The Tribune, Chandigarh, India

Buccaneers on seas
A global effort is needed to deter them

While the Gulf of Aden is fast becoming the world’s most unsafe sea lane, the only country which has so far been successful against the Somali pirates is India. After two successful operations against the pirates who attacked two merchant vessels last week, the Indian Navy stealth frigate INS Tabar repulsed an attack by the pirates off the Somali coast on Tuesday and sunk their ship. The way the pirates’ ship - which had several speedboats accompanying it - fired at INS Tabar and even tried to ram it shows that they are becoming more and more audacious. They have reasons to be. After all, they have been successful in hijacking nearly 100 ships during the past one year, of which they are still holding about a dozen. Among them is the biggest ship ever seized, Saudi supertanker Sirius Star, which is carrying $100 million oil cargo. Since they could grab it despite the presence of naval ships of several countries, and that too far beyond the coastal waters of Somalia and even the Gulf of Aden, the seaborne terrorists are getting bolder and bolder. Some $30 million is reported to have been paid to them as ransom this year alone. They grabbed another Greek vessel in the Gulf of Aden on Tuesday.

The US-led NATO mission has not been successful in stopping the scourge. It is time the whole world joins the European-led initiative to step up security in the affected shipping lanes. It is true that the “transitional government” in Somalia is in no position to rein in the marauding gangs operating from its territory. But the world should not become helpless jelly before by a handful of the marauders on the seas. If need be, it should even think of blockading the Somalian coast and possibly use the right to pursue.

India must be playing a leading role in this effort. More than 90 per cent of its trade totalling $400 billion is transported by sea. While about 20 per cent of this is through Indian ships, the rest is carried through merchant vessels flying foreign flags. So, India should be proactive in protecting its maritime interests. That goal would be better achieved if the international community closes ranks to fight the buccaneers.

Sweatshops
Provide amenable working conditions

Sixty-one years after Independence, India is sadly home to the world’s second largest population and resurgent economy where millions continue to work in miserable conditions. While in “Shining India” salaries define opulent lifestyles, in the dark alleys workers, especially women and children, are subjected to subhuman existence in many parts of the country. A study by the Voluntary Health Association of India exposes the deplorable plight of bidi workers in Murshidabad and Anand. The report points out that 75 per cent of the bidi workers suffer from multiple diseases due to tobacco hazards. The bidi industry is not the only one where workers, women and children in particular face such appalling conditions. Serious health hazards exist in many sweatshops.

In the infamous Sivakasi fireworks industry, fatal accidents involving children occur frequently. Children are forced to inhale wool fluff and toxic fumes in the carpet and match industry in eastern UP. In the bangles and glass industries of Ferozabad, workers are affected by silica dust, which causes silicosis, wrecking their lungs. To cap it all, the child workers are forced to work long hours -- often 20 hours a day-- amidst unhygienic, suffocating conditions and are paid lower wages. In the apprenticeship period in the gem industry, they are asked to work for a pittance. For the families of workers, the option is between starvation and disease. The employers have vested interests in employing women and children as they provide cheap labour, are vulnerable and least likely to form unions and offer resistance to injustice.

Many laws are on the statue book meant for congenial conditions in factories. Strict regulations prescribing health and safety standards have also been specified. Clear guidelines about cleanliness in places of work, disposal of wastes and effluents, ventilation, toilets and drinking water have been laid down. The law also makes provisions for ensuring that children are not employed in hazardous activities. But the law enforcement machinery has often woefully failed in the implementation of the law. NGOs like SEWA (the Self-Employed Women’s Association) in Gujarat have been able to generate awareness and action, especially in organising bidi workers. Still, the gap between the law and the working reality is glaring. Health Minister Anbumani Ramadoss has shown excessive zeal in banning smoking, undoubtedly an unhealthy practice, in public places. But will he pay heed to the shocking health conditions of millions of workers?

Thought for the Day

That’s one small step for man, one giant leap for mankind. — Neil Armstrong

ARTICLE

Interests of the unemployed
A radical agenda for Obama
by Arun Kumar

Against all odds, Mr Barack Obama has won the Presidency of the US only to be confronted with extraordinary odds — incomparably greater than those faced by any recently elected US President. Economically, socially and politically, the country and the world are in a state of deep crisis. The US as the leader of the world is both a cause of the problems and a possible source of solutions. Without the US being a part of any solution, it is unlikely that the world, as it is, will be able to resolve its problems. In this sense, it is said the whole world should have a vote in the US presidential elections.

The G-20 heads met under the leadership of a lame-duck US President, Mr Bush, in a largely futile talking exercise. Our own Prime Minister made noises about how he saw the crisis coming while till the other day he was saying that there is no crisis; does credibility matter. Mr Obama did not participate, perhaps due to his irreconcilable differences with Mr Bush who only talked of the free markets. Mr Obama’s presence may have given the wrong signals and made his own task more difficult when he takes over in two months. However, this delay could be very expensive.

Not only is the economic weight of the US so large that it determines world economic events but its financial and political clout sways other countries politically and socially as well. It draws the best in the world to its universities and think tanks and leads all others in research in almost all fields. Thus, it is able to set the agenda for the entire world in intellectual terms and also because it has lobbies pushing for its interest in almost all parts of the world. It dominates the multilateral agencies and that is another important source of its influence. From issues of poverty removal, research in health, agenda for the environment, nature of the financial architecture, fight against terrorism and money laundering, etc, the US moulds world events.

To be able to lead in such an extraordinarily complex world on such a broad front requires statespersonship of a high order among the leaders. This has been missing for decades. The US and, following its lead, most other governments in the world have been governed by narrowly defined short-term self-interest. One may say, what is new? But in a far more complex world, old ways will not do. Narrowness of approach is a recipe for disaster and pay-back time has now come. The world as we have known it can hardly survive.

All the above listed problems have a common source, a belief in a narrowly defined national and individual interest, based on greed and unlimited exploitation. Thus, respect for nature and other people has been at a discount. While this was tolerated earlier, today this has serious implications, especially at the economic plane and now we are confronted with a collapse for which no one has an answer.

The governments all over the world are scrambling with packages to salvage their financial institutions and their economies. Huge sums of money are on offer (capital injection, loans, etc.) — amounting to about $5 trillion. The financial bubble, which is in the process of collapse and is dragging down the real economy, was a result of deregulation of the financial markets and an undiluted pursuit of lucre and the resulting massive disparities in society.

The financial assets created (in hundreds of trillions of dollars) were a multiple of the size of the real world economy (around 60 trillion dollars) so that the latter does not have the resources to resolve the problems created by the former. Governments can neither replicate the markets nor their intervention is adequate to stop the financial bubble from collapsing.

The financial bubble consists of borrowings and lending by various economic entities. As the bubble deflates, while asset values decline, the liabilities remain. Hence institutions develop huge holes in their balance sheets. Since the various financial entities are interlinked through borrowing and lending, as one institution collapses and is unable to pay its lenders, the latter runs into problems and this ricochets to yet others leading to further collapse. A vicious cycle sets in and institutions lose trust in each other and stop lending to others and instead try to accumulate capital to cover their own declining asset base. The money given by the government goes to support their own asset base with little lent to anyone else.

While the build-up of the financial bubble is gradual and systematic, its collapse is sudden and chaotic and that is why it is beyond anyone’s control. Release of liquidity and cuts in interest rates do not spur investments and the economy enters a “liquidity trap”. In this scenario, it appears inevitable that the financial markets would collapse and nothing in the short run can save them.

Unfortunately, businesses are inter-linked, a large number of the firms dealing in real products and services also were involved in the financial markets to invest their funds or to cover their risk (say, in foreign exchange). These firms are also suffering losses. Further, they are confronted with a slow- down in demand and a tightening of the credit markets since borrowing and lending has frozen. Thus, the growth rate of the real output which had already started declining in 2007 is now in negative territory over large parts of the advanced world.

Consequently, unemployment is rising dramatically all over the globalised world. This is going to bring real pain to a vast majority of the people while the collapse of the financial world hits only a small percentage of the rich and the upper middle class populations. The collapse of the latter is inevitable but if the former collapses, it would be catastrophic. The choice before the governments is clear — should funds be thrown into the bottomless pit of the financial sector without any real benefits or should they be used to retrieve the real economy and keep it going?

The US government is an establishment run by various vested interests, and the financial sector interests are deeply entrenched in it — they have been running the Treasury and the Fed for long. Their interest is seen as the main interest. That is why the poor are not getting help with their houses or General Motors is not getting $25 billion while AIG has got $15 billion. Mr Obama would have to overcome this bias in policy and put together a radically new plan. This would require him to change his set of advisers and those in the establishment, but that is easier said than done.

Mr Obama’s win was like climbing Mount Everest, but can one do so everyday? Or, having climbed it once, can that become a habit? The world needs it to be so. Will Mr Obama, a left-leaning suspect in the eyes of the conservatives, be cautious and play safe? This would be tragic since there is no option but to carry forward a radical programme. His self-imposed limits will determine his achievements or failures and those of the world in the coming years. If he could take on the establishment in the economic sphere, there would be hope that he could also do so in other aspects of life.

MIDDLE

Bad hair days
by Vivek Atray

THERE is nothing that upsets a modern woman more than a look in the mirror that tells her she’s in for a Bad Hair Day. Sometimes her hair just refuses to obey orders and in fact rebels in every possible way, leading to a situation wherein she just wants to pull it out, altogether! She combs it frantically, wets it, pleads with it, prays to God, tries every trick in the book, but her hair still looks as if its just been cropped by a lawn mower which is in need of serious repair.

How do I know all this, may well be the question, but we’ll leave that one unanswered for now. Lets just say that a woman and her hair are inseparable companions (hopefully, for her sake!), and that her mood often swings from the sublime to the ridiculous depending on the state of the foliage on her head.

Ladies with extremely short hair are, of course, likely to be luckier than others and more akin to us men who are fortunate to face bad-hair-days only on the rarest of occasions. Females with longer hair-dos (shoulder-length seems to be par-for-the-course nowadays, as one looks around), are the ones most likely to be affected by BHDs.

The fact that they insist on leaving their hair open nowadays, as opposed to tying it neatly up, also adds to the risk of these trendy girls being afflicted by the disease. Therefore, it is common for a strand here and a strand there, being totally askew, thus getting the lady in question more looks on such a day than she would otherwise have done!

Recently I’ve learnt through an extremely reliable source that hair-straightening is the current fad among the fairer sex. One would think that they had always wanted to “seedha- karo” their hair for being petulant on occasion, but this new trend is really baffling. A perfectly nice curly or wavy hair-do is replaced by a hairstyle which looks as if it’s just had a dressing down from the school principal, whereas in reality the young thing has just paid a bomb for getting it straightened. Women are difficult to understand on most occasions, but sometimes they can take even the wizened male onlooker by surprise.

On my part, the only really bad-hair-day I’ve had was when my younger daughter came and stood behind me as I was seated at the dining table. “Papa all your hair has turned white!” she exclaimed, as if in shock. Askance at this horrible piece of breaking news, I rushed to the nearest mirror, only to find that most of it was still black, thank God.

Turning towards her, befuddled as I was, with a quizzical look, I demanded an explanation for her statement. “Papa, most of it is white, I just saw it”, she retorted. A second look at the mirror told me that 10 percent of it was indeed grey and that’s what she had meant by “most”. (Excitable kids are known to exaggerate, I reassured myself).

That hair-raising incident notwithstanding, I offer my strongest sympathies to the fairer sex, for the BHD syndrome could crop up upon them, any day without warning.

OPED

Airlines’ costs rise, traffic slumps
by S.L. Rao

When telecommunications was opened to private investment with the introduction of cell phones, the government sold licences to the highest bidders. There was a scramble for licences. Companies paid hundreds of crores for their licences. They had not, estimated demand realistically, accounting for three principal factors — quality of the service, cost of cell phone instruments and the cost per call-minute.

At the outset a cell phone cost Rs 20,000 and a minute call Rs 20. These costs would and did limit demand. To recover the high fee from call earnings would take many decades at the low level of demand at such prices.

Companies paid high licence fees without estimating this equation and had poor revenues. They appealed to the government to save them.

Airlines in India were in a similar position but were unable to do much about reducing costs. They were mostly outside their control. It is a cyclical business everywhere with a few years of rising traffic and profits and others of poor profits and even losses.

The best-run airlines in the USA of past years are no longer there. New ones come up and will probably suffer the same fate.

Mr Ratan Tata's executives must be happy that his passion for flying was grounded by government obduracy. The Tatas, like the others, would have lost a lot. The group position would have deteriorated further after the expensive and, perhaps, ill-timed acquisitions: of Corus steel, which is mired in declining demand and world recession; and of the three declining but iconic car brands led by Jaguar.

The fall of the rupee in relation to the dollar by over 20 per cent in nine months, the much higher costs of servicing foreign debt as well as a decline in domestic demand and prices would have been aggravated by similar conditions in the airline market.

The "low-cost" airlines were actually selling below cost without compensating cost savings. At these low prices many travellers switched to air travel. A huge market resulted as air fares fell close to the level of rail fares.

Unbridled price wars began. All airlines began to lose money as they tried to retain customers by selling below cost. The big ones were playing "chicken", i.e., who would fold up first, leaving the market to the rest, or who would blink first and who charge remunerative prices.

These operators had not grasped the essentials of a "budget" airline. It demands tight cost control over all costs.

Outstanding managerial skills gave low costs, low prices and large demand from undemanding customers, who only wanted on-time safe travel.

Indian airline operators neither displayed managerial skills nor did the operating conditions make it possible to keep costs low. Indian aviation fuel taxes are more than their cost.

Fuel prices in most cases are 100 per cent higher in India. Sales taxes on fuel amount to 27 to per cent. Fuel costs are fixed and at 35 to 40 per cent of total costs are the largest components of airline expenses.

Many other taxes — service tax, excise and customs duties, user development charges in new airports — add to costs. Our airport charges are said to be 62 per cent higher than comparable tariffs abroad.

Aircraft utilisation suffers because of poor airport infrastructure, with fewer runways and hangars and no alternative cheaper airports nearby. Cost flexibility is confined to a fraction of operating costs, namely customer services on ground and on air, service of food and water, etc.

These are inadequate to make a difference unless the government reduces fuel taxes and rationalises airport charges. There are alternative airports close by and airport infrastructure improves.

Hence, when "low-cost" airlines cut fares, they were selling well below costs. Bigger airlines had to follow. Demand boomed but everyone lost money.

When prices of aviation fuel rose with crude prices, so did passenger fares, leading to a precipitous decline in airline traffic. An emerging recession also reduced air travel. The "low-cost" airlines sank because of their unviability and disappeared.

Air fares have risen greatly and traffic has dropped. Overheads on account of high-cost debt, lease charges, expensive foreign pilots, led to unbearable fixed costs. Many airlines will close down.

Business leaders with demonstrated commercial success in other businesses went berserk in their airline businesses. They bought new craft with borrowed funds. They leased many aircraft.

High interest and repayment costs, high lease rents, high-priced aviation fuel and high airport charges are inflexible costs. An aircraft with empty seats is a loss of revenue. Filling it requires unviable low fares. The business model in these circumstances is not viable.

Despite this simple economics, airlines opened new routes and ignored the relation of costs to prices and volumes. Airline entrepreneurs have shown a lack of foresight, poor skills in forecasting demand at different prices poor understanding of irreducible costs, and sunk costs on borrowings and lease rents.

Fighting over emotive issues
by N K Singh

Test checks of muster rolls, public complaints and cross-verification with villagers revealed that wages were shown as disbursed to deceased beneficiaries showing engagement even after their death as well to daughters of labourers living outside after marriage, student undergoing studies in towns, businessmen, employees etc who never worked.”

Thus reads the latest report of the Comptroller and Auditor General (CAG) on the performance and audit of the much-hyped National Rural Employ-ment Guarantee Act (NREGA) meant for providing jobs to the rural unemployed.

The test cases are from the most poverty-stricken district of Kalahandi in Orissa. The entire report is suffused with such indictment against almost all states.

There was not a single public agitation against the corrupt officials of the Orissa Government who deprived the most eligible rural people of their jobs and thereby pocketed the money. No political leader whipped up the collective conscience on this glaring loot of public money.

But in the same state on the question of religious conversion the same semi-literate, deprivation-emaciated people (Hindus and Christians as they identify themselves) went on a killing spree for months and political parties positioned themselves according to their avowed “political lines”.

The report equally highlights the irregularities in Maharashtra and Bihar. Ironically, no Raj Thackeray in Maharashtra or Lalu and Nitish in Bihar ever tried to ensure that the corrupt system under their leadership did not eat away the share of the rural unemployed.

The explanation for adopting wrong priorities can be sought in formulations by some political scientists. According to them, in semi-literate societies with low-collective consciousness and less capability for reasoning many a time emotive issues (Marathi pride, including linguistic chauvinism) gain precedence over the real issues. In the process new political subjects like Marathi Manush, Biharis , Hindus and Muslims are created and sharpened by the political class.

That also explains why when inflation goes up no political party or society per se comes to the street, no reaction gets generated when farmers commit suicide for a full one decade — one every half an hour — or when the rich-poor divide assumes alarming proportion.

That also explains why not a single national-level or even state-level agitation was organised by a Leftist or rightist party or a Raj/Bal Thackeray.

The Reserve Bank Of India handbook figures clearly suggests that for the past 15 years one rural bank branch had been closed down every day. This clearly indicates the reason for farmers’ suicide in the event of crop failure and subsequent lack of institutional loan but not a single political party or so-called mass leaders came forward to change the course through the democratic process of agitation.

In the same report the most startling revelation made was that in an otherwise prosperous Gujarat of Narendra Modi one of the five (highest in the country) children is engaged in unpaid work for a non-household member — means working for someone who is not a family member.

Not a single agitation was organised by denizens or champions of the secular cause but thousands of press conferences were held to demonise Modi and to highlight the Delhi police encounter in which a police inspector was killed.

In Indian context democracy seems to have developed some ugly warts. Normally for the success of any political outfit a strong ideological and cadre base is sine qua non. But a Mulayam can survive for decades by making his state police chief to issue statement “Parinda bhi par nahin mar sakta” in reference to the Hindu march to Babri mosque. He ipso facto derives minority confidence through firing on the marching mob.

The BJP has suddenly gained popularity not by raising any real issue but by whipping up communal passion on a single symbol Ram Mandir. This is an achievement that it could not get all the decades after independence. The rise of Lalu during the euphoric phase of social justice forces (post-mandal phenomenon) had similar traits.

The demolition of credible democratic institutions so as to offer a false sense of empowerment to the perpetually deprived section is the most commonly applied method by Lalus , Mulayams and Mayawatis.

The consciousness level of society determines what form of governance will suit the country. Since in India we have the “first- past-the-post” electoral system, creating new political subjects so as to treat them as voting blocks is the obvious form of degeneration. A countervailing process should have been fast education of society about of real issues.

Two institutions, which were supposed to be assigned this job of public education, were the media and the political leadership. The media failed particularly after the advent of its electronic version and the political class itself degenerated to a fault because of lack of a proper process of public acknowledgement and recognition of genuine leadership.

Iraqi PM defends deal with US
by Mary Beth Sheridan

Prime Minister Nouri al-Maliki addressed the nation on Tuesday to defend a security pact that would let U.S. troops stay in Iraq three more years, and expressed concern that some lawmakers were trying to block it for political reasons.

The agreement was approved over the weekend by the Cabinet and submitted to the parliament, where the government is seeking as strong a vote as possible in order shield itself from political fallout. In his televised speech, al-Maliki lashed out at politicians who were taking "double positions" on the accord — speaking one way in public and another in private meetings.

Al-Maliki said the agreement was "a first step to regain Iraq's sovereignty completely within three years." The document sets a withdrawal deadline of Dec. 31, 2011, for American forces. It also says U.S. soldiers must leave cities and villages by July 2009 for more distant bases.

It is not clear that all 150,000 American troops will be gone in three years. "There is a provision for an extension by agreement of both sides," a senior U.S. official said this week, speaking on the condition of anonymity. The Iraqis could decide they see a continuing role for U.S. troops, he said. "They have every right to ask us for such a presence."

The role of U.S. troops in Iraqi cities after July 2009 may also be greater than the agreement implies. The details of the troops' activities would be worked out in negotiations between the Iraqi and American military, the senior official said.

While the agreement would allow U.S. forces to remain after the U.N. mandate expires Dec. 31, it reduces their power. American soldiers would have to get Iraqi warrants to make arrests, and hand over detainees to Iraqi authorities. The accord strips U.S. contractors of immunity from Iraqi law.

The security agreement was the subject of intense debate in parliament on Tuesday. The leaders of the main parties in al-Maliki's coalition were expected to press their lawmakers to support it. But approval was not guaranteed.

"Maybe the leaders are seeing the big picture and knowing their responsibility, but what I'm seeing in each political group and alliance are those accepting and those against," said Safia al-Souhail, an independent lawmaker.

A vote on the accord is expected before parliament adjourns Nov. 25. U.S. officials say they would have to shut down operations if they have no new legal authority for their presence after the U.N. mandate expires.

Opposition to the accord has been led by the bloc of anti-American cleric Muqtada al-Sadr, which has 30 members in the 275-seat parliament. Sadr's movement has called for a demonstration against the accord in Baghdad on Friday.

The secular Iraqi National List party of Ayad Allawi, which has 20 seats, has also been cool toward the accord, with its lawmakers saying they prefer an extension of the U.N. mandate. The main Sunni coalition is uneasy about a provision authorizing U.S. assistance in fighting former members of Saddam Hussein's government, said Omar Abdul Sattar, a lawmaker from the group, which has 40 seats. It is seeking guarantees that the language would only apply to extremists, he said.

— By arrangement with LA Times-Washington Post