U.S. slams Pakistan for using militant proxies against India

NARAYAN LAKSHMAN

November 5, 2014

APIn this file photo, BSF patrols the border area to prevent militant threat.

The Pentagon says "Afghan - and India-focused militants continue to operate from Pakistan territory

In an unusually candid report, the U.S. Pentagon has openly criticised Pakistan for using militant groups as proxies in a war against a “superior” Indian army, a step that could mark growing strategic closeness between Washington and New Delhi since Prime Minister Narendra Modi assumed office in May.

In its report on “Progress Towards Security and Stability in Afghanistan,” tabled in the U.S. Congress, the Pentagon said, “Afghan - and India - focused militants continue to operate from Pakistan territory to the detriment of Afghan and regional stability. Pakistan uses these proxy forces to hedge against the loss of influence in Afghanistan and to counter India's superior military.”

The report also strongly hints that the terrorist attack on the Indian consulate in Herat, Afghanistan, in May, was deliberately timed to coincide with Mr. Modi’s swearing-in.

“In May of this reporting period, the Indian consulate in Herat Province was attacked by a group of four heavily armed militants. The attack came three days prior to the swearing-in of the new Indian Prime Minister, Narendra Modi. Prime Minister Modi is perceived as being close to Hindu nationalist groups, a fact that may have played into the timing of the attack,” the report said.

It added that within a month of that strike the U.S. State Department announced that the terrorist outfit Lashkar-e-Taiba, the group behind the 2008 Mumbai terror attacks, was responsible for the violence.

The report assumes additional significance as given Mr. Modi’s use of similar terms when he said in August, “The neighbouring country has lost the strength to fight a conventional war, but continues to engage in the proxy war of terrorism.”

Time for India to Take Down Dawood Ibrahim

By Elizabeth Bennett 

November 01, 2014 

Recent reports suggest that the underworld figure with terrorist links is a bigger threat than ever before. 

Dawood Ibrahim is perhaps the most notorious“underworld don” in South Asia, involved in everything from supporting terrorist organizations like Lashkar-e-Taiba and now Boko Haram to organized crime and even fixing cricket matches. Dawood’s connection to al-Qaeda, allowing the use of his smuggling routes out of Afghanistan into Pakistan, made him a U.S. Treasury Department’s Specially Designated Terrorist in 2003. He is also wanted by INTERPOL. Most recent reporting has Dawood and his criminal syndicate D-Company headquartered in Pakistan under the protection of the Pakistani ISI. 

The U.S. has not involved itself in any military action to take down Dawood or D-Company, but has restricted itself to placing Dawood and his leadership on Treasury Department sanctions lists. The threat D-Company poses to U.S. national security is not often discussed domestically; rather, the focus is on the terrorist groups financed by D-Company. But with the recent announcement by al-Qaeda leader Ayman al-Zawahiri that the terrorist outfit is creating an India branch, and with the proliferation of jihad throughout South Asia, will the U.S. now finally act to take down Dawood Ibrahim? 

Unlikely. U.S. President Barack Obama has had no problem sending in special operations forces or conducting UAV strikes to take out major terrorist leadership, especially in a country like Pakistan that hosts more terrorists than any other country in the world. The list of figures killed in U.S. strikes includes Osama bin Laden, Abu Yahya al-Libi, Anwar al-Awlaki, and Hakimullah Mehsud, the former leader of the Tehrik-e-TalibanPakistan. Even though Dawood Ibrahim in on a par with these figures in terms of lethality and influence, his support of terrorism has not directly reached the U.S. homeland. It will not be until there is a major attack in India with direct evidence of Dawood’s involvement that the U.S. will become more involved. 

Andaman and Nicobar Islands : India’s Untapped Strategic Assets

Sanat Kaul

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Publisher: Pentagon Press

ISBN: 978-81-8274-774-6

Price: Rs. 995 [Download E-Book] [Buy Now]

About the Book

Since 1947, the Government of India has been curiously disinclined to dislodge itself from a Rip Van Winkle approach to the Andaman & Nicobar Islands that lie in the Bay of Bengal. The vast geographical spread of the archipelagos across 700 km can be understood only when we consider that approximately about 20 km separate Myanmar's Coco Island from Landfall, the northern most island in the Andaman archipelago, while Indira Point at the tip of Great Nicobar, the southern most island in the Nicobar archipelago, lies about 80 km from the tip of Sumatra in Indonesia. This is not a commonly known fact among Indians. 

The ignorance about the islands is endemic and may be the cause for the current policy of 'masterly inactivity and benign neglect' of these high value national assets of immense untapped strategic, commercial and geopolitical potential.

In this context, the author draws attention to the policy adopted by the country in the fifties to Arunachal Pradesh, erstwhile North-East Frontier Agency(NEFA) when it was decided to administer the tribal region by creating a specialized Agency out of a portion of the state of Assam, which has led to good results politically. In this book the author analyses strategic challenges facing the country as st we enter into the second decade of the 21 century. The issues of 'Malacca Dilemma' for China and India's advantage as well as the issues of South China Sea, Naval Diplomacy and India's Look East Policy have been discussed. Further, India's settled maritime borders with its neighbours in this region is yet another great advantage. The author argues that a government at the Centre which perpetuates the existing policy, would be wilfully tying one arm behind its back, before going forth to meet national security challenges. The indifference towards tapping the strategic potential of the islands is not in national interest. The facts and circumstances in the book make clear that, going forward in st the 21 century, a continuation of shutting out the islands through a government policy of 'masterly inactivity and benign neglect' as the preferred strategy instrument to keep the islands safe from inimical and anti-national elements, would be contrary to national interest and security. On the other hand, leveraging these assets as proposed would give the country a position of strength on issues of security. 

Finally, the author argues that though the islands are an environmentally sensitive region, its strategic importance in the present day context for India cannot be diminished. The book offers suggestions about ways in which India can leverage the geographical location of the islands, especially the Great Nicobar Island at the western entrance of the Straits of Malacca, to tap the potential of the islands to meet India's commercial and security challenges without sacrificing the environmental concerns

About The Author

Sanat Kaul was posted as Deputy Commissioner, Nicobar islands from 1975-1977 and again from 1991-1993 when he also served as Chief Secretary, Andaman & Nicobar Islands, the last outpost of the Indian Republic in the Bay of Bengal. The Bay Islands came immediately following a posting in Arunachal Pradesh from 1973-1975 where he served in several capacities including Deputy Secretary(Political). Arunachal had already exposed Kaul to the ground realities of administration and security compulsions in the remote and sensitive sub-Himalayan state located on the Sino-Indian border. Tours of duty in Arunachal and A&N, both abutting international borders, provided Kaul the unique opportunity to assess and critically analyse the government's attitude and quality of approach since 1947 to the remote tribal territories. It brought intrinsic understanding of the critical geopolitical importance of the islands which end up at the western entrance of the Straits of Malacca and for the urgent need for decision makers to shed apparent apathy, to harness the strategic potential of the island assets to further national interest. The author is convinced that, going forward, a deliberate failure to deploy the A&N strategic assets to strengthen India's geopolitical position will be directly adverse to India's national security and national defence.

Dysfunctional Operating Environment in Defence: The Malaise

Amit Cowshish

October 27, 2014

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It is less frustrating to deal with restrictive rules and procedures than to operate in the absence of, or in accordance with confusing, rules and logic-defying procedures.

Take, for example, the power to procure armament store from abroad. As per the ministry of defence (MoD) letter of 2006 on delegation of financial powers1., vice-chief of naval staff (VCNS) can sanction expenditure up to INR 12 crore on each occasion. But there is a rider. This power can be exercised only ‘after obtaining import clearance and ensuring full rupee backing and within the annual ceiling laid down by MoD (Fin)’. The MoD letter does not specify who is authorised to accord import clearance and how is the rupee backing to be ensured. It is doubtful if any annual ceiling is laid down by MoD (Finance) or if there is anyone who could explain why this is required. It is a puzzle how these powers are being exercised.

The inanity does not end with this. A procurement proposal exceeding INR 12 crore has to go to MoD, where it is sanctioned by the joint secretary if the estimated cost is up to INR 25 crore, by the Additional Secretary if it is up to INR 50 crore, by the Defence Secretary if it is up to INR 100 crore and by no less than the minister himself if the cost involved exceeds INR 100 crore.

These competent financial authorities (CFAs) exercise their financial power with the concurrence of the integrated financial advisors (IFA) at the naval headquarters (NHQ) and that of the finance division at MoD. There is no concept of level-jumping. Thus, if a proposal requires the approval of the minister, it must go through every level within MoD and MoD (Finance) before it reaches him. Even if it is assumed that everyone acts on the proposal with super alacrity, it is bound to take some time for a proposal to get sanctioned. This makes little sense as there is hardly any value addition at the several levels through which the proposal has to move.

The problem is not confined to the way the financial powers are delegated within the MoD and at the NHQ. The manner in which powers are delegated down the line appears equally fatuous. If there are three CFAs at MoD and two at the NHQ for sanctioning maintenance, repair and refit of ships and other vessels (including submarines), there are at least seven at the command and lower levels, starting from Chief Hydro and ending with the commander-in-chief. Thus, in all, there are as many as twelve competent financial authorities from top to bottom who exercise financial powers to sanction repairs and refits. This does not include the minister who alone is empowered to sanction repairs involving expenditure in excess of INR 20 crore when the ship is abroad in foreign waters.

The Islamic Caliphate of Bangladesh and West Bengal

RSN Singh

03 Nov , 2014

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For a Pakistan obsessed country India, the accidental bomb blasts in Burdwan on 02 October served as ‘a wake-up call’. Even as Indians primarily confined their concerns on terrorism emanating from Pakistan, the West Bengal–Bangladesh region was evolving into another hub of jihadi terror. Given the fact that Bangladesh geographically impacts on five Indian states; West Bengal, Assam, Meghalaya, Tripura and Mizoram; the destabilizing potential of jihadi terror orchestrated from Bangladesh is even more vicious than the Af-Pak region. For reasons of political and social facilitation, West Bengal and Assam have been so far the preferred areas for Bangladeshi jihadi groups. The new political outfit in Assam, All India United Democratic Front (AIDUF), led by Maulana Badruddin Ajmal (MP) has come under the scanner of agencies and the media for their alleged role in recruitment and training of jihadis in Bangladesh.Bases flourishedin these states particularly in the aftermath of the unprecedented crackdown on the fundamentalists and the jihadi groups by Sheikh Hasina regime in Bangladesh.

West Bengal exported and sustained Communism in parts of Bangladesh, and in return facilitated demographic assault and import of Islamic fundamentalism from that country.

In March 2007, the leader of the Jagrata Muslim Janata Bangladesh (JMJB), Siddique ul-Islam (Bangla Bhai) along with five others was executed by hanging. The JMJB, which was banned in 2004, was allegedly linked to the Al-Qaeda. It may be mentioned that JMJB is an outgrowth of Jamaat-ul-Mujahideen Bangladesh (JMB), with considerable overlap of leadership between the two. There are analysts who are convinced that JMB or JMJB are proxies established by the Jamaat-e-Islami (JeI). The links between Khaleda Zia’s Bangladesh National Party (BNP) and JMB have been conclusively proven. The inaugural rally of the JMJB was addressed by a BNP leader, Besharat Ullah. Later links between Khaleda’s Deputy Minister for Land, Ruhul Kuddus Talukder Dulu and JMB also surfaced.

The sinister reach and influence of the JMB was exhibited in 2005, when the outfit detonated 500 bombs at 300 locations all over Bangladesh (63 out of the 64 districts) within 30 minutes.

The stronghold of the JMB was the Northwestern part of Bangladesh. The principal import of JMB / JMJB ideology is an Islamic State based on Sharia and neutralization of left-wing cadres of Purba Banglar Communist Party (PBCP), which it did with ruthless and unsparing violence. The rabid anti-communist credentials of JMB and associated organisations came in handy to the anti- government political forces in West Bengal. They argued that some extraordinary method was needed to break the CPMs stranglehold on state apparatus achieved purely by means of intimidation and ideological subversion over the years.

India-Pakistan Relations: A Destructive Equilibrium

By Jordan Olmstead

November 02, 2014

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Is there a way to avert the constant derailing of bilateral relations? 

The seven-decade rivalry between India and Pakistan is often portrayed as intractable – with good reason. The countries were birthed out of a bloody partition that encouraged each to define itself in opposition to the other, and they have fought four wars since.

Even during peacetime, tensions are high. This year, though, encouraging overtures by newly elected prime ministers Nawaz Sharif and Narendra Modi led some observers to cautiously hope that the two countries would step up cooperation on trade, energy, humanitarian, and environmental issues.

Unfortunately, other actors, most notably the Pakistani defense establishment and its terrorist proxies, are derailing the process. There are two reasons. First, they see further cooperation and integration between India and Pakistan as putting off negotiations to settle the Kashmir issue. Second, from a broader perspective, closer relations between India and Pakistan would undermine the perception, held by a substantial portion of the Pakistani public, that India poses an existential threat to Pakistan. Both the military and terrorists would lose their raison d’être if this were to occur.

Thus, a destructive equilibrium has emerged, in which both cooperative overtures and displays of deterrence by the Indian government have the potential to lead to a further deterioration of Indian and Pakistani relations. However, a new and more cooperative equilibrium could be achieved if India and reconciliatory elements within Pakistan’s government were able to establish patterns of cooperation on non-securitized issues, and prevent those issues from becoming securitized.

How did India and Pakistan arrive at this equilibrium? The answer starts, of course, in Kashmir, which has always been the primary point of contention between the two countries. Unfortunately, the Kashmir question is unlikely to be answered soon. While territorial disputes between states are usually bitter and persistent – states usually perceive competition over territory as a winner take all, zero sum proposition – Kashmir presents a particularly difficult case.

For India, its claim to Kashmir rests on three main arguments. First, during Partition the ruler of Kashmir “choose” India over Pakistan (albeit in distress), giving India a legal claim to the territory. Second, retaining control over Kashmir is essential to India’s identity as a secular democracy, which can accommodate different ethnic and religious groups across a wide geographic area. And third, if India lost control of Kashmir, it would encourage separatist movements across the country.

Pakistan counters that India’s claim is illegitimate because, as a Muslim country established for Muslims, Pakistan should control a region like Kashmir that is predominantly Muslim and that culturally shares more with what is now Pakistan than it does with India. Moreover, Pakistan refutes India’s claim to Kashmir on the grounds that India’s first prime minister, Jawaharlal Nehru promised Kashmir a UN administered plebiscite in 1956. This promise was not kept, denying Kashmir the right to self-determination.

Unfortunately for Pakistan, Kashmir isn’t going anywhere. India has 500,000 soldiers in the region, and withstood a brutal insurgency in the 80s and 90s to retain control. Pakistan also lacks the military prowess to coerce India into ceding Kashmir, as evidenced by the wars Pakistan (largely) fought and lost in a bid to coerce India into making any substantive concessions on the issue.

Unfortunately for everyone else, Pakistan is unwilling to accept this reality. One of the few issues that a majority of Pakistanis rally around is Kashmiri independence. Adopting an unyielding stance on Kashmir helps tap into this popular support. However, the real problem stems from the Pakistani defense and intelligence establishment, and their terrorist proxies, exemplified by Lashkar-e-Taiba (LeT).

In her recent book Fighting to the End (The Pakistan Army’s Way of War), C. Christine Fair of Georgetownargues that “The ‘strategic culture’ of the Pakistan army is essentially unremitting hostility against India. The Pakistan Army believes that it is locked into a permanent, existential, civilizational battle against India.”

Exchange Rate Variation in Defence Contracts in India

Sandeep Verma

October 31, 2014

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I. Introduction

The rapid, albeit short-lived, depreciation of the Indian Rupeewitnessed recently saw some interesting claims and policy responses unfolding around public procurement in India: certain sections of India’sIT industry upped the ante for incorporation of an “Exchange Rate Variation” (ERV) clause in government contracts in India ; and the Ministry of Finance responded by issuing an office memorandum covering IT procurements by essentially restating, and potentially further complicating, an already existing provision of the Manual on Policies and Procedures for Purchase of Goods. These interesting and important developments lend themselves to a quick academic inspection of similar industry claims in the context of defence procurement in India ; and this shortnote accordingly attempts to put forth some suggestions on how government responses could be structured or improved upon, given potential conflicts of such industry demands withimportant policy interventions for increasing self-reliance and indigenisation outlined under India’s National Manufacturing Policy ,the Defence Production Policyand the Policy for Providing Preference to Domestically Manufactured Electronic Products (DMEP Policy).

II. ERV in Defence Contracts in India

ERV provisions under India’s Defence Procurement Procedures(DPP) are not very clearly or unambiguously outlined in the main text, the issue having been relegated to a relatively short and incomplete paragraph under “Commercial Clauses” part of the Standard RFP Document. Briefly, the applicable RFP provision reads as follows:

Exchange Rate variation shall be applicable for Rupee contracts with Indian Vendors, based on RFPs issued under the category ‘Buy(Global)’. ERV, however shall not be applicable in cases categorized as ‘Buy (Indian)’except for DPSUs in ab-initio Single Vendor cases or when nominated as Production Agency. The guidelines on protection of Exchange Rate variation are given at Annexure to this Appendix (emphasis added).

A. Indian Vendors vs. Foreign Bidders in Buy (Global) Cases

The regulatory language in DPP is incomplete, since foreign vendors are already permitted to bid (and to be paid) in Dollars, Euros or Pounds in capital acquisition cases categorised as “Buy (Global)” or “Buy and Make with ToT”. Thus, the DPP,de facto,provides complete ERV insulation to foreign vendors in these two categories since their payments do not get linked to prevailing exchange rates with Indian Rupee, whereas a plain text reading of the regulatory language could be lead a newcomer to believe thatERV is allowed onlyfor Indian vendors in “Buy (Global)” cases.

In contrast to full ERV protection to foreign vendors as outlined above, the DPP presently allows only partial ERV protection to Indian bidders, and that too, only mainly in theory. TheAnnexure to Commercial Clauses part, referred to in 1.4.8 reproduced earlier, read with another part on “Evaluation Criteria and Price Bid Format”, seems to indicate that payments to Indian vendors are based on exchange rates at the time of import (during the stage of contract performance) vis-à-vis exchange rates at the time of bid comparison . In a depreciating Rupee scenario, this places an extreme financial burden on Indian bidders, as the present formula ignores the exchange rates prevailing on the last date of submission of bids, making Indian bidders bear the full impact of exchange rate-dependent losses from the period from last date of bidding to date of actual bid comparison/ final contract valuation, which typically could run into a few years . This forces Indian defence industry to usually obtain exchange rate insurance to hedge their certain losses, artificially inflating their bid prices in the first instance, thus making them relatively non-competitive at the initial stage itself as compared to their foreign counterparts.

To add to the problem, the language of the DPP is potentially inconsistent:the bid comparison amongst Indian and foreign vendors takes place on the basis of exchange rates prevailing at the time of opening of bids, while payment to an Indian vendor could take place on the basis of exchange rate at the time of transaction vis-à-vis exchange rate at the time of bid comparison or that at the time contract finalisation, as may be interpreted by the MoD acquisition officials given significant inconsistency of the DPP text.13.

B. Private Indian Vendors vs. OFB/ DPSUs in Single Vendor“Buy (Indian)” Cases

Under DPP, ERV is not applicable in cases categorised as “Buy (Indian)”,except for DPSUs in ab-initio“Single Vendor” cases or when nominated as a production agency . In all probability, this means that ERV is available only to DPSUs in ab-initio single vendor cases or when nominated as production agencies in “Buy and Make with ToT” cases. The logic in extending ERV protection in both cases is clear: it would really make no financial difference to MoDwhether such ERV protection is provided or not provided in single vendor cases. This happens as the single vendor would anyway incorporate foreign exchange risks in the initial bid price in a fixed price contract if ERV protection is not afforded upfront, given the absence of competition and resulting absence of any market forces driving down bid prices.

Given this nuance, even though the DPP explicitly provides for ERV cover only to DPSUs in single vendor “Buy (Indian)” cases, and despite a common misunderstanding that private defence industry in India is somehow discriminated vis-à-vis DPSUs, the provision has virtually no adverse effect on the level-playing field.

C. Private Indian Vendors vs. OFB/ DPSUs in competitive “Buy (Indian)” Cases

ERV cover is unavailable to either OFB/ DPSUs or to private Indian vendors in competitive procurement made in competitive “Buy (Indian)” cases . This also is quite reasonable at one level, since in such a situation, all competent bidders can be expected to incorporate exchange risks in their bid prices, and to hedge their losses by taking exchange risk insurance policies where necessary. Since contract award is based on lowest price, competent participating bidders would negotiate exchange risk insurance policies at the best possible costs to them, and through that process, at the best possible costs to the Government.

NATO: REBELLION IN THE RANKS? – ANALYSIS

By John Feffer

NOVEMBER 2, 2014 

Russia' Vladimir Putin 

Vladimir Putin, the wily strategist of Russian revanchism, is well on his way to reconstructing the Warsaw Pact. That, at least, is what the pundits ofThe Washington Post are making it out to seem. Last week, Jackson Diehlpenned a column on how Putin has driven a wedge between NATO and its easternmost members. Anne Applebaum, meanwhile, pins the failure to maintain quiet on the eastern front on NATO itself and its decision not to establish bases in the region 10 years ago. The resulting crisis of confidence in what were once Soviet satellites, she laments, has undermined alliance cohesion.

These misreadings of what’s taking place on the eastern stretches of Europe contribute to an almost 1946-like sense of foreboding and inevitability. The small countries of Eastern Europe are bending to Moscow’s will, and the West is doing little more than appease the bear. Diehl and Applebaum stop short of declaring a new Iron Curtain and insisting that the region choose sides (over and above membership in NATO). But their all-or-nothing logic tends in that direction.

Contrary to these assertions, Poland, Slovakia, Hungary, and the rest of the region are not replaying 1946. Although these governments are pursuing very different strategies, they all know that a new Cold War would exact a terrible price on their countries. In most cases, they are quite sensibly trying to forestall this scenario. NATO’s imperative to push ever eastward, which pundits like Applebaum are urging it to do now under the cover of demonstrating resolve, will only make matters worse.

To understand why these pundits are wrong, first it’s important to understand how Russia and NATO arrived at this impasse.

After the Berlin Wall fell nearly 25 years ago, the new democratic governments in East-Central Europe couldn’t wait to leave the Warsaw Pact. Who could blame them: the Pact was a symbol of their subjection to the will of the Soviet Union. They showed a measure of caution, however, and didn’t disband the alliance until February 1991. Then, again at a rather cautious pace, they crept under the umbrella of NATO. First the Czech Republic, Hungary, and Poland took the plunge in 1999. In the second wave of expansion in 2004, Bulgaria, Romania, Slovakia, Slovenia, and the Baltic countries joined the fold. Albania and Croatia had to wait until 2009.

Russia was not overjoyed at these developments, to put it mildly. The Kremlin was under the impression that it had received guarantees that NATO would not expand to its doorstep. As Mary Elise Sarotte writes in Foreign Affairs, Soviet leader Mikhail Gorbachev and company received unwritten assurances early on that not even East Germany would be part of NATO. Then, in exchange for what amounted to a huge Deutschemark bribe, Gorbachev assented to a united Germany entering NATO. The Soviet Union didn’t expect NATO to move further eastward. But then, the Soviet Union also didn’t expected to disappear with the stroke of a pen. It is to the Russians’ perennial dismay that they never got any of these promises down on paper.

NATO didn’t have to twist the arms of the former Warsaw Pact members to switch sides. The coup in Moscow in 1991 and the outbreak of hostilities in Yugoslavia were both reminders of the importance of a security guarantee – against a revival of Russian imperialism and the potential of internecine conflicts. Also, whatever reservations they might have had about joining an alliance that had lost its original overarching purpose and however ambivalent they might have felt about the costs of modernizing their militaries to achiever interoperability with NATO, the countries in the region realized that membership conferred enormous non-military advantages. With accession to the European Union still in the future, NATO’s imprimatur was a powerful signal to investors that it was safe to pour money into the aspirant countries.

Still, significant portions of the population throughout the region expressed reservations about NATO membership. In Hungary and the Czech Republic, support for joining wasactually quite low: at 32 percent and 28 percent respectively in 1997. Bulgarians were generally split down the middle. Only in Romania, often an outlier in the region, was support consistently in the 70 percent range.

CAN EGYPT AND TURKEY TURN A NEW LEAF? – ANALYSIS

By Ahmed M. Al-Soukkary

NOVEMBER 2, 2014 

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Egypt-Turkey flags 

Egyptian-Turkish relations have been soured for some time. While there are no signs of rapprochement on either side, the cycle of dispute should end amid wider regional challenges.

Following closely the political discourse between Egypt and Turkey during more than a year leads to two clear conclusions: first, there is sharp political tension intertwined with stalling on different aspects of bilateral relations, especially in the economic and military fields; second, such escalating bilateral tension is building amid a wave of anger and popular discontent at Recep Tayyip Erdogan, spreading in mass demonstrations against his practices over recent years, particularly in imposing restrictions on freedoms of expression and assembly — to the extent of closing down YouTube and Twitter — and using excessive force against political activists and peaceful protesters.

It seems that Egypt and Turkey are entering a break-up phase after months of gradual disorder, an outcome that will not easily be changed in the middle run, as long as Turkey’s pattern of behaviour towards Egypt remains irrational and hostile.

The cycles of sharp conflict between Cairo and Ankara are based on critical issues of contention. These cycles can be mapped out as follows: 

Turkey’s increasing intervention in Egypt’s internal affairs. Erdogan’s intervention policy aims to try to create a pro-Turkish Egyptian regime. That is why the Muslim Brotherhood’s arrival to power in Egypt in 2012 was important for Erdogan, as Turkey perceived Egypt after its Arab Spring on the path to realising a new elected political elite that could reformulate the Middle East along lines favourable to Turkey. However, the Muslim Brotherhood’s overthrow on 3 July 2013 represented a step back in Turkey’s intervention policy in Egypt’s affairs. 

Turkey’s ambiguous relations with the Muslim Brotherhood was one of the issues spurring Egyptian-Turkish tensions, especially after their removal from power and in spite of the Egyptian decision to ban the Muslim Brotherhood, and the political wing emanating from it, and all of its activities. Erdogan’s statements welcoming Muslim Brotherhood members have drawn strong criticism, not only in Cairo but also inside Turkey’s opposition. 

Turkey sought, and still seeks, to follow its intervention policy, insisting on attacking the new regime in Egypt by describing it as illegal in an attempt to revive the situation before 3 July 2013. That is why Erdogan criticised the Egyptian president during his address at the UN General Assembly on 24 September 2014, which was not the first and will not be the last direct attack on Egypt’s new regime. Erdogan continues to act based on his pro-Islamist belief system, inciting hatred between the two countries and peoples for ideological calculations. 

Turkish external behaviour in the Middle East. Before 3 July 2013, relations between Cairo and Ankara were characterised by limited competition over certain issues, like Turkish-Israeli relations, countering Egypt’s influence in the Gulf, regional leadership in the Middle East, and creating interests in Africa away from the Egyptian sphere. However, after the dramatic changes that took place in Egypt, the competitive aspect sharpened, especially as relations between the two countries deteriorated. This competition peaked as both countries tried to secure a truce between Israel and Hamas, though historically Egypt has played the more important role in the settlement of conflict between Israel and the Palestinians. Though it poses as a balanced peace broker, the Egyptian government envisions itself as the patron of the Palestinian Authority (PA), which it sees as a counterweight to Israel. Egypt’s policy links full normalisation of relations between Cairo and Tel Aviv with a final settlement between Israel and the Palestinians, and not before. However, Erdogan claimed that Egypt had “no role” in resolving the Gaza crisis and implicitly defended Hamas, which remain in contention with the PA. 

Russia-Ukraine Gas Deal – Another Last-Minute Special

By Edward C. Chow

OCT 31, 2014

For the fifth time in eight and a half years, Russia and Ukraine signed another gas deal, literally at the eleventh hour, late evening on October 30 in Brussels. This time negotiations were conducted under the mediation of the European Union (EU) with six months of back and forth discussions, during which Russia ceased supplying gas to Ukraine while gas transit to Europe continued. With winter approaching and Ukraine’s gas storage only half full, this five-month deal for supply of Russian gas to Ukraine through March 2015 is an achievement for the two sides, in the midst of the most difficult security and political conditions in eastern Ukraine instigated by Russia, as well as of the outgoing European Commission (EC) a day before its final day in office, with the active participation of President Barroso and Energy Commissioner Oettinger. 

A potential gas supply crisis for Ukraine and Europe was forestalled for this winter. Time has been bought to findurgently needed longer-term solutions so that the same precarious energy conditions do not persist in Ukraine, as they had for the past two decades, at the risk of endangering itself and its European neighbors.

This interim deal has largely gone Russia’s way. The agreed price was set by an addendum to the January 2009 ten-year gas agreement signed by then-prime ministers Putin and Tymoshenko in Moscow. The 2009 deal was fundamentally flawed from Ukraine’s perspective by setting too high a base gas price at a time when oil prices were at a cyclical trough during the global financial crisis. (When oil prices recovered in 2010, the oil-indexed adjustment formula in the 2009 gas agreement drove the price Ukraine was to pay Russia to an astronomical level.) A $100 price “discount” is offered by Russia in the form of an export duty exemption to be formally approved by its government, just as it was in the April 2010 gas agreement signed in Kharkiv by then-Ukrainian president Yanukovych’s government. Ukraine’s demand for a new pricing basis is set aside, subject to arbitration in Stockholm that will likely be a long drawn-out process.

Accumulated Ukrainian gas debt to Russia of $3.1 billion will be repaid in two tranches by the end of this year. Ukraine will have to pre-pay for gas supplies from November to March. This amounts to another $1.5 billion for November and December, which will put a dent in Ukraine’s already stretched budget and foreign currency reserves. Given its active mediation, both Russia and Ukraine tried to draw the EU into providing guarantees or funds as part of the deal, which the EC avoided at the risk of non-performance by either Russia or Ukraine. The January 2009 ten-year gas transit agreement, which obliged Ukraine to provide pipeline capacity without an accompanying commitment by Russia to ship a minimum gas volume, remains in place.

The best that can be said about this deal is it was signed in autumn and not in the dead of winter. Given all its economic difficulties caused mainly by its own military and political actions, Russia chose not to use its leverage to trigger a gas supply crisis so as to cast Ukraine as an unreliable transit country and to force Europe into accepting its South Stream Gas Pipeline project to bypass Ukraine. However, the game is not over, only a time-out has been called.

Nevertheless, this is a critical reprieve for Ukraine and an opportunity for its new government, which will soon come into office as a result of the October 26th parliamentary elections. For more than twenty years, Ukraine has delayed the transition of its Soviet-era economy. Instead state assets have been hijacked for private use and corruption is rampant. Nowhere are the abuses worse than in the energy sector. President Poroshenko, who came into office in June, has said “Delay with reforms is fatal for us.” He should know as a close observer and indeed participant in the infighting and avarice that doomed Ukraine’s leaders after the 2004 Orange Revolution, the last time hopes for reform had risen so high. 

Energy is a key vulnerability for Ukraine. According to the IMF, its energy intensity (amount of energy used to generate a unit of GDP) is twice as high as Russia and energy subsidies are equivalent to 7.6 percent of GDP. Price controls encourage waste and corruption while discouraging conservation and investment in domestic energy production. A country that has the geologic potential to be self-sufficient in gas instead imported 60 percent of its gas needs from Russia. Various Ukrainian leaders have used Ukraine’s transit leverage, which was once as high as 80 percent of Russia’s gas exports to Europe to today’s 50 percent, to obtain cheap gas to fuel the corrupt system and line the pockets of their cronies.

THE POWER OF THE STORY: VLADIMIR PUTIN AND THE RISE OF THE RUSSIAN FEDERATION

Derek O'Malley

November 3, 2014 

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Following the fall of Saddam Hussein’s regime on April 2, 2003, U.S. and French forces filled the capital city to ensure the unrest and looting, which had been widely predicted by strategists, would not spread. Troops from a carefully crafted coalition poured into Iraq to maintain security along the borders and within the cities. Paul Bremer wisely decided to keep the Iraqi Army intact, and immediately began to structure the security forces with extensive Iraqi military integration. As a result, the Iraqi state remained intact, just as Secretary Rumsfeld had intended. Within hours of Saddam’s fall, U.S. special operations units located a vast arsenal of chemical weapons primed for employment. Saddam’s plans were every bit as sinister as U.S. intelligence analysts had postulated. The evidence was irrefutable. The regime had been conspiring with Al Qaeda for massive chemical attacks in several countries, including the United States. George Tenet’s “slam dunk” case against Saddam had truly come to fruition. Fortunately, the U.S. had acted promptly enough to prevent this massive wave of terror.

The horrors of terrorism, so vividly ingrained in the minds of the world after the attacks of September 11th, had almost been unleashed again. The UN came under immediate fire from the international community, as expert commentators painted the dismal picture of what would have happened on U.S. soil, if the invasion of Iraq had been delayed. Hans Blix was vilified as the great enabler of global terror, while President Bush and Vice President Cheney were celebrated as visionary and courageous leaders. The world was a safer place because the hawks took swift, decisive action. The doves who had sought to prolong the debate were only empowering terrorists. Thankfully, America possessed leaders with the foresight and grit to do what was needed.

Of course, the real story played out differently in every way. Eleven years after the invasion, Iraq is riddled with sectarian violence fueled by ancient rifts between the Sunni and Shia, and threatened by the expansion of ISIL. Yet, the leaders who decided to take America to war were clearly confident in the outcome the invasion would produce. They believed the threat was imminent and immediate violent action was the only solution. Unfortunately, there was a dramatic gap between their understanding of the situation and reality. This article does not intend to explain why they got it wrong, but rather, how difficult it is to get it right.

When we only assume the worst of our adversaries, we lay a trap for ourselves. In preparing for the worse case, we dream up thousands of tragic scenarios unlikely to occur. These unchecked dreams (or nightmares) become our reality and form the lens through which we interpret the actions of our opponents. The trap is sprung when our own narratives lock us onto a dangerous course, and we reject other equally plausible narratives that lack the potential to spiral into violent conflicts. We become prisoners of flawed narratives.

Keeping this prelude in mind, this article examines the narratives surrounding Vladimir Putin and the rise of the Russian Federation. These stories will weave in and out of reality, often making it difficult to discern the line between fact and fiction. The events and the characters will be complex, and the facts will be elusive; however, the moral of our stories will be clear: We must continually scrutinize the narratives we accept as truth, and strive to comprehend the narratives our own actions create for our adversaries. Whether true, false, or somewhere in between, these stories matter, because they drive behavior. Let’s begin with the story of Vladimir Putin.

It was a cold, rainy night in October 1952. Maria and Vladimir Putin, Sr. burrowed into a dirty Leningrad hospital with flickering florescent lights and musty air. After several hours of labor, Vladimir Putin, Jr. was born. His birth fell eight years after the German siege that nearly annihilated the city, and killed more than a million people. The siege left Putin’s father disabled and disfigured, and his mother nearly starved to death. The Leningrad of Putin’s childhood was a harsh and impoverished place that bred a generation of hungry and aggressive children. Putin’s parents endured a series of backbreaking jobs, leaving young Vladimir to fend for himself in the communal courtyards outside of their shabby apartment building. Emerging from an environment of fistfights and drunken thugs, Putin gained an explosive temper. He lashed out violently at anyone who dared cross him.

In his teenage years, defying his mother, Putin became a competitive judo martial artist, earning a black belt at the age of eighteen. He was an average student, and his schoolteachers described him as a troublemakerin class who rebelled against authority and threw chalkboard erasers at other children.

A Bad Gas Deal For Ukraine As Europe Looks After Its Own Interests

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The BBC headline tells it all: Russia-Ukraine gas deal secures EU winter supply(via Ukraine). European officials also confirmed the message of the headline. Commission President Manuel Barroso triumphantly declared: “There is now no reason for people in Europe to stay cold this winter,” and European Union energy chief, Guenther Oettinger, announced he was confident that Ukraine would be able to afford to pay for the gas it needed (Says who?). Where are Ukraine’s expressions of gratitude and relief? They are lacking for good reason.

It turns out the month-long negotiations over Ukraine’s gas dispute with Russia were really about securing Europe’s Russian gas. Ukraine was only a side issue. Russia’s incessant propaganda that Europe itself was threatened by Ukraine’s gas cutoff dominated the discussion. Europe pushed Ukraine into a bad deal to protect itself.

What did Ukraine get out of the deal? It received the go-ahead to transfer some one third of the financial assistance it is receiving from the IMF and European Union to pay for the Russian gas, diverting scarce funds from its desperate defense, infrastructure, and reform needs. Ukraine gets to pay Russia one of the highest gas prices in Europe ($378 versus the $304European average), and there appears to be no agreement as to how much of this gas goes to the gas-guzzling heavy industry of the Donbass, occupied by pro-Russian rebels. Kiev, by the way, has been virtually cut off from Donbass coal and has to buy elsewhere.

Europe has agreed that Ukraine should buy natural gas at high prices just at a time when Ukraine was taking significant steps towards developing interconnections with European suppliers and getting serious about cutting back on its high per capita natural gas use.

Even worse, European officials are making noises about rapprochement with Russia. EU’s energy chief characterizes the agreement as a possible “first glimmer” of hope in easing tensions between Russian and Ukraine. (So we should all forgive and forget?) Russia’s energy minister hastened to laud the deal as proof that “Russia has always been a reliable supplier of energy resources to Europe and other consumers.” This assurance came after months of threatening Europe’s gas supplies. I would also like to know whether part of the deal is that the European Commission would drop its investigation of monopoly behavior by Gazprom in the European gas market? Avoiding an anti-trust suit would be worth billions to Gazprom.

Russia gets the bonanza of $5 billion to shore up its meager liquidity resulting from the sanctions against borrowing in Western capital markets. Earlier Russia’s national oil company gave up one tenth of its best Siberian field to China for the grant total of $1 billion. This generous agreement can be regarded as a major sanctions buster.

You would think that Europe, after two close calls (2009 and 2014) with Russia’s use of the natural gas weapon, would have negotiated hard and tough for a better deal for Ukraine, not pushed Ukraine into the narcotic of plentiful gas paid for with scarce credits, and moved full speed ahead with measures to insure independence from Putin’s heavy handed gas weapon.

Not so, it appears.

I’d like to thank my colleague Anders Aslund for his assistance. The views expressed herein are my own.

THE AUTHOR is a member of the International Advisory Board of the Kiev School of Economics. The views expressed in this article are those of the author and not of the school. Click here for information on his documentary film Women of the Gulag.

The Aftermath of Ukraine's Elections: One Step Forward or Two Steps Back?

Katrina V. Negrouk

November 1, 2014

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"For a truly peaceful resolution to take place, Ukraine has to embrace dissenting voices in its government not with contempt, but with an intention to work with them." 

Following Sunday’s highly anticipated parliamentary elections, the EU and United States celebrated the overwhelming win by pro-European parties in Ukraine’s Verkhovna Rada. However, the results of Sunday’s election show that Ukraine is still deeply divided and will face an uphill battle in implementing future reform policies. In the coming months, President Poroshenko will have to work towards reconciling the differences between the major parties and ensure that no group feels alienated from decision making. Otherwise, Ukraine could face an escalation in the conflict and further splintering.

Over the past week, the main focus in Western media has been on the overwhelming support for the pro-Western parties, namely Prime Minister Yatsenyuk’s People’s Front, which placed first at 22.2 percent, and President Poroshenko’s party, Poroshenko Bloc, receiving 21.8 percent.

Overlooked is the fact that Yatsenyuk and Poroshenko came to power during two different, but equally critical, phases of the conflict in Ukraine and as a result represent different political priorities. Yatsenyuk, who was designated prime minister by the Maidan Council when Yanukovych fled, represents the revolutionary spirit of Maidan. Poroshenko on the other hand, was elected president and as an oligarch embodies a mix of Ukraine’s past and possible future. While both parties agree that Ukraine should be heading in the European direction, points of contention will arise in exactly how to achieve this goal.

Meanwhile, the Opposition Bloc, with many of former president Yanukovych’s associates, placed fourth at 9 percent. While significantly lower than its previous standing, it demonstrates that there is still a significant constituency. In celebrating the pro-Western parties’ dominance in parliament, the West is promoting a winner-take-all approach and risks alienating those who voted for the Opposition Bloc, many of which are located in areas of eastern Ukraine that are controlled by the Ukrainian government. Isolating these voters will not only lead to future dissent and hurt attempts at reconciliation, but more importantly, could push additional areas in eastern and southern Ukraine to fall under the separatists’ control.

Geo-strategic Implications of the Asian Infrastructure Investment Bank

R. S. Kalha

October 31, 2014

Last Friday when the Chinese President Xi Jinping inaugurated the establishment of the Asian Infrastructure Investment Bank [AIIB] at Beijing along with 21 other member countries, including India, a new and a highly significant financial institution emerged on the geo-strategic horizon of Asia. To give it broader scope, the Chinese have invited and also won the support of some wealthy West Asian nations, such as Qatar and Saudi Arabia. The proposal for the Asian Infrastructure Investment Bank (AIIB) was first presented publicly by Premier Li Keqiang at the Boao Forum for Asia in April 2013. Nonetheless, the Chinese Finance Minister, Lou Jiwei would have us believe that this event is entirely altruistic and that:

The AIIB will be a multilateral development organization for Asia established on intergovernmental lines, and it will function in accordance with the models and principles of other multilateral development banks. It aims to boost economic development and regional economic cooperation by supporting investment in infrastructure and other projects in Asian countries. The new bank will become a professional and highly efficient investment and financing platform for infrastructure facilities, and will meet the demand for further development.1.

And yet close US allies in Asia such as Japan, South Korea, and Australia opted to stay out under intense US pressure. The case of Indonesia under the leadership of its new President Joko Widodo also staying out is rather unique; for did they too fall under US pressure or was it simply a case that the new government had no time to take such a crucial decision? That the US was not pleased with these developments had been known for long.

Several major news outlets, including the Financial Times and The New York Times, have carried reports in recent days highlighting the Obama administration’s attempt to convince other world powers to stay away from the Chinese led bank for a host of reasons.2. Senior United States officials and representatives of other governments involved have disclosed that in conversations with China’s potential partners, US officials, including US Secretary of State John Kerry, have lobbied against AIIB with unexpected determination and engaged in a vigorous campaign to persuade important allies to shun the project.3. It is reported that the United States Treasury Department has criticized AIIB as a ‘deliberate effort to undercut’ the World Bank and the Asian Development Bank; international financial institutions that are dominated by the United States and Japan. The US Treasury Department would have us believe that the new bank would ‘fail to meet environmental standards, procurement requirements and other safeguards adopted by the World Bank and the Asian Development Bank, including protection intended to prevent the forced removal of vulnerable populations from their lands’.4. The US has fought long and hard to have its ‘norms’ reflected in the programs of International financial institutions.

Surprisingly the US sponsored President of the World Bank, Jim Yong Kim, a Korean-American national told reporters last Friday at a breakfast in Washington hosted by The Christian Science Monitor, that he simply did not spend much time worrying about such risks and that the White House’s political push has carried little weight within the World Bank. Asserting that the bank is ‘not a political organization’ and that it is ‘actually in our articles of agreement that we don’t get involved in domestic politics,’ Kim declined to elaborate the US position but added that it is for Washington to clarify its stand on the Chinese bank. As for the World Bank’s position, he said, ‘my sense is that we can work with [the Chinese] very well and that the Chinese government began talking with us very early on, really sort of immediately after they had this idea that, especially in Asia, there’s nowhere near enough money for infrastructure investment.’5.

The Birth of Bangladesh Was a Triumph of Culture Over Religion

BY GURUSADAY BATABYAL

OCTOBER 28, 2014 

Gurusaday Batabyal is a retired Colonel of the Indian Army. He is a graduate of the prestigious Defence Services Staff College, Wellington (India), a

War is not only a military act performed, but an expression of the conflict of cultures.

More often than not, wars result from multiple causes that may be political, economic, or driven by geographical considerations. However, the birth of Bangladesh has proven that culture is yet another fundamental cause, and had become a tool of organized warfare.

Religion was used as glue during the construction of Pakistan so that the multi-ethnic people – Punjabis, Sindhis, Baluchis and Bengalis – irrespective of their different cultures, could be kept together. Seeing Pakistan increasingly at war with itself, Salman Rushdie, in his controversial book Shame, described it as “a failure of the dreaming mind perhaps the place was just insufficiently imagined.”

Samuel Huntington famously said that “fault lines between civilizations will be the battle lines of future.” According to him, at the broadest level individuals belong to a civilization with which they can identify. East Pakistanis intensely identified themselves as Bengalis and “Bengaliness” represented their culture not religion. In the instant case, in a pluralistic society like Pakistan, “when two cultures collide, does one flee from other, accommodate it, ignore it, absorb it, yield to it, or try to destroy it?”

Creation of Pakistan proved Clausewitz right in that war is not an act performed by military men alone but is an expression of the conflict of ideas, objects, and the way of life of an entire society intertwined with those of another society.

Creation of Pakistan

While analyzing the genesis of Pakistan, one finds that the idea of a separate homeland for Hindus and Muslims was hovering around in some form or the other since the inception of the Muslim League in 1906. In 1930, the poet and philosopher Mohammed Alama Iqbal, while arguing for a separate Muslim state, remarked in his presidential address in the Muslim League Annual Session at Allahabad that the formation of a consolidated north west Indian Muslim state appears to be the final destiny of the Muslims at least of north-west India. It is interesting to note that Iqbal, in his scheme for a Muslim state, did not mention Bengal (east Bengal); nor did Chaudhuri Rahamat Ali, a student at Cambridge, who coined the word Pakistan an acronym to denote “P” for Punjab, “A” for Afghanistan, “K” for Kashmir, “S” for Sind and “Tan” for Balochistan.

The central government, in its attempt to de-sanskritize the Bengali language – derived from Sanskrit (Brahmi) – undertook a program to teach Bengali through the Arabic script. Students of the University of Dhaka protested vehemently.

During the Muslim League Annual Session at Lahore in 1940, Chief Minister of Bengal, Mr. A.K. Fazlul Haq had moved a resolution stating that the areas in which Muslims are numerically in a majority, as in the north western and eastern zones of India, be grouped to constitute independent states in which the constituent units shall be autonomous and sovereign.

The crux of the Lahore Resolution was the formation of autonomous states for Muslim majority areas of India but not the amalgamation of these areas to form a separate country. Muhammed Ali Jinnah, in this session mooted his idea of the two nation theory by making an emphatic statement that Hindus and Muslims belong to two different civilizations based on conflicting ideas.

It was only in 1946 during the Muslim League Legislatures Convention held in Delhi that the concept of a single state of Pakistan comprising both the north western and eastern Muslim majority areas of the undivided British India was endorsed. Geography of India and Pakistan was decided by Sir Cyril Radcliff. Thus, Pakistan, born on the premise that uniformity of religion, will one day overcome the impediments created by the diversity of culture.

Culture Under Attack

Jinnah, during his very first address to the constituent assembly on August 11, 1947, stated: “You may belong to any religion or caste or creed – that has nothing to do with the business of state. We are starting with this fundamental principle that we are all citizens and equal citizens of one state.”

Jinnah’s proclamation notwithstanding, during the National Education Summit in Karachi the same year, it was proposed that Urdu be the sole state language and be used in the media and schools. It was perceived that Urdu is an Islamic language and it will help coalesce the nascent nation. The Pakistan Public Service Commission removed Bengali from the list of approved subjects. Bengali was also removed from currency notes and stamps. Public outrage spread, and a large number of Bengali students met in the University of Dhaka campus on December 8, 1947, demanding Bengali to be made an official language. Dr. Shahidulla, in his presidential address at the East Pakistan Literary Conference on December 31, expressed rather forcefully: “While it is fact that we are Hindus or Muslims, the more important fact is that we are Bengalis.”