Austerity aids who?

...Governments run by people who are either rich or supported by rich, have only the best interest of the rich in their minds...

In my previous post, I had argued that austerity would only lead to further austerity as it shrinks the economy. Keynesian Theory of economics is a classical theory that every student of economics would come across. Then, why are the EU nations and IMF administering the hard-pill of austerity on Greece. Why UK administers austerity when it has only increased poverty? Why is Canada administering austerity, when it claims to be well-off in the media? Why is US administering austerity? Some one should be benefitted by it, right? Who gets benefitted by austerity and who loses?

Runners first

During the European Debt Crisis in the later part of 2008, many European countries assumed the indebtedness of their banks to prevent them from failing. This left many of the European countries in debt to the extent they were not able to pay their debts without assistance from third parties such as EFSF (European Financial Stability Facility), ECB (European Central Bank) and IMF (International Monetary fund). Since many of these organizations require austerity as a part of their bail-out programs, countries are forced to impose austerity measures. 

For example, Ireland imposed austerity measures when it assumed the debts of its private sector banks and had to be assisted by the EU and IMF. While Ireland eventually recovered and ended its austerity in the 2015 budget, the impact of austerity was substantial. Property values collapsed making people pay mortgage more than what their property worth.  The economy shrunk resulting in widespread employment which rose from 4.2% in 2007 to 14.6% in 2012. Ireland also saw huge emigration with around 34500 people leaving Ireland between 2009 and 2010. However, the impact of these measures were felt most by those who could not bear it. 

Similarly, austerity measures imposed by UK due to its bank bail-outs were also affecting the poorest population who could hardly bear the impacts. As of 2014, close to a quarter of the UK population are in poverty. Unemployment rate rose from around 5.7% in 2007 to over 8% in 2012. However, since 2012 unemployment rate has shown gradual decrease. However the austerity was again found to affect the poorest of population. 

Though here two countries are taken as an example, we could make a point that the poorest of poor are those who'd be affected the most, the losers to austerity. This is also because the poor are the biggest consumer of public services, which takes the major hit due to spending cuts. If people tend to commit suicide  then austerity is effectively eliminating poor instead of poverty. 

Winners next

Naturally, those who hold and control government debts gains the most. When the governments bailed the banks, the investors benefitted from the austerity as their assets grew while the poor suffered as it is their jobs and earnings which was taken to pay for bailing out the banks. Naturally, investors and the wealthy were the big winners. 

Further, when the governments cuts its services and shrinks its work force, the private sectors see a increase in the supply of labor. Most of these labor could be acquired at low cost, particularly for short-term. Temporary workers are neither paid on par with the permanent workers nor have the benefits of the latter, in many countries. Further, their employees could be forced to put on more hours at work with the threat of lay-off. In other words, austerity helps big corporations and the wealthy to exploit the labor of the poor. 

Naturally, the rich-poor divide has grown sharply since 2007 with many billionaires seeing large increase in their wealth. 

Conclusion

Clearly, Austerity aids the rich, corporations and the investors...

There are many studies hailing the rich and the reason for the growth of their wealth as due to their wise investments. However, these studies/articles carefully "forget" to mention that poor and middle class don't have enough disposable income to invest, in the first place. Further, while the rich may have their investment knowledge transferred from their parents or bought, the poor and middle class are left in the dark. 

Further, I believe the system itself is designed to aid the investors. While I cannot say for every country, I could about India and Canada. In India, the rich has the money to buy the Govt. officials and vital information to make informed decisions on their investment, though illegal. In Canada, the start-up visa program, I believe, was designed with the interest of the investors (venture-capitalists) in mind. For example, it wouldn't include crowd-sourcing opportunities to raise capital. The system provides little opportunities for immigrant researchers for entrepreneurial pursuits though, those pursuits could create more jobs for Canadians... Rich again has an opportunity to get a investor visa or buy a business...

This makes me wonder, if the Governments real intentions are to help its people or only a section of its population. I'm afraid, the Governments run by people who are either rich or supported by rich, have only the best interest of the rich in their minds. However, what I don't understand is why people don't realize this and why they are falling prey to politicians' lies...

Grexit: World may suffer with Greece

Currently, the world is going nuts over the Greek dilemma. The surprising move by the President of Greece, Mr. Alexis Tsipras to call for a referendum on EU bailout conditions, have stumped many of the EU's leaders that they have started to openly vilify Mr. Alexis Tsipras. While the world would know Greece's decision by the start of next week, in the mean time Mr. Tsipras has closed the banks and stock-exchange to prevent financial collapse. 

Greece's bold move

In my previous post, I had argued that austerity is likely to lead a country into a vicious cycle. As austerity tends to reduce disposable income, people may tend to be frugal which could further aggravate the problem. Austerity is also likely to cause unsurmountable hardships to the citizens of the nation. Hence, I regard Mr. Tsipras move for a referendum bold and creative. Apparently, the move have stumped the EU leaders' expectation that Mr. Tsipras could be pressured to submission as is apparent by their open personal attacks on him. If anything, he might be on the right track.

Greece is not without precedent. Many countries have defaulted and have recovered from the financial crisis in the wake of such default to become strong economies. In case, on July 5th, Greece rejects EU's proposal it may its exit from EU. In such case, Greece is at liberty to issue its own currency. Though the currency might start on par with Euro, it would soon be devalued which may increase inflation sharply. However, such devaluation may also turn out to be a boon as it could boost exports there by setting Greece on its path to recovery. The period of intense economic hardships due to inflation would have severe effects on the lives of the people. However, I hardly doubt if the situation would be any different if Greece accepts EU's proposal.

However, Greece should guard itself against continuing to commit the mistakes that had led it into the crisis - corruption and tax evasion. If the tax is not friendly or is felt unjustified, it is likely to encourage corruption and tax evasion. With increasing tax evasion, the country is unlikely to increase its revenue, which is critical for its recovery from the debt-trap.

Greece Exist cost more to EU

I believe Greece's exist from EU is likely to affect the other nations in EU more than the Greece itself. Greece's exit would mean a fracture in the political union of Europe. It is likely that other countries like Ireland and Spain may follow suit plunging Europe into financial crisis, affecting markets and resulting in financial instability whose effects would be felt all over the world. Euro would lose its value plunging EU into high inflation.

A fractured EU would likely see EU's influence diminished in the World politics. Greece is already trying to woo Russia to invest. In such case, the NATO allies may not be particularly comfortable knowing the growing influence of Russia in their backyard. In addition, China is also buying off Greece's debts, which would likely increase China's influence in the region.

Greece's exit at this juncture would also be inopportune as UK is in the process of conducting a referendum to decide whether to continue with EU or not. In case of Greece's exit, the anti-EU parties' claims could find support, which may further weaken EU.

Hence, Greece's tragedy is likely a EU's tragedy and may likely to lead to many set-backs, economic and strategic. I'm sure the EU leaders are not oblivious to the reality but their dogged insistent ofn austerity makes anyone wonder the reason behind their insistence...

In any case, the world would know Greece's verdict by Sunday evening...

India cries foul in Pakistan's glee

"...had the people of India refused to buy Chinese products/services for one day, China would have learnt its lesson...!"

For the last couple of days, Indian media is going crazy over China blocking India's proposal against Zakhir-ur-Rehman Lakhvi the terror mastermind of 26/11 massacre. However, it is neither new nor in the interest of China's grand strategy to help India in the issue of Pakistan-sponsored-terrorism.

China's act is nothing new

In fact China is consistently blocking India's attempt to bring Pakistan's state sponsored terrorism for quite sometime. China did the same in the case of Syed Salahuddin (United Jihad Council), when China put India's proposal on a "Technical hold", effectively stalling the process. Since December 2014, it seems India had filed three separate proposals with UN, each of which has been stalled by China. The discussion on Syed Salahuddin was even stalled for long time, thanks to China. Similarly, China had blocked India's proposals against Maulana Masood Ashar, Abdur Rehman Makki and Azam Cheema in 2010.

It is not just with the proposals on terrorism. China was against US-India nuclear deal as well and has been consistently sabotaging India's bid to UN Security Council. It was also consistently blocking India's entry into the Nuclear Supplier Group and was trying to push Pakistan, in the name of 'parity' with utter disregard to Pakistan's nuclear proliferation history. 

Hence, it could be safely said that China blocking India's proposal on Lakhvi is nothing new but was consistent with their unstated official policy. In other words, China is India's foe in the grab of a "friend". Though many in India would agree, those clamouring for a few bucks at the cost of the national security wouldn't and the government of India is still spineless to call spade a spade.

Pakistan's all-weather friend

In my previous post, I had argued that Pakistan plays a vital role in China's grand strategy, as spoiler state of the region and as a counter-balance for India. As long as India concerned with the Pakieconomic assistance to nuclear blue prints?

stan sponsored terrorism, it wouldn't look to challenge China in the global politics - at least thats what China expects. To add value to the expectation, India is extremely occupied with Pakistan than the source of the threat. Isn't this the reason, it is carefully harbouring Pakistan, from providing

There is also another dimensions, why China wouldn't go against Pakistan. Pakistan didn't hesitate to sabotage US operations and supply routes through Pakistan, even after accepting billions in aid, ostensibly against US' drone strikes. However, this is also viewed as the result of growing India-US relations in nuclear energy and counter-terrorism. Dwadar Port and the road through Karakoram range is vital to China's "String of pearl" strategy, aimed at encircling India. Further, Pakistan is one of the staunch supporter of China's "Silk Road" project. If China votes in favour of India, it is highly likely that it would face break-down in relation similar to US. While US had no "string of pearls", China has and it cannot afford to lose its advantage after spending billions for the purpose. 

India Cries foul

Yes, history stands as a proof for India's credentials to regional and world peace. However sometimes, India should look beyond its own self-inflicted restraints. Further, with a UNSC a foe and a supporter of the nations hostile to India's interest, India's efforts are next to nothing but just "optics" to fool people. Doesn't India know that China is going to block its proposals? Had it not done before? So waste time in doing the same and waste taxpayer's money? Until this date, India has not enacted any acts to counter China or make China rethink its actions. This shows nothing but the political-strategic ineptitude of our politicians and bureaucracy. "Linear" thinking may be great for bureaucracy but wouldn't work in power-play.

I believe India's state, with respect to terrorism, is a consequence of the ill-fated and ill-advised move by Mr. I. K. Gujral to disband India's covert operational capabilities in Pakistan. Had, the tough speaking Mr. Modi's Government determined in bringing the perpetrators to books, he would have re-instituted India's covert operational capabilities. With covert capabilities, these masterminds could have been eliminated. Similarly, had India spent some time in developing technologies, India could easily pinpoint and eliminate its hostile targets within Pakistan with perfect deniability. However, I don't see any sincerity on the part of Mr. Modi or his government, in this direction. Though, Mr. Modi is trying to emulate China is other aspects, he fails to emulate it in the most important one - reversing brain drain and bring technologies and know hows from other nations...

I understand that India, as a nation may not be in position to impose sanctions against Chinese business interests due to it being a part of WTO. However, what makes the people to renounce Chinese products? In response, to China's act in the US, had the people of India refused to buy Chinese products/services for one day, China would have learnt its lesson...!

West drives Russia...

US, EU  and NATO drives Russia to China and India is oblivious to the consequences

Russia has been a strategic friend and ally of India for the past few decades. However, Russia's policy maneuvers in the last 5 years seems to show an increasing trend towards China and Pakistan. While many Indian analysts term these moves a mistake, I think that these are strategic moves with multiple messages. This article views some of the policy maneuvers of Russia and the context in which they are made.

Sino-Russian Relations in the context:

Russia and China have been gradually building relations since the 1990s. However, the following policy maneuvers by Russia seems more of a consequences of geo-politics than of friendship...

2004 Complementary Agreement

Since the 1990s the Sino-Russia border situations has been steadily improving, which culminated in the transfer of land by Russia to China in 2004, with the complementary agreement. With the transfer of the islands, the border dispute between the two countries was resolved. This could enable them to pursue common strategic goals and deepen their economic ties.

Though, from the surface, it may seem like Russia capitulating to China, it is not the case when this act is viewed from a global perspective. During 2004, the West and Russia were trying to assert their influence in Ukraine. The joining of some former Soviet States in EU might have not gone well with Russia. In this context, by ceding some land that is disputed to China, Russia turned a potential foe into a friend. This is also a signal by Russia for a multi-polar world. US should have noted the signal, as such moves not only rises China's stature but also its aspirations, potentially making the Asia-pacific open to Chinese brinkmanship and adventurism.

India, should also have noted this Russian move as it has ominous warnings to India. Though China's military and economic capabilities are awesome, China is still far behind Russia in military technologies. The alliance would mean that China is now capable of acquiring more advanced weaponry for potential use against India and other nations with which it has hostilities over territories. China, being a "blood brother" of Pakistan is likely to influence Russia to end its arms embargo against Pakistan. Further, the boost in China's economy is likely to increase its defense spending. None of the mentioned situations bode well for India but I'm not sure how India chose to be blind to the developments. 

30 Year Gas deal

The long meddling of  West and Russia in Ukraine led to the break up of Crimea, which was successfully annexed to Russia on 18 March, 2014. Following which, the West (NATO and EU) were up in arms with a slew of economic sanctions against Russia. I believe the 30 year Gas deal with China is a consequence of these sanctions, as the deal followed the first two rounds of economic sanctions against Russia - its enterprises and individuals. In other words, the West's activities not only split Ukraine and pushed it into a civil war but also helped China to diversify its energy routes. With the supply of Russian oil, China is less dependent on its oil routes through Malacca strait, a strategic choke point. Further, the boost to China's economy is likely to affect the security and territorial interests of countries in the Asia pacific.

In this context, it should also be noted that Russia's proposal to bypass Ukraine as its main oil transit hub, which is likely to affect Ukraine's economy adversely and have far flung implications.

Personally, I think India missed an opportunity both in terms of strategy and solidarity. India could have struck a similar deal with Russia which would have provided a boost to Indian economy. However, India has been increasingly showing timidity and ineptitude in such affairs for quite some time (as in the case of Iran). I believe, the reason behind India's reluctance to make use of the opportunity is due to its intentions to purchase "not so much needed" nuclear reactors from Western nations. Please don't mistake me. India very much needs power but India, over the years, have developed capabilities to build its own nuclear reactors. At this juncture, what India needed most is to further develop its capabilities - which could be through attracting Indian diaspora as well as help from friends, as Chinese did. However, the 'turf-dom' politics, corruption, nepotism, etc., is a turn-away for most of the talents. India is also not serious in making its own facilities efficient. India also forgot that it was Russia which helped build its first capabilities. Hence, it is wonderful opportunity wasted. 

End of Arms Embargo to Pakistan

As I had mentioned earlier, China's close association with Russia is likely to influence the latter to end its arms embargo against Pakistan, a country which uses terrorism as its state-policy. However, the tipping point, I believe is the MMRCA deal to France in which Russia was one of the contender. In this context, the action of Russia seems like a punitive action for India's decision to give the deal to the West with which it is in conflict. Further, it is also a demonstration that Russia is not solely dependent on Indian market for its defense products. Though MiG-35 was cheaper considerably than Rafale, it was also inferior to Rafale in range and combat radius. However MiG-35 is faster than Rafale and had a better climb rate. Rafale is also consider among the top 10 dog-fighters. In addition, Rafale is tested and found to suit army needs based on other non-combative factors too. So, though it is in Indian interest to choose Rafale, it is likely that Russia had felt betrayed.

The economic prospect in the MMRCA deal is likely to make any country, rich or poor, drool. In this context, it may be a human nature to feel betrayed. However, India was both inept and myopic here. It could have gradually tried to acquire the crafts, instead of giving the total number of acquisitions in a "winner-takes-all" fashion. If at all, the 1998 sanctions against India, should have served as a warning. Further, by gradual increase, India is at a better position to acquire the latest and best. In any case, the deal is literally dead now, after many delays and cost overruns, portraying India's indecisiveness and ineptitude in strategic acquisitions.  This is much ado about nothing...

West drives East

In this context, some believe that Russia has diminished its stature and strategic sheen by "bear-hugging" with China. However, I believe that Russia's actions are more of its response to International events that has direct bearing to its security and economy.

Some times it is hard for me to shake the feeling whether the West (US, EU and NATO) is more intent on erasing Russia from the map instead of achieving world peace. If such is the case, it wouldn't surprise me given the cold-war attitude of the politicians in US and NATO. This attitude is against the very democratic principles, that the West supposedly champion (Isn't tolerance a core principle of democracy?). However, with the world dynamics changing, EU is no more the sole power wielder next to US. China is rising, belligerently. Unlike the erstwhile Soviet Union, it is more calculative and vicious. The world economy is suffering and the terrorism, ISIS, is at large. In this context, I believe the entire Ukraine episode could (should) have been avoided, had the West been a bit more sensitive to Russian sentiments (US was not particularly accommodative to communist ideals in its backyard, so why should Russia?!). With the events on the contrary, I believe the West drove Russia into China's embrace, a more aggressive opponent.

India would do well to have its interests as priority and develop ability to identify its friends from foes. As the rise of China would have a immediate bearing on its security and territorial integrity. Mr. Modi, should realize that boasting and Hindutva, is not going to make India rise to a super-power status if it makes a habit of missing strategic opportunities and continues show immaturity and inefficiently in building its capabilities.

It is not late for India and the West to realign their strategic priorities with a view on the future. 

Dragon's Rise: Could it be Caged?

For the past few decades, China is developing rapidly both in terms of economy and military prowess. However, China's rise is studied with caution by many countries while looked-upon in fear by the others. China's attempt to allay those fear is the propaganda of "China's peaceful rise" by Mr. Hu, the president of China from 2003 to 2013. Unfortunately, I believe many of the countries in China's periphery might buy that. In my previous post, I argued that the lack of leadership is aiding China's hegemony in the region. However, what are the cards China hold? What could be the possible implications of China's rise to the region? Could it be contained? - Let us See...

China's Tactics

Benevolence or Bait

China is now a member of many important international organizations and financial institutions. In its global aspirations it has extended credit lines to many nations. However, these financial assistance seem to come at a great cost to the debtor. These financial benevolence seems to become a debt trap forcing countries to work of Chinese interests instead of their own. Usually, China and Chinese companies benefit from these relations more than the debtor itself.

As case in point is Sri Lanka. When Sri Lanka was reprimanded by entire world for its excess and war crimes during the last phase of the Elam War, China became highly benevolent to Sri Lanka. Mr. Rajapaska trying to play the China card against India when India didn't support Sri Lanka in UNHRC resolution, neglecting the warnings of his opposition.  It seems part of the nation has been mortgaged to China. The new president, Mr. Sirisena, was not shy when he said "foreigners are stealing his nation" in his election manifesto. After his successful election as the president of Sri Lanka, he announced that he'd be reviewing the terms of Chinese loans to Sri Lanka. However, when he was visiting China after coming to power, it seems that he was forced by China to look away. Unfortunately, Sri Lanka didn't have much room to maneuver. 

Another case in point is Africa, where China has committed billions in aid. However, what is not well publicized is that in the same period (in the last 10 years) more than a million Chinese have settled in these regions, capturing every employment opportunities. 

Currently many countries are receiving financial assistance from China and are getting caught in its trap...!  

"Old Rum in New Bottle"

Another diplomatic route that China pursues is the "One Road One  Belt" project, which is a revival of the ancient (206 BC - 220 BC) "Silk Road". However, unlike the ancient silk road, the proposed project has security, strategic and political implications, though China is trying hard to sell its economic credentials. India for one seeing this project as a part of "String of Pearl" strategy to encircle it. China isn't helping either, by setting up suspicious listening towers in Sri Lanka.  Similarly, the Gwadar Port and the Karakoram Highway development by Chinese are watched with caution in India. US and Russia who should be concerned with the project. The revived silk route also will diversify China's supply routes thereby reduce its dependence on Malacca Strait, a possible choke point.

From the military perspective, it has a tremendous potential for China to mobilize its troops. Most of China's ICBMs and nuclear stockpile are mobile. In a case of confrontation, the road increases the probability of survival of China's stockpile for retaliatory action. If China is the offender, as could be the case in South Asia, it would ensure the destruction of China's opponents. No wonder countries with history of nuclear proliferation are the most interested in the project.  

Spoilers: Pakistan and North Korea

Source: IMF

Cultivating and harnessing these two spoilers of the regions is vital to the China's aspirations. While China commits a lot of financial aid to Pakistan, most of it are loans that could inevitably draw Pakistan into a debt-trap. Further, the benevolence of China is mostly in handing over its old war machinery such as submarines, missiles and nuclear technology, while Pakistan is suffering from militancy and poor economy. If I'm to guess, China wants Pakistan to be poor so that it can control and use it to counter India. Pakistan is stupid and arrogant, as is India,  for failing to look into the Chinese schemes. Pakistan is more than happy to give a piece of land to China that would ensure its unending sufferings than settle it with India, which is only looked up on as a soft-power.

Similarly in the Pacific, China is cultivating North Korea by arming it with nuclear and missile technologies (through Pakistan). It also has a similarity. Like Pakistan, North Korea is cultivated against Japan and US forces in the region. Having obtained reputation for being unpredictable and for having the least concern to the well being of its citizens, North Korea is full open to China to be prodded to attack on any US or Japanese installations, which would give China an edge in the region.

Interestingly, these two nations are reeling in poverty and both need not be actually asked to attack any of the countries in the region. For example, if Pakistan feels necessary or think it has an edge, it would attack India on its own volition and with the Chinese nuclear submarines the risk of nuclear clash has just gone up. Similarly, North Korea, would have no apprehensions to attack South Korea. That is the reason, I called these countries as "Spoilers" of the region. Further, US is more happy to engage with Pakistan, a spoiler state that survives with US aids but consider itself closer to China, than to help India or other countries for that matter, which have had no aggression or proliferation history. As a matter of fact, the only two choices US may have in the region are India and Japan...neither of them are capable of taking on China by themselves.

Fear

I have argued in my previous post that China wants to keep the border issue unsettled with India so as to extract financial gains that would inevitably finds its way to China's strategy for world dominance. But such pressure points has some strategic elements too. For example, any attempt of India to help Tibetan refugees could be chastised by China and India scarred by its humiliation in 1962 would try to "consider" China's sensitivities. 

Another incident that comes to mind is China's coercion of Vietnam against internationalizing the South China sea issue. In fact, though many countries are not happy with China constructing artificial islands in the South China Sea, most remains mute spectators even when their own domain is encroached fearing China's military and economic clout.

Philippines is no stranger to China's coercion either. 

Even the Asian quadrilateral to be formed between US, India, Japan and Australia fizzled away as the countries didn't want to be seen as block against China - yielding to Chinese sentiments. 

US: From China's perspective

Source: IMF

US is undoubtedly the most powerful country in the world in both economy and military terms. However, since 2008 US's economy and the economy of many of the Western countries have slowed down considerably. On the other hand, China's economy didn't suffer much due to recession and is strong even after that. Many of the US industries are dependent on China's exports of raw materials. US companies like Wal-Mart are also great importer of China's cheaper goods. This scenario could be seen as two economies entangled, though the countries themselves have diverging visions.

US' commitments in the Middle East, had emboldened China's regional and global brinkmanship and coercion. Much of the woes of US in the Middle East are its own doing. By destroying Libya and destabilizing Syria US has only succeeded in creating ISIS, much worse than Al-Qaeda itself. Hence, China is confident that US would give a free reign to its ambitions in South Asia. In fact, the US policy was ambiguous for a very long time. Even after the announcement of Asia pivot, there many lobbies that try to pull US back from Asia.

Chinese thinking do hold some credence as a confrontation with China is likely to send US economy in a nose drive, and currently US may not be in a position to absorb the economic fall-outs, having spent a lot in the Middle East. The best US could do is "optics", pretend it is serious in stopping China and provide some reassurance but nothing more than that. That's exactly, what the much hyped US' Asia re-balancing strategy is all about.

The Chinese are aware of this... the US is aware of this... but, for those this matters, is nothing but oblivious!

Possible impacts of China's uncontrolled rise

China's rise has serious socio, economic and strategic ramifications. Some of the possible impacts that could happen are:

• Most likely it would start with the withering away of US influence in the region, if not the entire world. 
• Japan which has a serious history with China would likely suffer the most - loss of territories, destruction of economy, etc. 
• Given Japan-China history and China's apathy to human right abuses, I wouldn't be surprised if the resulting poverty and mafia lead to increase in human trafficking and slave trade. The same result with other countries such as Vietnam, Philippines, etc as it is now happening... 
• Could likely spell a doom for South Korea as well. Given the close relationship between N. Korea and China, especially if China considers S. Korea a challenge to its communist ideologies and a competitor in economy. 
• India will lose its entire North Eastern region to China and secessionist forces and J&K to Pakistan. 
• India would also economically suffer, given China's penchant to dictate terms in any negotiations.
• Other countries may lose their economic well-beings and Communists ideologies will find a renewal.

Of course, the impact of the China's rise would not be felt immediately. As the proverbial frog, the countries would only realize when it is already too late. Think about the state of Tibetans in China now, that is pretty much the state the countries in the region would be after China's ascent. This may seem like a pretty pessimistic attitude towards China, but I don't have proof that convince me otherwise...!

Containing China

The Asia Pivot strategy of US is to deploy forward forces in the region to contain China. This is based on the assumption, that lack of US entrenchment in the region is what causing China's brinkmanship in the region and China is dependent on US for its growth. However, it is not entirely true. So, if China is to be contained:

• US, Japan, and other trading partners of China need to untangle their economies from China. Though this may not completely stop China, it would at least make China to rethink its conduct in the region and the world
• India is behind China by decades. Given the amount of nepotism, and corruption (I know some would disagree but many from South and East in the Hindi belt would agree...!) in India combined with red-tape, myopic attitude and racism, it is extremely difficult for India to increase its capabilities in any near future. The best India could do at the moment is to reinstate its covert operational capabilities.
• India should try and break the Chinese "String of Pearl" strategy while US should concentrate on the "One Road One Belt" strategy.
• International trade laws and understanding may prevent the nations from making anti-dumping duties. However, since the Govts. are vested in the interest and well-being of its citizens, they could try and ensure that the interest of their citizens are met. A simple rule India that all products imported should be biodegradable, and free of PBA or lead would greatly reduce the import of China goods. Further, India could make the importer pay for those tests and hold the importer accountable for any violations. This is would greatly increase the cost of import and could encourage the local industries to prime up their supplies. 
• Formation of  "SATO" or sort of: None of the countries in the region could counter China by itself. US, given its commitments in middle East may not be able to completely devote his muscles or money in the region. Hence, the need to form a block such as NATO or EU for the region, in the region and without China (and of course its proxies) is a need of the hour. Such a block would have benefits beyond the region.
• Most importantly, the countries together should find a way to counter Chinese espionage.

In simple words, some one should take the brave step or everyone is sure to perish...!

India on path to another humiliation?

For the past few days, the Indian Govt. is embarking on jingoistic propaganda about the success of operation in Myanmar. As had mentioned in my previous post, whenever there is a big news in the media we have to look into things that the news what to distract us from. This may not be far from the truth. 

China's Encroachments

Deccan Herald reported a face-off between China's People Liberation Army (PLA) and Indian troops in the Burtese and Depsang regions of north Ladakh on March 20 and March 28, 2015. This is the latest of the incursions that happened only a few days before the visit of Mr. Modi to China. A similar incursion occurred in the Chumar region last year when Mr. Xi Jinping was visiting Mr. Modi. However, this is nothing new. Medias, citing department of defense response to parliament, claims over a 1278 transgressions/incursions of PLA into the Indian Line of Actual Control (LAC). However, Mr. Parrikar (Defense Minister of India), maintains that Chinese troops entering Indian soil are transgressions not incursions. Similar denials were also aired during the last UPA regimes. However, analysts and experts note at least 15 major incursions of PLA into India. They believe that China is slowly eating into Indian territory through "salami slicing", for which India has not yet developed an effective strategy.  For how long the Indian Govt., would try to sweep these incursions under the carpet, is anyone's guess... 

Two-Front War

China calls Pakistan its "Iron Friend" and Pakistan views China as its all-weather friend. Since 1962, China hasn't gone to war with any country. However, it often flexes its military muscles to subdue smaller countries. China may not enter into war for its allies as was demonstrated during the Kargil war of 1999. However, the same cannot be said about Pakistan. Pakistan, is conventionally unmatched in its military prowess against India. Hence, it is unlikely that it would pass an opportunity should it show up. 

Though China is adopting "salami slicing" to encroach on Indian territories it is only a matter of time before the Indian public notices, when the Govt. would be forced by public pressure to defend its territories. In such conditions, Pakistan would likely capitalize on the situation as majority of the Indian troops would be deployed against China leaving India's Western regions vulnerable. The objective of the "Two-front war" doctrine to develop and deploy armed forces to simultaneously counter attacks on multiple fronts (East and West). 

Systematic weakening of India's war capabilities

• Weakening the Mountain Corps

          The Mountain corps officially christened as 17 Corps was raised particularly to counter China-threat. However, recently, the Govt. has decided to reduce the strength of 17 Corps just before Mr. Modi's visit to China making one to think if this step was some sort of gift to China. If it is so, then this could only be construed as ceding Indian regions over to China.   

• Clipping off the Air Force

          The sanctioned size of Indian Air Force is 39.5 squadrons with a healthy strength of about 44 squadrons. However, this strength was achieved only in the mid 1980s. This led to the MMRCA competition to buy 126 aircrafts from the winner of the competition (Rafale). However, this program is cut short, in the name of fund crunch. 

• Soldiers to fight with Stones and Sticks

      In May 2015, the press release by the CAG slammed the Army Head Quarters for acquiring ammunitions based on 'Minimum Acceptable Risk Level' (MARL), which corresponds to 20 days of intense period. This is in total disregard to authorized 'War Wastage Reserve' i.e. 40 days of intense period. It adds that MARL guidelines were also disregarded and 50% of the 175 types of ammunitions are "critical" i.e., could last only for 10 days of intense fighting or less. Apparently, this was already stated by Gen. V. K. Singh, 3 years ago. However, as usual, Mr. Rajnath Singh has denied that India's war preparedness is at stake. Similar sentiments were expressed by the recent article in 'The Hindu' on Army's failure to acquire the required small arms. 

However, what is more interesting is that neither the previous UPA nor the jingoistic NDA is in any hurry to meet the dismal shortages in war reserves!

• Infrastructure neglected

          In 2014, it was reported that the infrastructure along the border was in a dismal state reflecting high disparity between the preparedness on either side of Line of Actual Control (LAC). The only good news with the new NDA is the apparent emphasis of Mr. Modi to the border infrastructure projects.  However, its anyone's guess on how much is accomplished on reality rather than on the paper, given Mr. Modi's penchant for publicity. 

•  Trade deficit 

      In my earlier post, I argued that China wants to keep the border issue hot in an attempt to benefit from the gaping trade-deficit which largely favours China's military modernization drive. However, in stead of taking proactive steps to reduce the deficits, in the name of Confidence Building measures, Mr. Modi's Govt. is only setting up goals that is likely to increase this deficit even more. It is either Mr. Modi is naive or is just favouring China. I know that many would disagree with me for including economy, particularly trade, in the discussion on War capabilities. However, as Sun Tzu says, economy is vital for the machine and since trade is vital for economy, I have included my trade deficit as one for the factors contributing 

On path to another humiliation?

None of these deficiencies, by itself, would warrant an outcry among the Indian public who are inured by the bureaucracy and corruption in India. However, when these deficiencies are taken together, should warrant a public mobilization as it directly affects the security of nation.

It seems Mr. Modi is not much different from UPA, in its neglect towards India's war preparedness. This is in spit of the fact that he was the most vociferous  opponent of UPA for its soft-approach towards China. At that time UPA was blamed for lacking in strategic culture and many analyzts were hoping NDA would be any different. However, the problem lies not just with the Govt. and politicians. It seems even the army top brass is negligent and corrupt, as indicated by the article in 'The Hindu'. Such continued and systematic neglect and weakening of the India's war capabilities makes one suspect if India is preparing the grounds to handover its territories to China and Pakistan.

Boasting may not help repeating success!

There is a great euphoria in Indian media on the well-planned and successful surgical strike against terrorists targets in the Indo-Myanmar border. India lost 20 [1] of its service men in an ambush on June 4, 2015. This was followed by another attack on June 7, 2015 in which no causalities reported [2]. The well-planned and successful strike is commendable. However, this is not the first time Indian Armed Forces have crossed the border in pursuit of terrorist targets [3]. According, to Brig. Rumel Dahiya the operation Golden bird could have been more successful but for the untimely announcement of Jawaharlal Nehru Award for International Understanding for Ms. Aung San Suu Kyi [4]. Though Indian armed forces have been having the capability for quite some time, it is the change in the attitude of political bosses that is new. It is widely believed that order for the operation was given to raise the morals of the service men.

While the Defence Minister of India is correct in saying that the action reflected the change of attitude of Indian Government, his insinuation that India is capable of such operations in the other regions of its hostile neighbourhood is an exaggeration at the best. His insinuation isn’t lost on Pakistan, either. Mr. Parrikar’s dig prompted a response from Pakistan reminding him that Pakistan is not Myanmar [5]. The principal opposition has also reacted in response to his comments [6]. Interestingly, there are contradictions from Myanmar, as well [7]. In any case, I believe that it is not currently possible for India to repeat its Myanmar success in Pakistan or China.

Myanmar’s military has a good relation with India and in many cases they cooperated but for the foot soldiers who seem to side with the militants. Though there is gaping void between the capabilities of respective countries, Myanmar is more occupied with its counter-insurgence activities. Hence, a combination of good-will and the definite military superiority could have given the edge to India.

May not be possible to replicate

In the case of Pakistan, India has a hostile relation particularly with respect to the former’s use of terrorists in its soil. Further, though Pakistan’s military prowess fare low in comparison to India it is among the top 20 military powers in the world [8]. It is also the country with the fastest growing nuclear arsenal [9]. With no no-first-use moratorium, Pakistan is not shy in using its nuclear card either [10]. India is well aware of Pakistan’s tendency to escalate any limited interventions to a full-fledged war that could easily escalate to a nuclear war, as was feared during Kargil war [11].  This is reason the reason behind India’s Cold Start War doctrine [12]. However, this doctrine is criticized by many analysts as could lead to war expansion [13-14], the very scenario the doctorine is supposed to prevent. In addition, Pakistan’s relation with US and China is likely to put pressure on India. This is the reason why India has desisted in the past to cross border against terrorist’s camps in Pakistan, though it had known its operations for a long time. 

In this context, if indeed India intents to talk the walk, it could do so if it acquires the following capabilities:

• Ability to rapidly mobilize troops to prevent Pakistan from escalating any such interventions into a full-fledged war.
• Ability to plan, execute and extract troops in a very short time – in a matter of hours, so that India would have the element of surprise and Pakistan would be incapable of responding and internationalizing the issue.
• Ability to stealth intrusion and extraction – abilities that India currently doesn’t have. India may have those capabilities when the Fifth Generation Fighter it develops with Russia enters production. However, the fighter wouldn’t be of much use if China is to supply capabilities to counter it.
• Superior technologies - most of the military technologies currently India has had been acquired from friendly nations, which means Pakistan could do so too. Unlike China, which used its foreign educated nationals to bring back know-hows to build its technology, to my knowledge, India is not that keen.

The stakes totally tilt against India, in the case of China. In any case, China is not harboring terrorists against India in its soils, though on occasion it had aided groups that were against India.

In this case, the best India could do to neutralize terrorist targets within Pakistan’s territory are:

• Re-activating its covert abilities which were disbanded by Mr. I. K. Gujjral as an act of good-faith [15].
• Continue to acquire weapon systems encouraging an arms-race with Pakistan, which would force Pakistan’s already perilous economy into further doom. However, this would likely put Pakistan’s nuclear weapons in the hands of terrorists.

India could do better, if it tries to remove its red-tape and control its corruption and nepotism to bring talents drained to other countries. However, it remains to be seen if India is indeed intent on developing this capability.

References

[1]http://www.thehindu.com/news/national/20-soldiers-killed-in-manipur-ambush/article7283373.ece

[2] http://www.thehindu.com/todays-paper/tp-national/militants-attack-assam-rifles-camp/article7292644.ece

[3] http://en.wikipedia.org/wiki/Operation_Golden_Bird

[4] http://idsa.in/policybrief/EnsuringPeaceinNortheast_rdahiya_110615.html

[5] http://www.ndtv.com/india-news/those-who-fear-indias-new-posture-have-started-reacting-defence-minister-manhohar-parrikar-on-myanma-770650

[6] http://www.thehindu.com/news/national/congress-bjp-on-war-of-words-over-armys-myanmar-operation/article7306073.ece?homepage=true

[7] http://www.ibnlive.com/news/india/govt-rubbishes-myanmars-claim-as-diplomatic-parrikar-says-operation-changed-mindset-towards-india-1004632.html

[8] http://www.businessinsider.com/35-most-powerful-militaries-in-the-world-2014-7

[9] http://bos.sagepub.com/content/67/4/91.full

[10] http://www.thehindu.com/news/international/pervez-musharraf-accuses-india-of-destabilising-pakistan/article7305793.ece?homepage=true

[11] http://en.wikipedia.org/wiki/Kargil_War#WMDs_and_the_nuclear_factor

[12] http://www.idsa.in/idsacomments/IndiasColdStartDoctrineandStrategicStability_gkanwal_010610

[13] http://www.idsa.in/~idsa/strategicanalysis/35_3/ProactiveMilitaryStrategy_aahmed.html

[14] http://www.ibnlive.com/news/india/wikileaks-indias-cold-start-mix-of-myth-reality-353499.html

[15] http://www.southasiaanalysis.org/node/1182

Lack of Regional leadership helps China's hegemony in South Asia

Xi Jinping, declared that "China will never pursue its development at the cost of sacrificing interests of other countries... We will never give up our legitimate rights and will never sacrifice our national core interests. No country should presume that we will engage in trade involving our core interests or that we will swallow the bitter fruit of harming of sovereignty, security or development interests", at a Party Politburo Study session on 28 Jan 2013 [1].

The statement is clear that it won't compromise on its territorial claims even though its claims, on historical grounds is dubious at the best[2].  However, I believe that the lack of regional leadership is what helping China push its way through coercion.

China aspires a bipolar world (at least for now) with US and itself as twin poles. China's booming economy is largely fuelling its aspiration. Its military expenditure grows accordingly. However, what is troubling to the countries in the region is its territorial claims. China claims almost the entire South China Sea and Arunachal Pradesh in India. 

Source: Wikipedia

The claims of China on the South China sea intensified following its publication of huge potential oil reserves in the region[3]. This area overlaps the Exclusive Economic Zones of Brunei, Indonesia, Malaysia, Philippines, Singapore, Taiwan and Vietnam. However, none of these countries could stand up to the military brinkmanship of China whose military expenditure ($131 billions) is more than thrice the total military expenditure of these countries put together. However, China also has disputes with Japan and claims the Senkaku islands of Japan as its own[4].  US also comes into fray due to close association with Japan and interests in the region.  

Source: The Economist

Similar situation prevails in India's North East. After its occupation of Tibet, it claims Arunachal Pradesh as Southern Tibet. It claims the Twang region of the Arunachal Pradesh on the grounds that the Fourth Dalai Lama was born there. However, being a religious leader, Dalai Lama can be born anywhere[5]. The claims are in contrast to its earlier agreement in 2005 that no populated regions would be exchanged. Further, to complicate the issue China avoids providing clarifications on Line of Actual Control (LAC)[6]. To complicate the situation Chinese army routinely enter into regions claimed by India as under its LAC[7]. Though the CBMs and the established procedures had helped diffuse the situations from escalating into a full-fledged war, so far, it seems China is least interested to settle the dispute. It complicates the situation by implicitly accepting Pakistan Occupied Kashmir (PoK) as Pakistani territory by issuing visa while contending J&K and Arunachal Pradesh as disputed territories. Historically, it doesn't share a border with Pakistan but thanks to PoK and Askai Chin, it now does and by enforcing PoK as Pakistani territory it tries to pre-empt India from reclaiming its regions, in future.

Whenever any of the countries, with which it has conflict with, tries to internationalize the situation or tries to build relations with a superior force, it adopts to coercive diplomacy, like in the case of Vietnam [8] and India [9]. At the same time, it pushes economic ties that are in its favour, which by fuelling its economy is helping in building its military might[10] leading to more coercion from China. 

The China's strategy in the region seems to be centred on: 

1. Make India pre-occupied with South East Asia
2. Pre-empt any attempt by countries in the regions from forming a front.
3. Resist US deployments

China is helping Pakistan to build its missile[11] and nuclear capabilities[12], though it is against International norms. Pakistan has good network of terrorists in India and is a volatile country constantly engaging in exchange of fire and has already been in war with India multiple times. By making Pakistan Nuclear, China is has placed India's focus on countering Pakistan which is more likely to engage in war than China whose last war with India was in 1962. Further, in the name economic cooperation it is pushing a "string of pearls" strategy to engage and contain India within the region. As a part of the strategy, China is developing Gwadar port in Pakistan and Hambantota port in Sri Lanka. Both these countries are also caught in the debt trap set by China and could not refuse to China's intentions without heavy cost to the economies[13]. In South China Sea region, China coerces countries that tries to internationalize the border dispute while pre-empting any attempts by the countries to form an alliance. It is forming artificial islands in the region to bolster its claims and to use them as backup airstrips to its carriers to pre-empt US from the region. China also feels that US is incapable of helping the region given its engagements in the Middle-East and its sagging economy. Nevertheless, it accepts US as a force to reckon with. 

China's tactic in the region is not just its military might. It uses economy as its second weapon. Pakistan, Sri Lanka and a host of other countries carry huge Chinese debt and have to follow Chinese suit in the matter. It now pushes its ambitious Silk Road policy, which India views with suspicion as the same infrastructure could be used to mobilize armed forces during conflict. As a matter of fact, I believe that China is slowly building infrastructure surrounding India in the name of co-operation with India's neighbours until an opportune moment. Similar situation prevails for the maritime route connecting countries in the South China sea as well.

Further, by encouraging rogue states such as Pakistan and N. Korea to develop nuclear weapons, it adds a level of uncertainty in the region. In the likelihood of war with China, Pakistan will jump in to make the most of the situation. India, having focused for a very long time on Pakistan is incapable to fight war at two fronts. Similarly, it can use unpredictable N. Korea against Japan and US installations in the region. 

If all the countries in the region including Japan and Australia forms a economic-military block, then it would be possible to contain China's hegemonist attitude and brinkmanship in the region. Such an attempt requires commendable leadership and the ability to outmaneuver Chinese designs in the region. However, it seems, the South Asian region is devoid of such leadership which is what is letting China unchecked in the region to pursue its hegemonist attitude. Though US could not spread its resources thin across the globe, it could let countries like India, Japan and Australia and help them from behind. However, US is also highly dependent on China for its imports and China holds ~7% of US treasury bonds, which makes one doubt if US would be full committed to contain China in the region. Unlikely, as is evident from the very many one step forward two-step backward acts of US in the region. This is the South-Asian Conundrum Waiting for a solution.

Reference

1. http://southasiaanalysis.org/node/1671
2. http://www.worldaffairsjournal.org/article/historical-fiction-china%E2%80%99s-south-china-sea-claims
3. http://scholarbank.nus.edu.sg/bitstream/handle/10635/15352/MASHAOHUATHESIS.pdf?sequence=1
4. http://en.wikipedia.org/wiki/Senkaku_Islands_dispute
5. http://www.southasiaanalysis.org/node/1745
6. http://www.southasiaanalysis.org/node/1778
7. http://www.southasiaanalysis.org/node/1758
8. http://www.southasiaanalysis.org/node/1761
9. http://www.businessinsider.com/china-gripes-about-us-india-relations-2015-1
10. http://theanalyzt.blogspot.ca/2015/05/the-challenge-for-india-and-mr.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed:+TheAnalyzt+(The+Analyzt)
11. http://cns.miis.edu/archive/country_india/china/mpakchr.htm
12. http://www.washingtonpost.com/wp-dyn/content/article/2009/11/12/AR2009111211060.html
13. http://www.southasiaanalysis.org/node/1753