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Pay For The Afghanistan War, Or Just Call It Off?

posted ‎ by RSD Reports   [ updated ‎ ]

By Ivan Eland

Congressman David Obey (D-Wis.), the powerful chairman of the House Appropriations Committee and an opponent of President Barack Obama’s Afghan War escalation, recently proposed a special “temporary” income surtax to fund the war. Although his intentions are good, this proposal should be rejected.

Obey’s proposal is inconvenient for proponents of the escalation—most prominently, the president and Republicans. In Washington, when advocating a new policy, proponents, like a salesperson who’s trying to sell you a big-ticket item, like to bury, hide, or avoid talking about the cost. This behavior occurs because the sticker shock can sometimes be too great.

Rather than being delusional that politicians will not be politicians and that his proposal would actually pass, Obey is merely needling the war hawks to own up to how much their deepening quagmire will cost. Obey notes that if the president is asking taxpayers to pay the costs of an expensive revamp of the health care system, why not ask them to face up to the costs of the war, instead of adding to the already yawning $1 trillion annual federal budget deficit? Obey estimates that the Afghan War will cost about the same over the next decade as the House’s version of the health care bill—$900 billion.

Of the several ways to fund a war, surprisingly, increased taxation is one of the least pernicious. It at least provides transparent information to the taxpayer about how much the war is costing. The taxpayer, if he or she is inclined, can then complain about it. That’s why politicians hate this option and why Obey and other liberal Democratic escalation opponents, normally not known for being fiscal hawks, are proposing it.

Other ways to fund a war are even worse. Borrowing money—thus adding to the already massive budget deficit—foists the interest costs on future generations and causes a crowding-out by government borrowing of legitimate private borrowing.

Finally, the worst option is for the government to run the presses and print money. Wars tend to cause inflation, and printing money makes things worse. Borrowing and printing money are ways of hiding the costs to the taxpayer, which is why presidential administrations and Congresses like to use them rather than very obviously raising taxes.

Of course, the most intelligent way to fund the war would be to cut other government spending. This option is usually a “no go” zone for politicians, because one or more powerful special interests would make a fuss over their program getting cut or eliminated. It is funny how armchair patriotism on the home front often evaporates when personal sacrifice is afoot.

For example, in the unlikely event that changing the health care system is scrapped in a “patriotic” frenzy to fund the Afghan escalation, the increased taxes on Cadillac health care plans or wealthy people would finance the quagmire instead of providing health insurance for those who don’t have it. But at least the taxpayer would be funding only one government boondoggle instead of two. On the other hand, of Obama’s two pet projects, at least a health care revamp doesn’t kill anyone directly.

If the politicians really got inspired, they would scrap both expensive efforts entirely. Scrapping further government intervention in the health care system would please the Republicans, and scrapping the escalation would put a smile on the face of liberal Democrats. Why doesn’t Congress use this reverse logrolling more often? Because all special interests, who by their nature like to spend other people’s money, would be disappointed.

If the politicians got downright courageous, they would cancel the Afghan escalation and further government meddling in health care, end both the unnecessary wars in Afghanistan and Iraq rapidly, and deregulate health care markets so that an efficient national market was created. Now there’s an intelligent plan that has absolutely no chance of passing!

Ivan Eland is Senior Fellow and Director of the Center on Peace & Liberty at The Independent Institute. Dr. Eland is a graduate of Iowa State University and received an M.B.A. in applied economics and Ph.D. in national security policy from George Washington University. He has been Director of Defense Policy Studies at the Cato Institute, and he spent 15 years working for Congress on national security issues, including stints as an investigator for the House Foreign Affairs Committee and Principal Defense Analyst at the Congressional Budget Office. He is author of the books Partitioning for Peace: An Exit Strategy for Iraq, and Recarving Rushmore. This article was published by The Independent Institute.

Russia's Military Reform Still Faces Major Problems

posted ‎ by RSD Reports   [ updated ‎ ]

By Ilya Kramnik

The first phase of the ongoing military reform to overhaul the structure of the Russian Armed Forces as well as its troop control and recruitment processes officially ended by December 1, 2009.

The reform, which covers all fighting services, remains controversial in terms of necessity and effectiveness.

The army is the first service to be overhauled.

Despite previous reforms and troop cuts, the Russian army has remained a scaled-down version of the Soviet Army, which was primarily intended to conduct a large-scale war with prior general mobilization. Except for some postwar changes, the Russian army's structure has also remained virtually the same since 1945-1946. Four-regiment divisions were the main tactical units, while the recruitment system aimed to swell troop strength in wartime. But, a hypothetical large-scale non-nuclear conflict remains far-fetched. Besides, any local conflict can be won without resorting to mobilization.

So, what will the Russian army look like after the current reform?

The entire chain of command is now being revamped. The previous system comprising military districts, armies, divisions and regiments is giving way to another system that will consist of military districts, tactical commands and brigades.

The brigade structure seems to be more flexible and better suited for local conflicts because divisions are too cumbersome and regiments lack the required weaponry and equipment for conducting independent operations. Army brigades are supposed to be used as mobile permanent-readiness units capable of fighting independently with the support of highly mobile task forces or together with other brigades under joint command.

Moreover, each military district will establish rapid-deployment brigades from the airborne force's units.

The results of the reform are not yet very encouraging. A check of military units conducted by the General Staff shows that 60% of army brigades received C grades, 33% of units got B grades, and not a single brigade was given an A grade.

The inadequate readiness of military units can be explained by the transitional period's problems, insufficient personnel training levels, the lack of modern military equipment and other factors. All these problems should be tackled at the same time as the army's conversion to a new recruitment system to promote the latest in the training process.

The armed forces' personnel structure will also be overhauled. At the beginning of the reform, officers accounted for over 30% of military personnel. In fact, over 400,000 out of the 1.2 million men and women in uniform were officers. The post-reform armed forces will total a million men and women, including not more than 150,000 officers (15%).

Officers serving with logistics support units, headquarters of various levels and generals will be affected most of all, while the number of lieutenants and senior lieutenants will increase from 50,000 to 60,000.

At the same time, professional sergeants and sergeant majors will be trained, playing a far more important role than they do today. Career sergeants with a long service record will make it possible to quickly and effectively train contract soldiers and conscripts. Unfortunately, professional sergeants are currently being trained at a rather slow pace.

The new armed forces structure calls for gradually reducing the number of positions held by conscripts. However, this objective has not yet been accomplished. Most army units have a mixed recruitment system stipulating 12-month service commitments for conscripts. This does not enhance combat readiness either.

The Russian air force will also be restructured. In 2010, the air force will comprise seven tactical commands to replace the four operational air armies.

Four tactical commands will control tactical aviation and army aviation units, while the remaining three will be given authority over strategic aviation, military transport aviation and aerospace defense units. These commands will control air bases and brigades of the air defense force. The above brigades will receive various air defense squadrons (units) depending on specific objectives.

Although this approach implies an enhancement to the air force's tactical and strategic flexibility, the success of this concept remains in doubt, especially if we consider the ageing air force fleet and its slow modernization pace.

Many other specifics should be clarified including the level of up-to-date equipment, combat training standards and confirming that armed forces armament needs are met.

At the same time, the Russian Defense Ministry does not prioritize media coverage for the reform's concepts, progress and prospects. Consequently, the reform remains a mystery to most Russians, including military personnel.

The opinions expressed in this article are the author's and do not necessarily represent those of RIA Novosti, where this article was published. 

Obama's Af-Pak Policy - Seeds Of Failure

posted ‎ by RSD Reports   [ updated ‎ ]

By B. Raman

President Barack Obama's Af-Pak policy - Mark 2 as unveiled by him in his address to US military officer cadets at West Point on December 2, 2009, has been marked by critical words for the Afghan Government and soft words for the rulers of Pakistan - as if evils such as corruption, poor governance, narcotics production and lack of accountability are confined only to Afghanistan and one does not find these evils in Pakistan.

2. It is these evils long tolerated by successive US administrations that have landed Pakistan in the situation in which it finds itself today - a breeding ground of extremism and sectarianism of every hue. The cancer of extremism and jihadi terrorism did not spread to Pakistan from Afghanistan. It spread from the madrasas of Pakistan to Afghanistan with the encouragement and often at the instance of Pakistan's military and intelligence establishments. The root of this cancer is in Pakistan and not in Afghanistan. The surgery has to start in Pakistan. This harsh reality has been played down in his address.

3. The Taliban, which nourished Al Qaeda and gave it shelter in Afghan territory, was born in Pakistani territory in 1994. Al Qaeda and the leadership of the Afgan Taliban escaped defeat by the US forces post-9/11 by taking shelter in Pakistani territory - Al Qaeda in the North Waziristan area of the Federally-Administered Tribal Areas (FATA) and the Neo Taliban headed by Mulla Mohammad Omar in the Quetta area of Balochistan.

4. From there, the surviving senior cadres of the two organisations moved to sanctuaries in the non-tribal areas. A recent report of the "Washington Times" has quoted retired US intelligence sources as saying that Mulla Omar and other leaders of the Neo Taliban have shifted to the Karachi area from the Quetta area to escape attacks by US drone (pilotless) planes in the tribal areas.

5. Many senior Al Qaeda leaders operated from the non-tribal areas of Pakistan - some even before 9/11. Khalid Sheikh Mohammad (KSM) was reported to have orchestrated the 9/11 strikes in the US from Karachi from where he shifted to Quetta and then to Rawalpindi, where he was ultimately arrested. Abu Zubaidah was caught in Faislabad in Punjab and Ramzi Binalshib in Karachi. One should not be surprised if it ultimately turns out that Osama bin Laden and his No.2 Ayman al-Zawahiri have also been sheltered in the non-tribal areas and that is why the US has not been able to get at them so far despite offers of huge rewards and the Drone strikes.

6. The command and control of both the Neo Taliban and Al Qaeda are now located in Pakistani territory. Obama said in his address at West Point: "Our overarching goal remains the same: to disrupt, dismantle, and defeat al Qaeda in Afghanistan and Pakistan, and to prevent its capacity to threaten America and our allies in the future. ...... We will strengthen Pakistan's capacity to target those groups that threaten our countries, and have made it clear that we cannot tolerate a safe-haven for terrorists whose location is known, and whose intentions are clear."

7. Strong words regarding the safehavens for terrorists in Pakistan. As in the past, strong words do not presage strong action to force Pakistan to destroy those safehavens. The Pakistani military operations in the Swat Valley and South Waziristan are meant to counter a threat to Pakistan's internal security from indigenous elements. They are not directed against the external activities of Al Qaeda. Nor are they directed towards facilitating the military operations of the NATO forces and the Afghan National Army in Afghan territory. The safehavens of organisations, which are seen as an asset and not as a threat to Pakistan, are being shifted from place to place to escape detection and action by the US.

8. If Obama is serious about wanting to start withdrawing from Afghanistan in dignity and honour by the middle of 2011, he has only two options. Either force the Pakistani rulers to act against the safehavens whether they are located in tribal or non-tribal areas or act against them with available US capabilities. The Obama Administration like its predecessor lacks the political will to do so.

9. Seeking partnership with a state perpetrator of terrorism is not the way of ending it. That is what Obama has done in his address. That is why his revised Af-Pak policy is unlikely to meet the objectives which he has set for the US and other NATO countries. Obama's West Point address contains the seeds of its pre-destined failure.


The writer is Additional Secretary (retd), Cabinet Secretariat, Govt of India, New Delhi, and, presently, Director, Institute For Topical Studies, Chennai. E-mail: seventyone2@gmail.com)

The Path To Full Employment

posted ‎ by RSD Reports   [ updated ‎ ]

By Mike Whitney

Marshall Auerback is a Fellow at the Franklin and Eleanor Roosevelt Institute. He has some 28 years experience in the investment management business, serving as a global portfolio strategist. Mr Auerback graduated magna cum laude in English & Philosophy from Queen’s University in 1981 and received a law degree from Corpus Christi College, Oxford University in 1983.

Mike Whitney: In a recent article on New Deal 2.0, you offered an practical solution to growing unemployment:  Make government the "Employer of Last Resort". How would this work and who would be included? What effect would this have on the economy?

Marshall Auerback: What I am advocating would create something close to a full employment: a universal job guarantee available through the thick and thin of the business cycle. The federal government would ensure a job offer to anyone ready and willing to work, at the established program compensation level (including wages and a healthy benefits package). To keep it simple, the program wage could be set at the current federal minimum wage ($7.25 an hour) to minimize wage disruption, and then adjusted periodically as that is raised. The key is to get it entrenched as a permanent feature of government.

It would not be introducing another element of intrusive bureaucracy into our economy, but simply better utilizing the existing stock of unemployed...Social spending on the unemployed prevents aggregate demand from collapsing into a depression-like state, but little is done to enhance future growth and demand, which can be done by providing them with employment, greater education and higher skill levels.
   
The usual benefits would be provided, including vacation and sick leave, and contributions to Social Security. Although Hyman Minsky called this a "Government as Employer of Last Resort" idea, the phrase might be too emotive for some (many in this country have a visceral hatred of government), so let's call it Job Guarantee (JG) program or an Employment Guarantee Act.

The original New Deal programs included large-scale infrastructure projects with direction coming from Washington. A permanent and universal JG program should be decentralized, with projects created and administered locally -- where the workers are, and for the benefit of their communities.

This brings us to the fundamental principle of the Job Guarantee program: it is a complement that provides jobs to those who would otherwise be jobless and it provides public services and infrastructure that otherwise would not be supplied. JG workers will be gaining useful work experience and training, making them more appealing to other employers. When firms hire, they will recruit from the JG program, offering a slightly higher wage.

Mike Whitney: Every day I get e mails from people who are worried that the US is sliding towards Zimbabwe-type hyperinflation. Since the financial crisis began, the money supply has exploded and the Fed's balance sheet has widened to over $2.2 trillion. What effect will this have on the dollar and the US economy? Should we be concerned about Bernanke's quantitative easing (QE) program?

Marshall Auerback: The only circumstances in which I could envisage a Weimar or Zimbabwe scenario is if we had complete political dysfunction and a corresponding loss of taxing authority, a la Zimbabwe (or the Confederacy during the Civil War).  If the tax system breaks down, the government's fiat money can indeed become worthless - which is manifested as hyperinflation.  The government in that situation can print ever increasing quantities of money, but find little for sale, even as resources sit idle.  This does not require full employment or high capacity utilization. In fact, quite the opposite because once the value of money collapses in the manner I described above, it becomes virtually impossible to undertake 'money now for money later' transactions, and the economy degenerates into barter, or the private sector contracts with alternative money with a relatively more stable value.  The point is that that the hyperinflation is not caused by the "printing of money" per se.  Rather, running the printing presses at full speed captures only the effect, not the cause of the problem.  It is usually the breakdown of the tax system, indeed the political system as a whole, that creates the hyperinflation.

That is still an outlier in the US in my opinion, although watching our current government in action, I do not discount it as a possibility. 

Quantitative easing is a crock. Let me quote our Federal Reserve chairman, Ben Bernanke:  "Under a paper-money system, a determined government can always generate higher spending and hence positive inflation."  But the government also has to know which buttons to press. QE and lower interest rates are not the buttons for that job.  The button is the budget deficit, and they seem categorically against pressing it due to deficit myths.

Proponents of quantitative easing claim it adds liquidity to a system where lending by commercial banks is seemingly frozen because of a lack of reserves in the banking system overall. It is commonly claimed that it involves “printing money” to ease a “cash-starved” system. That is an unfortunate and misleading representation.

The mainstream economists advocate QE once interest rates get down to zero because they see it as the only stimulatory monetary policy measure left. But their conception of the way the monetary system operates is flawed and also reflects their obsession with the use of monetary policy as a counterstabilising policy tool.

Modern monetary theory suggests that monetary policy will not be an effective instrument and QE in particular is a very long bow to draw if your objective is to stimulate economic activity.  

Does quantitative easing work?

The mainstream belief is based on the erroneous belief that the banks need reserves before they can lend and that quantitative easing provides those reserves. That is a major misrepresentation of the way the banking system actually operates. But the mainstream position asserts (wrongly) that banks only lend if they have prior reserves.

This is the text-book conception of the world and parades as the money multiplier theory. It is taught – to their disadvantage – to all undergraduate students in economics. It is an exercise in deceptive brainwashing. The illusion is that a bank is an institution that accepts deposits to build up reserves and then on-lends them at a margin to make money. The conceptualization suggests that if it doesn’t have adequate reserves then it cannot lend. So the presupposition is that by adding to bank reserves, quantitative easing will help lending.

But bank lending is not “reserve constrained”. Banks lend to any credit worthy customer they can find and then worry about their reserve positions afterwards. If they are short of reserves (their reserve accounts have to be in positive balance each day and in some countries central banks require certain ratios to be maintained) then they borrow from each other in the interbank market or, ultimately, they will borrow from the central bank through the so-called discount window. They are reluctant to use the latter facility because it carries a penalty (higher interest cost).

The point is that building bank reserves will not increase the bank’s capacity to lend. Loans create deposits which generate reserves. The reason that the commercial banks are currently not lending much is because they are not convinced there are credit worthy customers on their doorstep. In the current climate the assessment of what is credit worthy has become very strict compared to the lax days as the top of the boom approached.

All that the central bank is doing is buying one type of financial asset (private holdings of bonds, company paper) and exchanging it for another (reserve balances at the central bank). The net financial assets in the private sector are in fact unchanged although the portfolio composition of those assets is altered (maturity substitution) which changes yields and returns.

In terms of changing portfolio compositions, QE increases central bank demand for “long maturity” assets held in the private sector which reduces interest rates at the longer end of the yield curve. These are traditionally thought of as the investment rates.

This might (but probably will not) increase aggregate demand given the cost of investment funds is likely to drop. But on the other hand, the lower rates reduce the interest-income of savers who will reduce consumption (demand) accordingly. How these opposing effects balance out is unclear. Clearly, the BOE research department has no idea of how the effects interact.

Overall, this uncertainty points to the problems involved in using monetary policy to stimulate (or contract) the economy. It is a blunt policy instrument with ambiguous impacts.  

According to Bloomberg News, the Fed has committed or loaned over $11.4 trillion to stabilize the financial system.  But very little has changed by way of regulation. In fact, capital requirements, securitzation, unregulated derivatives trading, and off-balance sheet operations, remain virtually the same. Aren't we reassembling a system that we know has basic design-flaws? How do we fix this?

Marshall Auerback: Again, I think this misrepresents what the Fed has done. It's been an asset shift.  The Fed cannot create new net financial assets. Only the Treasury can do that.  Instead, I tend to agree with Professor Perry Mehrling of Barnard College, who has argued, fairly convincingly in my view, that the expansion of the Fed’s balance sheet has been widely misunderstood within the economics profession, because it has been viewed through the lens of a pre-existing debate about the monetary transmission mechanism.  Those who emphasized the importance of the money supply (on nominal spending) saw the expansion as quantitative easing, and warned about eventual inflationary consequences.  Those who emphasized the credit channel (as Bernanke) saw the expansion as providing credit that was temporarily unavailable in the private market.  The fact that the balance sheet expanded on both sides, and in both cases with the private sector as counterparty, tells us that something else was going on.

Instead, Mehrling has argued that the Fed’s actions after Lehman should be understood as moving the wholesale money market onto its own balance sheet.  Banks with surplus funds lent them to the Fed by holding excess reserve balances, and banks that needed funds borrowed them from the Fed through the discount window.  Foreign banks that needed dollar funding got it through their own central bank, which got it from the Fed through the liquidity swap facility.  Banks that were short of collateral eligible for discount borrowed directly through the new commercial paper facility.  Shadow banks that could not deposit in the Fed instead bought Treasury bills, and the Treasury deposited the proceeds at the Fed.

And, again, because we haven't deployed our fiscal resources to support aggregate demand, the policies have not been successful.  They are simply an attempt to restore a highly destructive status quo ante.

Economic growth in the US depends heavily on consumer spending. But for the last decade or more, workers’ wages have been stagnant, so growth has come from debt-spending. Now all that is beginning to change.  Credit is getting tighter and households--that lost $13 trillion since the  financial crisis began-- have been forced to cut back. Is it really possible for GDP to increase without strong wage growth? How is widening inequality reducing aggregate demand and weakening the economy?

Marshall Auerback: This is not a new phenomenon. There is little understanding that if households and firms try to net save (save more out of income flows than they tangibly invest) incomes collapse, and desired private net saving is thwarted. The private "excess saving" cannot exist without a budget deficit or a trade surplus. Many people make this mistake. At best, we can talk about planned private saving being in excess of planned private investment, but other than that, we are violating double entry book keeping principles.

And consider this: in 1998, 1999 and 2000 (increasing each year), the US government "virtuously" ran budget surpluses. These were widely lauded even though they had the effect of draining aggregate demand and forcing the private sector to rely more on debt, the very things we are now rightly decrying.  But we've misdiagnosed the cause.  The fiscal surpluses caused the private sector to become more heavily indebted than before as the fiscal drag squeezed liquidity and destroyed aggregate demand and incomes. Along with our misconceived embrace of financial deregulation, the combined result was sharply rising unemployment and a major recession.

I would argue that we have the model from the FDR years. But this entails an approach where we work to restore personal incomes and balance sheets before we deal with the bank balance sheets.  You improve aggregate demand and incomes will rise and with that so will CREDITWORTHINESS, as well as the ability to service existing loans.  This in turn enhances the banks' balance sheets and facilitates greater provision of credit.  It's so easy, even a banker can figure it out.

Today, I believe that most major banks are insolvent and cannot (and should not) be saved. Too big to fail means they are to big to be saved, although I think we have to approach this from the perspective of functionality as well as the sheer size of the banks.

We should insist upon a market structure in which financial institutions are universally small. But smallness cannot be defined by balance-sheet assets alone. We need to manage the degree of interconnectedness and the scale of total exposures (including off-balance sheet exposures arising from derivative market participation), which gets to your point about functionality. Further, we need to ensure that no market participants are indispensable by virtue of controlling some essential market infrastructure.

Right now it is essential that all big banks be examined during the “holiday” to uncover claims on one another. It is highly likely that supervisors will find that several trillions of dollars of bad assets will turn out to be claims big financial institutions have on one another (that is exactly what was found when AIG was examined—which is why the government bail-out of AIG led to side payments to the big banks and shadow banks). In addition, it will be necessary to increase supervision and regulation of the financial sector. It is particularly important to put a stop to the practices that brought on the crisis.

As the experience of the early 1930s as well as that of the 1980s tells us, if left alone to deal with the current problems, market mechanisms will push management and owners of insolvent institutions to ramp up losses. The result can be massive deflation, massive bankruptcies, massive destructions of physical assets, and enormous unemployment will continue until the debt structure is simplified. In the process, social unrest will grow to the point that the entire socio-economic system will be threatened.

Debt Forgiveness

A more effective way to restart the economic process on the solid ground is to deal with the underlying cause of the problem: borrowers cannot meet the required payments. This implies sustaining their income and employment and, if necessary, drastically modifying their debt service burden. The whole boom of the 2000s (and more broadly the growth process that emerged at the in the early 1980s) was based on household borrowing and the continuation of negative saving trends (that is, household deficit spending). A good place to start recovery efforts, therefore, would be to change this method of economic growth. There are two key ways to do that.

First, a household’s main source of income is its employment, which itself is heavily tied to the state of the economy. Policy can “decouple” this link to some degree through creation of counter-cyclical government employment programs. There are plenty of non-profitable, even though crucial, economic activities that require labor (from massive infrastructure programs to social services). CCC, WPA, and other programs of the New Deal employed millions of people, creating jobs very rapidly in extremely useful projects. In its first six years, the WPA spent $11 billion, three-quarters of that on construction and conservation projects and the remainder on community service programs. During that time, WPA employed about 8 million workers. The Civilian Conservation Corps (CCC) put approximately 2.75 million unemployed young men to work to reclaim government land and forests through irrigation, soil enrichment, pest control, tree planting, fire prevention and other conservation projects. Workers earned a dollar a day, and had to send part of their wages home to their families. Through the National Youth Administration (NYA) the government made it possible for 1.5 million high school students and 600,000 college students to continue their education by providing them with part-time jobs to meet their expenses.

Debt Jubilee 2010

However, guaranteeing access to employment will not be enough to deal with the current crisis. Indeed, following decades of growing debt, households have accumulated debt well beyond their means, and even if employment programs are put in place, they will pay on average a lower wage than what many jobless households used to earn. Given that many households could not service their debt with their previous income, providing them employment (at a wage that could be below their previous wage) will only provide some relief from their debt problem. We, therefore, need a massive modification of loans and possibility bankruptcy (which must be made simpler and less costly). Some economists, remembering that this was done in the past, have suggested a debt jubilee; credit card companies have already begun to go down this road and more could be done here. The government could provide incentives to encourage more financial companies to go down this path.

If borrowers can meet their payments, lenders will receive their funds and will return to profitability; in turn, some of the securitization processes will be revived. Of course, many banks are no longer used to making most of their money from interest payments, but it may be time to return toward a less trade-and-fee driven financial sector. Hold to maturity is a good starting point.

Marshall Auerback is a Fellow at the Franklin and Eleanor Roosevelt Institute. He has some 28 years experience in the investment management business, serving as a global portfolio strategist. Mr Auerback graduated magna cum laude in English & Philosophy from Queen’s University in 1981 and received a law degree from Corpus Christi College, Oxford University in 1983. He has contributed several articles to CounterPunch. He can be reached at be reached at MAuer1959@aol.com

Mike Whitney lives in Washington state and can be reached at fergiewhitney@msn.com.

The Dark Side Of Lisbon

posted ‎‎Dec 2, 2009 12:15 AM‎‎ by RSD Reports   [ updated ‎‎Dec 2, 2009 12:17 AM‎‎ ]

By Ahto Lobjakas

Far from injecting new impetus into the European Union's foreign policy, the Lisbon Treaty, which came into force on December 1, is likely to further sap its effectiveness.

As a result of the treaty's coming into effect, the institutional underpinnings and basic assumptions of EU foreign policy now require adjustment in a manner that will diminish the importance of its communal (also described, variously, as the supranational, federalist, or integrationist) element.

Under the guise of the "streamlining" changes introduced by Lisbon, member states will wrest back most of the control over external relations they had ceded to the European Commission over the past decade.

As a result, the leverage the EU can bring to bear on events beyond its borders will be increasingly generated along axes connecting national capitals -- bypassing Brussels.

This will have a number of important consequences. Most immediately, the EU's flagship "eastern neighborhood" project will be gradually stripped of political dynamism and support.

No large (or small, for that matter) EU member state is interested in aggravating its relations with Russia. As Moscow has made abundantly clear, this is precisely what any real extension of Western influence into former Soviet territory would bring with it.

Only higher, shared ends and values can check the national instinct of self-interest. With the decline of the role of the European Commission heralded by the way the Lisbon Treaty is being put into practice, it is inevitable that the EU's encouragement of political and economic reforms beyond its borders will gradually become less a political imperative and more a project carried forward by bureaucratic inertia provided by existing mechanisms of cooperation.

End Of Expansion


Nowhere is this tendency brought into clearer relief than in the European Commission's announcement last week of an impending merger of its enlargement and (most of the) neighborhood directorates.

Welcomed by some observers as possibly signaling a boost to the aspirations of those countries not yet granted accession prospects, the move is far more likely to have the opposite effect. It threatens to remove the European Neighborhood Policy (ENP) from the sphere of the political and anchor it firmly in that of the "administration of things."

The horizons of the ENP will not expand. Instead, they will be limited -- like those of the enlargement policy -- to the carrying out of existing projects where groundbreaking moments of political decision-making by EU member states are separated by longer and longer periods of bureaucratic routine in the form of consultation and assessment.

The key advantage the candidates for enlargement -- meaning the Balkan states, but not necessarily Turkey -- will have is that they already have the political incentive of a confirmed EU membership promise. None of the neighborhood countries have this. This difference is likely to be reflected in the quality of the reforms they will end up implementing.

Not for nothing was the merger of the two European Commission structures a French initiative. France has become notoriously skeptical of further EU enlargement, and increasingly friendly towards Russia (witness the planned sale to Moscow of an advanced assault warship, despite the vocal protests of smaller Eastern European allies, or the commitment exacted from Paris by Russian Prime Minister Vladimir Putin last week to take a stake in the South Stream gas pipeline).

National Power Grab


This general logic of member-state ascendancy, to the detriment of the EU's communal pillar -- and the hopes of eastern neighbors-- runs through all of the institutional reforms stemming from the Lisbon Treaty.

Thus, Catherine Ashton's double-hatted appointment as EU foreign minister and vice president of the European Commission is effectively a power grab by the (larger) EU member states. It is a bid to "reseal" the Common Foreign and Security Policy (CFSP), traditionally an exclusive domain of national capitals, parts of which seemed to have leaked to the European Commission in the first half of this decade.

When Chris Patten, the EU's then-external relations commissioner, called for EU member states to "sing from the same hymn book" in 2004, he could do so because his power base, the European Commission, had succeeded in carving out a niche independent of the member states.

This niche, fortified by appeals to the value added by joint action and, to a degree, the moral force of the EU's "basic values" of which the commission professed to be a guardian, has now virtually disappeared.

This has been a long process likely to be brought to a close by Ashton's appointment. Her full title reads high representative for foreign policy. That job is within the gift of the member states, which she will represent (as will Herman van Rompuy as the president of the European Council tasked with chairing EU summits). Tellingly, Ashton has yet to decide whether to set up office in the European Commission's Berlaymont headquarters or the EU Council of Ministers building across the street.

The new commissioner for enlargement and neighborhood policy (subject to approval by the European Parliament), Stefan Fuele, will play a largely administrative role, EU officials say. In the enlargement part of his portfolio, this is established practice, with member states deciding which countries to invite to accession talks and when to close them. In neighborhood policy, officials say, Fuele's remit will be similar -- devoid of all political function. He will effectively act as Ashton's "assistant," one Brussels official says.

Losing Its Voice

Eventually, Ashton will move into the future headquarters of the External Action Service (EAS), an embryonic diplomatic corps for the EU, up to 8,000-strong, mandated by the Lisbon Treaty. The EAS will be the future vessel of most significant joint EU diplomacy. As such, it can only be a continuation of member-state foreign policies -- limited to the passing on and putting into practice of political instructions that can only emanate from member-state capitals.

There is a power struggle currently under way between the national capitals and the European Parliament over control over the new agency's finances (and, less importantly, staffing). The parliament is trying to put the EAS within the remit of the European Commission, whose finances it controls. However, commission President Jose Manuel Barroso is said to be unenthusiastic about that move, even though it would extend his powers, for fear of falling out with the member states. His record over the past five years backs that assessment.

A final decision is expected next spring. It is highly likely the member states will get their way, as, first, CFSP remains within their gift, and second, they are in ultimate control of the EU's purse strings, providing the lion's share of the bloc's annual budget.

The picture that emerges is very far from that predicted by the more optimistic commentators of a European Union with a vibrant joint foreign policy, and possibly its own army. Among other things, far from emulating the mutual defense commitment enshrined in Article 5 of the NATO (itself increasingly shaky) charter, the untried "solidarity clause" contained in the Lisbon Treaty applies to man-made and natural catastrophes and terrorist attacks, but cannot be evoked against other countries.

The Lisbon Treaty in its early application has failed to surmount the in-built limits of the EU's foreign policy. In fact, it is already contributing to their further constriction.

The EU's foreign policy is increasingly what the larger member states want it to be -- or it is nothing. It is arguable that even the preference for the "lowest common denominator," so often imputed to the EU in the past, is becoming an anachronism. There are either EU positions that accommodate the interests of the larger member states, or there are none. This has been the case at least since the end of the Russo-Georgian war in August 2008.

In a second and subtler way, the EU's choices are also increasingly constrained by the changing international context. The rise of the "new powers" such as China, India, Brazil, and others -- enthusiastically welcomed by the EU -- is only serving to distract its member states further.

As a result, the EU is left to exercise "leadership" in areas where there is no competition, such as climate change. In areas where the world's big powers have vested interests, competition does exist, and there the EU is struggling to hold its own.

Ahto Lobjakas is RFE/RL's Brussels correspondent. The views expressed in this commentary are the author's own and do not necessarily reflect those of RFE/RL that published this article. Copyright (c) 2009. RFE/RL, Inc. Reprinted with the permission of Radio Free Europe/Radio Liberty, 1201 Connecticut Ave., N.W. Washington DC 20036.

Why Most Counterinsurgency Wars Fail

posted ‎‎Dec 1, 2009 12:33 PM‎‎ by RSD Reports   [ updated ‎‎Dec 1, 2009 12:36 PM‎‎ ]

By Ivan Eland

In recent history, very few counterinsurgency wars have ended in success. Guerrillas are often outgunned by a wealthier invading power, but they do have two powerful advantages. One is that they are fighting on their home turf, which they usually know much better than the invader. Guerrilla warfare at the strategic level is defensive, even though at the tactical level, raiding insurgents are many times on the offense. As a result of being on the strategic defense, the second advantage is that the attacking power will find it difficult to overcome the "foreign invader" label among the population of the invaded country. Thus, because winning the support of the local population is the most important—and difficult—objective in any counterinsurgency war, most such campaigns end in failure.

But there have been a few notable exceptions. At the turn of the 20th century, the United States refused independence to the Philippines after the Spanish-American War and then outfought Filipino guerrillas to make U.S. colonial rule stick; a U.S.-supported Greek government beat back communist insurgents in the late 1940s; and the British beat back Marxist guerrillas in Malaya in the late 1940s to the early 1960s. Although it might be tempting to assume that the only way to beat guerrillas is to use ruthlessly brutal tactics, this predominated in only the first of the three episodes. The United States used concentration camps, torture, and a scorched-earth policy in taming Filipino guerrillas. But even here, such drastic and unacceptable methods may not have been what tipped the outcome to a counterinsurgency success.

The common thread in these three success stories seems to be that either the guerrilla movement was divided or did not win the overwhelming support of the local populace. In the case of the Filipino insurgency, Emilio Aguinaldo, the guerrilla leader, never really had the support of most of the Filipino population. Similarly, in Malaya, the rebellion occurred only in a minority of the minority Chinese population, thus allowing the British to eventually stamp it out. In Greece in the late 1940s, the opposition movement was divided, allowing the U.S.-backed Greek government to prevail.

How do these conclusions apply to current counterinsurgency wars? In both the rugged terrain of Afghanistan and the urban landscape of Iraq, guerrilla groups have taken advantage of familiar environments to effectively harass the U.S. superpower. In addition, the United States, in some sense, has been more restrained than the Taliban and Iraqi insurgents toward the local populations. The Taliban is known for its harsh methods of justice and killing, and some of the Iraqi guerrillas have slaughtered civilians with suicide bombs. In contrast, in both nations, the United States has built infrastructure projects and handed out candy to children. Yet the United States has failed to win the hearts and minds of either population, because of excessive collateral killings from air and ground attacks. At the end of the day, even a foreign invader who tries to be more sharing and caring is still regarded as a foreign invader.

In Somalia, the militant Islamist Shaabab movement had little public support until the United States, as part of its global "war on terror," began funding unpopular and corrupt Somali warlords to promote "stability"—turning the local population toward the movement and away from the perceived meddling superpower and its Somali government lackey. Then, making things worse, a U.S.-backed Ethiopian invasion provided only some temporary stability as long as Ethiopian troops were willing to occupy the country. The cross-border invasion by Ethiopia—long regarded by Somalis as their archenemy—to quash the militant Islamists only enhanced the radicals’ standing in Somalia once Ethiopian forces withdrew. In short, history shows that the presence or influence of foreigners only feeds the flames of any insurgency, which can then be portrayed as a defense of the nation against outside aggression.

But isn’t there hope for Iraq and Afghanistan because opposition forces are divided and often unpopular? Not really. In Iraq, the United States was able to take advantage of al-Qaeda-in-Iraq’s brutal killing of civilians to divide the Sunni guerrilla movement and bribe the Awakening Councils to battle the group. The problem in Iraq is that as U.S. forces draw down, the now reduced guerrilla war could turn into a civil war among the Sunni, Shi’ite, and Kurdish ethno-sectarian groups. In Afghanistan, the Taliban is unquestionably brutal, but Afghans do regard the United States as a foreign occupier, are suspicious of the U.S. long-term military presence, do not support a surge in U.S. forces, do not think it will defeat the Taliban, and thus support negotiating with the insurgents. In short, the prognosis is not good in either case.

Ivan Eland is Senior Fellow and Director of the Center on Peace & Liberty at The Independent Institute. Dr. Eland is a graduate of Iowa State University and received an M.B.A. in applied economics and Ph.D. in national security policy from George Washington University. He has been Director of Defense Policy Studies at the Cato Institute, and he spent 15 years working for Congress on national security issues, including stints as an investigator for the House Foreign Affairs Committee and Principal Defense Analyst at the Congressional Budget Office. He is author of the books Partitioning for Peace: An Exit Strategy for Iraq, and Recarving Rushmore. This article was published by The Independent Institute.

Counter-Terrorism In India: The Morale Of The Human Element

posted ‎‎Dec 1, 2009 12:28 PM‎‎ by RSD Reports   [ updated ‎‎Dec 1, 2009 12:30 PM‎‎ ]

By B. Raman

The citizens of this country (India) have valid reasons to be concerned over indications of poor morale and a deteriorating esprit de corps in the Mumbai Police and the Research & Analysis Wing (R&AW), our external intelligence agency.

2. One may have the best of technical capabilities and unlimited resources, but if the human element responsible for using them effectively is disgruntled and pulling in different directions, our counter-terrorism machinery runs the danger of  failing  once again as shockingly as it did on 26/11 of last year.

3. Prime Minister Manmohan Singh, Home Minister P.Chidambaram, National Security Adviser M.K.Narayanan and Congress (I) leader Sonia Gandhi show no signs of being the least concerned over the poor state of morale in the Mumbai Police and the R&AW.

4. One does not need to have access to inside information to realise that the staff morale is far from satisfactory in two segments of our counter-terrorism machinery that will have to play an important role in preventing another 26/11.We have had three acts of mass casualty terrorism committed in Mumbai by  Pakistan-based terrorists.

5. To prevent another----either in Mumbai or elsewhere--- we need a revamped and rejuvenated police machinery in Mumbai which will act as a team in detecting and neutralising any new conspiracy. The role of the R&AW, which has the task of monitoring the plans and activities of Pakistan's Inter-Services Intelligence (ISI) and its terrorist creations, will be equally important. If the officers of the Mumbai Police and the R&AW are in a dispirited state of mind, the terrorists from Pakistan and their ISI creators will find the road open for a repeat of 26/11.

6. One has to only read carefully the reports appearing with disturbing frequency in the media to realise that the morale of the human element is in a poor shape. When morale and esprit de corps are poor, the human elements in the counter-terrorism machinery spend their time more in countering each other through the medium of an obliging media than in countering the terrorists.

7. The stories that some senior officers of the Mumbai Police are disseminating about each other and the serious allegations that they are making against each other do not speak of a happy, contented and energetic officer cadre on the go against the terrorists. They speak of the worrisome state of inter-personal relations among  sections of the senior officers.

8.If inter-personal tensions are the cause of the poor morale in the Mumbai police, inter-service tensions are the cause of the malaise in the R&AW. When Indira Gandhi created the R&AW in September 1968, she had desired  that it should not be a carbon copy of the Intelligence Bureau dominated by police officers. It was her wish that the new organisation should recruit its officers from a much wider reservoir in the open market.

9. After a little more than 30 years, those who entered the officer cadre of the organisation from the open market have reached senior levels and rightly aspire to become the head of the organisation. It is a legitimate aspiration. Some of the reported decisions regarding promotions at senior levels have rightly or wrongly created an impression that an attempt is being made to deny them a chance to occupy the chair of the head of the organisation.

10. The Special Task Force For the Revamping of the Intelligence Apparatus headed by G.C.Saxena, former head of the R&AW, had in 2000 recommended that we should study and adopt the good practices of the concept of the intelligence community as it has evolved over the years in the US. This concept looks upon all the intelligence agencies as constituting a single community and all decisions--- whether in respect of human or material resources---- are required to be taken in the over-all interest of the community and the nation as  a whole instead of in the interest of any individual agency of the community.

11. This recommendation was accepted by the Government, but there appears to have been foot-dragging in its implementation. Had the intelligence community concept been followed in decision-making, the kind of inter-service tensions that one finds in the R&AW now might not have been there.

12. The Prime Minister has an important role in the maintenance of morale and efficiency in the intelligence community similar to the role played by the US President. He should personally look into the reasons for the poor morale not only in the R&AW, but also in the Mumbai Police and address them in order to promote team work in our counter-terrorism machinery.

The writer is Additional Secretary (retd.), Cabinet Secretariat, Govt. of India, New Delhi, and, presently, Director, Institute For Topical Studies, Chennai. E-mail: seventyone2@gmail.com

Is "Helping Homeowners" Washingtonspeak For Bailing Out The Banks?

posted ‎‎Dec 1, 2009 10:48 AM‎‎ by RSD Reports

By Dean Baker

Unfortunately, what passes for help to homeowners in Washington might look more like handing out money to banks anywhere else.

The basic story is fairly simple. Tens of millions of homeowners are now underwater. They owe more on their mortgage than the value of their home. The reason is that they bought homes at bubble-inflated prices earlier in the decade. Economists and other policy wonks insisted that housing was a great buy, even as house prices got ever more out-of-line with fundamentals.

Needless to say, the Wall Street crew was eager to cash in on the mania, peddling deceptive mortgages and reselling mortgage-backed securities all over the world. These deceptive mortgages have reset to higher interest rates, leaving many people unable to afford their mortgages. However, even at lower interest rates, homeowners who purchased houses at bubble-inflated prices would find themselves paying far more for their homes than they would to rent a comparable house.

As a result, these homeowners are effectively throwing money away every time they make a mortgage payment. They would be much better off renting the same house and putting the savings in a retirement account or some other form of investment.

The gaps between mortgage payments and rent are often quite large. A study that we put out at the Center for Economic and Policy Research calculated that a family who purchased a small home in Los Angeles near the peak of the bubble could save $1,640 a month by renting rather than owning. This comes to almost $20,000 a year. In Phoenix, a family who purchased a home near the peak of the bubble could save $420 a month or $5,000 a year. In Miami, the savings would be $1,940 a month, more than $23,000 a year.

These homeowners also have no reasonable prospect of ever getting equity in their homes. In many cases they are 20 or 30 percent underwater, possibly owing over $100,000 more than the current value of their home. Many of the people who never saw the housing bubble are arguing that house prices will return to their bubble peaks. No doubt, these people also expect a resurgence of the Internet stocks of the late 90s.

In reality, there continues to be an enormous over-supply of housing as reflected by the record vacancy rate. This huge over-supply is causing nominal rents to actually decline for the first time ever. Once the homebuyers’ tax credit and other extraordinary subsidies end, house prices will resume falling to bring supply and demand into balance.

In this context, it is extremely unlikely that the vast majority of underwater homeowners will ever accumulate a penny in equity. Keeping them in their homes as owners means wasting thousands of dollars a year on excess housing costs only to be forced to arrange a short sale or face a foreclosure at some future point in time.

So, who benefits from “helping homeowners” in this story? Naturally the big beneficiaries are the banks. If the government pays for a mortgage modification where the homeowner is still paying more for the mortgage than they would for rent, then the bank gets a big gift from the government, but the homeowner is still coming out behind.

In some cases the government may pay enough to buy down principle that the homeowner is no longer underwater, but the bulk of this money is a gift to the bank, not the homeowner. If a homeowner is $100k underwater and the government pays the bank $50k to write the loan down to the current value of the house, then the bank has pocketed $50k, while the homeowner is essentially left just breaking even. This is very generous to the bank, but homeowners have nothing to show in this story.

President Obama has proposed putting up $70 billion to help homeowners in this way. This help for homeowners is likely to end up as a larger subsidy to the banks than the rest of the TARP program. The reason is that the rest of the TARP program was a loan. The loans were at below market interest rates – thereby providing a subsidy to the banks – but most of the money is getting paid back.

The original batch of lending to banks was $250 billion. Even if we assume an average interest subsidy of 10 percentage points (a very large subsidy), this still implies that the lending portion of TARP only handed $25 billion to the banks, far less than the $70 billion that we are prepared to hand them under the guise of helping homeowners.

There are simple low-cost ways to help homeowners who were victims of the housing bubble and the lending sharks. The most obvious way would be to give homeowners the right to rent their home at the market price for the next decade. But this would mean hurting the banks rather than giving them taxpayer dollars, and we still don’t talk about hurting banks in Washington, D.C.

Dean Baker is the co-director of the Center for Economic and Policy Research (CEPR). He is the author of Plunder and Blunder: The Rise and Fall of the Bubble Economy.

This column was originally published by the Guardian.

The Indian Community In Myanmar

posted ‎‎Dec 1, 2009 3:17 AM‎‎ by RSD Reports   [ updated ‎‎Dec 1, 2009 3:25 AM‎‎ ]

By Dr. V. Suryanarayan

The Indian Community in Myanmar is one of those forgotten children of Mother India. The tragic status of the community has not been sufficiently brought to light by any institution in India..

The Singhvi Committee Report:

According to the Singhvi Committee Report, the total Indian population in Myanmar is estimated to be 2.9 million, of which 2,500,00 are People of Indian Origin (PIO), 2,000 are Indian citizens, and 400,000 are stateless.1 Regarding the Stateless category, it must be mentioned that all of them are born in Myanmar, they belong to the third or fourth generation. But since they do not have any "documents to prove their citizenship under the Burmese citizenship law of 1982" they are deemed to be "stateless. "2 As T. P. Sreenivasan, former Indian Ambassador to Myanmar has pointed out  "they had no rights either in the land of their origin or in their land of adoption, and neither the two governments seemed concerned. "3 In fact, of the Indian diaspora, Myanmar has the largest number of  "stateless " people.

History:

Historically, like other parts of Southeast Asia, Burma came under the spell of Indian cultural influences. Thanks to priests, princes, poets, and artists, the Indian culture spread into Burma in a big way; the spread of Buddhism directly from India and indirectly through Ceylon profoundly influenced all aspects of Burmese life.

If one leaves aside this glorious chapter in the history of India, the contacts with the outside world, especially during the colonial period, had been accompanied by sorrow, misery, and impoverishment. Imperialist domination made India the pivot of the British Empire and the vast reservoir of manpower were exploited to serve the colonial interests of Britain. Large armies of labourers, soldiers, clerks, and traders migrated to different parts of the Empire to serve the politico-economic interests of Britain. Few money lenders and educated people also went to those countries on their own initiative.

Indigenous and Alien Minorities

An important clue to the understanding of modern Burmese history is to keep in mind the demographic and ethnic diversity in the country. With more than 100 ethnic groups, languages, and dialects, no other country in Southeast Asia displays such a diversity. It is a veritable kaleidoscope. Historically Burma had been the buffer among the neighbouring countries of China, India, and Thailand.

More than 2,000 years of cultural interaction among various races and ethnic groups has resulted in the development of diverse ethnic settlements, residing both in the mountainous frontier zones and lowland plains. Burma has a population of 56 million, the majority Burman number nearly two-thirds. The largest minorities are Shan  "9 per cent and Karen " 7 per cent. Other indigenous minority groups include Mon, Rakhine, Chin, Kachin, Kayan, Danu, Akha, Kokang, Lahu, Rohingyia, Tavoyan, and Wa peoples. They constitute nearly 5 per cent of the population.

Until the annexation of Burma as an integral part of the Indian Empire in 1886, the country had never existed as a unified State. What is more, the British permitted many indigenous groups living in the frontier areas to have their own administrative set up. It was only after independence that the Government made attempts to integrate the various ethnic groups into one nation. The nation-building experiment was based on the language, culture, and religion of the majority Burmans. This policy was resisted by the minority groups, many of them belonging to the Christian faith. The post-independence history of Burma is full of struggles by the minority groups for autonomy and self-determination.

The Chinese and the Indians who migrated to Burma under the protective umbrella of the British rule are considered to be alien minorities, unlike the ethnic groups mentioned before, who are indigenous minorities. It may also be pointed out that the history of Myanmar is riddled with two types of struggles, one fight against the military junta for restoration of democracy and the struggle by the minorities for autonomy and self-determination. The problems of the alien minority groups - Indians and the Chinese - for citizenship and fair treatment have not attracted the attention that they richly deserve.

The Chinese have one advantage, compared to the Indians, though their number is less than that of the Indians, they have far greater economic clout and they own a disproportionate share of the Burmese economy. The good relations between the People's Republic of China (PRC) and the military junta have also led to a situation where their problems are attended to with greater sensitivity by the military rulers. According to media reports, the number of Chinese has been increasing in the country with many of them settling down in the Burmese side of the Sino-Burma border.

Indians not Homogenous

The geographical contiguity, with India sharing both land and maritime boundaries with Burma, facilitated large-scale migration of Indians into Burma. Though the term Indians encompassed all sections of people who migrated from British India - which today consists of India, Pakistan, Bangladesh, and Nepal - the Indians were not a homogenous group. In terms of religion, there were Hindus, Moslems, Sikhs, and Christians. In terms of language, there were Bengalis, Hindi-speaking people from Bihar and Uttar Pradesh, Tamil-, Telugu-, and Malayalam-speaking people from the former Madras Presidency and Punjabi-speaking people from Punjab. They belonged to various caste groups and were also economically stratified, the rich Chettiars, the poor Tamils, and Hindi-speaking people, and the English educated middle classes from all parts of the country.

What must be remembered is that the Burmese perception of Indians depended upon which strata of society various Indian groups occupied in the Burmese society. The Burmese had contempt for the poor Indians, who monopolised jobs such as scavenging, rickshaw pulling, and other menial jobs, which the Burmans themselves were reluctant to do. They hated the Chettiars, who lent money at exorbitant rates and gradually became absentee landlords in Lower Burma.

Social tensions began to build up when the Moslems from Bengal began to marry Burmese women, exploiting the simple traditions of the Burmese. Since Islamic law permitted polygamy, intermarriages became a common practice among the Indian Moslems. What added fuel to the fire was the fact that many of them deserted their wives when they returned to their native villages. The educated Indians, who became doctors, lawyers, teachers, and political leaders, were an object of envy and admiration and there was friendly interaction between the Indian and Burmese intelligentsia. The Burmese nationalist leaders had great admiration for leaders like Gandhiji and Nehru and the educated Indian middle classes represented the best of Indian nationalist traditions.

Indian Influx into Burma

Condemned and despised in their native villages, whether in Bengal, Bihar, United Provinces, and Madras Presidency, the Indian working classes braved the seas, provided the much needed labour to clear the swamps in Lower Burma and malaria-infested jungles and in that process also became the most exploited and vulnerable section of the Indian population. The laissez-faire policies of the British Raj and the xenophobic and ultra-nationalist policies of the governments in independent Burma have contributed to this unprecedented saga of human misery.

As the nationalist movement in Burma began to gather momentum, it also took an anti-Indian dimension. The alienation of vast tracts of agricultural land to Indian Chettiars, the Burmese entry into the labour markets following the depression of the 1930s, which was hitherto an exclusive Indian domain; the opening of the University of Rangoon and consequent turning out of Burmese graduates searching for clerical jobs - all these provided the fertilizer for the growth of anti-Indian sentiments. There were large scale riots against the Indians in the 1930s, due to social, economic, and cultural reasons. The Burmese nationalists wanted freedom not only from the British political domination but they were also equally keen to throw out the yoke of Indian economic stranglehold.

Japanese Occupation

The period of Japanese Occupation, 1942-45, was the darkest period in the history of the Indian community in Burma. The war entirely destroyed the pre-war economy and the commanding position which the Indian community enjoyed. Some Chettiars saw the writing on the wall and even before the war began they repatriated their vast wealth from the country. The majority of Indians suffered untold misery and hardship. Nearly 500,000 Indians left the country and out of these nearly half of them died on the way. Those who were left in Rangoon joined the Indian National Army in large numbers. At a later period, they also supported the Burmese demand for independence.

Introduction Of Citizenship Rules and Land Reforms

The independent Government of Burma introduced large number of progressive measures to give the land back to the tiller. These measures naturally hit the interests of Chettiars very badly. The Standard Rent Act, Tenancy Disposal Act, Agricultural Debt Relief Act, Land Nationalisation Act, Agricultural Bank Act, and Burma Foreigners Act - all these had the cumulative effect of depriving the Chettiars of their enormous wealth. No one, with a tinge of social conscience, could protest against these progressive measures. At the same time, the compensation paid to the landlords was meagre; what is more, the Chettiars found it difficult to repatriate their money into India due to stringent foreign exchange restrictions.

When the new Constitution was promulgated, it was stipulated that those who had been in continuous residence in Burma for eight out of the past ten years immediately preceding war years were eligible for citizenship. But the immediate prospects of stability in the country were so uncertain that most Indians preferred to sit on the fence and did not apply for citizenship.

Adding to the political uncertainty was the assassination of Aung San, who was generally considered to be a great friend of India and the Indian community. Only 400,000 applications were received for citizenship and out of these only 10,000 were granted Burmese citizenship. The rest were treated as aliens. When the Government introduced Burmanisation of public services in the 1950s large number of Indians employed in the railways, water transport, customs, post and telegraph, and public works and other departments were retrenched. In the 1960s under the Burmese Socialist Programme, the government even nationalized petty trade. These measures sounded the death knell of the poorer sections of the Indian community in Burma. To add insult to injury, they were not even allowed to bring back their savings to India. Women were not even allowed to take back their Mangalyasutra. The repatriates also complained of demonetization of currency notes, expropriation of properties, confiscation of valuables, and unimaginable humiliations. According to the Policy Note issued by the Government of Tamil Nadu, from June 1963 onwards, 1,44,353 Burmese repatriates have returned to India.4 What is more tragic, even after the lapse of forty-five years, the compensations due to these people have not been settled.

Annadura's Initiative to Settle Compensation

C.N. Annadurai, who became the Chief Minister of Tamil Nadu when the DMK was voted to power in the 1967 elections, was very concerned about the developments in Burma and was keen to resolve the issue of compensation expeditiously. In a conversation with the author, Thomas Abraham, then Minister Counsellor in the Indian Embassy in Rangoon, recalled his meeting with Annadurai in the Chief Minister's residence in Mambalam. The meeting was arranged through the good offices of common friends. After discussing the pros and cons of the matter, Annadurai wrote a letter to the central government suggesting that India should enter into a long term agreement with Burma for the import of rice and the compensation due to Burmese repatriates could be adjusted in the proposed deal. It may be recalled that during 1967 India was facing an acute crisis in food grains. On his return to Rangoon, Thomas Abraham also made a similar proposal to the Ministry of External Affairs. It is unfortunate, but true, that these concrete proposals did not elicit any favourable response from New Delhi

New Delhi's Hands off Policy Towards The Indian Community in Myanmar

The author had discussions with several Indian diplomats based in Rangoon as to why the issue of the status of the  "stateless people " of Indian origin in Myanmar never figured in the bilateral discussions between the two countries. Ambassador Parthsarathy, who along with J.N. Dixit, played a big role in re-establishing cordial relations with the military junta, informed the author that after establishing good rapport with the military junta, he wanted to take up the question of stateless people and arrive at an amicable solution.

Attempts made by Ambassador T.P. Sreenivasan to kindle interest in the subject turned out to be a futile exercise. In his recently published memoirs, Words, Words, Words: Adventures in Indian Diplomacy, T.P. Sreenivasan has described the consequences of New Delhi's "hands off policy" with regard to the Indian community in Myanmar. Though the Ne Win government expelled the Indian petty traders, the authorities wanted the Indian farmers to stay back to provide continuity in rice cultivation. When Sreenivasan visited them, he found the farmers had become  "totally impoverished. " Their quality of life was  "extremely poor. " Ironically they did not have even  "rice to eat " as the procurement authorities  "lifted their produce wholly. " They had to consume low-quality rice, which the State did not want to procure for export.5

Future of Indian Community in Myanmar

Two contrasting views about the prospects of the Indian community in Myanmar are given below, one by a Burmese bureaucrat and the other from the Singhvi Committee Report. Thet Lwin, who is a member of the Myanmar Academy of Arts and Science, Ministry of Education, Government of Myanmar, in a recent essay on Indians in Myanmar has presented an optimistic view. To quote Thet Lwin,  "Indian presence in Burma is a historical legacy; a section of Myanmar's Indian community is engaged in business while a majority is in agriculture or in menial labour - The younger generation through education is moving fast towards integration into the mainstream Myanmar society. The rise of India has a profound impact on the image-building attempts of overseas Indians. For Myanmar Buddhists, India is the place for pilgrimage, and for those of Indian stock, it is the country of their forefathers. Culture and religious links could be strengthened by promoting tourism. "6

Unlike the above statement, which is couched in the best diplomatic parlance, but which hides the actual reality, the comments made in the Singhvi Committee Report reflects the reality. To quote the Singhvi Committee Report, the Indians are  "fairly impoverished in Myanmar, " the more prosperous elements having left, following waves of nationalization and other measures which hurt their livelihood. The educational scene is pathetic. At one time, the faculty and alumni of the University of Rangoon comprised mainly of Indians. Today,  "there are hardly any Indian students in the Universities, " and results in a virtual extinction of a professional class. The main reason was that  "between 1964 and 1988, Indians were denied admission to the Universities and professional courses. "7

Conclusion

In early January 2010, the Pravasi Bharatiya Divas will be celebrated with great pomp and splendour. The ministers of the Central Government, the concerned government officials, and the assembled delegates will harp on the necessity to speed up the administrative procedures relating to Overseas Indian citizenship. In June 2010, the DMK government in Tamil Nadu will be organizing another equally important conference in Coimbatore on Tamil as a classical language. True to Dravidian traditions, Chief Minister Karunanidhi and his loyal lieutenants will sing paeans of praise about the greatness of Tamil Language and how Tamil culture has spread and enriched the traditions of several countries in the world. Will the delegates in these two conferences have the time to discuss about the abject living conditions of the Indian community in Myanmar, many of them Tamil-speaking people of Indian Origin? Unlikely, because New Delhi and Tamil Nadu are more keen to provide legitimacy to the authoritarian government in Myanmar. Naturally they will not like to focus on embarrassing issues, which impinge upon bilateral relations such as the plight of the unfortunate children of Mother India.

Dr. V. Suryanarayan is Senior Professor (Retd), Centre for South and Southeast Asian Studies, University of Madras. He can be reached at e-mail suryageeth@sify.com

NOTES 

1. Singhvi Committee Report,  pp. xvii-xx. 

2. T.P. Sreenivasan, Words, Words, Words: Adventures in Indian Diplomacy (New Delhi: Pearson Longman, 2008), p. 198. 

3. Ibid. 

4. Ibid. 

5. Sreenivasan, Words, Words, Words, pp. 195-202. 

6. Thet Lwin, "Indians in Myanmar," K. Kesavapani, A. Mani, and P. Ramasamy, Eds., Rising India and Indian Communities in East Asia (Singapore: ISEAS, 2008), pp. 485-98. 

7. Singhvi Committee Report, pp. 259-62.

Hamlet As War President

posted ‎‎Dec 1, 2009 3:02 AM‎‎ by RSD Reports   [ updated ‎‎Dec 1, 2009 3:08 AM‎‎ ]

By Patrick J. Buchanan

Led by a conflicted president of a divided party and nation, America is deepening her involvement in a war in its ninth year with no end in sight.

Only one parallel to Barack Obama’s troop decision comes to mind: the 2007 decision by George W. Bush to ignore the Baker Commission and put Gen. David Petraeus in command of a “surge” of 30,000 troops into Iraq.

That surge succeeded. Baghdad was largely pacified. The Sunni of Anbar, heart of the resistance, accepted Petraeus’ offer of cash and a role in the new Iraq. Together, Americans and Sunni began to eradicate al-Qaida. In July, the surge ended and U.S. troops withdrew from the cities.

In August and October, however, the Finance, Justice and Foreign ministries were bombed. The Sons of Iraq now say the Shia government reneged on its pledge to pay their wages and bring them into the army.

Jockeying in parliament for the inside track to power in January’s elections may force a postponement of the elections, and of the U.S. timetable for withdrawal. Kurds and Arabs are battling over Kirkuk. Iraqis seem to be going back to fighting one another.

What hope can there be then for a U.S. troop surge in Afghanistan, a larger, wilder, less accessible, more backward country, whose regime is less competent and more corrupt than that in Iraq?

Conservative columnist Tony Blankley, who supported the Iraq war and surge, has come out against more troops in Afghanistan. His reasoning: Obama will be sending many hundreds of young Americans to their deaths and thousands to be wounded in a war about which he himself has doubts.

While it may speak well of Obama as a man that he has reflected, agonized, debated within himself and conducted nine war counsels with scores of advisers before acceding to Gen. McChrystal’s request, what does this say of him as commander in chief?

Whatever one may say against George W. Bush, he was decisive. As was James K. Polk when he sent Winfield Scott to take Mexico City. As was Abraham Lincoln when he congratulated Gen. Sherman on his barbarous March to the Sea. As was Harry Truman, who ordered the dropping of an atom bomb to jolt Tokyo into accepting unconditional surrender.

One may condemn the wars these president fought. One may deplore their tactics. But they and the most successful American generals — Stonewall Jackson, Ulysses S. Grant, Douglas MacArthur, George Patton — were not Hamlets. They did not agonize over why they were fighting or whether it was worth it.

How does a president lead a nation into a war where he is not wholly and heartily committed to victory and from which, say his aides, he is even now planning the earliest possible exit?

When Dwight Eisenhower took office, he concluded that the price of uniting Korea under a pro-U.S. government meant years more of war and scores of thousands more U.S. dead. He decided on an armistice. In six months, the war was over.

Ike was as decisive as Obama is diffident.

From tapes of his conversations with Sen. Richard Russell, LBJ agonized over Vietnam as early as 1964. He worried about the U.S. casualties and whether we could prevail in a country of little interest to him and of no vital strategic interest to the United States.

Out of fear that Richard Nixon and Barry Goldwater would call him the first president to lose a war, Johnson plunged in. And rather than win swiftly and brutally as we had with a mighty Japanese Empire, LBJ fought Vietnam as the conflicted war president he was, babbling on about building “a Great Society on the Mekong.”

One senses Obama is escalating for the same reason: He is not so much exhilarated by the prospect of victory and what it will mean as he is fearful of what a Taliban triumph and U.S. defeat would mean for America — and him.

And he is right to be. A U.S. withdrawal leading to a Taliban triumph would electrify jihadists from Marrakech to Mindanao and mark a milestone in the long retreat of American power. Pakistan, having cast its lot with us, would be in mortal peril. NATO, humiliated in its first war, would become more of a hollow shell than it already is.

To prevent this, Obama plans to send tens of thousands more U.S. troops to hold off a resurgent Taliban, even as he plans for their eventual withdrawal.

The United States is today led by a commander in chief who does not believe military victory is possible, who is not sure this war should be fought and who has a timetable in his own mind as to when to draw down our troops. And we face a Taliban that, after eight years of pounding, is stronger than ever, and believes God is on its side and its victory is assured.

Who do we think is ultimately going to prevail?

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