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    Major Shift in U.S. Policy to South Asia: Democracy in Pakistan More Critical Than F 16s C Uday Bhaskar April 05, 2005

    The visit of US Secretary of State Ms. Condi Rice to Delhi on March 16 had generated considerable optimism about where India-US ties are headed and this was highlighted in my last column (March 24). However events over the last week have been even more promising and the telephone conversation between US President Mr. Bush and the Indian PM Dr Manmohan Singh on March 25 and the subsequent background briefing by the US State Department indicate that the Bush team has outlined an ambitious policy towards South Asia.

    The visit of US Secretary of State Ms. Condi Rice to Delhi on March 16 had generated considerable optimism about where India-US ties are headed and this was highlighted in my last column (March 24). However events over the last week have been even more promising and the telephone conversation between US President Mr. Bush and the Indian PM Dr Manmohan Singh on March 25 and the subsequent background briefing by the US State Department indicate that the Bush team has outlined an ambitious policy towards South Asia.

    For the first time Washington has identified the region as being "vital to the future of the US" and more importantly it has asserted that the US will help India become a major world power in the 21st century. The scope of the proposed re-orientation of current US policy towards the region is ambitious and when implemented, the implications of this US new policy could be very radical and has the potential to alter the very basis of the India – US relationship.

    The initial focus of the March 25th White House announcement dwelt more on the F 16s being supplied to Pakistan and the 'disappointment' generated in India but as the full contours of the new US policy became more clear, it is now evident that notwithstanding certain contradictions, the US has for the first time crafted a comprehensive policy towards the region that is cognizant of the past and the mismatch between the short term goals and long term objectives that Washington has pursued. This contradiction is most vividly reflected in the fact that the White House is staunchly supporting a military ruler in Islamabad even while being committed to the return of democracy in Pakistan by 2007 and is willing to live with the AQ Khan iceberg even though nuclear transgressions are on top of the Bush priority list.

    While the F 16 has become the more visible issue, it would be misleading to associate the March 25th initiative only with the resumption of arms supplies to Pakistan by the US. The F 16 deal has been in the pipeline for almost 15 years and has been withheld for various nuclear and other transgressions including a military coup by the Pakistani military. It is true that there has been no change of circumstances or behavioral pattern by Islamabad in that the military is still in power, the AQ Khan episode remains to be investigated and Islamabad's support to religious radicalism and jehadi terrorism continues in a selective manner – albeit against India.

    Thus it is valid to ask if Pakistan is being rewarded despite its deviations from the core principles now being pursued by the White House – more so when the past track record suggests that the Pakistan military leadership has always acted in an adventurist and belligerent manner when it has been enabled by Washington by way of military equipment – and the 1965 Indo-Pak war is case in point. However it appears that this time Washington is following a very carefully crafted policy of carrot and stick by way of dealing with Islamabad.

    The US administration is fully aware of the many 9-11 related terrorist leads that point to Pakistan and the current turbulence in that society and its deep anti –US orientation. The roots of the current terrorist activity are deeply embedded in the Pak polity and the US had noted this in December last when they had passed a law that requires the US executive to report to Congress the progress made in the transformation of Pakistan. As part of the 9-11 Recommendations Implementation Act passed by the US Congress in December last, sections 4082 and 4083 are Pakistan specific. The former refers to the US Commitment to the Future of Pakistan and the latter is regarding authorization to the US President to exercise waivers in respect of earlier sanctions imposed on Pakistan. Section 4082 is wide in scope and seeks to 'de-jehadise' Pakistan and encourage the emergence of a moderate Pakistan. This in many ways corresponds with the Indian long-term objective as well but there are divergences in the means adopted by the US.

    As of now 4082 states that it is the sense of Congress that the US should "over a long-term period, help to ensure a promising, stable and secure future for Pakistan" and in particular provide assistance to Islamabad in eight areas that include inter alia: commitment to combating extremists; resolving outstanding difficulties with neighbors; fully control its territory and borders; become a more effective and participatory democracy; modernize its economy; halt the spread of WMD; reform the education system; and implement a strategy of moderation.

    More importantly the law requires the US President to transmit to Congress a detailed strategy within 180 days about the nuts and bolts of how the objectives in 4082 will be achieved. Thus by about mid June 2005, the US executive branch will have to inform the Congress about the progress made in this regard and from all accounts the Bush-Rice team are determined to keep the focus on democracy and genuinely representative governance as a core principle for compliance by Pakistan. There is little dissent that this will finally enable the beleaguered Pakistani civil society to reclaim the political space appropriated by the Pak military and the strengthening of the moderate, civilian political constituency will be in the true long terms interests of the Pakistani people.

    Thus while the F 16 has become the lightning rod in the Indian public perception about a shift in US policies, it is in many ways the less important issue. The more strategic and long term policy assertion by Washington is about the transformation of Pakistan to becoming a more moderate state and society. This is an ambitious goal and history tells us that no military that has seized power has ever returned to the barracks in a voluntary manner. Whether General Musharraf will be the exception thanks to the Bush-Rice prescription remains to be seen and the future of the composite dialogue with India will be linked with the choice made by the Pakistani military leadership. The core issue essentially is the orientation of the GHQ in Rawalpindi and how they respond to the new US policy about democracy in Pakistan.

    India-US Relations Nuclear and Arms Control IDSA COMMENT
    Tug-of-possible-war over Taiwan Abanti Bhattacharya April 05, 2005

    On March 7, China unveiled a new Anti-Secession Law in its third session of the 10th National People’s Congress meeting. The law legalizes China to take military action against the renegade province, Taiwan. The full text of the Anti-Secession Law stated a three-point scenario for ‘‘non-peaceful action’’ against Taiwan.

    On March 7, China unveiled a new Anti-Secession Law in its third session of the 10th National People’s Congress meeting. The law legalizes China to take military action against the renegade province, Taiwan. The full text of the Anti-Secession Law stated a three-point scenario for ‘‘non-peaceful action’’ against Taiwan. It says that China will attack Taiwan if the forces clamouring for Taiwan’s independence ‘‘under any name or by any means’’ create the ‘‘fact of Taiwan’s secession from China’’, if there is ‘‘occurrence of major incidents entailing Taiwan’s secession from China’’ and if ‘‘possibilities for a peaceful reunification are completely exhausted.’’

    Taiwan has strongly opposed the Anti-Secession Law and called it as China’s ploy to annex Taiwan and unilaterally change the status quo. The pro-independent groups have opposed Chen Shui-bian’s moderate tone in Cross-Strait relations and demanded that the government should counter anti-secession law with an anti-annexation law, which would state that Taiwan is a sovereign country.

    A careful reading of the full text of the Anti-Secession Law indicates that the proposal on taking non-peaceful means to stop Taiwan’s Secession from China by the Taiwan Independent force, comes in the fourth and the last section of the text. This is in tandem with China’s earlier positions on Taiwan reunification as codified in the 16th Party Congress Report of 2002. It vindicates China’s three positions on when to attack Taiwan that is if Taiwan declares independence, if there is foreign intervention in Cross-Strait relations and if there is indefinite postponement of re-unification goal.

    Second, the section on Achieving National Reunification Through Peaceful Means, clearly points at the significance of peaceful reunification both for China and the world. It says, ‘‘A reunification by peaceful means best serves the fundamental interests of all Chinese people, the Taiwan compatriots included, as it is conducive to fostering a warm affection among compatriots on both sides, to peace and stability in the Taiwan Straits and the Asia-Pacific region as a whole, and to the great rejuvenation of the Chinese nation.’’ The draft proposal in fact, mentions a five-point formula to create peace and stability in the region and promote Cross-Strait relations.

    Third, the full text does not mention any time-table for unification with Taiwan or for taking aggressive military action to thwart Taiwan from going independent. In fact, the law mandated that ‘‘the state shall exert its utmost to protect the lives, property and other legitimate rights and interests of Taiwan civilians and foreign nationals in Taiwan.’’

    As against the legalization of use of force against Taiwan, the anti-secession law is basically meant to reinforce the status quo position on Cross- Strait relations. The three-point scenario for ‘‘non-peaceful action’’ is intended to thwart the pro-independent groups from campaigning for independence.

    It is also intended to prevent Taiwan President Chen Shui-bian from enacting a new Constitution for Taiwan by 2008. China looks upon the revision of the Constitution as a declaration of Taiwan’s independence and unilateral change in the status quo. In February 2005, the US came out with a US-Japan joint statement indicating Taiwan as a common security concern for both countries. This joint statement is not directly linked with proposed Anti-secession Law, but against China’s increasing military power. It is meant to contain China’s rising influence in the region. The overall US policy on Cross-Strait relations is based on strategic ambiguity. This strategic ambiguity perpetrates status quo on Cross- Strait relations. Strategic ambiguity helps balance competing US interests in China and Taiwan, and maintain credibility, peace and stability in the Asia-Pacific region.

    China, with its developmental nationalism and pragmatic foreign policy, is not supportive of military action against Taiwan. It will severely jeopardize China’s image building exercise as a responsible and peaceful power. More so, China’s development is contingent on the continuance of a stable economic world order. Its economy is increasingly intertwined with the world’s economic growth and therefore it is in China’s interests to maintain peace across the Straits. Therefore, present policy both in China and the US, is to maintain the status quo.

    Further, the status quo position is increasingly becoming the hallmark of the ruling Democratic Progressive Party in Taiwan whose party ideology supports independence of Taiwan. In fact, Chen Shui-bian’s second Presidential inaugural speech reiterates that Taiwan would not declare independence, would not change the national title, would not insert two-state theory into Constitution, would not promote a referendum to change the status quo regarding independence or unification, and would not abolish the national unification guidelines. The February 2005 Chen-Soong 10-point joint statement also reflects a conciliatory position adopted by DPP and it is decreasing its aggressive pro-independent stand, of course under the Chinese threat.

    In sum, the Anti-secession Law — rather than being primarily a non-peaceful law — reinforces China’s stand on maintaining status quo on Cross-Strait relations.

    Taiwan, Anti-Secession Law, China East Asia IDSA COMMENT
    F-16s: Can we trust Uncle Sam? C Uday Bhaskar April 05, 2005

    The US offer to sell F16s and F18s to India, announced on March 25, has to be seen in context. True, this initiative is linked to the White House decision to lift the ban on supplying F16s to Pakistan and the more cynical view is that the US manufacturers of these aircraft will now laugh all the way to the bank as the sub-continent gets sucked into an arms race.

    The US offer to sell F16s and F18s to India, announced on March 25, has to be seen in context. True, this initiative is linked to the White House decision to lift the ban on supplying F16s to Pakistan and the more cynical view is that the US manufacturers of these aircraft will now laugh all the way to the bank as the sub-continent gets sucked into an arms race.

    This black-and-white reduction is misleading. The US has offered India these aircraft as part of its radically new policy towards South Asia and this re-orientation is significant. The other elements include co-operation in nuclear energy and safety, space and high technology commerce, as also access to the US military industrial complex. This is being undertaken to enable India to become a credible world power and clearly the new Bush template has accorded Delhi a certain salience in the concert of democracies. If these statements of intent are implemented with determination, then India-US relations will note March 25 as a major punctuation.

    The new Bush policy for the sub-continent has been crafted to advance US interests, and this is to be expected. But, in the emerging regional and global systemic, an economically prosperous and militarily strong India is perceived to be in the US' larger interests. The package that includes nuclear energy co-operation and the sale of military hardware is the means to this end. Given the fact that India and the US had widely divergent perceptions of their security interests during the Cold War decades, there is a great deal of wariness about the 'other' on both sides.

    The F16 itself has become a symbol of contestation between India, the US and Pakistan since it was originally denied to Islamabad for multiple transgressions by the Pak military establishment. There is little to suggest that the Pakistan GHQ has either atoned or recanted or allowed genuine democracy to take roots and to that extent the US decision to resume the supply of F16s is deemed to be perfidious.

    It merits repetition that India is not in a position to radically influence the short-term objectives that the Bush team has prioritised by way of the war against terror and the capture of bin Laden. Against this, it would be prudent for India to accept the US offer for closer strategic co-operation in an objective manner and nurture shared interests. Trust grows gradually in any bi-lateral relationship and the US offer to India to enter into what is termed the NSSP — the Next Steps in Strategic Partnership — is unique and indicative of how the Bush team perceives India. Delhi has to decide when and how to get its feet wet and the F16 may turn out to be an unintended catalyst.

    India-US Relations, Indian Air Force Military Affairs IDSA COMMENT
    The rise of fiscal terror Sudhir Saxena March 25, 2005

    By targetting the IT industry, terrorists are revealing that the Indian economy may increasingly be their target

    By targetting the IT industry, terrorists are revealing that the Indian economy may increasingly be their target

    The elimination of the Delhi based Lashkar-e-Tayyiba (LeT) cell on 6 March 2005, could possibly indicate a new trend in Pakistan-based terror operations in India. Preliminary reports indicate that these terrorists were intending to strike against the Indian Military Academy (IMA) and the IT infrastructure especially in Bangalore using the network of the banned Students Islamic Movement of India (SIMI). A couple of issues emerge from the episode. First, is this an indication of widening of the area of operations by the LeT and similar groups away from Jammu and Kashmir and North India to relatively un-touched peninsular India? Secondly, do the plans of the captured terrorist suggest a change in the nature of targets from tactical to strategic, indicating increasing complexity of conceptual planning and hence institutional involvement?

    Jammu and Kashmir is undergoing a rather harsh and prolonged winter snow fall season. Like the tsunami, unpredictable mother nature seems to have purged any possibility of an escalation of terrorist activity. Further, the Indo-Pak Composite Dialogue Process (CDP) process (agreed to in January 2004) has shrunk the political space for high-intensity, high-frequency terror operations. It is quite possible that the political and geo-climactic factors may have forced the terrorists to shift areas of operation southwards and if possible perform a repeat of the 12/13 attack on the Parliament. Though, there have been sporadic incidents involving J&K terrorist (like LeT) operating in areas like Hyderabad, the phenomenon could not be termed as wide spread, possibly due to logistical reasons. The planned future intentions of the LeT cell captured in Delhi may indicate just such a spread.

    The choice of targets certainly raises a new warning. It is known that the IT industry has been one of the success stories contributing to the growing vitality of the Indian economy. The amount of RDX captured (10.5 kgs along with detonators) provides clues to the nature and explosive power of the planned operation. However, a pertinent question needs to be answered - was blowing up few buildings of the Polaris company the only aim of the now failed operation, or was there a larger objective? A strike against a leading IT company and its aftermath would have no doubt lead to many tactical counter-operational and intelligence measures. But it would have also left a certain wariness in the investor market, particularly in the FDI sector, which is very sensitive about security of its assets give the experience in Iraq, Afghanistan and certain African locations. A planned strike at IMA, Dehradun is indicative of similar operations by the Zarqawi group in Iraq.

    As a first choice, the facts point towards the culprit state actor - Pakistan. The Delhi police has claimed that with the capture of Pakistani nationals along with incriminating documents, passports, the operation provides direct evidence of Pakistani involvement in country wide terrorist activity. Recent media reports also indicate a relative increase in the arrests of Pakistani spies in Delhi and other areas of strategic importance. The information being traded by these enemy agents cover a range of issues of national security importance including defence installations, industrial infrastructure, R&D institutions etc. It seems that despite the Indo-Pak dialogue, increasing people-to-people contact, cricket matches and CBMs, Pakistani intelligence agencies and/or Pakistan leadership does not intend to lose that vital strategic advantage gained through terror leverages mustered over the decades. From their point of view it sounds to be a logical and viable state-craft option.

    To extend the analysis, if one partially absolves Musharraf’s Pakistan of an all out covert war in the current context, involvement of a larger terrorist entity like the Al Qaeda with rogue Pakistani support seems to be the second probability. Traditionally, analysts have believed that India does not appear high on the Al Qaeda’s priority list. Possibly, Iraq, Afghanistan, Saudi Arabia, Kuwait, Gaza, West Bank and the USA remain the priority targets. An increasing pressure in North West Pakistan by the US and Pakistani agencies (under duress), may be forcing Al Qaeda hierarchy to look for other alternatives as an operational exigency. It is known that Nepal and Bangladesh have been comfortable hiding places for terrorists for some time now.

    However, Nepal with its current political crisis and Bangladesh with its politico-religious configuration of governance have invited increasing international scrutiny. Bangladesh has actually started responding to the Indian pressure to clean-up its territory of terrorist elements. This could be uncomfortable for the terrorist entities either residing in these countries or operating from their soil. It needs little elaboration that Pakistani agencies are also under ‘‘friendly’’ obligation to rehabilitate these old associates in a productive manner.

    In the past Al Qaeda had possibly left J&K to its junior partners like LeT, Jaish-e-Mohammad (JeM), Hizbul and Harkat variants. However, under the present circumstances, the ‘‘big guys’’ may be deciding to drop-in and take charge of operations in India, though not directly. This may explain the strategic target selection by the terrorist captured in Delhi. It is known that Al Qaeda had developed an elaborate strategy of purging the US economy through various complicated ‘‘fiscal attacks’’ ranging from disrupting fund supplies to targeting banking infrastructure and stock market mechanism. Was something similar under planning in case of the LeT cadres operating out of Delhi?

    It does seems obvious that in both scenarios, the first beneficiary of such a wide planned terror act will be Pakistan. As a secondary effect, Al Qaeda gains will be at present limited to the larger jihadi success in the region. It is natural to be alarmist in threat assessment and probably safer as well, but given the past history of the involvement of Pakistan backed terror syndicates in attacking the Indian state and society, it is difficult to ignore the aforementioned possibilities. We may not have the colour code threat indicators as yet, but the terror bar seems to be showing spikes and presumably the Indian security establishment would have raised these concerns with Condoleezza Rice during her visit to Delhi.

    Students Islamic Movement of India (SIMI), Lashkar-e-Taiba (LeT) Terrorism & Internal Security IDSA COMMENT
    Condi Rice visit to Delhi: Landmark in India-US Ties C Uday Bhaskar March 24, 2005

    The just concluded visit to India (March 16) by Ms. Condi Rice, the US Secretary of State may be deemed a landmark pointing to a deeper strategic underpinning between the two countries notwithstanding the divergences that were expressed over issues such as Iran and the sale of F-16 aircraft to Pakistan – which inadvertently received greater focus in the immediate aftermath of the Rice visit. While there is considerable symbolism in the fact that Ms.

    The just concluded visit to India (March 16) by Ms. Condi Rice, the US Secretary of State may be deemed a landmark pointing to a deeper strategic underpinning between the two countries notwithstanding the divergences that were expressed over issues such as Iran and the sale of F-16 aircraft to Pakistan – which inadvertently received greater focus in the immediate aftermath of the Rice visit. While there is considerable symbolism in the fact that Ms. Rice chose to make Delhi the first stop in her whistle stop tour of Asia, her responses to the broad range of issues discussed with her Indian interlocutors indicate that the Bush 2 team is determined to take forward the content in the bi-lateral relationship that had been hinted at in the first term of the Bush administration.

    This is amply reflected in three areas that are of strategic importance to India and which till recently were in various stages of delay or procedural deadlock. While Ms. Rice conveyed Washington's concerns over the proposed Indian (and Pakistani) co-operation with Iran over the energy pipeline, she made an important observation by way of acknowledging India's growing energy requirements if it is to sustain its economic growth. She alluded to the need for an India-U.S 'energy dialogue' that would inter alia look at other options – the inference being that of nuclear energy. The US had suspended its support and co-operation in this field after the Indian peaceful nuclear explosion (PNE) of 1974 and while this area has been identified in the NSSP (next steps in strategic partnership) agreed to between Mr. Bush and Mr. Vajpayee in January 2004, there has been little actual progress to-date. Ms. Rice indicated that phase two of the NSSP would now be embarked upon and the salience and strategic import of the US assisting India in the nuclear energy domain would by itself make this visit a landmark one. This initiative would call for considerable innovative interpretation of existing US non-proliferation norms and its multilateral commitments in this area but while these may be complex, they are not insurmountable if the White House is determined to stay the course.

    However there are other areas that are of equal relevance and these include the reference to greater US defence supplies that would also encompass technological and joint-production possibilities which is of long term significance for the Indian military establishment. Notwithstanding the standard reference to Indian and the US being the world's largest and oldest democracies, the Indian military inventory has little or no significant platform of US origin. While there have been historical reasons for such an occurrence, it is an existential reality that today the US is the most credible and technologically advanced military supplier in the world and the other suppliers relevant to India are Russia and Europe. The Indian defence establishment has to make a strategic choice regarding the manner in which its inventory profile will be nurtured for the next 30 years (the life cycle of major platforms such as aircraft, ships and artillery) keeping the nature of the RMA (Revolution in Military Affairs) in mind and the US is a logical and viable supplier. However Indian anxieties about the dependability index of the US will have to be assuaged and the deliberations during the Rice visit suggest that this aspect of the bi-lateral relationship will be taken forward by the professionals on both sides and that some major decisions will have to be taken in this regard.

    The third area that is of deep import is the acknowledgement of India's regional and global relevance as a node that contributes positively to stability and prosperity. India's economic growth rate, macro-fiscal indicators and the empathy with information technology and the new economy are familiar and have been noted but Ms. Rice also dwelt on India's noteworthy ability – particularly the Indian Navy - to respond to the December tsunami tragedy as an indicator of Delhi's increasing ability to contribute meaningfully to regional security and stability. This positive affirmation about India is in sharp contrast to the shrill response that was associated with Ms. Madeline Albright, a former US Secretary of State in the immediate aftermath of the May 1998 nuclear tests - and a pointer to the ground that has been covered in the India-US relationship.

    Thus the Rice visit to India is to be objectively assessed for its potential to advance those areas that may be deemed strategic from Delhi's point of view and each of them independently and together will have a direct co-relation with India's profile in the post 9-11 systemic. Managing major power bi-lateral relations calls for consistent prudence and the ability to distinguish what is immediate or tactical and those which have deeper resonances for the national interest. While divergences over Iran, F-16s and visa issues are more visible just now, they should not be allowed to deflect the potential of the Rice visit to strengthen the strategic convergences between the two nations.

    In identifying areas that are of deeper relevance to India, mention must also be made of Ms. Rice's assertion in Islamabad which she visited after Delhi. Predictably she praised General Musharraf for his role in supporting the US war against terrorism but also added a caveat when she noted: "We look forward to the evolution of a democratic path towards elections in 2007." India is not in position to either encourage or advise Pakistan's military rulers to return to the barracks even though this would be in the larger interests of the Pakistani people and regional stability and Ms. Rice's unambiguous comments have aroused considerable ferment in Pakistan's civil society and military establishment. And finally the AQ Khan issue also found mention in a manner that reflects the mood of the international community when Ms. Rice reiterated that "it is a network that we want to make certain that its tentacles are broken up as well."

    Whether it is the fundamental support to equitable democracy as a principle or the need to manage the emerging nuclear challenges and find a modus vivendi to the energy domain, there is a shared interest that binds India and the USA and the Rice visit served to illuminate these areas. The challenge in the next three will be to ensure that the Bush team remains focused on these issues. Confirmation of a visit by the US President to India within the year will give further impetus to the promising foundation laid by Ms. Rice in her first visit to the sub-continent and will make it truly 'landmark'.

    India-US Relations IDSA COMMENT
    Manmohan Doctrine and India's External Relations C Uday Bhaskar March 16, 2005

    The next four weeks will be very eventful for advancing India's relations with the major powers as Delhi prepares to receive US Secretary of State Condoleezza Rice (March 16), Japanese Prime Minister Junichiro Koizumi (end-March) and Chinese Premier Wen Jiabao (early April).

    The next four weeks will be very eventful for advancing India's relations with the major powers as Delhi prepares to receive US Secretary of State Condoleezza Rice (March 16), Japanese Prime Minister Junichiro Koizumi (end-March) and Chinese Premier Wen Jiabao (early April).

    While there are distinctive issues that are specific to each of these bilateral relationships, the over-arching template as to how India will engage with the major powers and its overall external relations was provided in a landmark speech by Prime Minister Manmohan Singh in end-February at the India Today Conclave in New Delhi.

    The major theme was the assertion of a renewed confidence about India and the manner in which it will recover its "lost space in the global economy and our economic status in the comity of nations".

    Linking India's current economic potential and abiding aspirations with the Nehruvian vision of free India's foreign policy as articulated in December 1947 wherein Pandit Jawaharlal Nehru had cautioned that "ultimately, foreign policy is the outcome of economic policy", Dr Singh provided the much-needed clarity regarding the determinants that ought to normatively underpin a nation's foreign policy.

    Noting that the global environment has never been "more conducive for India's economic development than it is today", the Prime Minister drew the axiomatic linkage with security and added that "the response of other countries to our national security concerns is being shaped by perceptions of business and economic opportunities."

    In their own way, the USA, China and Japan have emerged as major nodes of India's trade, technology and investment opportunities and, notwithstanding certain areas of divergence, with all these nations on specific security and strategic issues, the shared economic domain is too compelling to be ignored in how the bilateral ties evolve in the near future.

    And the inescapable reality is that India's bilateral relations with each of these states will have a non-linear impact on the relationship with the other two. In other words, the manner in which the Rice visit advances the India-US strand will have its own impact on India's ties with both China and Japan and vice versa.

    However it would be misleading to infer from the above that the Prime Minister's template is only about economics -- an area where his expertise is globally acknowledged -- both as the Finance Minister who steered India's hesitant liberalisation era and as the Governor of the Reserve Bank before that.

    A careful content-analysis of the speech would indicate that Dr Singh has made certain old and radical political and strategic assertions about India's orientation and relevance in the international comity.

    In keeping with his own persona, the assertions are confident and firm, albeit conveyed in a persuasive manner. Reiterating the resilience of India's multiple diversities and the manner in which the 'idea of India' has prevailed over the centuries, Dr Singh identifies openness, both in economic policies and in the social fabric as the cardinal values that need to be nurtured.

    Asserting that "the test of the vibrancy and resilience of a democracy is not just the ability to conduct elections and convene legislatures. It lies in a society's ability to communicate with itself and with the outside world through civilised modes of interaction. We are, like any real democracy, an argumentative society. The right to disagree and the freedom to debate is a hallmark of such societies."

    Dr Singh added an important caution for the domestic polity when he noted with concern the emergence of communalism and majoritarianism in the Indian body politic. The Achilles heel nature of these two trends and the extent to which they distort the societal ozone layer will be the litmus test for India, as Gujarat demonstrated in 2002.

    In what may be termed as a bold departure, the Prime Minister rejected any form of authoritarianism and welcomed the movement towards democracy in states like Afghanistan and their "long awaited tryst with peace."

    Referring to economies in transition and the manner in which the international community provides support for such transition, he introduced a new phrase into the political lexicon which may well become part of the Manmohan doctrine -- 'Societies in Transition.'

    Dr Singh suggested that developed democracies should assist such societies in their transition to becoming more open constituencies and the relevance for the southern Asian region with its many non-democratic regimes is self-evident.

    The inference that follows is not that India will export democracy to China -- that is a transition that the Chinese people and their leaders will have to steer -- but a signal that India can and will play a part in the transitions that are underway in Afghanistan, Iraq and elsewhere.

    The convergence with the current Bush agenda that seeks to democratise the Greater Middle East is discernible but it is also evident that India will proceed in this endeavour in its own manner and not as part of any band-wagon.

    However, democratisation is not restricted to states but to the management of the global system as well and Dr Singh refers to seeking "the reform and democratisation of multilateral institutions" -- read the UN and its Security Council -- where the correspondence with Japan is clear.

    Yet another reiteration that is valuable is the commitment to universal nuclear disarmament that should dispel any perception that India has diluted its stand on this long term goal. India's profile as a responsible nuclear power has been high-lighted and these are areas that are relevant to all major powers against the backdrop of emerging nuclear challenges that were not envisaged by earlier regimes and agreements.

    The post-Cold War years resulted in a period of considerable turbulence and uncertainty as well-defined referents and paradigms were swept away and most nations, including India, groped for the appropriate framework or template to underpin their orientation and values by which they would deal with the external world.

    Dr Singh's February articulation will provide the core of what may later be defined as the Manmohan doctrine -- and the challenge will be in the next few weeks when these principles will be put into practice.

    Foreign Policy IDSA COMMENT
    Troubled Road to SAFTA Alok Bansal March 10, 2005

    The proposal to reconvene the 13th SAARC Summit soon has rekindled the hopes of South Asian Free Trade Area (SAFTA) coming into force on schedule on 01 Jan 2006. It is a sad commentary on the regional economic cooperation that although the South Asian Association for Regional Cooperation (SAARC) has been in existence for about 20 years, the intra regional trade is still languishing below five percent of the global trade of the member states. It is widely believed that all the seven states of the region will benefit immensely in the long run from the economic benefits of SAFTA.

    The proposal to reconvene the 13th SAARC Summit soon has rekindled the hopes of South Asian Free Trade Area (SAFTA) coming into force on schedule on 01 Jan 2006. It is a sad commentary on the regional economic cooperation that although the South Asian Association for Regional Cooperation (SAARC) has been in existence for about 20 years, the intra regional trade is still languishing below five percent of the global trade of the member states. It is widely believed that all the seven states of the region will benefit immensely in the long run from the economic benefits of SAFTA. Removal of trade barriers and all other irritants hampering free trade in the SAARC region would result in a win-win situation for all, be it the governments, common people or businessmen.

    South Asian states have taken long to overcome their mutual suspicion and to relate to one another as a bloc. Inter-state hostility has lingered in the region while in other regions; the states have overcome far more complex hurdles to successfully activate regional trading blocs. The idea of South Asian Cooperation was mooted for the first time by then president of Bangladesh Gen Zia-ur-Rahman in May 1980. The SAARC was finally established at a summit held in Dhaka in December 1985. The first tentative steps towards economic cooperation within the region were taken in July 1991 when the Council of Ministers, in Male endorsed a Regional Study on Trade, Manufactures and Services. The SAARC Preferential Trading Arrangement (SAPTA) came into force on 7 December 1995, exactly a decade after the establishment of SAARC. In January 1996, SAARC commerce ministers reiterated commitment to accelerate the SAPTA process and set realisation of SAFTA as the goal.

    A report by a Group of Eminent Persons (EPG) titled SAARC: Vision Beyond the Year 2000 was submitted to the Tenth SAARC Summit in Colombo in 1998. The report envisaged a Free Trade Area by the year 2010, a Customs Union by 2015 and an Economic Union by 2020. However, after the Colombo Summit, the entire process came to a grinding halt mainly because of the rapid deterioration in Indo- Pak relations. It took four years to put the process back on the rails. A commitment was made at the Eleventh SAARC Summit at Kathmandu in 2002 for the creation of a South Asian Economic Union. Finally it was the Twelfth Summit at Islamabad, where the Framework Agreement for a South Asia Free Trade Area was signed.

    The agreement comes into effect on 01 January 2006 and requires all countries to reduce tariffs to 0-5%. The time schedule for reduction of tariffs is as follows :-

    1. The non-least developed states namely India, Pakistan and Sri Lanka are to reduce the existing tariff rates to 20% within two years i.e. by 01 Jan 2008.
    2. Least developed states which are designated as least developed Country by the UN namely Bangladesh, Nepal, Bhutan and Maldives are to reduce the existing tariff rates to 30% by 01 Jan 2008. Significantly the agreement classifies Maldives as a Least Developed State even though it has not been designated a least developed country by the UN.
    3. India and Pakistan are required to reduce tariffs to 5 % or below by 01 Jan 2013 and Sri Lanka by 01 Jan 2014. The reduction in tariffs should as far as possible be in equal instalments but in no case less than 15 % annually.
    4. Least Developed states are to reduce tariffs to 5% or below by 01 Jan 2016. The reduction in tariffs should be as far as possible in equal instalments but in no case less than 10 % annually.
    5. Notwithstanding the above timeframe the Non-Least Developed States shall reduce their tariff to 0-5% for the products of Least Developed Contracting States within a timeframe of three years beginning from the date of coming into force of the Agreement.

    The agreement has a provision for sensitive lists and the tariff reduction will not be applicable to the items in these lists. There will be different sensitive lists applicable to Least Developed States and other states. These will be reviewed regularly at intervals not exceeding four years to curtail them. The agreement provides for special treatment to Least Developed States and expects others to provide them with preferential tariffs during the process of Trade Liberalisation Programme (TLP). The agreement recognizes that the Least Developed States will lose customs revenue due to the implementation of the TLP and has recommended establishment of a mechanism to compensate them for the loss. This mechanism and its rules and regulations are required to be established prior to the commencement of the TLP.

    The agreement also recommends the adoption of trade facilitation and other measures to support and complement SAFTA for mutual benefit. These include harmonisation of standards, simplification of custom clearance procedures, simplification of banking procedures for import financing, transit facilities for intra-SAARC trade, removal of barriers to intra SAARC investments, development of communication systems and transport infrastructure and simplification of procedures for business visas. The treaty is however, silent on the goals of establishing a Customs Union or Economic Union in South Asia. .

    Many critics feel that the schedule for implementation of SAFTA is extremely slow and the process envisaged in the Treaty may be overtaken by events at both bilateral and global levels. Bilaterally, the conclusion of various free trade agreements (latest being the Pak –Sri Lanka FTA) might make SAFTA redundant. Similarly at the global levels the lowering of tariffs consequent to WTO negotiations may make SAFTA superfluous. However, going by the past experience, the process can be derailed by any adverse political relationships between the countries of the region. It is therefore prudent to move cautiously.

    The agreement also leaves the Services – a major component of the regional economy, outside its scope. This is a major drawback, as the Services have become major drivers of the economies of the region and account for over 50 percent of the GDP in most of the countries. The treaty is also silent on liberalisation of investment in the region. The movement of capital can compensate the trade imbalance of Least Developed States and is therefore necessary for stimulating trade.

    There is no doubt that SAFTA is in the interest of the region but the political environment in the region makes any forecast of its outcome extremely hazardous. According to studies, by completely eliminating tariffs on all the products, under the SAFTA, the likely increase in intra-regional trade of SAARC would be substantial. The simulation results show that the complete removal of tariffs would enhance intra-regional trade by 1.6 times or 160 per cent. If the political events do not derail the process and SAFTA comes into force on 01 Jan 2006 it will be a major milestone but there is a lot of ground to be covered before SAFTA comes into force, The actions that need to be taken expeditiously are as follows:-

      Promulgation of sensitive lists.
    1. Finalisation of Revenue Compensation Mechanism, before the implementation of TLP.
    2. Negotiations on Rules of Origin.
    3. Ratification of Agreement by all States before it comes into force.

    The SAFTA agreement however, is only the initial stage and the infrastructure of the region needs to be integrated to facilitate integration of trade. Cooperation in the field of Energy and strengthening of transportation, transit and communication links in the region are essential for fostering meaningful economic cooperation.

    South Asian Association for Regional Cooperation (SAARC), South Asian Free Trade Area (SAFTA) South Asia IDSA COMMENT
    Indo-Pak Peace Process: Keep the Process Afloat Ashok K. Behuria March 10, 2005

    India-Pakistan interaction, in recent days, is fast losing its familiar flavour of distrust and bitterness. This is not to deny, however, that one can still identify the inertial sense of rancour, the propensity to misunderstand and misinterpret each other within the dialogic track that has completed one year.

    India-Pakistan interaction, in recent days, is fast losing its familiar flavour of distrust and bitterness. This is not to deny, however, that one can still identify the inertial sense of rancour, the propensity to misunderstand and misinterpret each other within the dialogic track that has completed one year. But, this time round, there is certainly a precipitate will on both the sides to engage each other, to diversify the nodes of interaction and to treat each track-one interaction as part of a ‘process’ not ‘event’, as the Indian Foreign Minister so aptly put during the course of the dialogue not long ago. Howsoever haltingly the process is hurtling along, the incremental advances are there for all to see, i.e., the willingness to re-open Srinagar-Muzafarabad bus-link after almost 58 years, the decision to revive the Munabao-Khokrapar rail-link and above all, the shedding of Indian inhibition on the gas-pipeline issue.

    The thorns remain however. The spoilers are getting impatient on the margins. The issue of Kashmir everybody knows can turn the applecart. The move to re-start the bus-link between the two parts of Kashmir has divided the public opinion in Pakistan. Excepting Benazir Bhutto’s Peoples’ Party, and of course, the ruling PML(Q), being touted as King’s party, no other political party or group welcomed the step. The Indian decision to climb down on the issue of use of Indian passport by Kashmiris travelling to the other side has been interpreted by them as an adroit move to scuttle the Kashmir issue. The chief commander of the Hizbul Mujahideen and the leader of the United Jehad Council, Syed Salahuddin even said that the Pakistani government was playing with the blood of the mujahideens fighting in Kashmir. The sacrifices of the freedom fighters are being wasted, said the spokesman of the right-wing Jamiat-ul-Ulema-i-Islam (Fazlur). Musharraf and his men have assured the people of Pakistan that the core interests of Pakistan — an allusion to the Kashmir issue and the safety of the strategic assets of Pakistan — shall be protected, even if the gates between the two Kashmirs were to open.

    Meanwhile, the Baglihar issue (the hydro-electric power-plant India is undertaking on river Chenab) has strayed out of the bilateral track. Pakistan has injected a third negotiator into the process by seeking the help of the World Bank to mediate between the two countries as the Bank had initially mediated and was a guarantor to the Indus Water Treaty between the two countries in 1960. India has requested continuation of bilateral negotiations over the issue but has taken no exception to Pakistan’s appeal to the World Bank. Pakistan has also brought in the issue of Kishenganga project on Neelum river in the Gurez valley, where India is seeking to divert the course of the river through a tunnel to the Wullar lake. The discussions on Kishenganga are going on. However, the India-Pakistan differences over Baglihar and Kishenganga have not affected the rhythm of the ongoing talks.

    The trajectory of the process of dialogue seems to be on a positive track even if many analysts, in the US (Stephen Cohen, George Weinbaum, Hussain Haqani, Ashley Tellis etc.) and Pakistan, have come out with their observations, recently in a conference organized by the US Institute of Peace, that there is no future for the India-Pakistan dialogue. The irreconcilable differences over Kashmir and the ideological divergences between the two state-systems will soon upset the process, they have concluded.

    The proliferation of tracks in the ongoing process of dialogue, however, suggest otherwise. The connect between the two Punjabs, the movement of retired soldiers, theatre groups, writers, poets, parliamentarians, students, political personalities, cine-stars and businessmen across the India-Pakistan borders, the effusive bonhomie between the people of India and Pakistan reveal the urge of the two people to come together in spite of their differences. They meet, argue inconclusively over Kashmir, convince each other about their mutually exclusive perceptions and depart with tears in their eyes, hoping against hope that such opportunities for fights would be there for all time to come.

    Is it because they feel that years of separation have failed to wipe out the bonds that unite them? Is it because they want to take maximum advantage of the thaw that has set in between India and Pakistan? Is this because there is a mutual realization of the human costs of protracted sense of bitterness? The leaders of the two countries will have to register this surge of goodwill between the two people, the spontaneous flow of empathy for one another across the borders. It is easier to provoke hatred than to inspire love. The negativity in India-Pakistan relationship, the inertia of the politics of partition, is mostly an elite construct. The elite has managed to sell this idea of hatred to the people in Pakistan quite successfully. As some Pakistani observers (Adeel Khan, Khaled Ahmed) have concluded, the people of Pakistan are more united in their hatred against India than their love for themselves. The official histories of both the states have sought to villainise each other. One is reminded of the observations of Vajpayee during his trip to Pakistan as foreign minister in 1978 that the leaders of India and Pakistan have to shape political opinion rather than fall victims to it. The constituency of hatred has to be quarantined and its impact on statecraft has to be identified and evaluated.

    At the same time, the leaders of the two countries will have to take their best step forward in each of the bilateral meets and shun the temptation to withdraw and reap political capital at the domestic level out of an exclusivist-moralist position. As the process shows signs of progress now, it is necessary to take the following points into account, to keep it afloat.

    • Peace between India and Pakistan is an achievable end and supremely beneficial for the two peoples even if it may not serve short term political interests of the leadership within the two countries.
    • Open the doors, inter-lock the ties, emphasise on common advantages and make the process irreversible.
    • Do not let the process be straitjacketed around a label or a bumper sticker, i.e., ‘composite dialogue’, ‘core-issue-centred’.
    • Factor in the political costs at respective internal levels while talking about ‘flexibility’.
    • Avoid points of saturation and allow proliferation of tracks of engagement. It will take lot of time and patience to balance the trust-deficit. The only way it can happen is through continued engagement. No magician’s wand will dispel the thick layer of distrust built up over the years.
    • Try to reconcile exclusivist historiographies in both the countries.
    • Do not seek to adopt or replicate any other models (ref. the Sino-Indian model). Every relationship has its own dynamic, its own socio-cultural history and political reflexes. India-Pakistan relations emit strong emotive signals.
    • Recognise the failures and fallacies in policies and approaches uninhibitedly, i.e., use of terrorism as an instrument of foreign policy or HR violations in Jammu and Kashmir.
    • Demonstrate maturity in fulfilling nuclear responsibilities.
    • Resist the temptation of issuing public statements either to pressurize the other or to guard or expand constituency at home and build upon the available level of mutual trust, howsoever meagre it may be.

    The onset of the present peace process is likely to pay huge economic dividends and ensure stability in both the countries. Peace is the crying need of the hour. The leaders will have to realise that they hold the keys to peace and they owe it to their people.

    India-Pakistan Relations South Asia IDSA COMMENT
    Till the Dragon spits fire Alok Rashmi Mukhopadhyay March 10, 2005

    Putting an end to all speculations, protests from the media and other quarters and hectic Chinese diplomatic parleys in Brussels before the EU-China Summit in December 2004, the EU finally declared (December 8) that the arms embargo on China would not be lifted for the time being. The embargo, which was sanctioned against China in the aftermath of Tiananmen Square tragedy in 1989, remained one of the most debatable issues before the summit. The EU however informed that there was a willingness within the Union to work towards the lifting of the ban.

    Putting an end to all speculations, protests from the media and other quarters and hectic Chinese diplomatic parleys in Brussels before the EU-China Summit in December 2004, the EU finally declared (December 8) that the arms embargo on China would not be lifted for the time being. The embargo, which was sanctioned against China in the aftermath of Tiananmen Square tragedy in 1989, remained one of the most debatable issues before the summit. The EU however informed that there was a willingness within the Union to work towards the lifting of the ban. In fact, the Chinese Premier Wen Jiabao attached great importance to the existing embargo. On the eve of the summit, Jiabao, who led the Chinese delegation to Brussels, was categorical while commenting on the EU decision. He informed that the Chinese demand for lifting of embargo does not mean that China would like to purchase advanced weapons from Europe. However, he demanded that the lifting of the sanctions, ‘a legacy of the Cold War’ would put an end to the political discrimination against China.

    Chinese diplomats in Brussels had worked hard to get a decisive outcome on this issue from the summit. Wang Shaoxin, spokesperson at the Chinese Mission in Brussels, also reportedly told the EU officials that continuing the arms embargo would not be beneficial for future Sino-European cooperation. Similarly, on December 3, 2004, a Chinese Foreign Ministry press briefing underscored that although the lifting of the arms embargo would not be linked with any other issue, it would be impossible that bilateral relations would not be affected by maintaining such embargo. Chinese officials were seen to be pursuing this issue with the important European national governments with great care. Finally, a compromise was worked out in the shape of the joint statement at the end of the summit. The Chinese side welcomed it as a positive sign, as the EU confirmed in the joint statement its political will to continue to work towards lifting of the embargo. In return, China also expressed its commitment to ratify the International Covenant on Civil and Political Rights (ICCPR) as soon as possible.

    The interest of the European Union in general and some specific nations in particular, in lifting the arms embargo on China, is quite comprehensible. Official statistics speak for themselves. In 2003, the EU sanctioned arms sales to China was worth €416 million, which was almost double of the approved sales in 2002 (€210 million). France, like in 2002 (€105 million), remained at the top of the list with the sanctioned amount of €171 million. While the debate of lifting the arms embargo on China is getting a transatlantic dimension, figures published in the EU Official Journal is certainly not comfortable for the EU. The record of the major EU nations in supplying arms to China, in reality has reduced the embargo to a misnomer. In addition, observers are of the opinion that the EU arms export policy lacks coherence and does not address the issue of transferring dual-use technology to China. The symbolic arms embargo, therefore, strengthens the Chinese and partially European argument that it is a legacy of Cold War and it unnecessarily brackets China with regimes in Zimbabwe and North Korea. One may also raise some pertinent facts that China is an important partner in EU Galileo project and as per latest figures, Sino-European trade has reached €122 billion till November 2004, why then the sanctions are still in place?

    The issue appears to have been well discussed at the European Union level and a EU agreement on lifting the arms embargo on China is already on the cards, notwithstanding the American displeasure. This was clearly visible in the announcement made by the European Commission President, José Manuel Barroso, during the visit of Condoleezza Rice in Europe. But there was yet a dilemma on the EU side under whose presidency the decision would be ultimately taken? Those who are studying the issue minutely may recall that Jean Peter Balkenende, the Prime Minister of the Netherlands, who held the EU presidency in the second half of 2004, did not specify after the EU-China Summit whether his successor from the smaller Benelux neighbour, Luxembourg, may lift the arms embargo in the first half of 2005. It could be argued that irrespective of the size and population of a member country holding the EU presidency, decisions at EU level are taken unanimously. But it should also be mentioned that every member country also aspires to take some path-breaking decisions during its presidency, which could also be projected later as its major achievements.

    However, given the gravity and political ramifications of the decision to end the arms embargo, it was interesting to observe that Britain, who will hold the next presidency from July 2005, put the responsibility of this unpleasant decision to one of the smallest European nations, Luxembourg. The statement of Jack Straw prior to his visit to Beijing in January 2005, that he believed that the embargo could be lifted during Luxembourg's current tenure, made the diplomatic calculations clearer. Britain would not like to be connected with such a controversial decision to end the fifteen-year old arms embargo, sanctioned on the ground of one of the most historic cases of human rights violations in present times. It is true that European Union collectively and its member nations individually have invested considerably in efforts aimed at improving human rights situation in China. At another level, the EU cannot also deceive itself by endorsing the Chinese argument that the human rights situation has improved remarkably since Tiananmen. The human rights record of China has been rather poor and violations are more discreet then ever before. The effect of sanctions has been negligible. It makes good sense at this juncture to engage China and persuade her to take democratic reforms in a graduated manner.

    But by progressively arming China, the EU may be losing its power to push China towards democracy. Acquiring more military-technological muscle may also contribute to the sense of insecurity in its neighbourhood. In fact, experts opine that there is lack of transatlantic understanding about the region. The EU must consider the ramifications of a further increased military cooperation with China in the Chinese neighbourhood. The questions remain: Will the cooperation augur well for the region and world at large or the European arms merchants may have to wait for the answer, till perhaps the Dragon spits fire?

    EU-China Summit Nuclear and Arms Control IDSA COMMENT
    Defence outlay-modest increase but shades of gray C Uday Bhaskar March 01, 2005

    The defence expenditure (DE) announced today is Rs. 83,000 crores and this is a modest increase of Rs 6,000 crores or 7.7% over last year’s budgeted estimate (BE).

    The defence expenditure (DE) announced today is Rs. 83,000 crores and this is a modest increase of Rs 6,000 crores or 7.7% over last year’s budgeted estimate (BE).

    As a thumb-rule, this percentage is less than the amount required to stand still when general national inflation and the military deflator are taken into account. In the Indian context, a figure of about 10 to 12 percent would have ensured the same level of budget support for defence as the previous year at constant prices.

    However, this year’s figures reveal a very encouraging sign in that the revised estimate (RE) of the DE is the same as the BE, meaning thereby that the amount allocated at the beginning of the financial year has been actually spent or disbursed and not returned as unspent to the national exchequer.

    This reverses a trend that had set in during the NDA government years when large sums of money were returned--in one year (2002-03) to the tune of Rs 9,000 crores.

    Consequently there has been a backlog of inventory obsolescence in the three armed forces across the board for the last decade---a reality that was driven home in an undesirable manner during the Kargil War of 1999.

    It is noteworthy that in the financial year (FY) 2004-05 whereas Rs 77,000 was allocated at the BE stage, the RE as indicated today is the same, and all the money allocated has been spent.

    This would indicate that the defence modernization and acquisition plan is moving as per the budgetary schedule and, given the many constraints in the systemic procedures that characterize the Indian experience, this must be seen as a positive indicator. But the real challenge is to ensure that this trend is sustained, and this is where some shades of gray are discernible from the Chidambaram budget.

    From the preliminary figures currently available, it appears that the capital outlay of the DE which caters to the modernization and acquisition has reduced marginally though there is an apparent increase in the total outlay.

    There is an interesting pattern embedded in these statistics. The capital outlay of the DE ranged from Rs 16,207 to Rs 14,953 to Rs 16,863 crores in the last three years of the NDA regime and many major acquisition programs were kept on hold.

    It was only in the last year that pending deals were finalized such as for the Sukhoi and AJT (advanced jet trainer) and the aircraft carrier Gorshkov, among other military inventory items.

    Hence the capital outlay of the DE in FY 2004-05 jumped by almost 100 % from Rs 16,863 crores to Rs 33,483 crores.

    However this year (2005-06), while the capital outlay has increased marginally by 2.66 % from Rs 33,483 crores to Rs 34,375 crores, but, more significantly, the share of the three services---the army, navy and the air force---as a whole has shrunk by about Rs 500 crores from Rs 31,490 crore in the last fiscal to Rs 31,001 crore this year. The inference that follows is that some of the big ticket items that have been mooted such as a new generation of combat aircraft, for instance, would not receive adequate budgetary support this year.

    The larger challenge for the Indian DE is the inability to reduce numbers and stabilize the total revenue component of the budget, which is traditionally between 55 and 65 percent of the total DE.

    The revenue component caters to the standing costs of the overall military edifice and with a one million plus army, which over the years has been drawn into low intensity conflict (LIC) and internal security (IS) duties, it is evident that the army which is the lead-service cannot reduce numbers dramatically.

    Hence the army is unable to arrive at the right balance between its standing costs and the need to have a steady technological up-grade, that is be able to absorb the Revolution in Military Affairs---the RMA.

    Currently there is also need to find resources to cater for the Assured Career Progression (ACP) scheme, which in itself is very commendable as a long-delayed human resource measure to redress promotion imbalances.

    When this scheme is implemented in total, the impact on the recurring revenue budget will need to be added, which in turn will add to the existing imbalance between capital and revenue for the army.

    The overall preliminary analysis of the defence outlay at this stage is that it is just about satisfactory at the tactical level, that is on an annual basis. But there is a need to carry out a more holistic strategic review of the country’s military and defence profile and ensure that the status quo that has accreted over the years is redressed in a manner that is deemed appropriate wherein the technological edge of the military machine is retained and jointness advanced, even while ensuring that the ‘izzat’ of the man behind the machine is respected in the long run.

    Squaring this circle is the perennial challenge for liberal democracies and it remains to be seen how the UPA government will innovate over the next four years.

    Defence Budget Defence Economics & Industry IDSA COMMENT

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