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The copter
that strayed Unrealistic
advisories |
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India decimate England Youngsters made the key difference India’s home One-day International series against England has come to an end and barring the lone T20 left to play at Eden Gardens, the entire tour has been sorted out, with the hosts displaying complete dominance in all fields – batting, bowling and fielding – not to mention team tactics and captaincy. The 5-0 margin doesn’t have any hidden stories, no deceiving fights to the finish. It was indeed complete annihilation.
Geopolitics
of Durand Line
People
of cheer
Bankers
to blame for European crisis Summary
of statement
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Unrealistic advisories
The
advisories issued by the US, the UK, Australia, Canada and New Zealand for travel to India between October 2011 and January 2012 present a picture which has little to do with the ground reality. Contrary to the impression sought to be created, there is no apparent threat to security even in Jammu and Kashmir and the Northeast owing to adequate measures taken to frustrate the designs of terrorists and insurgents. As Tourism Minister Subodh Kant Sahay has pointed out, Jammu and Kashmir has been able to attract the highest number of tourists this summer. But this is the peak season for the tourism industry, which may get seriously hit by the “scare-mongering” indulged in by these countries. They must be told to immediately withdraw their unrealistic guidelines for their citizens intending to visit India. As Foreign Secretary Ranjan Mathai has stated, India has lodged its protest to the US and will do so with the other countries too. New Delhi has described these security alerts as being “disproportionate” to the prevailing situation. These advisories give the impression that India is not a safe place to travel to, which is contrary to the situation at the ground level. The wordings of the travel alerts should have been entirely different. It is not fair on the part of these countries to create a strong feeling of insecurity among its citizens vis-à-vis India. New Delhi should tell these countries that if they do not withdraw their unrealistic advisories immediately, India too will issue such a security alert about the five nations concerned. Saying that what they have done is a “routine” security exercise, Australian Foreign Minister Kevin Rudd told Indian External Affairs Minister S.M. Krishna in Perth that “we do not have any information of any specific threat to share with India”. Then why should Australia use the objectionable language it has done in its security alert? Where was the need to mention now what happened on 26/11 in 2008? Terrorism is a global problem and poses a threat to security all over the world. What these countries have done by singling out India is a serious matter. New Delhi cannot afford to take it lying down.
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India decimate England
India’s home One-day International series against England has come to an end and barring the lone T20 left to play at Eden Gardens, the entire tour has been sorted out, with the hosts displaying complete dominance in all fields – batting, bowling and fielding – not to mention team tactics and captaincy. The 5-0 margin doesn’t have any hidden stories, no deceiving fights to the finish. It was indeed complete annihilation. What is mystifying, however, is how dominant India can be at home and how complete an antithesis it is when they are on an overseas tour. It was practically the same England team (barring two vital bowling cogs) that the Indians met there not so long ago, and the story was completely different. They went down 0-3 in the Test series and were blanked out in the ODI matches too with rain thankfully ending their misery at least once. It seems to be a question of mental attitude more than anything else. Also, there is another distinction which the Indian team and the BCCI will need to address urgently. The core team that has carried India on its shoulders so long is looking worn out. Sachin Tendulkar, Zaheer Khan, Virender Sehwag, Yuvraj Singh and Harbhajan Singh are showing signs of fatigue and extended injury runs, which won’t get better, simply as there is no recovery time, nor are they getting any younger. Also, once the side went down in two Test matches, they were mentally extremely defensive and that reflected on their performance thereafter. And as was seen with England skipper Alastair Cook here, Mahendra Singh Dhoni’s captaincy also showed cracks. Additionally, the younger players who have now taken the places of the seniors in the home series are fitter and evidently keener to make a name for themselves and cement a place in the side. So their performance was naturally that much more intense and competitive. As for the England team, it was not only a little light on the bowling front but it also capitulated in batting. Yet, all this still needs to be carried on since the litmus test will be the Australia away series beginning in December.
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Difficulties are meant to rouse, not discourage. The human spirit is to grow strong by conflict. — William Ellery Channing
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Geopolitics of Durand Line As
the “end game” of American withdrawal from combat operations in Afghanistan begins, there is increasing resort to bluff, bravado and bluster challenging American power and influence, in Pakistani pronouncements. The Pakistan Army’s grandiose schemes for “strategic depth” in Afghanistan have been premised on ensuring that Afghanistan is ruled by an internationally isolated Pariah regime, which would result in it becoming a de facto client state of Pakistan. Given its pretensions to power and influence in Afghanistan, the brief period of Taliban rule was regarded by the Pakistan military as its golden age. But behind this bluster and bravado lies a key strategic calculation. A Pariah regime in Kabul would have neither the influence nor power to aggressively assert Afghanistan’s historical claims to territories seized from defeated Afghan rulers by Imperial British power. No Afghan Pashtun ruler has ever accepted the Durand Line, which divided and separated Pashtuns between Afghanistan and British India, as its international border with Pakistan. The Prime Minister’s Special envoy to Af-Pak, Mr Satinder Lambah, has recently published a study of the Imperial machinations that led to the Durand Line being imposed as the “frontier line” between British India and Afghanistan in 1893 following negotiations between Afghanistan’s then Amir, Abdur Rahman Khan, and Sir Mortimer Durand, the then Foreign Secretary of British India. With Tsarist Russia extending its empire across Central Asia and into Persia, the 1893 agreement also set the limits of British territorial ambitions in the “Great Game,” after Imperial Britain and Tsarist Russia had agreed on the limits of Russia’s sphere of influence in 1873. Sandwiched between an expansionist Russia and Imperial British power, the hapless Afghans had no choice but to accept the inevitable. The British sought to widen the terms of their rule over what later became parts of the Northwest Frontier and Baluchistan provinces of Pakistan. The “frontier line”’ became the “frontier” after the then Amir, Amanullah Khan, was compelled to accept a peace treaty with the British in 1919. But the flames of Pashtun nationalism could not be extinguished. No Afghan ruler ever accepted the legitimacy of the division of historical and traditional Pashtun homelands. The first time that the Durand Line was referred to as an “international boundary” was in a statement by Pakistan in 1947. The British Government, thereafter, referred to the Durand Line as the “International Frontier” between Pakistan and Afghanistan in 1950. This was not surprising. Egged on by its erstwhile Governor of the Northwest Frontier Province, Sir Olaf Caroe, the British, who had developed a distinct distaste for Prime Minister Nehru’s left-oriented nonalignment, decided to adopt a pro-Pakistani tilt. Caroe, who was an ardent admirer of Jinnah, persuaded American Secretary of State John Foster Dulles that it was essential for the Western allies to support Pakistan as a Muslim state which was to be designated to safeguard Western access to the “wells of power” — the oilfields of the Persian Gulf. The Afghans held that the disputed Pashtun region should not only have been given the option of joining either India or Pakistan, but also the additional option of becoming an independent state joining Afghanistan through a referendum. The Afghan position remains that the areas that historically and legally formed a part of Afghanistan were forcibly taken away between 1879 and 1921 and subsequently made a part of Pakistan. Afghanistan’s claim that territories extending till the River Indus constituted its frontier, together with its demand for the inclusion of the port of Karachi in Afghanistan, was voiced in secret negotiations with Nazi Germany. Thereafter, in November 1944, the Afghans urged the British that Pashtun tribal areas under British rule should be given the choice of independence or reuniting with their “motherland”. They also urged the British that Afghanistan should be given a “corridor” to the sea through Baluchistan. The Afghan National Assembly passed a resolution in July 1949, rejecting all “unequal” treaties signed with the British and denouncing the description of the Durand Line as the international frontier with Pakistan. The Afghan government also staunchly opposed the grant of UN membership to Pakistan. Under pressure from Afghanistan over the Durand Line, Zulfiqar Ali Bhutto retaliated by inviting the fundamentalist Gulbuddin Hekmatyar to organise cross-border insurgency to destabilise the Daoud regime in Afghanistan. Gen Zia-ul-Haq thereafter used the opportunity of the ill-advised Soviet invasion of Afghanistan to put together an alliance of Wahabi-oriented parties, to wage an armed struggle against the Soviets and, with Western backing, to seize power in Afghanistan. According to a German journalist who interviewed him the day before he died, Zia was beset with delusions of grandeur and spoke of Pakistani influence extending from the ramparts of Delhi’s Red Fort, across Afghanistan, to Central Asia. Pakistani author Ahmed Rashid asserts: “Zia’s vision of a Pakistani influenced region extending into Central Asia depended on an undefined border with Afghanistan, so that the army could justify interference in that country and beyond, as a defined frontier would have entailed recognising international law and the sovereignty of Afghanistan.” Pakistan thereafter entered into a dangerous game of imperial overreach into Afghanistan and Central Asia, by challenging the international community, through support for what Ahmed Rashid describes as “surrogate regimes such as the Taliban”. It has left virtually no space for backing off on this score. While the Punjabi-dominated Pakistani military may have brutalised lightly armed Baluchis and Bangladeshis, it fears the Pashtuns. General Kayani thus has a difficult choice. If he chooses to try and fulfil Zia’s ambitions, he will have to confront American and Western wrath amidst concern in Iran, Central Asia and Russia. Even if the Taliban succeed in capturing substantial parts of the Pashtun areas in Southern Afghanistan, they will find that unlike in the past they will be faced with determined resistance from the non-Pashtuns in the country, backed by Western powers, Russia, Iran and the neighbouring Central Asian states. In the ensuing turmoil, the already dwindling writ of the Pakistani state in its Pakhtunkhwa Province and tribal areas will be further eroded. We will then have a de facto Talibanised “Pakhtunistan” on both sides of the Durand Line. Have General Kayani and his Corps Commanders seriously thought through what would happen as a consequence of their ill-advised swagger, bluff and bluster? I think not. Historically, apart from the foray of Maharaja Ranjit Singh’s brilliant Sikh General Hari Singh Nalwa, Punjab’s rulers have never prevailed over the Pashtuns. General Kayani would be well advised to remember
this.
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People of cheer There
are some human beings who never fail to uplift the mood. Others never fail to dampen it. People of cheer are rare commodities, but they light up the lives of hundreds around them. In a world that is increasingly tense and stressed, a person of cheer is like manna from heaven. He stands out in a crowd. His smile enlivens proceedings, warms the heart and soothes frayed nerves. He’s the one who lends a helping hand to an old lady; and he’s the one who smiles at the shop attendant (even if the latter is not a pretty girl, but a grumpy old man!) When a scenario is grim and hopeless, such gems are even more invaluable. On the battlefront, for instance, in the face of adversity unparalleled, he who can generate a few chuckles with his banter is akin to a breath of fresh air. Some bring cheer by dint of being inherently funny; others by way of effort. Whether in films or in real life, the ability to actually plant the seeds of mirth in the hearts of others is no mean feat. Rajesh Khanna’s character in the timeless classic, Anand, was a memorable harbinger of happiness. He would never sit still and he would never stop his chatter, even while knowing that his days were numbered. He brought many a smile to our lips as we watched him in action and many a tear to our eyes when it was time for him to go. Thus the need for us earthlings to recognise and even fete those who cheer us up! Not only those who professionally bring out the laughter instinct in us, but also those who do it intuitively and without practice. These people have extra happy genes inside them for sure. They need to be analysed, dissected and discussed in order to discern the qualities that they possess deep within. At a recent meeting of a discussion circle, one lady complained that she hadn’t found the time to laugh in the last 10 days. Thankfully, the fact that the session was on ‘humour in real life’ enabled her to laugh enough to last her the rest of the year! There are of course those who try to be very serious but still happen to be the cause of amusements. Some teachers are among them. The more they frown in anger at their class, the more they succeed in generating sniggers and even guffaws. One look at the prophets of doom who abound in society these days, and we can be sure that had it not been for the champions of cheer, the world would have collapsed long ago. When the day of reckoning comes, and when it is really time to be counted, these ‘cheer-leaders’ will surely lead humanity towards eternal joy. The rest of us will merely applaud them, smile broadly and follow
on.
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Bankers to blame for European crisis
Two
entities are more powerful than any individual government in the West. They are the financial markets and the media. We could argue about the latter, but surely nobody would deny the supreme and often malevolent power of the former. Yesterday in Brussels a room full of 27 European presidents, chancellors and prime ministers was intent on a single task, trying to do what financial power demands. We are really talking about the banks. We mean groups such as Barclays Bank, which received 250,000 complaints from its British customers in the first six months of the year. We mean HSBC, which threatened to move its domicile out of London if it didn’t get its way over bank regulation. Or Goldman Sachs, the American firm that tried to bully HM Revenue & Customs out of collecting tax that was correctly levied. How did some banks become “too big to fail”? Why did their reckless behaviour go unchecked for so long and is it restrained even now? How can their directors afford to pay themselves as much as 500 times the average annual salary of those whom they employ? What explains their arrogance? Why don’t they get it? Andrew Haldane, executive director of the Bank of England in charge of “financial stability”, in a speech this week reviewing the development of banking over the past 150 years, which is an illuminating exercise if one is to understand today’s circumstances, remarked flatly: “For a century, both risks and returns have been high. But while the risks have typically been borne by wider society, the returns have been harvested by bank shareholders and managers.” That, actually, is the whole story in two sentences. It is worth going back to the first half of the 19th century to see banking in its primitive form. Remember its essence is the dangerous task of transforming the short-term deposits you accept, which you must pay back on their due date, into the long-term loans you make, which will sometimes prove irrecoverable. As a result, in those faraway days, the owners of banks often matched the value of their deposits with their own capital on a 50/50 basis to provide a big safety cushion. Nowadays this equity buffer is down to almost nothing. There was no such thing as limited liability. Bank owners were responsible for paying off every penny of their business’s debts. That made them cautious lenders. Of course this system couldn’t survive through an industrial revolution with its enormous demands for credit. Banks became limited liability companies in the second half of the nineteenth century. While in retrospect that seems right, it was, nonetheless, a first step in the progressive throwing off of all restraints that has gone on ever since. Recall Northern Rock and its “shadow banking” that eventually drove it into bankruptcy three years ago. That was also throwing off restraint. Then a century ago, there was a wave of consolidation. This was the time when the chairman of Midland Bank (now part of HSBC) went round England in a taxi buying up smaller banks. We were on our way to the too-big-to-fail syndrome. By the 1930s, as Mr Haldane sums up the situation, “ownership and control were amicably divorced. Ownership was vested in a widely dispersed set of shareholders, unvetted and anonymous. Their upside payoffs remained unlimited, but their downside risks were now capped by limited liability”. From now onwards, the banks were to assume greater and greater risk. At the same time, the banks decided they would take on more debt to boost their returns, thus simultaneously increasing risk and reward. This reached its high water mark in 2007. Now consider an aspect of modern capitalism that we take for granted: that companies can deduct their interest payments from their tax liabilities. The banks were the first to persuade the tax authorities and non-financial firms followed. But looked at in the cold light of day, this is in effect a subsidy for financial risk-taking. But we are rushing ahead too fast here. The presence of debt amongst a bank’s resources ought to have been a restraint, for bondholders generally discriminate between good and bad risks. But by the period between 2002 and 2007, when risk in the system was building strongly, the banks could raise as much new debt finance as they wanted and they all paid much the same for it, good banks and bad banks alike. Why was this? Because the assumption that governments would always bail out the banks had entered into bond investors’ calculations. So lend away. Then, finally, came the crowning folly. Since the late 1990s, banks have set “return on equity” as their target — that is on the highly geared narrow sliver that accounts for only 5 per cent of their resources. They have tied the remuneration arrangements of their directors and senior executives to upward movements in this figure. The result has been to give a mighty boost to risk-taking. In the US, for instance, the typical chief executive of a bank could pocket over $1 million for every 1 per cent increase in the value of his firm. What’s not to like? Well, there is plenty not to like from the point of view of ordinary people. Which means the banks must be ruthlessly reformed. Sir John Vickers’s Independent Commission on Banking has proposed that UK banks should have more equity capital and loss-absorbing debt (tick); that their retail banking activities should be structurally separated, by a ring-fence, from their other activities (tick as this would get rid of the too-big-to-fail problem); that banks should have more equity capital (tick) and that a new “strong challenger bank” should be carved out of Lloyds TSB Bank (tick). Tax deductibility for debt should also be removed, as far as banks are concerned, voting rights should be extended to suppliers of debt finance and the return on equity target for executive remuneration should be replaced by return on all capital. The Government should get on with a programme along these lines and waste no time discussing it with the banks. They are no more likely to agree than the Mafia would be to restrain their activities. Just do it. As the Prime Minister should have said: “we can’t go on like
this”. — The Independent
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Summary of statement
Euro
zone leaders struck a deal with private banks and insurers on Thursday for them to accept a 50 percent loss on holdings of Greek government bonds as part of a plan to lower Greece’s debt burden and try to contain the two-year-old euro zone crisis. The following is the EU text summarising the results of the summit: The euro is at the core of our European project of peace, stability and prosperity. We agreed today on a comprehensive set of measures to restore confidence and address the current tensions in financial markets. These measures reflect our unwavering determination to overcome together the current difficulties and to take all the necessary steps towards a deeper economic union commensurate with our monetary union. Today we agreed on the following:
n An agreement that should secure the decline of the Greek debt to GDP ratio with an objective of reaching 120 per cent by 2020. Euro area Member States will contribute to the PSI package up to 30 bn euro. The nominal discount will be 50 per cent on notional Greek debt held by private investors. A new EU-IMF multiannual programme financing up to 100 bn euro will be put in place by the end of the year. It will be accompanied by a strengthening of the mechanisms for the monitoring of implementation of the reforms. n
The significant optimisation of the resources of the EFSF, without extending the guarantees underpinning the facility. The options agreed will allow the EFSF resources to be leveraged. The leverage effect of both options will vary, depending on their specific features and market conditions, but could be up to 4 or 5, which is expected to yield around 1 trillion euro (around 1.4 trillion dollars). We call on the Eurogroup to finalise the terms and conditions for the implementation of these modalities in November. In addition, further cooperation with the IMF will be sought to further enhance the EFSF resources. n
A comprehensive set of measures to raise confidence in the banking sector by (i) facilitating access to term-funding through a coordinated approach at EU level and (ii) the increase in the capital position of banks to 9 per cent of Core Tier 1 by the end of June 2012. National supervisors must ensure that banks’ recapitalisation plans do not lead to excess deleveraging. n
An unequivocal commitment to ensure fiscal discipline and accelerate structural reforms for growth and employment. Particular efforts are being deployed by Spain. New strong commitments on structural reforms have been made by Italy. Portugal and Ireland will continue their reform programmes with the support of our crisis mechanisms. n
A significant strengthening of economic and fiscal coordination and surveillance. A set of very specific measures, going beyond and above the recently adopted package on economic governance, will be put in place. n
Ten measures to improve the governance of the Euro area. n
A mandate to the President of the European Council, in close collaboration with the President of the Commission and the President of the Eurogroup, to identify possible steps to strengthen the economic union, including exploring the possibility of limited Treaty changes. An interim report will be presented in December 2011. A report on how to implement the agreed measures will be finalised by March 2012.
— Reuters
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