delhi goes through Uttar Pradesh”. This power will cease to exist by the division as no one state would then possess the power to have undue influence on Central politics.

My answer to the division skeptics who say that Uttar Pradesh will not improve after the division is to look at neighbouring Uttarakhand. Uttarakhand (formerly Uttaranchal) was separated from Uttar Pradesh in 2000 as a separate state. Since then, the difference between the two states can only be explained by the word “stellar”. Uttarakhand rose from a muddy backwater region of Northern India to become one the best governed states in North India after Himachal Pradesh. Today, Uttarakhand ranks above Uttar Pradesh in all major development indicators from poverty and healthcare to women’s rights.

Those are my two cents on this issue. I will like to hear from all of you.

Mitul Choksi

16-November-2011

Ahmedabad, Republic of India

Steve Jobs and the "Think Different" Perception of Apple

To steal a line from Stanley Wolpert about the founder of Pakistan, Muhammad Ali Jinnah, I would like to quote a line that explains what Steve Jobs meant to the field of computing.

"Few individuals significantly alter the course of history. Fewer still create a groundbreaking technology. Hardly anyone can be credited with creating an industry. Steven Paul Jobs did all three."

Most people know Steve Jobs and recognize him as the “Apple Guy” or the guy who made the iPod, iPhone or iPad. That’s most people for you with their general description of even the most iconic of figures.

But I recognize Steve Jobs for something else. I recognize Steve Jobs as the man who basically took an idea that he had and changed the world as we know it.

I recognize Steve Jobs as someone so passionate that he infects others with the passion for his work. Nowhere else have I seen people lining up for days in front of a store to buy a newly launched phone! Nowhere else have I seen people line up for days to buy a touch screen computer which by technological standards was more than ten years old! Nowhere have I seen users of products literally fight with users of other products over a discussion of who has the better product (Mac v PC)!

Nowhere have I seen normally sane and sophisticated people behaving like perspiring teenagers in a technology conference to the arrival of a company’s CEO!

Nowhere have I seen the resignation of one man from one of the largest companies in the world to lead to a 5% drop in share prices!

Incredible you may say. I say it is iNcredible.

That is Steve Jobs at work.

Love him or hate him, Steve Jobs will always be irreplaceable. He brought that charisma, that passion and that special “Jobs” factor to the table. Everything intangible in him brought tangible gains to his company and an unprecedented change in the perception of people towards entertainment, communications and computing. That in itself was revolutionary.

Now, Steve also had a nasty side like his over bearing nature towards subordinates when it came to perfection and performance. His overemphasis on positioning Apple products as superior and premium to everyday run of the mill products made Apple stay a tiny player in the personal computer market.

But in the end he did prove to everyone that he stood for what he said and preached – Think Different.

Apple, today is different from the rest and probably the best at what it does due to one man – Steven Paul Jobs.

Thank You Steve.

Mitul Choksi

Ahmedabad, Republic of India

Steve Jobs @ Apple

Apple Inc., the maker of the famed iPod, iPhone, iPad and of course the Macintosh computers announced today that its long time CEO, the charismatic Steve Jobs has resigned from his post yesterday. Mr. Job’s reason for leaving were not specifically cited but is widely believed to be due to his medical condition. He has nominated Mr. Tim Cook, the Chief Operating Officer to replace him as CEO.

This little piece of news has shaken the tech industry and tech users alike. Steve Jobs cofounded Apple Computers in 1975 along with his friend the lesser known Steve, Steve Wozniak and thus gave birth not only to a company or a technology, but to an industry.

Steve Jobs was responsible for launching the famous Macintosh in the mid 1980s which even then was known for its “different looks” which made it stand apart from the rest of the competition. Mr. Jobs also introduced the concept of the mouse based Graphical User Interface (GUI) which he borrowed from Xerox Corporation at the time and brought it into the public sphere. What happened after that to the personal computer (yes, the Macintosh for all uses and purposes except marketing is a personal computer) industry is history.

After being booted out of the company in 1985, Mr. Jobs founded NeXT, a computer platform aimed at the higher education and business markets. He was also responsible for the incredible rise to fame of Pixar Animation Studios which was subsequently bought by The Walt Disney Company.

But Mr. Jobs’ greatest fame came after his return to Apple in 1997 when he was appointed as the CEO in a then floundering company badly in the need of his iconic vision. He was criticized in the beginning of his second tenure by hardcore pro-Apple anti-Microsoft loyalists when he secured Apple’s financial health by asking Microsoft for a cash infusion of $150 by investing in non-voting stock. Little did everyone know that that was the beginning of Apple’s Golden Decade.

In 1998, Mr. Jobs helped Apple launch an “extraterrestrial” looking desktop – the iMac, which integrated the CPU and monitor into a single box.

In 2001, Mr. Jobs launched Apple’s groundbreaking MP3 player – the iPod which took the then highly fragmented portable digital music player by storm. Mr. Jobs’ iconic vision was in display when he tied the iPod to Apple’s new music management software iTunes, which not only managed one’s music but also incorporated a new music store which enabled users to download individual songs at rock bottom rates ($0.99 a track then). Thus, in a single stroke, Mr. Jobs’ not only launched a legendary product, but also tied it to an innovative service which enabled Apple to have a monopoly on all media added on to the iPod and also played a tremendous role in curbing then rampant online music piracy.

In 2007, Mr. Jobs launched the now legendary iPhone which integrated an iPod, a phone and a breakthrough Internet communications device. Mr. Jobs did an iTunes like move with the iPhone by tying it to the Apple App Store which gave Apple a monopoly on the type and content of applications that can be installed on the iPhone. It is now one of Apple’s juiciest cash cows. The iPhone as of today is in its 5^th avatar (I count the iPhone 3G and 3GS as separate avatars) and is awaiting a 6^th avatar in form of the 5^th generation iPhone.

And in 2010, Mr. Jobs helped redefine computing and computing ergonomics yet again with the launch of the iPad, a tablet computer loaded with a powerful version of the iPhone Operating System or iOS. The iPad was also tied to the Apple App Store which gave it complete control of the entire hardware-software ecosystem for the device, just like the iPhone.

Mr. Jobs tenure from September 1997 to August 2011 saw Apple going from what people called a nearly bankrupt one hit wonder like company to the largest software company (by market valuations) in 14 years. In the process he not only beat giants like Microsoft and Google, but also in the process literally changed the world by changing our perceptions about entertainment, communications and computing. That’s a giant feat by any standards.

Steve Jobs will always be missed.

Thank You Steve.

Mitul Choksi

Ahmedabad, Republic of India

Anna Hazare and CopyCat Gandhism

The mood of the entire country seems to have changed drastically in the last couple of days with Mr. Kisan Baburao Hazare (popularly known as Anna Hazare, where Anna means "Elder Brother") and his supporters taking on the juggernaut that is the Central Government of India.

Regarding Anna Hazare and his so called India Against Corruption movement, I am not a supporter of it. The word "Mass Hysteria" that can be used as appropriate to describe all the happenings in this "movement" since April.

Anna Hazare's demands for the passing of the Jan Lokpal bill or the Lokpal bill, a corruption watchdog with legal superpowers to arrest, prosecute and imprison every corrupt official in the country would obviously lead him into a collision course with the government. Mr. Hazare demands that the Lokpal should be empowered to nab anyone and everyone who is accused to be corrupt right down from yours truly up to the Prime Minister of India has sent shivers down the spines of the power houses in New Delhi (and yet our previous theory that politicians were spineless creatures has lay to the dust!)

Duplicating the Police Forces, Investigating Agencies and other agencies which already exist in some other form would be a futile exercise in tackling corruption as there would be issues arising as to which case should be tried in which agency (the existing one or the newly formed Lokpal system), issues regarding jurisdiction of the respective systems and issues arising out of issues raised by the competing agencies regarding what sort of exact power do they have the right to exercise.

Anna Hazare has obviously found great support and admiration among the masses, especially the middle class who is routinely plagued by corruption in many and most government offices. Mr. Hazare has decided to adopt the nonviolent "fast unto death" satyagraha against the government to force them into signing the bill with conditions as laid down by himself and his team of civil society activists.

I call this "CopyCat Gandhism".

I have tremendous respect for Mohandas Gandhi and most of his principles but I have always thought that the so called "fast unto death" threats known as satyagraha was and is a form of blackmail. The reason it has been glorified is that it was the tool that enabled Mr. Gandhi to boot the British peacefully from India. In his "special case" the ends justified the means but it also had the residual effect of giving people a new method in which to blackmail the government into giving into their demands. This method is being used by Mr. Hazare today. And No, I do not consider this movement of Mr. Hazare as a "special case".

Although the media is to be thanked for exposing many scandals in recent times and getting the involved people prosecuted and arrested, it has turned into a populist tool to forward the momentum in this "India Against Corruption" movement. I must admit that I have re-started watching Indian news channels somewhat after a lull of almost 3-4 years on a somewhat regular basis due to this "media activism". I must say that the debates that many news channels (notable mentions: TIMES NOW and NDTV 24x7) broadcast in the Prime Time slots are good but at the same time they are structured so as to portray a heavy bias towards Mr. Hazare's movement. The debates on the Lokpal have members from the Congress and the BJP which is understandable as they are the two largest parties. Then you have someone like Anupam Kher and Kiran Bedi who have taken up key roles in this "movement" and some other members of fringe parties and what I like to call "Fringe Society" (includes people like film stars etc. who hardly have to deal with corruption. Their presence is only to add glitter value).

Once this debate gets going you find that only the member of the Congress party is opposing the Lokpal bill and all the others in one way or the other support it (including the fellow of BJP-NDA who mostly agrees on everything Lokpal). This inevitably makes the ruling party member look like the bad guy and the government completely corrupt and what not. These debates never have anyone from the smaller parties, "Fringe Society" and other members of civil society who oppose the Lokpal bill.

This amounts to classic media bias in favour of populism which is once again a blot on the so called "independent media". The Indian constitution clearly states that while the majority wins principle is applicable in a democracy, it is the duty of the democratic system (the system includes everyone from the government, and other public institutions and some private institutions like the media etc.) to listen, understand, tolerate and protect the views of the minority points of view. This principle is being clearly violated here.

Coercing the government is not a good idea neither is it democratic. Just because Mr. Gandhi did it does not make it right. Napoleon, Hitler, Mussolini, Stalin, Idi Amin were considered heroes at the time when they came to power bolstered by "Mass Hysteria". But we all know the end result of what happened in each case. While, it would not be correct to compare Mr. Hazare to either of these villains, it should be noted as a matter of principle and in the long term interests of the nation that this "movement" be taken with a pinch of salt and be properly understood by anyone and everyone who intends to be involved in it before raising any war cries.

A good start for everyone would be to read the Constitution of India.

Think About It.

Mitul Choksi

Ahmedabad, Republic of India

August 17, 2011

Implications – Libya vs. The West

I must say one thing before starting this article. I have been waiting for more than three months to write something about the NATO (North Atlantic Treaty Organization) led assault on Libya to allegedly “free its people” from the tyranny of Muammar Gadaffi and his minions.

The reason I did not write anything on the topic till now is due to hope. Yes, hope. Hope that NATO would route the already teetering country led by Gadaffi in a matter of weeks. This hope stemmed from my now apparent overconfidence in the military strength of NATO. I was initially jubilant after the passing of Resolution 1973 of the United Nations which authorized military use (although it did not use the word regime change in any way) to liberate the Libyan people from oppression by an autocratic tyrant. The resolution passed after a lot of drama with the usual suspects, China and Russia (and some unusual ones like South Africa, Brazil, India and even Germany!) abstaining to vote on the resolution, signifying implicit opposition to such an operation.

Yet, I hoped the principles of Western idealism and belief in universal freedom and human rights was going to be upheld in a matter of weeks as NATO (primarily led by the UK and a resurgent and aggressive France) would send Gadaffi and his fellows packing into the sunset. My hopes were boosted with another unprecedented event when the Arab League decided to support NATO in Operation Odyssey Dawn with countries like Qatar and the UAE even promising logistical and military assistance. The UAE even promised air strikes in addition to aerial recon. Encouraging news indeed.

But where are we now. The initial objective of creating a No Fly Zone which basically meant the destruction of major Libyan air strike capabilities and the destruction of anti-aircraft capabilities has turned out to be a resounding success. But there has been little progress afterwards. Dare I say, there has been some regress! NATO has lost some credibility due to a surge in civilian casualties in the last month. There are no signs of clear progress. Gadaffi is still holding his ground in the West with the capital Tripoli and the oil town of Misrata still under his control. The rebels, after their initial advances have been pushed back as Gadaffi’s men still have superior firepower, especially the heavy weapons which the rebels can’t match.

NATO is reluctant to provide them with equalizers fearing a future “destabilization” of the region and the thought of even sending in ground troops is a taboo like none other, especially in the UK who still maintains a strong contingent in Afghanistan (they pulled out of Iraq some time ago). The British public support for the Afghan war is already waning and the ruling Tory led government knows that sending in ground troops would be political suicide. The French are even more against sending in ground troops. The presidential elections are coming up next year and the already politically cornered Mr. Sarkozy would think twice before taking up any such operation in a dangerous foreign theatre. America, NATO’s biggest sponsor and fan wants to stay as far away from the war as possible. A wise decision Mr. Obama.

There have been constant rumours since the last few months on multiple occasions which speculate on the “imminent departure” of Mr. Gadaffi and his near agreement on getting a “political solution” to the crisis. But they have been just that – rumours.

So where does that leave the war? In a stalemate? I think so.

The West needs to weigh in its options very carefully right now. After the “jasmine” revolution in Tunisia, Egypt, Syria, Bahrain and the “mini jasmines” in places like Jordan, Oman and Morocco it is imperative that the West stop this contagion from spreading further into sub-Saharan Africa which houses some of the most brutal dictators and repressed populations, who if inspired by these events in their neighbourhood could start a more bloody variety of “African Jasmines”. The recent separation of South Sudan from the North could inspire others in the region to follow the Sudanese example. Given that Africa is one of the biggest and most important suppliers of mineral wealth (including oil) and the most rapidly developing market for exports from all over the world, any destabilization of the continent (or even a reasonably sized chunk of it) could lead to significant global implications, the primary of which could be a rise in global commodity prices and inflation. A not so pretty picture emerges.

Therefore, it is of paramount importance that the NATO led operation make a stand on this decision for a change (unanimous decisions in Brussels are increasingly rare) and put an end to this to war and get on with the much difficult to task of rebuilding Libya.

One ponders whether if the West would succeed in getting rid of Gadaffi and successfully rebuilding Libya with a functioning democratic government, it would inspire the other repressed people of Africa to revolt against their leaders in hope of a better future. Will they expect similar help from NATO and the West? A question only time will answer. And perhaps oil too!

Mitul Choksi

July 10, 2011

Ahmedabad, Republic of India

Are we giving the press too much independence for our own good?

News of the World and the Phone Hacking Scandal

Are we giving the press too much independence for our own good?

The concept of “Freedom of Speech” and “Freedom of Expression” are two basic principles enshrined in our country’s constitution. These principles are constitutionally guaranteed in almost all nations of the free world and are recognized by the United Nations as “inalienable human rights”.

While governments of free countries throughout the world make It their mission and habit to extend these principles of free speech to countries around the world that do not recognize these rights as fundamental to the existence of their citizens, we as citizens of the free world must also ponder around the question “Are we giving too much leeway to the media?” in our own backyards on the basis of these very principles of “Freedom of Speech” and “Freedom of Expression”.

The answer to that question has always been a contentious one in free societies around the world. While it is generally believed that censorship is something that is eventually detrimental to the interests of society, the question I (and people like me) pose is whether there should be curtailment at times on the media’s power when interests of the public can be threatened by such a freewheeling press.

Like I pointed out earlier, these questions have been there for a long time and have always have been a rather controversial issue. But I am raising these questions in the light of the recent Phone Hacking Scandal in the United Kingdom. It has been alleged that the editors of the 160 plus year old tabloid News of the World (owned by Rupert Murdoch) had authorized private detectives and investigators to hack the phones of rape and murder victims, children victims of pedophilia, victims of the 7/7 London Bombings and even families of soldiers who had died fighting for their country in Afghanistan and Iraq.

This piece of news has just gone so viral in the public in the last few days that the British House of Commons (equivalent of India’s Lok Sabha) called a special discussion on the issue with major parties (the ruling Conservative-Lib Dem coalition) and the opposition Labour Party going at each other’s throats. British politics, being how it is today cannot be predicted as regarding to the specific actions they will take against this whole situation. But “censorship” remains a taboo word in Britain which has one of the freest presses in the western world.

The British PM has guaranteed that the guilty will be brought to justice. But, he made an even deeper point. He said in the House of Commons that the media industry has become used to these kinds of questionable tactics in the hunt for publicity of their papers in what is a highly competitive environment. Former Labour Deputy Prime Minister Lord Prescott made clear in an interview with the BBC on July 7th (ironically the sixth anniversary of the London Bombings of 2005) that he has produced evidence in collaboration with British intelligence about the involvement of 300 odd reporters of different media houses that have been involved in such questionable and invasive techniques to garner information for “cheap publicity”. The politicians, I believe will love going after the media for once this time rather than the usual other way round scenario.

But the happenings in Britain are in my humble opinion a warning signal for all free governments in the world that give the media a free hand in reporting basically anything (including unfounded doubts and rumours about people which may tarnish their reputation without any of their wrong doing). While “censorship” is too heavy a word to use in given its association with repression, there has to be a way in which the media can reined in to behave in a more civilized manner. The threat of media as a blackmail tool against people who have done no wrong needs to be stopped while at the same time its edges need to be sharpened against people who are involved in activities which are in essence against social good (corrupt politicians, the evil side of business and commerce etc.). That is what an ideal media organization is supposed to do anyway. It is the premise on which any media organization is found upon. If they don’t behave that way, isn’t it the job of the public to enforce their “moral constitution”?

The media will most likely scoff at these suggestions. But as an old saying goes “Too much of anything is a bad thing.” That includes too much independence.

The process of reining the “freewheeling” press has to be decided in a democratic manner with something like a joint government-media-civil society body debating and deciding as to basically “where the line should be drawn?” Such a debate and democratic decision process in itself signifies that it is not media censorship but rather “civilization of the media”.

All this internal restructuring of media rights and duties should not at the same time become a detriment to the free world’s major cause of promoting free speech in the repressed and less fortunate parts of the world that really suffer from some or the other form of censorship of individual freedom and expression.

I would like to hear the views of the readers on this issue as I think it is something everyone will have an opinion on. You have the “Freedom to Speak”!!!

Mitul Choksi

July 8th 2011

Ahmedabad, Republic of India

The need for a Uniform Civil Code in India

A recent observation by the Supreme Court of India regarding the failure of every post-Independence government to adopt a Uniform Civil Code (UCC) which applies to all religious communities equally across the spectrum has made headlines in many regional and national dailies.

The observation was made during hearing petitions of the National Commission of Women’s Delhi chapter.

Provision for UCC is incorporated in Article 44 under the Directive Principles chapter of the Constitution, which says, “The state shall endeavour to secure for the citizens a Uniform Civil Code throughout the territory of India”.

The Supreme Court went on to remark specifically that the majority Hindu community has been more tolerant and receptive of changes brought in their personal law but the government has failed to replicate that success in upgrading the personal laws of minorities.

The other major issue is the contradictory provisions laid down in various personal laws when it comes to issues like marriageable age. For example, the legal age of marriage is 18 for girls and 21 for boys. But the Hindu Marriage Act and the Prohibition of Child Marriage Act 2006 render different interpretations on what constitutes the legal age for marriage. Under the 2006 law the marriages of girls below 16 are void and marriages in the 16-18 period is voidable. Needless to say, this leads to confusion.

It takes no genius that by using the term “minorities”, the Court is referring to the Muslim community which has always shown tremendous resistance to any effort made by the government (or even some members of their community) to make changes to their personal laws. A popular example of this is the Shah Bano case which achieved tremendous infamy during the tenure of Rajiv Gandhi.

In my humble opinion the personal laws need to work side by side with a newly drafted UCC which is applicable to all communities except in a few matters regulated by the applicable personal laws. This sounds simple enough on paper but in reality this would be a monumental task keeping in mind the convincing required to be done to various communities and their religious leaders. Also because of the overwhelming political will required to undertake such a monumental effort which would affect every citizen in one way or another.

“Upgrading” ourselves to the UCC would enact the principle of “The Law is One” for all communities irrespective of cast, creed, sex, colour or religion. This would also smoothen inter-community disputes on various issues like inter-faith marriages, inheritance etc. whose cases form a large chunk of pending matters in all levels of judiciary.

Whether such a day will come when all this rings true is questionable. But let us hope anyway like we do about a lot of other things…..

Mitul Choksi

10-February 2011

2:05 PM Indian Standard Time

Why has the Crescent fallen behind?

A report authored by a group of Arab scholars in 2002 has pointed out broadly, the reason why the Middle East and the Islamic world by extension had fallen behind the West in the last few centuries. The chief culprits as stated by the report were the deficits in knowledge and freedom. A salutary debate ensued. Now Timur Kuran, a Turkish-American economist has come out with an equally if not more bold book entitled “The Long Divergence: How Islamic Law Held Back The Middle East”. Let us hope that another equally salutary debate ensues once again.

For the period since the beginning of Islam up to 17th century, the Middle East was a dynamic place comparable to the Europe of today. Muslim traders flocked various parts of the region trading in items ranging from spices and silk to imported prostitutes and slaves. But somehow, the Middle East’s share of world economic activity has gown downhill since the year 1000. At that time, the Middle East Gross Domestic Product (GDP) was 10% compared to Europe’s 9%. By the year 1700 the Middle East was a paltry 2% compared to Europe’s 22%.

The standard explanations offered for this have mostly till date been unsatisfactory. It is widely believed that Islam by its very nature is hostile to commerce. But if anything, Islamic scripture is more business friendly than Christian or Hindu texts. The prophet Muhammad was a merchant and the Koran is full of praise for commerce. The second perceived reason is that Islam bans usury. But so do the Torah and the Bible. A third widely perceived belief is that Islamic countries fell behind as they were victims of Western imperialism.

Mr. Kuran’s work goes down to the very core of the problem. He reasons that the principle underlying reason for the fallback of the Islamic countries was because these countries failed to build commercial institutions – most notably Joint Stock Companies which are capable of mobilizing large quantities of productive resources over a period of time.

Europeans on the other hand inherited the Joint Stock Company from Roman Law. They built on this concept to form the modern day corporations of the 19th and 20th centuries. Islamic law on the other hand has queasy rules when it comes to managing commercial institutions. For example, according to the Islamic partnership law, a partnership can be dissolved simply by the whim of another partner. Obviously, these kind of quirks cannot work in a modern day business environment. Moreover, the widespread practice of polygamy led to the dispersion of wealth among many inheritors descending from the same paternal ancestor.

None of these things mattered when business was simple. But as business grew with more advances in technologies and the resultant technological and legal complications, these laws became a thorn in the path of developing the business. While the western concept of the joint stock company evolved along with time, the concept in Islamic law didn’t adapt itself to the changing conditions.

From the 19th century, the Middle Eastern rulers with a more outwardly looking take on things started to adopt Western style companies and institutions at home. They imported the concepts, the technologies, the people and in many cases even the style of government. The most notable example of this is the Ataturk’s introduction of a secular legal system in Turkey in the 1920s. Countries whose rulers adopted similar importation of business ideology from the West have benefitted the most (notable examples include Turkey, Egypt, Iran and the UAE).

Still, the Middle East has a lot of catching up to do. Its income per capita still remains less than 30% of Europe’s, the infrastructure in many countries is quite weak, economies are heavily dependent on export of commodities like oil instead of value adding industries and political stability is but a rarity.

Business remains complicatedly intertwined with the state as the region lacks strong commercial institutions. The Global Entrepreneurship Monitor suggests that rates of entrepreneurship are particularly low in the Middle East and north Africa. Transparency International’s corruption-perceptions index suggests that corruption is rife: in 2010, on a scale from one (the worst) to ten, Western Europe’s five most populous countries received an average score of 6.5, whereas the three most populous countries in the Middle East averaged 3.2 (Turkey scored 4.4, Egypt 3.1 and Iran 2.2)

Culture’s long shadow

The “long divergence” also helps to explain some of the Islamist rage against capitalism. Traditional societies of all kinds have been uncomfortable with corporations which, according to Edward Thurlow, an 18th-century British jurist, have “neither bodies to be punished, nor souls to be condemned”. But that unhappiness has been particularly marked in the Middle East. Corporations and other capitalist institutions were imported by progressive governments that believed the region faced a choice between Mecca and modernisation. Local businesses—particularly capital-intensive ones such as transport and manufacturing—were dominated by Jews and Christians who were allowed to opt out of Islamic law.

Mr Kuran’s arguments have broad implications for the debate about how to foster economic development. He demonstrates that the West’s long ascendancy was rooted in its ability to develop institutions that combined labour and capital in imaginative new ways. The Protestant work ethic and the scientific revolution no doubt mattered. But they may have mattered less than previously thought. People who want to ensure that economic development puts down deep roots in emerging societies would be well advised to create the institutional environment in which Thurlow’s soulless institutions can flourish.

Mitul Choksi

31-January-2011

2:37 PM Indian Standard Time

Rise of the 'redback'

IN 1965 Valéry Giscard d’Estaing, then France’s finance minister, complained that America, as the issuer of the world’s reserve currency, enjoyed “an exorbitant privilege”. China’s president, Hu Jintao, does not have quite the same way with words. But on the eve of his visit to America this week he told two of the country’s newspapers that the international currency system was a “product of the past”. Something can be a product of the past without being a thing of the past. But his implication was clear: the dollar’s role reflects America’s historical clout, not its present stature.

Mr Hu is right that America’s currency punches above its economy’s diminished weight in the world. America’s share of global output (20%), trade (only 11%) and even financial assets (about 30%) is shrinking, as emerging economies flourish. But many of those economies, such as South Korea, still sell their exports for dollars; many, including China, still peg their currencies to the greenback, however loosely; and about 60% of the world’s foreign-exchange reserves remain in dollars.

This allows America to borrow cheaply from the rest of the world. Its government has been able to overspend, secure in the knowledge that its IOUs will be bought by foreign central banks, which are not too fussy about price. America would show more self-discipline, many Chinese believe, if the dollar had a little bit more competition.

Could the yuan become a rival? China’s economy will probably surpass America’s in outright size within 20 years. It is already a bigger exporter. It is prodding firms to settle trade and even acquire foreign companies in its own currency. That is adding to a pool of “redbacks” outside its borders. These offshore yuan are, in turn, being tapped by borrowers, issuing “dim sum” bonds in Hong Kong (see article).

But as the dollar’s history shows, economic clout is not enough without financial sophistication (see article). If foreigners are to store their wealth in yuan, they will need financial instruments that are safe, stable and easily sold. Dim sum makes for a tasty appetiser. But the main feast of China’s financial assets is onshore and off-limits, thanks to its strict capital controls. The government remains deeply reluctant to let foreigners hold, buy and sell these assets, except under tight limits. Indeed, it is barely ready to give its own people financial freedom: interest on bank deposits is capped; shares are largely owned by state entities; and bonds are chiefly held by the banks—which are, in turn, mostly owned by the state.

Over time China will relax its financial grip. But even if it could usurp the dollar’s role as the world’s currency, it will not replicate the American set-up. The United States takes advantage of the dollar’s position to borrow cheaply from the rest of the world, selling its assets in return for goods. China is a mirror image of this. It runs a trade surplus, selling goods in return for financial claims on foreigners. Its firms, households and government save more than they can invest at home.

A different kind of perk

Rather than seeking to borrow in its own currency, China may harbour the opposite ambition: to lend in its own currency. The exorbitant privilege it may covet is a lower foreign-exchange risk on its savings. On top of the trillions China has lent to America’s treasury, it also holds stakes in Australian mines, African farms and Swedish car companies. But because none of these assets is in yuan, China suffers a capital loss whenever its currency strengthens. It would no doubt like to share some of this risk with the rest of the world. The model is not America, but Germany, an international creditor which holds 70% of its foreign assets in euros.

There is a catch, though. No one will want to borrow in a currency that is only ever going to strengthen, increasing the value of their debts. So if China wants to “yuanify” some of its claims on the rest of the world, it will need a currency that can go down as well as up. To make people believe the yuan can fall tomorrow, China will have to loosen its currency’s peg and let it rise faster today. China is different from America: it is a rising economic power and a thrifty one. But one rule still holds: China will have to open its financial system to the world if the yuan is to be the dominant currency.

Mitul Choksi

24-January-2011

8:31 PM Indian Standard Time