Pilgrimage is an act of faith

By M H AHSAN

About 2 million Muslims from more than 70 countries journey to the holy city of Mecca each year to make the spiritual pilgrimage known as the Hajj. The pilgrimage is one of five Pillars of Islam that form the framework of Islamic life. All Muslims who are physically and financially able are expected to perform the Hajj at least once. The Hajj begins on the eighth day of Dhul-Hijjah (month for Hajj), the 12th month of the Islamic year, and lasts for as long as six days.

"Labbaik Allahumma Labbaik. Labbaik, La Shareek Laka, Labbaik. Innal Hamdah, Wan Nematah, Laka wal Mulk, La Shareek Laka" "Here I am at Thy service O Lord, here I am. Here I am at Thy service and Thou hast no partners. Thine alone is All Praise and All Bounty, and Thine alone is The Sovereignty. Thou hast no partners."

Hajj Days Description:

Day One:
The 8th Day of Dhul-Hijjah
On the eighth day the pilgrim put on his Ihram and head out of Makkah to Mina. He spends the whole day and night in Mina involved in prayer, preparing himself to set out to 'Arafat. He prays Dhuhr and 'Asr shortened two Rak'ahs (units) each, Maghrib three Rak'ahs and 'Ishaa shortened to two Rak'ahs.

Day Two:
The 9th day of Dhul-Hijjah
This day is known as Yawm 'Arafah, after praying Salaatul-Fajr in Minaa, the pilgrim waits until just after sunrise, then he heads out of Mina to Plain of 'Arafah which he should enter around noon. In 'Arafah he prays Salaatdh-Dhuhr and Salaatul-'Asr joined and shortened. He should then wait in 'Arafah until just after sunset, then set out to Muzdalifah (an area between 'Arafah and Minaa). There he should pray Maghrib and 'Ishaa together with 'Ishaa shortened, then spend the rest of the night in prayer and sleep.

Day Three:
The 10th day of Dhul-Hijjah
This day is known as 'Eid al-Ad-haa. The pilgrim should pray salaatul-Fajr in Muzdalifah, then leave Muzdalifah for Mina shortly before sunrise. In Mina he collects seven small stones and heads for the largest Jamrah. As he throws each stone at the Jamrah he should say Allahu Akbar. On completion of the rites of stoning he should clip or shave his head and take off his Ihram. He should then go to the place where animals are kept and slaughter an animal if he is making a Hajj Qiraan or Hajj Tamattu'. After that he goes to Makkah and makes seven circuits of the Ka'bah known as Tawaaf al-Ifaadah, then returns to Mina and spends the rest of the night there.

Day Four:
The 11th day of Dhul-Hijjah
On this day he should pray Fajr in Mina and wait until after Dhuhr then he should head for the three Jamrahs. On the way there, he collects enough pebbles with which to stone all three of them. He should start with Jamratul-Oolaa then al-Wustaa and al-Aqabah.

Day Five:
The 12th day of Dhul-Hijjah
He does as he did on the 11th and, on the completion of the stoning, he is allowed to return home. Before leaving the vicinity of Makkah the pilgrim should perform the farewell Tawaaf known as Tawaaf al-Widaa'.

Day Six:
The 13th day of Dhul-Hijjah
It is however recommended that he stay for the 13th and do exactly as he did on the 11th and 12th. After completing the stoning he should then perform the farewell Tawaaf of the Ka'bah before leaving Makkah. áÈíß Çááåã áÈíß áÈíß áÇ ÔÑíß áß áÈíß Åä ÇáÍãÏ æÇáäÚãÉ áß æÇáãáß áÇ ÔÑíß áß Labbayk, Allahumma Labbayk! Labbayka, Laa shareeka laka labbayk. Innal-hamda wan-ni'mata laka wal-mulk, laa shareeka lak (Here I am, O Allah, here I am You have no partner; here I am! You alone deserve all praise and gratitude! To you belong all favors, blessings and Sovereignty and You have no partner.)

MAY GOD BLESS YOUR HAJJ - AAMEEN SUMMA AAMEEN
- posted by dhamaka @ 7:49 AM

 
Shh ... Iraq (US) owes $200bn war debt

By Ian Williams

There has been a lot of discussion of debt forgiveness for Iraq, but there have also been some interesting, almost forbidden, topics in the debate. Perhaps the least mentioned issue is the reparations of US$200 billion that Iraq allegedly owes, mostly to Kuwait and Saudi Arabia, from the first Gulf War of 1991.

As US envoy James Baker toured the world asking countries like France, Bulgaria Germany and Russia to forgive Iraqi debt, neither he nor Washington has made much noise about the reparations issue, even though, according to a report just submitted by the Congressional Budget Office, in addition to its external debts of up to $128 billion, Iraqi also owes $199 billion in reparations for the invasion of Kuwait.

Last week, Baker did raise the issue with the Kuwaitis, who indignantly rebuffed any suggestion that it would waive its compensation claims. Indeed, Kuwait Foreign Minister Sheikh Mohammad refused even to discuss the issue. With little publicity outside the country, it seems that the Kuwaiti parliament passed a law last year forbidding any relaxation in the reparations, which was assessed at that time at $98 billion. Under the old regime of Saddam Hussein, American diplomats pursued the claims against Iraq with considerable and vindictive vigor, but now the US taxpayer is footing the bill, they are less keen.

Reparations are an old fashioned idea. Most historians see German reparations after World War I as a significant cause of the second. Kuwait seems prepared to live with potential Iraqi resentment and maybe even some American disgruntlement.

So far, Iraq has paid $18 billion in compensation, with the bulk going to Kuwait. The cash came from oil revenues under the United Nations' oil-for-food program. The original cut was 30 percent, reduced then to 25 percent, but after the American occupation the Security Council reduced the amount to 5 percent of oil revenues. However, the Compensation Commission has already agreed on another $30 billion in compensation, once again mostly to Kuwait.

The 5 percent levy remains, according to Security Council resolution 1483, "unless an internationally recognized, representative government of Iraq and the governing council of the United Nations Compensation Commission, in the exercise of its authority over methods of ensuring that payments are made into the compensation fund, decide otherwise, this requirement shall be binding on a properly constituted, internationally recognized, representative government of Iraq and any successor thereto."

In their more aggressively hawkish mode last year, American leaders were demanding that Russia, France and Germany in particular write off all Iraqi debts. It was unfair, the Americans claimed, that the suffering Iraqi people should have to struggle to pay off debts incurred by the tyrant who oppressed them.

Of course, the same people had shown no compunction in insisting on repayment of the billions lent to Nigerian and Zairean kleptomaniacs at Washington's behest, let alone the South Africans repaying the bills run up by the apartheid regime to keep blacks in the townships and Bantustans. But they never mentioned the Kuwaiti reparations, since American tax payers, and the creditor countries together, may want to know why, having liberated Kuwait, they should subsidize the oil rich emirate now.

It is easy to see why there is not much publicity about this unique instance of reparations actually being paid. The US, for example, simply refused to recognize the World Court judgment against it for mining Nicaraguan harbors, although it eventually came to a settlement with the pro-American government that replaced the Sandinistas.

The precedent it sets is dangerous for the region. There is a definite chance of laying a trail for future conflicts between Iraq and Kuwait, but also with Iran. As part of the ceasefire agreement between Iran and Iraq under UN resolution 598, then UN secretary general Perez de Cuellar appointed a commission to determine who started the war. Giandomenico Picco, who was the UN official in charge of it, remembers that the commission was composed of three European historians, who, as well as wanting to remain anonymous, for reasons of personal safety, decided unequivocally that Iraq was the aggressor.

The report was released, very, very quietly, in December 1991. It was inconvenient, not just because Tehran was no one's favorite regime at the time, but also because the Security Council had just ordered Iraq to pay compensation for damages incurred in the war on Kuwait. Picco points out that the 598 commission did not mention compensation, so he is not sure that its results implied reparations. However, nor are the reparations that Iraq is paying the result of any judicial legal process. They result from a decision that the Security Council made, under heavy and vindictive American pressure.

If the Iranians had been less isolated, or had had friends to put their case to, they could surely have argued that they had a claim for reparations, which was both earlier and more ethical than Kuwait's. After all, the $100 billion that the Gulf states now claim for debt from Iraq was spent on attacking Iran.

Saddam's attack on Iran in 1980 was, of course, supported in various forms by Britain, France and the US. The Iranians are aware of this, and recently members of parliament have mentioned sums of $200 billion in reparations. They have a very good claim, legally, and certainly a very embarrassing one for the US, and for Kuwait.

Ironically, as Picco points out, almost the only world leader to reinforce the 1991 commission's finding that Iraq had committed aggression against Iran was one George W Bush. In his speech to the UN in September 2002, the president very clearly put aggression against Iran in the litany of charges against Saddam, to the joy, albeit temporary, of President Mohammad Khatami of Iran, who was sitting in the audience.

While not shouting about the reparations issue, it would appear that Baker at least has it in hand. One suspects that, whether the Kuwaitis like it or not, some part of the final UN resolutions recognizing and admitting a new Iraqi government will abolish the Compensation Commission and renounce any outstanding claims.
- posted by dhamaka @ 7:47 AM

 
Trekkers' paradise is Nepalis' hell

By Julian Gearing

KATHMANDU - There are a number of ways to break a person's legs. Maoist guerrillas in Nepal often use rocks. They lay the person down and smash the thighbones and shins. There is no need to describe the pain felt by the victim. Or the devastating effect crippling a person has in a mountainous country where walking is often the only way to get around. Breaking legs is a primitive but effective way of sowing terror into the population.

How then do these Nepalese communists treat well-off "decadent" Westerners trekking in Nepal's mountain trails? In a strange irony, these insurgents don't kidnap and torture such prime targets, or demand ransom, as in the Philippines, nor do they break their legs. Instead, they offer foreign visitors virtually VIP treatment, though usually for a small mandatory fee.

Comrade Prachanda, the enigmatic Nepalese Maoist leader, claims that he loves the Nepalese people. Yet his "people's army" has a strange way of showing it.

It could only happen in the world's "greatest trekking paradise", a country rich in idyllic mountains, but dirt poor for the majority of the population. Since 49-year-old Comrade Prachanda, whose real name is Puspa Kamal Dahal, began the communist insurgency aimed at replacing the monarchy with "true people's democracy" in 1996, the conflict has claimed over 8,000 lives and threatens to turn the poor Himalayan country into a basket case. In Kathmandu, the capital, politicians bicker and students agitate, while King Gyanendra resolutely hangs on to power, having dissolved parliament and assumed ruling powers on October 4, 2002.

It is often in the hills and mountains, the tourists' trekking playground, where the crisis is most acute. It is here that Prachanda's Maoists on the one hand and the Nepalese army and police on the other excel at torture and killing.

Yet, as one Kathmandu restaurant owner put it, "Despite the troubles, the tourists keep coming." While the number of arrivals has dropped to about 270,000, down about 50 percent since 1996, and foreign embassies offer travel advisories warning foreigners to be careful, tourists and climbers still flock by the planeload to the land of Mount Everest.

It is surreal. Privileged foreigners visiting Nepal live in one world, the Nepalese people live in another.

On the winding mountainous trail from Tolka to Chomrong on the route up to the Annapurna base camp, foreign trekkers occasionally run into the foot soldiers of Prachanda's Maoist insurgency, as well as in other trekking areas. Sheila, a trekker from England, recalled the encounter she and her friends had with two Maoists near Chomrong. "They were small boys and looked worried and embarrassed when they asked us for a trekking 'fee'," she said. "We guessed there were men with guns in the surrounding forest, so we paid the 200 rupee fee [about US$4.5]. And we got a receipt."

A few trekkers miss out and don't see sight or sound of the Maoists. Others do worse than Sheila and her friends. Rolph, a trekker from Holland, recalled his party being stopped by a large group of armed Maoists who asked them for 4,000 rupees each. The trekkers bargained it down to 2,000 rupees. Climbers who were about to climb Mount Makalu were forced to pay 10,000 rupees each in 2002. In the same year, eight trekkers in the Everest region were evacuated by the authorities to prevent their holiday from being ruined by gunfire. Soldiers and Maoists were battling it out nearby. The trekkers were airlifted by army helicopter from Lukla airport's small landing strip in the high mountains to Kathmandu, a thrill of a ride.

There have been a few foulups. Some cases have been reported in which trekkers were beaten because they refused to pay the men and women with guns. Foreign embassy advisories suggest not to resist the call for a "donation". And a British army officer strolling in the hills recruiting Gurkha soldiers for the British army was abducted in 2003, then released, with profuse public apologies offered by Maoist leader Prachanda. The British officer claimed he was "well-treated" by his captors.

For foreign tourists, a meeting with Maoists is usually a "big adventure". This is something to tell the folks about back home. Trekkers boast of being given a "People's Liberation Army of Nepal" receipt - a note offering thanks for the "donation to fight feudalism, imperialism, expansionism and all types of reactionaries". After all, the "encounters" are usually polite and the "donation" is a small price to pay for the pleasure of trekking in this mountain paradise.

Cruel justice
But for Kal Bahadur Budha, Nepal was no paradise. Budha was born and raised in Humla in the impoverished west of the country, the Maoist heartland. In 2003, the 27-year-old farmer was kidnapped by Maoists and taken to another villager after he failed to persuade his brother to quit the police force, following pressure from the insurgents. Villagers were reportedly forced to watch as he dug a ditch. According to press reports citing the captive audience, when he refused to lie in the ditch, the Maoists chopped off his legs and buried him alive. In another incident reported by the press, 79-year-old Prabahang Kedem had his head slowly cut off by rebels with a kukri knife in front of his family, his last words a curse on his young assailants. Eyewitnesses claim that after his head was severed, his body was hacked into pieces. His crime? Refusing to pay a donation to the Maoists.

Prachanda's war didn't start off this way. When the Communist Party of Nepal (Maoist) rose out of the splintering of the communist party movement in 1995 following the end of absolute monarchy and the beginning of parliamentary democracy in 1990, the emphasis in the countryside was on "winning hearts and minds". This was not hard. Nepal lives under a pall of feudalism, casteism, corruption and a chasm between the small percentage of the rich and the masses, the poor. As one foreign aid worker put it, life for the poor is "short, brutish and ugly", especially in the hidden valleys where people suffer "years of drudgery, backbreaking labor, dirt, cold, disease and bites, and the rule of the club or gun". As much as 75 percent of the population live in the countryside, many close to or below the poverty line, often at the beck and call of landlords and the elite. Prachanda's Maoists have reason to be angry with the landlords, the police and the politicians.

The Maoists, under Prachanda and the party's intellectual and ideology chief, Baburam Bhattarai, were itching for more direct action following the Communist Party of Nepal-United Marxist Leninist's (CPN-UML) poor showing in elections in 1990. Building on an already existing strata of support among the poor and disenfranchised people in the country's most backward region, the west, Prachanda and Bhattarai began their "people's war" in 1996, a movement initially dismissed in Kathmandu as "insignificant".

This was the era of "father-like" Maoist village meetings where political lectures on equality and the failings of Nepal's feudal and corrupt elite were lapped up. Many young people willingly flocked to the Maoist ranks. This was the Maoism as seen in China in the 1930s under the guidance of the communist guerrilla leader Mao Zedong, a visionary helping and winning over the people.

But then more and more voices from the Nepalese hills spoke of youngsters being forced at gun or knifepoint to join. As the army and police stamped down hard, the level of brutality ratcheted up on both sides. Stories from human rights groups surfaced of villagers being forced by the Maoists to act as cannon fodder in attacks on police and army targets. Many are reported to have lost their lives in suicidal attacks.

Evidence of Maoist brutality grew. Over the past three years, many of the Maoist village meetings have ended up resembling the "struggle sessions" of the Chinese Cultural Revolution 1966-76 or the "killing fields" of Cambodia's Khmer Rouge, 1975-79. According to local sources, the victims were suspected transgressors to the "cause" - small landowners, richer villagers, teachers - or those who refused or were too poor to pay the "tax" demanded.

The "trick" to sowing fear into the population appears to be to gather together the villagers to watch. In some cases, the victim's family members were forced to inflict the punishment, an eerie echo of the excesses when Chinese Red Guards forced children to kill their parents. Young male and female Maoists appear to be the main players in this "purification". In one case two years ago, a teacher became the taught when he was stabbed and hung in front of his school pupils.

Nepalese journalist Puskar Gautam says the brutality may partly be the result of the fighters being out of the direct control of the leaders and that in the massive recruiting, the correct political ideology was not properly instilled. Other commentators see the nod of Prachanda behind the violence. There is discipline in the brutality. Thieves, drinkers or gamblers, if caught, might lose a hand or foot, according to reports. They are the fortunate. For the unfortunate numbering in the hundreds, there is torture, beatings and eventual murder. People have been thrown off cliffs or tied down with rocks, then thrown into the river. Others have been burnt, beheaded, crucified or disemboweled. This "friendly and hospitable" trekkers' heaven can change in a flash into Dante's hell.

International human rights groups point fingers at both sides in the conflict. Apart from "the disappeared", those civilians who were said to have been taken into custody by the authorities, but whose whereabouts are now unknown, the survivors paint a picture of savagery. Hospitals and clinics document the injuries inflicted by Maoist's rocks, bullets and kukri knives and the effects of beatings, torture and rape carried out by the security forces. Patients with broken legs are common. Some never walk again.

It is not just the rich and middle class who are "terrified" by the Maoists, or "Maobadi", as they are known in Nepali. The poor fear both Maoists and security forces, having to say yes to both, according to local observers. Little wonder that thousands have fled the countryside for the city of Kathmandu, into India, or into badly paid menial servitude in the Middle East. For many youngsters, it's a choice of fight for the Maoists or flee.

Terror and tourism
For foreign tourists flying into Kathmandu airport, it is hard to get a handle on the situation. Travel agents say there is a "little trouble" but it is "nothing to worry about". On most days in the tourist season, Thamel, the capital's tourist ghetto, is bustling with mostly Western travelers in search of adventure, pizza and pie, or good hash. The talk is of great trekking trails and Maoist encounters.

Only when a bomb goes off or a bandh, a strike, is called by Prachanda's Maoists does the Hindu kingdom's capital take on the persona of a city at war. Soldiers and police hunker down with their rifles behind sandbags on street corners, the normally clogged streets taking on the appearance of a ghost town.

It is not just the Maoists who bring normal life to a halt. Students, teachers and others upset with the king, fed up with the corruption, fed up with the bickering political parties, and fed up with the killing, often take to the streets to air their discontent. Shouts are raised. Stones are thrown. Bullets or tear-gas canisters are fired. And more casualties fill the hospital emergency wards.

For the tourists who find themselves confined to their hotels and guesthouses at such times, the astute read books describing the regicide of 2001. A good choice is Massacre at the Palace: The Doomed Royal Dynasty of Nepal by Jonathan Gregson. In it the author documents how on June 1, 2001, Crown Prince Dipendra ran amuck when his father, King Birendra, refused to allow him to marry his sweetheart. The drunken prince grabbed a shotgun and an M-16 assault rifle and sprayed his family with gunfire before turning a gun on himself. The king and queen died, as did seven other members of the royal family. This wasn't the end of the monarchy. Prince Gyanendra, viewed by many as the black sheep of the family, took over as king.

This bloody event, and the arrival of a new monarch, King Gyanendra, added to the growing chaos in the country. Now, with millions of dollars' worth of United States military aid being given to the government, and with US military advisors to combat what is now post-September 11 called the "terrorist" threat, the scene is being set for more confrontation.

Nepal is at war with itself as it struggles to enter the 21st century. If Comrade Prachanda has his way, he will take the country back to "year zero". In a rare interview in 1999 with Li Onesto, a journalist from the leftist Revolutionary Worker publication, Prachanda talked of the inspiration Nepal's communist movement gained from Mao's communist victory in China in 1949 and the Chinese Cultural Revolution. He said he followed Mao's path in developing a mass class struggle in the countryside. "We came to understand Mao's vision that the backward rural areas will be the real basin of the revolution," he said.

In this interview, the elusive Prachanda paraphrased Mao's thoughts on war, saying: "People usually think that war is very destructive, war is very bad, it kills people ... But people do not understand that war is a great process of construction. War has a very big cleansing effect."

Yet the level of brutality and destruction pursued by Prachanda's forces appears to eclipse that of the young Mao. In addition to the human artery cutting and bone breaking, Nepal's limited infrastructure has been targeted. Blowing up bridges is understandable. But the breaking of irrigation channels, the destruction of electricity solar panels, and the burning or closing of schools in a country with a 55 percent literacy rate and a fragile agricultural economy makes little sense, according to local people.

This is "Prachanda's Path", as the Maoist leadership now calls it. It bears the handiwork of Maoist intellectual Bhattarai, but it owes a major part of its thrust and inspiration to the Shining Path, the Maoist insurgents in Peru, and their leader Abimael Guzman's vision. Journalists' reports indicate Peruvian advisors from Sendero Luminoso trained Prachanda's fighters in the earlier stages of the war, though much of the support appears to come from sympathetic leftist rebel groups in India, where the Nepalese rebel leaders spend much of their time. As Prachanda is reported to have said: "There was international involvement right from the beginning."

In the 1980s, Peru's Shining Path was the international flag-bearer of Maoism. Guzman's brutal insurgency, and the Peruvian government's response, led to over 27,000 deaths in just over a decade and to the kidnapping of tourists. But with Guzman captured and sentenced to life in 1992, Prachanda appears to now be promoted as the new Mao. As Prachanda reportedly said: "A new wave of world revolution is beginning, because imperialism is facing a great crisis," adding, "our people's war may be a spark, a spark for a prairie fire." Prachanda's Path is also being promoted in effect as "Prachanda's Thoughts", just as Mao ended up putting over his message in his little red book, The Thoughts of Mao Zedong.

Yet in China, Maoism is dead, the body of its leader Mao lying in his mausoleum in Tiananmen Square in Beijing. The "worship" of Mao is just a cult, devoid of ideology, just as the international commercialization of Argentina's communist folk hero Che Guevara is just a T-shirt image with no body. Those Chinese people who are old enough prefer to put behind them the bitter memories of Mao's Chinese Cultural Revolution, an orgy of madness and killing that followed the leader's abortive attempts to "revolutionize" agriculture and industry. Mao generated millions of tons of useless scrap iron, millions of deaths from starvation, and countless deaths and trauma due to his Red Guards' frenzy. Bar a few leftist hardliners, China's leadership, rightly or wrongly, has embraced capitalism and the mantra of the late reformist communist party leader Deng Xiaopeng that "to get rich is glorious". Beijing now thumbs its nose at Prachanda. Chinese border guards eject Nepalese Maoist guerrillas if they trespass over the mountainous border into the Tibetan Autonomous Region and China's leaders back the Nepal government line against the Maoist guerrillas.

Prachanda is trying to succeed where others have failed. As was made clear in his interview with journalist Onesto, he rails against "revisionism", the backtracking of communist leaders who lose sight of the ideals of communism and "desert the revolution". Communism is dying around the world not because the basic ideology or philosophy is unachievable or wrong. It has collapsed because of the failings of its leaders, the worst examples being Russia's Joseph Stalin, Cambodia's Pol Pot and, ironically, China's Mao.

Yet failings of these leaders cannot be put down to the Nepalese leader's hated "revisionism". For him, Mao remains a hero. These revolutionaries failed because of their ego, fanaticism, virtual madness. Today, Prachanda is the leader of one of the most prominent, yet small, communist movements in the world still doggedly hanging on to a vision of a proletarian Utopia. But Prachanda may ultimately have to pay the price of excess. The Maoist grip is slipping.

He and Bhattarai have unleashed a level of brutality that is traumatizing the Nepalese people and destroying the minds of many of the younger generation, people say. Talk on the streets in Kathmandu is that Prachanda's "people's war" is out of control. Stop the killing, stop the fear, is the call.

For Prachanda, squeezing the genie back into the bottle would be tough. Amid the chaos of Nepal's politics, the political parties have called for the Maoist leader to put down the gun and for his communist splinter party to reenter the democratic arena. Yet his fighters would feel betrayed by a softening of the Maoist line, says one observer. As Nepal's capital is beset by political shadow plays, intrigue and back-stabbing, the tension is rising and rumors circle, including one in which the king is said to be trying to cut a deal with the Maoists to undercut the other political parties.

For the tourists, the intrigue will pass them by. Nepal remains for them a great place for temples and lofty mountains. They can rest easy. The kid gloves treatment of these foreign guests by Prachanda's Maoists, claims journalist Gautam, is because these communists are concerned about their "international" image and their place in the vanguard of the international Maoist struggle.

But Nepalese may wonder why "people's leader" Prachanda does not treat the Nepalese people with such care.
- posted by dhamaka @ 7:45 AM

 
India-Brazil: Cementing the South-South alliance

By Mario Osava

RIO DE JANEIRO - Trade is the cement with which President Luiz Inacio Lula da Silva aims to consolidate Brazil's alliance with the other heavyweights of the developing South. The three-day visit he just made to India marked progress in that strategy, which is based on specific economic interests and a shared attitude of pragmatism, unlike the efforts made within the Third World of the past.

The aim is to construct a "new trade geography" in the world, said Lula, but stressed that this does not mean playing down the "fundamental" importance of exchange with rich countries. Instead, it means creating new alternatives, reducing dependence, and uniting developing countries to negotiate in equal conditions all global or regional agreements, the president said.

The outstanding result of Lula's India visit was the signing of a market access treaty that establishes tariff preferences between India and the countries of Mercosur (Southern Common Market), made up of Argentina, Brazil, Paraguay and Uruguay. Brazil's Mercosur partners sent representatives as part of Lula's retinue.

Within four months, the two parties to the agreement will select the products that will have reduced tariffs in bilateral trade, and decide on rules of origin and dispute settlement mechanisms. The accord, a first step towards future free trade, "inaugurates a new era in South-South cooperation", said Lula.

Five other agreements - on cooperation in space research, including the joint launch of satellites, and on cultural exchange and tourism - were also signed in New Delhi. More than a hundred Brazilian business executives accompanied the president on his visit. Negotiations with their Indian colleagues extended through Thursday, as they explored the range of possibilities for bilateral trade, investment and technology transfer.

But trade between Brazil and India today is relatively modest: just US$1.04 billion last year, or one percent of Brazil's total foreign trade flow. However, it is growing rapidly, more than doubling in the past three years.

Brazil's minister of development, industry and trade, Luiz Fernando Furlan, says bilateral trade could grow five-fold in five years. An annual flow of $5 billion is no exaggeration, he says, considering the size of the two markets (Brazil has a population of 174 million, India has 1.1 billion).

Fuel alcohol mixed with gasoline is becoming more and more common in India, which throws open the door for massive Brazilian exports of this alternative fuel and the related technology. The two countries are leaders in the production of sugarcane, the raw material for alcohol, and over the past three decades Brazil has developed an intensive program for substituting gasoline with ethanol. Brazilian firm Dedini transferred technology to India last year that has led to the construction of alcohol distilleries. There will be as many as 15 of these fuel alcohol plants operating in India in two years, announced the company.

Aircraft, footwear, furniture and food could diversify Brazil's exports to India, which are currently concentrated in crude oil, soya, and iron ore. Imports from India are already quite diverse, however, including diesel fuel, medications, capital goods and chemical products.

Trade holds a central place in the intensive diplomacy that Lula is carrying forward, both in terms of strengthening the national economy and firming up international alliances. His top priority right now is to consolidate and expand the Group of Three (G3), comprising of Brazil, India and South Africa. The latter two have already received visits and are negotiating trade agreements with Mercosur. Lula will pay a visit to the next target, China, in May.

Brazil's foreign trade is currently concentrated in the United States and the European Union, which absorb nearly half of the South American giant's exports. But progress has been made in the search for new markets. Argentina and China are the second and third leading importers of Brazilian products, surpassed only by the United States.

The Brazilian effort to multiply exchange with countries in the developing world, which was begun with Mercosur and is continuing in the negotiations for South American integration, now extends to all continents. In June, when Brazil will host in Sao Paulo the meeting of the United Nations Conference on Trade and Development, Lula hopes to launch the bases of the System of Trade Preferences Among Developing Countries, an idea that emerged in the 1980s but was never implemented.

The intensification of trade within the developing South is accompanied by other demands from these countries, or at least by the heavyweights, which are seeking the democratization of international relations. For example, Brazil, India and South Africa are pushing for an expanded UN Security Council, in which they would also hold permanent seats, today monopolized by Britain, China, France, Russia and the United States.
- posted by dhamaka @ 7:44 AM

 
China, India confront the Wal-Marts

By Jayanthi Iyengar

Nothing reflects better the unity in diversity shared by China and India, the world's largest and second largest consumer markets, than the manner in which both countries have approached the opening up of their retail sectors to foreign investors, as well as the significant problems and popular resistance they face in the liberalization process.

"In terms of sheer size, India and China have huge potential in the retail sector," says N V Sivakumar, executive director of PricewaterhouseCoopers (PwC), India. The global consultancy firm recently completed a study on the global retail potential and Sivakumar has been involved with this project from the Indian end.

Though both countries have been quick to partially open up foreign direct investment (FDI) in their retail sectors, they have faltered when it came to opening up fully. They fear the public backlash that could follow, if unchecked growth of the foreign retailers were to be permitted. "Both countries have had relatively more closed economies for decades. Hence the 'fear' of the unknown is more, especially since the potential impact will be on millions of existing employees and hundred-thousands of existing small business," says Arvind Singhal, chairman of KSA Technopak, a management consulting organization focusing on consumer products and retail sectors.

He summarizes some of the reasons which could be at the root of these fears. These include:

Existence of highly fragmented retailing.
Organized large retailing, especially from global giants like Wal-Mart, Tesco, Carrefour, Makro and others, could potentially cause major disruption to small retailers.
Large international retailers might upset the import balance, by preferring to source more globally rather than use local production bases.
Large international retailers might also resort to predatory pricing, thereby disrupting local small and large retailers.

Predictably, having partially opened up their retail sectors, both countries struggle with regulating the often illegal and uncontrolled growth of the foreign retailers, though the hesitation is greater in the case of India than China. Both countries were die-hard socialists prior to opening up economically. Yet resistance to everything foreign lingers more strongly in the Indian psyche than that of the Chinese, possibly because of the promotion of swadeshi meaning national self-sufficiency, and swaraj, or self-rule. These have been propounded as powerful and defining goals by national leaders, from Mohandas K Gandhi, the Mahatma, to former prime minister Indira Gandhi.

In spite of some regulatory constraints, foreign retailers have found both these markets highly attractive. "China has been voted as the country with greatest positive outlook change in the last year, as it has long-term growth prospects with rising disposable incomes and an increasing qualified labor pool," says Sivakumar.

Further, the race to corner the retail space is so strong in these emerging markets that foreign retailers have not hesitated to cut a few corners. In China, the French retail chain, Carrefour, was publicly castigated in 2000 for violating the Chinese federal government's norms for regional expansion. As a fallout of that affair, stricter entry norms now are being discussed with foreign retailers, including minimum capital requirements, compulsory land use and other clearances at the time of approval. Fresh expansion would only be approved after the cleared projects have gone on stream and violators have been punished, according to the proposed guidelines.

German retailer faces charges in India
In India, allegations currently abound against the world's fourth largest retailer, Germany's Metro Cash & Carry GmbH, for violating licensing conditions. One of the latest to enter the Indian market, it was granted approval, along with Shoprite Checkers of South Africa, in 2001 to carry on cash and carry wholesale business. The Indian domestic retail lobby, comprised of small and large traders, is convinced that the company is selling directly to retail customers, while Metro GmbH is taking the position that it is selling only to retailers, which is permitted under the law. This case is being fought in the Indian legal system and the ball now is in the Indian courts to decide whether the German retailer is guilty of violating entry norms.

To understand the charged atmosphere that surrounds the opening up of the retail sector in India and China, one needs to understand how public opinion has influenced the opening up process. To start with, India permitted foreign retailers to sell directly to retail customers. In 1997, it took a step back. The Foreign Investment Promotion Board (FIPB) decided that it would "encourage" foreign investors to set up manufacturing facilities in the country, instead of permitting entry merely to traders. The immediate cause for this change in approach was manifold. At the basic level was the fear voiced by the domestic trader lobby that the millions of kirana shops - the Indian equivalent of the mom and pop stores in the United States - would be wiped out by the foreign onslaught.

The FIPB was also receiving far too many applications for trading, instead of fresh FDI investment proposals. FDI in China was booming, despite the mandatory capital and other requirements that the country was placing on foreign investors seeking to do business there. Last, a substantial number of the applications for trading licenses were actually coming in from the Chinese.

India was worried about the Chinese, who were known both for dumping as well as their ability to corner markets with their low-price advantage. Given strains over the years in Sino-Indian relations, there were also security dimensions to allowing Chinese traders to enter India, especially when the Foreign Investment Promotion Board lacked the wherewithal to run security checks on the applicants. The net result was the new norm, introduced in 1997, which categorized foreign companies into three broad types:

Companies that set up domestic manufacturing facilities and sold products manufactured domestically.
Companies that came in to trade prior to the 1997 norms.
Companies that came in to trade after the 1997 norms were adopted.

India favors those that manufacture and sell domestically.
There were no restrictions on the sale of products by the first set of companies. Thus, India has consumer durable companies like Sony, LG, Samsung and Phillips, which manufacture and sell products in India. They also import and sell some of their high-tech product lines such as laser printers and photocopiers, on the certification that current manufacturing techniques and costs do not yet permit them to manufacture these items domestically. They undertake to do so in the near future.

Under the second category, only two companies have been granted permission to operate in India. They are Nanz and Spencers, which hold permission to sell their products directly to retail customers.

In the third category - those entering the market after 1997 - foreign retailers can set up wholly owned subsidiaries in India for the purpose of trade, but they can sell only to wholesalers (who are essentially domestic retailers) and not to retail customers. This set of retailers can come in as franchisees and/or as cash and carry wholesalers.

Bata India, India's largest retailer is also a manufacturer. It has been in India since 1931, entering India long before the wave of nationalization in the mid-1970s. To rule out scope for ambiguity, the Foreign Investment Promotion Board approvals define a wholesale buyer to be one who holds a sales tax registration number.

The charge against Metro GmbH is that it is selling to retailers. The campaign is led by the Federation of Associations of Maharashtra state (FAM), a state-level organization of small traders. Among others, FAM is supported by the Karnataka and Tamil chambers of commerce at the state levels and by the Confederation of India Industry at the national industry chamber level.

FAM is also being supported by parliamentarians, politicians, political parties and even the Swadeshi Jagaran Manch. The SJM is the nationalist wing of the ruling Bharatiya Janata Party (BJP), whose traditional vote-bank has been business. As People's Democracy, the mouthpiece of the Communist Party of India (Marxist), points out in its December 2003 issue, "It was primarily because of the support from several parliamentarians and political parties that the government of India was obliged to take a decision not to permit FDI in retail trade."

Fears foreign retailers will swamp domestic retail
The federation in Maharashtra has stated in the Metro GmbH context that it had been reassured in writing by Murasoli Maran, the late minister for industry and commerce, that domestic retail trading would be closed to foreign retailers. Maran is not around to reiterate his statement, but the FAM seems to be factually correct, since the industry ministry did issue a press note in February 2001, soon after Metro GmbH had been given a clearance to do business.

"The approval given to Metro Cash and Carry GmbH recently, which have received extensive press coverage, is for setting up of state-of-the-art cash and carry wholesale complexes. The company is not permitted to have retail outlets or sell products to consumers directly. It may be added that approval for cash and carry wholesale trading have been given in the past also. Any violation of the approval terms renders the company liable to action," the statement said.

The public furor had died down then, but the FAM renewed its attack on Metro GmbH in 2003 after it came to light that the German retailer was on a membership drive, possibly recruiting retail members. FAM wrote its complaints to opposition political parties as well as to Minister for Commerce Arun Jaitley in November 2003.

The Federation of Associations of Maharashtra, backed by similar organizations, contends that Metro GmbH has issued 250,000 loyalty cards within nine months of entering the market and is violating its license conditions by selling directly to retailers. Loyalty cards are incentive cards that grant a buyer bonus points with every purchase from the same shop and/or manufacturer. The trader lobby is arguing that the cards have been issued to commercial organizations, associations of professionals such as doctors, lawyers, employees of information technology companies, architects, chartered accountants - categories that do not fit the description of allowed retailers.

"In some cases, these cards have been issued to employees of certain organizations even without explicit consent or knowledge of the concerned organizations," says the People's Democracy, the communist newspaper.

Further, it says, Metro's customers are buying products not connected to their business, as stated to be the case in its sales tax registration. Also, the German retailer is selling even single units of a product, without specifying minimum purchase requirements, which clearly proves that "it is indulging in nothing but retail trade", the publication says.

Foreign retailers now an election issue
With announcements about the dissolution of the Indian parliament next month and the general elections scheduled to take place soon afterward, the political stridency surrounding the retail issue is self-explanatory.

Since Metro GmbH has started operations at Yashwantpur and Kanakpura areas in Bangalore, where it has opened stores of 17,600 square meters in area, the Karantaka (state) government has been rattled. Consequently, backed by the central government, it has filed a writ petition in a Bangalore court against Metro GmbH. The German retailer is being represented by legal hawk and former commerce minister, P Chidambaram.

The left-wing parties have been supporting the trader lobby all along because of their anti-multinational corporation (MNC) line but FAM, the Maharastra traders association, also claims support from former ministers, Dr Man Mohan Singh - the father of India's liberalization under a Congress Party government - Margaret Alva, and parliamentarian Priyaranjan Das Munshi.

Not to be outdone, SJM national convener Muralidhara Rao recently made a vehement anti-Metro presentation to the Federation of Karnataka Chambers of Commerce and Industry, saying: "Our market is an asset," which could not be "sold away to multinationals". SJM, Swadeshi Jagaran Manch, is the nationalist wing of the governing Bharatiya Janata Party.

While the courts will ultimately decide on the merits of the charges leveled against Metro GmbH, the cause of this charged political atmosphere is easy to understand. By the Maharastra trade federation's reckoning, India has 30 million domestic retail traders. PricewaterhouseCooper's Sivakumar pegs current figures at 20 million retailers, while Euromonitor had estimated 12 million retailers in 2001, apart from the millions of low-cost kiosks and push-cart vendors who dot the Indian retail landscape.

Each of them is a potential voter in a country where 600 million persons are registered on the polling lists, but the picture becomes clearer when one looks at the rest of the statistics.

According to Euromonitor, the retail sector is India's second largest employer after agriculture. It employs about 10 percent of the labor force, estimated at 39.3 million people in 2001. It was also one of the fastest growing employers, averaging an annual growth of 37 percent between 1996 and 2001, until it was displaced by Business Process Outsourcing (BPO). The BPO sector provides back-office services to overseas client using the Internet. In money power, the organized retail trade in India was worth Rs11.2 trillion (US$247 billion) during the same period.

India has 11 shops for every 1,000 people
The Indian retail industry was, and continues to be, highly fragmented. According to global consultancy firm A C Neilson, India had the highest shop densities in the world. In 2001, it was estimated there were 11 outlets for every 1,000 people.

Further, a report prepared by McKinsey & Company, global management consultants, and the Confederation of Indian Industry (CII), predicted that global retail giants such as Tesco, Kingfisher, Carrefour and Ahold were waiting in the wings to enter the retail arena. It further stated that the Indian retail market holds the potential of becoming a $300 billion per year market by 2010, provided the sector is opened up significantly.

All of this - the strength of retailing in India and inroads by foreign retailers - clearly explain the fears that fuel public imagination and why the political leadership in democratic India feels compelled to build consensus and take the people along on its path to totally opening up the retail sector.

"Incidentally, major concerns are there even in developed markets (eg UK, US, France and Germany) on allowing unrestrained growth of large format big box discounters," says Singhal, the chairman of KSA Technopak management consultants. "Most of them are not allowed to operate in 'city centers' and have to take local permissions from local counties and districts before they can open new stores. In many cases, such new store openings have met with strong protests from local businesses," Singhal says.

In China, despite the difference in ideologies and political systems - which clearly permits autocratic decision-making in Beijing - the picture is not dissimilar.

To understand the dampening of enthusiasm - to opening up the retail sector in China, one needs to look at two documents, the World Trade Organization (WTO) accession agreement and the recently circulated foreign investment norms for foreign retailers - and juxtapose them against public reactions.

WTO requires China to admit foreign retailers
Under China's WTO commitments, during the first year of the five-year transition period ending December 2004, Beijing agreed to open up its retail sector to foreign retailers in two phases. For the first two years, foreign retailers had to come in as joint ventures, while in the last two years they could also enter as fully owned subsidiaries. In the first phase, China agreed that to permit joint ventures to be set up in the five special economic zones and six cities. These are the zones in Shenzhen, Zhuhai, Shantou, Xiamen and Hainan and the cities of Beijing, Shanghai, Tianjin, Guangzhou, Dalian and Qingdao.

In the special economic zones, foreign suppliers were permitted to provide comprehensive services for their product distribution, including after-sales services. In the case of Beijing and Shanghai, foreign retailers were allowed to set up only four joint ventures in each, while in the other four cities, the number of joint ventures was capped at two per retailer.

The provincial capitals, including Chongqing in Chongqing province and Ningbo in Zhejiang, were to be opened to foreign investors in the second year. By January 2003, all the regional, quantity and foreign equity shared restrictions were to be lifted. This meant that from 2003 onwards, a foreign company could own 100 percent retail subsidiaries in China, subject to some exceptions. For department stores of over 20,000 square meters, and chain stores with more than 30 outlets, the foreign equity in the joint venture was to be capped at 50 percent.

Further, the WTO agreement also allowed China to impose sector-specific restrictions on foreign retail activity in some sectors. Only those that had already been in business for more than a year were to be allowed to sell books, newspapers and magazines. The timetable permitted the foreign-funded retailers to deal in pharmaceuticals, pesticides and petroleum products in the fourth year and chemical fertilizer only in the fifth year.

The Chinese central leadership had agreed to this timetable with the WTO. Problems, however, began when the French retail giant, Carrefour, approached the provincial governments for clearances to set up retail units in their respective provinces. Lack of coordination as well as competition among the provinces allowed Carrefour to obtain far more clearances and set up far more joint ventures than was permitted under the license agreement and the WTO agreement. Before the central leadership realized what was happening, Carrefour had dotted the Chinese landscape with its outlets.

The Chinese government reprimanded but did not seriously punish the French retail giant, and seeing Carrefour get away with the violation without major losses, other foreign retailers followed suit. The net result is that today several foreign retailers have circumvented the license conditions. Apart from lack of political will, the Chinese government has also been unable to act against such violators, as it lacks specific legal mechanisms to do so.

Foreign retailers rush to corner market share
For their part, foreign retailers largely ignore the consequences of violations. With over 300 foreign retailers, large and small, already jostling for space, the race is on to corner as much of the market share as possible before China is fully integrated with the global trading community under the WTO.

Meanwhile, public criticism of foreign retailers has been growing in China. The Chinese media is replete with stories of domestic retailers being edged out of the market by mega foreign chains such as Wal-Mart, the world's largest retailer. The China Daily, for instance, quotes a Wall Street Journal report that mentions a Chinese supplier being forced to lay off staff because Wal-Mart, which sources about 95 percent of its supplies from China, has been ruthlessly pressing down on the supplier's margin. This report is also quoted in India as proof of the evil intent of the foreign retailers.

A common thread in the Chinese media is the fear that the cost advantage enjoyed by the Chinese exports would be eroded if the foreign retailers were allowed to source supplies from within the country.

The expression of public distress and opposition has not ended there. Zhang Hongwei, vice chairman of the All-China Federation of Trade Unions (ACFTU), has been quoted by Chinese newspapers as saying: "Domestic retail businesses are facing complete annihilation. Major foreign retail giants have completed the layouts of their sales outlets through virtually illegal means, and other investors are coming via the same routes."

Understandably, the ACFTU, with a membership of 131 million, has taken aim at Wal-Mart as the symbolic of foreign repression. The national union has been urging "active" instead of "passive" unionization by the Wal-Mart management in its stores in China since 2000. At the Chinese Trade Unions 14th National Congress held in late September 2003, the federation further intensified its attack by officially announcing: "For companies depriving the rights of employees to establish trade unions, we reserve the right of resorting to lawsuits."

Unionization is legal in China, but only officially approved trade unions. Foreign companies could face legal action for not permitting the workers to organize for better wages, working conditions safety and other concerns.

The All-China Federation of Trade Unions has a different, land-use focus in Shanghai. The Shanghai Chain Enterprise Association (SCEA) recently pushed the panic button when Wal-Mart was given permission to enter Eastern China for the first time through a joint venture with CITIC Trust & Invest Co Ltd. After it became clear that Wal-Mart proposed to open three mega outlets, including a 100,000 square-meter super-center at Wujiaochang, a busy commercial area in west Shanghai, the Shanghai association argued that little space was available for such stores. Erecting this super shopping mall would mean razing existing structures, which in turn has set off fears of unplanned and indiscriminate land use with adverse consequences for local residents, retailers and others.

The Chinese central leadership has been quick to appease Wal-Mart, which has opened 26 units since it entered China in 1996 and procured an estimated $15 billion worth of Chinese products in 2003. Through the joint venture with CITIC Trust & Invest Co Ltd, for instance, the huge retailer proposes to bring in total investments amounting to $18 million, on an equity base of $7.2 million.

Wal-Mart CEO receives warm Chinese welcome
Understandably, when Wal-Mart Stores Inc's president and CEO Lee Scott visited China in October 2003, Vice Premier Wu Yi assured him of continued commitment to the WTO terms for opening up retailing. At the same time, such assurances have not stopped the Chinese central leadership from circulating the draft guidelines to regulate foreign retailers.

Under these proposed regulations, China would compile a list of foreign retail violators and non-violators. The law-abiding foreign retailers would be permitted to expand, while a one-year curb on expansion would be imposed on those who had violated the norms. Chronic violators would be banned indefinitely from expanding their operations.

Technically, these provisions if implemented, should have addressed and halted the Carrefour-type of expansion violations. However, the Chinese government has gone a step further by stating in the proposed guidelines that foreign retailers seeking to set up outlets in areas of less than 3,000 square meters would have to bring in 30 percent of the investments necessary up front. In the case of larger units, the proposed minimum capital requirement has been set at 5 million yuan (US$6.04 million) for 3,000-8,000 square-meter outlets and at 30 million yuan for outlets over 8,000 square meters.

Under the proposed guidelines, the large units also would have to submit applications for building approval at the time of FDI clearances. This appears to be the introduction of WTO-compatible qualitative restrictions in order to protect the domestic retail sector on the eve of global integration.

Undoubtedly, like India, China's concern also is dictated by the human dimension, the human price, of opening up to massive foreign retailing that could overwhelm domestic retailers.

Euromonitor's data for 1996-2001 show that China had 20.3 million retail units in 2001, growing at 32.6 percent over 1996-2001. Total retail sales had reached 3.2 trillion yuan, growing at the rate of 38.5 percent between 1996 and 2001. The sector employed 39.2 million people, up from 32 million in 1996, representing a 22.5 percent growth.

Part-time employment opportunities scarcely exist in the Indian retail sector, but in China, this is the fastest growing segment with 86 percent growth being notched on this front between 1996-2001. Full-time retail employment, however, grew at a more sedate 12.4 percent during this period.

So what are the solutions?

Sivakumar, executive director of PwC in India, is convinced that China is following relatively orderly growth, but says India needs to further open up its retail sector to foreign direct investment. "As demonstrated by China, this will not only lead to significant foreign investment but will also help create a base for foreign retailers to step up their sourcing from India," he says.

Political compulsions and the need to build popular consensus, however, are unlikely to permit swift evolution of policy changes to permit this opening up. This is more so in India, where democracy tempers the commercial liberalization process, than in China, but Beijing, too, is hearing calls for greater caution in its headlong drive to modernize.
- posted by dhamaka @ 7:42 AM

 
US's Kurdish ban risks backfiring

By Mark Berniker

In news that must have been music to Turkish Prime Minister Recep Tayyip Erdogan's ears, L Paul Bremer, the US proconsul in Iraq, on Wednesday announced that the United States-led coalition regards the Kurdish Workers' Party, or PKK, as a terrorist organization.

Bremer's announcement in Baghdad came several hours before a meeting in Washington between US President George W Bush and Erdogan. The PKK is accused of using northern Iraq as a base for staging attacks on neighboring Turkey, which has been engaged in a decades-long struggle with Kurdish rebels and which has itself banned the PKK.

No one should underestimate the depth of enmity between the Kurds and Turks, or how both groups could complicate an already shaky security situation in Iraq, and Kurdish moves for an autonomous Kurdish enclave in the new northern Iraq are making Ankara very edgy.

Erdogan is also trying to patch up US-Turkish relations, which took a body blow when the Turkish parliament denied US-led coalition forces access to Iraq through Turkey last year, and when Turkey reversed its decision to send troops to Iraq to help with peacekeeping.

While Bremer and Shi'ite leader Ayatollah al-Sistani have voiced different ideas about how, when and in what format elections will proceed in Iraq by July 2004, the Turks and Kurds have strong views concerning whether the new Iraq should be split along federal, geographic, or perhaps ethnic lines.

Ahead of his meetings with Bush, Erdogan addressed the Council for Foreign Relations in New York, saying: "There is a demand to establish a federation in the north of Iraq. We approve of neither an ethnic, nor religious-based federation. These developments will cause a difficult situation for Iraq in the future."

But the Kurds of northern Iraq, with strong ties to more than 13 million Kurds in Turkey, and perhaps another 20 million Kurds in Iran, Syria and elsewhere around the world, want to see an Iraq with a federal government structure. The Kurds see their northern region as becoming semi-autonomous, with access to the lucrative oil fields of Kirkuk and Khanakin, an area that the US doesn't consider Kurdish territory. The Kurds were an integral ally in the US-led invasion of Iraq, and not only came to the coalition's rescue in the north of Iraq, but also gave forces a transit way to Baghdad, something Turkey was not willing to do. No US or coalition forces have been killed in northern Kurdish-controlled areas of Iraq.

While the Kurds have sizeable nationalist aspirations, there are indications that the US is actively trying to reel them in, as they try to juggle a range of competing views coming out of the Sunni and Shi'ite communities in the many other regions of Iraq. Bremer met with Kurdish leaders in early January, and apparently emphasized that their hopes for a secular Kurdish state in the north go too far, and also don't sit well with the other 80 percent of Iraq made up of non-Kurds.

But the Kurds have never been big on compromise. There is no question that Turkey, Syria and Iran don't want to see what amounts to an autonomous Kurdish state in the north of Iraq, further hardening the Kurdish position. However, to ignore the Kurd's chance for some stability and autonomy would be a mistake, as well.

On January 27, Kurdish frustrations surfaced when officials in the Irbil province of Iraq threatened to close the offices of the Peace Monitoring Force (PMF), which is commanded by Turkish officers and a force of close to 400 mainly Iraqi Turkmen and Iraqi Assyrians. The PMF was put in place to patrol a line separating the two rival Kurdish groups: the Kurdistan Democratic Party (KDP) and the Patriotic Union of Kurdistan (PUK). Neschirwan Barzani, prime minister of the portion of northern Iraq controlled by his KDP forces, told the Associated Press that the PMF is no longer needed now that Saddam Hussein has been ousted and captured. The report quotes US Lieutenant-Colonel James Bullion of the US Army's Civil Affairs Battalion in Irbil as saying that it was "unlikely" that the Kurds would use force to expel Turkish troops in Irbil. But the tension remains.

While Barzani is talking tough, Erdogan is in Washington, and all indications point to Ankara angling for a closer relationship with the US, emerging as the foreign policy broker between the US and Europe on one hand, and the Middle East and Central Asia, on the other.

During his meeting with Erdogan, when concerns about Iraq were brought to the agenda, Bush reportedly confirmed that speculation about Iraq's territorial integrity will not be allowed. "We are aware of your [Turkey's] anxieties. You could be sure. I am an honest man; trust my word."

In a joint press briefing held after the meetings, Bush acknowledged that Turkey is an important friend and ally of the US. "We talked about a US Iraq ideal in territorial integrity and peace. [Erdogan] informed me about the Cyprus issue. I am very pleased by the effort to resolve the dispute. This is a matter that has continued for such a long time."

Erdogan's Turkey has signaled that it is willing to be a mediator between Syria and Israel, and is moving forward with resolving the longstanding row with Greece over Cyprus, so that it can position itself for possible talks on a vote to join the European Union in December.

On January 28, US Vice President Dick Cheney, speaking to a group of European newspaper columnists, reiterated US support for Turkey's bid to enter the EU, which is a far more popular proposition in Turkey than in much of Europe.

Turkey is trying to turn around from a low point for US-Turkish relations last year, when the Turkish parliament voted to not allow Turkish territory to be used as a staging ground for its invasion of Iraq. But now it appears the Turkish government will be extending some of its bases to be used for troop rotation and the gradual removal of much of the US force in Iraq through Turkey back to Europe and the US. Turkey is keen to be a broker, assisting in US troop departure from the region, something that many neighbors, and much of Islamic world, feel can't happen soon enough.

So, once again it looks like the Kurds are going to get the short end of the stick, and be told they will be given a degree of autonomy, but will not be allowed to control oil resources, pipeline taxes, or to maintain their own Peshmerga para-militia. It's hard to imagine that one, especially given the history. Surely, if the Turks have their way, the Kurdish aspirations will be muted, which could be a radicalizing influence on the more-rebellious Kurdish factions.

On January 28, Agence-France Press reported that close to 250 Arab tribal chiefs said they are strongly against Kurdish demands for the oil center of Kirkuk to be part of a still-to-be-determined Kurdish autonomous region in the north of Iraq. Kurdish leaders want to see the Kirkuk region included with the three other provinces which make up part of the Kurdish region.

Speaking at the Center for Strategic and International Studies in Washington ahead of meetings with Bush, Erdogan said point blank that creating a federal structure based on ethnic and sectarian origins could shatter Iraq. The Turkish president went on to say the PKK is strengthening its position in northern Iraq.

Not everyone welcomed the US announcement on the PKK, however. Mahmud Uthman, an independent Kurdish politician and a member of the US-appointed Iraqi Governing Council, told RFE/RL that Ankara's accusations regarding the PKK are unfounded and that the US is only seeking to pacify its North Atlantic Treaty Organization ally Turkey: "I think it is not founded, this declaration. [It's] only to satisfy Ankara. There is no basis for it, because first of all, the name has [been] changed from PKK to People's Congress. Their name has changed and they haven't fought or shot a bullet in the last four years."

Some observers have speculated that the US move might spur hostilities between the PKK and Iraqi Kurdish forces. But Uthman says such tensions would work only to Ankara's benefit and that he does not expect clashes between Kurdish factions in Iraq: "[The PKK] does not believe in fighting. They are not using violence at all, either in Turkey or in Iraq. And I think there are no problems now between them and Iraqi Kurdish parties. So I don't see any possibility of fighting. The Turkish government very much wants to see fighting between Iraqi Kurds and those from Turkey, but I don't think they will succeed."

The PKK's imprisoned leader, Abdullah Ocalan, urged his followers to leave Turkey in 1999, following a 15-year insurgency against Ankara that claimed some 35,000 lives. Some 5,000 PKK fighters and their families are believed to be hiding in the mountains separating northern Iraq from Iran. But Uthman says, according to RFE/RL, that it is unclear how many PKK members are in Iraq and how strong a challenge they might pose if attacked by coalition troops: "Well, I don't know. A few thousand people there are armed; they are like Peshmergas, although they are not using their arms. But there are also some other Kurds from Turkey who are now refugees in camps near Erbil. They are supervised by the United Nations, of course."

While the US is grateful for the Kurds' support and critical intelligence in northern Iraq, there is also evidence that the US State Department continues to be concerned about what it sees as possible links between Kurdish groups and terrorist activities. Despite evidence of several Kurdish splinter groups, several legitimate Kurdish leaders are still going to make their voices heard as parties continue to jockey for position in the evolving political map in Iraq.

On January 25, the London-based al-Sharq al-Awsat web site reported: "The Patriotic Union of Kurdistan [PUK], led by Jalal Talabani, member of the transitional Iraqi Governing Council [IGC], has called for holding elections for the assembly that will assume sovereignty from the coalition forces by July 2004 in what he described as a compromise formula. This formula is a compromise between Shi'ite leader Ayatollah Ali al-Sistani's call for holding direct elections and the US call for holding elections to choose committees of representatives, who will elect the representatives of the transitional assembly."

Maybe the Kurds, finally, are ready to play a role in helping move Iraq towards elections and self-governance, and the removal of occupying coalition forces. But don't expect the Kurds to stay still, as Erdogan raises Turkey's foreign policy profile, and Syria and Iran also try to curb the aspirations of the Kurdish people.
- posted by dhamaka @ 7:41 AM

 
The business of stifling the Internet

By Alan Boyd

SYDNEY - Internet users are losing ground in the censorship war being fought in Asia's cyberwaves, partly because Western corporations are helping to undermine the spirit of enterprise that made the medium such a potent weapon for free speech.

While smarter and more discreet communication technologies offer a way around creeping state controls, advocates of reduced government intervention fear that multinationals may present a far greater long-term threat.

Media watchdog Privacy International warned in a year-long study released in September that corporations with a vastly different agendas were quietly hijacking the 'Net for their own commercial ends. At the same time, almost all governments worldwide - including many supposed flagbearers of democracy - were exploiting terrorism fears to enact laws that would impede the flow of information.

"Governments and their agencies have traditionally viewed new technologies with suspicion, arguing that their presence can disturb the hard-won 'balance' of rights and responsibilities, in the same way that large companies have traditionally viewed any new media as a threat to the balance of their markets," co-authors Simon Davies and Karen Banks wrote in a foreword.

"Technological developments are being implemented to protect a free Internet, but the knowledge gap between radical innovators and restrictive institutions appears to be closing," they said.

The study, and a flurry of other recent reports by media watchdogs and human-rights organizations, confirm what many frustrated Asian consumers had suspected: meddling in the 'Net has intensified during the past two or three years.

Websites and their harassed subscribers have fought back with a game of subterfuge that many had expected would eventually exhaust surveillance resources by stretching their ability to monitor constantly changing techniques. Online addresses have been rerouted through a maze of cyber corridors to fool proxy government servers that attempt to block content by filtering all data before it actually reaches the public domain. Crossover technologies between the Internet and mobile phones are opening up other possibilities, as websites use messaging services to keep regular users informed of suppressed content or shifting site locations.

Amnesty International (AI) noted this week that even in China, widely regarded as having the most repressive Internet climate worldwide, online activism has become more evident as controls have been tightened.

"Over the last year, there have been signs of Internet users acting increasingly in solidarity with one another, in particular by expressing support for each other online," the human-rights group stated, adding: "Such expressions of solidarity have proved dangerous, as a growing number of people have been detained on the basis of such postings."

Amnesty International listed the names of 54 Chinese nationals who had been detained or sentenced for expressing their opinions online, or for downloading information from the Internet, since November 2002 - a 60 percent increase in that period. This was in addition to an unknown number of people who were still in detention for disseminating information about the spread of severe acute respiratory syndrome (SARS) over the Internet last year.

Most Internet criminals in China have been charged under 1995 decrees that make all users register with their local police stations and sign an agreement with the Ministry of Public Security that they will not engage in "subversion" or "endanger state security". The edicts carry prison sentences of two to 12 years. A separate proclamation issued by then-premier Li Peng in 1996 required that all international computer networking traffic, both incoming and outgoing, be routed through state channels.

China, as well as autocratic neighbors Myanmar, Laos and Vietnam, got its censorship cue from Singapore, whose filtering system is arguably the most effective in Asia. Because it controls the three Internet service providers, Singapore was able to set up a computerized proxy server in the 1990s that screens all websites for content viewed as "objectionable" or a potential threat to national security.

Although political leaders in the republic acknowledge that some loosening of media controls is inevitable as education and income levels grow, they are not in any hurry to oblige.

"I have no doubt that our society must open up further. The government has no monopoly of knowledge and ideas. To understand and tackle our challenges fully and vigorously, we need to draw on the expertise and resources of all our people," Deputy Prime Minister Lee Hsien Loong said in an address to the Harvard Club this month. "But we will not ape others blindly and do something simply because it appears fashionable. Coffee-shop talk is helpful for sensing the popular mood, but it cannot be the basis for deciding on national policies," Lee said.

Singapore acted as an adviser to several of the communist states when they were setting up their Internet filters in the late 1990s. Most initially had little success because of Cold War limits on technology transfers.

However, this has all changed in the past decade, as Western companies have targeted emerging investment opportunities for telecommunication systems, especially in China.

China, with a reputed 30,000 full-time Internet surveillance operatives for the country's 45 million web surfers, now has access to the same cutting-edge technology that content providers were using to skirt its censorship regime.

The Amnesty International report named Cisco Systems, Microsoft, Nortel Networks, Websense and Sun Microsystems as multinationals that had supplied Beijing with Internet equipment without imposing any conditions on its use.

Privacy International, which has also campaigned against unrestricted sales, noted: "Without the aid of this technology transfer, it is unlikely that non-democratic regimes could impose the current levels of control over Internet activity."

An equally worrying trend is that Western corporations, including many in the mass media, are manipulating the Internet to pursue their own business objectives without considering the adverse effects elsewhere. According to the Privacy International study, "multinational corporate censors" with different agendas from their governments' have represented one of the most important growth trends in recent years.

"Some American cable companies seek to turn the Internet into a controlled distribution medium like TV and radio, and are putting in place the necessary technological changes to the Internet's infrastructure to do so," warned Simon Davies and Karen Banks. "It is arguable that in the first decade of the 21st century, corporations will rival governments in threatening Internet freedoms."

Some Western governments indirectly add to this process by using commercial pressures to impose misguided censorship standards on software manufacturers, even with products that were designed to blunt the technological edge of repressive regimes. Last year the makers of Safeweb, a US software package that was developed in partnership with the Central Intelligence Agency to help Chinese users avoid censorship, were forced to install a filter on some content so it would qualify for US public funding.

Asian governments have taken note of the financial and political benefits of letting the commercial world assume the censorship burden, which takes some of the human-rights heat off security agencies.

For the past 12 months, China has been delegating responsibility for surveillance and monitoring to private companies, including Internet cafes and information service providers. Davies and Banks argued that Western governments were neglecting their leadership responsibilities to ensure that the Internet is allowed to evolve without political or commercial constraints.

In many cases this has occurred, they said, because political leaders have overreacted to perceived security threats posed by the free flow of information since the 2001 terrorist attacks in the US.

"While paying lip service to personal freedoms, the leaders of the democratic world have affirmed with uncharacteristic harmony that the pursuit of a safer society must prompt a reassessment of individual liberties and privacy," they said.

"In its most blatant manifestation, this will result in a substantial increase in the right of the state to place controls on all citizens, shifting the default in favor of comprehensive surveillance over the population.

"Technology is at the same time the culprit and the savior."
- posted by dhamaka @ 7:40 AM

 
Covetous eyes on Sri Lanka's strategic jewel

By Ramtanu Maitra

After protecting Sri Lanka Monitoring Mission (SLMM) chief and fellow Norwegian Tryggve Tellefsen since October 23, when he was first accused of aiding rebel Tamil Tigers by Sri Lankan President Chandrika Kumaratunga's Peoples Alliance (PA) party, Norway's Deputy Foreign Minister Vidar Helgesen finally announced Tellefsen's replacement with General Trond Furuhovde on January 16. Furuhovde was the first SLMM chief and had preceded Tellefsen.

The Norwegian's replacement and the incident behind it shed new light on the political fight that erupted between Kumaratunga and Prime Minister Ranil Wickremesinghe in November, and point to the strategic churning around Sri Lanka, the island nation off the southern coast of India at the crossroads between the Middle East and the rest of Asia.

In addition to Norway, India and the US have remained unseen string-pullers in Sri Lanka's latest effort to resolve the decades-old insurgency by the island's Tamil minority led by the Liberation Tigers of Tamil Elam (LTTE).

Not surprisingly, Sri Lanka's Trincomalee - a "strategic jewel" that is considered one of the best deep sea ports in the world, and which lies in the Tigers' turf - is at the center of the maneuvering.

Peacekeeper's faux pas
In October, the PA, the coalition party behind Kumaratunga, complained in parliament that Tellefsen, using the authority of his office, had alerted the Tamil Tigers so that they could evade capture. According to the PA, the Sri Lankan navy had spotted a rebel Sea Tiger ship in Sri Lankan waters, and asked for monitors from the SLMM to go with them to apprehend the suspicious ship. The PA says that Tellefsen telephoned the rebels to inquire whether it was one of their vessels - in effect forewarning the Tigers. The ship in question fled.

Meanwhile, Kumaratunga was growing increasingly uneasy over Norway's pro-Tiger bias in its involvement in the ongoing peace talks between Colombo and the Tigers. Initially, the SLMM, set up in February 2002 by the LTTE and the government of Sri Lanka, comprised 25-30 persons representing Norway, Iceland, Denmark, Finland and Sweden. But by June last year, the mission was strengthened, and now comprises 47 representatives, including naval monitors, the majority from Norway.

The PA's finger-pointing at Tellefsen is not an isolated incident. Many observers in Sri Lanka were complaining that the SLMM, under the pretext of evenhandedness, was doing a whole lot to protect the Tigers' interests. On June 14 last year, for instance, the Sri Lankan navy sank the LTTE ship, Shioshin. Frederica Jansz of The Sunday Leader newspaper reports that when her newspaper contacted Tellefsen, he said the SLMM was still in the process of gathering all information from both parties concerned and would only be in a position to make a clarifying statement thereafter. No SLMM monitors were present at the time of the confrontation.

One might wonder why not. A mere 24 hours before the incident, The Sunday Leader points out, an LTTE leader had told Tellefsen that increasing interference with LTTE ships in Tiger-controlled areas and harassment of Sea Tigers, the Tiger navy, would lead to a serious confrontation between the two sides if not checked. Tellefsen was in the Tiger-dominated town of Killinochchi on Friday, June 13, together with a delegation from the SLMM.

Kumaratunga strikes
Following the PA's accusation before parliamentarians, Kumaratunga declared Tellefsen persona non-grata on October 23. Tellefsen had to leave Sri Lanka, but Helgesen and other Norwegian authorities kept Tellefsen's sacking at bay.

The Norwegian daily Aftenposten wrote recently that Tellefsen was forced to work from Oslo with the remaining members of SLMM in Sri Lanka, using the telephone and email. This charade might have continued longer, but New Delhi intervened on behalf of the Sri Lankan president, and Norway let the Tigers' good friend go.

On November 23 last year, while premier Wickremesinghe was in Washington receiving kudos for his government's on-going talks with the Tigers, whom the United States had officially identified in 2002 as a terrorist outfit, Kumaratunga proceeded to topple the Norwegian-pulled apple cart. Kumaratunga sacked defense minister Tilak Marapana, accusing him of allowing the Tigers to use the Norwegian-brokered ceasefire that had been in place for 20 months to strengthen militarily. She also fired interior minister John Amaratunga, who controls the police, and mass communications minister Imthiaz Bakeer Markar, who controls the state-run media. These three were considered the most powerful of Wickremesinghe's ministers.

The president announced the dismissal of the three ministers three days after the Tigers unveiled power-sharing in their formal proposals. She pointed out that she took this step "after careful consideration, in order to prevent further deterioration of the security situation in the country". Kumaratunga was acting on the belief, held by many Sri Lankans, that the peace process has led to a legitimization of the Tigers and their control of large chunks of the country's territory even though the group remains banned in countries from India to the US.

Kumaratunga's drastic move no doubt rattled not only Wickremesinghe, but also some in Washington with whom he was then visiting. "We certainly hope that these political tensions do not delay progress on peace talks ... " one unnamed official said, in a veiled attack on Kumaratunga. Washington made clear at that point whose side it would be on in case a full-fledged power struggle was unleashed in Sri Lanka between the president and the prime minister. The growing US interest in the Sri Lankan peace talks is particularly intriguing as there was no evidence in Sri Lanka of any al-Qaeda involvement, Washington's ostensible priority concern.

Trincomalee to the fore
The revived US interest in Sri Lankan affairs centers, no doubt, on the old Trincomalee port. Trincomalee, located on the northeastern coast of Sri Lanka, has a slightly higher percentage of Tamils than Sinhalese (the majority community) or Muslims. The Tamils, who mostly live in the north and the east, claim they have been discriminated against in job allocation, land use and education by governments run by the majority community.

Trincomalee, meanwhile, is considered by military experts as one of the best deep seat ports in the world. Moreover, it is situated strategically on the sea lanes through which oil is carried from the Middle East to east and far-eastern Asia. According to observers, Trincomalee is a "strategic jewel". For several decades, the Pentagon had shown interest in this port, but during the Ronald Reagan administration interest appeared to have waned.

The recent revival of interest in Trincomalee in the Pentagon can then only be associated with the growing overall US interest in acquiring bases for intervention and rapid deployment for the sake of developing a quick strike capability in the general area. According to anti-imperialist American strategists such as Chalmers Johnson, "once upon a time" you could trace the spread of imperialism by counting up colonies. Says Johnson: "America's version of the colony is the military base. By following the changing politics of global basing, one can learn much about our ever-larger imperial stance and the militarism that grows with it. Militarism and imperialism are Siamese twins joined at the hip. Each thrives off the other."

Visits to Sri Lanka by Deputy Secretary of State Richard Armitage and ranking US government and military officials in recent times, and the strong statements repeatedly issued by the US ambassador in Sri Lanka, Ashley Wills, are noteworthy.

Is the US seeking a base?
Soon after the ceasefire between Colombo and the Tigers was announced in February 2002, the Straits Times of Singapore put out an article, perhaps to test the Indian reaction. "As rebel fire ceases in Sri Lanka, the United States has been laying the groundwork to deploy its military personnel to the strategically located country. This move will both aid its campaign in Afghanistan and keep New Delhi's growing influence in check," the newspaper reported. "Located between the Middle East and Asia, Sri Lanka could ease the transport of US military ships, troops and equipment. Its port, Trincomalee, is one of the world's deepest natural ports and could serve as a refueling station for the US military."

It has been generally reported that Sri Lanka and the US have been discussing military cooperation for some time now. The two countries have been negotiating an Acquisition and Cross-Service Agreement (ACSA) for several months. The ACSA would allow US forces to procure food, fuel, ammunition and transport in Sri Lanka at the same rates as those paid by Sri Lankan forces.

But the US's move, if there ever was a formal one, was not in any manner challenged by New Delhi. In fact, New Delhi had struck up an excellent relationship, centered around economic and trade issues, with Wickremesinghe, who, to put it mildly, was gung-ho on the peace talks. Signals emanated from New Delhi suggesting that India was watching every move the Norwegians made like a hawk. But at the same time, New Delhi exhibited the utmost caution. Every time the star Norwegian peacemaker, Erik Solheim, visited India, he was cordially received. This despite India's discovery of the paw-marks of the Tigers in India's turbulent northeast, and the Tiger-Naxalite alliance in India's southern states in recent years. In other words, India and the US concurred in seeing that the peace talks succeed.

But Sri Lankan observers point out that India was fully aware of the growing American interest in Trincomalee. It is perhaps for that reason that soon after the Straits Times article appeared, Indian High Commissioner Gopalkrishna Gandhi, along with other embassy officials, paid a visit to the Trincomalee harbor. Gandhi's inspection of the oil tanks located in the harbor was a reminder of the abiding Indian interest in Sri Lanka.

One result of Gandhi's trip to Trincomalee is an Indo-Sri Lankan agreement to lease part of the Ceylon Petroleum Corporation's 99 oil tanks, each with a capacity of 100,000 tonnes, to the Indian Oil Corp. The deal was signed in New Delhi in June, 2002. The deal was not adequately analyzed at the time, but it could be Kumaratunga's way of keeping India in Trincomalee and fending off the US pressure. The other major commercial establishments already in the city are a flour mill owned by Prima Ceylon, a subsidiary of Prima Singapore, and the Tokyo Cement Co plant, a subsidiary of Japan's Mitsui.

India alerted
What drew the attention of Indian authorities to developments surrounding the ceasefire agreement was the report they received from former Sri Lankan foreign minister Lakshman Kadirgamar during a visit last August to New Delhi to "alert and sensitize" Indian leaders about the "grave situation" on the island.

The former Sri Lankan foreign minister, who is now a senior adviser to Kumaratunga, pointed out during extensive discussions with Indian National Security Adviser Brajesh Mishra, External Affairs Minister Yashwant Sinha, Finance Minister Jaswant Singh, former foreign secretary Kanwal Sibal and Congress leader K Natwar Singh, that the Tamil Tiger guerrillas have tightened their stranglehold over the strategic eastern port of Trincomalee, taking advantage of the ceasefire. Armed with a map of the harbor and the LTTE camps and bases that have sprung up around it, Kadirgamar also provided Indian leaders with details of preparations being made by the Tigers to seize control of Trincomalee port at any moment. This revelation startled the Indian officials, who made it clear that the development was of concern to New Delhi. Kadirgamar did not make a similar pilgrimage to either Oslo or Washington.

Interestingly, the ill-fated Indo-Sri Lanka Accord of 1987 contains an annexure stating: "Trincomalee or any other port in Sri Lanka will not be made available to military use by any country in a manner prejudicial to India's interests." Further that "the work of restoring and operating the Trincomalee oil tank farm will be undertaken as a joint venture between India and Sri Lanka."

In early January, when Kumaratunga was in Islamabad attending the South Asian Association of Regional Countries (SAARC) summit, she told reporters that Sri Lanka is ready to work out a defense pact with India. Within days, a defense team from Sri Lanka arrived in New Delhi to work out the details. It is yet to be seen how the defense pact gets formulated and until such time as it is made public, it is unlikely that Washington will respond one way or the other.

The LTTE has already expressed serious concern over the envisaged Indo-Sri Lankan Defense Agreement, arguing that it could have far-reaching negative consequences for the current peace process, sources told TamilNet on January 19. Anton Balasingham, the chief negotiator and political strategist of the LTTE, has also reportedly conveyed his organizations' objections to the government of India.

The same Balasingham told the Norwegians that the proposed defense agreement between New Delhi and Colombo might upset the balance of forces to the disadvantage of the LTTE. What "balance of power" Balasingham is referring to is difficult to fathom, unless he is still thinking of an independent Tamil nation.

How solid is the ceasefire?
The peace talks have been stalled since early November as the power struggle between Kumaratunga and Wickremesinghe heated up in Colombo. Kumaratunga has further increased tensions by bringing her political party, the Sri Lanka Freedom Party (SLFP), and the pro-socialist Sinhala party, the Janatha Vimukti Peramuna (JVP), together. Sri Lankan observers say that this alliance is a clear parting of the ways between Kumaratunga and the Wickremesinghe-led United National Front (UNF) government.

The SLFP-JVP alliance has rightly pointed out that the February 2002 ceasefire agreement gave away too much to the LTTE. At the same time, the LTTE has all the reasons to consider the SLFP-JVP alliance as a move directed against the continuation of peace talks. The JVP is against devolution and believes the ethnic conflict should be resolved only by administrative decentralization. Kumaratunga, on the other hand, is the only Sinhala leader to have unilaterally put on the table a far-reaching devolution package to resolve the conflict as early as 1995. The JVP's condition for the short-lived alliance it had with the PA in 2001 was a freeze on plans for devolution. While no such condition was mentioned in forming the alliance this time, the SLFP-JVP "memorandum of understanding" clearly states their differences on the devolution issue. The SLFP-JVP combine says it believes in a "negotiated settlement" to the ethnic conflict.

The declaration of the SLFP-JVP alliance is an indication that Kumaratunga is considering an early parliamentary election to break the cohabitation deadlock between her and the UNF government. In reaching an understanding with the JVP, Kumaratunga, who has sidled quite close to New Delhi in recent months, has linked the political fortunes of the PA, of which the SLFP is the main constituent, with a party that was once virulently anti-India and heavily dominated by anti-Tamil, Sinhala chauvinists.

Kumaratunga had hinted at snap polls at the beginning of the year when she said her party is ready to face the electorate at any time. Washington has indicated that it does not encourage a snap poll. There is no doubt that New Delhi does not want a snap poll to take place right now. Kumaratunga sent Economic Reforms Minister Milinda Moragoda as her emissary to India on January 23 to discuss the island's worsening political crisis and the troubled peace process against a backdrop of new proposals to resolve the tug-of-war, officials said. She held talks with Sinha and Mishra over the weekend.

Since the SLFP-JVP alliance has been announced, the Tigers have warned at least twice that the ceasefire could break down. Sri Lanka's Tamil Tiger rebels have increased their numbers of child soldiers in spite of a ceasefire, the United Nations reports. The BBC's Frances Harrison in Colombo says there is a real possibility that the child soldiers may fight again. Sri Lankan newspapers report major rallies in the Tamil-dominated districts in northern and eastern Sri Lanka as an indication that the Tamils are preparing for confrontation once again.
- posted by dhamaka @ 7:38 AM

 
Pakistan loses ground in Afghanistan

By Syed Saleem Shahzad

ISLAMABAD - As the Taliban prepare for a crucial phase of their struggle against foreign troops in Afghanistan, a prelude for the final "spring offensive", the resistance movement has lost its support from Pakistan's establishment, under pressure from the United States.

The resistance, meanwhile, under a new commander, is regrouping in the remote Khyber Agency region of Pakistan, using the infrastructure of people and fortifications laid by Osama bin Laden's al-Qaeda several years ago.

Asia Times Online has learned from insiders within the security administration of President General Pervez Musharraf in Islamabad that strategists have bowed to pressure from Washington, and will end all covert support for the resistance in Afghanistan.

Up to now, Pakistan has aided some commanders in Afghanistan belonging to the Hizb-i-Islami Afghanistan (HIA) of Gulbuddin Hekmatyar, the veteran mujahideen leader now largely responsible for orchestrating the Afghan resistance.

Pakistan's purpose was not so much to damage US interests, but to establish a counter-force to the growing pro-India presence along the Afghani border areas with Pakistan. Pakistan's support, though limited, did, nevertheless, work against the interests of the US. As a result, US intelligence tracked HIA recruiting offices in Pakistani cities such as Karachi and Peshawar, and pointed to various locations in Pakistan where HIA volunteers were being given training, money and arms. And for example, legendary Afghan commander Jalaluddin Haqqani ( who joined the Taliban and became a minister and who is now the main force behind the resistance in Khost and Paktia) visited Miran Shah in Pakistan several times, but authorities turned a blind eye.

Confronted with this, and coming at a time of revelations of some Pakistani scientists being accused of nuclear proliferation to Iran, among other countries, Islamabad had little option but to pledge to pull out all of its operators and their proxy networks from Afghanistan.

Musharraf, did, however, apparently manage to extract a concession from the US that coalition troops would increase their presence in Afghanistan in areas where warlords are hand-in-glove with the Indian establishment. For example, Pakistan wants more International Security Assistance Force (ISAF) troops in Jalalabad and Kandahar, where warlords associated with the anti-Pakistan former Shura-i-Nazaar and the Northern Alliance are active. The US leads a 12,000-person force in Afghanistan.

Carry on in the Khyber
These developments come as the Taliban step up their struggle to include more suicide attacks. Asia Times Online was first publication to report this strategy (Taliban raise the stakes - Oct 30, 2003). These attacks are the prelude to a broader struggle that will start in spring in which the Taliban will attempt to retake the major cities in Afghanistan that they held before being ousted by the US in late 2001.

One British soldier of the ISAF was killed on Wednesday morning and three of his comrades wounded in a car bomb attack on an eastern Kabul highway. The attack occurred just a day after a Canadian peacekeeper lost his life and three others were injured in a suicide bomb attack in southern Kabul area. About 10 civilians, including a French aid worker, were also wounded in the two attacks.

In the latest unrest, an explosion near an ammunition dump in southern Afghanistan on Thursday killed seven US soldiers and wounded three other soldiers and an interpreter. The US Army central command said that the soldiers were working near an arms cache in the southern province of Ghazni. The cause of the blast is unclear.

For some time the US has focused on South Waziristan Agency in Pakistan as a hotbed of the resistance, where guerrillas hide and receive support from the local population between raids in Afghanistan. As a result, at US instigation, the Pakistan army has undertaken a number of missions to the region, but to date without major success in tracking down resistance ringleaders.

Now, though, it emerges that the real center of resistance action is the remote Khyber Agency in North West Frontier Province. Two mountainous areas here, Tera and Moro, which lie on the Pakistan-Afghanistan border, have no roads and the local population is almost 100 percent behind bin Laden and the Taliban. Some years ago, bin Laden had a network of tunnels and underground bunkers built here, which the resistance is now using as hideaways and for the storage of supplies and ammunition as a source of most supply lines into Afghanistan.

Obviously, this region is known to both the US and Pakistani authorities - the problem is dealing with it. Clearly, the US cannot utilize its massive air strength in Pakistan as it did in ousting the Taliban from Kabul. And due to the terrain - and the completely hostile population - the Pakistani army is in no position to make an offensive of any significance. The use of helicopters would also be hazardous as they would have to fly low in the valleys, opening themselves up for ground-to-air missile attacks.

According to Taliban sources, the resistance for the spring offensive is now under the command of Mullah Sabir Momin of Orugzan province. The battle lines are drawn.
- posted by dhamaka @ 7:33 AM

 
Internet hacks : Web news cashes in

By John Berthelsen

After the bubble years in which Internet publications burned through a phenomenal amount of other people's money, web journalism is starting to take off. It may hold ominous implications for newspapers globally, but it could well save journalism itself.

Until very recently - mostly in the past six months - nobody had figured out how to make money off Internet journalism. Now, they have, partly because very recent, rapid changes in technology have made the web more reader-friendly and more receptive to advertising. But it is mostly conventional newspaper companies that have the editorial, advertising and marketing resources to take advantage of the 'Net, not the startups, or e-zines as they are called.

Inexorably, all media are losing readers to the 'Net. According to an exhaustive study of US at-work Internet users by the New York-based marketing research firm eMarketer, those who use the web, particularly at work, have cut their television viewing time by 28.8 percent, their magazine reading time by 22.5 percent and of newspapers by 23 percent. These numbers are for the United States, but they are certain to apply to the world at large, and Asia in particular, as time passes.

In the study done in conjunction with the Wall Street Journal Online, titled "The Elephant in the Room", eMarketer found that a lot of people in the office are using their computers for purposes other than work. Some 50 million to 60 million are online at the office in the US alone, of about 135 million total viewers. These web viewers are more affluent, more adventurous, better-educated and younger than newspaper readers. Between 43 and 52 percent make upwards of US$75,000 a year. Another 21.7 percent earn more than $100,000. The vast majority - 70 percent - have a college degree or higher. Baby-boomers and generation-Xers dominate, with 23.7 percent aged between 25 and 34, and 29.4 percent aged 35-44.

They also use the web to shop. Some 60 percent of the 53 billion annual online consumer dollars are spent at the workplace. Of these at-work users, 45 percent notice ads online and say the ads influence them. The average total time spent online at the office per Internet visitor last November was an amazing 35.5 hours. Advertisers are awakening to these facts. A full quarter of users claim to be addicted to online meandering while at work.

They are also increasingly likely to use the Internet for news. Some 35 percent say they refer to the Internet for news at work, followed by 25 percent who rely on newspapers, 21 percent on magazines and 17 percent on radio. A minority - 9 percent - say they refer to television or cable. (Apparently there is some overlap - the total is 107 percent.) Watching television at work can get you fired, but searching for the news on your computer probably won't.

Two major new factors are responsible for the sudden change in fortunes.

The first is the growing ubiquity of fast Internet connections that allow vast amounts of information to be piped to computers. Broadband means that for users, getting to information is no longer tedious and frustrating. It is also always on, spurring viewers to check their favorite sites as many as 30-40 times a day instead of once or twice, as they would do with dial-up service. Particularly in the Asia-Pacific region, broadband is projected by eMarketer to grow from 5.8 million computers in 1990 to 67 million by 2005.

Second, technological advances have made it possible to embed ads in journalistic copy itself, as they are in newspapers and magazines, and to tie the ads to articles related to those interests, rather than having to resort to annoying pop-ups and banners.

The growing upswing in Internet revenues and readers is reaching a kind of critical mass that has been growing for several years, according to Robert S Cauthorn, vice president for digital media for the San Francisco Chronicle. Media buyers now have online entries on their buy sheets that they use to solicit customers. Simply adding that category has made advertisers and media buyers conscious of a new - and effective - way to reach the public.

It is beginning to pay off. For instance, the New York Times went from a $7.5 million loss on its Internet site in 2001 to an $8 million profit in 2002 - a swing of nearly US$16 million in a single year, a spokeswoman says. The Sacramento Bee, a regional newspaper based in California, says its website earned $6 million in 2002, some three-quarters of that from classified advertising.

The San Francisco Chronicle is privately held, and Cauthorn wouldn't describe revenues. However, he commented, "I can tell you that our revenues are growing faster than those of our parent organization, and that [in March] we had the highest revenues in our history. The reality is that this year, it has become clear that the Internet is mass media." SFGate, the Chronicle's website, is the fourth-most-active news website in the United States.

The Washington Post also declined to discuss specific numbers. But, said George Nolan, communications coordinator for Washington Post/Newsweek Interactive, "If you look at advertising across all media last year - radio, television, print - at best the industry was flat or down by different estimates. At the same time, our online advertising has been surging upwards. In the last year, for non-classified advertising, [the Internet site] was up 36 percent, and up 80 percent for the fourth quarter."

Officials with several newspapers and online sites say they expect steady, long-term growth in revenues, not the kind of spectacular changes that drove the dotcom bubble of the 1990s into wishful hysteria. They are also gaining readers whose cost base is dramatically reduced. There is obviously no need for paper, at about $450 a tonne, nor is there a wide range of distribution costs including printers' salaries, trucks to get the papers through traffic, and fixed costs for presses, etc. Cauthorn describes the cost of delivering the news as "infinitesimal" compared with print journalism.

Figures on Asian Internet journalism are not readily available, and requests to the region's top papers have gone unanswered. Nonetheless, most if not all of the major newspapers in Asia maintain readily accessible and informative websites. Most also know that their ability to grow in circulation and advertising revenues is constrained by geography and, in some cases, their ability to report objectively is constrained by government censorship.

Unfortunately, there are no specific studies of Internet journalism consumers in Asia. However, eMarketer found, an estimated 566 million persons worldwide logged on in 2002 - a figure that can be expected to rise to 725 million by 2004. Of those, Asia-Pacific users totaled 115.9 million in 2000 and are expected to grow to 235.8 million by 2004, a combined annual growth rate of 19.4 percent.

Broadband penetration for
selected countries at end 2001, as a percentage of all
households:

South Korea 51.7
Hong Kong 26.0
Taiwan 18.2
Singapore 11.7
US 10.4
Japan 5.8
China 0.1
Source: eMarketer
In fact, eMarketer found, the Asia-Pacific region contains the largest share of worldwide Internet users, at nearly one-third. Their percentage of the total is increasing, from 30.1 percent in 2000 to a projected 32.5 percent in 2004. Japan is a distant second in terms of absolute numbers of users, at 61 million compared with the US at 152.8 million.


Much of the evidence for the optimistic new outlook for electronic journalism is contained in three exhaustive studies of demographics and the Internet by eMarketer. While these studies primarily deal with the United States, their implications are, if anything, even more encouraging for Asia. For instance, their figures for the growing ubiquity of high-speed broadband connections, crucial to fast delivery of attractive advertising, show that Asia is growing faster than any other region.

Regional share of broadband households worldwide,
2000-2005 (% of total broadband households):

2000
2001
2002
2003
2004
2005

W Europe
12.5%
18.8%
20.1%
22.7%
24.9%
26.6%

N America
42.0%
42.1%
36.0%
33.1%
30.2%
27.6%

Asia Pacific
44.6%
37.7%
42.3%
42.6%
42.9%
43.6%

Latin America
0.9%
1.5%
1.5%
1.7%
2.0%
2.1%

Source: eMarketer, March 2003

Newspapers have only recently begun to become aware of the Internet's potential.

"We have had the shakeout from irrational exuberance to seeing the pendulum swing to where people were irrationally somber," says Ben Macklin, a senior analyst for eMarketer. "I think now that it is finding its equilibrium. Content on the Internet is not going to go away. People are becoming conditioned to expect it. Now - how to make money? Some publishers are finding some means that are working and some are not. It's like every business. The news media swung their attention too radically, to where they said this isn't going to work, it's all a house of cards."

Certainly, the doyens of Internet journalism, the so-called e-zines, have not done too well. Two of the oldest original content sites on the web, Suck and Feed, folded because of lack of money. The Industry Standard, which covered America's high-tech world, has closed everything but a rudimentary website. Red Herring, its competition, has also closed. Salon, perhaps the first major Internet magazine, has recorded losing nearly $80 million since it was created in the mid-1990s. Slate, a unit of Microsoft, has not revealed its financial picture, although a spokeswoman for the Internet publication says it has been dependent on advertising revenue for the past four years.

Some publications have attempted to get revenues through subscriptions, but by and large the experience has been disappointing. Despite Salon's 3 million readers, only about 20,000 have opted for a subscription. The Wall Street Journal is the most successful, with 664,000 readers at $79 per year; the Financial Times, which recently began to require a monthly payment averaging $6.95 a month for some services; and the Economist at $19.95 a month, which has 140,000 readers.

"Ultimately, people are willing to pay for content only if it makes them more money, saves them money, or it ties into their career or some other passionate, personal interest," says Richard Gordon, professor of new media at Northwestern University.

This is despite truly spectacular numbers of readers. Slate has 5 million unique viewers, according to the website publication's public-relations director. No newspaper in the United States comes close to those figures. USA Today, the biggest-selling paper, tops out at 2.13 million daily, followed by the Wall Street Journal, with 1.8 million. The New York Times sells 1.11 million, the Washington Post 780,000 - while its website has 6 million unique visitors a month, some 85 percent from outside the paper's Washington, DC, circulation area.

Many of these readers are looking at the newspaper in the morning, then checking into websites for updates all day long, especially as the Gulf War II crisis has intensified. Asia Times Online itself reports striking numbers of new readers who have propelled the publication's numbers upward. This website went from an average of 26,000 per day in January to 42,000 in March to 65,000 so far in April.

Christine Mohan, senior public-relations manager for New York Times Digital, says the paper's Internet readers have increased by from 1.1 million to more than 2 million over recent weeks as the war has intensified. As with the Washington Post, the Times' national and international readers outside the paper's primary circulation area are significant.

"That means that to advertisers, we are a national proposition," says the Post Co's George Nolan. "The Washington Post is a local newspaper, granted that we are in the nation's capital."

Advertisers have responded with display ads specifically tailored to the medium, which provides the online publications with a growing revenue source. The New York Times recently announced that it would initiate a half-page Internet site ad. The advertisers have realized that, unlike with newspapers, they can target not only specific readers but reach them at specific times of the day or week. Patrick Hurley of Salon, for instance, describes a Budweiser Beer advertisement that runs on Friday, beamed at online users to take advantage of end-of-the-workweek anticipation of the weekend.

"Marketers are starting to understand that people on the 'Net commingle their lives," Hurley says. No print medium can match this kind of targeting. The New York Times provides specials on Paris fashion shows, narrating them as the models march down the catwalk, in real time.

Nor can either newspapers or television match the kind of kinetic, interactive advertisements that now are reaching Internet users - although some people are skeptical, including the Chronicle's Cauthorn, who says it is expensive and not very effective.

"The reality is that while ads like these are sexy and ad agencies are thrilled to have billable hours to put them together, they don't transform a user's experience," he says. "From an outside analyst's point of view, they are sexy. But for a fact, what readers want is a whole lot more prosaic. Ads are content, to be delivered efficiently to them in the form they want."

Nonetheless, perhaps the best recent example is a new travel feature initiated by Slate Magazine. The feature was inaugurated by a three-part series on Scandinavian countries. Tied into the middle of the series was an ad for Volvo, the Swedish car maker. By clicking on the ad, the viewer could take a virtual tour of the newest Volvo models. He or she could take a virtual test drive, and learn how to order a car.

Perhaps the most spectacular of these new ads is for the Porsche Cayenne SUV. By clicking on www.porschecayenne.com, the reader can zoom on to a test track with full-dimension sound. Travel advertisers can give virtual tours of resorts, show off hotel rooms (although there is some concern that the rooms look smaller on the web, no matter how big they are). Nor can television match this kind of advertising, which can be viewed at the viewer's leisure.

While Internet advertisers are making these kinds of gains, and readers are growing exponentially, the print media are reporting only minuscule annual gains. Of the top 20 newspapers by circulation size in the United States, only three had annual circulation gains over 2 percent.

Newspapers are finding that readers are increasingly combining print reading with the Internet, particularly as the Iraq war has intensified. Ever since the scandal erupted over president Bill Clinton and his affair with White House intern Monica Lewinsky, newspapers have been posting news on to the web without waiting for the once-a-day publishing cycle dictated by printing presses.

The fact is that print newspapers in the United States are dying - literally. They won't be gone tomorrow, and some of the best will continue to flourish. But as newspaper readers age and die, no new readers are replacing them. According to Hazel Reinhardt, a Minneapolis-based consultant whose work centers on market and demographic analysis and who did a study for the American Society of Newspaper Editors, some 70 percent of those born before 1946 read a newspaper on a typical weekday. For baby-boomers, that has dropped to about 58 percent. For the so-called Generation X, it is only 46 percent.

Significantly, one survey found that 46 percent of all trade title journalists believe their publication will be available only online within the next 15 years. Some 25 percent of those working for consumer magazines believe the same. Overall, 12 percent of journalists believe their publication will exist solely online within the next five years, while 20 percent expect their publication to go this way in the next 10 years.

Cauthorn of the San Francisco Chronicle doesn't expect newspapers to die, but he does expect them to change. For instance, he believes that some might stop publishing print editions on Monday through Wednesday or Thursday because papers on those days lose money. But, he thinks, they want a paper on Friday for the entertainment section, Saturday for real estate and auto ads, and Sunday because the leisurely opportunity to read a full newspaper slowly is a pleasurable experience.

Nonetheless, each generation of younger people has been reading the daily newspaper less, and there is no evidence that reading increases as readers age. The average newspaper reader in the United States is now about 46 years old.

Newspapers have sponsored newspaper reading programs for students. Nonetheless, very few schools are trying to encourage any real newspaper habit. By contrast, in the United States and many other industrialized countries, such as Singapore, schools are enthusiastically promoting computer classes for virtually every child.

The US Department of Commerce estimates that more than 80 percent of 18-24-year-olds in school or higher institutions in the US have a home computer and 68 percent have home Internet access. Some 86 percent of all college/university students use the Internet, compared with 59 percent of the overall US population.

This is a generation that will probably never read a newspaper. But it is a generation that will use the Internet for just about everything, including reading.
- posted by dhamaka @ 3:03 AM

 
America's new rival: 'Old' Europe

By Gregers Friisberg

There has been much discussion in the media about US hegemony in the world after that country's triumphs on the battlefields of Iraq. It is apparently forgotten that there seems to be a rival coming up in the heartland of continental Europe.

"Old Europe" is beginning to manifest itself in a number of ways. Germany and France may have seemed cautious as they, together with President Vladimir Putin, licked their wounds this month in St Petersburg - the "summit of the losers" - but some of the rhetoric at the European Union summit in Athens recently seemed to leave no doubt that we will see new onslaughts on US global supremacy.

The EU summit was held at the foot of the Acropolis. The very cradle of democracy! That was no coincidence. Isn't this the proper place to stress the values of "Old Europe" when admitting 10 new members into the club?

European democracy is fundamentally different from US democracy. It is not so much a matter of the trigger-happy individual nursing his or her investments while eating "freedom fries" and shooting his way to market domination and oil supplies as it is a matter of building democracy around a core of collective values. Germany and France, Benelux and Scandinavia practice very different brands of capitalism from the US brand of individual success and short-sighted shareholder value. Social partnership, with employee representation on the boards of companies, and extensive state-regulated welfare are important ingredients.

The problem is that there is a lot of disagreement among European Union members on what a "united Europe" is really about. Despite what the EU calls itself, it is far from being a union. So far it is mostly a pragmatic economic cooperation. However, by creating the European Monetary Union, with a common currency, the EU, or at least the 12 EMU members, is moving toward still closer political cooperation.

The 10 new EU members have a combined gross domestic product that is only equivalent to the Dutch GDP, but if the success stories of the Spanish and Portuguese memberships are repeated, the production figures of the new members can be expected to shoot up very rapidly. A European Union of 450 million people with high GDP-per-capita figures will be by far the heaviest economic bloc in the world. Even today the EU countries have higher exports than the United States. The dominant threesome of France, Germany and Belgium, which created the biggest rift in the history of the North Atlantic Treaty Organization by not accepting the decision on common preventive defense of Turkey, has a combined population of 150 million well-educated citizens and stronger export penetration of world markets than the United States. What are they up to?

The Franco-German partnership has been behind most new important EU initiatives, eg the common currency, which may have profound effects not only on internal economic integration, but also the coming processes of globalization by creating a rival to the dollar. The partnership between the old foes at times turns into a combination of French ideological rhetoric and German economic pragmatism. There seems to be no doubt, however, that Old Europe wants to strengthen European defense and foreign policy. It seems that in French President Jacques Chirac's thinking, the weak, Atlanticist new members, as well as the old ones such as Denmark, the United Kingdom, the Netherlands, Italy and Spain, must find their places in the future lineup against US hegemony. "The European Union is about more than just a large market, common policies, a single currency and free movement," Chirac said (by way of warning). "It is more importantly about a collective ambition, shared disciplines, firm solidarity and naturally looking to the European family."

Denmark, which participated in the Iraq war by sending a battleship and a submarine to the Persian Gulf, has been asked by the United States to equip and send a force to help establish and maintain law and order in Iraq. Denmark is not able to send a big force on its own. Before and even at the EU summit, Danish Prime Minister Anders Fogh Rasmussen tried to enlist other countries into the force. He received positive answers from Poland and the Baltic states to participate in this neo-colonial occupation force. The effort received some very caustic comments and outright ridicule from Chirac.

Is the balance of power shifting in the EU, as some commentators have hinted, by admitting 10 new (Atlanticist) members? That might seem to be a reasonable guess, but it is not the case. The strong nucleus of Franco-Germany with Belgium represents the roots of the EU, going all the way back to the coal and steel community of the 1950s. They are strong. They may very well prevail. In the course of a half-century their three economies have merged into one of the strongest and most dynamic globalization centers in the world. They need a real political union, though. Otherwise the EU cannot implement strong expansionist economic policies. The growth and stabilization pact that only allows budget deficits of up to 3 percent of GDP is not viable in periods of recession.

In spite of US Defense Secretary Donald Rumsfeld's clumsy remarks, or perhaps fear, about "Old Europe", we are witnessing a new, proud Europe arising with a strong Germany coming out of the shadow of World War II, a Germany that lets France take the ideological and foreign-affairs leadership, as the pacifist German tradition does not allow Germany itself to take it. What drives the tandem is not self-assertion for its own sake, but a preoccupation with what will happen to the two countries' interests in a world under US hegemony. In that sense, what we are witnessing is a beginning imperialist rivalry: US "hard power" versus European "soft power". It is, however, a power that may in the latter case quickly turn from soft to hard. The Americans know that. That's why they are so eager to line up weak Atlanticist states behind the US leadership.
- posted by dhamaka @ 3:01 AM

 
North Korea: Hand in the cookie jar

By Alan Boyd

The interception of a US$48 million heroin shipment in Australia has given Washington an unexpected diplomatic lever as it acts to neutralize North Korea's weapons of mass destruction.

Special-forces troops boarded the 4,000-ton trader Pong Su in treacherous seas off Sydney last week, ending a dramatic 48-hour chase that had involved a warship, police launches and helicopters. Its alleged consignment, 50 kilograms of heroin, was earlier found hidden in a car that was stopped in a Victoria coastal resort by police, who had been alerted after the body of a man was found on a nearby beach.

For US investigators, the trial of the captain and 29 crew members will offer a long-awaited opportunity to lift the covers off Pyongyang's secretive trade in narcotics, weapons and other illicit contraband.

Senior US terrorism and narcotics advisor Raphael Perl said in Washington on the weekend that the Pong Su shipment was part of a wider trafficking network sanctioned by North Korea's reclusive leadership. "No question about it. It is standard practice for them to use trading companies for shipping narcotics," he said.

While Pyongyang has been implicated in narcotics trafficking for two decades, the Australian seizure is one of the first to involve a non-Asian country, and one of few that have left a clear trail of North Korean complicity. The vessel was registered on the Pacific island of Tuvalu, but Pyongyang's embassy in Canberra has reportedly admitted that the vessel is North Korean, as are its captain and most of the crew.

Three men arrested on land with the heroin were identified as Malaysian and Singaporean, while police have not disclosed the nationality of a fourth man found dead on a beach. He is believed to have drowned while landing the heroin from a small boat.

According to reports in diplomatic circles, North Korean envoys were in direct radio contact with the ship shortly before it was boarded, but the crew ignored pleas that they cooperate with Australian security forces.

"There is no implication that the ship was being controlled from the embassy, but [the radio contact] does seem to establish the identity of the Pong Su and tie the shipment directly to Pyongyang, as it is unlikely a vessel of this size would be permitted to function without the regime's sanction," said one diplomat.

Washington has long been criticized for playing down the impact of smuggled contraband from the Democratic People's Republic of Korea (DPRK), primarily because these shipments were not thought to be directed against US interests. In its latest country assessment, released in February, the State Department reiterated that "there is still no evidence that even a single incident of trafficking from the DPRK has had any impact on the US".

Most seizures have taken place within a short distance of North Korea, and appear to be an offshoot of Pyongyang's well-documented involvement in Asian gambling industries and white-collar crimes.

Last year 79kg of heroin was recovered by authorities in Taiwan, and a separate shipment of 150kg of methamphetamines, the largest in recent years, was apprehended in Japan.

In Seoul, a North Korean defector revealed the existence of a 100-member trafficking ring based in Pyongyang and admitted making nine illicit border crossings into China since 1998, each time bringing in 50kg of heroin. As with the Australian seizure, it was unclear whether the operations were being directed by Asian syndicates using North Korean crewmen or had high-level involvement from Pyongyang.

"Police interrogation of suspects apprehended while trafficking in illicit drugs developed credible reports of North Korean boats engaged in transporting heroin and uniformed North Korean personnel transferring drugs from North Korean vessels to traffickers' boats," the State Department noted. "It nevertheless remains possible that criminal elements, or some rogue military organization in the DPRK, are trafficking on their own, without formal state direction."

This conclusion is disputed by emigre groups, which contend that all North Korean vessels operate as an official arm of the government, while the families of crewmen are usually held under house arrest to ensure they don't defect. Using relatives as hostages is a practice that dates back to the 1970s, when farmers were reportedly first coerced into growing opium poppies in remote regions around the Hambuk, Yanggang, Jagang and Kangwondo mountain ranges.

According to reports compiled by the South Korean government, cultivation was stepped up dramatically in the mid-1990s, when the collapse of the Soviet Union severed Pyongyang's main source of foreign exchange and precipitated a deep economic crisis. Seoul claims, with backing from some independent US monitors, that the farms are now operated by the state security apparatus and manned by army units using political prisoners as a slave labor.

Similar reports have emerged from Russia's far eastern republics and China, which are believed to be the main overland transit countries for drugs smuggled to Japan and Taiwan.

Moscow revealed recently that two North Korean "agents" had been imprisoned in 1994, shortly after the Soviet demise, for trying to sell 2,000kg of heroin worth $1.5 million to fund an upgrade of under-equipped army units.

South Korea believes that raw opium is refined at government pharmaceutical factories, along with cocaine and methamphetamines, which were added to the consignment list in the last decade.

Marketing is handled by the Foreign Economic Commission, an agency under the control of the ruling Communist Party that has 20 overseas branches operating as the Daesung Sangsa trading company.

Based on the South Korean estimates, about 40 tonnes of opium is produced each year, with a street value of $50 million to $100 million. Data on other drugs are hazy, but an average of 400kg of chemicals are imported each year to make methamphetamines. "Since only 1.5 [tonnes] per year would be enough to make medicines like cough suppressants and medicine for treating bronchial asthma in North Korea, it is clear that the remaining quantity is likely to be converted into 'meth' to be sold in secret overseas through international drug smuggling networks," Seoul alleged in a report issued last year.

A key question that may be answered by the Australian seizure is whether the North Korean operations have now gone international in partnership with Asian trafficking rings - and are expanding into other forms of contraband.

Australian authorities, apparently acting on information from at least one Pong Su crew member, have said the heroin was not from North Korea, but originated in the so-called Golden Triangle adjoining Thailand, Laos and Myanmar.

Coast guard officers in Japan are also believed to have uncovered evidence of a link between North Korea and mafia groups when they salvaged a ship last year that had been scuttled by its crew just before they were apprehended. The ship was almost identical to others used in North Korean smuggling rings, and contained a mobile phone with the stored numbers of known members of Japan's Yakusa criminal underworld.

It is not just heroin that Pyongyang is believed to have been trafficking with its new partners in crime: Washington is convinced that the narcotics routes also serve as a conduit for shipments of arms and forged documents.

Intelligence agencies in the United States have listed North Korea as the biggest global source of ballistic missiles, in a trade that nets Pyongyang at least $150 million a year from such unstable regimes as Libya, Pakistan, Iran, Syria and Yemen.

Washington may not have a smoking gun to brandish in the demilitarization talks with Pyongyang, but intelligence derived from the narcotics seizures offers the next best thing.

"Find the drugs and you also stand a good chance of finding whatever else they have been doing," said the diplomat. "Narcotics and gun-running are two sides of the same terrorist coin. The difficulty is in proving that we are dealing with state-sponsored terrorism and not just a rogue criminal organization that is functioning on its own behalf."
- posted by dhamaka @ 3:00 AM

 
Humanity threatened by systemic failure

By Jaime R Sadullo


Severe acute respiratory syndrome (SARS) comes at a period of severe acute world recession radiating on its third year from contracting First World economies, notably the United States, the United Kingdom, Europe and Japan.

The timing bodes ill for humanity: SARS as a potential full-blown global epidemic jeopardizes hopes of economic recovery in 2003 as fear of deadly infectious contagion hits an already weakened world economy. For one, airline companies, many in dire financial straits even before, see their earnings further dipping, as fear inhibits travel prospects and decisions, even among business people. Avoidance of crowded places and indiscriminate human contact compounds the woes of retail, entertainment and service businesses already beset with sliding consumption.

While there is confidence vaccines can be developed in a year or so and partial quarantine schemes will eventually wither the virus, there is a question whether the disruptive impact of fear plus persisting infections in Asia and elsewhere shall so downgrade the world economy by then to a status socio-demographically conducive not only to SARS but also to a host of new and old contagious diseases. Inadequate public health facilities, personnel and standards and ballooning fiscal deficits from decades of underdevelopment make Third World countries fertile fields for imported, exportable and endemic plagues as the balance is tipped in favor of viruses in a deteriorating world economy.

Around the world are extant contagious diseases hibernating, limbering or circulating that eagerly await the concoction of conditions a deepening recession can help instigate, to resurge, explode and rage region or globewide. Ebola in Africa (relishing an outbreak in Congo as of this writing), dengue in the Philippines, malaria in Southeast Asia, West Nile encephalitis in the United States, to name a few. Among animals grown as human food, an avian flu is currently razing Dutch poultry, reminiscent of an earlier avian flu in Hong Kong reported to have infected humans. And who will forget the scare of suspected Ebola among monkeys that got into or came from the Philippines some time ago and the mad-cow disease among heavily bred beef stocks in Europe? Of course, there is the human immunodeficiency virus (HIV); AIDS, the disease it causes, will not only continue to kill many millions but has also set up millions of others, especially in Africa, to be the first-line victims and vessels of prospective epidemics by drastic weakening of human immune systems. These diseases can one day or one after another make their show of force and put humanity at mortal edge.

The foregoing paints a grim picture that can be dismissed as alarmist. But this can only be if we do not consider the gruesome social and environmental effects of a protracted recession as the present world economic crisis is proving to be. Deepening economic recession means, on an increasing scale, firms retrenching or folding up due to falling profits; millions losing their jobs and livelihoods; household incomes and savings eroding; sanitary and medical services failing as fiscal deficits mount; commodities becoming costlier or lacking; and impoverished families in Third World rural areas forced to despoil ecosystems further in order to wrest daily survival. The roots of this recession are systemic: the underdevelopment of the Third World as productive markets and the consumerist-militaristic stagnation of Western industrial technology under the globalist regime of a US-dollar-based international floating-exchange-rate currency system.

To cope with such a scary scenario, we can instead depict SARS as managerially conquerable in lieu of vaccines since, besides quarantine, anti-panic and cleanliness measures, its dampening effect on physical economic traffic limits its geographic spread, by inducing people to curb on activities to avoid infection. But this can fare only to a certain extent, as the viability of economies depends on keeping a certain range of domestic and international traffic. Below that, collapse is the alternative.

Hence, governments' call on citizens to stay calm, to be preventive and in effect to stay in the market, with foreign investors and tourists as special audiences or guests. So unavoidably out of necessity, as countries pursue direct economic transactions, the virus will cross borders and mutate. There lies the hitch. Despite the fact that mainland China is reportedly the origin of the SARS virus, with the highest worsening incidence of infection, the world cannot quarantine this country of 1.3 billion people to control global spread. For China, hosting the largest chunk of shrinking global foreign direct investment (FDI) and with its huge domestic market, is a country many recession-afflicted nations cannot afford not to transact with. In fact, quarantining China means intolerable economic disruption not only for China but also the First World and the whole world.

In the absence of vaccines, SARS or other similar novel diseases can prove to be too slippery for lasting managerialist containment as countries to stay afloat in globalization need to interact economically. As SARS persists or grows like a conflict-fed terrorist menace in a shock-vulnerable world economy, humanity will be in a precarious bind.

Shall humanity then be doomed to relive history, as occurred beginning 700 years ago in Europe and other parts of Eurasia and North Africa - the Black Death epidemic? Ominously, China was also the origin of that terrible lymph/lung-attacking disease transported to Europe via the trade route which directly and indirectly killed nearly half of its aggregate population by the end of the 14th century. As in today's world economy, Europe with China, India, Byzantium, Russia and North Africa were in a kind of global trade bind mediated by vast flows of gold and silver, at that time mostly handled by Venetian merchants and the Venice state.This bind hooked Europe's economies to intense exhaustive production of select goods for super profit-seeking trade and locked them in a structural frame that went unmindful of the needs of serf peasants and climate change. When climate change came to fore, the so-called "Little Ice Age" of advancing Arctic glaciers, China, Europe and other regions experienced general economic slowdown, famines, financial crash and the Black Death epidemic.

Only the inability to recognize and address systemic contradictions will make a tragic repeat possible and inevitable. To escape the fate of 14th century Europe, this world of nations must urgently reorganize and mobilize to prevent global economic processes, under impact of recession, SARS and climate change, from worsening into conditions for global epidemics and pestilences. Through the self-financing, logistical and cultural powers of their states in collaborative efforts and with support of private and other groups, nations must now undertake comprehensive reconstruction programs that will solve effectively, especially in the Third World and major areas of the Second World, gross deficiencies in public health, energy/water supplies, goods production, ecology, mass employment, housing, transportation and education within a framework of social equity and civilizational anti-entropy, as vaccine search is under way and partial quarantines are enforced.

This approach will not only strengthen collective biological defenses but will also be the only feasible one for overcoming recession. For SARS is as much a freak of viral nature in chemo-genetically intensive Chinese commercial animal farms as it is an outcome of institutional failure to progressively attend to human needs under the shadow of an occurring global climate shift. Global warming with rising oceans, or New Ice Age with receding oceans, or something in between? You can bet and we can debate. China's SARS and export-driven modernization are related facets in a structurally distortive increasingly climate- and scarcity-constrained global dynamic.

SARS is a warning and foretaste of the worse to come. Leading First World countries such as the US and UK, if they wish to stay civilizationally viable, must choose to dump superpower imperial "preventive" wars such as the one in Iraq and commit their governments to help build a new, just world order free from the scourges of underdevelopment, poverty, bloody conflicts and disease as well as forwardly adopted, health- and productivity-wise, to the new incoming global climate. Instead of dissipating financial resources in an unjustifiable counter-recovery war, real gains of economic recovery could have been achieved had these been channeled to the rehabilitation of Third World countries debilitated by recession. Continuation of such wars will only further cripple the world economy, depress social conditions for disease outbreaks, create humanitarian disasters and spark a potential global systemic meltdown.

Without urgent reconstructive national mobilizations, international cooperation and retreat from war policy, humanity faces doom in a common ruin. National, regional and world summits to these effects must soon be in order.

- posted by dhamaka @ 2:59 AM

 
Aceh: A ticking time bomb, again

By Prangtip Daorueng

JAKARTA - As Aceh's peace effort lurches toward a possible collapse, fear has taken over the persistent, if increasingly uncertain, hope that many from that restive Indonesian province had over recent months.

"We can only hope that God will protect us. We have no weapons to fight with anybody. We have nothing but him," said Juanda, an Acehnese human-rights activist in the provincial capital Banda Aceh.

Like most Acehnese in the conflict-torn province, where Islam is the main pillar of life, faith is the only comfort now for Juanda, who uses one name.

Hasballah Saad, a former human-rights minister who is now a member of Indonesian Human Rights Commission, says there is still time for both sides to reconsider dialogue because they know that a military approach has not - and will not - work to address the causes of the 27-year-old separatist war in Aceh.

On Wednesday, the Acehnese community sent 55 members to try to meet with Indonesian President Megawati Sukarnoputri to urge her to keep the dialogue on track. The group, however, failed to meet with the president because of her tight schedule.

Juanda said the group's message was clear - stop the war and resume peace talks, based on the December 2002 ceasefire accord signed in Geneva between Jakarta and the separatist Free Aceh Movement (GAM).

The last round of talks was set for April, but was postponed. On Tuesday, Megawati repeated her instructions for the military to prepare to launch a campaign in Aceh given the lack of the progress in the peace efforts.

This campaign, government officials said, would also be made up of humanitarian assistance, justice, and the restoration of local government services.

The desperation in Acehnese society is a far cry from the mood just a few months ago, when the ceasefire was signed in December. The agreement received strong support from foreign governments, including Japan which hosted an international meeting on Aceh's post-war development even before the accord was signed.

At the time, all Acehnese celebrated with joy at the prospect of peace. But the ceasefire agreement now looks headed toward a short life.

Two months after the agreement, clashes between GAM and Indonesian troops resumed. Both sides have blamed each other for returning to violence since, and now the delay in the talks has driven the situation close to a deadlock.

The Indonesian government has now set a deadline for GAM to return to the negotiating table by Monday.

The deadline came with the precondition that GAM, which has fought for independence from Indonesia since 1976, lay down its weapons and accept the special autonomy law and agree to remain a part of Indonesia. GAM, which pulled out of the meeting in Geneva on April 25, has rejected Jakarta's ultimatum but said it was prepared to meet with Jakarta again after Monday.

This intense political confrontation is quickly moving toward a resumption of armed struggle, which Acehnese civilians fear most. "Acehnese want to end this conflict through dialogue. We believe it is the only solution to the violence, but we now fear that there is a move toward an open war here," said Juanda.

The concern is such that early this month, the Japanese government, which has spent US$8 million on humanitarian aid to Aceh, sent a senior vice minister to Jakarta to discuss the progress of peace deal with the government.

There are other worrisome signs. Indonesian officials have been putting more emphasis on the issue of territorial integrity more than in the past and deploying more troops to Aceh.

Coordinating Minister for Political and Security Affairs Susilo Bambang Yudhoyono says the situation in Aceh has reached the point where it was threatening the Acehnese, as well as the territorial integrity of the Indonesian republic. He said Megawati would decide before Monday on the legal umbrella under which the combined government and military operations in Aceh would be launched. He said there are four possibilities: maintenance of law and order, a state of civil emergency, martial law, or war.

Susilo insisted that war and diplomacy could take place simultaneously, and that negotiations could still resume even when the military operation had started.

On Thursday, military chief General Endriartono Sutarto said 2,164 military personnel would be sent to Aceh the next day, to join some 26,000 troops and 14,000 police already stationed there. By next week, there are expected to be up to 50,000 military and police personnel in Aceh. Indonesian troops would be facing 8,000-10,000 GAM members who are believed to have some 8,000 weapons, including SS-1, AK-47 and AK-54 rifles, the English-language daily the Jakarta Post said.

GAM's forces operate under Muzakkir Manaf, who underwent Libyan special force training in 1980s. GAM is believed to have purchased weapons from groups in southern Thailand, Malaysia and low-ranking military officers in Aceh itself. It has also collected what are called nanggroe taxes from business people in Aceh to support their guerrilla activities.

For its part, the armed forces has new heavy weapons from tanks to jet fighters, and the air force has undergone night-flight training specifically for operation in Aceh.

"We are not going to surrender even if Jakarta insists on sending military troops here. We are ready to face them," GAM spokesman Sofyan Dawood told the Jakarta Post recently.

In Aceh meanwhile, a source said some villagers, fearing a resumption of war, are storing weapons to protect themselves. "Be it knives or guns, they fear that the situation will be similar to [the] special-operations period, when nobody was safe under their own roofs," he said.

This period was from 1987-98, during which virtual military rule under the Suharto government led to massive human-rights violations. At least 7,000 died people during that time and many went missing, activists say.

Stressed Hasballah: That period "is proof that military solution is not the right answer for Aceh because it did not stop the secessionist movement".
- posted by dhamaka @ 2:58 AM

 
Saudi Arabia: The pendulum swings

By Syed Saleem Shahzad

KARACHI - The road map for peace in the Middle East envisages as a final destination an independent Palestinian state. But along the way, it will also certainly call for the curtailment of organizations such as Hamas and the Islamic Jehad, which in turn will put pressure on the main sponsor of these groups, Saudi Arabia.

Over the past few months, sections of the Saudi media, some circles of the royal family and the clergy and intellectuals have speculated that after Iraq, the US is determined to bring Saudi Arabia to heel.

This will not entail military action, rather political pressure brought to bear in the wake of the new circumstances that have arisen in the region with the fall of the Saddam Hussein regime in Iraq. Such pressure would include increased action against al-Qaeda members or sympathizers - 15 of the 19 September 11 hijackers in the US attacks were identified as Saudi citizens, a review of the main pillars of power in Saudi society, as well as its relations with the world.

As a first step in the changing relationship between the US and Saudi Arabia, the US announced last week that all of its troops stationed in the country, about 10,000 at present, apart from some training personnel, are to be withdrawn. The decision was confirmed by US Defense Secretary Donald Rumsfeld during a joint news conference with Saudi Defense Minister Prince Sultan. Both men stressed that there were no differences between their countries and that their cooperation would continue, but this was surely more for the benefit of the media than anything else.

Since the 1991 Gulf War, US troops have been in the country under the pretext of being a part of Operation Southern Watch, which enforced a no-fly zone over southern Iraq. But the US troops have become a potent symbol of Washington's role in the region, and many Saudis see them as proof of the kingdom's subservience to America.

Saudi Arabia is home to some of Islam's holiest sites, and the deployment of US forces there is seen by many - notably by Osama bin Laden - as an historic betrayal . This is one of the main reasons given by the Saudi-born Osama to justify violence against the US and its allies.

Political analysts believe that this development has deep significance. Washington has already compelled Syria to sever its links with the Lebanese Hezbollah and Palestinian organizations. But Saudi Arabia's case is different. Being the most holy land of Muslims around the world, it would be difficult for the US to deal with Saudi Arabia as it has with Syria - with threats of war.

Nevertheless, the US has already mounted pressure on Saudi Arabia to sever its financial ties with Hamas and other Palestinian groups. It is a demand which the US knows will be hard for the country to accept, let alone implement.

It is an open secret that apart from the state treasury, mosque collections, personal funds of Saudi princes and individual donations by rich Saudi sheiks are the main source of finance for the Palestinian intifada. Once the US troops leave Saudi Arabia, the religious segment of Saudi society can be expected to be more outspoken.

The Iraq war has already added fuel to the fire and fanned extremism in the country. As a result, Saudi authorities are now caught between the devil and the deep blue sea. If the Saudi government takes measures to appease the religious elements, it will have to balance these against measures to mollify the West. For instance, in a recent surprise move, Saudi authorities released Sheik Zuair. He was arrested in 1995 after he termed monarchy as anti-Islam and also rejected an official religious edict allowing peace with Israel. The release of Zuair is taken as a move aimed at appeasing religious circles.

At the same time, Saudi authorities are tipped to include a woman minister in the cabinet, responsible for women's education.

This juggling act between keeping the West and the inner religious circles happy cannot continue for ever, and a clash is almost inevitable.

For instance, any move to obstruct the movement of money in favor of the Palestinian intifada will cause a conflict between the royal family and religious figures, and even among members of the royal family, some of whom fought (albeit briefly) in Afghanistan against the Soviet Union in the 1980s. And among the population, according to Arab News, about 12,000 people from Saudi Arabia also fought in Afghanistan. Among these, there is strong support for the Palestinian intifada.

These factors apart, given the US victory in Iraq, where the majority Shi'ites were for decades suppressed by Saddam, Shi'ites in Saudi Arabia, who account for 30 percent of the population, can be expected to make their voice heard after a long period of forced silence as the government toys with political reforms.

This new voice will only create more political turbulence as Sunni hardliners among the ruling establishment will resist embracing Shi'ites too tightly. Unlike in the past, though, Shi'ites are not likely to give up easily.

In the past 50 years, Saudi Arabia has maintained a balance in its policies concerning its internal affairs and its external affairs, despite the fact that they were at odds - internal policies have been traditionalist and Islamic, while external ones have been liberal and pro-Western.

It will become ever more difficult for Saudi Arabia to maintain this balance in the future.

- posted by dhamaka @ 6:33 AM

 
India's IT future embedded in software

By Shehla Raza Hasan

KOLKATA - The word "embedded" was recently in vogue for journalists on the war front in Iraq accompanying British and American military units. However, the word in Indian IT jargon holds one of the hottest options for software entrepreneurs who want to do good business in the future.

When Indian Commerce Minister Arun Jaitley announced concessions for the information technology/software segment in his export and import (EXIM) policy at the end of March he seemed to have read the writing on the wall - place the push for embedded software products on a war footing.

Jaitley said, "To promote the growth of software exports in the area of embedded programs, the procedure for the import and re-export of the hardware, including automobiles, in which such programs are embedded for testing and development will be greatly simplified in consultation with the Ministry of Finance. Henceforth, such hardware for embedding up to the value of US$10,000 will be allowed to be imported duty free and permitted to be disposed of after testing subject to certification by the Software Technology Parks India."

This has generated a lot of interest in the embedded software market and industry experts are pointing out that despite being a world leader in information technology services, India lags behind in software products, having captured only a meager 0.2 percent of this $180 billion world market. Within this there is a worldwide market of $21 billion in embedded software, which holds a world of opportunities.

What is embedded software and why are there opportunities in India? An embedded software system is a combination of hardware, microcode, drivers, an operating system and an application that delivers functionality within traditional non-computing devices, such as personal digital assistants, mobile phones, industrial automation, automobiles, office automation and consumer electronics. The embedded system and software markets are expected to grow at a healthy 16 percent compound annual growth rate in the next three years.

A number of multinational firms are setting up huge development centers in the country, such as Intel, Texas Instruments, ST Microelectronics, Motorola and Cadence. Coupled with this, Indian IT majors such as Wipro, TCS and HCL Technologies are focusing on this sector. According to NASSCOM, an Indian IT body, over 60 percent of the top global independent software vendors are already leveraging India for maintenance services and new product development. The enabling factors in India arise out of leveraging the existing design and programming capabilities while outsourcing the actual development of chips to external silicon wafer manufacturers. A significant percentage was contributed by embedded software development out of the total contribution of $1.2 billion in 2001-02 from the research and development and technology sector.

NASSCOM feels that the embedded system space can be exciting for Indian companies. A number of factors have been taken into consideration that will contribute to the growth of services in the industry.

Rising software content: Software content in many traditional non-computing firms is rising.

Rapidly evolving hardware: Each time there is an upgrade of hardware, it calls for significant software input.

Lack of protocols: Most industries lack one standard protocol/platform (like MS DOS in the PC industry). As a result, original equipment manufacturers (OEMs)need to ensure all devices are compliant with all major protocols.

Lack of software skills in OEMs: OEMs face a huge challenge in attracting and retaining high quality software talent. This, coupled with an increasing need for services, is likely to result in a large number of OEMs and suppliers looking for third party services providers to augment their software development capabilities.

Evidently, the IT industry is delighted with the commerce minister's policies outlined in the EXIM policy. Kiran Karnik, NASSCOM president, said, "The new policy has taken a major positive step by introducing a scheme for the promotion of exports of services and also does away with procedural deterrents which were hampering Indian software companies conducting work in cutting edge areas such as embedded software. The removal of procedures for the import and re-export of hardware with regard to embedded software for testing and development is a positive step that will promote software exports in this area."

Besides embedded software, which seems to be the most buoyant of the emerging software segments, software products do hold a lot of promise but yet remain a weak area in the Indian IT set up.

This is primarily because the core skills in a product are fundamentally different from the IT and information technology enabled services (ITES) sectors and Indian companies have not paid attention to the unique aspects of the product market. India's core strengths lie in lower costs of development, a large pool of entry and mid-level talent and quality management processes. However, success in the products business requires sizable investment in sales, marketing and branding, a sizable pool of high-end architectural, design and testing skills and flexible and dynamic development environments. Also, the dual shore models have not developed in the same level of strength as the IT-services global delivery models.

On the face of it, it may seem alright for India to forget the product opportunity. However, strategically, for the future, it may seem to be a good idea to explore the opportunities in offshore product development, development and delivery of specialized components, product acquisition and enhancement and shrink wrapped product development - all emerging areas in products besides embedded software. The fortunes made out of IT services and ITES must be re-invested in these vital areas for better future projections.

Indian companies need to leverage skills in these spheres when global competition gets too hot in the IT and ITES segments, owing to further development of Chinese, Filipino and South Asian talents in the IT services and ITES sectors.

Warns Talat Hasan, chairman and CEO of the Silicon Valley-based Sensys Instruments, said that the good times may run out in the near future for India IT services and ITES segments: "Indian information technology today is very vulnerable as it is not developing unique software products on its own. There is not much intellectual property development in India. What Indian IT companies are doing is routine service and customized software development for US companies. Once the US companies pull out these contracts, there will be no IT left in India. There is a huge threat from China and other Southeast Asian countries. Once these countries start offering the same services at lesser costs, what will happen to India?. India should start developing new products and not merely provide cheap labor."

The trend is therefore clear. Software product development is no longer an option for Indian IT entrepreneurs. It is fast becoming a necessity.
- posted by dhamaka @ 6:26 AM

 
After 325 years, seminal treatise bears new fruit

By Ranjit Devraj

NEW DELHI - Fully 325 years after its publication in Amsterdam, the 132-volume Hortus Malabaricus ("Garden of Malabar"), a treatise on the medicinal plants of the southern Indian state of Kerala, has finally been translated from Latin into English - and it has unlocked a wealth of information for historians, botanists and medical researchers.

Its original author, Hendrik Adriaan van Rheede, the Dutch governor of the former princely state of Cochin between 1670 and 1677, would have approved of the effort taken by the Kerala University in bringing out an English version after it defied translation for centuries.

"Several attempts were made to bring out Dutch and English translations of the Hortus Malabaricus, but all of them failed, so much so that there is a superstition surrounding it - we have just broken that superstition," said Dr B Ekbal, the vice chancellor of Kerala University, in an interview soon after its much-awaited release for general sale this month.

Rheede's feat was almost superhuman considering that he brought out the 12 finely illustrated volumes between 1678 and 1703 in Latin, the accepted language for scientific work in Europe at that time, and also employed three other scripts - the local Malayalam, Arabic and Sanskrit. Plant names appeared in the Portuguese and Flemish languages as well.

Ekbal, a well-known neurosurgeon and health expert, said that apart from its obvious botanical and medical importance, Hortus Malabaricus throws light on the intense rivalry between European maritime powers on the coast of Malabar and in Ceylon (now Sri Lanka) and on the socio-cultural history of these regions.

The various volumes are replete with copious introductions, forewords, dedications, references and certificates given by or for people ranging from Rheede himself to the native physicians on whom he relied. They contain much information about the social and cultural conditions of the time in Kerala, as well as the rest of India.

"None of this could be properly studied, analyzed or appreciated by contemporary scholars because the text was in old Latin and so the vast fund of information contained in the several volumes remained inaccessible," Ekbal said.

Hortus Malabaricus is many things to many people depending on their background and interest. Professor K S Manilal, who labored 30 years to bring out the English version, complete with annotations and modern botanical nomenclature, said the volumes were important to people of Kerala because they represented the earliest example of printing in the Malayalam language, now spoken by at least 30 million literate people.

For botanists, the work, which has detailed descriptions and illustrations of 780 rare plant species, represents a landmark in plant science and was extensively referred to 75 years later by Carl Linnaeus, the Swede who pioneered plant classification and is considered to be the father of modern botany. Hortus Malabaricus is not only historical, but it actually created history.

According to Manilal, the book decided the political fortunes of Malabar and Ceylon and was in fact the product of political rivalry between van Rheede and the formidable Ryklof van Goens, who was bent on establishing the Dutch colonial capital at Colombo rather than Cochin.

"Van Rheede's main purpose in producing the volumes was to prove Malabar's superiority in terms of ready supply of valuable spices, cotton, timber and the availability of essential drugs for Dutch officers and their families in the East Indies," Manilal said.

Van Rheede was able to show that many valuable drugs purchased in European cities, including those used for the treatment of Dutch officers in the Indies, were actually made from medicinal plants originating in Malabar and exported through Arabian and other trade routes.

It worked. The Dutch government approved the opinion of van Rheede over that of his superior, while his publication went on to create a stir in the scientific and political circles of Europe, further stimulating the rivalry for colonies in India.

But the Dutch, who had captured Cochin from the Portuguese in 1663 after years of coastal warfare, lost it to the British in 1795. They later withdrew forever to the East Indies, leaving behind in what became modern Kerala and Sri Lanka a string of ruined fortifications and, of course, Hortus Malabaricus.

Manilal says the treatise would be invaluable to nature conservationists trying to trace the migration, disappearance and possible extinction of many useful plants from their original habitats in the western areas of peninsular India, a zone recognized as one of the world's biodiversity hotspots.

In today's world, where the value of natural drugs is gaining fresh recognition but is bedeviled by such issues as intellectual property rights and biological patent laws, van Rheede's work and its English translation have a new and special relevance.

In recent times, several of India's traditional plant-based remedies, such as those from turmeric and neem, have come under assault by biopirates and Indian groups. The government has had to defend them from being patented by recourse to ancient texts to show "prior art".

But some patent experts think that translating such texts as Hortus Malabaricus may actually help biopirates rather than hinder them, especially in the absence of universal acceptance of the Biodiversity Convention, which is in serious trouble with the Trade Related Aspects of Intellectual Property Rights agreement under the World Trade Organization.

"By publishing the Hortus Malabaricus in English you will be handing it to them [biopirates] on a platter," said B K Keyala, one of India's foremost patent experts. Keyala said the details of medicinal plants and their uses given in the translated version, which is being made available at US$500 for a set by Kerala University, will be tapped by biopirates who cannot be prevented from taking out patents on extracts from the plants and processes to do that.
- posted by dhamaka @ 6:25 AM

 
KASHMIR IN FOCUS : New start, new ideas and new faces

By Syed Saleem Shahzad

KARACHI - With both India and Pakistan appearing ready to make a paradigm shift in their policies on Kashmir, proposed talks on the disputed territory can be expected to be more precise and practical than the last abortive round in Agra in India in July 2001, and could result in a change in the region's political map.

The diplomatic endeavors of the United States aside, it is now emerging that the efforts of Prince Karim Aga Khan on behalf of US authorities have contributed in no small way to the breaking of the ice between the two countries in recent weeks.

Prince Karim Aga Khan is the head of the Ismaili community (a branch of the Muslim Shi'ites), and although he lives in Europe he has a strong following in India, Pakistan - including Kashmir - and Afghanistan. Sir Aga Khan, the grandfather of present head of the Ismaili community, was the first president of the All India Muslim League, the party that laid the foundations for Pakistan in 1947.

Recently, Prince Karim visited both India and Pakistan, where he met with Indian Prime Minister Atal Bihari Vajpayee and President General Pervez Musharraf. During both meetings he stressed the need for a practical solution on Kashmir, as well as confidence-building measures between the two countries.

It is perhaps no coincidence, then, that soon after the prince's visits, the flurry of exchanges between Delhi and Islamabad has resulted in the countries expressing the desire to resume road, rail and air links, as well as top-level diplomatic ties and softer visa regulations to make it easier for divided families to reunite.

And to talk about Kashmir.

Numerous rounds have failed in the past, and even led to wars, but this time diplomatic sources in Pakistan emphasize that unlike past initiatives, the present efforts will be more closely based on ground realities.

Instead of focusing on United Nations resolutions, water problems, the Simla agreement of 1972 that resulted in the establishment of the Line of Control (LoC) that now separates Indian and Pakistani-administered Kashmir, other proposals will be given serious thought.

One such proposal has been outlined in great detail by a US think tank, the Kashmir Study Group, which functions as an advisory body to the US State Department. It details new Kashmir entities, each with their own government and constitution. The paper suggests that some districts of Kashmir - Doda, Gool Gulabgarh in Udhampur, Poonch and three northern areas of adjacent Rajauri - could be made part of a new autonomous entity or entities acceptable to both India and Pakistan and "the people of Kashmir".

The group claims that its proposal is based on responses from opinion makers, including government officials, in both India and Pakistan. The think tank maintains that the responses were in general positive towards the creation of a Kashmir entity. Former bureaucrats and defense officers were involved in the preparation of the draft proposal, which has been boiled down to three options: Two Kashmiri entities on either side of the LoC, one straddling the LoC, or just one entity on the Indian side of the LoC. In all three options, the proposed entities would have their "own government, constitution and special relationship with India and/or Pakistan".

The proposals, which are now under discussion at different levels in both countries, seek to identify areas in Jammu and Kashmir that would like to be part of the new Kashmiri entities. The identification will be based on religion and "Kashmiriyat" (The concept of a distinct Kashmiri identity ).

Kargil, where a brief war was fought in 1999, is also included in the list of districts, but the paper adds that "though this group, too, has interacted closely with Kashmiris, their desire to join a Kashmiri state cannot be assumed".

On the Pakistan side, the paper presumes that "what is now Azad [Free] Kashmir would opt to have sovereign status more or less equivalent to that of an Eastern Kashmiri state". But the study group, which is more categorical in listing the supposed preferences of the people of Jammu and Kashmir state in India, hesitates to make the same presumptions for Pakistan-occupied Kashmir, stating, "It is presently difficult to gauge the wishes of the people of the region and we have therefore not attempted to distinguish varying regional degrees of desire for a new political dispensation."

The paper, while providing for a single Kashmiri state "with the concurrence of India and Pakistan", states that this would be more difficult than the other option of two Kashmiri entities on either side of the LoC. The new proposal goes into details about the religious, linguistic and territorial profile of the region. It also calls the existing LoC "dysfunctional" and without any inherent logic and proposes territorial exchanges between India and Pakistan "to enhance regional security" involving 11,815 square kilometers of territory.

Apart from these proposals, others are doing the rounds, one of which envisages the creation of a neutral entity that would act as a buffer between the proposed new entities of Kashmir. This theory sees the carving out of a new autonomous entity comprising those areas in Pakistan and India with Ismaili communities to form a community of about 1 million people under an Ismaili administration.

The initial feedback to this idea has apparently been positive, given that in effect most of the needs of these areas are already fulfilled by the Aga Khan Foundation, which is engaged in improving the quality of life of people there through rural development, education, healthcare, micro-credit, financial services, humanitarian assistance and the enhancement of non-governmental organizations. Almost 90 percent of the schools, hospital and services, including civic services, in these regions are operated by the foundation.

Which goes some way to explain Prince Karim Aga Khan's involvement in trying to break the Kashmir impasse for the benefit of all of the people in the Valley.
- posted by dhamaka @ 6:23 AM

 
India's underwater heritage

By Uttara Gangopadhyay

NEW DELHI : Scientists from Chennai's National Institute of Oceanography (NIO) were routinely going through some underwater sonar pictures taken while monitoring marine pollution in the Gulf of Cambay, off the coast of Gujarat, a couple of years ago. Much to their surprise, they came across the ruins of a city. Initially, the news received mixed responses. While some believed that it was the lost city of the mythical Dwarka mentioned in ancient scriptures, others dismissed it as a probable shipwreck. The scientists launched a more intensive search last year and came up with plenty of interesting finds.

The ancient city is located at a depth of 40 meters and spread over a nine-kilometer stretch with relics from a typical Indus Valley civilization - pools with sunken steps, a granary, house foundations, drainage systems, mud roads as well as broken pots, figurines, semiprecious stones, ornaments, fossilized remains of wood and human body parts. Carbon dating of wooden pieces has revealed even more interesting facts. One piece tested by the Birbal Shahni Institute of Paleobotany in Lucknow shows it belonged to 5500 BC, while one tested by National Geophysical Research Institute, Hyderabad, belonged to 7500 BC. Although yet to be conclusively proved whether the pieces were washed to the place or belonged to the city, the findings are intriguing.

Despite its gloomy association, a shipwreck is interesting as a piece of history. It is a documentation of life on board, boat building, trade routes, cargo, etc. The wrecks turn into homes for a number of marine fauna. Divers love shipwrecks because of the challenge they offer. The luxurious ocean liner Andrea Doria that sank near Nantucket off Long Island in the Atlantic Ocean in July 1956 is now considered the "Mount Everest of shipwreck diving". Experienced divers have died in their quest to explore the ship. The UNESCO (United Nations Educational, Scientific and Cultural Organization) Convention on Underwater Cultural Heritage adopted in 2001 has now laid out a set of rules for the preservation of underwater sites and wrecks. International Heritage Day observed on April 18 had "Underwater Cultural Heritage" as its theme, aimed at raising people's awareness and to foster conservation of underwater heritage.

Throughout history, seafaring explorers have rewritten the boundaries of land many times. On the other hand, maritime trade routes have been a bone of contention between nations. The strategic location of India encouraged maritime trade and commerce as well as expeditions to foreign lands in the past. Foreigners from across the seas influenced India's history in the post-Mughal period. Hence, many people believe that the Indian seacoast can provide important shipwrecks and lost cities.

The recent findings near Mahabalipuram in Tamil Nadu seem to vindicate that belief. A joint expedition by the Scientific Exploration Society of the United Kingdom and NIO revealed an extensive series of structures at a depth of five to seven meters. The ruins, consisting of masonry walls, rock-cut structures, stone platforms with steps etc, are probably the remains of six of the seven pagodas built by the Pallava rulers. There is a popular legend among local fishermen that the beautiful city was devastated by floods unleashed by some jealous gods which caused the six pagodas to be submerged. An account by British traveler J Goldingham in 1798 referred to the place as the land of the Seven Pagodas. It was he who also recorded the myth. Some time ago, British author and television presenter Graham Hancock was inspired by the legend and it was at his initiative that the expedition took off last year.

"Despite these interesting findings, underwater exploration for archeological sites and shipwrecks is still lagging in India," feels Dr Prateep Sen of Kolkata. A certified diver, Sen often goes diving in the Southeast Asian seas. "Whether it's the flora and the fauna or heritage findings, like ancient cities and shipwrecks, the underwater world is no less interesting than the world above. The heritage findings are time capsules that lie far away from curious eyes, preserved for posterity," he says. Although the screening of the film Titanic created deeper interest in wrecks, India is yet to join the bandwagon. Mitali Kakar of Reef Watch Marine Conservation, a non-governmental organization involved in promoting diving and reef conservation, agrees, "There're several wrecks and submerged cities around the Indian subcontinent which could be landmarked as heritage sites if managed in a proper manner."

Even though underwater exploration is costly and thus difficult for individuals to finance, Sen says it is high time exploring the deep was taken seriously. "Amateur divers go down searching for hidden treasures and often come up with lovely booties." Local fishermen and boat people are well aware of such sites. Often amateur divers work on these bits of information and strike gold. "The fishermen's tales of the submerged pagodas ultimately came true in the sense that ruins were discovered here."

Sen also highlights the recent findings of a 300-year-old shipwreck now being explored by the Indian Navy off the Lakshadweep islands. "I heard about the wrecked Princess Royal lying on the seabed quite some time ago," he recalls. "It's also mentioned in the book Diving in the Indian Ocean, published in 1999 by Rizzoli of New York. According to local people, amateur divers have been down to the wreck site. The navy divers have come up with interesting findings like canons, an anchor, iron objects, porcelain as well as a bell with the ship's name inscribed on it."

Countries such as the Philippines, Indonesia and Thailand have converted shipwrecks found off their coasts into diving attractions, in the process reaping the benefits of niche tourism. The warm waters of the tropical seas are the favorite haunts of divers from all over the world and the shipwrecks have increased the attraction.

Local people reap the benefit of direct and indirect employment opportunities. According to Kakar, if the sea conditions permit visibility and people have the opportunity for scuba diving in the area, the lost city off the Gujarat coast could serve as a premier archeological site for exploration. "The income earned from this kind of eco-tourism could flow into preservation and conservation of the site and benefit the communities living along the coast."

Who would have though that the land of the famed Taj Mahal and palaces could also throw up attractions like underwater lost cities?
- posted by dhamaka @ 6:14 AM

 
Mental asylum becomes dumping ground for unwanted women

By Nikhil Khanna

RANCHI (JHARKHAND): Her in-laws found her mad enough to dump her at a mental hospital, but the most insane act that Veena Choudhary can remember committing is slapping her violent mother-in-law during a fight.

Veena, an inmate at the Ranchi Institute of Neurology and Psychiatry here in eastern India, is sure her parents' inability to pay a hefty dowry had something to do with the abandonment by her husband's family, who left her here in December last year.

Speaking of her experience immediately after marriage, Veena said: "I was kept in an isolated room and nobody was allowed to meet me. My in-laws, husband and other family members used to beat me black and blue. One day I could not bear the beating of my mother-in-law and I slapped her on her face."

After that slap, Veena, who got married in 1995 and has a two-year-old son, was packed off to the mental hospital, where she found many with similar stories.

Inmate Sanju Aggarwal said her mother and brother forced her to divorce her husband because he was poor. When they later found that there were no other lucrative alliances coming in, they reportedly sent Sanju to the institute.

As for Madhuri, this is her second stint at the Ranchi Institute of Neurology and Psychiatry. When she was admitted earlier, treatment had cured her. However, when she returned home, people in her neighbourhood began behaving strangely.

"Neighbours refused to even take a glass of water from me, dismissing me as a mad woman. I was hounded by people living around our homes and this became unbearable to my in-laws so they again dumped me here," Madhuri said.

There are also unmarried women whose family members have left them at the institute and do not even bother to come and visit. Some have gotten so used to the isolation that they are reluctant to go home.

Nagma, a woman from Andhra Pradesh who has been here for the last 25 years, said: "If I go back I will be forced to work. I want to stay here."

There are 550 patients in the hospital, out of who 140 are women. Nearly half the women have been treated successfully but their family members are unwilling to take them back. The oldest woman inmate is 65 years and the youngest 20.

Said the institute's psychiatry social worker Manisha Kiran: "These women have been cured but there is no one to take them back. Despite several reminders, the family members do not bother to come and take the women to their homes.

"In many cases family members do not give correct addresses. When the patients are cured we send letters to the family, but often there is no response. We do not want to risk sending the patients out of the institute without any support."

Kiran added: "When cured patients remain in the same ward with mentally sick people, there are chances of a relapse."

And women like Veena are afraid they will lose their sanity if they stay.

"I want to go back to my husband's house. I am even ready to face the agony of living with my in-laws. I'm scared if I stay here for long I will go mad."
- posted by dhamaka @ 6:10 AM

 
Malaysia: Workers' patience wears thin

By Arun Bhattacharjee

PENANG, Malaysia - The prospect of a wage increase looks bleak for a very large segment of Malaysia's 10.5 million workers in spite of their persistent demand for a minimum wage, or at least a poverty-line wage. The government asserts that any increase in wages would hurt the economy badly.

Malaysia perhaps took too long to work out a compromise between the rising cost of living and its low labor costs. Low wages and steady prices were two fundamentals of its progress toward becoming a First World country among the Third World Asian nations. But these two conditions do not hold good anymore.

Caught between rising prices and the government's determination to keep wages low, trade unions in Malaysia are becoming more and more vocal in spite of the Internal Security Act (ISA) and the continued ban against assemblies. The issue is not confined any more to the poorly paid workers demanding a minimum wage, but involves the comparatively highly paid Bhumiputra (Malay) majority civil servants as well, who enjoyed a hefty increase in their pay packets last year.

After a decade's effort demanding higher wages and a guaranteed minimum wage, workers from various disciplines, from farm labor to construction to plantation workers, demonstrated for the first time on May 1, Labor Day, a national holiday for the country. They were supported by 62 non-government organizations (NGOs).

Prime Minister Mahathir Mohamad returned to his office after 60 days of leave to face the demand for higher wages. Considering the adverse impact of the minimum wage of MR900 (US$237) per month being requested by the trade unions for the country's new economic policy, Mahathir rejected the idea. He rejected as well a proposal for a five-day week for 900,000 civil servants in the country, as this would increase costs to the government. Mahathir also told Malaysians that they would have to do the jobs previously performed by immigrant workers.

Senator Zainal Rampak, president of the Malaysian Trade Union Congress, the largest organized labor group within the country, asked for legislation of a minimum wage of MR900 per month and a scaled rate of dividends from employee provident funds for lower-income groups. The unorganized labor groups and NGOs were asking in addition for a poverty-line wage even before a minimum wage for the country is accepted. The poverty-line income requested for peninsular Malaysia is MR509, for Sabah MR684 and MR583 for those living in Sarawak.

The new demands came at a time when the economy was being battered by the impacts of severe acute respiratory syndrome (SARS) on top of slow growth in almost all sectors, from automobiles to construction.

The labor movement in Malaysia has always taken a soft approach to avoid direct confrontation with government or industry. The recent demands for wage increases are the result of rising prices, growing unemployment and stymied industrial growth last year. Unemployment in 2002 was 3.5 percent, according to data released by the central Bank Negara Malaysia, and the projection to bring it down to 3.4 percent is difficult to achieve because of various factors, including the country's over-dependence on industrialization and foreign trade, which suffered because of the global economic slowdown.

As a quick fix for the unemployment problem, an consequent drain on the economy, the government decided to repatriate 2 million foreign workers, 20.4 percent of the country's workforce of 9.8 million in 2002, hoping locals would fill the void. That did not work; rather, there was a further decline in economic growth. The construction industry, which had accounted for 2.3 percent of gross domestic product (GDP), has slipped to 1.9 percent as of this month, while the services sector recorded a decline by 0.1 percent. Real wages per employee have declined since 2000. Many fear a further decline in real wages this year due to rising prices of food and consumables.

In an attempt to convince critics, mostly from the opposition and private economists, about the good health of the economy, the government changed the base year for its consumer price index (CPI) from 1989 to 2000, which lowered the statistical inflation rate from 2.9 percent to 1.8 percent for 2002.

"All types of consumer items recorded price increases, with a significant rise in food prices, which accounts for 63 percent of the increase in CPI," admitted one government economist. Malaysia has realized that one of the major flaws in the planning process was low priority to agriculture, requiring the country to spend $2 billion on food imports, he explained.

On top of this, income from agriculture, forestry and fishery is yet to reach the 2000 figure of 2 percent of GDP.

The construction and housing sector complains about the high price of steel and a shortage of materials and manpower, the latter resulting from the repatriation of foreign workers, mainly Indonesian and Bangladeshis, who provided low-cost labor. Along with other industries, the construction industry is asking for a subsidy to maintain growth. Malaysia pumped $620 million last year into the construction sector, but new houses and condominiums remain unsold in almost every state.

Coupled with unemployment and demands for increased wages, Malaysia is suffering because of non-performing loans, another result of the economic slowdown. Malaysia's debt-recovery agency Danaharta has told the government that in spite of its best effort it could recover only $380 million in 2002 out of $7.5 billion in non-performing loans.

It seems that until the economy takes a turn for the better, workers in Malaysia have no option but to listen to the government and put their hopes for higher wages on hold. But how long such a truce will last remains a big question.
- posted by dhamaka @ 6:07 AM

 
Education? Dream on, women

By Dipta Bhog

How unchanging can rhetoric be? The state?s track record on women?s education provides an answer. Homilies about women?s education that can be found in the 10th five year plan are the same as those that we have been hearing for the last three decades ? educating a woman will ensure that her children are educated, reduce fertility, ensure hygiene, increase life expectancy etc.

Yet a close look at the budget for 2003, clearly indicates that the government is not putting money where its mouth is.

Budget 2003 does not accord priority to education. A meager 5 per cent of the total central plan outlay has been marked for education for 2002-2007. The education budget itself reflects a hierarchy of entitlements to resources.

Adult education is the Dalit in this hierarchy, as it gets a paltry 4.9 per cent share of the 5 per cent allotment to the education sector. But you can get lower than that. Lower than the Dalit is the Dalit woman. In a curious way, she is invisible in the present budget too with the budget head of women?s education being scrapped in the 10th five year plan!

Mahila Samakhya, the ministry of human resources development?s flagship programme for women?s education, finds itself subsumed in the budget, within the head of ?Elementary Education?. It gets a meager 0.06 per cent of the resources allocated for elementary education. The gains are minimal but the price it pays is high.

Collapsing an adult women?s education programme within ?Elementary? education rather than locating it within adult education is indicative of the state?s priorities. With the success of the Mahila Samakhya programme in developing women?s strength in communication, it has become a plum proposition to enroll its workers as mobilisers in getting children to school as part of the Sarva Shiksha Abhiyan (the state, of course, never speaks of anything less than campaigns and missions).

It is evident that the 10th plan no longer even wishes to teach the woman in order to teach her family. It merely wishes to involve her in getting children to school. Women?s role both within and outside the home, seems to be the same ? invisible and poorly paid.

In the Sarv Shiksha Abhiyan, women do not find any new possibilities or roles. The category of ?Sarv? clearly does not include them. We also have before us a case of the left hand not knowing what the right hand does. In the 10th plan itself, the chapter on woman and child identifies women?s education as a priority in its plan for social empowerment of women. It calls for ?a consolidation of the progress made under female education towards the goals set in the National Policy of Education?.

Yet we find neither vision or strategy as to how women?s literacy is to be sustained. What we do have in the 10th plan document as well as the budget notes of 2003 is a call for an efficiency approach in adult education, which essentially translates as cutbacks in institutional investments and minimal investments in post literacy and continuing education.

This talk of efficiency is ironic. In the absence of a strategy for sustaining women?s literacy, precious resources are being lost. Literacy missions across the country are busy in ?mopping up? operations. Literacy volunteers are being implored, yet again, to do their bit for the cause of literacy.

Literacy figures are chased without any long term vision of how this is going to be sustained. Women forget how to decode the alphabets and the state is back to mopping them up.

The sooner the state recognises that unless it invests sufficient resources, both financial and human, towards concrete strategies to enable women to gain and use literacy in ways empowering for them, the 10th plan target of achieving full literacy to a sustainable threshold level ? 75 per cent by 2005 ? will at best remain a dream.
- posted by dhamaka @ 6:05 AM

 
A peace of Vajpayee?s mind

By Shekhar Gupta

To understand why the prime minister?s third peace initiative is qualitatively different from the previous two, read again the text of his speech in Parliament this Thursday. Even in Lahore and Agra, he was passionate and persuasive but not so shrewd. Further, this plea is directed not at the Pakistanis or the international community but at his own public opinion.

Vajpayee is astute enough to imbibe the real lesson of the Lahore and Agra failures: That any peace process has to be a long haul, will have its setbacks and will not be sustained unless it is backed overwhelmingly by public opinion. And public opinion is not candles at Wagah border, another cricket series, a Sufi qawwali night or a mushaira. It is the very cut and thrust of everyday politics.

That is why this intervention in Parliament must rank among the most statesmanly pleas of the kind ever made by an Indian leader. It is a real pity if you did not hear it live, or if you do not follow Hindi, because so much is lost between the spoken word and printed text and then translation.

It wasn?t just the usual oratorical flourish that you can always expect from Vajpayee, the acknowledged master of the set-piece. It was one of the cleverest statements of India?s position and that of his reasons for risking yet another peace move. He was making a case for this sudden move and yet giving himself enormous room for manoeuvre, over a reasonable period of time. He wasn?t promising a quick summit, a take-it-or-leave-it formula and quick results one way or the other ? or ?aar ya paar? as he had promised this war against terrorism was going to be in a chilling speech in Kashmir last summer.

A couple of passages call for closer reading. He said he could fail again, but asked if the fear of failure should frighten him into doing nothing. Then he said terrorism had reduced and if you so wished India could remain static, waiting till it ended fully. But is it alright for a country of India?s size and stakes to remain frozen in a policy-trench for ever? It was a stunning message for a foreign policy establishment that makes a living out of confusing high strategy with static trench warfare.

Then he said there were many shades of terrorism, that it was not all controlled in one place by one entity and that terrorism had its politics too. He was creating elbow room for himself, and for Pakistan, and a one-size-fits-all answer for his official spokespersons each time another terrorist strike takes place even while the peace process is on.

On CNN earlier in the week, we heard James Rubin, former state department spokesman in the Clinton administration, who became a familiar presence in our lives during the Kargil war (but is better known as Christiane Amanpour?s husband), give his wisdom on Vajpayee?s latest move.

??I think the prime minister is motivated by legacy issues,?? he told a very bored Daljit Dhaliwal who seemed to be looking for something she had probably dropped under her desk. He thought Vajpayee had made this one grand move in his keenness to create for himself a place in history.

It may be partly true. But it also shows how little even those who?ve been close to policy understand Vajpayee and his style. He is a poet, alright. All politicians want history to judge them flatteringly. But he is not one to be on a sentimental, self-obsessed ego-trip to be making such a significant policy shift only for a place in history.

Also, what Rubin and so many others who see the same motivation in the Srinagar initiative fail to realise is that Vajpayee, at this juncture, is not particularly waiting to walk into the sunset in 2004. He certainly wants to be around, is more energetic and involved than at any time in the past five years and what drives him is not merely a place in history but another term for the NDA. His political outlook is more complex. He believes in his BJP and his NDA but equally detests

the Modi/Togadia/VHP kind of agenda. He has understood the perils of the BJP going into the next elections with the flag of Moditva as so many of his own partymen, high on the Gujarat success, have been demanding. To sustain that agenda until October 2004, you have to also sustain the hatred for the Muslims and the anger with Pakistan. Vajpayee is not so cynical as not to know what costs that can entail in terms of the national interest.

His latest move, therefore, is directed as much at domestic politics as towards Pakistan. If the peace process goes along, terrorism diminishes, the economy does better, there is harmony between communities, he could lead the NDA into the next elections ? irrespective of whether he is in front for prime ministership or L.K. Advani ? on an agenda of peace and prosperity. Wouldn?t that work so much better than any negative campaign based on hatred, fear, war-mongering and revenge? On the other hand, how will the Congress counter that? The party was already at a loss for ideas in Parliament this week, its lines having been so deftly stolen by Vajpayee.

Just the other day the BJP was accusing the Mufti government of being soft on the terrorists. Now Vajpayee was praising him, calling his election one of the greatest turning points in our history and all that the Congress, instead of applauding him, could do was interrupt by reminding him the BJP had lost that election.

?Well, we keep losing all the time. That?s why we are here and you there,? Vajpayee said, and he had had the last laugh not merely in terms of repartee but also politics. In some ways, the Mufti government is Sonia Gandhi?s gift to the nation. But so bankrupt is the Congress for ideas, and so inadequately skilled is its leadership, that they had ceded even this gain to Vajpayee.

You can only imagine how this will work in 2004 if Vajpayee is actually able to build an agenda of peace and prosperity. It could be a slogan to rival Indira Gandhi?s garibi hatao and, certainly, would be enormously more potent than a plea for another five years to fight Islamic terror and Pakistan. Then the voter and the Congress could turn around and ask, but what were you doing for seven years, Mr Vajpayee ? or Mr Advani? How will the Congress counter a Vajpayee promise of peace?

Several readers have responded, seeking evidence for my argument two weeks ago (National Interest, IE, April 26) that while we have been bled by cross-border terrorism, Pakistan has actually paid a greater price in terms of its economic growth.

I had said that when I first visited Pakistan in 1985 it had looked like a much richer country than ours, so let me use that as the starting point. The World Bank?s World Development Reports will tell you Pakistan?s per capita income then was $380, nearly 40 per cent higher than India?s at $270.

The latest report shows the equation had reversed by 2001, with India at $460 and Pakistan $420. Even conservative estimates for 2003 will put India close to 500, a clear 15 per cent ahead of Pakistan?s $435 or thereabouts (the Karachi Chamber of Commerce puts the 2002 figure at $427 and then you add 4 per cent GDP growth netted against 2.8 per cent population increase).

With our economy still growing faster and the population increase a clear percentage point lower, and falling, this differential will increase. This, when embedded in India?s national average are also large and populous swathes of extreme poverty like Bihar, Orissa and West Bengal.

In fact, according to the figures, in 1990, applying the principle of purchasing power parity, Pakistan?s per capita income was $1862, more than 70 per cent higher than India?s $1072. By 2001, Pakistan per capita income had risen to $1920, but it stood over 25 per cent lower than India?s, which was now $2450.

How has Pakistan lost such a headstart? One, these years have coincided with Indian economic reform and transition from the era of Hindu growth rates to what could be called more secular growth rates. But more importantly, these have also been the years of Pakistan?s most deliberate and cynical use of terrorism against India in Punjab and then Kashmir.

The ISI generals who scripted it always called it a low-cost strategy to bleed India. But they do not understand economics or the marketplace. These years have seen a huge exodus of capital, talent and even social and financial elites from Pakistan. It is true that Pakistan?s economy has improved over the past two years under Musharraf. But for it to break out of this stagnation and also to prevent this gap with its archrival widening, it will have to understand the real costs of the so-called war by a thousand cuts and junk it as a stupid, suicidal idea.

Here is, then, an agenda for peace and prosperity that even Musharraf could offer his people in his next election. I can?t promise it will get him 99 per cent vote again. But you?d bet the people of Pakistan are more likely to believe this than any boast of annexing Kashmir through terror, war, diplomacy, or divine intervention.
- posted by dhamaka @ 6:01 AM

 
Payback time for Musharraf

By Nadeem Malik

ISLAMABAD : Pakistan has gained substantially in terms of its economy since it joined the US-led "war against terrorism", with rapid growth in foreign exchange earnings, the manufacturing sector and tax revenues.

The Gross Domestic Product (GDP) is expected to rise by more than 4.5 percent during the current fiscal year ending June 2003, and latest forecasts project a 5-5.5 percent growth rate during the next two fiscals. The rate of inflation is stable at below 4 percent, with little threat of any dramatic rise. The budget deficit is also likely to be contained within the announced benchmark of 4.6 percent of GDP.

The turnaround started soon after September 11, 2001. Large external flows of new concessional multilateral loans, re-profiling of the entire official bilateral external stock of debt and one-off budgetary grants helped build coffers to the tune of $10.5 billion. The current account, which was in a historical deficit, posted a surplus of $2.22 billion last year (July-June 2001-02), and $4.38 billion until April 2003. Even if official transfers, including the Saudi Oil Facility (SOF), are excluded, the current account balance was in surplus by $2.56 billion this year, as compared to $1.014 billion in the corresponding period of the last fiscal.

The State Bank of Pakistan made large outright purchases of dollars of almost $10 billion in recent years to accumulate these reserves. Growing inflows sent by overseas workers through official banking channels provided this window of opportunity. Remittances during the July-April period were about $3.2 billion, which the government hoped would cross $4 billion mark during the year.

Foreign Direct Investment has also trickled in, with a $658 million total in 10 months. At least one major private sector bank, United Bank Limited, has been sold during this difficult period. Portfolio investment is also in the positive column after a long time, showing an over bullish trend in the market that has taken the KSE-100 Share Index to all-time highs.

There were genuine reasons to be skeptical about this positive trend in the external sector. Many believe that it was due to one-off factors and would not be sustainable. However, recent signs of growth in the real economy are more promising. "There are indications suggesting that the growth was broad based," said Nawid Hamid, senior economist of the Asian Development Bank. He maintained that industrial sector activity, agriculture growth and trends of international trade all support this assessment.

The large-scale manufacturing sector (LSM), according to official data of the Ministry of Industries, registered an average growth of 11.71 percent during July-March period of the current fiscal. The growth rate registered in the third quarter (January-March) was the highest, at 15.38 percent, as against 10.39 percent during second quarter (October-December) and 5.11 percent during the first quarter of 2002-03.

A new wave of car leasing and auto-cash facilities offered by commercial banks, awash with liquidity, along with new consumer finance schemes, has provided new impetus. However, the textile, cement and sugar industries have also shown buoyancy. The production of cement during this period was up by 20 percent, sugar grew by 12 percent and cotton cloth by 13 percent. With textiles having 19.1 percent weightage in the LSM basket, followed by 8.6 percent of sugar and 1.9 percent of cement, the overall growth rate has been dramatic.

The consumer goods industry, like deep freezers, refrigerators and TVs, and the auto industry, including cars (52 percent), motorcycles (33 percent), light commercial vehicles (58 percent), buses (42 percent), trucks (118 percent) and tractors (17 percent) have all shown robust performances in this period.

As a result of the higher economic activity, the Central Board of Revenue collected about Rs 310 billion (US$5.3 billion) in taxes during July-March 2002-03, registering an increase of 15 percent over the corresponding period of the previous fiscal. The board needs to collect another Rs 149 billion in the last quarter of the current financial year to meet its annual target of Rs 460 billion, which it is sure to do. The revenue generation will also mean that the budget deficit will remain within limits.

Exports during the period under review totaled $7.86 billion, as compared to $6.53 billion in the corresponding period of the last fiscal year, registering a record increase of 20.4 percent. Mainly textile manufactures, ready-made garments, knitwear and bed wear were exported during this period. Imports during the first three quarters increased at an even higher pace of 22.8 percent, from $7.3 billion of the last year to about $9 billion during the current fiscal year. This includes 37 percent higher machinery imports, which the government claimed was a reflection of increased industrial, manufacturing and investment activity in the country.

On the trade account, the facility granted by the European Union in response to Pakistan's support against the Taliban and al-Qaeda helped a lot, as the textile sector results show. However, the United States has not offered much in terms of trade concessions. Only a $142 million additional quota was granted over a three-year period. Pakistan's exports to the US increased from $2.25 billion in the year 2001 to $2.3 billion in 2002. At the same time, imports from the US increased from $542 million to $693.8 million.

However, US support for Pakistan within the multilateral institutions, as well as bilateral debt relief, helped Pakistan reduce its debt-servicing burden from 66 percent of budgetary revenues in 1999-2000 to 46 percent in 2002-03. The US recently provided Pakistan $188 million under the Economic Support Fund (ESF) to help buy down the $1 billion bilateral loan that Islamabad owed to Washington. US budget proposals for 2004 also indicated $395 million in new commitments, including $200 million under the ESF to help reduce the debt burden further.

However, Islamabad had made an official request to the US to waive the remaining stock of $1.8 billion debt in recognition of Islamabad's support against terrorism. Pakistan has helped catch and extradite almost 450 terrorists during the past 18 months, including Khalid Sheikh Mohammad and Abu Zubaida.

A senior official at the Ministry of Finance said that Pakistan was also seeking continued support in the issue of market access, and sales of defense articles from the US during 2004. This issue, he said, would be discussed in detail with Richard Armitage, US Deputy Secretary of State, who arrived in Pakistan on Wednesday "to promote peace and stability in the South Asia region".

One of the primary agenda items of Armitage's visit is to help facilitate dialogue between India and Pakistan ahead of President General Pervez Musharraf's visit to Washington in June 2003. Musharraf is due to meet President George W Bush to seek further economic assistance, investment and trade guarantees, and military cooperation in the fight against terrorism.

The timing of his visit is also crucial for Musharraf's personal political standing. Opposition parties have refused to accept a president in uniform, and the wide powers he still retains, including the discretion to dismiss the elected assemblies and the prime minister.

However, many diplomatic observes believe that it is time for Musharraf to concede more to the US to pave the way for better Pakistan-India relations, a process that has been revitalized in the past few weeks with the planned resumption of air, rail road and diplomatic links. Islamabad has also added 78 more items to the tradable list under the South Asian Association for Regional Cooperation.

For fully-successful ties, though, much will depend on concessions granted on the issue of Kashmir, and the Line of Control (LoC) that divides the disputed Himalayan region between the two countries. In this regard, Musharraf's summit meeting with Bush could hold the key.
- posted by dhamaka @ 5:58 AM

 
Bill on setting up private universities on the anvil

By M H Ahsan

HYDERABAD: Andhra Pradesh is getting ready to adopt a legislation that would allow private universities to come up in the State.

A high powered committee comprising of officials and experts set up by the State Government is expected to finalise a draft Bill by the month end.

If this comes through, Andhra Pradesh will be the third state in the country to legalise private universities. So far, only Uttar Pradesh and Chattisgarh have enacted laws for the purpose, while a host of other states are in the process of doing it.

Though the University Grants Commission (UGC) liberalised the procedure for according Deemed University status to private educational institutions three years ago, a Central legislation on the issue is still pending before the Parliament.

Though education is a subjectb on the concurrent list, states have greater flexibility in framing their own rules in allowing educational institutions. "However, we are broadly following the draft Bill pending before the Parliament," said a top functionary.

Ever since the UGC liberalised the procedure, about 51 institutions had been granted Deemed Universty status in the country. But, AP got only one - International Institute of Information Technology.

However, the proposed Bill allows grant of varsity status to an institution only if it meets the standards prescribed by the State Government. "Past track record, eminence of board of governance and multi-disciplinary approach will be key criteria," sources explained.

The government will, however, impose certain conditions on the private varsities like inducting at least one nominee each from the State Government, the UGC and all India apex bodies such as AICTE.

"We know that there is a greater demand from students for private varsities. But, we want to exclude fly-by-night operators who want to make money and get away from the governmental control. Financial soundness of applicants will be given due consideration," sources said.

The UGC norms say that priority will be given to "innovative programmes of long-term importance" while granting Deemed University status. This approach is likely to be included in the draft Bill.
- posted by dhamaka @ 5:56 AM

 
US and India: A dangerous alliance

By Conn Hallinan

In the wake of the Iraq War, growing tensions with Iran, and a possible confrontation with North Korea, it would be easy to miss the formation of yet another Washington think tank. But the freshly minted US-India Institute for Strategic Policy is an organization to watch and one that may help reveal the next target of American power: containing China.

The institute, closely aligned with the ultra-conservative Center for Security Policy, is the outcome of a series of quiet meetings and low-profile joint military operations between the US and the government of Prime Minister Atal Bihari Vajpayee, dominated by the Hindu nationalist Bharatiya Janata Party (BJP).

In May of last year, Douglas Feith, Under Secretary of Defense for Policy, and one of the most hawkish members of Defense Secretary Donald Rumsfeld's inner circle, hosted a meeting of the US-India Defense Policy Group to map out joint defense strategies for the two countries. These included planning joint naval patrols of the strategic Malacca Strait, workshops on ballistic missile defense, and cooperation in defense technology. While the goal, according to conference documents, was to build "stability and security in Asia and beyond", according to P R Chari of the New Delhi-based Institute of Peace and Conflict Studies, "stabilization" is a code: "What they really mean is how to deal with China."

China is certainly on the minds of administration-linked think tanks. As Lloyd Richardson of the Hudson Institute told the Financial Times, India has the "economic and military strength to counter the adverse effects of China's rise as a regional and world power. India is the most overlooked of our potential allies in a strategy to contain China."

That analysis was paralleled in a recent, classified US Department of Defense document revealed by Jane's Foreign Report. The document argues that "China represents the most significant threat to both countries' [India and the US] security in the future as an economic and military competitor." The document also quoted an unnamed US admiral as saying that both the US and India view China as a strategic threat "though we do not discuss this publicly". The document goes on to observe that US relations with its "traditional" allies in Asia - South Korea and Japan - have become "fragile" and concludes that "India should emerge as a vital component of US strategy".

Military ties between the two nations have blossomed, culminating in the recent Malabar IV exercises, which coordinated the efforts of Indian and US battle groups, including cruisers, destroyers, frigates, submarines, aircraft and several thousand personal. The Indian navy has launched a 30-year program to construct a fleet capable of projecting power into the South China Sea. According to the Financial Times, India plans to parlay its military cooperation with the US into beefing up its arms industry and supplementing China as a major regional arms supplier.

Relations between the two nations have been tense since India lost a 1962 border war with China, and the Vajpayee government regularly accuses China of aiding Pakistan's nuclear weapons program. "Reliable and widespread reports of Chinese nuclear and missile proliferation to Pakistan cause deep concern," Indian Foreign Minister Yashwant Sinha said in January, adding that he was disappointed "over the pace of improvement in the relationship between India and China".

That relationship is not likely to improve if the Chinese think that the Indians are ganging up with the White House to "contain" China. Almost as soon as the Bush administration took office, it altered China's status from "strategic partner" under Bill Clinton to "strategic competitor". The administration's US-China Security Review Commission argued that China is "in direct competition with us for influence in Asia and beyond" and that in "the worst case this could lead to war". When President George W Bush threatened North Korea with nuclear weapons last year, he leveled the same threat at China in the advent of a China-Taiwan war.

The administration lifted sanctions against India for its 1998 violation of the Comprehensive Test Ban Treaty, and resumed arms sales. Even the White House's choice for ambassador to India, Robert Blackwell, must have set off alarm bells in Beijing. Blackwell was a member of the Vulcans - candidate George W Bush's team of foreign policy advisers - most of whom opposed the Anti-Ballistic Missile Treaty (ABM) and supported deployment of an ABM system. The Chinese have long felt the ABM system now being assembled in Alaska is aimed at them.

Joining up with the Bush administration's strategy to "contain" China may not be a path India wants to follow. China is indeed a growing power in Asia, with the sixth-largest economy in the world. But there is no evidence it is particularly aggressive. It has certainly played a peacemaker role on the Korean peninsula.

And military competition with China will be painful for the average Indian. India spends $14 billion a year on its military, while half of its children are malnourished, and 350 million people go to bed hungry. One third of India's one billion people are illiterate, and the country spends only 1.9 percent of its Gross Domestic Product on education, about half of what most East Asian countries spend.

The burdens of poverty and illiteracy are likely to be far more destabilizing to India than Chinese influence in Asia, and India should have no illusions that a military alliance with the US will open the aid spigots. American foreign aid has been declining for decades, and US economic difficulties, coupled with the Iraq War, will undoubtedly accelerate that trend.

The burdens of empire eventually outweigh the benefits.
- posted by dhamaka @ 5:54 AM

 
UK man places 'son for sale' ad on the Net

By Nizami Kaif

LONDON: A man who jokingly offered his five-year-old son for sale on the Internet has had to explain himself to police after a complaint from a concerned web surfer.

Police officers visited Alex Wilson at his Scottish home after being alerted by a Canadian woman who spotted the offer on a website selling bicycles and prams, the Times newspaper reported on Friday.

"Hyperactive kid for sale, good at vacuuming, not great at washing dishes because he's too short," the advert read. "Guaranteed to annoy. Five pounds ($8) or nearest offer."

Wilson, 33, of Carrickstone, placed the ad as a joke about two years ago to tease his son Liam, now aged seven. He then forgot all about it until he heard from the police, the Times said.

"The police officer was quite jokey at the end of the conversation, but said I'd have to remove the advert," Wilson told the newspaper.
- posted by dhamaka @ 5:50 AM

 
World's biggest gas reserves discovered in Andhra Pradesh

By Nand P Kumar

Significant gas discoveries, including the world's biggest one by Reliance-Niko resources joint venture, were made in the Krishna-Godavari basin offshore (deepwater), near Hamsaladeeve, about 25 km South of this Port town, official sources from the Ministry of Petroleum and Natural Gas revealed on Saturday.

Under the new exploration licensing policy (NELP), these discoveries have been made in blocks from NELP-1 and NELP-2.

Another block by UK-based Cairn Energy in the same area was made from NELP-1.

The gas discoveries, by Reliance and Cairn Energy in the K-G deepwater, were estimated to have about ten trillion cubic feet inplace reserves. These could help the country procure gas to the tune of about 30 million cubic meters per day (mmscmd).

This would add 50 per cent to the country's total output against the current availability of about 65 mmscmd and demand of nearly 150 mmscmd, sources added.
- posted by dhamaka @ 5:48 AM

 
The simmering tensions in Turkish polity

By K Gajendra Singh

Tensions building up between Turkey's secular elite, led by its powerful armed forces, and the ruling Justice and Development Party (AKP), which has Islamic roots, ever since the latter's electoral triumph last November, have up to now remained under check. This was because of Turkey's preoccupation with more important matters, such as an admission date into the Europe Union, a United Nations-led attempt to resolve the Cyprus problem and the United States efforts to persuade Turkey to join in the war against Iraq.

With these issues now either resolved or in limbo, the first battle lines between the two sides were drawn on April 23 when President Ahmet Sezer, a former head of the Constitutional Court, and the top military brass led by General Hilmi Ozkok, refused to attend a reception at parliament house hosted by its speaker, Bulent Arinc of the AKP, to mark National Sovereignty and Children's Day, as hostess Munnever Arinc planned to wear a Muslim head scarf. The opposition, left of the center People's Republican Party (RPP), also boycotted the reception. A last-minute announcement that Mrs Arinc would not attend the reception came too late.

Since the establishment of the secular republic in 1923, Ottoman and Islamic dresses have been forbidden in public places. Many an Islamist women has lost her job or place in university, and some women their seats in parliament, for defying this regulation.

On April 30, a statement issued after a meeting of Turkey's National Security Council (NSC), underlined secularism as one of the basic pillars of the Turkish Republic. Reiterating that its "vigilant protection cannot be over-emphasized", it urged the AKP government to protect the secular state. The NSC is Turkey's highest policy-making body and is composed of the chief of general staff (CGS) of the armed forces and top military commanders, the prime minister and his senior colleagues and is chaired by the president of the republic. The CGS is next in protocol after the prime minister and forms one of the three centers of power, along with the president.

In 1997, Turkey's first-ever Islamist prime minister, Najemettin Erbakan, then heading a coalition government with a secular party, was made to resign by the armed forces for his failure to curb growing Islamic fundamentalism. In 1971, the military members of the NSC had forced premier Suleiman Demirel to resign for his failure to implement land and other radical reforms and curb left-right strife. The military also intervened directly in 1960 and 1980, when politicians had brought the country to an impasse.

But after cleaning up the mess created by the politicians and getting a new constitution in place, the armed forces, self-styled custodians of Kemal Ataturk's legacy of secularism, as usual, returned to the barracks. Ataturk had forged the secular republic from the ashes of the Ottoman empire after its defeat in World War I.

Arinc, a maverick politician, blotted his copybook earlier when, in a defiant gesture soon after the elections, was accompanied by his scarf-wearing wife to see the Turkish president off on a diplomatic mission. This was noted with concern by the Pashas (as the military brass is called in Turkey)as well as the secular elite. Recently, another minister's turbaned wife turned out to receive the Iranian vice president and his delegation. Then the men and the ladies went to different reception rooms, a practice frowned on by the Westernized secular elite. Wives of AKP leaders, like Prime Minister Recep Tayep Erdogan (even when he was the mayor of Istanbul) , Foreign Minister Abdullah Gul and others avoid attending state functions.

The leadership believe that women are "flowers and must find fulfillment at home". Apart from the clash over the wearing of head scarves and long body covering dresses, other differences that have cropped up between the two sides are; the appointment of the AKP's cadre with Islamic leanings to official positions, a plan to amend the Higher Education Board law and proposed radical changes in the constitution, even making it presidential. Recently, the Foreign Ministry sent a circular to its embassies abroad to "support the National View Organizations and the Fethullah Gulen schools". These have an Islamist agenda. The AKP also wants to consolidate and expand its vote. Its backers are upwardly mobile conservative trading and industrial classes from central Anatolian towns such as Kayseri, Konya and beyond, who want a share in the economic cake. This will clash with the interests of the established supporters of the secular establishment.

Some AKP leaders have also publicly criticized the armed forces' annual dismissal of officers with Islamic proclivities and connections, a practice that has been in place since the establishment of the republic. The armed forces have enjoyed autonomy in internal matters and are very sensitive about it. Many a time Abdullah Gul, a moderate, has tried to smooth differences, but the AKP's attempts to strengthen its position in the establishment, help its supporters and challenge the established secular norms have been carried on stealthily.

All these matters were discussed vigorously at the April 30 NSC meeting, which lasted seven-and-half hours. Prime Minister Erdogan, who spoke most of the time on behalf of the civilians and President Sezer, had frank discussions on the question of army appointments and other matters.

However, on one subject both the AKP government and the armed forces agreed - not allowing the US to use bases for its troops in southeast Turkey. The motion, which had the full support of the government, but with 90 percent of Turks opposed to a war on Muslim Iraq and huge crowds protesting outside parliament building and elsewhere, failed to pass muster when nearly 100 AKP deputies voted with the opposition.

Not sure of being able to garner enough support for a second vote and even afraid that the party might split apart, Erdogan did not dare take up the motion again in parliament, despite relentless US pressure and an attractive economic package said to be worth over US$30 billion. Turkey finally agreed to grant the US the use of its airspace only, that too with some conditions.

With Iraqi defenses inexplicably collapsing so easily, many in Turkey, especially the secular establishment, now rue the decision not to go along fully with the US. They would have had around 40,000 troops in north Iraq, with a say in the future shape of Iraq, notably over possible Kurdish autonomy. The Turkish armed forces, with half a century of association with the US defense establishment, left the decision to the politicians at the time of the vote, but later publicly extended its full support to the government motion.

Turkey's November 3 election results had shocked many in the West after they delivered a quixotic two-thirds majority (365 out of 550 ) to the AKP, which had received only a third (34 percent) of the total votes cast. The only other party to cross the 10 percent threshold and enter parliament was the left of the center RPP, which won nearly a third of the seats. Thus other parties remain unrepresented, but independents, polling only 1 percent of the votes, won eight parliamentary seats. Although the AKP was the front runner in pre-election polls, even its leadership was surprised by the magnitude of the windfall. A large number of new and inexperienced AKP deputies have entered parliament, many friends and officials when Erdogan was mayor of Istanbul.

In 1995, Necmettin Erbakan's Islamic Welfare party won 158 seats even though it only polled 21.3 percent of the votes. With great difficulty he formed a coalition government in 1996, which was made to resign the following year. The veteran Erbakan established the first "Islamist" party in Turkey in 1969. It was called the National Order Party, hinting at Islamic order. When it was closed in 1971 after military intervention, he named its successor the National Salvation Party ( like the Islamic Salvation Front in Algeria).

When that was banned, too, along with other parties after the 1980 military takeover, Erbakan named the next party the Welfare Party (zakat for welfare). After it was closed by law, Erbakan founded the Virtue Party. When that was also closed and a ban put on Erbakan himself from politics in 2001, Erdogan, Gul and other younger and moderate leaders of the Welfare formed the conservative AKP. They have repeatedly proclaimed that it is not a religious party. Erbakan's rightist followers have formed the Saadet Party led by Recai Kutan, a proxy for Erbakan (it won 2.5 percent of the votes in the recent elections ).

The outgoing ruling coalition parties were decimated, each getting much less than 10 percent of the votes. They were entirely responsible for the result with their mis-governance which saw a record 10 percent fall in Turkey's GDP in the preceding year, adding millions more to the ranks of the unemployed. The elections also saw the exit of the last of the dinosaurs, outgoing prime minister Bulent Ecevit, who along with Demirel, Erbakan and Turgut Ozal, all nearly 80 years old, had dominated Turkish political life over the past 40 years.

The quirky election results are an excellent demonstration of the maxim that errors tend to add up in the same direction. Turkey's d'Hont electoral system, based on the German pattern with a very high threshold, was selected to provide stability to governments in a highly fragmented polity. Apart from the fond wish that each party leader has of seeing others not crossing the 10 percent threshold, there appears a tacit understanding not to lower it to 5 percent as Kurdish parties, on the basis of their strength in the southeast, who consistently manage to cross the 5 percent mark, can be kept out of power. Kurds form over 20 percent of the population, with many supporting left of center parties.

The Pashas were clearly unhappy with the election results. After waiting for some time, they declared, "We will continue to protect the republic against any threat, particularly the fundamentalist and separatist [Kurdish] ones." Erdogan had been banned from contesting the elections because of a 1999 conviction for reciting a poem at a political rally which said that "Minarets are our bayonets, domes are our helmets, mosques are our barracks, believers are our soldiers." To begin with, both Sezer and the Pashas expressed opposition to amending the constitution to enable Erdogan to stand for bye-elections and take over as prime minister from Abdullah Gul. But later they relented.

To soothe the anxiety felt in the West over the AKP's massive victory, Erdogan and other party leaders went on a charm offensive, reiterating that the AKP was a conservative and not an Islamic party. Its leadership had no connection with the banned Islamic Welfare party of which they were once members. They did not even meet Erbakan now, they said. No changes were planned in Turkey's secular dispensation. They redoubled their efforts to take Turkey into the European Union (unsuccessfully) and stood by the International Monetary Fund's program to sort out Turkey's dire economic problems.

The West and the US were relieved to see the AKP's English-speaking leadership in Western suits (having seen the rise of Islamic parties in Pakistan with its fierce-looking bearded mullahs in last year's elections while many AKP ministers are highly educated with backgrounds in economics and management.) It helped the AKP establish its credentials as a conservative party with which Europe and the US could do business. Further legal reforms that have to be carried out in Turkey to meet EU norms will usher in greater freedom of expression, specially for the Kurds, and improve the country's human rights record. The changes will make it difficult for the secular establishment to ban the AKP and other parties with Islamic inclinations or those promoting the Kurdish cause. EU leaders have openly said that the military's role in Turkish politics must be reduced to qualify it for membership.

Tussles between the armed forces and religious political parties are nothing new in the Islamic world. In 1992, the Islamic Salvation Front in Algeria, on the verge of electoral victory and bringing in Sharia law and doing away with elections, was banned, leading to violence that is still smoldering. There is a constant battle between Islamist parties and the armed forces in Indonesia, Bangladesh and Pakistan.

Since 1923 Turkey has had a laic (secular) constitution, which, according to many, is more Jacobin than genuinely secular. The country is a member of the Council of Europe, NATO, the Organization for Economic Cooperation and Development, and it has a customs agreement with the European Union. But with its 67 million Muslims, Turkey is unlikely to be admitted into the EU any time soon, which is basically a Christian club. At the Copenhagen EU summit in December last year, France's former president Valery Giscard d'Estaing said that admitting Turkey "would be the end of the European Union" because Turkey has "a different culture, a different approach, a different way of life - it is not a European country".

Preceded by modernizing and Westernizing reforms during the last century of the Ottoman rule and nearly 80 years after Ataturk's sweeping reforms, Turkey's experiment in democracy goes wobbly from time to time. Ironically, it is invariably put back on the rails by the armed forces.

A Muslim majority state (99 percent) it is closest to a modern secular democracy in the Muslim world. Its half a million strong armed forces is a stabilizing factor in a turbulent region. But Turkey is now tending to look more to the east after the runaway success of the AKP. For stronger economic and political linkages with the east, AKP leaders have visited Turkic-speaking states in Central Asia, and also Iran, Syria (in spite of US frowns) and other neighbors recently.

The US wants other Muslim countries in the region and elsewhere to become secular democracies, so it will be keen that Turkey serve as a good, stable example. From their viewpoint, they certainly don't want the armed forces to have to intervene once again.
- posted by dhamaka @ 5:34 AM

 
NORTHERN KERAL MUSLIMS LIVE IN FEAR

By Ashraf Padanna

THIRUVANANTHAPURAM : Muslims in Marad and nearby areas of northern Kerala district of Kozhikode offered jum?a prayers under heavy police protection for fear of revenge attacks for last Friday?s communal carnage that claimed nine
lives.

The Marad Jum?a Masjid was taken over by the district administration Thursday
after huge cache of crude weapons suspected to have used in the attacks
recovered from its premises.

District Collector said though the administration had allowed prayers
at the mosque and offered police protection none turned up so far, including for
the jum?a prayers. Most of the Muslim families had since fled the area leaving
behind their houses and properties fearing retaliatory attack.
The takeover orders, the first in many years, will be in force for 15 days from
Thursday, which could be reviewed and extended if required. The police led by
Muslim officers strictly restrict the entry into the mosque.
Believers attached to the mahal will be allowed to offer prayers after getting
the prior approval of the Tahsildar P Koyakkutty by producing identity to enter
the mosque and people from outside Marad will not be allowed in. No one will be
allowed to remain in the mosque after the prayers. Cleaning the premises and the
interiors is undertaken only with the assistance of the police.
Koya Kutty and three village officers had visited the mosque, prepared a list of
movable and immovable properties inside it, and locked the doors.
Police have made more than 100 arrests in connection with Friday?s surprise
raids by alleged Muslim extremists revenging last year?s riots that killed five
people, including three Muslims. A Muslim youth was also among the nine victims
of the attack by a gang of around 50 that used swords and machetes.
The coastal hamlets of anglers in Beypore and nearby areas, including Marad that
witnessed a mass exodus since the attack, is facing severe famine as the fishing
activities came to a standstill. Nobody dares to venture out into the sea for
fear of a repeat of last year?s incidents when scores of boats were burnt
offshore. Only the patrolling boats of the Marine Enforcement and a ship of the
Coast Guard are present along the coasts of historic Beypore, famous for urus,
large trading vessels that attracted Arab merchants and spice traders.
The fishing harbours of Beypore and Puthiyappa are deserted and some 1000
mechanised boats are lying idle as fear, suspicion and uncertainty dominate.
Senior Congress party leader and Member of Parliament VM Sudheeran demanded a
ban on trishul (trident) distribution of Vishwa Hindu Parishath (VHP)
threatening communal harmony in Kerala. ?The government has the responsibility
to ensure communal peace. This would do no good for the people or any religion.
Such activities aimed at making political capital should have been stopped at
the very beginning,? he said.

Though some of the Congress party-ruled states have banned the VHP campaign,
Kerala Chief Minister AK Antony had rejected the demand saying Keralites are
matured enough not to fall into the trap.

Sudheeran said the government should not take chances especially in the backdropof Marad and should act tough on those who are out to create vote banks fanningreligious sentiments.

Meanwhile, the Hindu Aikya Vedi (Forum for Hindu Unity), an umbrella
organisation of Hindu outfits in Kerala, demanded removal of Indian Union Muslim
League (IUML) and Industry Minister PK Kunhalikutty from the state cabinet the
Marad probe is concluded.

Crime Branch of the state police led by its chief is presently probing the case.
The state cabinet will decide on terms of reference of a judicial probe on
Wednesday.

The Vedi leaders J Sisupalan and VK Vishwanathan said that any sort of enquiry
by the state administration would be a farce if the minister and the district
collector TO Sooraj, a Muslim, remain in the office.

They alleged that Kunahlikutty was running the State Home department and Hindus

will never get justice under him. ?Those arrested from Marad the other day are
known IUML workers. The peace committee meetings and other initiatives of the
minister and the collector are aimed at creating a false sense of security among
the Hindus and paving way for another surprise attack,? they said.
They said the carnage was part of a conspiracy to annihilate Hindus residing
along the coastal belt. The Hindu organisations will launch massive agitation
soon.

The Bharatiya Janata Party state secretary PK Krishna Das alleged that the IUML
links to the carnage came to the fore during the preliminary investigation and
Chief Minister AK Antony was shielding the real culprits due to political
compulsions. He demanded a probe by the federally-controlled Central Bureau of
Investigation (CBI). The BJP will organise a statewide agitation pressing the
demand.

Meanwhile, the IUML has severed ties with the Communist Party of India-Marxist
(CPI-M), which alleged IUML links in the carnage, in three local bodies in
Malappuram district.

- posted by dhamaka @ 5:32 AM

 
M&A: What motivates Indian companies?

The past couple of years have seen a spate of mergers and acquisitions by Indian IT companies. Companies have taken to M&A for different reasons. Dhamaka Bureau attempts to understand the rationale behind Indian IT companies making acquisitions and getting merged

M&A activity is on the rise in the Indian IT industry with the last couple of years having seen a few large mergers and acquisitions. Whether it was the merger of Polaris with OrbiTech or Wipro's acquisition of Spectramind and GE Medical Systems Information Technology (India) or Mphasis BFL's acquisition of a Chinese firm, mergers and acquisitions in the Indian IT industry are here to stay and more are expected to follow in the near future. Why do Indian IT companies opt for M&A?

The size factor
Many companies have undertaken M&A to grow in size by adding manpower and to facilitate overall expansion. The Polaris-OrbiTech merger saw a spurt in the merged entity’s revenues from $60 million to $125 million. The merger also added 1,400 employees to Polaris, taking the total employee strength to 4,000.

Similarly, for Bangalore-based vMoksha Technologies, the logic behind the acquisition of two US-based companies, Challenger Systems and X media, was to increase in size by widening its customer base. Pawan Kumar, chairman and CEO of vMoksha Technologies says, “The size of a company does matter when interacting with customers and clients. These acquisitions added 120 people to our staff.”

The acquisition of China-based Navion software helped Mphasis BFL increase its employee strength by 85 people and expand its business in the region. Similarly, when software services giant Wipro acquired BPO player Spectramind, it helped the company expand into the BPO space.

In the same vein, Bangalore-based Mascot Systems’ acquisition of US-based eJiva and Hyderabad-based Aqua Regia enhanced the company’s value proposition and made it globally competitive. With the acquisition of eJiva and Aqua Regia, the total employee strength of Mascot Systems increased from 1,700 to 2,000.

To gain new customers
One likely reason behind M&A has been to gain new customers. Polaris Software had six major customer wins after it acquired the Intellectual Property Rights (IPR) of OrbiTech’s Orbi suite framework of banking solutions. vMoksha also saw a rise in the number of its customers (four new customers) due to acquisitions as it expanded considerably in the US market and leveraged on the existing customer base. Mphasis also added new customers in the Japanese and Chinese markets after the acquisition of Navion.

The need for skill set enhancement
The need for skill set enhancement seems to be a major reason for companies to merge and make new acquisitions. The Polaris-OrbiTech merger helped in combining skill sets of both companies, which in turn led to growth and expansion of the merged entity. While Polaris Software was looking for a specialised product suite, OrbiTech was looking forward to efficient marketing and service support for its products. Post-merger, Polaris got the Orbi suite framework and combined it with its service expertise to win more customers. After the merger, Polaris has become a large, specialised company in the banking, financial services and insurance (BFSI) space, offering solutions, products and transaction services. Polaris has had some recent post-merger wins, including ABN-AMRO Bank, Kuwait Commercial Bank and Deutsche Leasing.

Wipro acquired GE Medical Systems Information Techno-logy (India) to leverage its specialisation in the health science domain. The intellectual property that Wipro acquired from the medical systems software company provided it with a platform to expand its offerings in the Indian and the Asia-Pacific healthcare IT market. Similarly, when Wipro acquired the global energy practice of American Management System and the R&D divisions of Ericsson, it acquired skilled professionals and a strong customer base in the areas of energy consultancy and telecom R&D.

vMoksha Technologies’ acquisition of two US-based companies helped it to increase its size, and leverage on the expertise of the acquired companies. Says Kumar, “One of the acquired companies is very strong in banking and we leveraged this factor to gain some good banking customers.”

Likewise Bangalore-based Mascot Systems was benefited by the technical expertise of eJiva and Aqua Regia, the two companies it recently acquired. The acquisition also helped Mascot to extend its offerings through a portfolio of complementary services, technologies and skills.

Expand their market reach into new geographies
Many Indian companies have carried out acquisitions and mergers to expand their reach in international markets and
to spread across different geographies.

Mphasis BFL, through its acquisition of Navion software wants to expand its operations into the Chinese and Japanese markets. Ravi Ramu, Mphasis BFL’s group chief financial officer of says, “The need for developing a near-shore centre for the Japanese market triggered this acquisition. Besides this, we plan to tap the skilled labour force in China to improve our prospects in the region. We also plan to tap the local market at a later stage and use the Chinese base as an alternative centre for our offshore services in the region.”

Similarly, vMoksha Techn-ologies after acquiring the two US-based companies has cemented its base in the US market and plans further expansions from here. Adds Kumar, “With the acquisitions, we also expanded our reach in the US market besides India. Since the majority of workforce in the acquired companies was Indian, integration was much easier and smooth”.

What does the future hold?
Many Indian software players see a rise in the number of mergers and acquisitions by Indian IT companies in the near future. Kumar says, “A rise in the number of mergers and acquisitions by Indian IT companies is likely in the near future due to competition ushered in by the influx of MNC IT companies. In order to compete with global IT majors setting up base in India and to expand their global reach, more and more Tier-1 Indian IT companies would acquire global Tier-2 IT companies.” Similarly global Tier-1 IT companies in order to penetrate deeper into the Indian market would look at Tier-2 Indian IT companies in the near future. vMoksha would always keep its options open for further acquisitions and would do so as and when it gets good opportunities, he adds.

Many players feel that Indian IT companies look at M&As due to the size factor, the niche factor or for expanding their market reach . Many are also of the opinion that acquisitions help in the inorganic (and quicker) growth of the business of a company and the decision to acquire or grow organically depends on the business targets that the companies have set for themselves. Some feel that in today’s competitive economic environment, size and focus are factors that matter for surviving the onslaught of competition. In this scenario, mergers and acquisitions have emerged as key growth drivers in the Indian software services landscape. Apart from this, the importance, size, pricing pressures and global companies consolidating and building offshore capabilities have made M&A relevant for Indian IT enterprises.

But Ravi Ramu of Mphasis terms the whole spate of mergers and acquisitions as premature and says that although there will be a few acquisitions and mergers in the near future there won’t be a whole lot of them. However, according to him, Mphasis will always be on the lookout for further acquisitions.

Mergers and acquisitions are primarily aimed at expanding a company’s business and earning profits for it. Acquisitions bring in more customers and business, which in turn brings in more money for the companies thus helping in its overall expansion and growth. More and more companies will move towards acquisitions for a fast-paced growth.
- posted by dhamaka @ 8:59 AM

 
Indian IT industry poised to maintain a rising graph

By M H Ahsan

Every year strategy and marketing consulting firm Skoch Consultancy Services releases its annual analysis of the Indian IT industry. The sixth annual edition, titled Browser 2002, was presented at Skoch Summit-Challengers 2003, held at New Delhi on March 26. The report covers all IT market segments from hardware and software to networking.

The global tech slump notwithstanding, the Indian IT industry has shown a remarkable resilience to record an overall upsurge in almost every category. With an overall growth of 9 percent in 2002, the domestic market stood at Rs 23,774 crore as users in government, banking and finance, education and telecom sectors have emerged as major spenders. Over half the revenues have come from 1.8 million PCs and other hardware sold during the year.

Despite some stagnant demand for Indian software services in the traditional US market, software exports—the backbone of Indian IT industry—have been higher by 30 percent at $8 billion during the period. A significant one-fourth of the contribution coming from IT-enabled services (ITES) has added to the export performance. As all other segments like training, consultancy and systems integration continue to do better, the industry is poised to maintain a rising graph in the current year too.

Discrepancies
Skoch’s findings have explained some of the anomalies in market data that is floating around from different sources, confusing industry and the consumer alike. Skoch says that due to various discrepancies, the size of the Indian hardware industry is overstated by as much as $600 million because of the trickle down impact from a $40 billion global IT grey market. For example, as India and China get differentiated prices that are lower, systems bought for these countries get added in the figures, but in fact the shipments get diverted to some other markets to gain price advantage.



Similarly, norms to determine software market size need to be refined, as some unquantifiable data is getting reflected in most industry figures, including captive software development.

Hardware
The action is also clearly shifting from metros to non-metros with the latter expected to overtake their share with 52 percent by 2003 end as compared to a marginal 20 percent in 1997. That has opened up a lot of opportunities for vendors to explore new markets. This is largely due to a vast percentage of the SME and consumer PC market being non-metro, and further aided by an increased thrust to implement IT projects, including e-governance initiatives by almost all the state governments and Union territories. The user awareness levels are also higher now in non-metros as vendors are carrying out regular promotional events in these areas.

Among the growth drivers have been the increasing requirement in the telecom sector that aims to increase tele-density in the country with wireline and wireless networks. Applications such as billing, customer services through call centres and online payments have driven demand. Similarly, increasing automation in the banking and insurance sectors has provided the impetus as more private players want to attract consumers with better quality of services.

Private participation in the education business and the government’s thrust to spread computer literacy through projects like Vidya Vahini are among the factors that make education a high-potential market segment. Yet we are still way behind countries such as China and can possibly lose our competitive advantage to them in the long term if this is not corrected immediately.

PCs sold in the education segment have grown to 89,852 units in 2002 compared to 63,054 units in 2001. BFSI, telecom and education combined have contributed a good 18 percent in the total market size.

The overall volume-wise growth of PCs was 14 percent, selling 17,97,039 units in 2002. While almost all the user segments have bought more PCs during the year, cost still remains a critical issue. An entry-level basic PC configuration is still exorbitantly priced at around Rs 35,000, despite a fall in average unit price. That’s evident as volumes have increased by 14 percent, while the total value has shown a rise of 11 percent.



There are various cost reduction measures—ranging from lower excise duty to 100 percent depreciation benefits that can make PCs affordable by bringing down costs. This may not result in an immediate surge in buying patterns, but will be beneficial in the long run to attract more consumers, especially price-sensitive home PC buyers.

With a view to further develop the market and induce demand, there is a clear need to introduce some conducive policy changes. By allowing 100 percent depreciation, the government can offset its revenues by way of increased excise duty collection. In fact, by applying this, the annual profit to the government could be over Rs 30 crore.

While the PC market growth was slower than some of the earlier years (2000, for instance), the biggest disappointment has come from the ubiquitous network—the Internet—that has failed to spur demand for PCs as was expected. Indian consumers have less than a 1 percent share in a world Internet subscriber base of 600 million. High prices and choked phone lines for the poor man’s dial-up alternative persist to be the deterrents. Also the lack of relevant content for the local market has kept potential buyers at an arm’s length.

The general perception on the lacklustre performance by the retail channels is not true. In fact, over 8,00,000 PCs have gone through retail outlets giving them an attractive 48 percent share. The number of units sold through retail was 8,60,782 during 2002. Small businesses and first-time users are mostly buying from retailers, who are largely assemblers. It’s observed that even some big corporates have bought machines from assemblers. Those machines are generally bought as client PCs that are linked to a branded server. While the retail market is highly fragmented, HP’s performance as the single largest organised retailer stands out.

Big metros continue to increase their PC penetration. For example, Mumbai and Delhi have an equal PC penetration of 23.5, while Bangalore is a notch ahead at 23.6. The penetration level in some of the non-metros is also high at over 17 percent. This is attributed to enhanced awareness levels and expanded distribution channels of PC vendors.

From the ‘rightsizing’ years in the early nineties, India is still a PC country with a strong preference for Intel architecture-based PCs. That holds true for front-end as well as back-end systems. AMD has been making significant gains at the front-end market, accounting for nearly 10 percent of all PCs. This year Skoch also expects a lot of activity from other vendors like Via in the thin-client space. With some of the forthcoming launches, we might also find non-Intel architecture based CPUs getting into the server space as well.



While high-end non-PC servers have a negligibly small percentage share, the user preference for PC servers shows that India is a price-sensitive market. First time users and small businesses continue to be the leading buyers as they have been buying around 40 percent of PCs during the last four years. SME users too have been big spenders as usual, accounting for another 30 percent. Corporates and government organisations are the other major categories, with a combined share of 28 percent during last year.

Because enterprise buying is far lower as compared to SME and home categories, a clear preference is indicated for assembled PCs that are cheaper. They have enjoyed over 60 percent share as compared to Indian brands with only 17 percent and those produced by MNCs at 22 percent. In fact, the MNC brands have dropped their share from 28 percent last year, attributed largely to the hiccups faced by post-merger HP and Compaq. Skoch expects the new HP to bounce back over the next couple of years. Skoch also believes that Samsung will emerge as a strong branded PC player given the fact that they control the bulk of the component base.

The value-wise share of PCs has increased by over 11 percent, accruing revenues of Rs 7,664 crore. In fact, the value has surpassed the 2000 level, which was considered to be the boom period. This shows that the market turnaround is happening and growth will be more robust in the current year.

Despite slow corporate spending, the server market grew by 15 percent with 45,640 unit shipments. Though most companies are using networked systems for their computerisation needs, most PCs bought by the corporate and government sectors have either gone as standalone machines or as additional clients in existing networks.

Peripherals & Networking
Peripherals have also witnessed a matching demand. Printers, for example, have crossed the one-million unit mark for the first time during 2002. Network printers, all-in-one devices offering print, fax, scan and photocopy are among the new offerings that will spur SME buying. Technology innovations and lower cost of ownership for printers have been the major factors for increased buying.

Laser and inkjet machines have collected a combined share of 70 percent, which is considered to be a healthy growth as office and enterprise printing requirements have gone up. Users have many more options now with vendors introducing new products at regular intervals. Applications such as bills printing, passbook printing, etc., in the service sector industry (for instance, banking and telecom) have increased printing requirements. Skoch expects Canon and Samsung to make significant gains in the printer market over the next few years.

Likewise, the networking market value has increased by 9 percent to Rs. 1,850 crore. The slow growth in this segment is largely due to a ‘go-slow’ on Internet penetration.



Enterprise apps
A slow spending approach and disillusionment with standalone ERP implementation has affected the packaged enterprise application software market, which has been almost stagnant at less than Rs 300 crore. Total cost of ownership is also driving increase in Unix and Linux-based servers. The impact of Linux on desktops however so far is negligible and Skoch expects it to catch up, but more in the medium-term than short-term.

Software exports
As was expected, software export revenues have gone up by 30 percent in dollar terms to cross the $8 billion mark. This is a good achievement considering the persisting tech slowdown in the US, which has been a traditional buyer of Indian software services. However, a major contribution in software exports has come from the ITeS segment, including call centres in India working for global clients.

Given the fact that a major part of software export earnings have happened through the government facilities offered by STPI, it shows that SMEs have played an important role in the software exports area. More than half the export revenues have come through SMEs—covering IT services and the ITeS categories.

Despite their remarkable export performance, SMEs continue to face a step-motherly treatment in terms of policy support or rather lack of it. Skoch believes that various measures need to be immediately taken to follow an SME-friendly approach, including better access to capital and broadening the definition of ITeS to come at least in line with the WTO Information Technology Agreement.
- posted by dhamaka @ 8:57 AM

 
Will India Software Inc. get caught in US-Iraq crossfire?

By M H Ahsan

When US forces struck at Iraq on March 19, many analysts and industry players shrugged it off because they felt a short, decisive war would have little impact on India Software Inc. But with Iraqi forces refusing to stick to the US war script, things could get pretty messy for the US and for the Indian IT industry.

The Indian software industry didn’t seem very worried when the first American missiles hit Baghdad. Everyone expected a quick American victory. Fact is, even the United States expected that. But within a few days, it was clear that the story wasn’t going the way the US expected it to. Iraqi resistance has meant that the US is now rushing in more troops, all of which adds to concerns that the war could drag on for a while. And that scenario has the Indian software industry worried.

According to Kiran Karnik, president of software industry association Nasscom, India’s software exports for the current fiscal are likely to fall 2-3 percent in value terms on account of a weakening US dollar. Earlier, the software sector had predicted that the dollar would appreciate to Rs 50 over a few quarters, which did not happen. A prolonged Iraq conflict will lead to a deferral of capital spending in the US and a weakening of consumer confidence.

“As during the Kashmir crisis last summer, and the aftermath of September 11, 2001, there will undoubtedly be a negative impact on international travel. That, in turn, will slow down client visits to offshore facilities and, as a result, could delay projects that are dependent on face-to-face interactions,” Stephen Lane, research director, IT Services for Aberdeen Group told Express Computer. “The same holds true for sales cycles as visits to supplier sites and meetings with top management are an important part of the due diligence process that companies must go through when building an offshore relationship,” he adds.

Bangalore-based MindTree Consulting has witnessed a 25 percent fall in customer/prospect visits. Some other Indian companies have also admitted that prospect visits have fallen in the range of 25-50 percent.

Economists have pegged the cost of the war at around $100 billion, equivalent to 1 percent of US GDP. With the US accounting for around one-third of Indian software exports, there are obvious reasons to believe that a sluggish US economy will affect India Software Inc.’s prospects in the near-term.

There is a school of thought however, which believes that a slowing US economy will force US enterprises to increase offshore outsourcing. It will also result in several new outsourcers seeking to offshore their IT needs. According to Gartner, fears of war are strongly affecting offshore outsourcing engagements between global enterprises and geographically diverse service providers. Disaster recovery and business continuity planning are going to drive outsourcing decisions.

“Cancellation/postponement of customer/prospect visits are seen from the US and Japan geographies, while there are no cancellations so far from Europe. This leads to delay in decision making, but in a few cases only since people do take decisions even without visiting us,” says S Janakiraman, president and CEO of MindTree’s Technology Business. “If the war continues for a longer period it can lead to a slowdown in the market and impact us in medium term outlook for Q2/Q3,” he adds.

“We do not see any significant long-term implications for Indian offshore players, except the fact that pre-sales scrutiny by clients will be more rigorous in terms of understanding the ability of the service provider to offer disaster recovery and business continuity services,” says Govind Singhal, executive director of Polaris Software Labs.

New outsourcers may hold decisions
“The biggest impact will undoubtedly be on new business opportunities involving companies that have little or no experience with offshore models and who lack the experience or dedicated resources for managing international business relationships,” says Lane. Aberdeen research indicates that such companies tend to consider geopolitical risks as being much more important than companies that have experience with offshoring.

There is the question of the potential impact of the current conflict on the global economy. If it continues to deteriorate companies could end up spending even less on IT, even in areas that are fundamentally about cost reduction, such as offshore outsourcing.

Client visits
Recent high profile visits of Sun Microsystems’ chairman, CEO and president Scott McNealy, and Dell chief Michael Dell have endorsed the fact that India is definitely very safe for trade visits. However, analysts believe that there is a definite decline in the visits made by traditional outsourcers. They peg the decline at around 25 percent, compared to a quarter ago. A facility visit is integral to any offshoring decision process, therefore, any decline in client visits leads to a much longer sales cycle.

“Client visits to India may get stretched owing to the war that may lengthen sales cycles in the short-term but we don’t expect it to be extended longer,” agrees Singhal. However India’s largest software services firm, TCS doesn’t think this is true. A TCS spokesperson said that the company has not seen any drop in client visits.

The bottom line: A decline in client visits might be short-lived if the war doesn’t continue beyond a quarter. In the event of a prolonged conflict, things will get worse.

Mitigating geo-political risks
Time and again, analysts have been asking Indian companies to formulate a comprehensive de-risking strategy, diluting focus from the US to other markets. For an outsourcer, it is very important to have a strategy that provides a choice of multiple offshore locations. But do outsourcers consider geopolitical issues before offshoring? “I take a contrary view to the conventional wisdom that states that geopolitical issues are the most important things a company should consider with regard to offshore outsourcing. Companies outsource to other companies, not to countries. If I were negotiating a contract with any outsourcing supplier—foreign or domestic—my goal would be to transfer as much risk to it as possible,” argues Lane of Aberdeen.

Establishing a near-shore centre in another geography is an effective way to mitigate geopolitical risks. “Apart from strengthening their local sales presence, the companies should also set up proximity centres so that some of the projects can be initiated locally,” says Janakiraman.

“This situation once again reinforces the need for Indian companies to have business continuity and disaster recovery plans in place and the need for them to highlight their global delivery models to their potential clients. Currently though, it is business is usual, customer visits are taking place as planned and Indian companies are pitching for new projects,” says Karnik.

“More companies are investing in business continuity and disaster recovery plans covering people, processes and technology to ensure continuing availability of business support systems and minimise disruption risks,” says a Mascot spokesperson. Mascot has a near-shore development centre in Wuxi, China and an offsite development centre in Toronto, Canada, which gives location redundancy to its clients.

“Some BPO companies have adopted the multinational business model to mitigate geopolitical risks. For the deals that are already in the pipeline we are in constant contact with our clients through our international offices abroad and facilities such as video conferencing, tele-conferencing, e-mail etc.,” says K Ganesh, president of ICICI OneSource.

Implications for the Indian Big Five
According to a Merrill Lynch survey of CIOs at 50 US and 25 European companies, about 17 percent of these enterprises are expected to slow their technology spending because of the war in Iraq. Going by past records, Indian software companies, especially the biggies, have shown that they are vulnerable to any slowdown in the US economy. Though most of them declined to talk about the specific implications for their companies, industry observers admit that the client visits at the Indian Big Five firms have definitely dropped. “Bigger players like TCS, Wipro and Infosys have ongoing, mature relationships with their clients who need not visit their facilities for giving future business. But new outsourcers have scaled down their business trips to these companies,” says an analyst.

“While there is some uncertainty, by and large, our business has not been impacted. Clients have been visiting India as regularly as before,” says Atul Takle, vice president, Corporate Communications, TCS. Companies like TCS have also insulated themselves to a large extent by having a worldwide development and sales presence. Wipro, Infosys and Satyam have also realised the importance of having location redundancy.

Many SMEs are dependent on large software companies for sub-contracting opportunities, which is definitely going to shrink if the war continues for long. Moreover, the SMEs lack financial muscle to invest heavily in building a proper disaster recovery system and business continuity planning. This will prevent them from getting new outsourcing deals. SMEs focussing on niche areas like embedded and chip design will also suffer as the manufacturing and semiconductor segments worldwide will enter recession if the war persists for long.

Will it affect the ITES industry?
ITES clients do not need to visit offshore processing centres in the country as much as IT services clients do. However, a slowing US economy with shrinking IT spend will not spare this segment. “From the BPO/ITES perspective, we do not expect a significant impact if the war is relatively short. Currently some clients are avoiding travelling to other geographies, based on travel advisory warnings and hence decision-making may slow down a little,” says Ganesh.

“In the short term though, potential clients may defer signing of contracts or travel plans. From a medium-term perspective, if the war continues, there will be added pressure on American companies to offset recession losses by outsourcing to India,” says Sri Dasari, president, India Operations, Brigade. “Companies, especially those with business process outsourcing deals in the pipeline will see delays in closure of these deals,” he adds.

Client relationships will drive new business and some of the IT services companies having BPO arm may benefit, as outsourcers would be keen on bundled contracts.

Final take
Over the years, Indian companies have been nurturing relationships with large outsourcers like GE, Amex and others. While business from old outsourcers may not be threatened, relatively new outsourcers will definitely go against offshore outsourcing, as they are very sensitive to geopolitical issues. Indian vendors need to undertake an awareness campaign, collectively or even individually, to educate these customers about their business continuity planning and disaster recovery mechanisms. Indian vendors should also realise that location redundancy is an effective strategy to address geopolitical issues. China can be leveraged as a near-shore base. For ITES companies, the war may not pose an immediate threat, but in the long run a sluggish US economy may hamper their prospects as well. The last word-there’s no need for war paranoia; what is required is a proactive approach in educating customers and prospects and also beefing up delivery systems with disaster recovery and business continuity planning.
- posted by dhamaka @ 8:55 AM

 
Windows 2003 to take on UNIX

By M H Ahsan

The world of enterprise computing is dominated by 4- and 8-way RISC UNIX boxes. Until now, Microsoft has lacked a presence in this lucrative and important market segment. With the upcoming launch of Windows 2003 Server, the company will finally have a 64-bit OS, that combined with McKinley (Itanium 2), will offer a credible alternative to RISC UNIX boxes for the first time.

Windows Server is a very successful product—unit shipments of the OS account for two-thirds of SIAS (Standard Intel Architecture Servers) hardware shipments, according to IDC. That said, Windows NT and 2000 have long been operating systems used for branch computerisation or as departmental file & print servers. The really crucial applications run on 64-bit RISC machines running UNIX. That’s the market that Microsoft wants to crack, and with Windows 2003, it has a product that could give it the crucial beachhead to start its campaign.

The target—Enterprise server market running ERP and database applications
At the heart of every enterprise IT installation is a server room where business-critical applications such as ERP and databases run. These applications have conventionally run on RISC UNIX boxes that offer a 64-bit environment. 64-bit UNIX has long been the Gold Standard for enterprise computing, more so in India, which lacks a widespread installed base of mainframes unlike, say, the US. UNIX on RISC has given companies the ability to access gigantic pools of memory and handle enormous databases, something 32-bit Windows wasn’t quite capable of doing. It is this $130 million market (Source: IDC; UNIX server revenues for CY 2002) that is now being targeted.

The incumbent—UNIX running on RISC boxes from Sun, IBM and HP
The dominant players in this market segment are Sun, HP and IBM. Each of these players offers one or more 64-bit UNIX operating systems and RISC hardware to go with the same. Of the three, Sun is firmly committed to Solaris-SPARC and will have nothing to do with Itanium or Windows. IBM is also committed to its AIX-pSeries platform though the company is planning to release an Itanium box built around IBM’s Summit architecture, the chipset used in its popular x440 range of Intel servers. HP is the wildcard; it is going to release a slew of Itanium boxes this year. While HP is promoting a multi-OS strategy, rest assured that Windows 2003 will be a big part of its strategy.

The challenger—Windows 2003 on McKinley/Deerfield boxes from HP
Microsoft admits that the market prefers 64-bit for running ERP, large databases and scientific applications. The company released a 64-bit limited edition of Windows 2000, but that product came long after the 32-bit Windows 2000 release and availability was limited. This time around, Microsoft is simultaneously launching both 32- and 64-bit versions of Windows 2003. The 64-bit Enterprise edition and Datacenter editions will be launched in India in the last week of April, along with Windows 2003’s 32-bit editions. It’s Wintel all over again, only this time it’s Itanium 2 and Windows 2003. “We will be as focused on the 64-bit space as we are on 32-bit,” says Yasir Yousuff, senior marketing manager, Windows Server Platforms, Microsoft India.

To take on UNIX on its home turf, Microsoft has worked hard to beef up security on Windows 2003. “It is our most secure product ever,” claims Yousuff. Security is being addressed from two angles. The first is to automate the process of keeping Windows Server up-to-date. The solution? SUS (Software Update Service) that makes its debut in Windows 2003, and which automates the process of downloading and updating the OS. With the manual update process of Windows 2000 or NT, chances were fairly high that administrators would forget to install crucial patches, making their servers vulnerable. Microsoft has learnt from the recent Slammer incident that it’s not enough to make software patches available and hope that customers would install them.

In the case of the Slammer worm, Service Pack 3 for SQL Server that would secure systems from the worm shipped four days before the attack. Unfortunately, far too many administrators didn’t apply the patch to their servers, thus letting Slammer through. SUS will be key to making sure that incidents like Slammer are avoided or, at least, their impact is minimised. The second measure is to ‘lockdown’ services in a default installation. For instance, Internet Information Services (IIS) 6 ships in ‘lockdown’ mode with nothing enabled except vanilla HTTP (Web server). Another popular service, telnet, runs at a lower privilege, reducing the fallout if the service is compromised.

Microsoft has also made the OS easier to manage. In Windows 2000 you had one shot at getting the Active Directory right and if you messed up you were hosed. In Windows 2003, you can go back and redo the Active Directory if you need to, provided all your PDCs (Primary Domain Controller) and BDCs (Backup Domain Controller) are running the OS. Administration is more granular—administrators can drill down to the individual user level, it’s easy to copy and paste policies from one organisational unit (OU) to another.

The 64-bit thrust makes the OS more scalable. Add-ons that let Windows server offer partitioning and schedule-driven resource management will be released post-launch as downloads.

India, in many ways, will be a test-bed of sorts for Windows 2003. Indian enterprises routinely use 4-way and 8-way UNIX boxes to run their business-critical applications. Windows 2003 Enterprise Edition is going to fit right into that slot. If Microsoft can establish a credible presence in this segment, it can then hope to push the Datacenter edition of Windows 2003 in the mission-critical market.

It all boils down to the Windows 2003-Itanium combo. Intel is bullish on Windows 2003. “Once Windows Server 2003 debuts, acceptance of Itanium will be much healthier. There are a lot of pilot projects going on,” says William Wu, Itanium processor family program manager, Intel Asia Pacific. HP’s the other vendor rallying behind the OS. “Windows 2003 is expected to have a very significant impact on HP’s Intel server business. All our new servers will be certified for it,” says Vaibhav Phadnis, business manager, Industry Standard Servers at HP India.

The outcome
Windows will move beyond file & print, messaging and low-end ERP applications to handling enterprise applications. NT 4 was purely an edge server OS. Windows 2000 took the first steps in Microsoft’s march towards the core of an organisation’s IT set-up. Windows 2003 will cement the gains of Windows 2000, and while UNIX will continue to be the preferred choice for top-of-the-line applications, when it comes to mid-size installations Windows Server will be a credible alternative.

- posted by dhamaka @ 8:52 AM

 
Europe beckons Indian software companies

By M H Ahsan

With the US economy still not showing complete revival, Indian companies are now eyeing Europe as the new shining star to guide them to growth in the years to come.

India’s rise as a software services player has been largely dependent on the US, with the greenback contributing more than 65 percent to Indian software exports. Other big markets like Europe have not really been tapped as compared to their potential. For instance, Western Europe, with an IT services spending capacity of $109.6 billion for 2002-03 translated to just a 21.3 percent market share of software services exports. Compare this to North America with an IT services spending capacity of $171.1 billion, which accounts for 67.7 percent of Indian software services exports.

Market opportunities
Europe accounts for around 30 percent of the global IT services market. According to IDC estimates, IT services spending in Western Europe is expected to grow at a CAGR of 11 percent in the medium term. Naturally, Indian players are looking at Europe to offset the slowdown in the US. Financial services and telecom are the main sectors that represent huge opportunities for Indian companies in Europe.

Says Sunil Mehta, vice president of research at Nasscom, “The financial services sector, including securities, banking and insurance services is the largest consumer of IT services. The key drivers for IT investments by the financial services sector are likely to be regulatory changes, e-business initiatives and enterprise security. In Europe, stock exchanges are required to implement the International Securities Identification Number (ISIN), for all securities trading. This is likely to offer a significant opportunity to Indian software companies with expertise in the European financial services industry.For instance, the six digit numeric Wertpapierkennnummer (WKN) currently used in Germany to uniquely identify securities, will be replaced by the new International Securities Identification Number (ISIN), a 12-digit alphanumeric code. Hence German banks will need to transition all relevant IT systems to the new standards. Also, expenditure by the telecom sector on IT services, as a percentage of revenues, is one of the highest at around 12–15 percent. This is mainly due to the rapid changes in telecommunications technology, as a result of mobile communications, and intense competition in the global telecom service and equipment markets. Some of the areas which can be tapped by Indian companies are software solutions, telecom software, mobile and wireless applications, e-business and IT-enabled services ”

Within Europe, UK is the largest IT market, estimated to be close to $39 billion and growing at a CAGR of 7.4 percent. Hence, Indian software companies look at UK as a springboard into the European market. In the UK, financial services, public sector, utility services and manufacturing are some of the traditional big spenders on IT.

But Europe is not just about the UK. Says Mehta, “There are large non-English speaking markets in Western Europe (Germany/ France/Italy) which remain under-penetrated by Indian IT companies. These three alone have the potential to offer the Indian industry over $2-$3 billion in export revenues by the year 2008. Germany for instance has the potential to emerge as a high-growth geography for Indian companies in the next two-three years followed by France and Italy. The IT services market in Germany is expected to be $40 billion by 2005. Likewise in France, the IT services market is expected to be close to $30 billion in size by 2005.”

The key players
While Indian software exports to Europe still lag behind the US by a huge number, there have been some companies that have taken the lead in tapping the European market and effectively decreasing dependence on the US. One of the first companies to make a foray into the European market was TCS. Unlike other Indian software companies, which have now started to look at the European market, TCS set up operations in UK way back in 1975, a time when the concept of software outsourcing itself was unknown.

Incidentally, the office in UK was the first overseas office of TCS. Today, the company has close to 2,000 professionals working for UK-based clients. TCS relentlessly went on to tap markets by setting up operations in various countries in Europe. The year 1985 saw TCS setting up operations in Switzerland; Germany and Denmark followed in 1990, Belgium in 1993, France in 1997, Sweden in 1998, Finland in 1999 and Hungary in 2001. And the key to success in all these markets are alliances TCS has with different local players in these countries.

Says Atul Takle, vice president for Corporate Communications at TCS, “In line with our quest to become a global company, we had started scouting markets in Europe for opportunities. But this was at a time when the concept of offshore outsourcing was relatively unknown. As we had built up considerable expertise in various industries, the company felt that the best approach to tap foreign markets would be to build alliances with local partners. Accordingly, we built an alliance with TKS Technosoft, a Swiss company well versed with the working of the Swiss banking industry. This helped TCS in understanding the local market and customise solutions or products accordingly. For example, Quartz, which is an important part of TCS’ product portfolio, was first developed for a Swiss bank. The alliance which started in 1985 continues till date.”

Similarly, Infosys has seen its revenues from Europe growing at a steady clip. For instance, the contribution of Europe to the company’s revenues have increased from 9.4 percent (1999) to 19.5 percent (2002). Infosys is also looking forward to the mandatory requirement for stock exchanges in Europe to implement the International Securities Identification Number (ISIN) for all securities trading. To capture this emerging market, Infosys has introduced its security number conversion services to ensure total ISIN and WKN compliance.

The other Indian biggie, Wipro Technologies has also seen its revenues from Europe grow by a significant number. For instance, the proportion of revenues from Europe has increased from 29 percent for the financial year 2001 to 36 percent for the year 2002. Besides, in traditional areas like finance and banking, Wipro has been doing a lot of work in the telecom sector in Scandinavian countries. While Wipro has been doing business with UK-based customers for the past 10 years, the emerging areas of opportunity for the company are countries like Germany, which has traditionally been a big manufacturing base for auto makers. Similarly, Switzerland has huge potential in the areas of banking, finance, travel and tourism and manufacturing.

Besides big names in the industry, mid-sized companies like Mastek too have benefited in a huge way from a European focus. Says Ashank Desai, CMD, Mastek, “Europe is a key market for us and contributes more than 60 percent to our revenues. Even in the current economic scenario, our revenues from the European market have been growing at 60 percent. We have been very successful in this region and have done some interesting projects. The latest one is the London traffic project where we have provided the solution for traffic congestion in London.” Desai believes that telecommunications, manufacturing, logistics and hospitality are some sectors that are still relatively untapped and represent a significant opportunity to Indian companies.

Adds Sukumar Namjoshi, managing director, Patni Computer Systems (UK), “Europe offers promising opportunities in the areas of Internet, e-commerce, mobile and wireless communications. Verticals like banking and finance, utilities, retail and manufacturing industries also offer opportunities. Patni has increased its focus on the European market since late 2000 and the opportunities emerging have been very promising.”

Polaris has also been focusing on the BFSI vertical and in emerging verticals like ERP implementations and business re-engineering solutions. Says Vijay R Narasimhan, senior vice president and sales director for the European region at Polaris Software Labs, “The European market is emerging as the second strongest outsourcing market after the US and we believe the continent offers the potential wherein it will adopt contemporary technologies in future by replacing existing technology systems. Outsourcing business re-engineering projects hold a huge potential in UK as most companies in the continent are still working with older systems and outsource only maintenance contracts. Within the UK, our focus is on providing customised solutions for business re-engineering. We have taken a product /customised software solution approach in multiple regions within the continent, especially central Europe. In certain geographies in Western Europe, we have been successful in winning contracts for customised business software and for our emerging verticals division that focuses on implementing SAP and BaaN solutions.” Besides the market for software services, Polaris is also looking to tap the European market for its banking products. In the product segment, the company recently established a strong footprint through product-related order wins from ABN Amro and the Deutsche Leasing group.

In line with the needs of the market, Polaris is looking at positioning its product portfolio to cater to different market segments. Explains Narasimhan, “We see a big opportunity in the SME space for our product portfolio. Most SME companies in the continent are active in the product shopping segment. They typically look for products that are robust, scalable, future-proof and require low maintenance. We will be going all out with our Orbipack framework of products to meet this need from component-based solutions to large integrated solution frameworks.” Polaris, which set up operations in Europe in 1998, has seen its revenues from Europe grow to 27 percent of total revenues.

Blue Star Infotech is another company that derives a big portion of its revenues from Europe. Currently around 35 percent of Blue Star Infotech’s revenues come from Europe and the company expects an annual growth rate of 25 percent for the next two years. Says Parmod Bhalla, managing director of Blue Star Infotech, “The banking sector in Europe has good potential as most of the players in this segment have experienced the benefits of outsourcing to India. The retail and energy sectors are also attractive. Further, due to a strong industrial base, European markets also have a lot of potential for embedded software work. Our focus is on the retail sector in the end-user space and telecom software providers in the technology sector. In the recent past we have strengthened our position in the telecom software market as well as application portfolio management space.” While Blue Star started its UK office in 1999 to address HP’s client base, the company has aggressively moved to form alliances to tap the European market in a big way. The company has a branch office in Finland and business associates in Austria, Sweden, Denmark and Germany. The European shift is evident from the fact that most alliances have been formed in the last 12-18 months.

Key Challenges
One of the key reasons why the European market still continues to be out of reach for Indian companies is the fact that there is a huge difference between the market in the US and Europe in terms of culture and acceptance of concepts in outsourcing.


Sukumar Namjoshi says that outsourcing is the accepted norm in the US as a means of saving costs, whereas Europe with its strong trade union culture is more resistant to outsourcing as it could mean job losses
Says Namjoshi of Patni, “Outsourcing is a tried and tested process in the US. In comparison, Europe is not an aggressive outsourcer. However, there are some exceptions, notably the UK. Big US companies have a different approach to dealing with third parties on a project basis. While in the US they are willing to outsource to new companies, European companies are more reluctant to tread on a similar path. The Europeans are more comfortable doing work with companies that they are already working with. Moreover outsourcing is the accepted norm in the US as a means for cost saving, whereas Europe with its strong trade union culture is more resistant to outsourcing as that could mean job losses.” Another significant factor unique to Europe is their conservative style of doing business. Companies are very particular about spending on specific projects and are risk-averse, unlike the American way of conducting business that encourages the spirit of entrepreneurship and is more adventurous in risk-taking. As European customers prefer dealing with vendors whom they know very well, Indian companies have to invest substantial efforts in building relationships with their European counterparts.

The European market also represents different countries with their own languages and culture and is hence a big challenge for Indian companies trying to acquire clients outside of UK. Indian software companies face lesser issues in tapping UK-based clients as English is the medium of communication. Agrees Namjoshi, “Most Europeans prefer to speak in their own languages, which can be quite uncomfortable for Indian IT professionals. Within Europe, the language issue partly explains why the UK alone accounts for 60 percent of Indian IT exports to the region. Also, work permits take longer to process times in most European countries. This is one of the biggest challenges faced by us in countries like Germany and France.”

European clients also lay significant emphasis on long-term relationships with their vendors. Says Bhalla, “European clients are comfortable only in dealing with vendors who have a local presence. The business culture involves much more face-to-face contact as compared to the US where a lot of business deals get done over electronic means or tele-commuting. Our experience has been moderately good as most of our clients have a long-term orientation.”

Taking up challenges
Some pointers on how to crack the European market can be seen from strategy adopted by TCS, the first Indian company to set up operations in Europe. In addition to building local alliances, TCS tries to get the views of the local Indian diplomats when it comes to understanding the varied cultures in different countries. And in cases where a client is not comfortable with an offshore model, TCS has tried to set up a model demonstration centre that showcases what TCS is capable of. For instance, the company has set up a demonstration centre in places like Amsterdam and Hungary. The positioning of the centres have also been carefully chosen. For example, Hungarian mathematicians are considered to be the best in the world and the cost of living in Hungary is significantly cheaper than in say, UK. In addition to having access to good talent, TCS can cost effectively service European markets like Germany. TCS also invests a significant amount of its resources in training its people in language skills. For instance, the training centre at Trivandrum imparts language skills in Japanese, French and German.

To overcome the European conservative view towards outsourcing, Nasscom has taken a host of initiatives to help Indian software companies tap the European market. Says Mehta, “To start with, we have initiated a public affairs and PR campaign to strengthen India’s global brand equity and inform key influential people, business decision makers, industry analysts, policy makers, academicians, senior government officials, media and the IT community about India’s strong value proposition as an IT oursourcing destination. We are also working with the Indian government and European countries to streamline visa and work permits and other policy issues facing the two countries. Nasscom is also working towards signing MoUs with its counterpart associations in European countries to encourage co-operation and enhance IT trade. Having successfully conducted seminars in various parts of Europe, including UK, Germany, Belgium, France, Italy and Austria, Nasscom will host more such seminars and conferences in Europe. We are also working at increasing interaction with European embassies through various initiatives like regular newsletters to increase flow of communication with different countries.”

While Europe with its varied culture and different languages represents a huge challenge for Indian companies, the path to growth is becoming clearer. The ominous signs of the US economy receding with events like the 9/11 terrorist attack and the ongoing war on Iraq makes it imperative for Indian companies not to keep all eggs in one basket. As one optimistic software industry analyst says, “So what if the egg does not hatch in a day’s time?” It is time Indian software companies thought along these lines and laid a foundation to reap a bountiful harvest in times to come.

IT services spending regional shares, 2002-03
Country IT services spending US$bn India’s exports US$m India’s market share(%) Relative dependence ratio Share in India’s exports
North America 171.1 6,685 3.92 1.4 67.7
Western Europe 109.6 2,103 1.92 0.7 21.3
Japan 34.9 193 0.55 0.2 2
Latin America & rest of the world 17.5 583 3.33 1.2 5.9
Asia Pacific 16 311 1.94 0.7 3.2
TOTAL 349.1 9,875 2.82 100



Indian Software Exports to Europe
2001-2002 Percentage
Albania 3 0.01
Austria 107 0.29
Belgium 510 1.4
Cyprus 15 0.04
Czech republic 4 0.01
Denmark 61 0.17
Finland 190 0.52
France 210 0.58
Germany 940 2.58
Greece 30 0.08
Hungary 5 0.01
Iceland 4 0.01
Ireland 190 0.52
Israel 2 0.01
Italy 60 0.16
Luxemburg 5 0.01
Malta 3 0.01
Netherlands 500 1.37
Norway 65 0.18
Poland 35 0.1
Portugal 4 0.01
Spain 8 0.02
Sweden 154 0.42
Switzerland 300 0.82
Uk 5,149 14.11
Others in europe 80 0.22
Europe 8,634 23.66
(Figures in Rs crore)
- posted by dhamaka @ 8:49 AM

 
Anantapur district starts online tenders

By Safiullah Shareef

ANANTAPUR: The transparent tendering process of the State Government is to be set into motion in the district with the contract for road work in Dharmavaram division to be available online.

The tender for the works for Krishnapuram roads under the Dharmavaram Division of the Roads and Buildings Department have been put up on the Internet for the contractors to participate.

The State Government had proposed to make tenders over Rs 1 crore online to curb formation of syndicates and political pressures on the tender process.

Further, the Roads and Buildings Department had conducted a training programme for the contractors on the process of participation in the online tender, according to some contractors here.

The contractors, who are already registered have to register themselves to be eligible to participate in the online tender.

Under the new process the Government will neither issue a notification nor will the schedules be available at the office, nor will there be a tender box at the office.

The contractors have to monitor online and submit their tenders within the due dates.

Further, the officials shall verify the supporting documents after the tenders have been submitted and if the documents are found to be faulty the contractor

would be blacklisted.

Online tender process has been designed to enable secrecy of the documents and the contractors can freely participate without the fear of syndicates and cartels.

Some of the contractors have said that they would still have to pay 'goodwill' and grease the palms of the officials.
- posted by dhamaka @ 8:46 AM

 
Human trafficking to be treated as organised crime

By M saber Hussain

HYDERABAD: Human trafficking will be dealt with as an organised crime in future under the Andhra Pradesh Organised Crimes Act, already adopted by the State Assembly, said Home Minister T Devender Goud.

Participating in the launch of a state-wide anti-trafficking campaign being organised by the Women Development and Child Welfare Department in association with UNICEF and other non-governmental organisations, he said that the government was committed to curbing trafficking.

The 'maitri sanghams' and the highway patrolling will also help reduce this crime, he added.

Earlier, Women Development and Child Welfare Department principal secretary Minnie Mathew said that

the campaign lasting till April end would cover 19 districts and target one lakh adolescent girls - 5,000 in each district.

Various government and non-governmental organisations would be involved in building awareness, which, she said, was important for adolescent girls as they were more vulnerable to trafficking.

Minister for Mines Uma Madhava Reddy, principal secretary to Home Department Bharat Chandra and

State Social Welfare Advisory Board chairperson P Aruna spoke.
- posted by dhamaka @ 8:44 AM

 
Ragpickers by chance, burglars by choice

By M Saber Hussain

HYDERABAD: The gangsters roamed the streets lugging huge gunny bags playacting ragpickers. They became real only when the spotted locked houses. Then, out of nowhere, iron rods would be fished out and the locks broke open. On Monday, their luck ran out and the foursome including a 10-yr-old boy were arrested by the Cyberabad police. Two other gangs were also busted as the cops recovered stolen property worth Rs 16.5 lakh from them.

Disclosing these details at a press conference here on Monday, Cyberabad police commissioner M Mahender Reddy said that the first gang comprising - Gudla Lakshmi (18), R Venkatamma (20), R Balakrishna (25) and Mahesh (10) were arrested by the Uppal police on Monday while they were moving under suspicious circumstances.

The gang, headed by Lakshmi, committed as many as 45 burglaries. She started committing the offences when she was just 14.

Between 1996 and 2000, she committed several burglaries in Golconda, Asifnagar, Humayun Nagar and Langer Houz areas. She was previously arrested eight times.

"Fifteen non-bailable warrants are pending against her in different courts," said Reddy.

In October 2002, Lakshmi formed the gang consisting of her relatives who hailed from Nalgonda.

In another case, the police arrested two persons - T Ramesh Kumar Goud and RM Chary who were responsible for 11 burglaries while three others - Suresh Sahu, G Narasimha and Thakur Sailu - were nabbed for committing theft of generators and jet pumps from houses.

While stolen property worth Rs 4 lakh was recovered at the instance of Goud and Chary, the police recovered property worth Rs 1.50 lakh from the three-member gang, the Cyberabad commissioner said.
- posted by dhamaka @ 8:43 AM

 
Exam, viva, seminar? No problem. Internet hai na

By M Saber Hussain

HYDERABAD: It is goodbye to chatting, browsing and emailing on the Internet. It is hello e-learning. Step inside a cybercafe and you wouldn't find the misers trying to email as many people as possible while looking at the clock. Instead, you will find youngsters busily soaking up educational and job opportunities.

Yuvraj Pethkar, 19, a student of Mallareddy Engineering College says that Internet has proved to be a treasure trove of information for his engineering assignments. ''It is cheaper, faster and more convenient than books,'' he says listing automobile.com and cars.com as the sites to check out for the latest designs, speed, economy in cars and the differences between Indian and foreign makes. ''It has also helped me to network with engineering students from Germany, Italy, Australia etc,'' he says.

For 13-year-old Akshay Joshi, a student of Shiv Shivani Public School, the Internet has proved to be a handy tool to help him complete assignments in physics, chemistry and English. ''There is more information on the net than in the books,'' he says.

''I wouldn't have been able to learn about half the educational opportunities that are there abroad along with the scholarships if the Internet was not there,'' says P Padmaja, an engineering student of Srinidhi Engineering College.

''I was able to browse, get info and apply in the right format. Of course it goes without saying that the net helped me tremendously with learning material,'' she says. It is not just learning that's happening on the net. Roopa, 26, is freelancing as a recruitment agent for a Bangalore-based company and works from home. She browses jobahead.com, naukri.co, jobsdb.com for candidates suitable for the posts, which she is looking to fill in.

K Suneel, 26, an employee of SBI Life Insurance Company, who is aiming to get an MBA from abroad, says Internet yields immediate results whereas processing through consultants takes a longer time. ''I have had nice experience browsing gradschool.com, search.aol.com etc for admission, and eligibility details of US universities,'' he says.

The net is also a big hit with students of science where information gets outdated in seconds. ''Internet was the main source of information for a seminar I had to present. Most of the books I had access to had dated information and the books that I really needed were expensive. On the net everything happened like a dream,'' says Ambika Srinivasan, 20, a bio-technology student of RBVRR college.
- posted by dhamaka @ 8:42 AM

 
Will Rev Graham's America realise it?

By S Gurumurthy

Islam is "a very evil and a wicked religion". Not a statement of a Togadia, the hated figure among the seculars in India. Not a statement made in any `un-modern' or `old- fashioned' nation, like India. But in America, regarded as the post-modern nation. It is a considered remark of an American, which he stood by despite all criticism. Still more. He is a revered Christian religious scholar, Rev Franklin Graham. Rev Graham is a religious scholar respected by the US government. He is the son of the `famed' Billy Graham, the Christian evangelist who attempts to globalise his faith. He has been invited to speak at the sacred Good Friday services at the Pentagon, the US Defence establishment.

Two things need notice. First the Defence establishment of (secular) America observes church services for Good Friday, a pure religious ritual. An aside. Imagine the Indian Army or Navy or Air Force doing a puja and inviting a Shankaracharya to address them. Second, it deliberately invites a known anti-Islamic evangelist.

When the Muslims in the US expressed `concern' at the Pentagon inviting Rev Graham, the Pentagon spokesman dismissed it saying `one religion regardless of the religion, does not have the veto right over another religion'. That is Islamic view against Rev Graham cannot veto the right of Pentagon to listen to the Reverend's sermon. It said clearly that it has "no plan or discussion to un-invite", that is, withdraw the invitation to, Rev Graham. "He is a recognised religious leader", said the Pentagon. The plan is not limited to not just invite Graham. But to avoid future problems, said the Pentagon, so that there can be no objection about the Pentagon inviting such `recognised' religious leaders to sermonise the Pentagon officials in future.

What is Pentagon? Says the Washington Times, which carried the report about Rev Graham's proposed service at the Pentagon, "Christians of various denominations are about 98 percent of incoming troops who declare a religious preference, according to a 1999 study". So is it a conscript Christian army? No more a professional one.

Pentagon invitation to Rev Graham is not an accident, part of a pattern. The Bush government has appointed Daniel Pipes as an official adviser to the US. What Rev Graham is in Church, Daniel Pipes is in the media, holding the same view on Islam. The US has changed once and for all, after September 11, 2001. It is now a believing America, not an agnostic or atheistic America. In short, it is the Christian, that too a Baptist, America. The entire American establishment is now hooked to Bible and Church. President Bush starts the day with the Bible. So is the Attorney General Ashcroft. The Attorney General even holds Bible classes in the office.

But a believing America, that is, a Christian America, will only become a counterpart of the believing Islamic nation. It is unlike a believing India, that is a Hindu India. For a nation that believes in the Christian religion, which does not believe that other religions can also offer salvation, is as bad as the Islam it seeks to fight. Or as good, not better. It is unlike Hindu India, which believes that what Hinduism does to ferry a Hindu to heaven can be equally well accomplished by Christianity and Islam. A religion like Hinduism, therefore a nation like Hindu India is unknown to The Abrahamic faiths. An aside. Of course, the Indian seculars will raise hell reading this.

Now, on with the main story, the fault of these two Palestine cousins is that they claim the exclusive wisdom to salvation and so only their followers can reach heaven. Consequence, others should change their faith. As Swami Dayananda Saraswati put it, herein lies the potential for violence in both.

Any way it is now Rev Graham's America. Graham's America must realise that if Islam is potentially violent, is Christianity any different. Both are just cousins, not just in beliefs but also in methods. This is what history tells. Will Rev Graham's America realise it?
- posted by dhamaka @ 8:41 AM

 
Saddam everywhere but nowhere to be seen

By Pepe Escobar

A replica of the al-Aqsa mosque in Jerusalem still greets the visitor at the sole entrance gate to Tikrit - the Meonia Tigrides (Tigris Tower) of the Romans. The city is the birth place of Saladin, the icon of the Arab world who forced the Crusaders from Jerusalem in the 14th century. The city was destroyed by Mongol ruler Tamerlane later in that century and its people massacred to punish their resistance. Tamerlane then erected an immense pyramid with the skulls of his victims.

This time there was no resistance against the American army when they arrived at the city, which also happens to be the home town of Saddam Hussein. Tikrit just folded. But Saddam's imprint is still everywhere to be seen.

Every lamp post in the avenue that leads to central Tikrit still boasts a Saddam picture - with rifle, as a Bedouin or in suit in the officially-sanctioned 1960s black and white pose. Saddam art is still on display around town - his images turned into masterpieces of abstract expressionism, but sometimes still visible: Saddam the peasant, Saddam leading the (invincible? invisible?) Republican Guards under a constellation of fighter jets. But the Americans, according to residents, couldn't resist toppling a Saddam equestrian statue near the city center.

Saddam was not actually born in Tikrit but in Owja - a village in the outskirts of the city. This later housed the so-called Uday palace: a mixture of huge California condo and Southeast Asian resort on the top of a hill overlooking the city, complete with spinning wheel for kids and nuns in the garden, now thoroughly burned and looted. The whole area belongs to the Albu Nasr clan. Influential Albu Nasr and Albu Majid clan members - the elite of Saddam's regime - all fled. Their mansions, and the streets of Owja, are empty. Most in America's most wanted list - the 55 in a pack of cards - had homes in Owja, including top figures of the Ahmn-al-Kaas and the Mukhabarat, the secret services. Black banners displayed outside a central mosque celebrate a local "martyr", Tariq al-Hazar, a former Iraqi air force pilot whose car was hit by an American missile. Tikritis are now being fed two hours a day of American-sponsored TV, as well as radio, part of the Iraqi Information Net ("the new voice of Iraq") - but they hardly pay attention to it: they prefer listening to Kathim Alsaher, an exile in Canada, favorite of Saddam's son Uday (who received a brand new limo every year from Alsaher) and known as "the Iraqi song ambassador to the world".

The billion-dollar question in Tikrit is inescapable: Where is Saddam? "Saddam is in every house of every Iraqi," says a man in Bedouin dress. The occupation won't stand: "If the Americans stay more than six months, we will destroy them."

The (former) Tikrit hotel is a scene of devastation. It is still being looted. A woman looter yells to her daughter: "Shut up. Don't say we are from Tikrit." Yellow arrival cards - in English - signed by the front office cashier, are scattered among the rubble. Locals confront the foreign visitor: "This is terrorism. It's a civilian building. The Americans bombed it four times." Locals say there were six dead and 51 wounded.

Welcome to the pleasure dome: Saddam's sprawling main palace in Tikrit, its main entrance flanked by giant twin statues of Saddam riding a horse above four missiles. The palace was thoroughly bombed, and is now a converted marine camp, complete with Mississippi Delta blues soundtrack and guided tour for the visiting media. Tikritis have a different take: "The palaces are for the Iraqi people. Saddam came to the main palace only once, four years ago. And he got to swim in the river."

In the village of Owainat, locals still pay tribute to "President Saddam Hussein, God bless him." On the way back to Baghdad, we stop in Taramiya - by the Diala river, around 40 kilometers northeast of the capital. The luxurious landscape would fit Malaysia or southern Thailand. Palm trees shade mud-brick houses and narrow alleys. "People who live here are very rich. There are very good houses inland," says a trader with vast contacts in the community.

Most people belong to the Albu Shibli clan. The infamous Chemical Ali (whom the trader says is still alive) told the original inhabitants to leave these grounds and then took possession of the riverside. Chemical Ali, otherwise General Ali Hassan al-Majid, a cousin of Saddam, masterminded the gas attacks on Kurds in northern Iraq in 1988 in which at least 5,000 people were killed in a single day.

"Most people here love Saddam Hussein. I'm sure he is hiding here," said the grinning trader. Saddam indeed owns a lot of land in Taramiya - although many locals cultivating their vegetable gardens don't know it. "Look at all these trees. Americans wouldn't find Saddam Hussein behind all these trees." The trader adds that Mahmoud Thiab al-Ahmed, the powerful former minister of internal security - also featured in the Americans' 55 playing cards - is hiding in Taramiya, where his family live.

Saddam as a ghost may soon be added to those splendid murals of Saddam art still visible all over Iraq. Iraqi National Congress leader Ahmad Chalabi, the Pentagon's pet Iraqi and self-styled successor to Saddam, says that the infamous Tikriti is alive and roaming around Iraq. Chalabi was sentenced to 22 years of hard labor in 1992 after he was tried in absentia for disappearing with US$60 million from the Petra Bank in Jordan.

Many Iraqis - and especially Tikritis - despise him, but for once Chalabi may be right. Saddam and the regime's elite have managed to melt away - maybe behind those palm trees in Taramiya - and they still haunt the Iraqi collective subconscious.
- posted by dhamaka @ 8:38 AM

 
Tigers prove the president right

By B Raman

Sri Lankan President Chandrika Kumaratunge, who has repeatedly expressed her concern over the way in which the government of Prime Minister Ranil Wickremasinghe has negotiated with the Liberation Tigers of Tamil Eelam (LTTE) and blindly trusted their promises of good behavior, must be feeling vindicated by the LTTE's suspension on Monday of its participation in the process.

A letter written by Anton Balasingham, the head of the LTTE delegation to the peace talks, to the prime minister, says, "The LTTE leadership has decided to suspend its participation in the negotiations for the time being. We will not be attending the donor conference in Japan in June." Interestingly, there is no mention of the next round of peace talks scheduled to take place in Thailand from April 29 to May 2. This has given rise to some speculation as to whether the LTTE's decision to suspend its participation relates to the entire negotiations process or only to the negotiations with international donors on reconstruction aid.

While backing the negotiation process itself, Kumaratunge has been vocally critical of the negotiating strategy of her prime minister, which, in her view, was enabling the LTTE to exploit the process for consolidating its hold over Tamil-inhabited areas and in setting up a de facto Tamil state even while proclaiming its willingness to consider a negotiated federal setup as a solution to the problems of the Tamils.

The president felt that by Wickremasinghe's over-eagerness to keep the process going, however intransigent the LTTE might be on critical issues, and by making one concession after another to the demands of the LTTE without any quid pro quo, her premier was giving an impression of negotiating from a position of weakness, which could prove counter-productive.

She also made no secret of her unhappiness over the way the Sri Lankan monitoring mission (SLMM) set up under the leadership of Norway, the so-called facilitator of the peace process, was bending backwards to humor the LTTE and coax it to continue to participate in the process and closing its eyes to repeated infringements by the LTTE of the provisions of the ceasefire agreement reached by it and the government before the talks began.

The disquieting attitude of Norway became apparent in the manner in which the SLMM sought to give the benefit of doubt to the LTTE by exonerating it of any responsibility or playing down its responsibility for serious incidents at sea involving ships of the so-called LTTE navy.

In the first incident, the LTTE was thwarted by the Sri Lankan navy while trying to smuggle an anti-aircraft weapon and other arms and ammunition. The LTTE's sea cadres chose to scuttle the ship and go down with it to avoid being captured with their consignment - similar to what Kittu, a prominent leader of the LTTE, did in 1993 when he was intercepted by the Indian coast guard while trying to smuggle a consignment of arms and ammunition procured in Pakistan.

In the second incident, 15 Chinese and two Sinhalese were feared killed on March 20 when the Chinese trawler Fu Yuan Ya 225 was attacked by a suspected LTTE naval unit off the Mullaitivu coast of eastern Sri Lanka. In the third incident reported on March 31, two Sri Lankan military personnel were injured when a Sri Lankan troop transporter was fired on with small arms.

No Tamil organization of Sri Lanka other than the LTTE is known to have a sea-fighting capability. There have been no reports of any rogue elements in the LTTE's so-called navy operating on their own without the knowledge of the LTTE leadership. The seas around Sri Lanka have never had a history of armed pirates operating in them.

In spite of this, the SLMM chose to accept at face value the LTTE's denial of any responsibility for the last two incidents and sought to give the impression that hitherto unidentified third parties might have been responsible for them. What was more shocking was the suggestion reportedly made by the SLMM for preventing a recurrence of similar incidents. In a paper prepared for consideration by the government and the LTTE, the SLMM reportedly suggested that the LTTE's Sea Tigers be treated as a "de facto naval unit" while reiterating the "undebatable obligation of the Sri Lankan navy's legitimate task of safeguarding sovereignty and territorial integrity".

"Sovereignty and territorial integrity" of what? The whole of Sri Lanka or only of those areas falling outside the control of the LTTE? These vague formulations, even if not so designed, would have the ultimate effect of conferring legitimacy on the existence and operations of the Sea Tigers and their ships used for the smuggling of arms and ammunition and categorizing certain portions of the territorial waters of Sri Lanka as falling within the jurisdiction of the de facto LTTE administrative setup, the legitimacy of which has not been recognized by the international community. Naturally, there has been strong criticism of these formulations in Sri Lanka.

While these incidents at sea contributed to malaise and the consequent shadows over the peace talks, the LTTE's decision to suspend its participation in the talks had been sought to be justified on three grounds, unrelated to these incidents, by Balasingham. These grounds are:

The failure of the Sri Lankan government and Norway to enable the participation of the LTTE on an equal footing at an international donors' conference held at Washington on April 14. The letter says: "We view the exclusion of the LTTE, the principal partner to peace and the authentic representatives of the Tamil people, from discussions on critical matters affecting the economic and social welfare of the Tamil nation, as a grave breach of good faith. Your government, as well as our facilitator Norway, are fully aware of the fact that the United States has legal constraints to invite representatives of a proscribed organization to their country. In these circumstances an appropriate venue could have been selected to facilitate the LTTE to participate in this important preparatory aid conference. But the failure on the part of your government to do so gives cause for suspicion that this omission was deliberate. The exclusion of the LTTE from this conference has severely eroded the confidence of our people in the peace process."

The failure of the government to withdraw its troops from Jaffna and other areas as part of the normalization process agreed to under the ceasefire accord. The letter says in this regard: "Though there is peace due to the silencing of the guns, normalcy has not returned to Tamil areas. Tens of thousands of government troops continue to occupy our towns, cities and residential areas suffocating the freedom of mobility of our people. Such a massive military occupation of Tamil lands, particularly in Jaffna - a densely populated district - during peace times denying the right of our displaced people to return to their homes, is unfair and unjust."

The Poverty Reduction Strategy worked out by the government as a basic document for seeking international assistance has failed to highlight the acute economic hardships and the collapse of the infrastructure in the Tamil areas due to the military operations of the security forces.The letter says: "The conditions prevailing in the south [Sinhalese areas] are distinctly different from the northeast [Tamil areas] where the scale and magnitude of the infrastructural destruction is monumental and the poverty is acute. Ignoring this distinctive reality, your government posits poverty as a common phenomenon across the country and attempts to seek a solution with a common approach. This approach grossly understates the severity of the problems faced by the people in the northeast."

The letter has, however, reiterated the LTTE's commitment to seek a negotiated political solution to the Tamil problem once its conditions are met. A careful analysis of the negotiating strategy of the LTTE during the six rounds of talks held so far would indicate certain constants to which it has been fiercely adhering without making any concession:

Its determination to project itself as an equal party with the same status as the government of Sri Lanka in all interactions with international donors whose assistance is sought for the reconstruction of Sri Lanka.

Its resolve to secure the withdrawal of the Sri Lankan forces from Jaffna, which the LTTE regards as the capital of Tamil Eelam, even before embarking on substantive discussions on the future political setup of the country. It projects such withdrawal as an essential component of the normalization process which has to precede substantive political negotiations. Its repeated emphasis on this demand is reflective of its perception that its de facto setup in the Tamil areas would be incomplete without Jaffna as the capital.

Its perception of the talks not as between the state of Sri Lanka and an organization which had taken up arms against it to achieve certain political objectives, but as between the de jure state of Sri Lanka and a de facto state of Tamil Eelam on the modalities for retaining and adjusting the de facto setup, with its own administrative, police, judiciary and military components, as part of an overall solution based on a federal facade for the two state entities - Sinhalese and Tamil.

The difficulties encountered by Wickremasinghe in furthering the peace process, despite his sincerity, are due to his unwise confrontational attitude to the president, who belongs to a different political formation, and his avoidance of consulting and associating her with the process; his failure to reach a national consensus on the negotiating strategy; his wrong belief that international support and pressure on the LTTE alone would keep the peace process going and moderate the stance of the LTTE, even in the absence of total domestic support for his strategy, and his hesitation to make it clear to the LTTE what points are negotiable and what are not.

The withdrawal or redeployment of the security forces in Jaffna and other areas even before a political solution on the future setup of Sri Lanka is reached is fraught with serious difficulties. Firstly, Sinhalese public opinion is unlikely to accept it. Secondly, even if it does, the army might demur. Thirdly, even if he persuades the army commanders to accept it, it has to be accepted by the president, who is the supreme commander of the armed forces. Fourthly, any confrontation between the president and him on this issue might end up in the politicization of the armed forces, which is not desirable in the interest of democracy in Sri Lanka.

Moreover, there are other important aspects of the peace process, such as its impact on Muslims in the Eastern Province, which have not been given the attention they deserve by the prime minister. There are already clear indications of a growing radicalization of sections of the Muslim youth, under the influence of the Lashkar-e-Toiba of Pakistan, which is a member of Osama bin Laden's International Islamic Front, due to their unhappiness over the neglect of the feelings and concerns of the Muslims and over the failure of the government to put down what they look on as the high-handed activities of LTTE cadres in their areas.

The lack of transparency surrounding the peace talks and the reluctance of the prime minister to clearly articulate the government position and seek the president's concurrence for it remain major roadblocks to a successful outcome.
- posted by dhamaka @ 8:36 AM

 
China's bureaucracy: A virus's best friend

By Francesco Sisci

It is the biggest political earthquake since the time of Tiananmen in 1989. On Sunday both the Chinese minister of health, Zhang Wenkang, and the newly appointed mayor of Beijing, Meng Xuenong, were demoted and blamed for the mishandling of the severe acute respiratory syndrome (SARS) crisis, which is tarnishing the prospects of high economic growth in China this year.

For a couple of weeks, President Hu Jintao and Premier Wen Jiabao had been preaching transparency and collaboration with the World Health Organization (WHO). However, WHO officials did not stop complaining about a lack of information and cooperation from their Chinese counterparts. Furthermore, Chinese authorities had been under-reporting cases of SARS, thus helping the spread of the disease in the country and undermining international confidence in China as a responsible member of the international community.

There were conflicting messages coming from Beijing: one preaching collaboration and one opposing it. The two demotions should now save some face for the government and, one hopes, signify the beginning of the long-awaited concerted and transparent effort from Chinese authorities against the spread of the disease.

The demotions are an important signal to the medical staff on the front lines of the battle against SARS. Some doctors have been refusing to treat patients suspected of being infected with SARS. Possible SARS cases were being turned away by hospitals with the excuse that the patients were unable to pay their fees. In reality, the health system was not prepared for the crisis and the medical staff were afraid of being infected. On Sunday the news conference held by Deputy Health Minister Gao Qiang seemingly turned over a new leaf. For the first time since the start of the epidemic last November, China has been straightforward in its attitude, promising resolute measures and daily updates of the situation.

However, there is not complete transparency yet. China's system of classifying SARS cases is not the same system promoted by WHO. China's system of prevention has difficulties coping with sick people in the countryside, where the hospitals and doctors are few and are ill-prepared for this type of emergency. Moreover, Chinese health officials have complained bitterly about the lack of collaboration from the military institutions, which tried to cover up and minimize the extent of the disease within the enormous military sector. Thus there is also the possibility that in the next hours or days more heads may roll to mollify vocal international and domestic critics and try to regain some of the confidence lost in the past months. Drastic measures appear necessary, such as the closure of all schools in the capital, a system of quarantine for the areas suspected of infection and widespread use of protective masks. More than 700 confirmed and suspected cases indicate that the situation in Beijing is quite serious, as the first case was announced on March 1.

Demotions notwithstanding, the crisis continues and underlines a strong deficiency not of any particular official but of the government bureaucracy, which has proved itself again to be unable to cope with emergencies. It echoes the US spy-plane incident of April 2001, when the government had serious problems coming up with a prompt response to the pressing US requests for a solution.

The Chinese bureaucracy of today is arranged so as not to give a large amount of power to one man. This is to avoid the excesses experienced during the years of Mao Zedong, when Mao could do and undo whatever he wished without any government checks. The present system in effect forestalls any dictatorship but impedes swift reaction to virtually any emergency. The system is geared for stability: reaching a large consensus on any given policy. This makes it cumbersome, although stable and quasi-democratic, in the sense that any policy has a very wide support among the hierarchy. However, there are no clear limits to the power exercised by top leaders and there is no opposition to any given policy, as any voice in the one-party system will be accounted for and included in the decision process. The system then folds and buckles under sudden threats and pressures, and thus can't effectively withstand the challenges of the fast-moving globalized system.

Beijing's evolving attitude toward SARS is a prime example of the flaws in the Chinese political system. It was a simple disease for which no politician could have been reasonably held culpable. But because of the system, nobody asserted the government's responsibility to its people and the world with the initial outbreak in November in Guangdong province. When it broke out, the first reaction was to hide it. Once hidden and covered up, it was necessary to keep covering up, to hide the former miscalculation. The practice had arguably worked in the past with chicken flu. Only this time it was more serious and soon got out of hand. A similar pattern was experienced during the spy-plane crisis when China had wished to resolve the issue under the table and was shocked and unable to react when the US made it open.

China can't afford this clumsiness, and thus a reform of the political system has become a priority that can't be postponed for too long. However, first China will have to recover some of the face it has lost, by bringing SARS under control. This will take months, if not years, unless a miraculous vaccine is found. In the meantime this will be an opportunity for Hu Jintao to prove his mettle. If he manages the situation well from here on, he will become almost invincible and could then implement reform within the system.

So far the US seems supportive of the new attitude taken by China. Despite SARS, the US talks with North Korea are still scheduled to be held in Beijing this week, a major sign of support at a time when almost all foreign delegations have canceled visits to China for fear of the deadly virus.
- posted by dhamaka @ 8:35 AM

 
NATO's shadow over South Asia

By B Raman

The North Atlantic Treaty Organization (NATO) is due to take over the command of the International Security Assistance Force (ISAF) in Afghanistan this summer. When this happens, it will be the first NATO operation out of Europe since its creation. Under a mandate of the United Nations, the ISAF, created in December, 2001, is responsible for the security of Kabul and its neighborhood. US forces, assisted by units from their allies, have assumed the responsibility for security and for the search of the remains of al-Qaeda and the Taliban in southern and eastern Afghanistan bordering Pakistan.

While denying that this could amount to a formal NATO operation, Yves Brodeur, a NATO spokesman, has been quoted in the media as saying, "The ISAF commander will be chosen by NATO's top military commander. Strategic coordination, command and control will be exercised by NATO through SHAPE [the Supreme Headquarters Allied Powers in Europe]. Neither ISAF nor the mission will change. What is going to change is the means by which the international community meets its commitment [in Afghanistan]."

The ISAF currently comprises about 4,600 troops from nearly 30 countries, including about 2,500 German and 600 Dutch soldiers and assists the Afghan authorities in maintaining security in Kabul. It has been reported that Germany, which presently exercises the leadership of the ISAF under a rotational system and whose leadership term ends in August, had proposed that NATO take over the leadership on a date to be decided by it. France and Belgium, which were initially opposed to this, are since reported to have agreed.

A French official at NATO headquarters in Brussels has been quoted as saying, "We are not planting the NATO flag in Afghanistan. NATO is anxious to avoid changing the perception in Kabul of what ISAF is." Another unnamed official said, "What we don't want to do is to give the impression that NATO is going to lead the mission. It is first of all an ISAF mission under the aegis of the UN. All we are doing is providing the structure."

According to Brodeur, George Robertson, the NATO chief, has informed UN Secretary General Kofi Annan of the alliance decision. NATO, which has already been providing logistical support to the ISAF, has reportedly asked its military experts to study how the alliance could "maximize" its role in Afghanistan.

NATO has thus quietly made a backdoor entry into a region which is of strategic concern to India, Russia, China, Iran and the Central Asian Republics and unilaterally assumed the leadership of a UN force without the matter being discussed in the UN and without the member states of the UN outside Europe, who have been supporting the coalition waging the so-called "war against terrorism", being consulted, either formally or informally, in the matter.

It is not known whether Pakistan was consulted. It is also not known whether the agreement of the Hamid Karzai government in Kabul was sought and, if so, how the Northern Alliance, which is an important constituent of the government, agreed to it.

In articles written after the US-led military operation started in Afghanistan on October 7, 2001, I expressed my concern over the US projecting the coalition's operation against the Taliban and al-Qaeda as a war against terrorism with the total emphasis on the military aspect of the operation instead of as a counter-terrorism operation. I am also concerned with the way the rest of the world, India and other Asian countries in particular, had accepted such a projection without carefully examining its implications.

By saying that "what is going to change is the means by which the international community meets its commitment [in Afghanistan]", NATO has projected its unilateral decision as the decision of the international community, even though the majority of the member nations of the international community are not members of the NATO. They have been confronted with a fait accompli.

This decision has come at a time when there are indications of a steady deterioration in the internal security situation in Afghanistan. Members of the Taliban and al-Qaeda, now operating from sanctuaries in Pakistan's North-West Frontier Province (NWFP) and Federally-Administered Tribal Areas (FATA) with the apparent connivance of Pakistan's military-intelligence establishment, have staged a comeback in the Pashtun areas of Afghanistan adjoining the Pakistani border. They have been joined in their operations by the Hizbe Islami of Gulbuddin Hekmatyar.

Karzai's writ continues to be confined to Kabul and his army, raised with Western assistance, is unlikely to be in a position to provide effective protection, even in Kabul, for months, if not for years, to come. He is not yet sure of the loyalty of his own security forces and police to him and continues to depend on US special forces for his personal security.

US forces operating in southern and eastern Afghanistan have been unable to neutralize the Taliban and al-Qaeda remnants and the newly-inducted jihadis of Hekmatyar. The security situation has been made worse by the depredations of the various warlords and narcotics barons of the 1980s vintage, who were inducted into the area by the US in the hope of using them and their sources and their knowledge of the topography of the area in its hunt for bin Laden and others.

They have been wreaking havoc in the region and have ignored with contempt the repeated warnings of Karzai of strong action against them. Well-informed sources say that junior- and middle-level US officers in the field feel that they would never be able to deal effectively with the situation so long as the Pakistan army does not take effective action against the sanctuaries in its territory and as long as the Pentagon and the State Department do not allow them to exercise the right of hot pursuit into Pakistani territory to destroy the terrorist infrastructure there.

The frustration of the US field officers in this regard became evident after an incident involving a US patrol and the Waziristan Scouts of the Pakistan army towards the end of last December. While the US field officers were vocal in their criticism of the Pakistani security forces and asserted their right of hot pursuit if they were attacked from the Pakistani side, the Pentagon and the State Department in Washington played down the incident, hushed their field officers with difficulty and reassured President General Pervez Musharraf that there was no question of the US forces exercising any right of hot pursuit into Pakistani territory.

The post-December assurances given by Musharraf of stricter action to prevent the Taliban, al-Qaeda and the Hizbe Islami from using Pakistani territory to step up their activities in Afghanistan have not been realized. Among the major recent incidents are:


Four foreigners, including a worker of the International Committee of the Red Cross in Oruzgan province, were killed in different incidents in March. The last of these incidents took place in the last week of March, when an Italian tourist was shot dead by suspected Taliban elements in the southern Afghan province of Zabul.

Two members of the US Special Forces were killed in an ambush near the Pakistan border on March 29.

On April 10, ten Afghan troops were killed when suspected Taliban cadres fired rockets on two Khost airports. At least 15 rockets landed on the airports where Afghan troops are camped. The attack was carried out at dawn from mountain ranges on the Pak-Afghan border and the attackers managed to flee into Pakistan. The incident followed the US attack on Baghdad and reportedly resulted in a lightning visit to Kabul by General Tommy Franks, Commander of US Central Command, from his headquarters in Doha, to discuss the security situation in Afghanistan with his officers.The fact that despite his preoccupation with the war in Iraq, he found it necessary to visit Kabul indicated the seriousness of the US concerns over the deteriorating situation.

On April 12, an Italian patrol in the vicinity of Khost had two hand grenades thrown at it. No casualties were reported.

A cousin and another relative of Kandahar’s governor, Gul Agha Sherzai, were killed by suspected Taliban militants in the Pakistani border town of Chaman on April 13, while his brother, Sharif Sherzai, was also injured. "Pakistan’s hand is behind this event," Sherzai’s spokesman, Khalid Pashtun, said. He accused Pakistan of backing the re-emergence of the Taliban. After the incident, some officers of the Afghan army tried to cross into Pakistan to arrest the Taliban attackers, but the Pakistani border security officials prevented them from doing so. They also refused to arrest the Taliban attackers and hand them over to the Afghan officials.

On April 13, an Afghan, two Pakistanis and a Yemeni, all suspected to be belonging to bin Laden's International Islamic Front, were killed in a massive blast as they were unloading explosives at a house in Khost. According to General Khial Baz Khan, the Khost military commander, the Afghan used to work for the Taliban's intelligence agency. Khan said that after the blast, the security forces recovered a large quantity of weapons and explosives from the house. In another incident the same day, four people were killed in Karwan Sarui, six kilometers east of Khost, when their car - packed with explosives for an apparent terrorist attack - blew up by accident. The same night, a suspected landmine exploded in east Kabul, at a spot one kilometer away from the US embassy.

Earlier, on April 1, Philip Reeker, a spokesman for the US State Department in Washington, issued a statement expressing concern about the increase in security incidents directed at US forces in Afghanistan, aid agencies and other foreigners. In another statement the next day, the department renewed its existing travel warning for Afghanistan, urging US citizens not to travel to the country because Taliban holdouts as well as members of al-Qaeda remained active.

On April 11, Hakim Taniwal, the governor of Khost, warned in a press interview that the dregs of the Taliban were regrouping in an effort to step up anti-government militancy. "The reality is that there are increased Taliban-related security incidents compared to the past," he said. His officials said that recently two Taliban fighters and two government soldiers died in a gun battle in the Zhawara District of the province.

There have been at least two serious incidents in northern Afghanistan involving rival elements of the Northern Alliance, one supporting General Rashid Dostum, the Deputy Defense Minister, and the other opposed to him. In the first incident on April 10,17 people, mostly soldiers, were killed. In the second incident on April 15, three were killed.

In a statement issued from Brussels on April 14, the foreign ministers of the European Union countries said that security in Afghanistan remained a major concern.

Towards the end of March, US forces undertook a special combing operation codenamed OP Valiant Strike to smoke out Taliban, al-Qaeda and the Hizbe Islami in the areas adjoining the Pakistan border. The fact that incidents continued to take place even after this indicated that the operation was not successful.

While US officials continue to maintain that the recent increase in incidents was expected with the onset of spring and that, hence, there was no special cause for alarm, Afghan officials posted in the area say that a situation similar to what had prevailed in the 1980s is slowly developing in the area and that unless the US is able to neutralize the terrorist infrastructure in adjoining Pakistani territory, history is likely to repeat itself.
- posted by dhamaka @ 8:34 AM

 
How to drag out the US-Korea talks

By Jaewoo Choo

South Korean analysts and US experts on Korean Peninsula affairs have agreed, according to reports in the Seoul press on Tuesday, that there is zero possibility of a US invasion of the North in the next year. Their calculation is simply based on how long it is going to take the US to get ready for another war in the aftermath of Iraq.

This military strategic calculation is in deep conflict with President George W Bush's schedule for re-election. For what both the Korean and American analysts omitted to state clearly was how Bush is going to be able to manipulate the talks with the North, scheduled to get under way in Beijing on Wednesday, to go beyond 2004. This is where understanding how the superpower plays it diplomatic poker game is vital.

When growing up, we all had the experience of opening up the back cover of a clock out of curiosity to see how a clock runs. There we saw two big cogs running against each other relatively at a much slower pace than other small cogs that supported them. Let's assume that these two big wheels were the US and North Korea, as they are the main actors of the upcoming talks. Always the supporting actors are spinning too much faster to notice anything but minding their own turnings. But the tooth of a big cog runs against the other from its counterpart at a much slower pace.

At the outset of the talks between the US and North Korea, the very first teeth biting each other will be the nuclear problem. However, as the talks proceed, they may run into a need for a shift in strategy. That is when the United States' second tooth will turn against the North's. It could range from human-rights issues to the freedom-of-religion issue, from inspections for weapons of mass destruction to reduction of conventional weapons, from espionage activities for military technology to its sales, or proliferation of its byproducts. Whatever the case, the US has plenty of teeth in its cog.

We can draw plenty of analogies from its conduct of relationship with China. When it needs to buy some time, the US may well come up with a human-rights card. It is foreseeable, as in the case with China since the Tiananmen massacre and the bloody suppression of the democratic movement in 1989, that the US has already prepared itself with such an issue to deliver to North Korea. When the news broke that the trilateral talks were to be held between Wednesday and Friday in Beijing, the report of the passing of resolution on North Korean human rights at the United Nations came out the same day. Of 53 countries voting, 28 voted yes, including Australia, Austria, Belgium, France, Germany, Ireland, Japan, Sweden, the United Kingdom and the United States. In other words, those nations that presumably are the main actors in an expanded multilateral talks format as suggested by the US last January, that is 5+5 (see North Korea: What's on the table, February 4), all voted for the resolution. On the other hand, China and Russia, also part of the 5+5 scheme, voted against it.

What is ironic about the two events is that South Korea excluded itself. As for the trilateral talks, it was disclosed that on April 4, South Korean President Roh Moo-hyun accepted a deal from Bush on the trilateral formation of the talks. At the voting of the UN resolution, South Korea decided not to attend in consideration of its relationship with the North. On the same day, however, it hosted a group of lawmakers from five countries launching an international parliamentary forum aimed at addressing issues concerning North Korean asylum seekers. The 31-member General Meeting of the International Parliamentarians Coalition for North Korea Refugees and Human Rights (IPCNKR) is composed of politicians from South Korea, the United States, Japan, Britain and Mongolia. Thus, it becomes quite obvious that the next item on the US agenda is human rights. This could very much hinder the talks progress when sufficiently used in the future course of the talks, as North Korea, like China, would be not willing to submit itself to such interference in its sovereign affairs.

The US could further employ another tactic in prolonging its talks with North Korea as it did in January 1999 by presenting an allegation on nuclear development. At that time, the Bill Clinton administration came up with a report of a possible nuclear-development program being built in a small remote town named Geum Chang-ri. After a persistent demand for inspection at the alleged site, the US finally got its way, only to find nothing but empty warehouses. A similar tactic could be employed with various sites in North Korea as the entire nation utilizes all its resources, including territory, to arm itself.

Another tactic could be found in US apprehension over the North's overseas activities. Such means were carried out in the heat of moment in 1993 when the US Navy detained a Chinese ship, the Yinhe, off the coast of North Africa for inspection because it was suspected of shipping Scud missiles to some rogue states in the Middle East. A similar detainment of North Korean vessels or trains is possible. Last summer, off the coast of Yemen, a North Korean vessel was raided by Spanish naval forces alerted by the US that it was shipping weapons of mass destruction to that country. Luckily for North Korea, the Yemeni government admitted its order of the shipment and the case faded away. However, two days prior to the US-North Korean talks, a North Korean ship with a Southeast Asian smuggler of heroin on board was stopped for inspection and was charged with drug-trafficking. Such hide-and-seek games could be played to the US advantage at any time with all the surveillance technology and equipment it has.

Another thing that could drag out the talks would be a religious factor. The practice of Falungong, a form of qigong, an ancient Chinese deep-breathing exercise system sometimes combined with meditation, certainly had a downside effect on the bilateral relationship between the US and China. China did not approve of its practice in its own territory as it dubbed it a heretical religion in violation of the Chinese constitution that prohibits illegal congregation, in which the religion is often practiced. For North Korea, however, it would not be much of a case because the society is very much closed to religious practice. Nonetheless, with South Korean missionaries' persistent efforts at spreading the Christian message combined with their continuous endeavor at organizing North Koreans to escape from their inhumane living condition for a better life, there is no guarantee Christianity has not permeated into the country. If that is the case, the consequences are self-evident: the international community will not stand for religious oppression.

Whatever teeth the US cog is going to use against North Korea, South Korea cannot afford to lose sight while spinning against the two. South Korea must concentrate to its utmost so as not to repeat its mistake of being left out but becoming fully responsible of bearing all the costs of the outcome of the bilateral talks. It must remind itself how the US initiated the Korean Peninsula Energy Development Organization (KEDO) program only to pass on the big chunk of financial burden to the shoulders of the South Korean people. South Korea also has to remember what kind of effect the allegation in Geum Chang-ri had on the stability and peace of the peninsula.

It also has to be able to read the next card the US is going to hand down in order to achieve true cooperation despite Seoul's exclusion from the talks. Otherwise, Roh Moo-hyun's government may have to rely on other means in pursuit of its policy toward the North, something like his predecessor Kim Dae-jung did when he held a summit meeting with Kim Jong-il in June 2000 after the breakdown of the four-party talks in August 1999.
- posted by dhamaka @ 8:33 AM

 
Talking to North Korea: Format or substance?

By Aidan Foster-Carter

A limerick whose first two lines I can't remember - just as well, since they were probably rude - ends thus: "They argued all night / Over who had the right / To do what, and with what, and to whom".

This seems an apt comment on some of the more shortsighted and self-serving reactions to what ought to be an unambiguous cause for relief. This week, with any luck, North Korea's nuclear crisis is finally about to be the subject of talks. Not a moment too soon, after more than six months of rising tension.

So who's talking? That's the problem. We know where: Beijing. We know when: starting April 23 - unless Pyongyang's bizarre weekend curveball - oh and by the way, guys, we've started reprocessing; oops! sorry, mistranslation, but we're well on the way - rattles the US into pulling out. I do hope not. God only knows what Kim Jong-il was playing at, but the only way to find out is to sit down and talk.

And we know who - or do we? Three-way talks, according to Washington, thus meeting its insistence on a multilateral format. That's not how Pyongyang sees it: just them and Uncle Sam, with China to lay the table but little more. China's own version seems closer to the North Korean one, it must be said.

Disagreement already, and we're not yet at first base. But worry not. Creative ambiguity can be good. Different definitions of the situation matter less, at this point, than the fact that they will meet and talk.

For the same reason, the shrill whining of the "excluded" is premature. Trust South Korea's rancid right-wing press to portray Seoul's absence as some kind of national insult. Gamely, and correctly, the new President Roh Moo-hyun countered that format is less important than substance. But still, it was tactful of the North - which has been oddly rude to a counterpart so keen to keep beaming sunshine: firing a missile at his inauguration and canceling talks, even while demanding rice and fertilizer - to offer a separate inter-Korean meeting at the end of this month, as a kind of consolation prize for Seoul.

Japan and Russia too let their disappointment show, albeit more mutedly. Moscow has worked hard to get Kim Jong-il to see reason; while in Tokyo, fear of missiles and anger over abductees has replaced the hopes raised by Prime Minister Junichiro Koizumi's now abortive-seeming tete-a-tete with Kim Jong-il last autumn.

Yet Russia has less real clout than China. As for Japan, North Korea - like South Korea - may never agree to give the ex-colonial power a formal role in any planning of the peninsula's future.

That might be unfair, or too pessimistic. But either way, the Beijing meeting is just the start (or restart) of a very long march. There'll be ample time farther down the road to argue about who else can join in.

There is plenty of precedent for all manner of permutations and combinations on the peninsula. Half a century ago, the armistice ending the Korean War (there is still no peace treaty) was signed by the same trio now set to meet in Beijing - except that the United States was acting for the United Nations: one reason North Korea has never been that keen on the world body. South Korea didn't sign: Syngman Rhee was all for fighting on. Nor did the Soviet Union, which wasn't in the war - or not officially. Nor did Japan, for the same reason.

More recently, does anyone remember four-way talks? Between 1997 and 1999 - it seems longer ago - the two Koreas, China and the United States met six times, mainly in Geneva - and did nothing much. They had jolly jaunts, including to a cheeseworks: Emmenthal or Gruyere, I forget. Why a cheeseworks? To get tips, one imagined, on how to concoct something seemingly solid, but odorous and full of hidden holes.

Just like the Agreed Framework, I hear you mutter. Not so fast. That earlier deal may now be in limbo; but whatever you think of the content, the format was innovative - and positive. Then as now, North Korea refused any multilateral forum, demanding to talk to the big fella. Okay, said the US (Bill Clinton); but you'll also have to deal with our agents, the Korean Peninsula Energy Development Organization.

The KEDO consortium was a stroke of genius, smuggling in South Korea and Japan (and anyone else prepared to pay) via the back door. The paying was and is a sore point. When Seoul's foreign minister Yoon Young-kwan warned recently that South Korea won't finance any deal it hasn't been involved in negotiating, this was a dig at KEDO. The US did the talking, but guess who picked up most of the tab.

Yet that is shortsighted. I'd argue that KEDO has done more for substantive inter-Korean ties than any other contact before or since, including the 2000 summit. Under it hundreds of South Korean engineers live and work in the North, alongside North Koreans. Such concrete cooperation is surely what counts. And couldn't that consortium format be extended? How about KFDO (food), or KIDO (infrastructure)?

So let's face it: North Korea just doesn't do multilateral. It didn't then, and it won't now. For one thing, its juche ideology abhors universalism in favor of unbridled national self-will. For another, Kim Jong-il suspects that if a multitude are gathered together, they'll all gang up on him. The four-way talks were a case in point. The supposed symmetry - North Korea had China, as South Korea had the US - never worked. In practice, the other three used to coordinate before confronting the aliens from Pyongyang.

Bilateral may be better, as each interlocutor can raise their own particular agenda. Thus kidnaps loom large for Japan, but are not an issue for anyone else (Seoul chooses not to raise this). Coordination is vital, of course. The US, South Korea and Japan have set up a Trilateral Coordination and Oversight Group (TCOG), where vice ministers meet regularly to ensure they're all singing from the same sheet.

This can also allow a division of labor. Those European Union states that lately recognized North Korea warned it that human rights were high on their list, being low on everyone else's. Sure enough, the EU has just sponsored a critical resolution - the first ever, amazingly - at the UN Commission on Human Rights.

Horses for courses. North Korea is everyone's problem - but that doesn't mean everyone has to turn up and gang up everywhere, every time. Roh Moo-hyun is right. Substance matters much more than form. Pragmatism, flexibility, and creativity should be the watchwords. And any talks are better than no talks.
- posted by dhamaka @ 8:32 AM

 
Arms deals buoy Russian-ASEAN trade

By Sergei Blagov

Russia has been keen to join in Asia-Pacific economic integration so as to capitalize on vast resources in the Far East. Yet when it comes to actual deal-making, Russian trade with Southeast Asian nations remain dominated by arms deals, including sales of aircraft.

As President Megawati Sukarnoputri met her Russian counterpart Vladimir Putin on Monday in the Kremlin, they signed a bilateral declaration that included a muted criticism of the United States. The two nations pledged "to strengthen the central role of the UN and prioritize principles of international law such as respect for national sovereignty, territorial integrity, non-interference in internal affairs", according to the declaration. As Indonesia and Russia have opposed the US-led war on Iraq, a talk of international law took a somewhat anti-US coloration.

Moscow and Jakarta advocate "political and diplomatic methods to solve international issues", as well as a bigger United Nations role in solving international crises, Putin confirmed after the talks. "The Indonesian government is now working to strengthen world peace," Putin said, adding that he had accepted an invitation to visit Jakarta, according to the Russian Information Agency (RIA).

Russia and Indonesia signed an intergovernmental agreement on military cooperation, as well as a memorandum of understanding on space-research cooperation. Megawati's five-day visit to Moscow from Sunday to Thursday, the first by an Indonesian leader since Suharto visited in 1989, was widely expected to focus on arms sales.

Megawati's father and founding president Sukarno received Soviet military supplies in the 1950s, yet bilateral ties came to an abrupt halt after the anti-communist takeover by General Suharto in 1965. In 1991, however, the US Congress banned arms sales after Indonesian troops killed hundreds of civilians in East Timor. Hence in recent years Moscow has moved to fill the gap.

In the wake of the 1997 Asian financial crisis, Indonesia canceled plans to procure Russian-built Sukhoi-30 jet fighters. Yet recently Indonesia signed a preliminary contract with Russia's state-owned monopoly Rosoboronexport for four Russian Sukhoi fighter planes, two Su-27s and two Su-30s, worth about US$100 million.

In 2002, Russia supplied 12 BTR 80-A amphibious armored vehicles to Indonesian armed forces. Russia also sold 10,000 Kalashnikov assault rifles and naval Mil-2 helicopters. The Indonesian military has expressed interest in buying more Kalashnikov rifles, helicopters, armed personnel carriers and Mi-17 helicopters, long-range S-300 air-defense missiles and portable Igla missiles.

Military sales "may become a tugboat that tows the relationship between the two countries", Russian business daily Kommersant commented. However, Russia may not really profit from these arms sales, because there has been talk that Indonesia had proposed a counter-trade to pay for Russian armaments.

Russian media have indicated that Russia had also offered a floating nuclear power plant to augment Indonesia's electricity supply, as well as to construct a rocket and satellite launch pad in Biak, Papua. However, these ambitious projects were not mentioned during the talks in the Kremlin.

Moreover, on the eve of Megawati's trip, there were hopes that Russia would cooperate in controlling world oil output. Indonesian Mines and Energy Minister Purnomo Yusgiantoro reportedly said he had asked Megawati to raise the issue of cooperating with the Organization of the Petroleum Exporting Countries (OPEC) to control production.

Megawati and Putin were also expected to ink agreements to give Russian companies access to Indonesia's oil-and-gas industry. However, no concrete oil-and-gas deals were announced and there was no mention of OPEC-related issues, at least officially.

Meanwhile, Russia and Indonesia pledged to increase bilateral trade. Russian Foreign Ministry spokesman Alexander Yakovenko stated that Moscow believes there are favorable conditions for boosting ties with Indonesia, notably trade, as well as military cooperation.

According to official Russian statistics, trade between Indonesia and Russia increased to $203.5 million in 2001, the last year for which statistics are available. However, Russian officials conceded that within the past five years an average figure of annual bilateral trade was a mere $120 million. Once again, Moscow seemingly hopes to boost trade with an Asian counterpart by increasing arms sales.

Likewise, the Kremlin conceded that trade with all Association of Southeast Asian Nations (ASEAN) states was still low and officials have long urged a boost in trade. For instance, last year Russian trade with Thailand barely exceeded $400 million. In 2001, bilateral trade between Malaysia and Russia reached $422 million.

Even Russia's trade with Vietnam has dropped to a level close to Russia's trade turnover with other ASEAN nations. In 2001, Russia exported $360 million worth of goods to Vietnam, while Vietnam sold $190 million of merchandise to Russia.

When Thai Prime Minister Thaksin Shinawatra traveled to Russia last October, it was disclosed that the Thai government planned to invite Putin to pay an official visit to Thailand in October this year to attend the summit of leaders of the Asia Pacific Economic Cooperation (APEC) forum.

The Kremlin has long pledged to prioritize its APEC policy and develop economic relations with the Asia-Pacific region. However, it remains to be seen whether official pronouncements are going to be accompanied by an actual increase in non-military trade.
- posted by dhamaka @ 8:30 AM