These 5 Countries Will Dominate the Global Economy in 2030

http://nationalinterest.org/feature/these-5-countries-will-dominate-the-global-economy-2030-16724?page=show

There’s room for competition at the top.

Samuel Rines, June 25, 2016 

Will today’s five largest economies—China, the United States, India, Japan and Germany—maintain their places between now and 2030? Or will see a reshuffling?

China has already passed the United States in terms of Purchasing Power Parity Gross Domestic Product (PPP GDP)—a method of measuring the relative purchasing power of a nation used throughout this piece. Granted, this is only one measure of wealth, and much of China remains poor, but it illustrates that measurement matters. By other measures, such as current dollar GDP, the United States is still the largest economy, and it is likely that U.S. economic dominance will continue.

The United States has a few advantages in remaining a top economic power. Unlike China, the United States has already pivoted from manufacturing toward services, thereby reducing its reliance on exports for growth. And the ability to hydraulically fracture lessens the United States’ reliance on global energy markets and Middle Eastern stability, something that was not true a decade ago.

For its part, China will certainly remain a top-five economy, but it will not overtake the United States in terms of GDP per capita—a measure of wealth versus size. The two primary headwinds for China maintaining are the need to reform its banking system, and the pivot to a more consumer-driven society. Neither is simple to address on its own, never mind in tandem.

China’s banking system is laden with nonperforming loans. The extent of the issue is unknowable, due to the opacity of the institutions, but the suspicion is that the need to recapitalize and expunge the balance sheets is imminent and stark. Tackling, and ultimately solving, the issue will consume resources that would be better used to transition the economy from infrastructure building and investment to services.

By 2030, China may find itself in a similar position to where Japan is today—a significant global economic player going nowhere quickly while aging rapidly. Unlike Japan, China will be a particularly poor position to pause its growth, given that it will be at best a middle-income nation.

This so-called “middle-income trap” is unforgiving, but the middle-income trap is not a middle-income decline. It is rare for nations to fall back significantly, which is what it would take for China, or the United States, to fall out of the top five. Therefore, the battle for spots in the top five will be fought from third to fifth place, positions currently held by India, Japan and Germany. The captivating question is who will fall out, and who will rise to replace them.

Using the International Monetary Fund’s PPP GDP figures, the United States and China have economies that are more than double that of third-place India. Nonetheless, it will take a serious twist of fate for India to be replaced in the top five. India’s tailwinds are numerous, its headwinds are manageable and, unlike most the rest of the world, India is a relatively young country. It also has the tailwind of needing to build the necessary infrastructure to be a twenty-first-century economy. And, at less than 70 percent according to the IMF, India does not have the government-debt-to-GDP burden that hinders the growth of many countries (meaning that there is some room for fiscal policies to encourage growth).

*** Brexit and the Future of Europe

GEORGE SOROS

George Soros is Chairman of Soros Fund Management and Chairman of the Open Society Foundations. A pioneer of the hedge-fund industry, he is the author of many books, including The Alchemy of Finance,The New Paradigm for Financial Markets: The Credit Crisis of 2008 and What it Means, and The Tragedy… READ MORE

JUN 25, 2016

NEW YORK – Britain, I believe, had the best of all possible deals with the European Union, being a member of the common market without belonging to the euro and having secured a number of other opt-outs from EU rules. And yet that was not enough to stop the United Kingdom’s electorate from voting to leave. Why?

The answer could be seen in opinion polls in the months leading up to the “Brexit” referendum. The European migration crisis and the Brexit debate fed on each other. The “Leave” campaign exploited the deteriorating refugee situation – symbolized by frightening images of thousands of asylum-seekers concentrating in Calais, desperate to enter Britain by any means necessary – to stoke fear of “uncontrolled” immigration from other EU member states. And the European authorities delayed important decisions on refugee policy in order to avoid a negative effect on the British referendum vote, thereby perpetuating scenes of chaos like the one in Calais.

German Chancellor Angela Merkel’s decision to open her country’s doors wide to refugees was an inspiring gesture, but it was not properly thought out, because it ignored the pull factor. A sudden influx of asylum-seekers disrupted people in their everyday lives across the EU.

The lack of adequate controls, moreover, created panic, affecting everyone: the local population, the authorities in charge of public safety, and the refugees themselves. It has also paved the way for the rapid rise of xenophobic anti-European parties – such as the UK Independence Party, which spearheaded the Leave campaign – as national governments and European institutions seem incapable of handling the crisis.

Now the catastrophic scenario that many feared has materialized, making the disintegration of the EU practically irreversible. Britain eventually may or may not be relatively better off than other countries by leaving the EU, but its economy and people stand to suffer significantly in the short to medium term. The pound plunged to its lowest level in more than three decades immediately after the vote, and financial markets worldwide are likely to remain in turmoil as the long, complicated process of political and economic divorce from the EU is negotiated. The consequences for the real economy will be comparable only to the financial crisis of 2007-2008.

That process is sure to be fraught with further uncertainty and political risk, because what is at stake was never only some real or imaginary advantage for Britain, but the very survival of the European project. Brexit will open the floodgates for other anti-European forces within the Union. Indeed, no sooner was the referendum’s outcome announced than France’s National Front issued a call for “Frexit,” while Dutch populist Geert Wilders promoted “Nexit.”

Moreover, the UK itself may not survive. Scotland, which voted overwhelmingly to remain in the EU, can be expected to make another attempt to gain its independence, and some officials in Northern Ireland, where voters also backed Remain, have already called for unification with the Republic of Ireland.

The EU’s response to Brexit could well prove to be another pitfall. European leaders, eager to deter other member states from following suit, may be in no mood to offer the UK terms – particularly concerning access to Europe’s single market – that would soften the pain of leaving. With the EU accounting for half of British trade turnover, the impact on exporters could be devastating (despite a more competitive exchange rate). And, with financial institutions relocating their operations and staff to eurozone hubs in the coming years, the City of London (and London’s housing market) will not be spared the pain.

But the implications for Europe could be far worse. Tensions among member states have reached a breaking point, not only over refugees, but also as a result of exceptional strains between creditor and debtor countries within the eurozone. At the same time, weakened leaders in France and Germany are now squarely focused on domestic problems. In Italy, a 10% fall in the stock market following the Brexit vote clearly signals the country’s vulnerability to a full-blown banking crisis – which could well bring the populist Five Star Movement, which has just won the mayoralty in Rome, to power as early as next year.

None of this bodes well for a serious program of eurozone reform, which would have to include a genuine banking union, a limited fiscal union, and much stronger mechanisms of democratic accountability. And time is not on Europe’s side, as external pressures from the likes of Turkey and Russia – both of which are exploiting the discord to their advantage – compound Europe’s internal political strife.

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That is where we are today. All of Europe, including Britain, would suffer from the loss of the common market and the loss of common values that the EU was designed to protect. Yet the EU truly has broken down and ceased to satisfy its citizens’ needs and aspirations. It is heading for a disorderly disintegration that will leave Europe worse off than where it would have been had the EU not been brought into existence.

But we must not give up. Admittedly, the EU is a flawed construction. After Brexit, all of us who believe in the values and principles that the EU was designed to uphold must band together to save it by thoroughly reconstructing it. I am convinced that as the consequences of Brexit unfold in the weeks and months ahead, more and more people will join us.

*** Brexit and the Future of Europe

GEORGE SOROS

JUN 25, 2016 29

NEW YORK – Britain, I believe, had the best of all possible deals with the European Union, being a member of the common market without belonging to the euro and having secured a number of other opt-outs from EU rules. And yet that was not enough to stop the United Kingdom’s electorate from voting to leave. Why?

The answer could be seen in opinion polls in the months leading up to the “Brexit” referendum. The European migration crisis and the Brexit debate fed on each other. The “Leave” campaign exploited the deteriorating refugee situation – symbolized by frightening images of thousands of asylum-seekers concentrating in Calais, desperate to enter Britain by any means necessary – to stoke fear of “uncontrolled” immigration from other EU member states. And the European authorities delayed important decisions on refugee policy in order to avoid a negative effect on the British referendum vote, thereby perpetuating scenes of chaos like the one in Calais.

German Chancellor Angela Merkel’s decision to open her country’s doors wide to refugees was an inspiring gesture, but it was not properly thought out, because it ignored the pull factor. A sudden influx of asylum-seekers disrupted people in their everyday lives across the EU.

The lack of adequate controls, moreover, created panic, affecting everyone: the local population, the authorities in charge of public safety, and the refugees themselves. It has also paved the way for the rapid rise of xenophobic anti-European parties – such as the UK Independence Party, which spearheaded the Leave campaign – as national governments and European institutions seem incapable of handling the crisis.

Now the catastrophic scenario that many feared has materialized, making the disintegration of the EU practically irreversible. Britain eventually may or may not be relatively better off than other countries by leaving the EU, but its economy and people stand to suffer significantly in the short to medium term. The pound plunged to its lowest level in more than three decades immediately after the vote, and financial markets worldwide are likely to remain in turmoil as the long, complicated process of political and economic divorce from the EU is negotiated. The consequences for the real economy will be comparable only to the financial crisis of 2007-2008.

That process is sure to be fraught with further uncertainty and political risk, because what is at stake was never only some real or imaginary advantage for Britain, but the very survival of the European project. Brexit will open the floodgates for other anti-European forces within the Union. Indeed, no sooner was the referendum’s outcome announced than France’s National Front issued a call for “Frexit,” while Dutch populist Geert Wilders promoted “Nexit.”

Moreover, the UK itself may not survive. Scotland, which voted overwhelmingly to remain in the EU, can be expected to make another attempt to gain its independence, and some officials in Northern Ireland, where voters also backed Remain, have already called for unification with the Republic of Ireland.

The EU’s response to Brexit could well prove to be another pitfall. European leaders, eager to deter other member states from following suit, may be in no mood to offer the UK terms – particularly concerning access to Europe’s single market – that would soften the pain of leaving. With the EU accounting for half of British trade turnover, the impact on exporters could be devastating (despite a more competitive exchange rate). And, with financial institutions relocating their operations and staff to eurozone hubs in the coming years, the City of London (and London’s housing market) will not be spared the pain.

But the implications for Europe could be far worse. Tensions among member states have reached a breaking point, not only over refugees, but also as a result of exceptional strains between creditor and debtor countries within the eurozone. At the same time, weakened leaders in France and Germany are now squarely focused on domestic problems. In Italy, a 10% fall in the stock market following the Brexit vote clearly signals the country’s vulnerability to a full-blown banking crisis – which could well bring the populist Five Star Movement, which has just won the mayoralty in Rome, to power as early as next year.

*** The Surprise at Brexit and the Social Crisis Behind It

June 25, 2016 The pro-EU elite never imagined “leave” would win.

By George Friedman

In looking at Friday’s market decline, it is clear that the investment community was surprised at the outcome of the referendum in the U.K. What is most surprising is that they were surprised. There were two competing views of the EU. One view regarded the European Union as essential to British economic well-being. The other saw the European Union as a failing institution, and saw Britain being pulled down if it remained.

The European Union has been caught in long-term stagnation. Eight years after the financial crisis it is still unable to break out of it. In addition, a large swath of Europe, especially in the south, is in depression with extremely high unemployment numbers. An argument could be made that these problems will be solved in the long run and that Britain should be part of the solution for its own sake. The counterargument is that if the problems had been soluble they would have been solved years ago.

For a financial community, there is a built-in desire for predictability. It can make money in good or bad markets and economies. It has trouble making money in uncertainty. Therefore, the financial community was inherently biased toward Britain remaining in the EU because it gave them predictability. There was a subconscious assumption that everyone had the same bias toward maintaining the status quo. This was not just the view of the global financial community. It was one shared with other elites – political, journalistic, academic and the rest.

Someone I know, who has many friends in Britain, told me that she didn’t know anyone who favored a British exit. That was true. As the graduate of an elite college she is in touch with similar people around the world. This enclosure has profound social indications to consider, but in this case it created a psychological barrier to anticipating what was coming. When everyone you know thinks an idea is rubbish, it is hard to imagine that there is a majority out there that you haven’t met that doesn’t share your views.

There was also a sense of contempt for the opponents. The leaders, like UKIP leader Nigel Farage, were odd from the elite point of view. Their rhetoric was unseemly. And their followers by and large did not come from the places in London where the elite did. Their views were not the liberal, transnational views of the supporters of the EU. They led much narrower, harder lives and did not know the world as the pro-EU people did. So they were discounted. There was an expectation that the elite, who had governed Britain for so long, were dealing with an annoyance, rather than a peaceful rising against them. Thus, in spite of the polls indicating the election would be extremely close, the “remain” supporters could not believe they would lose.

The reporters of leading British media were talking to their European and American counterparts. The politicians were doing the same. And the financial community is on the phone daily with colleagues around the world. The challenge that was posed in the U.K. referendum is present in many countries around the world, albeit in different forms. What has become universal is the dismissive attitudes of the elite to their challengers. It is difficult for the elite to take seriously that the less educated, the less sophisticated and the less successful would take control of the situation. The French Bourbons and the Russian Romanovs had similar contempt for the crowds in the streets. They dismissed their lack of understanding and inability to act – right to the moment they burst into the palaces.

The analogy should not be overdone but also should not be dismissed. The distance between what I will call the technocratic elite and the increasingly displaced lower-middle and even middle class is becoming one of the major characteristics of our time. This elite did not expect “leave” to win because it was clear to them that the EU would work itself out. They didn’t know anyone who disagreed with them – a measure of how far out of touch they had become with the real world. And above all, they were dismissive of the kind of people who led their opponents.

Not understanding their own isolation and insularity; not grasping the different world view of “leave” supporters or that they couldn’t care less if the financial institutions of the City moved to Frankfurt; not grasping the contempt in which they were held by so many, the elite believed that “leave” could not win. Hence, they were surprised in spite of the fact that others, including myself in my book “Flashpoints: The Coming Crisis in Europe,” had noted all of these trends.

In the end, the financial decline on Friday resulted from the lack of imagination of the elite. And it is that lack of imagination that led them to believe that the current situation could continue. That lack of imagination, the fact that the elite had no idea of what was happening beyond their circle of acquaintances, is a far greater crisis in the West than whether Britain is in the EU or even if the EU survives. We are living in a social divide so deep that serious people of good will and a certain class have never met anyone who wants to leave the EU or who supports blocking Muslim immigration or perhaps even who will vote for Donald Trump.

A democratic society cannot survive this divide. It occurred in the United States in the Great Depression, but was smashed by World War II when the young soldiers of all classes discovered that their lives depended on each other and social class meant nothing when the artillery opened up. The moderation of the post-war period had much to do with this experience.

Of course, World War II was unique and hardly the solution to a social problem. Nevertheless, something dramatic needs to happen. It will, as the situation becomes increasingly untenable. In the end, the palace doors may be kicked in. Hopefully, it will be done more politely and without the viciousness of the falls of the Bourbons and Romanovs.

No one had the right to believe that this couldn’t happen. No one should believe that it will be confined to Britain. No one should believe that it won’t happen again. The days when the elite could assert that the EU is going to be just fine in the face of evidence to the contrary are over.

** Is the US Army Ready for a Shocking Technological Revolution in Land Warfare?

http://nationalinterest.org/blog/the-buzz/the-us-army-ready-shocking-technological-revolution-land-16703?page=show

Dave Majumdar

June 23, 2016

The United States Army foresees a revolution in ground combat unfolding over the next several decades, but the exact nature of that fundamental change is unclear. Indeed, the Army’s top leadership compares the coming revolution to the introduction of the stirrup, rifled barrels or even mechanized warfare. But this revolution will be a change in the technological character of warfare; the “immutable” nature of war continues to remain a constant as it has throughout human history.

“I think we are on the cusp of a fundamental change in the character of ground warfare,” U.S. Army chief of staff Gen. Mark Milley told an audience at the Center for Strategic and International Studies in Washington, D.C., on June 23. “It will be of such significance that it will be like the rifling of a musket or the introduction of a machine gun or it will have such significance impact as the change from horse to mechanized vehicles.”

Revolutionary new technologies such as nanotechnology, robotics and artificial intelligence will drive that fundamental change. But while Milley said that a revolution is coming, how exactly the character of ground warfare will shape up remains an open question. “Exactly what that’s going to look like, I don’t know,” Milley said. “I just know that we’re there. We’re on the leading edge of it. I think we’ve got a few years to figure it out—probably less than ten. But I think by 2025, you’re going to see armies—not only the American Army but armies around the world—will be fundamentally and substantively different than they are today.”

Indeed, some of the harbingers of that future could already be here in prototype form. One potentially revolutionary technology could be an exoskeleton that greatly enhances the physical capabilities of individual soldiers. While even five years ago such technologies were the purview of science fiction, prototypes of exoskeletons and other technologies already exist. “They’re not ready for prime time today, but we’re looking at them” Milley said. “I think within ten years things like that are going to be very very possible on the battlefield.”

Meanwhile, for the immediate future, the U.S. Army is ramping up its training to defeat high-end threats that have not been seen since the end of the Cold War. Indeed, especially for the U.S. Army—which bore the brunt of the last 15 years of counterinsurgency war—the new era of renewed great power competition is proving to be a challenge. Milley said there has been an entire generation of officers and noncommissioned officers who have not trained for a full-scale combined-arms maneuver war. Indeed, Milley cited senior armor and artillery officers who have participated in less than one-fifth of the gunnery exercises than their pre-9/11 predecessors had. In the air, Milley spoke of AH-64 Apache gunship crews who have only flown two-ship operations and have never participated in battalion-sized deep attacks or other complex rotary-wing tactics.

***The Inaccuracy of Polling

Weekly Map: The Inaccuracy of Polling

This graphic contains two maps of the United Kingdom. On the left side are the results of a YouGov poll that identified different parts of the U.K. as more or less Euroskeptic. On the right side are the official results of Britain’s vote to leave the European Union.

The YouGov polls, as well as numerous other polls, failed to predict accurately what was going to happen in the referendum. The polls prior to the vote were not as wrong as the polls for the last British general election, but there were many areas in the U.K. where the strength of the “leave” vote was underestimated.

The first YouGov poll released after polls closed predicted a 52 percent to 48 percent victory for “remain” – and the result was almost the precise opposite. At the beginning of the night, Newcastle upon Tyne turned out to be a far more even heat than expected (the “leave” camp garnered a higher percent than anticipated), and Sunderland turned out stronger for “leave” than expected. Those were not flashes in the pan but actual discrepancies between polling and reality.

The map on the left doesn’t give you a sense that Wales would vote overall for “leave.” Northern Ireland looks very mixed, whereas in the majority voted for “remain.” And polls missed the strength of the “leave” sentiment in the center of England. The increasing inaccuracy of polling is a phenomenon George Friedman has pointed out before and that we have written on extensively. 

Also, Scotland, Northern Ireland and London all voted to remain. Wales and much of the rest of England voted predominantly to leave. This fits with the increase in nationalism across Europe, and brings into relief how nationalism is not just something that affects nation-states but also everything from multilateral international institutions to united kingdoms.

In George's latest book, Flashpoints: The Emerging Crisis in Europe, he predicted that the European Union would eventually fragment. Brexit is just the first step. In the coming weeks, we will be analyzing the government maneuvers on the Continent that will have the largest impact on the future of the U.K. and the rest of the world. 

This historic event is just the start of a major change in Europe. One that will not only impact the Peninsula, but will send shockwaves throughout the globe. 

How To Break Up With Al Qaeda & Date ISIS

Author: Clint Watts

June 25, 2016

PDF Version

A year ago I began building a graphic to describe the recent history of the al Qaeda and Islamic State split and the currents created by foreign fighter migrations to conflict zones in Afghanistan, Iraq, and now Syria. The infographic here doesn’t cover everything, but it is what I use for my five minute brief on al Qaeda and the Islamic State. This was also what I used to develop my research and resulting articles for 2016. (The bottom right hand corner is the “Third Foreign Fighter Glut”– you can read part 1, “Foreign Fighters”, and part 2,“ISIS Affiliates”.)

I offer this as another Sunday morning infographic to read as you wake up. If the graphic is helpful to anyone, have at it! And in the coming weeks I’ll be updating it with another segment at the bottom entitled “2016 and beyond.” 

ESSAR TAPES The Tapes No One Wants To Hear

http://www.outlookindia.com/magazine/story/the-tapes-no-one-wants-to-hear/297388

04 JULY 2016

The complaint to the PM makes explosive allegations about tapping and about how things are ‘managed’ by corporates, but the government seems to be going slow on investigating them

MEETU JAIN

The south-westerlies hit the Kerala coast in June, but it’s only about a fortnight later that Delhiites begin to spot dark clouds furtively signing autographs over India Gate. Monsoon 2016 is still en route, but Lutyens’ Delhi—the central part of the capital that is scorned by those who can’t fathom or stand its intrigues—is already in the throes of a storm whipped up by the ‘Essar tapes’. So far, there has been ple­nty of thunder and lightning, but very little rain; but nearly everyone’s ducking and there’s plenty of perspiration.

A week after the website ‘India Samvad’—followed by Outlook andThe Indian Express—showed how assorted artistes in the executive, legislature, judiciary and bureaucracy were dancing to the ringtones of the corporate world, the Narendra Modi government has moved below mandatory speed limits to get to the bottom of it. This despite India Today TV channel calling it “Bigger than Radia Tapes”. This despite Supreme Court lawyer Prashant Bhushan tweeting: “Essar tapes is the biggest expose of corporate/political corruption.”

On social media, though, a medium his government trusts, commentators let fly:

@Petterfitter: “First impression: Radia Tapes are barely a drop in the ocean compared to this stuff”

@manishtewari: “Selective deafness of sections of #corporate media underscores TRAI recommendations on media cross holdings”

@canarytrap: “If Radia Tapes made you think Republic was put on sale, Essar Tapes will tell you the sale was on even before that”

@thesuniljain: “...best not to speak on the phone any more, if you have to, choose telco carefully!”

How the Americans first proposed India's NSG membership and then turned it into a Sino-India tangle

http://scroll.in/article/810590/how-the-americans-first-proposed-indias-nsg-membership-and-then-turned-it-into-a-sino-india-tangle

India’s diplomacy and foreign policy has suffered a humiliating defeat at Seoul.

MK Bhadrakumar

Imagine a train accelerating along an S-curve. That is what Indian diplomacy has done. Now, close your eyes and don’t even look at the wreckage as the news comes from the plenary of the Nuclear Suppliers Group meeting in Seoul.

India’s diplomacy and foreign policy has suffered a humiliating defeat.

It was plain to see all along for anyone who is not myopic – and, most certainly, at least from June 9 when Prime Minister Narendra Modi dialled up the Kremlin number – how the denouement of India’s high voltage diplomacy on NSG membership would turn out to be.

The best spin one can give is that Modi’s aides led him up the garden path and left him in a world of make-believe that India’s membership of the Nuclear Suppliers Group was just round the corner.

Modi probably found the prospect irresistible that he would be claiming credit in the Indian public opinion for an incredible diplomatic achievement.

Talking tough

To what extent did Modi comprehend the complex issues involved in India’s NSG membership question? We will never get to know.

Despite being a shrewd politician who plans balance sheets with great anticipation, he probably chose to suspend disbelief and allowed himself to be misled by his aides into believing that it boiled down to a bilateral issue between India and China.

Nothing else explains his decision to travel to Tashkent and meet with Chinese President Xi Jinping (whom he hadn’t cared to meet for one full year.)

What gave Modi such confidence to estimate that the Chinese leadership too conducts personalised diplomacy? We do not know.

Suffice it to say, the only plausible explanation is that his aides convinced him that the “tough” policies his government has been pursuing toward China since Xi’s visit in September 2014 would have by now so nicely softened up Beijing that it’d be in a mood to placate India.

Indeed, South Block has been exceptionally nasty in its China policies through the past year and a half. Consider the sample list below:

The “regime change” in Sri Lanka;

The Joint Vision Statement on Asia-Pacific (co-authored by Modi and President Barack Obama);

Modi’s dalliances with Japan’s Shinzo Abe;

Modi’s celebrated lecturing to Xi on Zaki-ur-Rahman Lakhvi;

“Capacity building” of Vietnam’s armed forces;

The mud-slinging over Mohammed Azhar’s inclusion in UN watch list;

Expansion of Malabar Exercises to include Japan;

US-India-Japan Trilateral Dialogue at foreign minister level;

“Shangrila Dialogue” to debunk Xi’s One Belt One Road initiative;

Visa to Uighur separatists;

Extended deployment of Indian navy ships in South and East China Sea;

Threat to supply BrahMos missiles to Vietnam.

Strategic Reversal in Afghanistan

June 24, 2016

In a new Contingency Planning Memorandum produced by the Council on Foreign Relations' Center for Preventive Action, Seth Jones, director of the International Security and Defense Policy Center at the RAND Corporation, considers what an unraveling of the political and security situation over the next 18 months would mean for Afghanistan and what can be done to prevent it.

Progress achieved in Afghanistan since 2001 has recently come under threat from a resurgent Taliban and growing instability of the Afghan government, notes Jones in “Strategic Reversal in Afghanistan.”

A collapse of Afghanistan's national unity government—already plagued by corruption, slow economic growth, and poor governance—could embolden the Taliban to make advances on major urban areas, which in turn would further undermine support for the government.

A reversal could increase the number of extremist Islamic groups operating in Afghanistan, lead to regional instability, and foster the perception that the United States is not a reliable ally. Jones recommends several steps the United States can take to avoid such an outcome:

Sustain the current number and type of U.S. military forces through the end of the Obama administration. Approximately 10,000 U.S. forces are currently in Afghanistan. “President Obama should refrain from cutting the number of U.S. forces to 5,500, as he promised to do by the end of his presidency.”

Decrease constraints on U.S. forces in Afghanistan. “President Obama should grant the military new authorities to strike the Taliban and Haqqani network, as he did with ISIL-KP in January 2016.”

Sustain U.S. support for the Afghan National Defense and Security Forces. “The United States should commit to providing at least $3.8 billion per year for the next five years” to sustain the Ministry of Defense's and Interior's costs.

Focus U.S. diplomatic efforts on resolving acute political challenges. The United States should focus “on working with the Afghan government and political elites to reach a consensus on contentious issues such as electoral reform.” With a push to organize parliamentary and district council elections, “it makes little sense to hold elections until there is electoral reform, and Afghanistan should not hold a loya jirga until there is a broader consensus on its ultimate purpose.”

Address economic grievances that could trigger violent unrest. U.S. diplomats, working with the World Bank and the International Monetary Fund, could focus on alleviating poor agricultural harvests, rising unemployment, and energy shortages, as well as other issues that exacerbate public opposition.

— Khorshied Samad

Air-launched Brahmos — Southeast Asian counter to China’s bullying

by Bharat Karnad

June 25, 2016

The air-launched Brahmos supersonic cruise missile was recently flight tested for the first time off a Su-30 MKI platform at the Nasik air base. [A short video of the Brahmos-armed Su-30 MKI taxing for take off onhttps://twitter.com/livefist/status/746585004784816129%5D.

With India’s formal entry into the Missile Technology Control Regime, the last excuse for delaying the immediate transfer/sale of quantities of this missile to Vietnam, Indonesia, Philippines and Malaysia who have strongly expressed an interest in having this weapon in their arsenals, is now gone. Without further ado or loss of time, defence minister Manohar Parrikar should order transactions for the Brahmos to get underway right away. Between the land-based (in coastal batteries) and the air-launched versions of this missile in the Vietnamese, Indonesian, Philippine and Malayasian land and air orders of battle, the Chinese armed forces can be stopped dead in their tracks. Vietnam Air Force has Su-30MKs in its fleet whose flight control computers can be readily configured — as has been done with the IAF Su-30MKIs — to fire the Brahmos.

Perhaps, Moscow held off permission for dealing the Brahmos to our friends in Southeast Asia until recently because Russia was awaiting India’s entry into MTCR and the removal of all legal hurdles. With the barriers now removed, Parrikar’s MOD better get going. There’s no time to be lost because an exasperated Vietnam has already complained to New Delhi about its tardiness regarding the supersonic missile sale, with Hanoi actually giving an ultimatum of end-2016 by which time it expects a contract to be signed and for the training and other support aspects of the Brahmos program to be initiated.

What MTCR Membership Means for India, and What It Doesn’t

BY SHASHANK JOSHI 

09/06/2016 

India’s formal membership of the Missile Technology Control Regime is being hailed as a breakthrough, but the implications may be somewhat less dramatic.

File photo of the BrahMos missile, a joint India-Russia venture. Credit: PTI

In the 18 years since its nuclear tests, India’s pursuit of nuclear legitimacy has taken several forms. Successive governments have renounced further tests, promulgated defensive nuclear doctrines and accepted international supervision. These and similar steps have not been cost-free. They have been taken – for better or worse – not only to burnish a claim to responsible global leadership, but also to lubricate the inward flow of technology.

As part of this effort, India has placed particular emphasis on joining key export control regimes that, ironically, echo thetechnology denial that India faced and protested for decades. India now stands on the cusp of joining one of those groupings, the Missile Technology Control Regime (MTCR), as Devirupa Mitra explained on June 7. This has been a long road. In 2005, then Prime Minister Manmohan Singh promised India’s “harmonisation and adherence” to MTCR guidelines, as part of the US-India civil nuclear deal being negotiated at the time. By 2008, then President George W. Bush notified the US Congress that India had successfully done this. Formal membership, a decade on, is being hailed as a historic breakthrough. But the implications may be somewhat less dramatic. 

India will be formally admitted into the MTCR on Monday

The war that shaped an awesome army

By G Parthasarathy

19th June 2016 

One often finds writers in New Delhi today professing to be “strategic experts”. But rarely does one come across a relatively young analyst being as thoughtful and erudite on questions of war, peace and national strategy, as Dr Srinath Raghavan.

India’s War: The Making of Modern South Asia, 1939-1945 By: Srinath Raghavan Publisher: Allen Lane Price: Rs 699 Pages: 550His book India’s War—The Making of South Asia (1939-1945) is a comprehensive account of how a 2.5 million-strong Indian Army was raised, trained, equipped and deployed, to fight during the Second World War. This was the largest volunteer force in human history, raised to fight for a colonial power, against the forces of German Fascism and Japanese Imperialism. When the war ended, independent India inherited a disciplined army, with capable, battle-hardened officers and men. This army has served the country well, with loyalty, valour and distinction.

This build-up of the Indian Army occurred when the country’s freedom fighters and political parties were divided on how they should respond to a call to war by Imperial Britain. Raghavan dwells on how the British astutely used fissures in the Indian polity to their advantage, with their classic ploy of “divide and rule”. The Congress agitations, led by Mahatma Gandhi, faced solid roadblocks, caused by Jinnah and a large number of rulers of the country’s 565 Princely States. Then, there was the determination of Netaji Subhas Bose to make common cause with the Axis Powers, Germany and Japan, to overthrow British Rule, much to the consternation of Mahatma Gandhi.

The making and unmaking of UGC Its policies suffer from two opposite issues—under and over-regulation

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Since its inception in 1956, the University Grants Commission (UGC) has been witness to a spectacular growth in higher education. The number of universities has multiplied 40 times over, and student enrolment has increased a hundred fold. But the UGC has also been a silent spectator to the languishing quality of education in many of these institutions.

In this context, the T.S.R. Subramanian committee’s recommendation in the National Education Policy, that the UGC Act should be allowed to lapse and replaced by a new National Higher Education Act, brings up an important question—has the UGC failed to evolve according to the changing dynamics of higher education, and fallen short of achieving its original mandate?

The UGC is the central body for coordination, determination and maintenance of standards of university education in India. Though it can’t be blamed for all the problems with the higher education system, its decisions have an important bearing on the entire student population of the country. Therefore, when policies made by the UGC to keep pace with the changing dynamics of higher education are ill-considered, as well as lacking in research and consultation with stakeholders, there is reason to worry. The recent increase in teaching hours of the faculty and its subsequent cancellation, the implementation of the choice-based credit semester system in Delhi University, and the decision to discontinue UGC non-NET scholarship for MPhil and PhD students and its abandonment after protests, are all cases in point.

CULTURE India Has A Choice: Do We Want Success Or Are We Happy Just Being Right?

R Jagannathan

June 23, 2016

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The essential philosophical and practical question we must answer is this: do we want success and victory or are we satisfied with righteousness, never mind if it leads to defeat?

Indians, specially Hindus, have an enormous capacity to confuse themselves over everything, whether it is the despatch orders for Raghuram Rajan (a.k.a. Rexit), the opening up of foreign direct investment (FDI), or when dealing with Pakistan. You name it, we love breast-beating over it. We tie ourselves constantly in knots over good and evil, right and wrong, means and ends, dharma and adharma, forgetting basic lessons from the Rig Veda and the Bhagavad Gita.

For me, the essence of the Rig Veda is its gung-ho spirit, pursuit of success and victory over enemies. Almost all Rig Vedic hymns seek the help of gods to achieve success and victory. This is the spirit we lost during the Upanishadic period of deeper contemplation and metaphysical ruminations.

Even though there is doubt over when the Gita was composed, I suspect that it came towards the end of the Upanishadic period, when we had become effete and seized by self-doubt. The essence of the Gita – in my view at least - is that you cannot achieve peace without the ability and willingness to fight. When Arjuna was trying to weasel his way out of the Kurukshetra war, Sri Krishna stops him. He also tells us that when you do have to fight, give it all you have got. You must focus on winning, and not just fighting purely by the rules. If ethics leads you to defeat, or if a superior enemy has set the rules where you may fail, you must break the rules. This was the logic of Sri Krishna telling Arjuna to kill Karna when his chariot was stuck and the latter couldn’t fight back. It may sound like an ethical deficit in Sri Krishna, especially to our modern sensibilities, but once you are in a war, your dharma is to win. You can do the penance for it later. Adharma would have won if you had lost the war.

** China’s Encirclement Concerns – Analysis

http://www.eurasiareview.com/24062016-chinas-encirclement-concerns-analysis/

China’s Encirclement Concerns. Source: FPRI

BY PUBLISHED BY THE FOREIGN POLICY RESEARCH INSTITUTE JUNE 24, 2016

By Felix K. Chang*

(FPRI) — For almost two decades, Chinese strategists have worried about what they regard as the geopolitical encirclement of China. At various times, they have attributed that encirclement to the United States, then India, and most recently Japan.[1] No doubt last week’s large-scale naval exercise in the western Pacific did little to dispel their concerns. For the first time warships from India, Japan, and the United States jointly conducted anti-air and anti-submarine drills in the Philippine Sea, an area directly adjacent to the Chinese-claimed waters of the East and South China Seas.

Events over the past month likely added to China’s concerns. Last Friday, Indian Prime Minister Narendra Modi visited Bangkok in part to expand his country’s defense and maritime security cooperation with Thailand. A week earlier, he met with President Barack Obama at the White House, highlighting India’s closer ties with the United States. At a summit in late May, the United States and Japan, along with other Group of Seven countries, openly voiced their concern over China’s maritime actions. Days before the summit, Obama flew to Hanoi where he lifted the long-standing U.S. arms embargo against Vietnam, one of China’s South China Sea antagonists. Then after the summit, Japanese Prime Minister Shinzō Abe welcomed a Vietnamese delegation to discuss how they could enhance their military cooperation.

Certainly Chinese concerns over encirclement are not new. During the Cold War, China worried about the Soviet Union pursuing a similar geopolitical strategy. Even earlier, the Chinese Communist Party faced several all too real “encirclement campaigns” during China’s long civil war. Those experiences could have left an imprint may have left their imprint on China’s strategic thinking ever since.

What is clear is that Asia-Pacific countries have begun to prepare for what could be an era of heightened tensions. Such hedging has recently accelerated, as Chinese behavior in the East China Sea, South China Sea, and on its border with India has grown increasingly muscular. The United States has pursued its “pivot” or “rebalance” toward Asia, which shifted the bulk of American naval might to the Pacific. India and Japan have boosted their diplomatic and economic engagement in Southeast Asia and strengthened their military postures. Other countries have begun to do the same. As Australia’s 2016 defense white paper warned, “competing claims for territory and natural resources [in the region]… could undermine stability.”[2] But does such hedging constitute an encirclement of China?

Imagined Encirclements

Diplomatic mishap at NSG Seoul

by Bharat Karnad

June 24, 2016

It was an astounding misread of the international political situation for the BJP government to believe that just having Prime Minister Narendra Modi do rounds of his now trademark personalized diplomacy would get India a ticket into the Nuclear Suppliers Group at its two-day plenary in Seoul. It is one thing for Modi to be convinced about his own persuasive powers. Quite another thing for the Ministry of External Affairs mandarins, with Foreign Secretary K. Jaishankar in the lead, to go along with the PM’s conceit without alerting Modi to the near insurmountable barriers in place visible to any level-headed analyst and made perfectly plain by Beijing’s repeated negative pronouncements.

Did Modi really think that a meeting with Chinese President Xi Jinping on the sidelines of the Shanghai Cooperation Organization in Tashkent and Jaishankar’s attempts at changing the minds of the other holdout states — Ireland, New Zealand, Switzerland, Brazil, and Turkey, would prove anything but futile? Two days back Sartaj Aziz, PM Nawaz Sharif’s foreign policy adviser, had telegraphed this with his statement that Pakistan had succeeded in firming up the opposition to India’s NSG membership. As usual, he was taking more credit than was due his diplomatic efforts. The problem was/is with the different reasons for their holdout by the six countries. Let’s see what these are and decide whether India’s chances will brighten with time.

China WILL NOT budge until India begins seriously to strategically discomfit it with counter-leverage and counter-pressure. Such leverage/pressure has come its way with India formally becoming a participating state in the MTCR (Missile Technology Control Regime). China has been seeking an entry into MTCR since 2004. New Delhi can hereafter veto China’s membership in MTCR, and should do so. Secondly, it should fast-track the sale/transfer of the Brahmos supersonic cruise missile not just to Vietnam that has desperately desired it for years, but also the Philippines, Malaysia, Indonesia, and Brunei the states disputing China’s expansive claims in the South China Sea. MTCR membership means that India’s Brahmos transactions with these states and any other country that has any problems with Beijing and wishing to acquire this deadly and indefensible missile, are instantly legitimated, and will not draw sanctions for either India, the supplier, or any of its customer states.

China's India-Containment Policy Fully Manifested at NSG Seoul Meeting

By Dr Subhash Kapila

25-June-2016

China’s India-Containment Policy stood fully manifested at the NSG Meeting in Seoul on June23-24 2016 in opposing India’s admittance to the NSG. Strikingly evident was that China ignored vehement Major Powers support for India.

China’s scuttling India’s bid for NSG inclusion was a foregone conclusion but India and PM Modi orchestrated a high-voltage global diplomatic offensive to garner international support for India’s bid and which evidently came forth in that 40 out of 48 members strongly supported India’s bid and even forced a special session on India’s admittance late at night on June 23 2016.

Before discussing the long-term fall-out of China’s India Containment bid at Seoul one would at first instance dismiss criticism within India that India’s NSG campaign and PM Modi’s personal meeting with Chinese President at Tashkent on side-lines of SCO Summit demeaned India and that India could have done without it as India already with a ‘waiver; in 2008 was no longer constrained in nuclear commerce. Such criticism misses the point in analysing the underlying motives of PM Modi’s diplomatic offensive.

The high-voltage Indian diplomatic offensive on its NSG bid served two significant strategic objectives. Firstly, India was able to demonstrate to China the wide global support that existed for India’s admittance into NSG as an Emerged Power and its track-record of impeccable credentials for complying with all nuclear norms since 2008. This would not have been visible if India under the foregone conclusion that China will not budge in its opposition, had not conducted this diplomatic offensive.

How To Keep Britain’s Global Power Post-Brexit

http://breakingdefense.com/2016/06/british-influence-to-grow-in-wake-of-brexit-but-not-in-a-good-way/?utm_source=hs_email&utm_medium=email&utm_content=31003624&_hsenc=p2ANqtz-9H3YK0KzGRMnNMNmDuPjoXiZRTGdgrN_y7lG8YHXEI3x4D7yzVHkz792RJo9p1kKTb2k2xv5r0GlisW0MNw4vjDcCBpQ&_hsmi=31003624

By COLIN CLARKon June 24, 2016 

The United Kingdom is likely to need a new name after yesterday’s shocking vote by the British people to leave the European Union.

Scottish leaders have made clear for some time that they were likely to hold a second referendum on independence should their erstwhile countrymen vote to leave the EU, and the equivalent of the blue people‘s prime minister has already declared her intention to leave the UK behind and reach across the Channel to those foreign types.

Here’s how the British paper The Independent lead the story:

“Nicola Sturgeon has said the people of Scotland see their future as part of the European Union, after it became clear Britain had voted for Brexit in a historic referendum.”

Stark. Clear. And I would argue, an intelligent decision by the Scots. Full disclosure: my mother is a Campbell and I have many Scottish and English cousins. Many of my maternal relatives have served in Her Majesty’s armed forces throughout the old colonies and during the two World Wars. If my gene pool were an indicator of my sentiments, I’d be a huge supporter of the United Kingdom and its people and the so-called Special Relationship.

Sadly, as an analyst looking at the new Kingdom of Wessex, or whatever we’ll call it after Scotland leaves, I see little to be gained by giving England, Wales and Northern Ireland much, except in direct return for something, such as bases, diplomatic support and the like. The intelligence relationship will doubtless continue to be fruitful, since Britain remains more adept at human intelligence. Combine that with their unique access to many former colonies and the enormous amounts of data from GCHQ (Government Communications Headquarters), and the rump of Britain’s “cooperation” with the United States dating from World War II will remain tasty and useful.

China and the NSG

Posted by Jaideep A. Prabhu

21 Jun 2016 

https://jaideepprabhu.org/2016/06/21/china-and-the-nsg/

Indians are unusually preoccupied with the events unfolding at a small yet important meeting in Seoul: the Nuclear Suppliers Group plenary meeting. Up for discussion will be the membership process for countries not signatories to the Non-Proliferation Treaty. China insists that this agenda item does not focus in India’s application but considers the establishment of a clear set of guidelines for all future applicants – Beijing’s code for its client, Pakistan.

India has been trying to gain admission to the NSG ever since the historic Indo-US nuclear deal to gain access to nuclear material, equipment, know-how, and technology for use in its civilian nuclear energy programme. Ironically, the nuclear cartel was set up in November 1975 in response to India’s peaceful nuclear explosion a year and a half earlier. Yet the agreement with the United States on nuclear commerce ended four decades of India’s pariah status and brought the country in from the nuclear cold. The NSG waiver for India in 2008 allowed the South Asian country to buy nuclear reactors and uranium from the international market but still kept several dual-use technologies out of reach. Delhi hopes that membership to the group will allow it a role in global nuclear governance and perhaps even the latest in enrichment and reprocessing technology that could be very useful for its fast breeder reactor programme.

Countering Online Radicalization

by Jeff Cimmino, Foreign Policy Initiative Bulletin

… ISIS invests a substantial amount of time and effort to cultivate Western recruits via social media. J.M. Berger, a fellow with the George Washington University (GWU) Program on Extremism, has identified four stages of online recruitment: 1) First contact with a potential recruit; 2) Creation of a “micro-community” in which recruiters generate an echo chamber of radical ideas around the target; 3) A shift to private communications; and 4) Determination of which type of action the recruit should perform—some recruits become social media activists while others go on to commit attacks or seek to join ISIS in Iraq and Syria. A report from the New America Foundation found the average age of American recruits was 25, and “online activity was ubiquitous…with almost nine in 10 being active in online jihadist circles.”

Online radicalization is often complemented by in-person relationships. In their study “ISIS in America: From Retweets to Raqqa,” Lorenzo Vidino and Seamus Hughes of the GWU Program on Extremism conclude that in most U.S. cases “online and offline dynamics complement one another” in the radicalization process. Often, individuals are exposed to radical sentiments by face-to-face interaction and the Internet serves to reinforce these newly discovered ideas…

There are several different approaches toward countering online radicalization. Broadly stated, one approach stresses directly countering extremist narratives, for example, by engaging in confrontations on social media. In contrast, others favor promoting positive alternative narratives for those vulnerable to extremist propaganda. A third approach takes a long-term view toward fostering digital literacy and critical thinking among youth. Each approach has its merits, but it remains unclear whether any single approach, or even a combination of all three, will be sufficient to guide a comprehensive online counter-radicalization strategy.

Both counter-messaging and the promotion of positive alternative viewpoints can play complementary roles in countering online radicalization. While counter-narratives are meant to respond directly to extremist content and are thus reactive, positive alternatives can offer a different path for those susceptible to extremist ideology…

Read on.

** Companies Continue to Produce More Powerful Data Mining Software for US Intelligence Community

Data mining software used by spy agencies just got more powerful

Chris Bing

June 21, 2016

Data mining software used by both US intelligence agencies and large corporations just got an upgrade. 

Franklin, Tenn.-based Digital Reasoning — a cognitive computing developer that has contracts with the Departments of Defense and Homeland Security, as well as the U.S. intelligence community and several allied governments — has released a new version of its software, expanding the big data analytics capabilities of several agencies. 

The name of the new platform is Synthesys 4. It adds a suite of data aggregation, correlation and organization tools, among other things. The upgraded, “lighter” version will also be easier to install, requires less memory and is more user friendly, the firm claims. Company executives expect Synthesys 4 to be more widely employed by systems integrators, like Booz Allen Hamilton, than previous versions. 

Palantir Technologies, perhaps the most recognizable name in big data analytics, is a direct competitor to Digital Reasoning in the federal market. 

Vice President of Federal Programs Eric Hansen described his company’s technology as “cognitive computing solutions [that] help computers think like a human’s brain.” 

Hansen described that, “while computers are generally good at some tasks — like mathematical functions or finding specific terms quickly — historically they have not been able to see the big picture, with the complete context of the situation, like a human can. Digital Reasoning is helping computers merge concepts and behaviors and paint a more holistic picture to understand the contextual meaning of data.” 

Digital Reasoning is a portfolio company of In-Q-Tel, the CIA’s venture capital investment arm. 

Broadly, In-Q-Tel invests in innovative software and hardware companies that in-turn typically sell products to intelligence agencies and the U.S. defense sector. The investing group is a significant force in the U.S. intelligence community and as a result, influences the technology procurement process to some extent.

In 2012, then CIA Director David Petraeus spoke briefly about the importance of In-Q-Tel by saying, “our partnership with In-Q-Tel is essential to helping identify and deliver groundbreaking technologies with mission-critical applications to the CIA and to our partner agencies.” 

By using machine learning and neuro-linguistic programming, among other technologies, Digital Reasoning supports three general use cases within the federal government: threat intelligence, continuous monitoring and data enrichment. 

Continuous monitoring in this context relates to efforts at detecting possible threats posed by employees or contractors who have access to an organization’s network. The software, Hansen said, can predict and proactively respond to an individual’s attempted attack by determining a person’s baseline behavior and then detecting pattern anomalies over time. 

Clients of Digital Reasoning also include financial firms like Goldman Sachs and Credit Suisse, who must comply with SEC and FINRA rules that require them to supervise employee communications. 

U.S. Backed Forces Close in On Raqqa

By Sarah El Deeb

June 24, 2016

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BEIRUT (AP) — The U.S.-backed Syrian Democratic Forces pushed into the outskirts of the Islamic State group's stronghold of Manbij in northern Syria on Thursday and were advancing slowly to the center of town, an adviser to the predominantly Kurdish force and a monitoring group said.

The town lies along the only IS supply line between the Turkish border and the extremist group's self-styled capital, Raqqa. If Manbij is captured, it will be the biggest strategic defeat for IS in Syria since July 2015, when it lost the border town of Tal Abyad.

The Britain-based Syrian Observatory for Human Rights said fighting was taking place between IS fighters and the SDF on the southwestern edge of Manbij.

Rami Abdurrahman, the director of the monitoring group which relies on a network of activists in Syria, said the SDF seized two squares on the western side of the city, then advanced toward a third square with air support from the U.S.-led coalition.

An adviser to the SDF, Nasser Haj Mansour, said troops had moved into the town from its northern edge on Wednesday, close to grain silos, prompting clashes with IS militants. He confirmed that other troops entered Manbij from the west.

Is the Iranian-Saudi “cold war” heating up? How to reduce the temperature

Sultan Barakat 

June 22, 2016 

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Is the Iranian-Saudi “cold war” heating up? How to reduce the temperature

While Saudi-Iranian tensions have been on the rise for years, Saudi Arabia’s execution of Sheikh Nimr al-Nimr in January—met with angry reactions in Iran—heightened the stakes so dramatically that there is now serious potential for direct confrontation. Emotions are running high, and even an accidental spark could turn the cold war between the two regional powers hot. Their antagonism is a grave threat to the wider region, which isn’t exactly a bastion of stability these days—and it’s contrary to the long-term interests of Saudi Arabia and Iran.

Muhammad bin Salman, Saudi Arabia’s Deputy Crown Prince and Minister of Defense, stressed in a January interview with The Economist that “a war between Saudi Arabia and Iran [would be] the beginning of a major catastrophe in the region,” adding: “For sure we will not allow any such thing.” 

The prince is right—an outright Saudi-Iranian conflict would quickly spiral into a region-wide conflagration with gravely destabilizing effects on the Middle East and beyond. Yet the provocative rhetoric and actions of leaders on both sides continue to fan the flames.