Paranoid about the deficit

Despite the sluggish growth, China remains India’s topmost trade partner.

Posted: September 23, 2014 

By: Amitendu Palit

Chinese President Xi Jinping’s visit to India was noticeable for not having been accompanied by the declaration of a bilateral trade target. While ex-premier Wen Jiabao’s visit in December 2010 was followed by the announcement of a bilateral trade target of $100 billion by 2015, no such numbers were put out this time.

Avoiding a target might have to do with the fact that bilateral trade (merchandise) has not increased from its peak of $73.4 billion in 2011-12. The last two years have had trade hovering around $66 billion. As a result, achieving the target of $100 billion by 2015 appears almost impossible. This will be the first time since Zhu Rongji’s visit in 2002 that the declared trade target will remain unfulfilled.

Despite the sluggish growth, China remains India’s topmost trade partner. Most analysts, given India’s obsession with the trade deficit, usually accept this grudgingly. It is impossible to come across discussions on China-India relations that do not refer to the bilateral trade deficit.

The paranoia over the trade deficit with China could have been justified if India were a net exporter of goods to the rest of the world and its trade with China was an exception. The structure of India’s trade with China is not exceptional in any way. India buys much more from the rest of the world than it sells, and is a net importer of goods. It runs trade deficits with 16 of its top 25 trade partners.

Gas and hot air

Posted: September 23, 2014 

By: Anupama Sen

The government will soon reveal its decision on gas pricing, which will shape India’s energy landscape for the foreseeable future. The Kelkar Committee has recommended that gas producers be paid “market-determined” prices. But what does this mean?

Unlike oil, there is no global gas price. There are regional markets, where prices are determined by demand and supply. Gas supply contracts, which were typically hitched to oil prices, are increasingly linked to these regional market prices, reflecting a growing consensus that gas market dynamics are different. The three prominent markets used as price benchmarks are the US (Henry Hub), the UK (National Balancing Point) and Japan (Japan LNG), which imports liquefied natural gas. Gas prices are based on calorific value, measured in millions of British thermal units (mmBtu). Consumers in the US and UK pay prices three to four times lower than Asian consumers because Asia produces little gas and has to rely on imports, which are restricted by price and destination clauses.

In India, the producer price of gas is set according to the terms of the contract signed between the government and the operator of the producing field. Broadly, there have been three different contractual regimes. Two of these, the “nomination regime”, which covers production from pre-liberalisation-era fields by national oil companies, and the “new exploration licensing policy”, which covers production under India’s current liberalised policy, account for 60 per cent of the supply of gas. Under these, prices have been set at $4.20/mmBtu since 2010. In contrast, Asian LNG import prices range from $12-17/mmBtu.

So why the fuss? First, the pricing formula is linked to the price of crude oil up to a cap of $60 per barrel. But oil prices have persistently ranged around $100. Second, the price of rigs is set by the international market and capital costs of production have doubled in the last decade. Given the static domestic price, national oil companies, which produce the majority of India’s gas, have insufficient capital left over for reinvestment. For instance, ONGC’s production cost is such that it just breaks even. Since it cannot reinvest to produce more gas to meet India’s rising consumption, the deficit has to be met by importing LNG at three times the domestic price.

The Rangarajan Committee had recommended basing the producer price on the average of the Henry Hub, National Balancing Point, Japan LNG and Indian import prices. While this is a somewhat arbitrary price-formation mechanism, it attracted the greatest criticism for its impact on the price level as it would have pushed up prices for the domestic consumer, particularly in the fertiliser and power sectors, which account for 70 per cent of gas consumption.

A foreign economic policy

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Americans believe that India can achieve rapid economic growth through innovation if it opens up its economy to foreign technologies.

Written by Husain Haqqani | Posted: September 23, 2014 

For decades, pundits have described India and China as rivals for leadership in Asia. Chinese President Xi Jinping’s recent visit to India suggests that economic cooperation, rather than strategic competition, could be the main driver for the two Asian giants. If Prime Minister Narendra Modi’s forthcoming meeting with US President Barack Obama also gives due weight to economic considerations, India could be on the verge of significantly redefining its global role.

It is good that Modi pays attention to economics, unlike the entrenched establishment in Pakistan, which clings to military strategies even when the cost is the country’s impoverishment. India and the United States could still emerge as strategic partners, but with shared economic interests rather than just shared concerns about the balance of power. And Sino-Indian rivalry could be postponed to a day when both countries have modernised their economies.

India has yet to realise its full potential as a leading global economy. The rapid economic growth that India has witnessed since the mid-1990s was ushered in by much-needed reforms. After being criticised by economists for its low rate of growth, India finally earned a place among the world’s leading emerging markets. Further reform could lead it to greater success among the BRICS, that is, Brazil, Russia, India, China and South Africa, and beyond.

Americans believe that India can achieve rapid economic growth through innovation if it opens up its economy to foreign technologies. As Modi and Obama meet, Indian policymakers must recognise that economic factors are as important to Washington as they are to Beijing. For American FDI, India must strengthen its intellectual property right regulations and protect foreign investors who are exporting new technologies to India. Greater protection for foreign technologies will not only encourage growth and innovation, but also bring in vital FDI.

HOW TO BE REGIONAL IN THE TWENTY-FIRST CENTURY

http://www.telegraphindia.com/1140923/jsp/opinion/story_18827673.jsp#.VCDAl_mSzb4

India must be part of the trans-Pacific partnership, the largest global supply chain, in order to become a major global power, writes Jayanta Roy

The prime minister is visiting the United States of America later this month at the invitation of its president, Barack Obama, to revive the sagging decade-old US-India strategic partnership. The agenda will be broad and diverse but a key focus will undoubtedly be on economic issues.

The backdrop of the visit includes, inter alia, the tensions between the West and Russia over Ukraine and the resultant strengthening of Sino-Russian strategic ties, the establishment of the BRICS-led New Development Bank, the invitation to India to become a full member of the Shanghai Cooperation Organization and the impasse at the World Trade Organization meeting in Geneva. India’s special strategic and economic partnership with the world’s third largest economy was revealed during the prime minister’s visit to Japan, and its successful engagement with the second most powerful global power was manifested by the Chinese president’s visit to India. Almost all policy initiatives by the new government reflected its recognition that the fulfilment of its socio-economic development goals, as much as India’s national security interests, would be linked with our external engagement. There are also other indicators that India is now convinced about its need to rely on an outward-oriented growth strategy with an emphasis on improving the overall business climate to attract foreign direct investment.

The global trade landscape is marked with the predominance of mega-regionals like the trans-Pacific partnership (TPP) and the regional comprehensive economic partnership in Asia. India is already a member of RCEP. During the forthcoming visit, the prime minister could consider conveying to President Obama that India could upgrade most of its trade policy to meet the evolving gold standards of the TPP. It would do so keeping its national interests in the forefront. No commitment would be required at this stage on joining the TPP. This should send a strong signal that India is serious about removing all major impediments to trade and investment.

India in any case needs to align its trade policies to the drastically changed realities in the last two decades. International trade today is defined by integrated production networks that combine intermediate goods and services from several countries to produce the final goods and services. Global fragmentation of production is essentially a division of labour based on specialized tasks that need to be combined by the means of an efficient supply chain. Thus, the focus now is to connect to global supply chains. To succeed in that, the massive costs of trade transactions have to be drastically reduced through trade facilitation and logistical facilitation reforms and, along with it, the ease of doing business. This would facilitate the linking of small and medium enterprises to global supply chains. This, in turn, would encourage a larger flow of FDI with the aim of making India a hub in the supply-chain process. This will create jobs and make inclusive growth real.

Dealing with devolution

September 23, 2014

Ashok K. Mehta

After the defeat of the LTTE and the economic activism of China, the geostrategic reality has altered significantly in Colombo’s favour. With no usable leverages, India may have to live with 13A minus police powers, provided the devolved powers are actually implemented on the ground

In his interview with The Hindu (Sept. 11), Sri Lankan President Mahinda Rajapaksa has agreed to discuss the 13th Amendment (13A) with the Tamil National Alliance (TNA) which is ruling the Northern Province. He has also spoken about the issues of fishermen and alleged fears about China, making the assertion “India has nothing to worry about from China in Sri Lanka. Until I am here, I can promise that.” It is understood that for the first time, Mr. Rajapaksa told an Indian Prime Minister — in this case, Mr. Narendra Modi — during his recent meeting in New Delhi that police powers will not be devolved to the Northern Provincial Council (NPC), clearly rescinding from 13A plus. In spite of this, he has held that India-Sri Lanka relations are “very strong.”

Insurgency fears

This sentiment was endorsed by the chairman of the Bharatiya Janata Party (BJP) Committee for Strategic Action, Dr. Subramanian Swamy, at an international seminar in Colombo last month. He elaborated: “This is not the old government ... with Prime Minister Narendra Modi it is a new beginning in India-Sri Lanka relations.” An air of optimism and expectancy was palpable following Mr. Modi’s invite to President Rajapaksa to his inaugural, India’s abstention at the Geneva Human Rights Council after two consecutive votes against Sri Lanka and the massive electoral mandate in favour of Mr. Modi which frees it from deference to Tamil Nadu. Colombo’s biggest but latent insecurity emanates from the 65 million Tamils, a mere 19 kilometres across the Palk Strait. Sri Lankans keep an inventory of Tamils worldwide. Dr. Swamy, who is the darling of policy-crafters and the military in Colombo, is a frequently heard and quoted voice touching the right chords, like making light of Tamil Nadu’s politicians, stressing the centrality of national interest over narrow provincial political pressures. He suggested that the Indian policy of non-interference makes devolution Colombo’s business, with police powers being devolved over time.

No one can cavil at Dr. Swamy’s foreign policy formulation except over its nuanced variation from the government of India’s latest diplomatese: India was committed to engaging Sri Lanka in full implementation and going beyond 13A Plus as promised by Mr. Rajapaksa earlier (several times over). During his brief visit to New Delhi, Mr. Rajapaksa was told by Mr. Modi to implement 13A in full, as pledged, but firmly expressed difficulty in devolving police powers. To reiterate the point, several Sri Lankan Cabinet ministers and leaders — this includes Foreign Minister G.L. Peiris in Parliament and at the Colombo defence seminar, Economic Development Minister Basil Rajapaksa to the media, and the President himself to foreign correspondents in Colombo — have reiterated that police powers will not be delegated. The Tamil Central Minister from Jaffna, Douglas Devananda, whom the LTTE tried to take out 13 times, has played an old tune, one composed by Mr. Rajapaksa, that a political solution to the minority question has to be found from within, expressly rejecting 13A.

India’s Blind Spot on ISIS

By Kabir Taneja

September 21, 2014

So far, few Indians have joined the extremists, but gaps in New Delhi’s ability to track them are worrying. 

The terrorist group Islamic State of Syria and the Levant (ISIS) or, as it likes to call itself, the “Islamic State,” has managed to attract Islamist fighters not just from the Middle East but all across the world.

According to data released by the International Centre for the Study of Radicalisation and Political Violence (ICSR), a London-based think tank, would-be jihadists from countries as far away as Australia and Norway have joined the ranks of the ISIS, which recently announced that the territory it controls, greater than the landmass of the United Kingdom, is now a “caliphate” led by the group’s elusive leader Abu Bakr al-Baghdadi.

According to ICSR, most of the overseas fighters populating the ranks of the ISIS have come from Tunisia (3,000 plus), Saudi Arabia (2,500 plus), and other regional Gulf members. However, the organization also notes that Western countries are also rapidly adding to the ISIS numbers, with France (around 700) and Britain (around 500) leading the pack. Even China has figured prominently, with more than 100 jihadists of Chinese origin thought to have fought with ISIS. According to latest estimates by America’s Central Intelligence Agency (CIA), the terror group may have up to 30,000 personnel under its command across Iraq, Syria, and possibly even beyond that.

However, one region where the influence of ISIS and its recruiting propaganda seem to be minimal is South Asia. According to the data, even Pakistan, which has become a safe haven for militant activity, has contributed only around 300 known fighters to the ISIS. From Afghanistan, a meager 25 people seem to have joined.

In late August, reports of the death of one Arif Ejaz Majeed, a civil engineering student from suburban Mumbai, while fighting for the ISIS in Iraq hit the front pages of Indian newspapers. Majeed was reportedly part of a group of people on a pilgrimage to Iraq before he disappeared, and was last spotted in Mosul before his death, allegedly in an air strike. Two others from Mumbai had accompanied him. Majeed became the first confirmed Indian-origin casualty in the Iraq crisis from the side of the ISIS.

India’s National Investigation Agency (NIA) had already been alerted to the growing instability in the Middle East and the ripple effects it may have on Indian society. According to reports, an NIA dossier alleged that more than 300 Indian youths had been recruited by the Tehreek-e-Taliban Pakistan and the ISIS, which are now working together. While details beyond this dossier are scant, a similar dossier from the same agency made an appearance in the media some months back, revealing that some members of the now dismantled Indian Mujahideen terror network were going to the Afghanistan-Pakistan border regularly to train and fight.

The fact is that very little known as to whether Indians have actually gone and joined the ISIS in any capacity. There are two problems in developing the necessary data: First, local agencies have a vast region to cover both geographically and population wise to gather information; and second, more than 7 million Indians live in the Middle East, and no data is available on whether any of them may have joined the ISIS in Iraq or Syria, or have joined, fought and then returned home.

Standard Contract Document - Guideline or Canon?

Amit Cowshish

September 19, 2014

The Standard Contract Document (SCD) contained in chapter V of the Defence procurement Procedure (DPP) 2013 contains ‘general conditions of contract that would be the guideline for all acquisitions’.1 All draft contracts are required to be drawn up as per this guideline with one exception.

In single-vendor procurement cases, if the government of India has a standing agreement with the vendor or the country from which the equipment is being sourced, the terms and conditions of such an agreement supersede the corresponding standard clauses of the DPP.

Quite clearly, SCD is a template meant for guidance of the contracting parties. It is not cast in stone; every contract does not have to be its exact replica. That simply cannot be. But it is not uncommon for the contracting officials of the Ministry of Defence (MoD) and the vendors to get embroiled in protracted discussion on the wording of some of the clauses.

One possible reason for this is that any departure from the standard text is viewed as a ‘deviation’. As per paragraph 75 of DPP all deviations from the prescribed procedure require to be placed before the Defence Acquisition Council (DAC) through the Defence Procurement Board (DPB) for approval.

That would put the officials seeking approval for a deviation immediately on the back foot. To adopt this time-consuming route would inevitably entail giving detailed justification for seeking the approval and, given the atmosphere, running the risk of the entire move being seen with a tinge of suspicion. But this is not the only reason.

To a large extent, reluctance on the part of the officials to agree to any suggestion that requires tweaking of the clauses of the standard document is on account of the uncertainty about the consequences of agreeing to the suggested changes. Insistence on the part of the vendor to tweak the clauses - often without explaining the rationale - does not help. It is equally true that giving the rationale is also of little help in persuading the officials to agree to any change in the text of the standard clauses.

This must change but for that to happen DPP must clearly define what is meant by the ‘prescribed procedure’.

The ‘procedure’ comprises the following ‘functions’ enumerated in paragraph 12 of DPP: 

Services Qualitative Requirements (SQRs) 

Acceptance of Necessity (AoN) 

Solicitation of offers 

Evaluation of technical offers by the Technical Evaluation Committee (TEC) 

Field Evaluation 

Staff Evaluation 

Oversight by Technical Oversight Committee (TOC) for acquisitions above ₹ 300 crore 

Commercial negotiations by the Contract Negotiation Committee (CNC) 

Approval of the Competent Financial Authority (CFA) 

Award of contract/supply order 

Contract administration and post-contract management 

India Mission to Mars: Ready to Orbit

Ajey Lele

September 20, 2014

The Indian Space Research Organization (ISRO) launched its maiden mission to Mars – the Mars Orbiter Mission (MOM) – on November 5, 2013. This mission is expected to reach the ‘Red Planet’ on September 24, 2014 after a ten month long space journey. Currently, the MOM is travelling at a speed of 22 km/second. After reaching close vicinity of Mars, this speed needs to be reduced significantly to make a correct entry into the planet’s orbit. The biggest challenge of this mission will be faced by the on September 24, when the on-board liquid engine would require restarting. This engine has been in sleep mode since December 1, 2013. The challenge is significant because there is no information as to what kind of space weather and radiation the MOM has experienced during its long travel and how much of impact the spacecraft has taken. 

ISRO has announced that on September 22, 2014, about two days before the crucial orbit insertion, it would attempt to test-fire the engine for five seconds. For the September 24 insertion ISRO also has 'Plan B' in place, if in case the procedure of the orbit insertion develops any difficulties. This backup plan involves firing of eight 22 Newton Thrusters for the insertion. All this meticulous planning by ISRO clearly indicates that much is at stake. Mars has always been a difficult planetary customer since the 1960s when humans first started undertaking missions to this planet. There have been more failures than successes to visit the Martian orbit. For any spacecraft to reach to Mars takes almost ten months and entering into the Martian orbit has always been a technical challenge. 

What does the possible success with the Mars mission mean for India? What if ISRO’s mission fails? Would it be considered as a major blow to India’s space programme? In fact, judging by the progress made by the MOM it could be comfortably claimed that ISRO has already achieved around 30 to 40% of the success: first by flawlessly launching the MOM on Nov 5, 2013 and subsequently taking this spacecraft out of the sphere of influence of the earth. Here the primary gravitational influence of earth which is experienced by spacecraft diminishes and slowly the satellite starts under the influences of other planets. For the last ten months, the MOM is following a correct trajectory towards its travel to Mars. Ultimately, what remains is to succeed with correct Mars orbital insertion on September 24 and subsequently taking scientific observations to high levels of space research. 

ISRO’s space programme agenda has seen some great successes particularly in the last few decades. The successful Moon mission in 2008 is a landmark achievement. Surely the Mars mission would mean an additional feather in ISRO’s cap and would boost India’s global standing in space and technology. It may be noted that no Asian state has yet achieved the distinction of reaching the Mars. India could be the first. 

With the launch of Sputnik in 1957, the political dimensions have dominated the space discourse. The erstwhile Soviet Union made the US see ‘red’ when Yuri Gagarin became the first human in space. The Apollo human Moon programme was conceived essentially not only for the purposes of a detail study of Moon but to equally demonstrate a superior technological capability of a state. The US success with the Moon programme was an expression of its great power status.

India needs to expand its Mars agenda further. It is for scientific, technological and commercial gains purposes. The political gains are incidental. The best window to undertake a mission to Mars, arises only once in 26 months. This is because owing to the different orbital motions of the planets, Mars comes closer to Earth only once in every 26 months. In the near future there would be such opportunities available in 2016, 2018 and 2020 and India should utilise all these opportunities gainfully.

Any major success achieved by India could assist the global efforts towards the possible human colonization of Mars. This would automatically increase India’s status. Strategic superiority is not only about the display of nuclear weapons but also of alternative ideas. Mars is an idea whose time has come and any major success in this field holds the potential to transform a rising power like India into a great power. 

Views expressed are of the author and do not necessarily reflect the views of the IDSA or of the Government of India

A Bittersweet Meeting Between Xi and Modi

Chinese President Xi Jinping is on a three-day visit to India, where he meet with Prime Minister Narendra Modi in his home state of Gujarat yesterday and visited New Delhi today. The high-level talks have already netted a number of lucrative infrastructure deals, with more expected to follow, especially regarding rail system development. Indeed, China may go so far as to promise an eye-popping $100 billion to Indian development during the visit, though as of yet it has only officially offered $20 billion, still short of the Modi’s recent Japanese deal ($35 billion).

However, a recent border dispute has cast a pall over the happy event; Chinese and Indian troops are currently engaged in a standoff on the disputed border. The FT reports:

Hours before the two governments signed [the various agreements], India’s foreign ministry said Mr Modi had raised the issue of incursions in recent days by Chinese troops across the disputed border known as the Line of Actual Control.

It was not immediately clear if this latest incident in the Himalayas – apparently one of the most serious for years – was the result of a show of strength by Beijing to coincide with Mr Xi’s visit or arose from more aggressive patrolling by the Indian army on the orders of the nationalist Mr Modi.

Indian media quoted officials as saying hundreds of Chinese soldiers had crossed the line and were faced with Indian forces at Chumar, Ladakh in the state of Jammu and Kashmir.

Both leaders have called for an amicable relations regarding the border, however. Modi also said that the border must finally be delineated, saying it was essential to the two countries’ ongoing friendship.

Meanwhile, Indian President Pranab Mukherjee visited Vietnam earlier this week, and extended a $100 million credit for Vietnam to use to purchase Indian weaponry. He also strengthened the two countries’ energy ties. They stressed their mutual commitment to “freedom of navigation” in the surrounding maritime regions, a statement of opposition to Xi’s ambitions to build a “Maritime Silk Road” in the Indian ocean through which Chinese trade can run.

As India’s outreach to Vietnam and the spat on the border show, Modi is not letting down his guard when it comes to China’s ambitions. Nor, for its part, is Beijing backing down. But for the time being, India is certainly making out well from Xi and Abe’s competition for its affections.

Is India’s bold prime minister bold enough?

By Fareed Zakaria

September 18

Indian Prime Minster Narendra Modi. 

Narendra Modi, India’s new prime minister, radiates confidence. He has the first outright majority in India’s parliament in 30 years. The public lauds him, world leaders court him and the Bombay Stock Exchange continues to soar. But will this moment of euphoria translate into lasting gains? Can India become the world’s next economic powerhouse?

Fareed Zakaria writes a foreign affairs column for The Post. He is also the host of CNN’s Fareed Zakaria GPS and editor at large of Time magazine.

I had the chance to pose these questions when I met with Modi last weekend at his house in New Delhi, his first interview since becoming prime minister. Modi is extremely intelligent and focused but is different from most leaders I have met. His worldview has been shaped almost entirely from experience rather than formal schooling. Born poor and lower-caste (which in India is a worse fate), he left home when he was 17 and soon got involved in politics, joining the RSS, a hard-line Hindu nationalist group. He later got bachelor’s and master’s degrees, but his real education came from traveling around India.

He recounted the thousands of villages he had visited as the head of the government in the state of Gujarat — a period during which Gujarat grew as fast as China. This feel for how people live animates him. Modi is passionate about hygiene and has launched an ambitious drive to build toilets in homes, schools and elsewhere. In his Independence Day speech last month, atop the ramparts of the Red Fort in New Delhi, Modi spoke plainly about the shame that vast numbers of Indians defecate in public. Any previous prime minister would have considered the topic beneath the office. But Indians love his down-to-earth approach.

WAR AGAINST ISLAMIC STATE: CAN INDIA PLAY A ROLE? – ANALYSIS

By Monish Gulati

SEPTEMBER 22, 2014 

The national flag of India hoisted on the Red Fort in Delhi. Photo by Jasleen Kaur, Wikipedia Commons 

US President Barack Obama chose the eve of the 13th anniversary of the 9/11 attacks to unveil his strategy against the Islamic State (IS) in an address to the nation from the White House in Washington.

In what is seen by some analysts as a reversal, Obama authorised airstrikes inside Syria for the first time as well as expansion of strikes in Iraq as a part of the strategy to “degrade and ultimately destroy” the IS.

He ordered a broad military campaign in concert with a “coalition of the willing and capable” against the IS as it is seen to pose a risk to Americans and the interests of its allies in the region. In the past few weeks the US has been launching limited airstrikes against IS targets in Iraq in support of Iraqi and Kurdish resistance, and in response, the IS has released videos depicting the beheading of two American journalists in Syria.

There is speculation that India, in a departure from the past, may consider the option of being a part of this international effort; more as a “responsible” global actor than in response to any threat posed by the IS to the country. An issue US might take up in the forthcoming Obama-Modi meeting. The US State Department has indicated that more than 40 countries have already given or offered support of some kind to Iraq in dealing with the militants.

The Strategy

The US State Department briefing said the focus will be on “multiple lines of effort, including military support to our Iraqi partners, stopping the flow of foreign fighters, countering IS’ financing and funding, addressing humanitarian crises, and de-legitimising IS’ ideology”. Before Obama’s address the US Treasury Department indicated that it would, as a part of the strategy, step up efforts to undermine the IS’ finances by working with other countries, especially Gulf states, to cut off the group’s external funding networks and its access to the global financial system.

Obama’s declaration to destroy IS through a comprehensive and sustained counterterrorism strategy comes with a few caveats; no putting American troops in combat roles on the ground in Iraq or Syria. He said US will not do for Iraqis what they must do for themselves. Second, US will not take the place of Arab partners in securing their region.

WATER COOPERATION HAS POTENTIAL TO LIFT INDIA-NEPAL TIES – ANALYSIS

By Dr. Ram Kumar Jha

SEPTEMBER 22, 2014

Water resources is considered the backbone of the Nepalese economy. The issue of water resources has always been in the priority list of bilateral cooperation between India and Nepal.

It has vast potential to generate power and can assist in irrigation facilities by construction of mega projects. However, flash floods, erratic behaviour of rivers and construction of a barrage along the India-Nepal border have submerged Nepalese territory and caused huge loss of lives and property during the monsoon season.

The river system of Nepal with more than 6,000 rivers drains from north to south towards the Ganges. The total average annual runoff from all these river systems is estimated at about 225 billion cubic metres (BCM). Nepal is utilizing only a part of it (estimated at 15 BCM) for economic and social purposes. Until now, Nepal has utilized mainly medium and small rivers for different uses such as drinking water, irrigation and hydropower.

The larger and perennial Himalayan rivers have been virtually left untapped, except for a few run-of-the river schemes. Since there is extreme seasonal variation in water availability in the Nepalese rivers, all future programmes will have to focus on storage of water during the rainy season and its utilization during dry periods.

The Koshi River Basin is a trans-boundary river system that stretches from China in the north down through Nepal and across the Himalayan mountain ranges, and discharges into the Ganges river in India covering about 70,000 km2 of land. This basin is the home of millions of people reliant on the fertile floodplains and the river for their livelihoods. At the same time subsistence farmers balance the threat of starvation with that of floods.

CUTS International, a Jaipur-based research and advocacy organisation, with support from Department of Foreign Affairs and Trade, Government of Australia, has conducted a survey in Nepal to estimate the live conflicts and their remedial actions for water security between India and Nepal. The study found that India and Nepal signed the Koshi agreement in 1954 to regulate the flow of the river and to ensure flood management.

The project is utilised for power generation and irrigation purposes. The development of the Koshi project took place in three phases. The first phase was the period of the 1950s, when the Koshi Agreement was signed. Koshi Barrage was built between 1959 and 1963 and straddles the Indo-Nepal border. In the second phase, the 1966 version stated that Nepal would lease the land for the barrage to India for a period of 199 years.

INDIA-BANGLADESH BUSINESS: ENGAGEMENT OF NORTHEAST ESSENTIAL – ANALYSIS

By Rupak Bhattacharjee

SEPTEMBER 22, 2014 

In their bid to boost economic cooperation and connectivity, policy makers, government officials, bankers, economists, business and industry leaders of India and Bangladesh participated in a business conclave titled “A New Phase in Bilateral Economic Relations” on Aug 23-24 in Dhaka.

The conclave attached priorities to issues concerning Bangladesh’s trade ties with north eastern states. The representatives of both the countries discussed the challenges and opportunities of connectivity between Bangladesh and north eastern states and the possible ways of improving infrastructure at land ports, removing non-tariff barriers and increasing investment to enhance bilateral trade between the two countries.

Bangladesh demanded that India should do away with non-tariff and para-tariff barriers to help Dhaka in increasing its exports to India for minimising the trade imbalance between the two nations.

Bangladeshi business leaders and experts identified a number of impediments, including testing and certification, packaging and labelling issues that stood in the way of doing business with India. They maintained that in most cases, India does not recognise certification of Bangladesh Standard and Testing Institution, which is hampering exports to the country.

The Indian delegation led by Development of North Eastern Region (DoNER) Minister General (retd) V.K. Singh tried to convey the message that New Delhi is keen on forging ties with Bangladesh with special focus on expansion of business with north east because of geographical contiguity. Singh said at the conclave that there is endless scope for expanding Bangladesh’s trade with seven states and the union government would provide all possible support to explore the opportunities.

He reiterated India’s commitment to ensure prospects of neighbouring countries as it believes that India’s prosperity lies in the neighbour’s prosperity. General (retd) Singh, who fought Bangladesh’s Liberation War in 1971 alongside the Bengali freedom fighters, urged Bangladeshi entrepreneurs to explore his government’s neighbourhood policy for mutual benefit. Singh said his government had decided that the north east must develop in terms of infrastructure, which means rail, road and air connectivity and connectivity with neighbouring countries.

The minister noted that despite getting duty free access in the Indian market, Bangladeshi exporters could not fully exploit the opportunity as they failed to “understand the Indian market”. Indian Chamber of Commerce president Rajeev Singh observed that Bangladesh with its natural resources has enough potential to broaden trade ties with north east India

US to Ukraine: Good Luck, and Have a Nice Day

September 19, 2014 

Source Link

On a visit to Washington, Ukrainian President Petro Poroshenko spoke before a joint session of Congress, asking the United States to stand with Ukraine against Russian aggression. More specifically, he asked for increased military aid, including weaponry, which the U.S. has not so far provided, and for Ukraine to be granted a special non-NATO ally status, a request that received a standing ovation. The Washington Post reports:

Poroshenko urged lawmakers to provide more political support, as well as “military equipment, both lethal and non-lethal” to Ukrainian soldiers. “Blankets and night-vision goggles are important,” he said. “But one cannot win a war with blankets.”

On Wednesday morning, the White House announced a further $53 million in aid to Ukraine — but no military assistance. Including the latest installment, the United States has provided $219 million in aid to that nation so far this year.

The Ukrainian president, who received several standing ovations, urged Congress “not to let Ukraine stand alone in the face of this aggression” and asked for “special, non-allied partner status” for Ukraine.

Asked on CNN later about Obama’s response to the special non-NATO ally status plea, Poroshenko said that President Obama gave him a flat “no.” The Senate Foreign Relations committee, however, unanimously passed a bill sponsored by Senators Corker and Menendez granting Ukraine, Moldova, and Georgia that status. The bill is expected to reach the floor in November.

The Administration still seems to misunderstand the way that Putin thinks and acts. Putin is clearly testing U.S. commitments over time—previously with his war in Georgia, now with the conflict in Ukraine—and he is already stepping up the pressure on the Baltic republics. In an early example of this, Russian forces kidnapped an Estonian official in his home in early September. Estonia is a NATO member, and the kidnapping came two days after an Obama visit meant to demonstrate US resolution and support in the face of Russian pressure. Meanwhile, Poroshenko alleged to the European Commission that Putin privately threatened to invade Poland, Romania, and the Baltic states.

The anemic and apologetic response of western governments to repeated Russian provocations appears to have persuaded Putin that the west lacks the stomach for anything beyond economic sanctions that, it seems, Putin has decided that he can withstand.

Israel’s New Unwanted Neighbors on the Golan Heights - Al Qaeda

Ruth English and William Booth

September 22, 2014

Israel worries as al-Qaeda affiliates gain control of Syrian side of Golan frontier

NAFAH JUNCTION, Golan Heights — Israel has some new neighbors. Al-Qaeda-linked rebels have, for the first time, established a permanent presence on the Syrian frontier.

For 40 years, Israel and Syria have kept the peace along the 1974 armistice line here, a cease-fire overseen by U.N. troops from countries such as Fiji and the Philippines, who patrolled a demilitarized buffer zone populated by apple farmers.

Today, the U.N. peacekeepers are mostly gone. And so is the Syrian government.

In a series of sharp, decisive skirmishes over the past few weeks, Syrian army forces loyal to President Bashar al-Assad were swept aside by al-Qaeda-linked rebels from Jabhat al-Nusra and other anti-Assad militants along nearly the full length of the Golan buffer zone.

In August, Syrian rebel forces flushed U.N. peacekeepers from their base near the Quneitra border crossing and kidnapped a contingent of 45 Fijian soldiers stationed nearby. The Fijians were released unharmed after two weeks, but the entire contingent from Fiji has since packed up and left.

In this photo taken on Tuesday, Sept. 16, 2014, U.N. peacekeepers observe Syria’s Quneitra province at an observation point on Mt. Bental in the Israeli-controlled Golan Heights, overlooking the border with Syria. (Tsafrir Abayov/AP)

A generation of Israeli commanders has warily eyed the Syrian side. But things have gotten demonstrably worse in the past month. With U.N. peacekeepers absent, the Syrian army routed and al-Qaeda affiliates in the Jabhat al-Nusra in control, the sleepy borderland is more unstable than at any time in the past four decades.

“Who is in control over there? We don’t know,” said Col. Nir Ben David, a senior officer with the Northern Command of the Israeli Defense Forces.

He pointed to scattered farm towns in Syria.

Israel's Strategy: Shooting Pool With a Bowling Ball

By BARBARA OPALL-ROME

Sep. 20, 2014

http://www.defensenews.com/article/20140920/DEFREG04/309200020/1001/DEFSECT

Aftermath: A Palestinian family walks past the remains of a building destroyed in fighting between Hamas militants and Israel in Shejaiya, in Gaza. The Israeli military says the next conflict will be more complex. (ROBERTO SCHMIDT/ / AFP/Getty Images)

TEL AVIV — Israeli military leaders are assessing how lessons from Gaza could apply to war planning in Lebanon, Syria and other potential theaters.

But officers charged with future war planning are already nostalgic for the relative simplicity of Israel’s summer of combat in the Gaza Strip. Although challenging to battle well-armed enemies deeply embedded among innocent civilians, Israel still had the relative luxury of targeting so-called centers of gravity in its 50-day war in the Hamas-controlled Gaza Strip.

But in a fractured region in continuous flux, those centers of gravity are giving way to pockets of gravity with no single address, officers here say.

In this new Middle East of breakaway insurgencies and blurred borders, Israel can no longer direct its “bowling ball” — as one officer here described it — against a single strongman or central government.

“When it was nation against nation, it was relatively simple,” said Brig. Gen. Oren Avman, head of Israeli Army training and doctrine. “If you selected the right ball and threw it in the right way, you could effectively strike all those pins supporting the enemy’s center of gravity.”

But in a region with multiple pockets of gravity, Israeli planners are mulling how to decapitate only immediate threats without empowering others that continue to sprout.

In the Army, they’ve already started to replace metaphorical bowling for billiards, where artful strategy and geometrically calculated tactics is more effective than brute force.

“You have a table with many balls and many pockets and you’re holding a big stick. If this stick is not efficient and it causes you to put in the black ball — let’s call it civilians — you lose legitimacy,” Avman said.

“But if you scratch with the white ball, you’re squandering your capabilities.”

Officers here said the operational concept was demonstrated in maneuvering ground war in Gaza, but will prove inordinately more challenging in the Lebanese or Syrian theater.

“We have to use this big stick carefully and with extreme accuracy, because enemies are hiding among civilians all the time,” Avman said.

“And that’s just Gaza.”

Against threats to the north, those metaphorical billiard balls must be targeted in ways that won’t strengthen the spectrum of forces operating in the same domain, Avman said.

“When we look around in Lebanon, they have an army supported by the US. But there is another huge army [Hezbollah] backed by Iran operating by guerrilla methods in villages and tunnels.

“If you look at Syria, after more than 200,000 dead, they’re still killing each other. And now this so-called Islamic State joined the party and we have al-Qaida extremists meters from our border fence.”

When the Pentagon Feared Israel's Nukes

By Robert Beckhusen

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"Single most dangerous phenomenon" in the Mideast

Israel’s nuclear weapons program is one of the biggest military open secrets in the world. Now we know a little more about the angst inside the Pentagon in the late 1960s, as Israel was months away from activating its nuclear deterrent.

That’s all according to new documents obtained by the non-profit National Security Archive at George Washington University. In 2006, the researchers revealed the Nixon administration’s wrangling over what to do about Israel’s nuclear weapons program. But the latest round of documents shows new details about the debate—and the stark warnings from Pentagon officials about the dangers of Israeli nukes.

One of the more severe warnings came from then-Deputy Secretary of Defense David Packard. On July 14, 1969, Packard sent a memo to Melvin Laird—the secretary of defense—laying down what to discuss with the president. The memo reflected a “general consensus” among Pentagon officials and Secretary of State Henry Kissinger that Israel’s weapons program would destabilize the region.

“The choices of decision before the president is to lean on the Israelis or not to lean on them,” Packard wrote. “In my opinion, not to lean on them would, in effect, involve us in a conspiracy with Israel which would leave matters dangerous to our security in their hands.”

More from War Is Boring 

Israel remains highly secretive about its nuclear weapons—which are believed to number in the several hundreds. In the late 1960s, the secretive nature of the program led to lots of uncertainty in Washington about how far Israel had made it, and whether other Middle Eastern states knew about the program.

The officials recommended seeking an agreement with Israel not to deploy Jericho I ballistic missiles—which could plausibly be used for non-nuclear weapons, but were too impractical and expensive to build unless Israel intended to build nukes.

The Foreign Policy Essay: Al Qaeda’s Re-launch in South Asia

By C. Christine Fair

 September 21, 2014 

Lost in the hubbub over the rise of the Islamic State and the Obama administration’s move to war in Iraq was the Al Qaeda core’s declaration of a new affiliate in South Asia—long a home to jihadist activity. C. Christine Fair, a colleague of mine at Georgetown, preeminent South Asia expert, and chef d’evil cuisine, explains why Zawahiri might find the region ripe for expansion.

On September 30, 2014, the head of al-Qaeda, Ayman al-Zawahiri, released a video in which he declared a revivified and more ambitious al-Qaeda presence in South Asia. This ostensibly newly branded franchise of al-Qaeda in the Indian subcontinent is called the Jamā‘at Qā‘idat al-Jihād fī Shibh al-Qārra al-Hindīya (the “Organization of the Base of Jihad in the Indian Sub-Continent” or simply Al Qaeda in the Indian Subcontinent, or AQIS). The leader of AQIS is a well-known Pakistani Islamic scholar with long-standing ties to al-Qaeda known by the name Sheikh Asim Umar. Umar has long operated freely in Pakistan, where he has authored many tomes such as Teesri Jang-e-Azeem aur Dujjal(“The Third World War and the Anti-Christ”), Dujjal ka Lashkar: Blackwater (“Blackwater: the Army of the Anti-Christ”); and Burmuda Tikon aur Dujjal (“The Bermuda Triangle and the Anti-Christ”). Notably, all of these publications are in Urdu and are widely available in Pakistan and on theInternet. Helpfully, the online versions provide a list of bookstores throughout Pakistan (along with their phone numbers) from which one may procure the tomes in question.

According to Zawahiri, AQIS would raise the flag of jihad in the subcontinent and usher a return to Islamic rule, which was the law of the land until the “infidel army” took it over and divided it. Zawahiri anticipated that AQIS would be welcomed by the Muslims in “Burma, Bangladesh, Assam, Gujarat, Ahmedabad, and Kashmir” and asserted that this new organization would liberate Muslims of South Asia from oppression and injustice.

What explains this move and its timing? How important is it?

Something Old and Something New

Despite the fanfare surrounding this announcement and claims to novelty, al-Qaeda has had a long and simmering presence in the South Asian subcontinent. Afghanistan, which sits at the crossroads of South and Central Asia, hosted al-Qaeda and its deceased supreme leader, Osama Bin Laden, from 1996 until late 2001, when the organization and its leadership dispersed into Pakistan, Iran, and elsewhere following the October 2001 U.S.-led invasion. As is well known, Afghanistan and Pakistan served as two of the most important countries in planning and executing the 9/11 terror attacks, which precipitated the U.S.-led military action in Afghanistan and sustained counterterrorism operations in Pakistan.

Taliban Rejects Legitimacy of New Afghan Unity Government

Taliban Reject Afghan Unity Government Pact as U.S. ‘Sham’

September 22, 2014

KABUL — Afghanistan’s Taliban militants on Monday decried a pact by rival election candidates to form a government of national unity as a “sham” orchestrated by the United States and unacceptable to the Afghan people.

Former finance minister Ashraf Ghani was named president-elect on Sunday after he signed a deal to share power with his opponent, former foreign minister Abdullah Abdullah, ending months of turmoil that has destabilized the country as most foreign troops prepare to leave.

Ghani’s administration must now not only forge an effective government after so much acrimony, but also deal with an emboldened Taliban insurgency, with little, if any, help from foreign forces.

Ghani was scheduled to hold his first news briefing as president-elect later Monday.

The Taliban have been fighting to oust U.S.-led foreign forces and their spokesman, Zabihullah Mujahid, rejected the national unity government pact as a ploy orchestrated by their enemy.

"Installing Ashraf Ghani and forming a bogus administration will never be acceptable to the Afghans," Mujahid said in a statement emailed to journalists.

"The Americans must understand that our soil and land belong to us and all decisions and agreements are made by Afghans, not by the U.S. foreign secretary or ambassador."

The United States strongly pushed for a power-sharing deal between Ghani and Abdullah in order to prevent the election dispute from descending into deadlock and even violence between supporters of the candidates, who draw their support from ethnic groups that fought a civil war in the 1990s.

U.S. Secretary of State John Kerry telephoned the rival candidates for weeks to coax them towards compromise and President Barack Obama also made appeals for a unity government deal.

SECURITY PACT

Analysts Say Pakistan Moving Toward Sea-Based Nuclear Weapons and Tactical Nukes

Tim Craig and Karen DeYoung

September 21, 2014

Pakistan is eyeing sea-based and short-range nuclear weapons, analysts say

ISLAMABAD, Pakistan — In one of the world’s most volatile regions, Pakistan is advancing toward a sea-based missile capability and expanding its interest in tactical nuclear warheads, according to Pakistani and Western analysts. 

The development of nuclear missiles that could be fired from a Navy ship or submarine would give Pakistan “second-strike” capability if a catastrophic nuclear exchange destroyed all land-based weapons. But the acceleration of Pakistan’s nuclear and missile programs is renewing international concern about the vulnerability of those weapons in a country home to more than two dozen Islamist extremist groups.   

“The assurances Pakistan has given the world about the safety of its nuclear program will be severely tested with short-range and sea-based systems, but they are coming,” said Michael Krepon, co-founder of the Stimson Center, a Washington-based global security think tank. “A cardinal principle of Pakistan’s nuclear program has been: ‘Don’t worry; we separate warheads from launchers.’ Well, that is very hard to do at sea.” 

Western officials have been concerned about Pakistan’s nuclear program since it first tested an atomic device in 1998. Those fears have deepened over the past decade amid political tumult, terror attacks and tensions with the country’s nuclear-armed neighbor, India, with which it has fought three wars. 

That instability was underscored this month, as anti-government protests in the capital appeared to push Prime Minister Nawaz Sharif’s government to the brink of collapse. The political crisis was unfolding as Pakistan and India continued lobbing artillery shells across their border, in a tit-for-tat escalation that illustrated the continued risk of another war. 

For more than a decade, Pakistan has sent signals that it’s attempting to bolster its nuclear arsenal with “tactical” weapons — short-range missiles that carry a smaller warhead and are easier to transport. 

Over the past two years, Pakistan has conducted at least eight tests of various land-based ballistic or cruise missiles that it says are capable of delivering nuclear warheads. Last September, Sharif, citing “evolving security dynamics in South Asia,” said Pakistan is developing “a full spectrum deterrence capability to deter all forms of aggression.” 

Time for a U.S.-China Partnership in the Middle East?

Zachary Keck

September 21, 2014 

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"America’s and China’s major interests in the Middle East are nearly perfectly aligned."

The unraveling of the Middle East in recent months has laid bare the need for a fundamental change in U.S. policy. While no silver bullet will fix U.S. policy in the Middle East, enlisting China as a partner in the region would be a good place to start. Such a move would not only help stabilize the Middle East, but could also improve Sino-American relations.

Under President Xi Jinping, China and the United States have pledged to forgea new type of great-power relationship. To date, this effort has largely focused on strengthening bilateral cooperation in the Asia-Pacific. This is sensible insofar as Asia is the most important region for both the United States and China, and especially for interactions between them. At the same time, it is also the region where their interests are most at odds, and thus where cooperation is most likely to remain elusive.

By contrast, America’s and China’s major interests in the Middle East are nearly perfectly aligned. Foremost among these is the free flow of oil. Since at least the 1970s, the free flow of oil in the Persian Gulf has been a core U.S. national interest. Although the United States is becoming increasingly energy independent, its interest in a prosperous global economy makes the free flow of oil a continued priority.

Even as America’s dependence on Middle Eastern oil wanes, China’s dependence on it grows. This year China is expected to surpass the United States as the largest petroleum importer, and Beijing will soon get over 60 percent of its oil supplies abroad. The Middle East will remain the focal point of China’s efforts to secure foreign oil. Already, the region accounts for over half of China’s oil imports. Despite China’s best efforts to diversify its energy sources, Beijing’s spiking demand will force it to rely on the turbulent region for the foreseeable future. Giving China a stake in the region is essential for reducing Beijing’s sense of vulnerability.

The United States and China also have a common interest in combating Islamist terrorism in the Middle East. Since the 9/11 terrorist attacks, counterterrorism has dominated America’s engagement in the region. With the recent intervention in Iraq, terrorism is almost certain to continue dominating America’s engagement in the Middle East in the years ahead.

How Good Is Our Intelligence On China?

Colin Clark

September 19, 2014

Joint Intel Chief Says US Must ‘Better’ Understand China Strategy

WASHINGTON: We’ve got bus-sized satellites that can probably see any blemishes on Chairman Mao’s badly rebuilt face from space (didn’t know about that, did you?). We’ve got U-2s with their superb sensors watching the Chinese coast (for now). We’ve got P-8s scanning the seas for Chinese submarines and testing their radar. Our subs — hopefully — cruise within their harbors and along their coasts. Our diplomats and spies collect rumint, humint and huge quantities of documents about China. But that doesn’t mean we really understand what China is doing, plans to do, or why it’s doing what it’s doing.

The man responsible for indicators and strategic warnings at the Pentagon, the so-called J-2, told an audience of intelligence experts and industry types that the US suffers from a “data glut but an information deficit” about China. “We need tounderstand their strategy better,” Rear Adm. Paul Becker said this afternoon at the annual Intelligence and National Security Summit here. Our intelligence analysts need to come to closer grips with China’s grand strategy (if it has one), “interim objectives” and their “main campaigns” so they can better serve commanders and other senior leaders, he said.

You could almost hear his thoughts about the South China Sea, the East China Sea, the P-8 near-collision, oil rigs, and the Senkaku Islands as the admiral spoke.

And in a very interesting sidebar, Becker made clear that he worries the US lacks the sort of towering intelligence analysts we once possessed: “Where are those people for China? We need them?”

These are the names the admiral ticked off from World War II and the Cold War: Layton (probably a reference to the legendary naval intelligence analyst Edwin T. Layton); Vernon Walters, a military officer who rose to become UN ambassador and deputy director of CIA; Inman (certainly a reference to Adm. Bobby Ray Inman, who almost became Defense Secretary after serving as NSA director and deputy director at CIA); and Rochefort (which must be a nod to Joseph Rochefort, who worked with Layton, and played a crucial role in cracking the Japanese Navy’s most secure code).