Friday, December 31, 2010

Pakistan Shares Exceed BRIC Gains in 2010

Pakistan's main stock market ended 2010 with a 28 percent annual gain, driven by foreign buying mainly in the energy sector, despite concerns about the country's macroeconomic indicators after summer floods, according to Reuters. Although it was less than half of the 63% gain recorded in 2009, it is still an impressive rise in KSE-100 index when compared favorably with the performance of Mumbai(+17%) and Shanghai(-14.3%) key indexes. Among other BRICs, Brazil is up just 1% for the year, and the dollar-traded Russian RTS index rose 22% in the year, reaching a 16-month closing high of 1,769.57 on Tuesday, while the rouble-based MICEX is also up 22%.

Pakistan's key share index KSE-100 was just over 1000 points at the end of 1999, and it closed at 12022.46 on Dec 31, 2010, significantly outperforming BRIC markets for the decade. Pakistan rupee remained quite stable at 60 rupees to a US dollar until 2008, slipping only recently to a range of 80-85 rupees to a dollar. In spite of the currency decline, Pakistan's KSE-100 stock index surged 55% in 2009 in US dollar terms and 65% in rupee terms. During the same period of 1999-2009, Mumbai Sensex index moved from just over 5000 points to close at 17,464.81.

If you had invested $100 in KSE-100 stocks on Dec. 31, 1999, you'd have over $1000 today, while $100 invested in Mumbai's Sensex stocks would be worth about $400. Investment of $100 in emerging-market stocks in general on Dec. 31, 1999 would get you about $300 today, while $100 invested in the S&P500 would be essentially flat at $100 today.

The US Federal Reserve's current easy money policy, euphemistically called "quantitative easing", sent a torrent of US dollars flooding into the US, European and emerging markets around the world. All three major US stock indices rose in 2010. The Dow was up 1,149.46, or 11 percent. The S&P gained 142.54, or 12.8 percent. The Nasdaq ended higher by 383.72, or 16.9 percent.

Some of the US stimulus money found its way into India and Pakistan as well. The 28% gain in KSE-100 is driven in part by net foreign capital inflows of Rs. 43 billion ($515 million US dollars) in 2010. Similarly, global funds bought a net 6.05 billion rupees ($135 million) of Indian equities on Dec. 29, taking this year’s record flows into equities to 1.31 trillion rupees ($27 billion US dollars), according to data on the Securities and Exchange Board of India website. India's FII inflows surged 61 percent in 2010, making the gauge the most expensive in Asia and among the BRIC markets.

While China's situation is superior among the emerging markets, including BRICs, because it enjoys significant current account surpluses and has strong capital flow controls, it is also seeing its economy overheat along with India's economy. Joseph Stiglitz, a Nobel Laureate Columbia University economist, has argued that India is more vulnerable to an asset bubble than China, saying that “strong economies that don’t yet have capital control become the focal point” for the liquidity injected by the US Federal Reserve. Stiglitz thinks that India, more than China or Brazil, should watch out for the tidal wave of money made available from the Fed’s quantitative easing. Mike Shedlock, an American investment advisor, believes that "India and China are going to overheat and crash, or their economic growth is going to slow dramatically, quite possibly both".

Although the hot money does help to partially fund the growing current account deficits in both India and Pakistan, the net inflow of $515 million of FII in Pakistan is relatively small at 0.3% of its GDP, and it is less likely to impact the economy even if all of it goes away in 2011. In India's case, however, the $27 billion in FII represents a little over 2% of its GDP and its sudden flight out of India is a substantial risk for Indian economy.

In my opinion, the uncertain US and European economic recoveries and future monetary policy of the US Federal Reserve in 2011 and beyond represent the greatest source of instability for capital markets in the emerging nations such as India and Pakistan, which impose relatively lax controls on short-term capital flows.

Related Links:

Haq's Musings

Trade and Economy Indicators of 231 Countries

JS Global on Pakistani Stocks in 2010

Indian Economy's Hard Landing in 2011?

High Cost of Failure to Aid Flood Victims

Karachi Tops Mumbai in Stock Performance

India and Pakistan Contrasted in 2010

Pakistan's Decade 1999-2009

Musharraf's Economic Legacy

China's Trade and Investment in South Asia

India's Twin Deficits

Pakistan's Economy 2008-2010

Inflation Hits India

Goldman Sachs India Warning on Twin Deficits

India's Nov 2010 Imports, Exports

Thursday, December 30, 2010

Pakistan's Year 2010: The Other Story

Have you ever wondered if Pakistan is really as one-dimensional a country as stereotyped by the negative torrent of international media coverage that dominated the news headlines in 2010?

Have you ever thought that Pakistanis engage in any pursuits other than as perpetrators or victims of terror that the journalists find the most newsworthy about the world's sixth most populous South Asian nation?

Well, an Indian-American producer Madhlika Sikka on NPR's Talk of the Nation radio did wonder about it when she visited Pakistan this year. In the talk show aired on June 3, 2010, she described the main concerns of young Pakistanis follows:

"I think, that young people are concerned with the same things you'd think young people are concerned with. In fact, when I came home, the immigration officer asked me about Pakistan, and she said, well, what are they thinking about?

And I said, well, I met a lot of young people, and they're thinking about jobs, and they're thinking about the fact that the power goes out regularly, gas costs a fortune. They're really thinking about what their prospects are and the conflict with India, the war on terrorism, isn't at the top of their list."

She summed up her assessment of the current situation in Pakistan in the following words:

"Well, I think that I think that there's no doubt that if you live in a city like Islamabad or Peshawar, certainly where Julie McCarthy was, you know, they live and breathe this tension every day.

But let's take a city like Lahore, where we were just a couple of weeks ago. And last week, there was a huge attack on a mosque in Lahore, 70, 80 people were killed. You can't help but feel that tension, even though you are trying your best to go live your daily life as best you can. And I think that that push and pull is really a struggle.

But one thing I do want to talk about in the, you know, what is our vision of Pakistan, which often is one dimensional because of the way the news coverage drives it.

But, you know, we went to visit a park in the capital, Islamabad, which is just on the outskirts, up in the hills, and we blogged about it, and there are photos on our website. You could have been in suburban Virginia.

There were families, picnics, picnic tables, you know, kids playing, stores selling stuff, music playing. It was actually very revealing, I think for us and for people who saw that posting, because there's a lot that's similar that wouldn't surprise you, let's put it that way."

Along the same lines as NPR's Sikka, let me share with you some of the best kept secrets of Pakistan's other story which would take a lot of effort to discover on your own.

The world media have correctly reported on the deadly blasts caused by the frequent US drone strikes and many suicide bombings in 2010. But Pakistanis have also seen an explosion in arts and literature in the last few years as the nation's middle class has grown rapidly amidst a communications and mass media revolution. A British magazine Granta dedicated an entire issue in 2010 to highlight the softer side of Pakistan.

Granta has highlighted the extraordinary work of many Pakistani artists, poets, writers, painters, photographers and musicians inspired by life in their native land.

For example, the magazine cover carries a picture of a piece of truck art by a prolific truck painter Islam Gull of Bhutta village in Karachi. Gull was born in Peshawar and moved to Karachi 22 years ago. He has been practicing his craft on buses and trucks since the age of 13, and now teaches his unique craft to young apprentices. Commissioned with the assistance of British Council in Karachi, Gull produced two chipboard panels photographed for the magazine cover.

Granta issue has articles, poems, paintings, photographs and frescoes about various aspects of life in Pakistan. It carries work by writers like Mohsin Hamid (The Reluctant Fundamentalist), Daniyal Mueenuddin (In Other Rooms, Other Wonders), Kamila Shamsie (Burnt Shadows), Mohammad Hanif (A Case of Exploding Mangoes) and Nadeem Aslam (The Wasted Vigil) who have been making waves in literary circles and winning prizes in London and New York.

In a piece titled "Mangho Pir", Fatima Bhutto highlights the plight of the Sheedi community, a disadvantaged ethnic minority of African origin who live around the shrine of their sufi saint Mangho Pir on the outskirts of Karachi.

In another piece "Pop Idols", Kamila Shamsie traces the history of Pakistani pop music as she experienced it living in Karachi, and explains how the music scene has changed with Pakistan's changing politics.

A piece "Jinnah's Portrait" by New York Times' Jane Perlez describes the wide variety of Quaid-e-Azam's portraits showing him dressed in outfits that give him either "the aura of a religious man" or show him as a "young man with full head of dark hair, an Edwardian white shirt, black jacket and tie, alert dark eyes". Perlez believes the choice of the founding father's potrait hung in the offices of various Pakistani officials and politicians reveals how they see Jinnah's vision for Pakistan.

While Granta's focus on art and literature has produced a fairly good publication depicting multi-dimensional life in Pakistan, there are apects that it has not covered. For example, Pakistan has a growing fashion industry which puts on fashion shows in major cities on a regular basis. The biggest of these is Pakistan Fashion Week held in Karachi in February. Over 30 Pakistani designers - including Sonya Battla, Rizwan Beyg, and Maheen Khan - showed a variety of casual and formal outfits as well as western wear, jackets, and accessories.

There were scores of expos and trade shows put on by various industries, including a book fair in Karachi, attended by about 250,000 people. Publishers from the UK, Singapore, Iran, Malaysia and India also participated in the event.

Karachi's Mohatta Palace Museum hosted an Art exhibition, “The Rising Tide: New Direction in Art From Pakistan,” that included more than 40 canvases, videos, installations, mobiles and sculptures made in the past 20 years. Its curator, the feminist sculptor and painter Naiza Khan, told the New York Times that her aim was to show the coming of age of Pakistani art.

A Pakistani theater group defied the government ban and put on "Burqavanza", a satirical play in which all the actors wear burqa as a metaphor for hypocrisy in the nation. Adam Ellick of the NY Times reported that the play "doesn’t sidestep any of the country’s problems: a creeping radicalization, terrorism, government corruption, and interference by Western nations, especially the United States."

A conference celebrating 31 years of a theater group named Tehrik-i-Niswan (Feminist movement) included presentations, research papers, theatrical performances and a poetry recital just this month.

While it is true that Pakistan faces many serious crises, particularly religious extremism and terrorism, there is much more to see and report about this nation of 180 million people with a large and well-educated urban middle class.

Here's a video titled "I Am Pakistan":

Here's a CNBC Pakistan video on January 2011 events:

Related Links:

Haq's Musings

Pakistan's Media Revolution

Along Grand Trunk Road in India and Pakistan

Pakistan's Urban Middle Class

Music Drives Coke Sales in Pakistan

Life Goes On in Pakistan

Karachi Fashion Week

Is Pakistan Too Big to Fail?

Karachi Fashion Week Goes Bolder

More Pictures From Karachi Fashion Week 2009

Pakistan's Foreign Visitors Pleasantly Surprised

Start-ups Drive a Boom in Pakistan

Pakistan Conducting Research in Antarctica

Pakistan's Multi-billion Dollar IT Industry

Pakistan's Telecom Boom

ITU Internet Data

Eleven Days in Karachi

Pakistani Entrepreneurs in Silicon Valley

Musharraf's Economic Legacy

Infrastructure and Real Estate Development in Pakistan

Pakistan's International Rankings

Assessing Pakistan Army Capabilities

Pakistan is not Falling

Jinnah's Pakistan Booms Amidst Doom and Gloom

Tuesday, December 28, 2010

Indian Economy: Hard or Soft Landing in 2011?

Pakistan's economy had a hard landing in 2008. It was triggered by a balance of payments crisis brought about through precipitous decline in foreign capital inflows combined with policy inaction in response to major external shocks in terms of food and fuel prices during political transition. Is the Indian economy similarly vulnerable in 2011? Is it headed for significant slowdown in the next twelve months? And if it is, can the Indian leadership manage a soft landing through major policy actions now?

To answer these questions, let us examine the following facts:

1. India's current account deficit widened sharply to $13.7 billion in the June-quarter, which was around 3.7 per cent of GDP. The deficit was $4.5 billion in the same period year ago.

2. India's FDI has declined by a third from $34.6 billion in 2009 to $23.7 billion in 2010. Its current account deficit is being increasingly funded by short-term capital inflows (FII up 66% from $17.4 billion in 2009 to $29 billion in 2010) rather than more durable foreign direct investment (FDI), posing a risk to external balance and funding of gap, according to a recent warning by Goldman Sachs. "Nearly 80 per cent of the capital inflows are non- FDI related. Given the excess spare capacity globally, FDI may remain weak going forward," the Goldman note said.

3. Inflation in India is running at a double digit pace as is credit expansion. India's primary articles price index was up 15.35 percent in the latest week compared with an annual rise of 13.25 percent a week earlier, data on Thursday showed. Year-over-year credit growth was 23 per cent till December 3, while deposit growth was only 15 per cent, as compared to RBI's projection of 20 per cent and 18 per cent, respectively, for 2010-11.

4. India's Food and fuel prices are continuing to rise by double digits. The food price index rose more than 12 percent, with the price of onions -- the country's most widely-eaten vegetable -- of especial concern, while the fuel price index climbed 10.74 percent. This compared with 9.46 percent and 10.67 percent respectively in the previous week.

5. The oil prices are likely to spike as the American and European economies recover in 2011, prompting Indian commerce secretary Rahul Kullar to acknowledge that “I am not sanguine. One blip on crude prices and my import bill suddenly zooms. On pro-rata basis we are looking at $ 120 billion with a caveat that if oil prices go up, it could be $ 130-135 billion”. Crude oil prices are currently running at $ 87-88 per barrel.

While China's situation is better because it enjoys significant current account surpluses and has strong capital flow controls, it is also seeing its economy overheat along with India's economy. Joseph Stiglitz, a Nobel Laureate Columbia University economist, has argued that India is more vulnerable to an asset bubble than China, saying that “strong economies that don’t yet have capital control become the focal point” for the liquidity injected by the US Federal Reserve. Stiglitz thinks that India, more than China or Brazil, should watch out for the tidal wave of money made available from the Fed’s quantitative easing. Mike Shedlock, an American investment advisor, believes that "India and China are going to overheat and crash, or their economic growth is going to slow dramatically, quite possibly both".

Indian President Pratibha Patil said last week that she is confident the economy will grow at about 9 percent in the current fiscal year ending March 2011 and would be on a sustained growth path of about 9 to 10 percent in FY12, according to Reuters. It is quite surprising that the Indian government continues to talk about increasing levels of economic growth in 2010-2011 and beyond amidst growing inflation and rising imbalances in the Indian economy. What they should be thinking about now is how to manage a soft landing by reducing liquidity and cutting India's twin deficits, rather than stepping on the accelerator and risk a big economic crash with long term negative consequences.

Related Links:

Haq's Musings

China's Trade and Investment in South Asia

India's Twin Deficits

Pakistan's Economy 2008-2010

Inflation Hits India

Goldman Sachs India Warning on Twin Deficits

India's Nov 2010 Imports, Exports

Saturday, December 18, 2010

China's Investment and Trade in South Asia

The Chinese Prime Minister Mr. Wen Jiabao is on state visits to both India and Pakistan to grow his country's invesment and trade. He has signed deals worth $16 billion in trade with India, and $35 billion in trade and investment with Pakistan this month.

China is now India's largest trade partner, with bilateral trade expected to reach $60 billion during this fiscal year ending March 31, 2011. On Thursday, the two countries set a target for bilateral trade to reach $100 billion by 2015. The bulk of Chinese exports are financed by Chinese banks on attractive terms. And China has invested significantly in many parts of the world including South Asia, more in Pakistan than it has in India.

China is Pakistan’s third largest trading partner with $7 billion in trade in 2009, after the United States and the European Union, while Pakistan is China’s largest investment destination and second biggest trade partner in South Asia.

Currently, China enjoys two-to-one trade advantage with both South Asian nations, with China exporting twice as much as its imports. This large and growing imbalance stems from the fact that India and Pakistan import high-value manufactured products like power generation and telecom equipment from China, while India's biggest export to China is iron ore, and Pakistan's main export to China is cotton yarn.

The Chinese delegation to India and Pakistan was larger than the number in delegations led in recent weeks to India by US President Barack Obama (215), French President Nicolas Sarkozy (more than 60) and British Prime Minister David Cameron (about 40), according to a BBC report. For his Pakistan visit, Mr. Wen was accompanied by dozens of corporate chief executives and 250 business leaders—many of whom were also present during the Chinese leader's visit to India earlier this week, during which he announced economic deals aimed at stabilizing a fragile relationship with New Delhi, according to Wall Street Journal.

India and China signed some 50 deals in power, telecommunications, steel, wind energy, food and marine products worth $16bn at the end of a business conference attended by Mr Wen in the capital, Delhi, on Wednesday evening.

This overtakes the $10bn of agreements signed between Indian and American businesspeople during the recent visit of US President Barack Obama.

In Islamabad, Pakistan, the Chinese Premiere has signed 45 agreements worth $35 billion in just the first two days of his three day visit, approaching the total value ($40 billion) of all of India's agreements signed with China, US, France and Britain during their leaders' recent visits to New Delhi.

Pakistan and China Saturday signed 22 new trade agreements, worth $15-billion, aimed at deepening strategic and economic toes between the two countries, officials told media covering the visit.

These come on the top of another 13 agreements worth around $20 billion signed Friday after bilateral meetings.

The fresh deals were inked at a business summit addressed by Chinese Premier Wen Jiabao and his Pakistani host Prime Minister Yousuf Raza Gilani and attended by business representatives from the two nations.

Gilani said that the corporate and business sectors of both countries must now seize business opportunities offered by Pakistan and take the lead.

Wen urged the investors from his country to invest in Pakistan and help build the economic ties with the traditional Chinese friend.

"We have strong political relations and now we are building economic ties, which can witnessed from the fact that trade has risen from $1 billion in 2000 to $7 billion by 2009," he said.

The state-run Pakistan Television (PTV) said the agreements are expected to bring $25 billion in investments and double the bilateral trade to $15 billion by 2015.

Through their huge investments in Africa and significant commitments in Afghanistan and Pakistan, the Chinese have shown the extraordinary capacity to see great opportunity where others see large risks.

The Chinese know how to do good and do well. They are clearly demonstrating by Mr. Wen's Pakistan visit what they like to call their "all-weather friendship" with Pakistan. The marked shift in focus of this relationship from mostly defense-related deals to broad commerical ties is particularly welcome, given the rise of China as the world's second largest economy after the United States, and a major lender, investor and trading partner of the United States and the European Union.

The positive impact of China-Pakistan business relationship will only be achieved by full implementation of these agreements. Let's hope Pakistanis hold their end of the bargain to realize the full potential of economic ties with the world's fastest growing and the second largest economy.

Related Links:

Haq's Musings

China Signs Power Plant Deals with Pakistan

Soaring Imports from China Worry India

China's Checkbook Diplomacy

Yuan to Replace Dollar in World Trade?

China Sees Opportunities Where Others See Risk

Chinese Do Good and Do Well in Developing World

Can Chimerica Rescue the World Economy?

Food, Fuel Inflation Hits India; Primary Price Index Up 15%, Credit Expansion Up 23%

Friday, December 17, 2010

Wikileaks on India Kashmir Torture, Radical Hindu Threat

Delhi-based US diplomats have reported concerns about the growing Hindtuva threat to India and torture of Kashmiri prisoners by Indian security forces, according to the Guardian newspaper which has been given access to over 250,000 US diplomatic cables leaked by WikiLeaks.

These revelations come barely a week after the Pakistani media came under withering attack by the Guardian for publishing similar reports dubbed as "fake WikiLeaks" alleged to have come from Pakistani intelligence sources.

In a leaked cable posted by WikiLeaks, Rahul Gandhi, the "heir apparent" to Prime Minister Manmohan Singh, told the US ambassador Tim Roemer at a lunch last year that Hindu extremist groups could pose a greater threat to India than Muslim militants.

According to the leaked cable of August 3, 2009, "Gandhi said there was evidence of some support for the group (LeT) among certain elements in India's indigenous Muslim community. However, Gandhi warned, the bigger threat may be the growth of radicalized Hindu groups, which create religious tensions and political confrontations with the Muslim community".

In another leaked document dated April 6, 2005, an American diplomat describes being briefed by the ICRC on the routine use of torture to interrogate Kashmiri detainees. Close to 1,500 prisoners were interviewed by the organization during 177 visits to various detention centers between 2002 and 2004, according to the cable. The ICRC said they were subjected to beatings, electrocution, and other abuses. “The ICRC is forced to conclude that [the government of India] condones torture,” the cable said.

In another Kashmir related cable dated June 4, 2007 the embassy recommended that the US should deny visa application of Kashmiri Ikhwani leader and the then MLA Usman Abdul Majid "in the interest of remaining balanced in" their approach to the Kashmir issue following their denial of pro-Pakistan Kashmiri separatist leader Sayeed Ali Shah Geelani's visa request.

"Kashmiri paramilitary leader and J&K state MLA Usman Abdul Majid applied for a U.S. visa on May 22nd in order to attend functions held by the United States Institute of Peace starting on June 7th in Washington, DC. Majid is a leader of the pro-GOI (Government of India) Ikhawan-ul-Musilmeen paramilitary group, which was formed by India's security forces to combat terrorism in the Kashmir Valley. The group is made up of terrorists who have surrendered to the Indian government and agreed to fight against their former brethren," the cable mentioned.

Ikhawan, the cable said, "has a reputation in the Valley for committing brutal human rights abuses -- including extra-judicial killings of suspected terrorists and their family members, as well as torturing, killing, raping, and extorting Kashmiri civilians suspected of harboring or facilitating terrorists."

"Majid won election easily in his Baramullah district of Kashmir, but this is likely only because the district has had a minute voter turnout as terrorist groups continue to enforce a boycott there of Indian-held elections. This boycott continued in Baramullah even in 2002, when turnout was much higher in other areas.

However, the cable pointed out, "Similar to many of the instances of torture and violence surrounding the Kashmir dispute, Post is unable to verify with evidence the claims against Majid."

"Majid's reputation in the Kashmir Valley is one of the worst among those associated with the GOI. In light of our rejection of the Geelani visa, we will not be able to maintain our record of neutrality in the Kashmir dispute if we grant this visa. Nonetheless, denying his application may have some repercussions with GOI officials, especially those from India's Intelligence Bureau who have been close to his case. As with the Geelani case, this will be a very delicate matter, but in light of Ikhawan's history, Post recommends that the U.S. government deny the visa."

These latest cables finally reveal a semblance of US diplomats' humanity in the midst of growing violence against the Muslim miniority that characterizes life in India, and Indian occupied Kashmir. It is encouraging to see the breaking of their defeaning silence on Indian security forces' human rights abuses and Hindutva violence.

Related Links:

Haq's Musings

Hindutva Threat in India

Kashmir in Context

WikiLeaks Disclosures Expose Pakistani Leaders Duplicity

Kashmir's Forever War

WikiLeaks cables: India accused of systematic use of torture in Kashmir

Tuesday, December 14, 2010

Growing 2G Scandal Exposes India's Crony Capitalism

India's multi-billion dollar telecom scandal, also known as 2G scandal, is continuing to grow with new revelations coming out almost every day, especially since the failure of the blackout attempt orchestrated by some of the biggest Indian TV channels and newspapers.

The main source of these leaks are over 100 tapes of 5,000 recordings made by India's Enforcement Directorate and Income Tax authorities as part of their surveillance of Ms. Nira Radia. Radia lobbied government ministers and politicians on behalf of India's business elite, including the biggest business magnates Mukesh Ambani and Ratan Tata.

NDTV journalist Barkha Dutt and Hindustan Times columnist Vir Sanghvi are among those implicated by the tapes in the growing scandal. Initially, attention was focused on Ms. Dutt, who was accused of agreeing to pass on messages from Ms. Radia to the Congress party. Ms. Dutt denied that and defended herself on Twitter, in a statement and on television, and said that at most she had made an “error of judgment” in how she conversed with Ms. Radia.

The focus is now on on Mr. Sanghvi's role, according a Wall Street Journal report. In one of the tapes, Mr. Sanghvi sounded on one recording as if he was agreeing to slant his column on the feuding Ambani industrialist brothers according to Ms. Radia’s suggestions. Ms. Radia represents elder brother Mukesh Ambani, who controls Reliance Industries. Anil Ambani, the younger brother, controls the Reliance Anil Dhirubhai Ambani Group. Mr. Sanghvi tells Ms. Radia the piece is “dressed up as a plea to [Indian Prime Minister] Manmohan Singh so it won’t look like an inter-Ambani battle thing except to people in the know.” She responds: “Very nice.” In another conversation, between Ms. Radia and an employee, she asks for questions to be prepared for an interview between Mr. Sanghvi and Mukesh Ambani, saying that “he has agreed to ask whatever questions we suggest.”

In a court affidavit filed last week, the Indian government said it had begun tapping Ms Radia's phone after an allegation that she was spying for foreign intelligence.

Ms. Radia's telephone was tapped by the Indian government for 180 days during two separate stints in 2008 and 2009. Several hundreds of those call recordings have so far been leaked to Indian media outlets in the past few weeks. Some of these recordings have been posted on the Internet by India's Outlook and Open magazines.

Stung by the disclosures, Indian Prime Minister Manmohan Singh has asked cabinet secretary KM Chandrasekhar to investigate and report within a month. Singh said he "was aware of the nervousness in the corporate sector" over authorized phone-tapping. The Tata group chairman has taken legal action after his conversations with a lobbyist were leaked to media.

Here are some of the key revelations to date:

1. Billionaire businessman Mukesh Ambani is quoted as bragging that the ruling Congress Party is "Apni Dukan" (our shop), implying that he owns the ruling party.

2. Telecom minister Andimuthu Raja left an estimated $40 billion on the table by accepting bribes in exchange for lower bids from Indian and foreign bidders on 2G cellular spectrum auction, according to a New York Times report.

3. India's Highway Minister Kamal Nath is alleged to skim 15% on all the projects his ministry oversees.

There have long been allegations of corruption against Indian government ministers and politicians, but the tapes now confirm the extent of graft that was accidentally discovered by Indian authorities who were looking for evidence of Radia's possible involvement in spying for foreign nations.

There has long been a nexus of crime, corruption and politics in India. Of the 278 current Indian MPs for whom records are obtainable, 63 have criminal backgrounds. Of those, 11 have been charged with murder and two stand accused of dacoity (banditry). Other alleged misdemeanors range from fraud to kidnapping, according to data collected by National Election Watch, the campaign group that has put together the data.

Most Indian politicians have used their election wins to significantly enrich themselves, according to their own pre-election declarations of assets. For example, the comparison of assets of candidates who won in 2004 and sought re-elections in 2009 shows that the wealth of UP politicians has grown by 559%, over five times, in five years, second only to their Karnataka counterparts who registered a growth of 693% in the same period, according to a report..

Commenting on the scandal, Wharton's Professor Jitendra Singh says corruption in India is "heterogeneous and multifaceted," ranging from a simple bribe to systemic corruption, "where retrograde cultural norms get well-established in specific settings, such that a non-corrupt newcomer may well find it impossible to survive." Inferior cultural norms are the toughest to tackle, and those values could prove very difficult to unhinge, according to Singh. "In its abstract form, the gains in a transaction get disproportionately appropriated by actors in relation to their role in the creation of this value," he says. "This distorts incentives and, ultimately, values in a society and leads to inequitable distribution of income and wealth, and inefficient allocation of capital." He warns of "collective consequences such as the institutionalization of inferior cultural norms [for example, 'in order to succeed, you have to be dishonest, because everyone else is dishonest'] that may take generations, even centuries, to sort out meaningfully."

The telecom scandal may just be the tip of the iceberg. A broader and more serious independent inquiry is now necessary to find any evidence of widespread corruption as powerful Indian businessmen like Ambanis and Tatas use their power, influence and cash to garner resources or projects, whether mining rights, gas fields, land, infrastructure projects or the electromagnetic waves known as spectrum that carry cellphone service.

As to the role of the media, the US Supreme Court Justice Louis Brandeis once said that "sunlight is the best disnifectant". Transparency is not possible when the mass media join the effort to block sunlight, as has been the case in India's telecom scandal. Instead of playing their role as watchdogs in a democracy, many in the Indian media have chosen to collaborate with corrupt politicians and greedy businessmen to enrich themselves. The Indian media are guilty of manufacuring consent in a favor of the powerful few against the interests of the vast majority of India's population that is among the poorest and the most deprived in the world.

To protect the future of democracy, sustain economic growth and ensure that the benefits of growth are shared equitably by India's population, emergence of an honest, transparent and ethical media are absolutely essential. I hope the sane members of the Indian media will now find a way to clean up their ranks and begin a serious self-policing effort based on a new set of sound standards of professional ethics.

Related Links:

Haq's Musings

Manufacturing Consent in India

Challenges of Indian Democracy

Poor, Hungry and Illiterate India

Radia Tapes and Transcripts of India's 2G Scandal

Monday, December 13, 2010

Will Saudi Society Change Peacefully?

Saudi society has long been dominated by the overzealous religious police, known as mutawa or mutaween, who strictly enforce the Saudi version of the Islamic Sharia Laws. The most visible manifestations of such enforcement include the almost total gender segregation, conservative dress code in public, and interruption of business for prayers five times a day.

There are some recent signs that the Saudi government is moving toward broader social reform by beginning to create new mutawa-free spaces within the Kingdom where the rules are different. King Abdullah University of Science and Technology (KAUST) is one such space. Not only is the university co-educational, it has no dress code, nor does it allow the mutaween to enforce their rules. By offering greater freedom, the university is attempting to attract the best and the brightest academics, researchers and students from around the globe to create a world-class institution.

This is how the University describes itself: "The principles of academic freedom ensure that faculty members and researchers may conduct research and publish the results without undue hindrance or control. As an international university with many partners, KAUST recognizes the importance of academic freedom and the challenges presented by taking account of the various intellectual property regimes in the home countries of KAUST partner institutions."

IBM is one of the many international partners of KAUST. According to Businessweek, KAUST agreed to buy an IBM supercomputer, which is an essential tool in the research projects that IBM and the Saudis are targeting for their first collaboration. Among other things, the two teams will collaborate on a study of the nearby Red Sea, which they believe will help improve oil and mineral exploration. "[The supercomputer] is a magnet for smart people, and it makes it possible for us to solve big problems," says Majid F. Al-Ghaslan, KAUST's interim chief information officer.

Not content with KAUST to spur change, the Saudi ruler King Abdullah is now pushing the creation of four new special cities, according to the New York Times.

The first of these four cities is King Abdullah Economic City-KAEC (pronounced "cake"), a 65-square-mile development along the Red Sea. With a projected population of two million, the city is a Middle Eastern version of the “special economic zones” that have flourished in places like China.

Here is how New York Times describes the implications of the planned Saudi effort:

If the plan works, at best it would transform Saudi Arabia into a technologically advanced society controlled by a slightly more tolerant religious autocracy. Or it could provoke militant violence and government crackdowns. “What they are trying to do is very difficult,” said Bernard Haykel, a professor of Near Eastern studies at Princeton University who has written extensively on Saudi Arabia. “Someone telling you to go pray — that in-your-face religion — that’s not going to be permitted in these cities. It’s a more ecumenical Islam. But it’s a slippery slope. Once you start, you’ve basically opened up the door to a certain degree of diversity and tolerance.”

KAEC is expected to be followed by three other cities: Knowledge Economic City near Medina, the second holiest city for Muslims; Prince Abdulaziz bin Mousaed Economic City, 450 miles north of Riyadh, which will focus on agribusiness; and Jazan Economic City, proposed to create industrial jobs for Saudis living near the border with Yemen, where al Qaeda is believed to be very active.

The fact that Saudi leaders recognize the need to change was articulated recently by Sir William Charters Patey, the British ambassador in Riyadh until May 2010, in a interview with Arab News as follows: “They accept that you can’t just go on the same old way. Some of the assumptions that underpin Saudi Arabia...may not be enough to see them into the future.”

The Saudi rulers understand that oil could no longer be taken for granted. It currently accounts for 60 percent of GDP and 90 percent of revenue. Moreover, the country’s population is forecast to double over the next three decades and the Kingdom will need to generate income from other sources by then.

Patey said that the strategy, “a sensible and pragmatic one,” was to use the Kingdom’s current energy advantage to diversify into industries that are energy intensive. Saudi Arabia, he said, had also embarked on an ambitious strategy of developing a knowledge-based economy.

Change will eventually come to Saudi Arabia, but many questions remain about the process. Can the Saudi rulers escape the inevitable backlash from the adherents of the extreme Wahabi ideology that they have exported to other Muslim nations such as Afghanistan, Pakistan and Yemen? Will there be a process of political liberalization to match social and economic reforms? What will be the pace of this change? Will such change come peacefully? Can the current Saudi government manage this transition without unleashing widespread instability in Saudi Arabia, the Middle East and the wider Islamic world? How will the Saudi Kingdom's western allies and its neighbors react to such instability?

It's hard for any one, including the Saudis, to answer these and other similar questions now. The only thing that can be said with any certainty at this time is that the change is inevitable, and the face of the Middle East and Islamic world will change dramatically by the end of the 21st century.

Related Links:

Haq's Musings

Quality of Higher Education in India and Pakistan

Is Pakistan Emulating Saudi Arabia?

Jihadis Growing in Tenth Year of Afghan War

Pakistan Must Defeat Agents of Intolerance

Pervez Amirali Hoodbhoy: "Islam and Science Have Parted Ways"

Clash of Ideas in Islam

Turkey, Pakistan and Secularism

Jinnah's Vision for Pakistan

Tuesday, December 7, 2010

FBI Entrapping Young Muslims in Phony Terror Plots?

The FBI has intensified its pursuit of "home-grown" terrorists, allegedly foiling scores of plots around the United States since 9/11 terrorist attacks in America. The question now being increasingly asked is: Would there be many such terror plots to foil without government informants used to create them?

It is believed that foreign-born nationals are easy to recruit as FBI's confidential informants (CIs). If they get reported for any reason by any one and found to have any immigration issues, the police can threaten them with deportation. "You become a CI and you won't be deported, and you might even get paid tens of thousands of dollars if you help catch terrorists", they are told. It's a method the police in the United States have used for decades, according to a piece by Lorraine Adams and Ayesha Nasir published by London's Guardian newspaper.

Targeting of mosques by FBI informants has become quite common in New York and elsewhere in America since the weakening of court protections like the 1985 Handschu v Special Services Division decree that prohibited unfettered police monitoring of religious or political groups. In 2002, when NYPD's Adam Cohen was revamping the intelligence division, the police department sought a weakening of the Handschu decree from federal judge Charles S. Haight Jr who originally issued it, paving the way for the surveillance of Muslims. They won it in 2003.

In the Guardian story, Lorrain Adams and Ayesha Nasir discuss the case of Matin Siraj, a Pakistani-American convicted of terror in 2004. The FBI informant in the case, an Egyptian nuclear engineer named Osama Eldawoody, had been drawn in because he'd run a number of failed businesses out of his apartment, prompting neighbours to call police. The government paid Eldawoody's expenses, as well as $94,000 for his work as an informant on the case. Here's an excerpt from it:

The undercover officer in Siraj's case was a native of Bangladesh who used the pseudonym Kamil Pasha. "He's recruited in the classic NYPD way," Stolar says. "They troll the police academy to find someone who fits the targeted group. They started doing this with the Black Panther party back in the 60s. So they get someone who's, number one, young and number two, not known on the street. And they say. 'We promise you a gold shield, a detective's shield, if you do this.'"

The cop and the CI (Eldawoody) had no knowledge of each other. In July 2003 they began visiting the bookstore where Siraj was working. Eldawoody, 50 at the time, was old enough to be Siraj's father; Pasha, at 23, was more of a buddy. In 72 visits with Siraj, he was able to cull what the jury considered "radical statements", such as Siraj praising Osama Bin Laden as "a talented brother and a great planner".

None of Pasha and Siraj's conversations were tape-recorded and Eldawoody only began recording their encounters after he'd been meeting with Siraj for nine months. It's hard, therefore, to gauge what role the two men played in the conversation about the planned bomb attack.

In April 2004 the images of torture from Abu Ghraib prison in Baghdad surfaced. When Siraj saw the image of the hooded Iraqi prisoner, attached to wires, standing on a box, he became hysterical. "Turn it off, Mommy! Turn it off," Siraj shrieked at her. Trial testimony showed that Eldawoody gave him photographs of a Muslim girl being raped by a dog. He is soon discussing the placement of the bomb with Siraj and his co-defendant, a 21-year-old schizophrenic Egyptian who turned state's evidence in the case. Siraj, in this recording, says, "No killing. Only economic problems." He explains: "If somebody dies, then the blame will come on me. Allah doesn't see those situations as accidents." In earlier audio recordings, however, he has said, "I want at least 1,000 to 2,000 to die in one day."

Recently, the FBI arrested the 19-year-old Somali-American Osman Mohamud in Oregon minutes before the annual holiday tree-lighting in Portland's downtown Pioneer Courthouse Square. This case is similar to other recent cases targeting young impressionable Muslim men by undercover F.B.I. agents or paid informers playing the role of terrorists and, as in this case, suggesting terror plots, selecting targets, and supplying fake explosives.

For those who believe that the young Muslims targeted by the FBI for entrapment are pre-disposed to committing violence and therefore fundamentaly different from other law-abiding citizens, I would respectfully suggest a quick review of the findings of Milgram experiements conducted at Yale University in the 1960s that showed how good, honest and decent people can be manipulated by authority figures to do terrible things that they would not ordinarily imagine doing.

As Stanley Milgram also found, there are some exceptions, however, to obedience to authority to inflict harm. When a minority of people are suficiently suspicious of such manipulation by overzealous FBI informants as was the case with an FBI informer in Southern California's Orange County, they refuse to cooperate. Recently, an FBI informant Craig Monteilh sent to infiltrate a California mosque was issued a restraining order after scaring Muslim worshippers with demands for jihad against Americ. He was known to members of the Irvine Islamic Center as Farouk al-Aziz, an apparently devout and at times over-zealous Muslim. But when he began speaking of jihad and plans to blow up, he was reported to the police by community members, according to a report in the Daily Mail. Monteilh, a petty criminal with forgery convictions, claims he received $177,000 tax free in 15 months for his work as an FBI informant.

Here's an RTV video clip on the case of Farooq Ahmed, a Pakistani-American arrested on terror charges in Virginia:

Here are the key points in the above video:

1. It talks about "the Newark Four". These are 4 poor African-American Muslims with neither passports nor driving licenses who had absolutely no capability to commit the crimes they were alleged of and convicted of. The FBI informant Shahid Husain, a Pakistani immigrant, was reportedly paid $100,000 by the FBI for entrapping them. Shahid Husain then became the key prosecution witness in their trial.

2. The FBI agents provided these men fake explosives and a fake Stinger missile and encouraged them to use these on targets selected by them. The 4 were promised cash and cars in exchange by the FBI.

3. It questions whether there would be any of these alleged "terrorists plots" to foil without government informants creating them by using informants.

4. Former FBI agent James Weddick argues that, instead of actively going after the real terrorists who are still out there, FBI is wasting its resources by relying on individuals to make up crime.

6. The reporter in the video says that the kind of entrapment tactics being used by the FBI would be unacceptable any where in Europe.

5. An attorney Steve Dowds shows a big 10 ft wide wall of names of people, mostly Muslims, entrapped by FBI and accuses it of "planting ideology" and providing the details of plots and resources to them before grabbing them and calling them "homegrown" terrorists".

A study by New York University's Center on Law and Security, which tracks terrorism cases, found that of 156 prosecutions in what it identified as the most significant 50 cases since Sept 2001, informers were relied on in 97 of them, or 62 percent. In the current environment of fear of Islamic terrorism in the United States, the entrapment defense has often been raised in jury trials, but it has not so far been successful in producing any acquittal in a post-Sept. 11 terrorism trial, the study found.

Related Links:

Haq's Musings

Early Anthrax Probe of Pakistani-Americans

Inside the Mind of Times Square Bomber

Home-grown Terror Plots Seen as FBI Entrapment

Milgram's Experiments on Obedience to Authority

Friday, December 3, 2010

Wikileaks Disclosures Expose Pakistani Leaders' Disdain for Democracy

The latest batch of revelations by wikileaks website about Pakistan paints a picture of a country where the self-serving political and military elites heavily rely on foreign governments for support, and confide their most private thoughts more to the American ambassador in Islamabad than their own colleagues and the people to whom they supposedly owe their allegiance. This harsh reality shows in many diplomatic cables about Pakistan leaked by wikileaks to date, and it brings a great deal of despair and frustration to a people in dire need of good leadership to effectively lead the nation as it faces multiple national crises of economy, energy and security.

The leaked cables from the US embassy show that Pakistan's President Asif Ali Zardari thanked the United States government for forcing former President Musharraf to pardon him and his colleagues, thus enabling them to gain power. Another leaked document reveals that the JUI President Maulana Fazlur Rehman sought US help to become prime minister of Pakistan. The Pakistani Army chief General Ashfaq Pervez Kayani is reported to have confided in US officials that he seriously considered replacing Zardari as president with ANP leader Asfandyar Wali, and Zardari reportedly talked with the US officials about his fears of assassination, and his wish for his sister Faryal Talpur to succeed him as Pakistan's president.

In one of the leaked documents, Saudi King Abdullah is quoted as saying about Zardari that "when the head is rotten, it affects the whole body". The King goes on to describe Mr. Zardari as the "greatest obstacle" to Pakistan's progress.

Not only do I fully agree with the Saudi king's characterization of Zardari as the "greatest obstacle" to Pakistan's progress, I would extend it to include Pakistan's entire political class, including Zardari's coalition partners and Nawaz Sharif's PML reportedly favored by the Saudi king.

Noam Chomsky has recently reacted to the latest disclosures by wikileaks website by describing the ruling elite's penchant for secrecy as follows:

"One of the major reasons for government secrecy is to protect the government from its own population...[The WikiLeaks cables reveal a] profound hatred for democracy on the part of our political leadership."

I think Chomsky's assessment has much greater applicability to democracy in Pakistan than many democratic governments elsewhere in South Asia and the rest of the world.

The fresh wikileaks revelations about Pakistani leaders' duplicity will further add to the widespread conspiracy theories and breed greater cynicism about politics among Pakistanis. As the current crop of politicians are thoroughly discredited, my hope is that a new generation of leaders will emerge from the current chaos to lead Pakistan out of the prevailing depths of despair.

Related Links:

Haq's Musings

Incompetence Worse Than Corruption

NRO and Corrupt Democracies of South Asia

Pakistan's Decade of 1999-2009 in Review

ASEAN Architect Suharto Passes On

NRO and Corrupt Democracies in South Asia

Malaysia National Front Suffers Setback

Musharaf's Economic Legacy

Pakistan's Corruption Indexes

Return to Bad Old Days in Pakistan

Shaukat Aziz's Economic Legacy

Daily Carnage in Pakistan

Sunday, November 21, 2010

Is HAARP Enabling WMDs of the 21st Century?

The next generation of US weapons development effort has been brought into sharp focus by the latest controversy over the US military funded HAARP research project in Alaska. This controversey started when a Pakistani scientist Dr. Pervez Hoodbhoy sharply criticized the contents of a Dawn newspaper article by another Pakistani scientist Dr. Atta ur Rahman citing allegations that HAARP project is aimed at deliberately altering weather patttens adversely, and triggering earthquakes in different parts of the world by the US at will.

What has been forgotten in this debate is that the genesis of the US weapons research agenda that has been pursued for at least a decade lies in the following statement by former US Secretary of Defense William Cohen at an April 1997 counterterrorism conference sponsored by former US Senator Sam Nunn:

"Others [terrorists] are engaging even in an eco-type of terrorism whereby they can alter the climate, set off earthquakes, volcanoes remotely through the use of electromagnetic waves... So there are plenty of ingenious minds out there that are at work finding ways in which they can wreak terror upon other nations...It's real, and that's the reason why we have to intensify our [counterterrorism] efforts.

Manipulating forces of nature is clearly a part of the current weapons research being pursued in America.

I think Dr. Ata is well within the realm of science in speculating about HAARP's ability to effect weather patterns and seismic activity.

Here are some of the arguments that support Dr. Ata's concerns:

1. Major seismic activity is often preceded by extreme weather phenomena induced by ionospheric disturbances - like thunderstorms with extensive lightning discharges. Before the release of tectonic stresses, there are large changes in ground potential, and these interact with the atmosphere and eventually with the ionosphere. It is conceivable that humans could manipulate the coupling in the reverse direction - from the ionosphere via the atmosphere to the lithosphere.

2. HAARP's transmitter's 3.6 MW is not a "puny" amount of power, especially when it is focused like a laser beam to trigger tectonic instability in specific spots, thereby releasing the energy already stored in tectonic plates.

I expect there to be a whole new generation of weapons coming out by mid-century from the research being done now at advanced US weapons labs in collaboration with the academia. Such weapons, including space-based weapons and cyber weapons which may now seem like the stuff of science fiction, will be very different in terms of their outer-space locations, the mechanisms they use to wreak havoc, and the kind of extraordinay but targeted damage they may cause without the "enemy" having any clue of what hit them and from where they got hit.

In 2008, the Center for Defense Information released their survey of the Pentagon’s 2009 budget, highlighting research that could lead to arms in space. By the absolute most conservative estimate, we’re talking $520 million dollars a year. The real number is likely several multiples of that, according to Noah Schactman of

The current military space projects mostly involve ways to disable potentially hostile satellites; many have other uses, as well. They include a giant laser, to help spot targets in orbit (and to improve space imaging, in the meantime); micro satellites, that could disable another country’s orbiters (or repair our own); a series of jammers, to block enemy satellite signals; and missile interceptors, based in space.

At first glance, an anti-missile might not seem like a space weapon project. But, as last year's satellite shoot-down showed, the same gear used to intercept a missile can also be repurposed to blast a satellite. Especially if the gear is already in space. Space provides line of sight and secure communications. It also povides clear tacking of hostile objects. Command and control is likely to move from earth to space. There will be space stations as command platfoms at various distances from the earth's surface that will command robotic and manned systems on land and sea as they evade enemy attacks and attack enemy platfoms.

The new generation of weapons will avoid the kind of widespread fall-out on "friendly" nations in the "enemy" neighborhood that results from the current generation of WMDs like the thermonuclear bombs.

Some analysts, like George Friedman of Stratfor (Next 100 Years), have explored the nature of high-tech warfare that will determine the outcome of WW III they anticipate to be fought in this century. Friedman refers to military bases in space that would be used to attack enemy bases in space and on the ground as part of the space warfare in this century. Here are two video clips of George Friedman talking about it:

Related Links:

Haq's Musings

Is America Young and Barbaric?

Cyber Warfare in South Asia

Pakistani Drones in America

Foreign Origin of India's Agni Missiles

Mockery of Pakistani Sovereignty

India, Israel UAV Partnership

New York Times

India's UAV Technology Center

NPR Radio

Electronic Warfare


America's High-tech Warfare

It's not Your Father's Military

Thursday, November 11, 2010

Rulers and Media Manufacturing Consent in India

“The smart way to keep people passive and obedient is to strictly limit the spectrum of acceptable opinion, but allow very lively debate within that spectrum....” ― Noam Chomsky, The Common Good 

A recent Pew Global Attitudes survey shows that 85% of Indians are satisfied with their government's performance, particularly its handling of the economy. Only the Chinese and Brazilians are more satisfied with their economic situation among the 22 countries included in the survey.

India, a nation which has the dubious distinction of being home to the world's largest population of poor, hungry, illiterate and sick people, and where 7000 people die of hunger every day, fully 81% say terrorism is the biggest problem India faces today.

The only way to explain these strange opinions from the Pew Poll in India is to seriously ponder over the following excerpts from MIT's Linguistics and Communications Professor Noam Chomsky's inteview recently published in Outlook India:

Q: You once said, “Propaganda is to democracy what violence is to totalitarianism.” Do you mean that propaganda enables the elite to dull the will of people, depriving them of the capacity to make political choices?

A. That clearly is its goal, in fact its stated goal. Back in the 1920s, it used to be frankly called propaganda. But the word acquired a bad flavour with Nazism in the 1930s. So now, it’s not called propaganda any more. But they were right in the 1920s. The huge public relations industry, for example, has its goal to control attitudes and beliefs. Liberal commentators, like Walter Lippmann, said we have to manufacture consent and keep the rabble away from the decision-making. We are the responsible men, we have to make decisions and we have to be protected—and I quote Lippmann—“from the trampling under the rage of the bewildered herd—the public”. In the democratic process, we are the participants, they watch. And the task of intellectuals, media and so on is to make sure that they are quiet, subdued and obedient. That is the view from the liberal end of the spectrum. Yes, I don’t doubt that the media is liberal in that sense.

Professor Noam Chomsky, co-author with Ed Herman of Manufacturing Consent, also told Outlook India that “media subdues the public. It’s so in India, certainly".

Here are some more excerpts from Chomsky's Outlook inteview:

"I spent three weeks in India and a week in Pakistan. A friend of mine here, Iqbal Ahmed, told me that I would be surprised to find that the media in Pakistan is more open, free and vibrant than that in India.

In Pakistan, I read the English language media which go to a tiny part of the population. Apparently, the government, no matter how repressive it is, is willing to say to them that you have your fun, we are not going to bother you. So they don’t interfere with it.

The media in India is free, the government doesn’t have the power to control it. But what I saw was that it was pretty restricted, very narrow and provincial and not very informative, leaving out lots of things. What I saw was a small sample. There are very good things in the Indian media, specially the Hindu and a couple of others. But this picture (in India) doesn’t surprise me. In fact, the media situation is not very different in many other countries. The Mexican situation is unusual. La Jornada is the only independent newspaper in the whole hemisphere."

"As soon as the plan to invade Iraq was announced, the media began serving as a propaganda agency for the government. The same was true for Vietnam, for state violence generally. The media is called liberal because it is liberal in the sense that Obama is. For example, he’s considered as the principled critic of the Iraq war. Why? Because, right at the beginning, he said it was a strategic blunder. That’s the extent of his liberalism. You could read such comments in Pravda in 1985. The people said that the invasion of Afghanistan was a strategic blunder. Even the German general staff said that Stalingrad was a strategic blunder. But we don’t call that principled criticism."

"Perhaps the period of greatest real press freedom was in the more free societies of Britain and the US in the late 19th century. There was a great variety of newspapers, most often run by the factory workers, ethnic communities and others. There was a lot of popular involvement. These papers reflected a wide variety of opinions, were widely read too. It was the period of greatest vibrancy in the US. There were efforts, especially in England, to control and censor it. These didn’t work. But two things pretty much eliminated them. One, it was possible for the corporate sector to simply put so much capital into their own newspapers that others couldn’t compete. The other factor was advertising; advertiser-reliance. Advertisers are businesses. When newspapers become dependent on advertisers for their income, they are naturally going to bend to the interest of advertisers.

If you look at the New York Times, maybe the world’s greatest newspaper, they have the concept of news hole. What that means is that in the afternoon when they plan for the following day’s newspaper, the first thing they do is to layout where the advertising is going to be, because that’s an important part of a newspaper. You then put the news in the gaps between advertisements. In television there is a concept called content and fill. The content is the advertising, the fill is car chase, the sexy or whatever you put in to try to keep the viewer watching in between the ads. That’s a natural outcome when you have advertiser-reliance."

Chomsky is not alone in his assessment of the Indian media. Here are a few other examples:

1. Alice Albinia in the preface to her book "Empires of the Indus":

"It was April, 2000, almost a year since the war between Pakistan and India over Kargil in Kashmir had ended, and the newspapers which the delivery man threw on to my terace every morning still portrayed Pakistan as a rogue state, governed by military cowboys, inhabited by murderous fundamentalists: the rhetoric had the patina of hysteria."

2. John Briscoe, Harvard Professor and water expert on coverage of India-Pakistan water dispute:

Living in Delhi and working in both India and Pakistan, I was struck by a paradox. One country was a vigorous democracy, the other a military regime. But whereas an important part of the Pakistani press regularly reported India's views on the water issue in an objective way, the Indian press never did the same. I never saw a report which gave Indian readers a factual description of the enormous vulnerability of Pakistan, of the way in which India had socked it to Pakistan when filling Baglihar. How could this be, I asked? Because, a journalist colleague in Delhi told me, "when it comes to Kashmir – and the Indus Treaty is considered an integral part of Kashmir -- the ministry of external affairs instructs newspapers on what they can and cannot say, and often tells them explicitly what it is they are to say."

3. Shekhar Gupta in Indian Express:

Can we deny the fact that every new terror attack on the Pakistani establishment, every development that marks a further decline in the authority of its government is greeted with an utterly unconcealed sense of delight? This is not just the mood of the mobs here. Even the “intelligentsia”, the TV talking heads, opinion page columnists, government spokespersons, all have the same smug air of “I-told-you-so” and “so-what-else-did-they-expect” satisfaction. And they ask the same patronising question: hell, can Pakistan be saved?

It is time therefore to stop jubilating at the unfolding tragedy in Pakistan. India has to think of becoming a part of the solution. And that solution lies in not merely saving Pakistan — Pakistan will survive. It has evolved a strong nationalism that does bind its people even if that does not reflect in its current internal dissensions. It is slowly building a democratic system, howsoever imperfect. But it has a very robust media and a functional higher judiciary. Also, in its army, it has at least one national institution that provides stability and continuity. The question for us is, what kind of Pakistan do we want to see emerging from this bloodshed? What if fundamentalists of some kind, either religious or military or a combination of both, were to take control of Islamabad? The Americans will always have the option of cutting their losses and leaving. They have a long history of doing that successfully, from Vietnam to Iraq and maybe Afghanistan next. What will be our Plan-B then?

Related Links:

Haq's Musings

Disease Burdens in South Asia

Pakistan's Media Boom

Manufacturing Consent: Political Economy of the Mass Media

India 63 Years After Independence

Pew Poll in India

Media Subdues The Public. It’s So In India, Certainly

Empires of the Indus

Friday, November 5, 2010

Pakistan Ahead of India on Key Human Development Indices

Although Pakistan at 125 ranks 6 places below India at 119 on UNDP's 2010 human development index, Pakistanis fare much better than their Indian counterparts on several sub-indices including life expectancy, years of schooling and gender parity.

India lags behind its neighbors, Pakistan and Bangladesh, on human development indices like life expectancy at birth and mean or average years of schooling and gender parity, a United Nations Development Program (UNDP) report released Thursday said.

On gender parity, Pakistan ranks 112, ten places ahead of India at 122.

Titled "Real Wealth of Nations: Pathways to Human Development", the report had a global launch and was released at the UN in New York by UN secretary general Ban Ki-moon, according to media reports.

According to the report, life expectancy at birth in India is 64.4 years, while in Pakistan it is 67.2 years. In Bangladesh, life expectancy is 66.9 years.

Similarly, mean years of schooling in India is 4.4 years while in Pakistan and Bangladesh it is 4.9 and 4.8 years respectively.

Sri Lanka, which is ranked above India on HDI at 91, also fares better than India on the two indices. Its life expectancy at birth is 74.4 years and mean years of schooling is 8.2 years.

Reproductive health is the largest contributor to the inequality index. The other indicators, based on which it is calculated, include women's participation in the labor force, their level of empowerment based on educational attainment and parliamentary representation.

For maternal mortality, the figure for Pakistan is 320 deaths per 100,000 live births. In India, the corresponding figure stands at 450. The country also falters on adolescent fertility rate, another indicator of reproductive health.

According to the HDR 2010, the adolescent fertility rate in India is 68 births per 1,000 live births as compared to 45 births per 1,000 live births in Pakistan. The figures illustrate that Pakistan has fewer younger mothers.

Overall, both India and Pakistan are near the bottom of the list of medium human development countries while Bangladesh shows up among low human development nations. This report is just another reminder that the governments and the peoples of the entire South Asian region have a lot of work to do in terms of poverty reduction and education and health improvements to catch up with the rest of the world.

Related Links:

Haq's Musings

BRI C, Chindia and the "Indian Miracle"

Explore the

Multi-dimensional Poverty Index Finds Indians Poorer than Africans

South Asia Slipping in Human Development

OPHI Country Briefing: Pakistan

OPHI Country Briefing: India

Slumdog Inspires India's "Big Switch"

Do Urban Slums Offer Hope?

Pakistan Most Urbanized in South Asia

Sub-replacement Fertility Rates

Female Genocide Unfolding in India

Missing: 50 Million Indian Girls

Population Growth and Migration

The Empty Cradle By Phillip Longman

Demographics Trend Favor Muslims in the West?

Thursday, November 4, 2010

Indian Economic Miracle is Deceptive!

Some urban middle class Indians often leave comments on this blog citing their country's ranking relative to Pakistan's on a contrived index called "Prosperity Index". This index is published by Legatum and reported by Forbes magazine, a publication of the rich for the rich and by the rich that focuses exclusively on the world's multi-millionaires and billionaires as its key audience.

The producers of this "prosperity index" are part of the elaborate deception being perpetrated about India that is hurting its largest population of poor and hungry who are faring worse than the poorest of the poor in Africa.

Here's a recent report titled "India: Economic Power House or Poor House?" by The Star's reporter Mary Albino that talks about how deceptive "India's Miracle" is:

India’s economic miracle is a perfect example of how appearances can be deceiving.

The dominant narrative on the country goes like this: as the fourth largest economy in the world, with a steady annual growth rate of close to 9 per cent, India is a rising economic superstar. Bangalore is the new Silicon Valley. Magazines such as Forbes and Vogue have launched Indian editions. The Mumbai skyline is decorated with posh hotels and international banks.

There are numbers to back up this narrative. The average Indian takes home $1,017 (U.S.) a year. Not much, but that’s nearly double the average five years ago and triple the annual income at independence, in 1947. The business and technology sector has grown tenfold in the past decade. Manufacturing and agriculture are expanding, and trade levels are way up.

India is also on the up and up in terms of human well-being. Life expectancy and literacy are steadily rising, while child mortality continues to decline. The poverty rate is down to 42 per cent from 60 per cent in 1981. While 42 per cent still leaves a long way to go, India’s situation seems rosy compared with that of, say, Malawi and Tanzania, which have poverty rates of 74 per cent and 88 per cent, respectively.

If we examine these statistics in real numbers, however, a different narrative emerges, one the Indian government likes less.

With a population as big as India’s, 42 per cent means there are some 475 million Indians living on less than $1.25 per day. That’s 10 times as many facing dire poverty as Malawi and Tanzania combined.

It means India is home to more poor people than any other country in the world.

To put it another way, one of every three people in the world living without basic necessities is an Indian national.

The real number is probably even larger. The recently launched M ultidimensional Poverty Index (MPI), a more comprehensive measure of deprivation than the current “poverty line” of $1.25 per day, uses 10 markers of well-being, including education, health and standard of living. The MPI, developed by the Poverty & Human Development Initiative at Oxford University, puts the Indian poverty rate at 55 per cent. That’s 645 million people — double the population of the United States and nearly 20 times the population of Canada.

By this measure, India’s eight poorest states have more people living in poverty than Africa’s 26 poorest nations.

A 10-year-old living in the slums of Calcutta, raising her 5-year-old brother on garbage and scraps, and dealing with tapeworms and the threat of cholera, suffers neither more nor less than a 10-year-old living in the same conditions in the slums of Lilongwe, the capital of Malawi. But because the Indian girl lives in an “emerging economy,” slated to battle it out with China for the position of global economic superpower, and her counterpart in Lilongwe lives in a country with few resources and a bleak future, the Indian child's predicament is perceived with relatively less urgency.

One is “poor” while the other represents a “declining poverty rate.”

What’s more, in India there are huge discrepancies in poverty from one state to the next. Madhya Pradesh, for example, is comparable in population and incidence of poverty to the war-torn Democratic Republic of Congo. But the misery of the DRC is much better known than the misery of Madhya Pradesh, because sub-national regions do not appear on “poorest country” lists. If Madhya Pradesh were to seek independence from India, its dire situation would become more visible immediately.

As India demonstrates, having the largest number of poor people is not the same as being the poorest country. That’s unfortunate, because being the poorest country has advantages. In the same way a tsunami or earthquake garners an intense outpouring of aid and support, being labelled “worst off” or “most poor” tends to draw a bigger share of international attention — and dollars.

When Bangladesh became independent from Pakistan in 1971, it was the poorest country in the world, so poor most economists were skeptical it would ever succeed on its own. But being labelled “dead last” worked in its favour: billions of dollars in aid money flooded in, and NGO and charity groups arrived in droves. The dominant narrative of Bangladesh at the time was of a war-ravaged, cyclone-battered and fledgling country on the brink of famine. That seemed to help rally the troops.

No doubt India’s government wants the world to perceive the nation in terms of its potential and not its shortcomings. But because it’s home to 1.1 billion people, India is more able than most to conceal the bad news behind the good, making its impressive growth rates the lead story rather than the fact that it is home to more of the world’s poor than any other country.

Still, at least part of the blame should be placed on the way poverty is presented on the international stage. If the unit of deprivation is a human being, then the prevalence of poverty should be presented in numbers of lives. If we know precisely how many billionaires India has — 49 in 2010, double last year’s number — than we should also know precisely how many people live without basic necessities.

A much better measure of the average Indians' situation is the multi-dimensional poverty index recently published by Oxford University researchers.

OPHI 2010 country briefings on India and Pakistan contain the following comparisons of multi-dimensional (MPI) and income poverty figures:

MPI= 55%,Under$1.25=42%,Under$2=76%,India_BPL=29%

MPI= 51%,Under$1.25=23%,Under$2=60%,Pakistan_BPL=33%

Lesotho MPI=48%,Under$1.25=43%,Under$2=62%,Lesotho_BPL=68%

Haiti MPI=57%,Under$1.25=55%,Under@2=72%,Haiti_BPL=NA


Among other South Asian nations, MPI index measures poverty in Bangladesh at 58 per cent and 65 per cent in Nepal.

While OPHI's MPI is a significant improvement over the simplistic income level criterion for assessing poverty, it appears that the MPI index gives nearly three quarters of the weight to child mortality and school enrollment, and just over a quarter of the weight to a combination of critical factors such as access to electricity, sanitation and clean drinking water which are essential for proper learning environment, increased human productivity and healthy living.

Here's a video of Jawaharlal Nehru University's economic professor Dr. Jayati Ghosh's debunking "The Indian Miracle":

Related Links:

Haq's Musings

BRIC, Chindia and the "Indian Miracle"

M ulti-dimensional Poverty Index Finds Indians Poorer than Africans

South Asia Slipping in Human Development
OPHI Country Briefing: Pakistan

OPHI Country Briefing: India

Slumdog Inspires India's "Big Switch"

Mumbai's Slumdog Millionaire
Poverty Tours in India, Brazil and South Africa
South Asia's War on Hunger Takes Back Seat

British TV Accused of Making "Poverty Porn"

Orangi is Not Dharavi
Bollywood and Hollywood Mix Up Combos
Grinding Poverty in Resurgent India

Slumdog Is No Hit in India

Pakistani Children's Plight

UNESCO Education For All Report 2010

India's Arms Build-up: Guns Versus Bread

South Asia Slipping in Human Development

World Hunger Index 2009

Ch allenges of 2010-2020 in South Asia

India and Pakistan Contrasted 2010

Food, Clothing and Shelter in India and Pakistan