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    George Bush Puts Pakistan and Pervez Musharraf Out in the Cold Ashutosh Misra March 11, 2006

    US President George Bush's 26-hour visit to Pakistan was foredoomed to failure as the two leaders had two different sets of issues on their agenda for talks, which shows their divergent perceptions of mutual roles and concerns in the region. While terrorism, nuclear non-proliferation and democracy held salience for George Bush, General Musharraf seemed inclined to forging strategic cooperation and securing civil nuclear technology and US mediation in Kashmir.

    US President George Bush's 26-hour visit to Pakistan was foredoomed to failure as the two leaders had two different sets of issues on their agenda for talks, which shows their divergent perceptions of mutual roles and concerns in the region. While terrorism, nuclear non-proliferation and democracy held salience for George Bush, General Musharraf seemed inclined to forging strategic cooperation and securing civil nuclear technology and US mediation in Kashmir. On the one hand, George Bush managed to put across his concerns on the issues he thought were vital to the US' security interests, and on the other, in an articulated and nuanced manner, he refused to oblige General Musharraf on the civil nuclear cooperation and Kashmir issues.

    Take the issue of democracy. George Bush said "In the long run he (General Musharraf) understands that extremism can be defeated by freedom and democracy and prosperity and better education…I believe democracy is Pakistan's future…President Musharraf has made clear that he intends to hold elections." He also stressed on holding 'free and fair' elections in 2007. In response, General Musharraf strongly defended his system by mentioning his contribution to democracy in Pakistan, namely, empowerment of people, minorities, women and free press, which sounded rather unconvincing in the light of the ground realities in Pakistan. Interestingly, George Bush's remarks established that the rise of extremism in Pakistan was related to Musharraf's policy of appeasement of the mullahs at the expense of mainstream parties in the present political dispensation and now he must prepare to relinquish power to democratic parties by holding free and fair elections in 2007. This was a rather distressing note for General Musharraf.

    On the non-proliferation issue, all that Pakistan could get was passing praise for agreeing to join the Container Security Initiative (CSI). "Pakistan is an important partner in fighting proliferation…we'll continue to work together to ensure that the world's most dangerous weapons do not end up in the hands of the terrorists," is how George Bush described the US' concerns, and attaching caution as a caveat. The remarks pointed towards the A Q Khan episode in which the role of the Pakistani establishment, particularly the military and ISI had come under the scanner raising questions about the safety of WMDs in Pakistan. Plus, hand in glove relations between the military and Islamists have bred more apprehensions in American minds in the wake of rising anti-US sentiments in Pakistan in the post-9/11 period.

    Pakistan's fragile democracy, which has been tampered with by different military regimes and misused by the civilian regimes, has failed to evolve effective constitutional provisions to curtail and control the military's powers and adventurism. The A Q Khan episode is a testimony to this. Though both civilian and military regimes supported the nuclear programme, it was the military that controlled it without allowing any outside interference. On account of Pakistan's dismal non-proliferation record, George Bush declined to commit on civil nuclear supplies to Pakistan. He said, "We discussed a civilian nuclear programme, and I explained that Pakistan and India are different countries with different needs and different histories. So as we proceed forward, our strategies will take in effect those well-known differences."

    This statement could be considered the cornerstone of Bush's visit to Pakistan, which to a large extent de-hyphenated the 'India-Pakistan' nuclear relationship. Pakistan had always sought parity with India by linking its nuclear programme and the larger debate on non-proliferation to it. Bush's statement, in a single stroke, acknowledged India's impeccable non-proliferation record and elevated India into the league of responsible nuclear powers.

    On the energy issue, George Bush clarified that the US beef with the Iranian regime was its nuclear weapons programme and not the gas pipeline. Though he assured General Musharraf that the US would address Pakistan's energy deficiency, this failed to evoke much enthusiasm for it was limited to the gas pipeline. The US ignored Pakistan's cry for parity with India, implying that Pakistan's nuclear weapons programme in the light of the A Q Khan affair could not be equated with India's responsible and clean nuclear record.

    On the terrorism front, in the wake of September 11 attacks, General Musharraf had no option but to join the global war on terrorism (GWOT). It brought rich dividends for Pakistan - the subsequent $3 billion in US aid and waiving of several loans resurrected its tottering economy. It was also granted the status of Major Non-NATO Ally (MNNA). But now, Pakistan's role in GWOT, supposedly the lone bargaining chip in General Musharraf's hands, has come to be seen as insufficient by the US. Bush's statement, "Part of my mission today was to determine whether or not the president is as committed as he has been in the past (emphasis added) to bring these terrorists to justice, and he is," emanated out of this scepticism towards Pakistan's commitment to the cause. There have been lapses and gaps in intelligence-sharing on the whereabouts of Osama bin Laden, his deputy Ayman al-Zawahiri and other key leaders which were also possibly interpreted by the US as deliberate on Pakistan's part. Hence, General Musharraf was asked to do more in defeating the Al Qaeda.

    It is also very frustrating for Pakistan to find the US pointing out shortcomings and inadequacies in its role in Afghanistan, while simultaneously praising India's efforts in providing training to the Afghan assembly staff, elected leaders and security forces, as well as its provision of aid to Kabul for reconstruction. In the same vein, George Bush's description of India as 'global power' and 'natural partner of US' at Purana Qila (old fort) in New Delhi on March 3, 2006 was seen as incongruent to Pakistan's role and ground realities in the region. President Bush's comments that 'India helped the Afghan people to get back on their feet who will always remember that in their hours of need India stood by them' was rejected in Pakistan, considering that the new US-India partnership for the cause of 'democracy and liberty' accorded a dominant role to India in regional affairs. Analysts believe that Pakistan as a US frontline ally in the region, in spite of losing hundreds of soldiers in the fight against the Taliban and Al-Qaeda, finds its strategic depth in Afghanistan eroded significantly due to the Indian role.

    On the Kashmir issue too, the story was no different as George Bush ruled out any mediation and called for bilateral effort to settle the differences. Unlike Pakistan, he also shared the need for confidence building measures for changing the atmospherics and enhancing trade as a solution to India-Pakistan conflict. This negated General Musharraf's assertion that the CBMs have facilitated only the atmospherics and trust aspect but not the resolution portion per se. The US response on Kashmir perhaps dampened the spirits not only in Pakistan but also among the separatists in Jammu & Kashmir and the All Party Hurriyat Conference (APHC). Possibly, the resulting despair may heighten terrorist activities in J&K and elsewhere in India, inspired by Pakistan purely for domestic consumption. The bomb blasts in the Sankatmochan temple and railway station in Varanasi on March 7, 2006, which killed 20 people and injured over 50 others, could just be the beginning of another round of killings and bloodshed to be undertaken at Pakistan's behest.

    George Bush's visit to Pakistan, considered by many as a 'balancing act' and 'dull affair', provided a trigger for the mullahs, mainstream parties and the media to step up pressure on General Musharraf. More and more have now begun to join the debate arguing that Pakistan should accept that the US is not a trusted ally given that Washington had abandoned it on previous occasions as well. Many also contend that Pakistan must understand that the US has no role whatsoever to play in the Kashmir issue. The US nuclear deal with India and moves to establish a long-term strategic partnership with Pakistan's bloody rival has come to re-emphasize the fact that Pakistan at the most can only be a tactical and not strategic ally. After years of support to the US in Afghanistan and doing this at peril to his own life and political standing in Pakistan, General Musharraf has only got a sermon on the need to strengthen democracy by holding free and fair elections in 2007, to do more on the counter-terrorism front, and settle the Kashmir issue bilaterally. It is heartbreaking and demoralizing indeed! The opposition in Pakistan has stepped up pressure on General Musharraf asking for his resignation because of the failure of his foreign and defence policies, signified by the US presidential visit and the sermons pronounced by George Bush. General Musharraf himself off late has tried to soothe tempers saying that Pakistan does not want to indulge in an arms race with India and seek parity with it and that, therefore, Pakistan's relations with the US should be seen in isolation from US-India relations. But his domestic critics are likely to trash this argument by contending that even in the US-Pakistan context alone the Bush visit has put both General Musharraf and Pakistan out in the cold on all vital matters.

    In the aftermath of the Bush visit, two trends can be expected. First, one may witness a spurt in terrorist activities in J&K and elsewhere in India, not only to convince domestic constituencies that the Kashmir issue is very much the priority but also to keep the 'K' factor alive for political purposes. In 2007, supposedly the election year in Pakistan, General Musharraf may resort to old tactics of diverting attention to external threats and challenges and hence justify his indispensability for Pakistan. Second, it would lead to more robust Sino-Pakistan ties in the coming years. Just before George Bush's visit, General Musharraf had visited China and signed several deals pertaining to defence and energy cooperation including nuclear, and secured Chinese investments to the tune of $21 billion. Both have enjoyed strong relations historically and have reasons to feel concerned with the rise of India and its growing proximity to the US. But for now, General Musharraf has not only to figure out how to make Pakistan recover from the current debacle but also craft a policy that balances its relationship with both the US and China.

    Pakistan-US Relations, Pakistan South Asia IDSA COMMENT
    Indian President's Visit to Myanmar Udai Bhanu Singh March 09, 2006

    President APJ Abdul Kalam began his three day (March 8-10, 2006) state visit to Myanmar on March 8 at the invitation of Sr General Than Shwe who himself had visited India in October 2004. The visit began on International Women's Day: whether this was a mere coincidence or carried any hidden symbolism (to draw attention to the continued house arrest of Aung San Suu Kyi) is open to interpretation. However, one thing is certain.

    President APJ Abdul Kalam began his three day (March 8-10, 2006) state visit to Myanmar on March 8 at the invitation of Sr General Than Shwe who himself had visited India in October 2004. The visit began on International Women's Day: whether this was a mere coincidence or carried any hidden symbolism (to draw attention to the continued house arrest of Aung San Suu Kyi) is open to interpretation. However, one thing is certain. The first visit by an Indian head of state to this Southeast Asian nation shows that New Delhi attaches great importance to this geopolitically crucial country irrespective of the kind of political system it currently has.

    During his visit President Kalam is expected to visit Yangon University, Shwe Dagon Pagoda, and the memorial (mazaar) to the last Mughal emperor Bahadur Shah Zafar, besides seeing Bagan and Mandalay. Myanmar has had a steady stream of high level visits from India. Prime Minister Rajiv Gandhi paid a visit in 1987. India's three service chiefs who have held office at different times have deemed it important to visit Myanmar. The Indian Vice President Bhairon Singh Shekhawat's visit to Myanmar in November 2003 was an important landmark. There were equally significant visits by the Indian External Affairs Minister at different times (Jaswant Singh in April 2002, and Natwar Singh in March 2005). Foreign Secretary Shyam Saran, who had served as India's Ambassador to Myanmar, paid a visit in October 2004. He has described the current visit of the President as a very important visit to a very important neighbour. The then Home Secretary NN Vohra had visited Myanmar in 1994 and the process was continued by his successors right upto VK Duggal in October 2005.

    Viewed from Myanmar's perspective, its objective is clearly to attain greater integration with the international community and greater manoeuvrability in its foreign relation (which would in a sense be an extension of its earlier emphasis on nonalignment).This explains its urge to have a vibrant relationship with China, which country Myanmar Prime Minister Soe Win visited between February 14 and 18, 2006). Indonesian President Susilo Bambang Yudhoyono paid a visit to Myanmar on March 1-2, 2006. During this visit, Indonesia's foreign minister, Hassan Wirajuda who accompanied the President, offered to share his country's expereince in transition to democracy. The Malaysian Foreign Minister Syed Hamid Albar is waiting in the wings to visit Myanmar.

    When US President Bush came to India recently, he did criticise Myanmar's human rights record in his speech but what is significant is that Myanmar did not find a mention in India's joint declaration with the United States. From India's standpoint, the objectives it views as signifcant are: energy requirements, infrastructure projects, counter-insurgency, counter-narcotics policy, development of the northeast, and promotion of the Look East policy.

    There seems to be an urgency to India's need to import natural gas from an offshore block close to the Arakan coast of Myanmar in which the Gas Autority of India Limited (GAIL) and ONGC Videsh Limited (OVL) have stakes. India and Myanamar are expected to sign an agreement on gas supply from Myanmar's Arakan coast. Following Bangladeshi recalcitrance over this issue, India is left with only two options - a (far more expensive) pipeline bypassing Bangladesh through India's northeastern states, or shipping the gas by converting it into LNG. The latter appears to be a viable option and could be finally adopted. Keeping in view India's rapidly growing import dependence for energy (to keep pace with the requirements of GDP growth) it is worth taking Myanmar seriously as a source of energy.

    The Kaladan multi-modal transport project is also expected to get a boost with the President's visit. A multi-modal transport from Mizoram to Sitwe could provide "an alternative outlet to the sea for Northeast India in addition to transit through Chittagong" or through the Siliguri neck and Assam.

    Following the successful operation in Bhutan against militant outfits in December 2003, similar hopes were expressed for the Indo-Myanmar border. Talks held during General Joginder Jaswant Singh's visit in November 2005 covered security along the Indo-Myanmar border. During his October 2004 visit to India, Sr Gen Than Shwe had assured India that it would not allow insurgents to operate from the territory of Myanmar. Following that visit the armies of the two sides cooperated in counter-insurgency operations along the border in November 2004. India's Home Secretary VK Duggal visited Myanmar for the eleventh round of talks between Home Secretaries of the two countries, during which an agreement was reached on co-operation in tackling insurgents, arms smuggling drugs, etc. on October 14, 2005.

    India's trade with Myanmar has steadily increased after border trade was opened at Moreh-Tamu in April 1995 and was targeted at $1 billion this year. India is among Myanmar's top export destinations. But as relations between the two countries deepen, co-operation in other areas like human resource development, education and biotechnology will need to be emphasized.

    Military-to-military contacts between India and Myanmar have grown. The Indian Army Chief's visit in November 2005 was followed by the visit of India's Chief of Naval Staff Admiral Arun Prakash in January 2006. In February 2005 the Myanmar Chief of Naval Staff Vice Admiral Soe Thein visited India. Two Indian warships, guided missile destroyer INS Ranjit and the missile corvette INS Kuthar, visited Yangon to participate in some basic exercises with the Myanmar Navy between December 22 and 26, 2005. A corvette of the Myanmar Navy participated in the multi-nation exercise Milan-06 off the Andaman coast (January 9-14, 2006).

    A strong and stable Myanmar is in India's interest and it is equally in India's interest to promote agriculture on which Myanmar deeply depends. During his visit President Kalam is expected to discuss the setting up of a ground station in Myanmar which would receive relevant data for better crop management from Indian satellites.

    From the Indian point of view, a stable Myanmar is a good in itself and must not be construed as illustrative of Indian rivalry with China. If economics is the prime mover behind India's Look East policy, the economic transformation of India's eastern neighbour could play a very powerful role in its political transformation to a more democratic regime. The process may be gradual but if Myanmar is helped along in this process by neighbouring ASEAN States (including Indonesia which has an experience in this regard) and India, the results may be more enduring and least disruptive.

    Myanmar, India-Myanmar Relations South East Asia and Oceania IDSA COMMENT
    The Bush Offering: Uninterrupted Power Supply Cherian Samuel March 08, 2006

    With President Bush having concluded, in the eyes of both governments, a highly successful visit to India, the time has come to take stock of developments and to assess whether, as has been asserted over and over again, the outcome has been a win-win for both countries.

    In the course of his visit to the United States last July, Prime Minister Manmohan Singh and President Bush signed a landmark agreement whose intent was to "transform" the relationship between the two countries.

    With President Bush having concluded, in the eyes of both governments, a highly successful visit to India, the time has come to take stock of developments and to assess whether, as has been asserted over and over again, the outcome has been a win-win for both countries.

    In the course of his visit to the United States last July, Prime Minister Manmohan Singh and President Bush signed a landmark agreement whose intent was to "transform" the relationship between the two countries.

    Was the relationship in such dire need of transformation? The "Next Steps in Strategic Partnership" or NSSP, initiated in 2004, seemed to be doing an adequate job of removing many of the irritants coming in the way of improved relations, many of them legacies from the Cold War era. But the NSSP, despite its nomenclature, was, at best, a mechanism for normalizing relations between the two countries. The leadership in both countries felt the need to accelerate the process of improving ties through an approach other than the slow step-by-step glide path envisaged by the NSSP.

    Thus, the impetus to ratchet up ties and to address outstanding issues such as the nuclear technology denial regime was predicated on political, economic and strategic imperatives on both sides. Again, once the agreement had been signed, the momentum for following up on the Agreement was also provided by the very same imperatives. As a result, much has happened in the short span of seven months between the Prime Minister's visit to the United States and the President's reciprocal visit to India.

    The main driver for improved relations on the Indian side was provided by economic compulsions. The Prime Minister, who was responsible for initiating India's economic reforms in 1992, has been clear in his mind that India's growth has reached an inflection point, and that further growth can be sustained only with an infusion of foreign investment to overhaul our decaying infrastructure and to increase competitiveness and productivity. India also needed access to the latest cutting edge technologies, largely available with the United States, to power its economic growth. Such access was largely limited by the US export licensing regimes, which barred the export of high technology with the potential for dual use, both in the civilian and military spheres. These restrictions also cast a further shadow over investment by American companies in India, already constrained by fears of bureaucratic hurdles and infrastructural shortcomings. Though the Indian economy has been racing along on the back of pent-up demand, speed bumps were already looming ahead because of the lack of adequate infrastructure. In the energy sector alone, as reported by Andy Mukherjee in the Wall Street Journal, the recent economic survey released by the Finance Ministry had computed that in the current fiscal year, goods and services worth $68 billion hadn't been produced because of power shortages. According to the Prime Minister, India needed a yearly investment of $150 billion to shore up its infrastructure.

    The economic logic for closer relations with the United States was amply supported by the changing geo-political situation. Though India was being courted by all the major powers and being offered a seat at various high tables, only the United States could offer an optimum combination of economic and strategic benefits. But relations could only take off if there was a revaluation of strategic equations on the American side, one that factored in India's security challenges and foreign policy goals and aspirations. Hitherto, India had been on the margins of American political and strategic thinking, as a result of which much of the policy towards India was dictated by the predilections of the non-proliferation and pro-Pakistan lobbies within and outside the bureaucracy. Despite recognition at the political level for the need to reassess equations with India, the inertia of the pre-existing relationship came in the way of any meaningful movement forward. Only the political leadership in the two countries could work up the necessary momentum required to "transform" the relationship.

    The considerations that played a part in convincing President Bush of the advantages in advancing US-India relations are only too well known but bear retelling. Economic considerations such as the huge Indian market that was 300 million strong and reducing global dependence on fossil fuels dovetailed with strategic goals such as that of propping up India as a foil against the increasing weight that China carried by virtue of its size and gargantuan economy.

    India was also a shining example of the ability of democracy to scale up to provide representative government to a billion-plus people, nearly one-fifth of humanity. The cause of democracy promotion so ardently advocated by the President has undoubtedly got a shot in the arm with India's participation.

    There was also the bonus of drawing in the monetarily well endowed but politically unattached Indian American community into the folds of the Republican Party, a small but potentially significant step in Karl Rove's goal of creating a permanent majority for the GOP.

    This is the backdrop against which the strategic partnership was conceived and carried through. Beginning with the signing of the joint agreement on July 18, 2005, and notwithstanding the tortuous parleys that went into fashioning a break-through agreement that untangled the nuclear knot, the two sides have institutionalized the mechanisms for closer co-operation and signed a slew of other agreements. A back of the envelope count shows that no less than seventeen agreements have been signed and initiatives launched over the past twelve months in a wide spectrum of areas ranging from trade promotion, to agriculture, to space co-operation to defence co-production to AIDS prevention. During the current visit, one of the major criticisms of industry, that the two governments have to lead the way and focus on particular areas, has been addressed with the establishment of a $100 million project for agricultural co-operation and a $30 million project for co-operation in science and technology. In addition, 18 joint ventures were also agreed upon between the two governments. Many other projects are in the works, including a $500 million project to set up development laboratories where the latest cutting edge technologies will be used to develop products such as life-saving drugs. All these seek to replicate the US model of R&D where strong linkages are established between government, universities and the private sector, thus providing each with a stake in ensuring the success of the venture as well as a laid out path from the laboratory to the marketplace.

    The major coup for the Indian government has been the signing of a civilian nuclear deal on terms largely favourable to it and addressing the concerns of the scientific community and others that it would affect India's strategic nuclear programme. As Dr. M.R. Srinivasan, former head of the Atomic Energy Commission and a critic of the initial deal, put it: "From the Indian point of view it is a good agreement. The last minute hurdle was over acceptance of a clause regarding safeguards in perpetuity. But the compromise was reached with India getting a guarantee of uninterrupted power supply."

    In a sense, the Indo-US Strategic partnership is all about power supply, not just electricity to light up the villages or guaranteed uranium supply to feed the nuclear reactors, but also co-operation on the economic front that will ultimately feed all the other tangibles and intangibles that go into the making of a great power.

    India-US Relations Nuclear and Arms Control IDSA COMMENT
    The Bomb and the Bird Ajey Lele March 08, 2006

    In the backdrop of President Bush's successful visit to India and the finalizing of the 'nuclear energy' deal minus the US Congress approval, many opinion-makers are coming out with bizarre theories about this deal either in its favour or against it and appear to be making a few mistakes knowingly.

    In contrast, intellectual debate is entirely missing on bird flu and its future, particularly when the spread of bird flu has already started in the country. This clearly indicates the triviality of intellectual thinking, be it among academics, scientists or the media.

    In the backdrop of President Bush's successful visit to India and the finalizing of the 'nuclear energy' deal minus the US Congress approval, many opinion-makers are coming out with bizarre theories about this deal either in its favour or against it and appear to be making a few mistakes knowingly.

    In contrast, intellectual debate is entirely missing on bird flu and its future, particularly when the spread of bird flu has already started in the country. This clearly indicates the triviality of intellectual thinking, be it among academics, scientists or the media.

    The concern is this: why are scientists talking only about nuclear issues seriously, while other than routine media briefs by some doctors nothing significant is being discussed on the status of preparedness to handle the threat from bird flu? Is it that the media fails to understand the gravity of the plausible situation if human-to-human transmission of the disease starts, and is currently only interested in counting the dead chickens! Probably, bird flu in particular and agriculture in general do not have the requisite 'sex appeal' the nuclear deal has, and hence the lack of analytical focus.

    Interestingly, the texts of the Indo-US Joint Statement issued on July 18, 2005 and March 2, 2006 make clear mention of a US-India Knowledge Initiative on Agriculture focused on promoting teaching, research, service and commercial linkages. But the media is totally devoid of any news on that front, barring an odd report talking about Indian Mango reaching Uncle Sam's country. Particularly for a country like India, agriculture is one of the most important sectors for social, economic and political stability. But little attention is being paid to revolutionalise this field, and lack of significant debate on these issues is bound to harm the country in the long run. Over the years, many times the Indian agro-scientific community has essentially been seen only haggling over issues related to Genetically Modified (GM) food. The other reason for agro-science not coming to the forefront could be the Brahminical treatment given to nuclear scientists in this country. Many of these scientists have shown an ability to become political scientists. But the poor agro-scientist remains mostly in the background, and in the farms.

    On issues related to security and technology, the 'thinking community' just appears to be refusing to think out of the box. The strategic community in the country has become so obsessed with Pakistan, nuclear weapons and terrorism, that it fails to appreciate other facets of security, particularly human security. Human security essentially deals with protecting individuals and communities from any form of violence (civil war, genocide, etc.) and even a natural disaster could be defined as violence 'by nature'. It needs to be understood that secure States do not automatically mean secure people. National security may deal with protecting citizens from foreign attack, but does not guarantee protection in the holistic sense of the term.

    The chaos in handling bird flu cases in rural Maharashtra is an indication of how little we understand the complexities of human security. Luckily, the threat is still at a nascent stage, but are we prepared to handle fallouts of any human-to-human transmission? Here, it needs to be understood that under such a scenario challenges would go much beyond providing simple medical treatment. Are we as a state prepared to handle the political and social fallouts of any spread of infectious diseases? A simple indicator to such fallouts could be the case of copying by students in Nawapur in board examinations. Since the police force was deployed to handle the situation arising due to bird flu, it could not be made available at examination centres. The Katrina hurricane disaster in the US has shown to the entire world how anti-social elements take advantage of such circumstances.

    There also appears to be lack of interest in carrying out a "cost-benefit analysis" of money spent on security-related issues. Today, in India, the issue of national security has become more of a 'holy cow' and is unduly getting associated with 'nationalism'. Though a substantial amount of the budget is being spent on 'defence,' this is being done without undertaking proper threat and risk assessments. Issues like 'is nuclear energy the only viable, cheap and clean option' are not even getting discussed at the appropriate fora. A simple comparison of deaths caused by terrorism, investments made in counter-terrorism-related activities and human and economic losses incurred during recent natural disasters in the country indicates that the loss due to disasters surpasses investments in counter-terrorism.

    Over the years the entire security apparatus of the state has come to be been seen as more reactive than proactive, probably because we ourselves are not too sure about what we should guard against. As a nation we have a responsibility to make sure that the natural world continues to survive for our future generations and to do so, if we have to kill a bird, we better kill a bird and if we have to kill a bomb, we better kill a bomb.

    Bird Flu, India-US Relations North America & Strategic Technologies IDSA COMMENT
    Defence Budget 2006-07 Pravin Joshi March 07, 2006

    The Indian defence budget for FY 2006-07 is Rs 89, 000 crore (cr). This is 7.23 per cent more than the budget in FY 2004-05. As a percentage of GDP, the budget is 2.29 per cent as against 2.39 per cent in the previous year. Taking the revised allocation of Rs 81, 700 at RE (Revised Estimate) stage in FY 2004-05, the increase is 8.94 per cent.

    The Indian defence budget for FY 2006-07 is Rs 89, 000 crore (cr). This is 7.23 per cent more than the budget in FY 2004-05. As a percentage of GDP, the budget is 2.29 per cent as against 2.39 per cent in the previous year. Taking the revised allocation of Rs 81, 700 at RE (Revised Estimate) stage in FY 2004-05, the increase is 8.94 per cent.

    The revenue budget at Rs 51, 542 cr is Rs 2, 917 cr (or six per cent) more than the in previous year. The capital budget is Rs 37, 458 cr, i.e. an increase of Rs 3, 083 cr (8.97 per cent), though during the previous year it had been reduced at the RE stage by Rs 1,300 cr. So in effect the increase is of Rs 4, 383 cr, that is 13.25 per cent. The revenue budget is 57.91 per cent of the total (58.58 per cent last year), while the capital budget is 42.09 percent (41.42 per cent last year).

    Service-wise, the Army has an increase of 2.79 per cent, the Navy 13.13 per cent and the Air Force 9.48 per cent in the revenue budget. The capital budget has been increased by 10.01 per cent for the Army, 3.34 per cent for the Navy and 17.20 per cent for the Air Force. The total increase is 4.49 per cent for the Army, 7.16 per cent for the Navy and 14.01 per cent for the Air Force.

    The modernisation budget of the services has been enhanced by Rs 3, 222 cr (11.49 per cent) over the budget allocation last year and 3, 845 cr (14.03 per cent) over the revised allocation. The Air Force has the maximum increase of Rs 2, 175 cr (17.58 per cent), while the Army has been granted Rs 818 cr (11.54 per cent) and the Navy Rs 229 cr (2.67 per cent).

    The budget enhancement of Ordnance Factories is 53.81 per cent and that of the DRDO is 1.82 per cent.

    In spite of the PM giving an assurance earlier that defence allocations could be increased to 3 per cent of the GDP if economic growth rate were to reach 8 per cent, there has actually been a fall in the budget in terms of percentage of GDP though economic growth is around 8 per cent now.

    While there was no surrender of funds at RE stage in FY 2004-05, FY 2005-06 again saw a surrender of Rs 1, 700 cr at the RE stage out of the total allocation of Rs 83, 000 cr. The surrenders have been from the capital budget, out of which Rs 623 cr are from the modernisation budget. Once again the defence forces were not able to utilise the entire allotted modernisation budget, presumably by foregoing some planned acquisition contracts. In the forthcoming year, the modernisation budget is 35.12 per cent of the total budget as against 33.78 per cent in the previous year. The Air Force and the Army have a substantial increase in the modernisation budget. The Air Force is likely to go for the acquisition of 126 multirole combat aircraft, termed the ‘mother of all acquisitions’, and the Army for the much awaited 155 mm guns. Along with these, payment also have to made for the aircraft carrier ‘Gorshkov’ from Russia, the Advanced Jet Trainers from the UK and ‘Scorpene’ submarines from France.

    The Service-wise share of the defence budget is as follows: -

            2006-07         2005-06
    Army    46.72%    47.95%
    Navy    17.32%    17.33%
    Air Force  27.94%    26.28%

    Surprisingly the ‘research and development’ budget has been increased by only 1.82 per cent and is 6.13 per cent of the total defence budget.

    Comparing the defence allocations of China and Pakistan in terms of percentages of GDP, the Indian defence budget is far below the Chinese and Pakistani defence budgets, which remain above four per cent of their respective GDPs.

    Keeping in view the improvement of relations with China and the ongoing peace process with Pakistan, it may be reasonable to assess that India’s defence allocations in 2006-07 will be adequate to meet the security needs of the country with particular reference to the ‘modernisation’ programme.

    Defence Budget Defence Economics & Industry IDSA COMMENT
    Indo-US Attempt to Bite the Illegal Bytes Prasad P. Rane March 07, 2006

    Of the several agreements signed during the recently concluded US presidential visit to India, one initiative that has been lost to sight is on Cyber Crimes. As part of the larger counter-terrorism effort and realizing the importance of cyber security and cyber forensic research, India and the US have agreed to enhance cooperation to tackle Cyber Crime. This will lead to a greater sharing of expertise in the areas of tracing computer viruses and software worms and network analysis.

    Of the several agreements signed during the recently concluded US presidential visit to India, one initiative that has been lost to sight is on Cyber Crimes. As part of the larger counter-terrorism effort and realizing the importance of cyber security and cyber forensic research, India and the US have agreed to enhance cooperation to tackle Cyber Crime. This will lead to a greater sharing of expertise in the areas of tracing computer viruses and software worms and network analysis. The agencies involved in this exercise will be the Indian Computer Emergency Response Team (CERT-IN) under the Department of Information Technology and the United States Cyber Security Division. The joint statement released after the talks between Manmohan Singh and George Bush also stated that the two countries would be discussing a draft protocol on cyber security.

    As a part of the larger counter terrorism dialogue, former Indian Prime Minister Atal Bihari Vajpayee and President Bush had agreed to set up an India-US cyber security forum in November 2001. Under the auspices of this forum, high power delegations from both sides met for the first plenary in the National Security Council Secretariat (NSCS) on April 29-30, 2002. Since then three plenary meetings have taken place, the third one was held on January 17, 2006.

    The 21st century international system is inter-connected with information highways, and Information Technology (IT) has become the buzzword. Speaking philosophically, while the industrial revolution had already "solved" the problem of food, the information revolution solved the problem of "problems". After the initial euphoria subsided, the world slowly started realizing the shortcomings of this information revolution, which had eradicated the problem of "problems" only to lead to an even greater problem. IT can be called an enabling technology, for it enables the user to solve the problem by providing multiple solutions to the problem. The masters of binary logic who are also called computer wizards are responsible for this. But there is another breed of computer wizards who are responsible for cyber crimes. These cyber crimes encompass several nefarious activities like propagating disinformation, defacing websites, spreading computer viruses and software worms, phishing and hacking. Visualizing the problems ahead, a common vision is required to ensure cyber security and prevent cyber crimes.

    As is widely acknowledged, terrorism is a threat in all it forms and manifestation. Cyber terrorism is the convergence of terrorism and cyberspace. It is an unlawful attack and threat against computers, networks, and the information stored therein. It is a tool that has the capacity to paralyse a certain network. Such attacks are used to threaten or coerce a government or its people for promoting certain political or social objectives. In an age where information has become a currency of power and sensitive sectors like finance are networked via the Internet, cyber security has become an area of great concern. For countries like the US, an information superpower, and India, which has adopted the information revolution, securing cyber space and information networks has become a tightrope walk. Against this backdrop, the Indo-US Cyber Security forum has proved to be a platform for exchanging views on cyber security. These plenary meetings can also be seen as a tool to shape the Indo-US Strategic Partnership.

    As stated above, the Indian Prime Minister and the US President have agreed to enhance co-operation between the law enforcement agencies of the two countries to tackle cyber crimes. The two countries are also carrying out discussions on a draft protocol on cyber security. At the 3rd plenary, which concluded on January 17, 2006, several new initiatives were announced. It was decided to set up an India Information Sharing and Analysis Centre (ISAC) for better co-operation in anti-hacking measures as well as an India Anti-Bot Alliance to raise awareness about the emerging threats in cyberspace by the Confederation of Indian Industry (CII), in consultation with their US counterpart. It was also decided that the ongoing cooperation between India's Standardization, Testing and Quality Certification (STQC) and the US National Institute of Standards and Technology (NIST) will be expanded to newer areas including harmonization of standards. The R&D Working Group will concentrate on hard problems of cyber security, cyber forensics and anti-spam research. In a way, discussions during the plenary meetings chalked the way for intensifying bilateral cooperation to control cyber crime between India and the US. But the question to be addressed is: is it enough?

    Looking at the pace of developments in the field of information technology, these initiatives should pave the way for more institutionalised efforts. There is a need for institutionalising a framework to address the problem of cyber crimes by taking inputs and sharing information from law enforcement agencies of the two countries. The number of Indian websites facing the problem of defacement is alarming. CERT-IN reported that Indian websites were defaced 4824 times in the year 2005 alone. As most Indian financial institutions like banks and stock markets have opted for E-Commerce, the rate of defacement may lead to another worry, viz., phishing crimes. CERT-IN underlines phishing as a widespread targeted financial scam in which social engineering and spyware/malicious code methods are used to steal personal and financial data such as credit card numbers, account usernames, passwords and social security numbers of Internet users. Given the growing electronic interdependencies and the imperative of protecting electronic transactions and critical infrastructure, there is a need for joint research projects in the field of information technology, which would give an opportunity for scientists from both sides to conduct collaborative research. The gravity of cyber crimes increases with the potential of hackers to hack defence-related websites and create chaos. The mere thought of defacement of defence and nuclear energy related websites sends shivers down the spine.

    Though India has not yet experienced a full-fledged cyber attack paralysing the system, given its vitality the strategic community should include cyber security in the mainstream discourse. The Indo-US agreement in this context has marked a new beginning. This initiative will hopefully not lose out to other conventional areas.

    Cyber Security, India-US Relations Nuclear and Arms Control IDSA COMMENT
    The Sri Lankan Peace Process: Looking Beyond Geneva Sukanya Podder March 06, 2006

    While much analysis has gone into the recently held talks at Geneva on February 22 and 23, 2006, the consensus lies in the recognition that the talks were an important beginning to make a political solution possible to this intractable conflict. At Geneva the two sides had taken divergent positions prior to the talks, with the government desiring an amendment of the Ceasefire Agreement (CFA) and the LTTE seeking better implementation of the same.

    While much analysis has gone into the recently held talks at Geneva on February 22 and 23, 2006, the consensus lies in the recognition that the talks were an important beginning to make a political solution possible to this intractable conflict. At Geneva the two sides had taken divergent positions prior to the talks, with the government desiring an amendment of the Ceasefire Agreement (CFA) and the LTTE seeking better implementation of the same. However, in what appears as an accommodating stance from both sides, the LTTE has committed itself to taking "all necessary measures to ensure that there will be no acts of violence against the security forces and police." Colombo on its part will "take all necessary measures in accordance with the CFA to ensure that no armed group or person other than the government security forces will carry arms or conduct armed operations."

    These commitments were made by the two sides over and above their basic resolve to uphold the ceasefire. Hence, while the Rajapakse government was keen on extricating itself from the shackles of the ceasefire prior to the talks, it finds itself recommitted to the same document that it has declared unconstitutional since it was signed by the then PM Ranil Wickremsinghe.

    The final joint statement by Eric Solheim suggests that the Sri Lankan Monitoring Mission (SLMM) will report on implementation of the agreements reached at Geneva. But this goes against the spirit of the Presidential Policy statement of November 2005, which sought to reshape or replace the SLMM with a more open and transparent monitoring machinery. Amendments have not been officially made to the CFA although the government delegation described the Geneva commitments as amendments prompting a LTTE threat to abandon further dialogue. Thus post Geneva the CFA continues to be the key document holding the peace in place, indicating that for now the LTTE seems to have cornered a better deal.

    Against this backdrop the next round of talks slated for April 19-21, 2006 at Geneva seems poised for a major confrontation, and it is the implementation of the recent Geneva commitments that holds the key to how the process will shape itself. Efforts are already underway to prepare for the next round of talks and reveal a growing recognition of the need to address the often-overlooked humanitarian dimensions of the ethnic conflict.

    Last week the government held the first preparatory meeting attended by representatives from its allies - the Janatha Vimukthi Peramuna (JVP) and the Jathika Hela Urumaya (JHU). Despite the fact that the JVP and the JHU had signed pre-poll pacts with President Rajapakse amounting to a near overhaul of the Norwegian-brokered peace process, it seems that there exists a consensus in favour of engaging the Tigers. Hence, although they were critical of the Geneva talks they are unlikely to jeopardize the process of dialogue.

    The LTTE would like to address issues like fishing rights of civilians in the northeast and High Security Zones (HSZs) in the next round of talks. The question of HSZs is a sensitive one and has been placed on the backburner since the Hakone talks in March 2003. It has relevance for the freedom of movement enjoyed by the Tamils in the northeast, and also has implications for refugee settlements. Given that the HSZs in the Jaffna peninsula houses vital military installations like the Palaly airport and the Kankesanthurai harbour, dismantling the HSZs is going to be a tricky issue.

    The government on its part is likely to draw attention to human rights abuses by the Tigers. The just concluded round of talks did dwell on child recruitment by the LTTE and the paramilitary and armed groups. In fact, the issue of LTTE child soldiers is likely to be an important one given that the UN Secretary General's Report on Children and Armed Conflict (July 2005), which lists the LTTE as a violator of the legal ban on recruiting under-18s. Besides, the Report marks the genesis of a comprehensive monitoring and reporting mechanism that is expected to pre-empt measures like sanctions and travel bans on listed parties. Interestingly, on February 7, 2006, the Secretary General has appointed the noted Sri Lankan human rights and legal expert Dr. Radhika Coomaraswamy as his Special Representative for Children and Armed Conflict. Hence, the issue will come to the fore of the debate on human rights violations.

    Several other issues will soon have to be addressed by the government. These pertain to the LTTE's airstrip and aircraft, the decommissioning of their arms and disbanding of their suicide squad, and most significantly the illegal operation of LTTE vessels in Sri Lankan territorial waters. These have consequences for India and it would be to Indian benefit if the two sides address these issues in the near future.

    The intervening period provides much scope for consolidating or breaking the current thaw. For now it is wait and watch. It needs to be seen how the government proposes to address the issue of disarming armed groups, given that Karuna has declared his resolve to continue resisting the LTTE. The Tigers on their part are required to minimize attacks on government forces and seek a cleaner image as being committed to dialogue.

    The next round of talks thus seems poised for some major diplomatic manouvres, and holds the key to whether the Sri Lankan peace process will be effective in engendering conflict transformation and in mitigating decades of civil and ethnic violence.

    Sri Lanka South Asia IDSA COMMENT
    Unfazed New Delhi Continues the Dialogue Process Despite Hurriyat's Absence Ashutosh Misra March 03, 2006

    The All Party Hurriyat Conference's (APHC) refusal, apparently under 'outside' pressure, to participate in the February 25 roundtable can be held to be detrimental to none but itself and the people of Jammu and Kashmir. New Delhi for its part justifiably went ahead as per schedule, driving home the point that the creation of a 'Naya' and 'Khushaal' Kashmir will not be held hostage to the whim and moods of any individual or group.

    The All Party Hurriyat Conference's (APHC) refusal, apparently under 'outside' pressure, to participate in the February 25 roundtable can be held to be detrimental to none but itself and the people of Jammu and Kashmir. New Delhi for its part justifiably went ahead as per schedule, driving home the point that the creation of a 'Naya' and 'Khushaal' Kashmir will not be held hostage to the whim and moods of any individual or group. It understands the urgency of restoring peace, order and prosperity in the larger interests of the people who do not have to wait for another 50 years to lead a normal life. The absence of the APHC at the roundtable was disappointing as it failed to live up to the high standards it had set for itself by holding talks with New Delhi on previous occasions and boarding the Srinagar-Muzaffarabad bus for the sake of peace.

    The participants in the roundtable chaired by Prime Minister Manmohan Singh included Water Resources Minister Saifuddin Soz, Union Home Minister Shivraj Patil, J&K Chief Minister Ghulam Nabi Azad, Union Minister of State for Home Sriprakash Jaiswal, Minister of State in the PMO Prithviraj Chavan, Rajya Sabha member Karan Singh, National Conference president Omar Abdullah, Speaker of the J&K Assembly Tara Chand and J&K Deputy Chief Minister Muzaffar Beig, CPI(M) leader Yusuf Tarigami, Ladakh leader K Chawang, and Panoon Kashmir leader M K Kaw. The seven-hour long exercise held at the PM's residence discussed a broad range of issues including the peace process with Pakistan, status of detenus, 'self-rule', 'autonomy', terrorism, human rights, trade and development, and empowerment of people in the state. The thrust of the roundtable seemed to trash General Musharraf's idea of 'self-governance' and 'demilitarization' and reiterate that J&K has always been an internal matter, and hence solutions to the problems 'in' Kashmir have to be found through discussion with the internal stakeholders.

    India and Pakistan have repeatedly endeavoured to find a solution to the J&K issue through mutual cooperation and consultation but with little success. What has hampered bilateral efforts so far is that for Pakistan it is the 'problem of Kashmir', i.e., Kashmir is a 'disputed territory' and an 'unfinished agenda' of partition; while for India, it is the 'problem in Kashmir', suggesting that the accession of Kashmir to the Indian Union is final and complete, and the challenge rests in addressing cross-border terrorism as well as the economic and political grievances of the people of J&K.

    New Delhi's 'problem in Kashmir' approach is prudent and farsighted. Over the years it has spent energy on domestic issues in J&K such as restoration of Kashmiriyat, underdevelopment, unemployment, ineffective governance, human rights' violations, rehabilitation of exiled pundits and most notably debating the feasibility of 'autonomy' or 'self-rule' for the state. With regard to Pakistan, New Delhi has adopted a twin approach. One, discussing cross-border terrorism and two, promoting confidence-building measures to reduce mutual hostilities and improve the atmospherics for bilateral talks. On the former, talks have achieved little since Islamabad prefers to hold on to the 'jihad' card in case the peace process derails in the near future. On the latter, J&K specific CBMs such as the start of bus service between Srinagar-Muzaffarabad, agreement to start truck trade on this route, opening of five meeting points on the LoC, among others, have certainly reduced the intensity of hostilities. The question that Pakistan now poses is what next? Pakistan argues that CBMs and J&K are two different compartments, whereas India insists that CBMs are part of the solution.

    Therefore, being well aware that Pakistan would not compromise in the near term on its traditional stand on J&K, namely, 'deciding the future of J&K according to the will of the people' or 'holding plebiscite', India has pursed the domestic path to address the problems 'in' Kashmir. In recent years New Delhi has held discussions with a broad spectrum of people and groups in J&K state including the APHC for building consensus on the matter, which is a rather wise policy to adopt. This has repeatedly perturbed Islamabad, which cannot swallow the idea of being left out in the cold. The February 25 roundtable on J&K too upset Pakistan's long-term strategy, and after some recent soft-pedalling with the APHC moderates, it pressurized them to hold back this time.

    Until its split in September 2003, the APHC maintained overt hostility towards New Delhi through its aversion to everything - talks with New Delhi, peace process, CBMs, economic development, elections and dialogue within J&K. Being under the heavy influence of its mentors in Rawalpindi, it had virtually nothing constructive or substantial to offer towards J&K. But after the split in September 2003, the moderate faction of the APHC distanced itself from the hardliners and joined the peace bandwagon, which found favour not only in India but surprisingly in Pakistan as well.

    The visit of the moderates to Muzaffarabad and Islamabad in April 2005 brought to light the bold and pragmatic side of the APHC. Unperturbed by the hardliners' boycott, the delegation impressed all with its bold proclamations and utterances. It not only castigated the leadership in Muzaffarabad for glorifying militancy in J&K, but also firmly opposed General Pervez Musharraf's idea of forging reunification of the APHC. The moderates also urged the United Jihad Council (UJC) led by Syed Salahuddin to join the peace process. With regard to the hardliners holding back in Srinagar and calling the moderates 'traitors', Mirwaiz Umar Farooq, leader of the APHC, strongly responded saying,

    For fear of being labelled treacherous should we sit at home and repeat the song of UN resolutions. One lakh people have already lost their lives. Should we wait for the sacrifice of another lakh people before we begin to look at the other possible ways to resolve the issue... There are people (pointing towards S A S Geelani) in Kashmir who considered talking to New Delhi as treachery. Now we are being told that even visiting Pakistan amounted to treachery. It is high time the word treachery is redefined... when we return to Kashmir, we need to redefine certain things... certain words and phrases.

    The APHC also conceded that they cannot become part of a tripartite talk (India, Pakistan and the APHC) and can only talk separately with India and Pakistan. And after internal brainstorming, the APHC concluded that to legitimise their representation of the people of J&K (a popular contention) there was need to participate in the political process in J&K. Besides, the phrase 'United States of J&K' coined by Mirwaiz Farooq suggested the APHC's inclusive vision incorporating not only Ladakh and Jammu in the equation but Pakistan-occupied Kashmir (including Northern Areas) as well. In December 2005, former APHC Chairman, Prof Abdul Gani Bhat told Kashmir Times, "We do not support Mr. Geelani's idea that for settling the Kashmir issue there were only two options, either to remain with India or to get incorporated with Pakistan." It was also praiseworthy to find the APHC initiate and materialise the return of pundits to the valley.

    It needs to be emphasised that since 2003 the moderate faction has shown flexibility in coming to terms with New Delhi, which makes the APHC's decision to skip the February 25, 2006 roundtable intriguing. This was not the first time that the APHC was being invited for talks with the Indian government. On January 22 and again on March 27, 2004 the APHC had held talks with L K Advani and even managed to secure the release of 40 detenus from prison. Later on September 5, 2005, led by Abdul Ghani Bhatt, they held talks with Prime Minister Manmohan Singh. They were also granted permission by New Delhi to visit Pakistan in June and December 2005. These developments were suggestive of a spirit of accommodation from all sides and therefore in this context the APHC's refusal to participate in the roundtable appears baffling. Pakistan and India are continuing their bilateral talks on J&K (third round, foreign secretary level, January 17-18 2006, New Delhi) and therefore the APHC has no moral or political grounds for boycotting it.

    How can the APHC correlate its decision to the changing mood of the people in J&K? Peoples' overwhelming participation in general elections and local bodies elections in January 2005 show their eagerness to support the policies of both the central and state governments. Their enthusiasm has come to vindicate New Delhi's vision of finding solutions through democratic means and development. On both counts, the APHC's contribution has been lacking. The absence of any concrete suggestions from them over the years for alleviating poverty, unemployment, backwardness, and illiteracy in J&K does not reflect well on the conglomeration. Besides, till date it has not only refused to participate in the elections but also called for boycott by the people. Yet, in the 2004-05 local elections, average voter turnout in the state was around 43 percent and, more importantly, over 18 percent people turned out to vote in the Valley, the bastion of the APHC and jehadi activities. The development and reconstruction plans unleashed by New Delhi through the previous Mufti Muhammad Sayeed and the current Ghulam Nabi Azad governments have received support among the people. The common Kashmiri today acknowledges that money is reaching the grassroots and development is being seen on the ground, something unheard of ten years ago.

    In this context, while New Delhi is pushing its policies in J&K with utmost sincerity and purpose, would people approve of the APHC's boycott as prudent and constructive? Perhaps not. The APHC must realise that for the first time since its inception in 1993, it has managed to earn praise from India, Pakistan as well as the people of J&K simultaneously and it should not again slide into isolation. It is in the APHC's long-term interest to keep itself relevant in the rapidly changing international and national dynamics. Its participation in such events would not only give a positive signal to the people but also help them create an identity different from those espoused by hardliners and jehadi groups. Its gesture of welcoming the pundits back to the Valley has not gone unnoticed and it stands to gain a lot more by continuing on this path.

    The APHC should notice that Prime Minister Manmohan Singh was not critical of their decision, leaving space for future interaction in May in Srinagar. The Prime Minister underlined several key issues, such as people-to-people contacts between the two Kashmirs, human rights, trade, terrorism, status of detenus, 'self-rule' and 'autonomy'. All these issues are relevant for the APHC too, especially the feasibility of 'self-rule' and 'autonomy' for J&K, and it stands to maximise its interests provided it participates in such discussions. The APHC can achieve its objectives in J&K only through negotiations rather than by boycotting them under pressure from Pakistan.

    The APHC should not miss the opportunity in May when the next round is held in Srinagar. It is yet to concretise its identity and is plagued with internal contradictions pertaining to its representative status, stand on democratic processes, division of J&K on religious lines, role of UJC in peace process, and vulnerability to Rawalpindi's diktats. It sends confusing signals when, despite its dissociation from the hardliners, it continues to follow the non-cooperative and non-constructive approach of the latter. With these shortcomings the APHC could easily become history in J&K if it fails to read the mood of the people who have realised that in the 21st century development is freedom.

    Jammu and Kashmir, All Party Hurriyat Conference (APHC) Terrorism & Internal Security IDSA COMMENT
    Between Walls and Bridges of Business Vaishali Basu February 28, 2006

    President George W. Bush will be on his first official trip to India from March 1 to 3. India has travelled the road from natural partner to strategic partner to a global partner of the US in merely a few years. The new equation between India and the United States depends to a large extent on the manner in which business and trade ties progress in the future.

    President George W. Bush will be on his first official trip to India from March 1 to 3. India has travelled the road from natural partner to strategic partner to a global partner of the US in merely a few years. The new equation between India and the United States depends to a large extent on the manner in which business and trade ties progress in the future. This simple fact has been appreciated by both governments and the choice of Hyderabad as the other city besides New Delhi, which President Bush is scheduled to visit, by itself firmly establishes the fact that untapped financial opportunities in India are a prime concern for the American administration in pursuing the bilateral relationship. It is noteworthy that during his one-day Hyderabad trip President Bush will visit the Indian School of Business to meet with a selection of top young Indian entrepreneurs.

    It is interesting to note that coinciding with President Bush's India trip the United States-India Business Council (USIBC) is launching a mission with CEOs and senior industry. The USIBC is a business advocacy organization representing US companies, established in 1975 with the aim of broadening commercial ties with India. Bush's own entourage will comprise of top CEOs from the United States. This goes to demonstrate that the administration while attaching importance to the nuclear deal does not consider it to be the lynchpin of up-and-coming Indo-US relations.

    India and the United States will have to address the problem of low bilateral trade flows and adopt tangible measures to provide them a fillip. Despite a robust 11 per cent annual average growth rate recorded in the past decade, Indo-US trade remains far below potential. Last year Indian Commerce minister Kamal Nath and US Trade Representative Rob Portman had set a goal of doubling bilateral trade, taking it up to $40 billion in the next three years. During President Bush's trip the two sides should re-emphasise the need to increase bilateral trade from the current level of $21 billion. There are several accompanying trade related issues that need to be concentrated on. Like the lack of diversification in the trade basket, followed by the expansion of diversified trade into merchandise products. In the services sector this diversification is already taking place. Today, accounting firms in India are preparing American Internal Revenue Services (IRS) tax returns. In 2005 an estimated 400,000 tax returns were prepared in India.

    One chief constraint that has hindered expansion of bilateral trade is India's high tariffs in the agricultural sector. India has an average tariff rate of nearly 20 per cent in particular for agricultural products and petrochemicals. The issue has been a sore point between the two governments and is highly emotive for most Indians. Indian exporters also have their own set of complaints; the US offers heavy protection to some of its industries like agro products, food processing and textiles, which restrict market access to Indian exporters. Hopefully, President Bush's visit will help address some of these trade distortive practices that have prevented Indo-US economic relations from reaching the maximum potential.

    In the WTO India is engaging in multilateral negotiations in Mode 1, which involves cross border trade in services including BPO, and in Mode 4 which involves the movement of natural persons. During President Bush's visit the Indian leadership should seek a commitment from the US for granting India preferential market access in the United States. This is a critical problem for Indian professionals who even now have to deal with delays in visa and work permits. There are also concerns about discriminatory treatment and non-recognition of professional qualifications of Indians. With the case of Indian nuclear scientists being denied US visa still fresh in our minds, now is the opportunity for the Indian leadership to demand that intellectual equality be recognized and implemented for further expansion of commercial ties.

    There are some steps that India needs to take to guarantee the continued expansion of commercial relations between the two great democracies. To attract greater flows of FDI, India will have to ensure further liberalization of the insurance sector in addition to allowing a bigger opening of the retail sector and deregulation of the media sector. None of these issues are easy to resolve, as the Indian government has to deal with a large and divisive electorate, the majority of which finds India's emerging financial alliance with the US a psychologically emotive issue.

    On a more optimistic note, the institutional mechanisms to facilitate the progress of an Indo-US Economic Dialogue (ED) are already in place. The Economic Dialogue (ED) was launched in 2000, was revised in 2001 and realigned in 2005 to accommodate a separate Energy Dialogue. The Economic Dialogue (ED) within itself has four separate tracks for discussion. These are the Trade Policy Forum, the Financial and Economic Forum, the Environment Dialogue and the Commercial Dialogue. In addition, there is the CEOs forum, which is a high-level private sector forum to exchange business community views on key economic priorities that was launched in July 2005 during PM Manmohan Singh's visit to the US. On March 2, Ratan Tata and William Harrison, CEO of JPMorgan Chase will together present a report in Mumbai showcasing how India and the US can go about improving the "enabling environment" for international business between the two countries. Consequently, in conjunction with sustained dialogue, the two governments need to concentrate essentially on arriving at reasonable solutions and take substantive action to resolve glitches in bilateral economic relations.

    It is hoped that the visit of President Bush will help in curing the respective business communities of some of the psychological drags that have prevented greater investment in India. This is a unique instance in time to harness the inherent complementarities of the two economies in terms of human and natural resources by building strong bridges of business instead of erecting more protectionist walls.

    India-US Relations Nuclear and Arms Control IDSA COMMENT
    Khaleda's Pakistan visit Shifts Focus to Economic Synergy Sreeradha Datta February 27, 2006

    Bangladeshi Prime Minister Khaleda Zia's state visit (February 12-14, 2006) to Pakistan after a gap of a decade signals subtle changes that are driving bilateral relations. Both sides are consciously moving away from the political issues that had undermined ties for long and are looking to economic cooperation as the engine of change. The composition of the delegation accompanying the Prime Minister and the focus of the official dialogue reveal a focus on strengthening economic ties.

    Bangladeshi Prime Minister Khaleda Zia's state visit (February 12-14, 2006) to Pakistan after a gap of a decade signals subtle changes that are driving bilateral relations. Both sides are consciously moving away from the political issues that had undermined ties for long and are looking to economic cooperation as the engine of change. The composition of the delegation accompanying the Prime Minister and the focus of the official dialogue reveal a focus on strengthening economic ties.

    Since the birth of Bangladesh in 1971, its ties with Pakistan has been marred by a host of contentious issues and disputes. Principal among the irritants were a) division of assets of united Pakistan (consisting of East and West wing); b) repatriation of stranded Pakistanis or Bihari Muslims, who after the birth of Bangladesh had opted for Pakistani citizenship but were physically unable to move and resettle in Pakistan; and c) formal Pakistani apology for the atrocities committed during the Liberation War by its armed forces.

    Successive governments in Pakistan have been reluctant to discuss the substance of the dispute over the division of assets. Bangladesh has laid claim to an estimated US$4 billion with respect to retention of financial assets, creation of internal capital, and external debt settlement. It has also been demanding the US$200 million, which was received by Pakistan as donation from various countries for the 1970 cyclone victims of then East Pakistan.

    The issue of repatriation of stateless Bihari Pakistanis (present population estimated around 250,000) from Bangladesh has assumed further significance in light of some recent developments. First, in May 2003 the Bangladesh High Court awarded citizenship to ten such stranded Pakistanis of whom eight were born after 1971. In another controversial move, the Election Commission enlisted 10,000 such Pakistanis as voters for the upcoming Jatiya Sangsad election slated for early 2007. For years, Bangladeshi governments have been trying to repatriate these Bihari Muslims but with little success. While in the 1990s Prime Minister Nawaz Sharif did agree to a miniscule number to be repatriated, the problem has largely been ignored by all Pakistan leaders.

    On the eve of Khaleda's visit, a section of this stranded population had submitted a petition to the Prime Minister's Office asking her to raise the issue of Bihari repatriation to Pakistan with President Parvez Musharraf. The repatriation question is not without its pitfalls. Given its inclusion in the voters list, this segment has become an important component of vote bank politics in Bangladesh and keeping alive this issue was not going to ensure for the BNP any extra mileage in the ensuing polls given the lack of interest within Bangladesh on this.

    The issue of apology is deeply embedded in the Bangladesh psyche. Given the sensitivities that are involved in events leading up to the birth of Bangladesh, the regret that was expressed by Prime Minister Nawaz Sharif and subsequently by President Musharraf during his state visit in 2002 were not considered adequate and it continues to rankle Bangladesh.

    None of these protracted differences between the two countries are expected to be resolved anytime soon. Bangladesh consequently seems to have shifted the focus of its bilateral ties with Pakistan to the logic of economic cooperation. Here, the textile industry is proving to be the engine of change. In both countries, the textile industry is the principal foreign exchange earner. Moreover, in the case of Bangladesh, the textile industry accounts for 45 per cent of all industrial employment, contributes 5 per cent to the total national income, and is the largest employer with nearly 4 million employees. While Pakistan produces some of the best quality yarn and fabrics, Bangladesh enjoys low cost of production. Dhaka seems intent on exploring this mutual complementarity and the textile industry has thus emerged as the principal vehicle of Bangladesh-Pakistani economic synergy.

    The end of the Multi-Fibre Arrangement in 2005 actually gave rise to fears of a slump in the textile industries of both Bangladesh and Pakistan. However, despite some initial setbacks, the textile industry in Bangladesh recovered, especially in its knitwear garments sector. Similarly, in Pakistan too, textile and clothing exports during the first four months of 2005 were substantially higher than in 2004 and experienced an average monthly growth of 22.1 per cent.

    A new synergy between the textile manufacturers of the two countries is visible. Textile products are the mainstay of Pakistani exports, but the cost of production has gone up substantially. On the other hand, Bangladesh of late has been seriously searching for FDI and had offered a tax-free investment environment to the Pakistani textile industry. In November 2005, a 10-member Pakistani delegation of leading upholstery manufacturers and exporters visited Bangladesh and held a series of meetings at the Bangladesh Board of Investment and the Ministries of Commerce and Industries.

    Attempting to capitalise on the low cost of production in Bangladesh, Pakistani textile manufacturers showed interest in shifting some of their units to Bangladesh. This was a reflection of pressure tactics that could motivate the Pakistan government to introduce better incentives at home as well as indicative of the growing synergy between the textile industries of the two countries.

    Greater Cooperation in the textile sector was the major outcome of Khaleda Zia's visit to Pakistan. She was accompanied by a 43-member business delegation. During the visit four Memoranda of Understanding (MoU) were signed between the two countries covering agriculture, tourism, export promotion and standardization of export products. Currently Bangladesh has a US$ 75 million trade deficit with Pakistan and hence has asked for duty-free access to Pakistan's market for over 70 items in which it has a competitive edge. There are indications that the FTA and the operationalising of SAFTA were the other main items on the agenda. Although problems relating to terrorism and religious radicalism were also discussed during the visit, in view of the comprehensive discussions and agreements on economic convergence, it is evident that Dhaka and Islamabad are determined to make sure that unresolved political issues no longer hold the strengthening of bilateral relations hostage.

    Bangladesh, Bangladesh-Pakistan Relations, Pakistan South Asia IDSA COMMENT

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