March 30, 2006

Economic Nationalism and the Steel Industry: Mittal's Bid for Arcelor

In January 27, 2006, Mittal Steel, the world's largest steel producer, put forth a hostile bid to purchase the second-largest steel firm, Arcelor SA, for US$22.4 billion. If the deal succeeds, the resulting enterprise would account for approximately $70 billion in sales and 10 percent of world steel production, nearly quadruple that of the closest competitor, Japan's Nippon Steel Corp., and would employ 320,000 workers on four continents.

Luxembourg holds a 5.6 percent share in Arcelor, which is a major employer in France and Spain. Conversely, Mittal is based in Rotterdam, operated in London and largely owned by the India's Lakshmi Mittal family. As such, both Paris and Arcelor's C.E.O. Guy Dolle suggested that Mittal is "too foreign." Arcelor shareholders have called on Mittal to surrender two votes for each share he will own. According to the January 27 offer, Mittal's family will control 50.7 percent of the merged company and possess nearly two-thirds of the voting rights. However, Mittal has offered to operate the firm out of Luxembourg and pledged not to cut jobs at Arcelor "as a result of this merger." Mittal filed registration documents for the takeover with the S.E.C. on March 23, 2006.

Mittal Steel came about through the consolidation of the industry, beginning when Ispat International N.V. acquired LNM Holdings N.V. and merged with International Steel Group Inc. It comprises acquisitions in Mexico, Canada, Germany, Kazakhstan and Ukraine. Arcelor was created when Spain's Aceralia, Luxembourg's Arbed and France's Usinor merged; Arcelor sought to purchase U.S. Steel prior to Mittal's takeover bid.

European Opposition to the Takeover

Dolle has made every effort to block the Mittal takeover, including appeals to major investors and ordinary shareholders. When the bid was first announced, Dolle proclaimed that Mittal's takeover would result in "a massive destruction" of value for the stockholders and present "a threat" to workers in Europe. He has also stressed the distinction in quality of product, comparing Arcelor's steel to high-quality perfume and Mittal's to lower grade eau de cologne.

Luxembourg went about drafting legislation to block the takeover. Prime Minister Jean-Claude Juncker originally suggested that the new rules would require takeovers to be paid in cash unless 25 percent of the bidder's shares are liquid; with roughly half that amount, Mittal would be prohibited. However, the legislation that Luxembourg's finance ministry put forward is less restrictive. The change would prevent a bidder from re-submitting a hostile bid for 12 months, which could allow Arcelor to fend off the takeover by issuing more shares, and thereby compelling Mittal to resubmit its offer.

In recent weeks, Luxembourg sent a delegation to New Delhi to convince the Indian government not to support Mittal, despite the fact that India has previously stated that European opposition to the deal violates W.T.O. norms. Yet, Juncker has retreated from his protectionist position by stating that the government would not take steps to block the deal and leave the decision to shareholders, stating, "Legal prohibiting is not the Luxembourg way."

After Mittal announced its bid, France passed measures that would allow companies to thwart takeovers by employing a poison pill defense, which allows shareholders to purchase newly issued stock, thereby reducing share value. Mittal said that use of a poison pill would be "so much against the interest of shareholders that it would be unwise to do it."

In addition to European resistance to the deal, other offers have been put forth to foil Mittal's aims. Most notably, Nippon Steel Corp. and Arcelor have discussed a merger that would kill Mittal's takeover bid and thus create a new major player in the industry. Also of interest, both Arcelor and Mittal are competing to buy Brazil's Companhia Siderurgica Nacional (C.S.N.), which is worth a potential $10 billion.

Mittal's Consolidation of Steel

Lakshmi Mittal remains confident in the deal, stating that he would own Arcelor in "three months' time" and that "this deal is not about power or money, it is about the consolidation of the industry. Consolidation means improving sustainability." He has focused on the financial aspect of the deal, citing the fact that Arcelor's share price has increased significantly since the bid was announced and boosted the firm's value by $7 billion. Mittal continues to criticize politicians for interfering in the marketplace, and has declared that shareholders ultimately should make the decision. The firm responded to Luxembourg's attempts to block the takeover by stating, "We believe these proposals were exclusively intended to thwart the Mittal Steel offer, and are against E.U. principles."

Mittal sees his bid as the only method by which to create a European firm large enough to compete with China's burgeoning steel industry. Another key argument is that production and demand are moving eastward, and the combination of Arcelor's high-grade technology and Mittal's low-cost labor will greatly enhance their ability to compete in Asia. "This is about two concerns merging to become a European champion with global aspirations, nothing more, nothing less," he said. "I don't see anything in this that contradicts the European spirit."


The proposed Mittal takeover is the latest stage of the resurgence of economic nationalism among Western governments. The European Commission is pushing E.U. states to drop national barriers in order to boost Europe's competitiveness in the global market, and has threatened to force the opening of markets by reprimanding countries that violate the principles of the E.U. internal market. In refusing to abandon economic nationalism, Juncker told the E.U. summit, "Sometimes governments have good arguments."

Following in the wake of the Unocal and Dubai Ports deals in the U.S. and coinciding with the contested Eon takeover of Spain's Endesa, Italian and Belgian objection to the Suez-Gaz de France merger, and the public opposition to proposed French labor law changes, Mittal finds itself caught in the clash between protectionism and neo-liberalism.

European states are feeling the pinch from the rapidly expanding industries of India and China, and are seeking to insulate themselves from the realities of the free market. The protectionist traditions of Luxembourg and France stand in opposition to the neo-liberal economic policies espoused by the European Commission and adopted by emerging industrial countries.

As the current of consolidation moves forward, giant firms will dominate the steel industry for years to come. If Mittal's takeover of Arcelor passes, look for the new firm to make further major acquisitions, such as U.S. Steel, in coming months. If the bid fails, the decision will have been made by shareholders rather than governments, as the latter will be forced to side with market forces. Despite the urge to revert to protectionist policies, the global drive toward open markets and the emergence of new economic powers may force the hand of hesitant states.

Report Drafted By:
Michael Piskur

The Power and Interest News Report (PINR) is an independent organization that utilizes open source intelligence to provide conflict analysis services in the context of international relations. PINR approaches a subject based upon the powers and interests involved, leaving the moral judgments to the reader. This report may not be reproduced, reprinted or broadcast without the written permission of All comments should be directed to

March 28, 2006

Will BJP support the economic disaster?

Gurumuthy writes on full Rupee convertibility

Will BJP support the economic disaster?

If the RBI follows Manmohan Singh's advice, the Bombay Stock Exchange will sneeze whenever Wall Street catches cold,
writes S Gurumurthy

Big bang for financial reform, Bigger bang for the Indian rupee." This is how the pink media has welcomed Prime Minister Manmohan Singh's shocking advice to the RBI to revisit the issue of complete convertibility of the rupee. Within hours the RBI has begun working on it and in four months the advice will be actualised, the pink papers say.

In simple terms, full float of the rupee means that Indians can handle, say, the US dollar or Swiss franc almost as freely as they handle the rupee. They can buy dollar stocks in New York, like they buy rupee stocks in Mumbai. Indian banks can access dollar funds abroad as freely as rupee funds here. Global interest rates will beat down the rates here. Global games will be played in national markets. If New York stocks catches cold, Mumbai stocks will sneeze.

Currency convertibility is the ultimate in globalisation. The world praises us today for calibrated globalisation process, and we are regarded as a model. But that is precisely what is being reversed by this stunning announcement, almost an arrogant one.It is dangerous.

A decade ago, the current Finance Minister had proposed precisely what the Prime Minister now has. But, within months, came the Asian economic collapse precisely due to full convertibility and saved us from that fatal idea. The crisis set the economies of South Korea, Taiwan, Thailand, Malaysia, Indonesia and Philippines back by decades. Once praised by the West and the World Bank and International Monetary Fund as "Asian Tigers", the crisis turned the Tigers into mice. But, the poor Asian nations had only followed the Bank-Fund prescriptions.

The fact remains that Bank-Fund combine was the author of what was known as "Washington Consensus", of which full convertibility was the core, which was evolved in the 1970s. Before the Asian collapse, the Bank-Fund experts held the Tigers out as the model for the rest to follow. But once they collapsed, the very Bank-Fund mandarins began faulting them, ridiculing their model as "crony capitalism", besides blaming them for premature convertibility. Who is to decide on when that maturity comes?

The Asian crisis did not come suddenly, without warnings. Mexican and Latin American economic collapse had already highlighted the high risk of full currency float. Similarly, in the early 1990s, Europe experienced unmanageable crisis in what was known as "Exchange Rate Mechanism" (ERM).

In 1993, Mr Akio Morita, the celebrated chairman of Sony Corporation, Japan, wrote a letter to the Group-7 leaders, who met in Tokyo, warning that unbridled currency market speculation spurred by full convertibility was the root cause of most economic crisis, including Japan's in the 1990s. He pointed out that currency speculation to actual trade was 100 to one. He said no government or even all governments put together could save the world from crisis caused by currency trade, which full currency float inevitably brings about. He said that there could be no free global trade without a global currency, for which a global government is a must. Yet, the Bank-Fund combine kept insisting on full convertibility as the ideal destination till the Asian crisis forced them scoot.

The Bank-Fund combine had prescribed full convertibility for normally functional economies. Besides, it advised the nations that had collapsed precisely because of full convertibility to go for heavy Bank-Fund borrowing and continue the convertibility. Ironically, countries that followed their advice never got out of crisis. And only those that defied them could weather the crisis. Take, for example, Russia and Yugoslavia. Russia heeded the Bank-Fund advice, borrowed heavily to tide over its crisis and is even today not fully out of debts and crisis. See how Yugoslavia that defied Bank-Fund advice fared.

In the 1990s, the Yugoslav economy, like Russia's, was collapsing. Inflation was running at over three million percentage points - the highest ever in world history. With the result, the Yugoslavians had lost faith in their currency, the dinar. But the Yugoslavian Government rejected the Bank-Fund advice to borrow and keep its currency floated. Instead, it accepted the advice senior economist Dragoslav Avramovic and issued a second currency, super dinar, a limited currency, to circulate side by side with original dinar, the popular currency.

On Drag's advice, the super dinar, not the original dinar used by the common people, was floated fully. The idea was to avoid full convertibility by limited convertibility. This too was just a psycho-therapy to get the Yugoslavians regain confidence in their currency, the popular dinar. It worked. The three-million percentage points turned nil in a week. And exchange reserves rose by 60 per cent in three months. The successful super dinar, which prevented full convertibility of the popular dinar, was named after Dragoslav. He is no more now. The loud Bank-Fund mouth was shut. Even a decade later, not a whisper about the Yugoslavian miracle is known.

Similarly, during the Asian crisis, Malaysia followed the Indian model of limited convertibility and refused to heed the Bank-Fund advice. But here Mr Manmohan Singh has returned to the antiquated Bank-Fund prescription. He is commending what the Bank-Fund has stopped insisting publicly at least.

The Prime Minister says that as compared to 1997 when the Asian crisis occurred, "much water has flown down the Ganges since then". Our position is comfortable; we can go for full convertibility, he says. Mr Manmohan Singh is looking to the Bank-Fund combine, not a Dragoslav among us. But does he realise the risk to which he is exposing the nation over a billion, banking on benefits that are transient?

The move indicates not only how distanced Mr Manmohan Singh is from Indian realities, but also from economics other than Bank-Fund's. The CPI(M) has rightly called this as a disaster. Will the BJP support this disaster?


March 27, 2006

Steve Farmer caught trying to infiltrate a Hindu yahoogroup

Steve Farmer caught trying to infiltrate a Hindu yahoogroup (HC yahoo group)
Steve Farmer can't spell Hindu name correctly but he want to write California text books.
He thinks his IQ is better than Hindus.
Even every CDE meet he made fool of himself but still continue his anti Hindu campaign.
Read below his lies when he got caught.

We recently received the following request:

> Hello,
> My name is Raja Chadra. I'm a high school student and live in San
> Diego, California. I don't have my own phone. I grew up with my mother who is American but my father was born in India. I don't know much about that part of my background and about a year ago I started
> reading up on the Web. I joined the IndianCiv List but then it closed so I joined here too. I don't have a blog but i think I'll start one soon.;
> Raja

A request for information was szent to the reply-to address, which was (raja.chadra)

The reply came with four question marks on the subject line, but the reply came from Steve Farmer (not from raja.chadra). We reproduce the exchange in full.

[ quote] ----- Original Message -----

From: Steve Farmer
Cc: Steve Farmer

Sent: 25 March 2006 Saturday 22:47

Subject: ????

Who are you?? Why was this note copied to my email address? I don't know any Raja Chadra or ravi7640 am certainly not a member of the HinduCivilization List.

If someone has hijacked my address -- this wouldn't be the first time
-- I need information on this. [unquote]

This was time-stamped: 22:47 hrs.

On the same day, March 10, 2006, this address also enrolled (via the web) on the now hibernating IC list.

After this email from Steve Farmer on 25 March 2006, Raja.Chadra ( chose to unsubscribe from the HC list. This occurred at 23:50 hrs. on 25 March 2006

The IP address of (Raja.Chadra) is the same as that on the message from Received: from [] (EHLO

If someone has emails received directly from Dr. Farmer, please let us know the IP addresses from which they originated, to test the veracity of Dr. Farmer's complaint that someone is misusing his name.

Of course, we take all instances of identity theft and falsehoods seriously. Thank you

Attack on Afghan consulate condemned

QUETTA, Mar 26 (Pajhwok Afghan News): The Afghan Consul General in this provincial capital of Pakistan's Balochistan province Sunday condemned the attack on the Afghan consulate and said the local police had failed to protect the office.

About 400 angry protestors, said to be relatives and sympathisers of those 'Pakistanis' allegedly killed by Afghan forces a few days back, pelted stones at the consulate building and chanted slogans against the Afghan government.

Afghan Consul General Ali Ahmad Babak told Pajhwok Afghan News in Quetta, the security officials did not contact them so far. He said the law-enforcement agencies had prior information about the demonstration but they did not adopt steps to avert it.

Rejecting the protestors' demand regarding handing over of the killers to the Pakistani government, Babak said they had launched investigations into the incident to ascertain the real cause.

Participants of the Saturday's demonstration, on the other hand, chanted slogans against President Hamid Karzai, Kandahar Governor Asadullah Khalid and former governor of that province Gul Agha Sherzai. They warned of more protests if the killers were not handed over to the government.

Janat Gul, elder brother of one of the slain, Janan, told this scribe they would settle the score with refugees if the Afghan government turned deaf ear to their demands. He pleaded his brother had no links with miscreants.

Khair Mohammad Shaheen, a leader of the Noorzai Quomi Ittehad (national unity), said they were planning another demonstration which would be largely participated by members of the tribe.

Meanwhile, the incident and subsequent rage and anger had put the refugees living in Quetta in trouble. They feared if the dispute was not solved, it would endanger their lives.

Bashir Ahmad Nadim

Musharraf's own goals

Musharraf's own goals

Irfan Husain
27 - 3 - 2006

By embittering his foes and alienating potential allies, Pakistan's president is diminishing his room for political manoeuvre, says Irfan Husain.

One would have thought that being a soldier as well as president of Pakistan, General Pervez Musharraf would avoid opening multiple fronts, and create alliances rather than making new enemies.

Far from heeding these lessons from military history, he seems bent on starting new fights and spurning potential friends. Politically, he has never been more isolated. Militarily, his troops are heavily engaged in Waziristan on the Afghan border, and in Baluchistan where his paramilitary units are fighting Baluchi insurgents. His partnership with the six-party religious alliance, the Muttahida Majlis-e-Amal (MMA) – the natural support-base of military rulers in Pakistan – has collapsed due to his crackdown on Taliban elements in Pakistan's fractious "tribal areas".

If you find this material enjoyable or provoking please consider commenting in our forums – and supporting openDemocracy by sending us a donation so that we can continue our work for democratic dialogue

The month-long protest movement in February-March 2006, ostensibly against the offensive Danish cartoons, has shown yet again that when push comes to shove, the religious parties can call out the mobs. This is an issue that has united the fragmented parties that oppose Musharraf in a way local issues did not. Suddenly, the opposition seems galvanised while Musharraf is looking shakier than at any time since he seized power in 1999.

On the eve of President Bush's arrival in Islamabad on 3 March, the Pakistani army launched a major operation against alleged Taliban elements in South Waziristan as a show of force in the unsettled region, and a demonstration of Pakistan's loyalty to the American cause. This did not prevent Musharraf during Bush's visit appearing a beleaguered leader at bay on his own turf, nor the domestic political opposition from using the occasion to embarrass him.

The power to make enemies

Much of the opposition to Musharraf stems from his broken promise to retire as army chief in 2005, and continue as a civilian president until October 2007, when he would stand for re-election at the time of the parliamentary and provincial elections due then. After some dubious constitutional advice and shaky parliamentary support, he has announced that he will carry on in his dual capacity.

Musharraf's record of pledges breached has ensured that his many opponents now feel that the only way to get rid of him is through violent protest. His acolytes, by sending out signals that the president is unwilling to leave the scene even after the 2007 polls, have raised the stakes in Pakistan's ruthless game of power politics.

His only supporters at present, apart from the army and the Americans, are the carpetbaggers of the Muslim League. But as other military rulers in Pakistan have learned, this ragtag collection of opportunists backs a leader only as long as he is seen to be in charge. As soon as it senses his power ebbing away, it looks around desperately for the next rising star to hitch its wagon to.

Some of Musharraf's woes have been imposed on him; others have been own goals. An example of the latter is the explosive situation in the tribal belt dividing Pakistan and Afghanistan. This is a direct result of being America's staunch ally. Whilst prior to 9/11, Islamabad would not have raised an eyebrow over Taliban raids into its neighbouring country, today there is huge pressure from Washington on Musharraf to prevent these cross-border attacks. Moreover, in a conflict with well-armed and highly motivated men, there are bound to be civilian casualties from time to time, an issue that provides the MMA with more political ammunition against Musharraf.

In Baluchistan, there are almost daily reports that insurgents are using large numbers of rockets, mortars and mines against government personnel and assets. This kind of ordinance is expensive, and there are many suspicions and allegations about where the money is coming from. Musharraf has more than once hinted at an Indian hand in organising and financing the shadowy Baluch Liberation Army. Although the charge is unproven, such a policy would seem logical retaliation for Pakistan's support of Kashmiri rebels. If Musharraf had lived up to his repeated promises to halt cross-border terrorism, perhaps Pakistan would not be facing a well-organised Baluchi insurgency today.

Musharraf is probably exercising all his self-control not to follow his first instinct and go in to Baluchistan with guns blazing. He lacks the temperament to negotiate patiently and arrive at a formula that gives the Baluchis a greater share of revenues from their energy and mineral resources.

Politically, Musharraf's isolation is entirely of his own making. From the day he took over, he has acted to eradicate the influence of the country's two major politicians (and former prime ministers), Nawaz Sharif and Benazir Bhutto. While the former was treated leniently and sent into a luxurious exile in Saudi Arabia, Bhutto and her husband Asif Zardari have been hounded mercilessly. Every effort has been made to bribe and bully members of these opposition parties to switch allegiance. Now, when Musharraf needs their support to neutralise the mullahs, he finds them in the opposite camp.

Nawaz Sharif has spent five years in Saudi Arabia with his extended family as guests of the royal family, and has set up a steel business in the country. He has now been given permission to travel to Britain (where, in London, he owns several luxury flats) for medical treatment. But according to an agreement brokered between Islamabad and Riyadh, the Pakistani politician is barred from taking part in politics.

Benazir Bhutto has not fared as well: a regular on the lecture circuit in the United States, she has watched from a distance as Asif Zardari suffered incarceration for eight years (first under Nawaz Sharif, then General Musharraf). He was released on bail in 2004, and is currently undergoing cardiac treatment in America.

In his personal convictions Musharraf is a liberal, secular individual; had it not been for his obsessive hatred of civilian politicians like Sharif and Bhutto, he could have joined forces with them to marginalise the mullahs. After all, these two figures between them command the largest number of votes in Pakistan. Instead of broadening its base, this government has used its National Accountability Bureau (NAB) to crush politicians it does not approve of.

At the same time, the many charges against corrupt politicians cannot conceal the fact that – as previous NAB enquiries have established – several of them are members of the present cabinet. The whole exercise in house-cleaning is motivated not by a principled effort to remove the stain of corruption from Pakistani politics but solely by a desire to keep certain politicians the government finds undesirable far away from power and influence.

An end to isolation?

It is evident that Musharraf needs to reach out to potential allies. But what deals might he want to cut, and with whom? His options are clearly limited: he cannot further appease the mullahs without drastically reducing his close cooperation with the Americans. It follows from this that the uprising in the tribal areas will continue, and any civilian casualties there will further strengthen his Islamist opposition.

After more than six years of constant harassment and defamation, it is unlikely that a deal with Bhutto's Pakistan Peoples Party (PPP) is now possible. But politics make for strange bedfellows. Who knows, given the right inducements, how power-hungry politicians react to the prospect of high office?

In principle, then, there is still time for Musharraf to end his isolation. But all too often, people who have been in power for a long time convince themselves of their own invincibility. One problem is that his army deputies and corps commanders are now several years younger than him, and in the military this counts for a lot. For a considerable period after he took power in October 1999, his colleagues could have spoken to him as near equals; but their successors are probably far more deferential. This usually makes for bad advice.

Ultimately, dictators become detached because they surround themselves with yes-men and thus lose contact with the real world. Inevitably, they become convinced of their own infallibility.

Sonia: run away lady

Sandhya Jain

Contrary to the assertions of her spin doctors, this is actually the fourth time Ms. Sonia Gandhi has run away from an uncomfortable situation in her life in India. The first was in 1977 when her mother-in-law Indira Gandhi lost to the Janata conglomerate. Panicked at a possible post-Mussolini scenario in this land, Sonia Gandhi dragged her pilot husband and two children to the Italian Embassy for refuge; newspaper pictures of her sour countenance remain etched in my memory. Sonia returned home very reluctantly after the entire Gandhi family persuaded her to see reason. No doubt her countrymen (she was still an Italian national) also advised her that Indians were not vindictive and her personal safety was not in danger.

The second time the lady fled a difficult situation was in 1999 when, after ruthlessly ousting the then Congress president Sitaram Kesri, she found Sharad Pawar and P.A. Sangma questioning her authority, particularly her desire to project herself as candidate for the Prime Minister’s office. Rather than answer the questions raised, the lady quit in a sulk and her lieutenants then hustled up support for her, roughing up possible dissidents in the Working Committee, and organizing a bogus AICC meeting to endorse her coup.

The third time - which her media bards seek to project as the first time - was in May 2004 when President APJ Abdul Kalam gently advised her not to press her claim to be sworn in, owing to certain ambiguities in the Citizenship Act. At that time, she had procured letters of support from slavish UPA allies and supporting parties, and announced to a televised press conference that normally the leader of the majority alliance was sworn-in as Prime Minister. But this land is Bharat Mata, and somewhere an ageless Vikramaditya decided whom it would just not tolerate to sit upon its throne. Doubtless to her own surprise, Sonia Gandhi had to make a virtue of necessity. A televised renunciation drama was enacted, and Dr. Manmohan Singh was soon in the saddle.

Now, for the fourth time, Sonia Gandhi has run away from a thorny situation of her own making. Even friendly media analysts find it difficult to support the surreptitious manner in which both Houses of Parliament were adjourned sine die on Wednesday, when an all-party meeting had decided on the recess and resumption of the budget session. This, combined with a news leak about a proposed ordinance to protect the UPA chairperson from certain disqualification from the Lok Sabha, had former Prime Minister Atal Bihari Vajpayee rushing with a protest delegation to President Kalam.

This put the spotlight uncomfortably upon Ms. Gandhi, because many of her actions as UPA and National Advisory Council chairperson are questionable. Ms. Gandhi has a propensity to settle scores with those who have incurred her personal wrath, even if they are not direct political foes, and this has landed her in her present predicament. The genesis of the present crisis lies in her soured relations with the family of megastar Amitabh Bachchan, which came into the open when the latters’ wife, Jaya, made an oblique reference to the fact that no one defended her husband when incorrect insinuations were made about his involvement in the Bofors payoff scandal, the shadow of which falls squarely on Ms. Gandhi and her close friends.

Mrs. Jaya Bachchan later entered the Rajya Sabha as a member of the Samajwadi Party, with which Ms. Gandhi has a running dispute. Thereafter, a few things happened in quick succession. Mrs. Bachchan’s membership of the Rajya Sabha was terminated on the ground that she held an “office of profit” as chairperson of the UP Film Development Council; a gleeful Congress said it would gun for SP ideological supremo, Dr. Amar Singh. Superstar Amitabh Bachchan, who was invited to inaugurate the international film festival in Congress-ruled Goa last year, was dis-invited from the function. He was also served a gigantic income tax notice while battling for his life in a Mumbai hospital.

But the humiliation of Mrs. Jaya Bachchan boomeranged when non-Congress parties decided to hit back. Lok Sabha Speaker Somnath Chatterjee became vulnerable as the Trinamool Congress complained about his chairmanship of the Sriniketan-Shantiniketan Development Corporation in West Bengal. Several MPs are equally vulnerable on this count, which jurists concede is a grey area of the constitution.

But Sonia Gandhi has wielded real power of patronage as chairperson of the National Advisory Council, with Cabinet rank, and owes the nation an explanation. Her hand was seen in the scandalous drama which saw the Italian Ottavio Quattrochi making off with the Bofors kickback payments. When the matter became public, she left it to the hapless Prime Minister and others to protect her from the flak.

Since the UPA came to power, Ms. Gandhi has announced Government largesse to victims of tragedies and natural disasters, such as the victims of a fire in a Tamil Nadu school and the Tsunami victims in Tamil Nadu and Port Blair. In fact, she has a penchant for upstaging the Prime Minister and other competent authorities by reaching tragedy spots first and announcing government relief. More recently, after the public outcry against verdict in the Jessica Lall case, she directed Home Minister Shivraj Patil to amend the Criminal Procedure Code suitably to protect witnesses in criminal cases.

Since the budget for her ‘recommendatory’ office of NAC chairperson comes out of Government funds, there is little doubt that Ms. Gandhi draws benefits from the public exchequer for all her activities, and thus holds an ‘office of profit’, that too, one which appears to have little constitutional justification. Thus, when the chips were down, she was actually the most vulnerable of those being targetted for disqualification by respective political rivals.

Her resignation should not prevent the Election Commission from deciding the issue of the legality of her presence in the Lok Sabha on merits, as in the case of Mrs. Jaya Bachchan. This means the EC must adjudicate if Ms. Gandhi’s interventions in the House, like those of Mrs. Bachchan, must be expunged, and her salary and emoluments returned to Parliament. And before Ms. Gandhi returns to the NAC, presuming it is exempted from the definition of ‘office of profit,’ there must be a public debate on the relevance of that office, its powers and privileges, and budgetary support.


All Indian ministers in my pocket - Quottrochi

Ministers in Q pocket’

New Delhi, March 26: Controversial Italian businessman Ottavio Quattrocchi and his wife Maria, who had direct access to the Prime Minister’s House when the late Rajiv Gandhi was in power, had also established a powerful network among top Congress leaders and ministers. This was revealed in statements made before the CBI by the drivers who used to work for the Quattrocchis. These statements, recorded by the CBI, went on to claim that the Italian businessman had often boasted that “all Indian ministers were in his pocket.”

The statements, attached as annexures, have been summoned by the Supreme Court from a trial court on the basis of a public interest litigation case moved by advocate Ajay K. Agrawal. It was through the Gandhis that Ottavio Quattrocchi reportedly gained access to the corridors of power in New Delhi, if the statements made by the personal staff of the Quattrocchi family are any indication. Mr Quattrocchi, one of the key accused in the Rs 64-crores Bofors payoffs case, had met then law minister H.R. Bharadwaj, former information and broadcasting minister Vasant Sathe, and powerful Congress leaders like Satish Sharma, R.K. Dhawan, Dinesh Singh and Arun Nehru.

Sasi Dharan, who drove Mr Quattrocchi’s car, told the CBI: “He (Quattrocchi) used to visit most of the Congress ministers.” He added: “I had also driven both Mr and Mrs Quattrocchi to the bungalows of various ministers. Vasant Sathe was living at 2, Krishna Menon Marg, Dinesh Singh at 1, Thyagraj Marg and K.P. Unnikrishnan at 19, Teen Murti Marg.” He also gives details of the houses of other key players in the government, where he had chauffeured Mr Quattrocchi.

Mr Quattrocchi’s other driver, Surendra Singh, had said: “Quattrocchi used to say that all Indian ministers were in his pocket.” He added: “Quattrocchi used to send gifts to ministers through me.” The drivers’ statements mentioned that at times, and particularly at nights, Mr Quattrocchi drove himself to the houses of ministers, often to deliver the gifts personally.

Delhi's options beyond Iran

By Robert M Cutler

When US President George W Bush was in India this month, he caused a flurry of commentary, especially in the Indian media, by appearing to lift long-standing American objections to the construction of a natural gas pipeline from Iran through Pakistan to India.

"Our beef with Iran is not the pipeline," he said in Islamabad. "Our beef with Iran is the fact that they want to develop a nuclear weapon ... We understand that you [Pakistan] need to get natural gas, and that is fine."

Yet as recently as mid-January, the United States had reiterated

once more its opposition to an Iran-Pakistan-India pipeline. A week later, US Energy Secretary Samuel Bodman was in Islamabad to offer clarifications. The US continued to have "serious reservations" about the project. "Other pipeline projects are very good and we are ready to help."

If this was not clear enough, a White House National Security Council spokesman added: "As we stated before, the US government does not support the Iran-Pakistan-India [IPI] pipeline. We have repeatedly expressed concerns about international participation in energy projects with Iran." The genie was back in the bottle. Or was it?

A project for Indian importation of Iranian gas was first discussed in 1993, when relations with Pakistan were much worse and an undersea pipeline was proposed. This, however, turned out to be much too exorbitant, so Pakistan was eventually brought into play. Islamabad lifted its reticence to let Iranian gas cross its territory to India in early 2000, a few weeks after US president Bill Clinton, visiting India, met there with the Ambani family.

The Ambanis run Reliance Industries, a likely buyer of gas from Iran that has built an enormous petrochemical complex in Gujarat state near India's border with Pakistan.

Bodman's trip occurred coincidentally only a few days before the first trilateral meeting on the pipeline among the Iranian, Pakistani and Indian sides. Taking place in Tehran, it was supposed to prepare for a trilateral ministerial meeting set for April. Until relatively recently, all contacts had been bilateral, either between Iran and India or between Iran and Pakistan.

Last year, however, saw more than a half-dozen India-Pakistan meetings about the pipeline project. Meanwhile, construction costs for the pipeline itself, estimated at almost US$5 billion near the beginning of the decade, have now risen to over $7 billion.

Iran insists that India sign a "take-or-pay" contract, meaning that India would be obliged to pay for gas whether the gas was actually imported and consumed. India has coyly suggested a "supply-or-pay" arrangement in which Iran is contractually obligated to deliver gas at the Indian border with Pakistan, or else pay for the quantity not delivered.

Further complicating the situation, the gas would be of poor quality. India has asked to receive gas rich in such petrochemicals as butane, propane and ethane; but Tehran has rejected the idea. (This is one of several reasons why the level of Iranian gas exports to Turkey remain relatively low: Tehran insists on selling low-quality gas at high prices.)

Also, the sides are still far apart on the price. A year ago, erstwhile Indian petroleum minister, Mani Shankar Aiyar, stated that Iran wanted India to pay LNG (liquefied natural gas) rates for regular natural gas. LNG is more expensive because of the cost of liquefaction and subsequent regasification processes. According to Aiyar, the total including transportation and transit fees would be 50% higher than Indian industry was generally willing to pay. Aiyar suggested, moreover, that discounts from the correctly calculated price would be proper for large-quantity purchases.

The pricing of natural gas domestically within Pakistan is likewise an issue. The Pakistani government heavily subsidizes that price, and any attempt to raise it would surely provoke unrest. Yet if the pipeline were built, Pakistan, for its part, would reap an estimated $700 million or more per year in transit fees and also get to use the gas domestically.

Yet Pakistan is prospecting for natural gas on its own territory and seeks the right not to consume contracted quantities of Iranian gas if it does not need it. Thus Bodman's trip to Islamabad was specifically intended to help provide American technical assistance for prospecting natural gas on Pakistani territory, and so decreasing its need for imports, especially from Iran.

The recent agreement whereby the US will help India build nuclear power plants is likewise designed in part to provide groundwork for satisfying India's growing energy demand by means other than Iranian natural gas. In the end, it is far from certain that India need rely on Iran. Recent finds (since 2002) include 57 billion cubic meters (bcm) by Cairn Energy offshore of Andhra Pradesh, 400 bcm by Reliance also offshore of Andhra Pradesh, and 28 bcm by Reliance offshore of Orissa.

Importing gas from Bangladesh was an option for India, but Bangladesh did not want to export until domestic supply questions were clarified and reserve figures better calculated. In 2004, Unocal, the lead on the Bangladesh project, lost interest after years of delay. A pipeline from Myanmar across Bangladesh to the Indian state of West Bengal remains a possibility. Shell has contracted to receive LNG supplies from Oman at its terminal in Gujurat.

As a result of current conjuncture, the Turkmenistan-Afghanistan-Pakistan (TAP) pipeline has been getting a second look. Originally conceived in the mid-1990s, this project was shelved during the Taliban's years in power in Kabul. However, the Russian-Ukrainian gas conflict at the beginning of this year finally brought home to President Saparmurat Niyazov Turkmenbashi the danger of Turkmenistan's near-exclusive dependence on Russian pipelines for exports.

Although pipeline security in Afghanistan remains at present problematic, recent attacks on energy infrastructure in Pakistani Balochistan (an energy-rich region but one still poor and disfavored by the present government) raise equally the question of the security of an IPI pipeline. An interesting variant of the TAP project sees it extended beyond Pakistan into India.

India's natural gas consumption in 2003 was 27.4 bcm, projected to rise to almost 40 bcm by 2010 and over 50 bcm in 2015. However, the growth of demand for natural gas in India is dependent on the domestic power generation industry, which at present is about two-thirds fed by coal, but is projected to be one of the biggest consumers of natural gas.

The Electricity Act of 2003 foresees unbundling and eventually privatizing the assets of India's state electricity boards into generation, transmission and distribution companies. Yet the Turkish experience is a noteworthy caution. In the late 1990s, Turkey planned huge increases in natural gas imports during the present decade, while legislating a similar dismantlement of state-owned and state-run electricity enterprises.

Turkey went so far as to amend its constitution so that power industry companies were no longer required to be state-owned. However, the process of unbundling and privatization has flagged. As a result, the government in Ankara recently revised significantly downward its projected gas import needs for the remainder of the decade. One should therefore be cautious about projections in the growth of Indian natural gas import requirements, and hence about whether a pipeline from Iran would be necessary or cost-effective, especially given other potential suppliers.

The US knows that it cannot veto single-handedly the construction of a natural gas pipeline from Iran to India via Pakistan, but it continues to discourage the attempt. In fact, external factors have made such a pipeline impractical until now. In the future, other import options for India and Pakistan, as well as prospecting and resource development on the territories of the two states and developments in their electricity sectors, may well make dependence on Iran unnecessary.

Dr Robert M Cutler ( is Senior Research Fellow, Institute of European and Russian Studies, Carleton University, Canada, and consultant to non-governmental organizations, industry, governments and international organizations.

March 26, 2006

Politics of Dalitism: creating Dalits among Dalits

By R.Upadhyay

The attempt of some of activists of Dalit movement in India to internationalise the issue in World Conference Against Racism (WCAR) concluded in the first week of September and follow up actions have created an impression that there is something basically wrong in the ideological orientation of the movement. The word Dalit was coined in post-colonial India by the disciples of Ambedkar. They did not accept the word Harijan (Men of God) used by Gandhi for the untouchables in Hindu social order because of their aversion against him. The word Dalit therefore, became the vernacular terminology for the oppressed classes, with a wider connotation for electoral sociology in the democratic polity of the country.

Mahatma Gandhi & Dr. Ambedkar: If we look to the history of Dalit movement, it is as old as the birth of the concept of untouchability, which was the darkest spot in Hindu social structure. Though, Hindu reformists tried their best to fight against this social evil right from the days untouchability was born, the real concern over it came to surface during the freedom struggle, when Mahatma Gandhi and Dr. B.R.Ambedkar fought against it in their own way. While Gandhi wanted complete eradication of untouchability for emotional integration of Hindu society, Ambedkar was for abolition of Varnashram structure of the Hindu social order.

The conceptual difference between the two messiahs of untouchables continues to affect the Dalit movement even after their death. While the disciples rejected Mahatma Gandhi for the sake of power and fulfillment of their personal ambitions, Ambedkar became a symbol of Dalit movement. A clue to understanding Ambedkar lies in his hatred of Gandhi. The activists of Dalit movement adopted the same philosophy against the upper castes and are still found boiling in the anger generated by their messiah Ambedkar. Taking advantage of the violent landscape, which started emerging since the closing decades of twentieth century, the followers of Ambedkar adopted the sole agenda to create social disorder and capture power. In both the situations, the process of social transformation in Hindu society, which took off in positive direction just after independence got disturbed.

To understand the multi dimensional direction of the Dalit movement, we may briefly look into the difference between Gandhi and Ambedkar on this issue. During the first Round Table Conference, when Ambedkar favoured the move of the British Government to provide separate electorate for the oppressed classes, Gandhi strongly opposed it on the plea that the move would disintegrate the Hindu society. He went for an indefinite hunger strike from September 20, 1932 against the decision of the then British Prime Minister J.Ramsay MacDonald granting communal award to the depressed classes in the constitution for governance of British India.

In view of the mass upsurge generated in the country to save the life of Gandhi, Ambedkar was compelled to soften his stand. A compromise between the leaders of caste Hindu and the depressed classes was reached on September 24,1932, popularly known as Poona Pact. The resolution announced in a public meeting on September 25 in Bombay confirmed -" henceforth, amongst Hindus no one shall be regarded as an untouchable by reason of his birth and they will have the same rights in all the social institutions as the other Hindus have". This landmark resolution in the history of the Dalit movement in India subsequently formed the basis for giving due share to Dalits in the political empowerment of Indian people in a democratic Indian polity.

Even though Ambedkar was a party to Poona Pact, he was never reconciled to it. His contempt against Gandhi, which continued even after his assassination on January 30,1948. On the death of Gandhi he expressed, "My real enemy has gone, thank goodness the eclipse is over". He equated the assassination of Gandhi with that of Caesar and the remark of Cicero to the messenger - "Tell the Romans, your hour of liberty has come". He further remarked, "While one regrets the assassination of Mahatma Gandhi, one cannot help finding in his heart the echo of the sentiments expressed by Cicero on the assassination of Caesar". Considering Gandhi as a "positive danger to this country", he quoted from Bible that "sometime good cometh out of evil, so also I think good will come out of the death of Mr. Gandhi" ( Gandhi and Ambedkar - Saviours of Untouchables by Sheshrao Chavan. Bharatiya Vidya Bhavan publication 2001, page 263-64).

The reaction of Ambedkar over the death of Gandhi may be viewed as a politics of negation for vengeance against the caste Hindus and also for political power for Dalits. He felt, "the problem of depressed classes will never be solved unless they get political power in their own hand" (Thus spoke Ambedkar by Bhagwan Das). He however, did not clarify as to how in a democratic polity of pluralistic society, Dalits would be the sole custodians of power.

Post Ambedkar Dalit Movement: The post-Gandhian and post-Ambedkar Dalit activists re-invented the direction of their movement, which was by and large focussed towards developing the negative ideas in a dark room. They are yet to take the next step to focus their negatives in light for positive prints. In the absence of a scientific endeavour their movement lags in its march towards social reform, as it has more or less become a platform for the political empowerment of some individuals for their personal ambitions and vested interests. This is not only against the concept of equalitarian Hindu sociology of Vedic India but also against the concept of democracy.

The present clash for Dalit leadership has confirmed the theory of C.Rajagopalachari that many Dalit leaders are interested for continuance of the undesirable status of Dalits for the fulfillment of their personal ambitions. Disagreeing with Ambedkar on Dalits issue he said, "… This is material explanation for the violent dislike of Gandhiji exhibited by Dr. Ambedkar, who looks upon this great and inspired reformer as the enemy of the untouchables, meaning thereby of the educated and ambitious among them who find that the depressed status furnishes short cut to position ".( "Ambedkar Refuted"page 33, Hind Kitab Publishers: Bombay 1946)

It may be partially true that political empowerment is key to social and economic empowerment as suggested by Ambedkar but this cannot be the sole criteria for the social equality of Dalits. The representatives (122 -76 SC and 46 ST in parliament against its strength of 543 and 1085 -556 SC and 529 ST in state assemblies against their strength of 4370) of Dalits in parliament and state assemblies in sizeable strength have been sharing political power for last fifty years. But if they have failed to bring a desired social change and economic upliftment of Dalits, there is something wrong in the movement, which is yet to be identified. The students of the constituting history have therefore, a right to know from Dalit activists the reason behind the failure of their representatives sharing political power.

One may be amused to understand that how only160 Dalit delegates under the umbrella of National Campaign on Dalit Human Rights in WCAR would have fought for the cause of Dalits in India if the representatives of Dalits sharing political power could not assert and agitate for the cause of their community? An objective analysis of the prevailing social condition and sentiments in India may corroborate the theory of C.Rajagopalachari that Dalit movement has become a vehicle to promote the personal interest of some individuals or groups.

The Dalits despite empowerment are not a political force – why?: In the absence of an All India mind with a cohesive and unified perspective, Dalit movement has also failed to emerge as a strong political force. Dalits are divided into hundreds of castes and sub-castes. About 56 percent of Dalit population belong to about 20 dominant castes among them. These dominant castes are presently grabbing all the privileges provided to the Dalits constitutionally. Even Dr.Ambedkar failed to give an intellectual explanation to unify them together, as a result, his political influence during his life time also remained confined to only Mahar caste of his community in the Maharashtra region.

Dalit activists, due to lack of actual ideological direction are not clear whether they are interested to ensure the material prosperity of Dalits or equal status in Hindu social order. Untouchability has almost disappeared, as touch of Dalit is no more considered to have any polluting affect on caste Hindus. However, so long the Dalits enjoy the benefits of reservation in Government jobs and admission in academic institutions, they may have to bear the stigma of being considered unequal in merit to the caste Hindus. The objective of Dalit movements should be therefore, to erase such stigma, which is possible only if Dalits get a chance for their proper education befitting to the standard required for competitions.

Vested interests in Command: Contrary to the objective of the movement discussed above, the managers of Dalit movement due to their vested interest do not want their people to be cleansed from the stigma of reservation and the agony of their past humiliation of being treated as untouchables. In stead of fighting for transformation of the Hindu social order, they are found more interested to promote themselves as Esperanto of United Nations politics. With weapon of hate, they are neither able to fight against the social inequality and injustice effectively nor in a position to contribute any significant social change.

In stead of looking on the growing consciousness among the educated caste Hindus against the social evil of caste discrimination against Dalits and appreciating this positive change, the Dalit activists ignore and understate the development. Their sole aim is now pointed towards personal ambitions at the cost of their community. This has created a new class of Brahmins among the Dalits, who are now exploiting the actual Dalits by grabbing the benefits meant for the latter. This may look like a paradox, but it is the hard reality.

The on going Dalit movement is gradually losing its track. Its multi-dimensional character based on the philosophy of love and hate is unfortunately turned into political theocracy, which is contrary to the basic concept of the total transformation of Hindu social order. Inciting the Dalits against the caste Hindus for historical agony without any honest effort for their emotional integration with rest of the Hindu social order is neither in the interest of this disadvantaged section of population nor in the interest of the nation.

The shrinking influence of the so called Brahminsm in electoral politics, social transformation, spiritual movement, or even other public affairs are enough indications of gradual changes in Hindu sociology. Dalit movements with a view to create social disorder by promoting caste hatred against the upper castes of ancient Varnashram system will simply halt the process of the on going social transformation. With their political empowerment by occupying the post of President, Union Cabinet ministers, Chief ministers, and bureaucrats, Dalits are gradually getting more opportunities for achieving social empowerment under democratic process. By gaining more confidence, Dalits are now found to be quite assertive of their rights. This however, does not mean that they have been acceptable in community dining or inter-caste marriage, which is not even prevalent within the various Dalit castes.

The objective of any social reform movement is to ensure a peaceful, decent and dignified life for every body without any social confrontation. But, unfortunately the Dalit activists are so obsessed and possessive in their approach towards the historical agony of their community that they have made the latter as prisoners of Dalitism, which hardly has any constructive plan for creation of a just social order. Their slogan for abolition of Varnashram (professional units) system and total abolition of caste is an utopian concept, which will never take root in the diverse and pluralistic Indian society.

Casteism is the bane of Indian society but the Indian people accept caste as a hard reality. Even the Christians and Muslims boast themselves of their upper caste heritage. In South India even Christians are maintaining visible distance from the Dalit Chritians as the latter continue to have separate church, separate burial ground and even separate places for social interactions. Similarly, even Muslims in India and Pakistan there is no inter- caste marriage among the Sheiks, Syed, Paithan and others because of their upper caste heritage before conversion.

The three Dalits groups and their separate agenda: As far as the present Dalit movement is concerned, it is in the hands of three vested interest groups of Dalit politicians, Dalt writers and Chrisian missionaries. Dalit political leaders like Kansi Ram and Ms Mayawati of Bahujan Samaj Party and Ram Vilas Paswan of Lok Jana Shakti are having their influence exclusively among the members of their own community. They can never come to power on their own due to their limited influence among the voters. For coming to power they are compelled to join some other parties dominated by caste Hindus. They are therefore, hardly in a position to bring any social change.

The second group, which claims to be the champion for the cause of Dalits is of Dalit writers. Their personal ambition and ego have kept them away from the common Dalits, who are illiterate and poor. They are more interested in their self-promotion than serving the cause of their community. Their possessiveness is often mistaken as love for Dalits. Since they do not get enough space in media to spit venom against the caste Hindus and are hardly in a position to play an effective role in electoral politics, they are always in search of the forces through which they could get national and international recognition. They have therefore, joined hand with forces (third group) determined to disintegrate the Hindu society.

The interest of the third group in Dalit movement is to de-Hinduise the Dalits and promote their proselytisational endeavour. The argument of this group that Christian society does not have any caste discrimination is not based on ground reality. The Dalit Christians are facing the problem of caste discrimination even in Christian society. Such discrimination is prevalent in Kerala even after the death of Dalit Christians, whose corpses do not find any place in the cemetery meant for upper caste convert Christians. T.V.Rajshekhar, a Dalit writer, while speaking in a seminar (Church and Dalit) organised by Christian leaders in Madras on June 14, 1986 said that Dalit Christians form about 80 percent Christian population in India but contrary to what Jesus Christ preached, the Dalit Christians are also the victim of caste discrimination as they have separate burial ground, separate churches and separate dwelling places.

Ever since the promulgation of presidential order No 19 of 1950 debarring the Dalits of non-Hindu and non-Sikh community to be included in the list of Scheduled castes, the Christian missionaries have been facing difficulty in alluring the Hindu Dalits for their conversion. For this they have already launched a movement for constitutional privileges for Dalit Christians. If they succeed in alienating the Dalits from Hindu social order, the entire Dalit community will get the benefit of constitutional provisions and it will help them in their mission for proselytisation.

Indian Social Institute(ISI), a Roman Catholic Mission outfit organised a meeting on "Durban and Dalit Discourse: Post Durban Scenario" on September 20. The meeting was organised with a view to forming a "broad alliance of disadvantaged section of society to battle the status quo that would prefer to keep them on the periphery of the country's social structure" (Hindu dated September 24). The move of the institute is to internationalise the issue. Had it not been so, it should first cleanse the Christian society in Kerala. In fact the Christian missionaries are also facing a dilemma of the isolation of Dalits from the affluent sections of the community. Dr. Prakash Luis, Executive Director of ISI said, "There is a sense of vertical divide within the community between the socially mobile 'Brahmanical Dalits' and the real Dalits among Dalits".

Conclusion: In the backdrop of the dialectics of Dalit movements, it appears that the Dalits have now become the victims of the politics of Dalitism being played by various groups. Instead of fighting the evils of caste discrimination in Hindu society, the Dalit movement has given birth to neo Dalitism, which hardly has any difference with the polluted Brahmanism.

The movement, which does not have the ingredients to bring about reconciliation among conflicting social groups and fails to accelerate the process of social harmony and human dignity, is bound to lose real direction. Dalits should therefore be very careful about the politics of Dalitism being played by vested interests not only at the cost of the disadvantaged community but also at the cost of social harmony, which is more dangerous for the nation.

(The analysis in the paper is based on the personal perception of the writer. E-mail:


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

by B. Raman

The late R. N. Kao, the founding father of the Research & Analysis Wing (R&AW), India's external intelligence agency, was my mentor as an intelligence analyst.

2. In July, 1967, as a 31-year-old Police officer, I started my intelligence career under him in the Intelligence Bureau (IB). He was, inter alia, in charge of external intelligence. On September 21, 1968, when the R&AW was formed by bifurcating the IB, Indira Gandhi, the then Prime Minister, appointed him its head. I moved over to the R&AW along with other officers, who were serving in the external intelligence division of the IB.

3. I was close to him not only throughout my career as an intelligence officer, but also after my retirement-----almost till the day of his death in January, 2002. I had a feeling that he had a soft corner for me and often used to discuss with me the lessons which he had learnt as an intelligence professional.

4. He used to tell me: "Raman, from time to time, you must stop doing all work, put your legs on the table and read the analyses made by you as well as others in the past. That will help you understand where you and other analysts went right and where you went wrong. That will make you a better analyst. That will also help you assess other analysts."

5. On the third anniversary of the US invasion of Iraq, I decided to follow Mr. Kao's old advice and read the articles which I had written immediately before and after the invasion of Iraq three years ago, before deciding whether I should attempt another analysis. Here is what I found when I glanced through my past articles:

6. In an article ( written on February 17, 2003, a month before the US troops invaded Iraq, I wrote: "Make Iraq the USA's Chechnya." That was the theme of the sermons in many jihadi madrasas of Pakistan last Friday. It is reported that taking advantage of the large-scale movement of Muslims to Saudi Arabia for the Haj pilgrimage, at least about 80 to 120 jihad-hardened cadres of Osama bin Laden's International Islamic Front (IIF) have moved over to that country under the garb of pilgrims. They intend infiltrating from there into Iraq. Most of them are stated to be Pakistanis, including Yemeni-Balochis (born of mixed Yemeni and Balochi parentage) belonging to the Harkat-ul-Mujahideen Al-Alami (HUM International), the Harkat-ul-Jihad-Al-Islami (HUJI) and the Jaish-e-Mohammad (JEM). Some of them had fought against the Soviet troops in Chechnya. It is said that their mission would be not to fight against the US and British troops when they invade Iraq, but to motivate the Iraqi people and organise them into an Iraqi Mujahideen movement against the foreign invaders similar to the Afghan Mujahideen movement against the Soviet troops in the 1980s. There is so far no evidence to believe that the Saddam Hussein Government in Baghdad has had anything to do with this movement of the IIF cadres to Iraq via Saudi Arabia. The dregs of the IIF and Al Qaeda taking shelter in Pakistan have been discussing their strategy for what they look upon as the next phase of their jihad against the "crusaders" and the Jewish people, which will be Iraq-focussed, though not necessarily exclusively in Iraqi territory. It is reported that amongst the actions under consideration in this connection are: * Intensification of attacks on US troops in Afghanistan. * Air-borne and under-water operations directed against the US and British naval ships, particularly aircraft-carriers. The under-water operations may involve the use of jihadi frogmen. The HUM-International, the HUJI and the JEM have in their ranks a large number of ex-servicemen from the Pakistani Army. A drive has now been undertaken to recruit ex-servicemen from the Pakistani Air Force and Navy for possible use against the invaders in Iraq--either directly or indirectly as trainers of the Arab cadres of Al Qaeda."

7. In another article written on April 11, 2003, after the US occupation of Baghdad, I wrote as follows: " When the Iraqi security forces in the smaller towns down South with their predominantly Shia population put up a fierce resistance for nearly two weeks, why did their colleagues vanish without a serious and sustained fight in Baghdad? This is an intriguing question, which would be debated for days and weeks to come. Those, who had been regularly watching the telecast accounts of Raaghi Omar, the BBC correspondent in Baghdad, would have noticed that he had been repeatedly expressing his puzzlement over the seeming absence of any defensive measures in Baghdad as the US troops approached the capital. As he pointed out repeatedly, there were no visible troop deployments inside the capital, no security barriers, no civil defence measures, no patrolling. Nothing. Why this was so? Did the regime decide long before the US troops neared Baghdad not to put up a fight in Baghdad lest this historic city, to which the Iraqis are as emotionally attached as the French are to Paris, suffer irreparable destruction? One can only pose the question without being able to answer it. Despite the ease with which the US troops have established themselves in sections of Baghdad and the disappearance of the regime from the capital, President George Bush, Vice-President Cheney and the US military commanders have been repeatedly cautioning of the difficulties that still lay ahead. The US troops are yet to establish effective control over the Sunni sectors of Baghdad and win the acclaim of the Sunnis. The allied troops have not yet ventured into large parts of Central Iraq, which are the bastion of the pro-Saddam Sunni tribes. The fact that there has not so far been any terrorist retaliation in other parts of the world does not mean that no terrorist strike is planned or that they are demoralised. The terrorists strike at a time and place of their choosing. It would be unwise to let the scenes telecast from the Shia sectors of Baghdad on April 9 induce a mood of self-congratulation and self-complacency. Would the fall of Baghdad mark the beginning of a new phase of unconventional war, not confined to Iraq alone, but spread across the world? After occupying Iraq, would the allied forces be able to pacify it in a manner which would strengthen regional peace and stability without creating revanchist feelings in the minds of the Iraqis and other Arabs? Could Iraq turn out to be the USA's Palestine or Lebanon? These are very valid questions which would preoccupy not only the US and the UK, but also the rest of the world for months to come. (

8. I wrote again on June 17, 2003, as follows: "By their invasion and occupation of Iraq, the US and the UK find themselves caught in a den of scorpions. Sections of the Shias as well as the Sunnis, independently of each other in certain areas and in tandem in certain others, have mounted hit and run raids on the occupying troops, causing a steadily increasing number of casualties. A stream of jihadi volunteers from Pakistan, Saudi Arabia, Syria, Iran, Egypt, Lebanon and other countries have started moving into Iraq to join what is promised as the mother of all jihads against the USA. Before the occupation, there was no evidence of any links between the Saddam Hussein regime and Osama bin Laden's Al Qaeda and International Islamic Front (IIF), despite apparently fabricated US evidence to the contrary. After the occupation, there are increasing reports of attempts to bring the dregs of Al Qaeda and the IIF from Afghanistan and Pakistan and of Saddam Hussein's Army and Baath Party together for what is described as a new jihad, the like of which the world has not seen before. Initial meetings in this regard have already been held in Al Qaeda and IIF hide-outs in Pakistan. There are claims, as yet unsubstantiated, of Saddam being alive and of he and bin Laden soon issuing a joint fatwa against the US and the UK. (

9. In a fourth article ( on August 14, 2003, I wrote as follows: "The US is at our mercy. One leg caught in Afghanistan and the other in Iraq. Alla-ho-Akbar! “So said Prof. Hafeez Mohammad Sayeed, the head of the Lashkar-e-Toiba (LET), while addressing a religious congregation earlier this month at Muridke, near Lahore, where it has its headquarters which contain, among other things, a mosque and a guest house constructed in the past with funds given by Osama bin Laden. In the years when bin Laden was not yet a persona non grata with the US, he used to stay in this guest house and pray in this mosque during his visits to Pakistan. After 1994, he stopped coming there. The guest house was thereafter being used to put up jihadi fugitives and trainees from Saudi Arabia and other countries. Ramzi Yousef, now in jail in the US for his involvement in the February 1993 New York World Trade Centre explosion, used to stay there after he escaped from Manila in 1995 and before his arrest and deportation to the US. Many of the terrorists involved in the 9/11 strikes in the US had stayed there on their way to and back from the Al Qaeda training camps in Afghanistan. This guest house is one of the places in Pakistan reportedly being readied now for putting up another special guest--- you guess who. Saddam Hussein. Yes, the former President of Iraq. The LET, which is a member of bin Laden's International Islamic Front (IIF) and which is now acting as the standard bearer of Al Qaeda and the IIF, claims that its martyrs' squad in Iraq is protecting Saddam and trying to spirit him out of Iraq to Pakistan so that he could be saved from the hands of the American special forces, which are hunting for him. How will they spirit him out of Iraq since it will be almost impossible to do so by sea or air? By overland clandestine routes through Iran, they say. It is the same route which is being used by the LET and other members of the IIF to smuggle trained and well-motivated jihadis into Iraq to harass the American troops. One is not certain whether the Iranian authorities are aware of this. It is estimated by knowledgeable sources that at least 80 plus jihad-hardened terrorists from Pakistan, belonging to Al Qaeda and the Pakistani components of the IIF, have already managed to clandestinely move across Iran in ones and twos and join the anti-US jihad in Iraq. Calls have been made in the Binori madrasa of Karachi and the Akora Khattak madrasa of the North-West Frontier Province (NWFP) for more Arabic-knowing volunteers to join the jihad in Iraq. The 80 plus contingent, which has already gone, reportedly includes Arabs, Pakistanis and at least four from South-East Asia. This number does not include those from the Harkat-ul-Mujahideen (HUM) and other organisations who had travelled by air to Saudi Arabia under the guise of pilgrims during the Haj season and from there moved over to Iraq. No estimate of their number is available. The LET, which is now practically co-ordinating the jihad world-wide of the IIF due to the incapacity of bin Laden, has, in consultation with the other components of the IIF, made a division of responsibilities. While the survivors of the Taliban and the Hizb-e-Islami of Gulbuddin Heckmatyar will focus on Afghanistan, the survivors of the Al Qaeda and the Pakistani components of the IIF will concentrate on Iraq. There is no proposal at present to bring any more Iraqi volunteers to Pakistan for training or for smuggling arms and ammunition into Iraq. Thousands of trained fighters and large quantities of arms and ammunition and explosives are already available in Iraq. From a study of reports emanating from Iraq, one could discern the following three point strategy being followed by the jihadis:* Acts of sabotage, in Sunni as well as Shia majority areas, directed at oil and electricity installations. The purpose is to create difficulties in the efforts of the US-led occupation authority to restore normal economic activity and ensure the availability of essential supplies to the people, thereby adding to their anger against the occupation authority;* Attacks, with hand-held weapons and explosive devices, against the American forces only, while avoiding such attacks on the British forces in southern Iraq and against troops from other countries; and * Attacks on Iraqis collaborating with the Americans. While the attacks on the American forces and their Iraqi collaborators are being made by the Iraqi as well as non-Iraqi jihadis, the acts of sabotage have been largely the work of Iraqis. For organising the anti-American resistance, lessons have been drawn not only from the jihadi experience in Afghanistan, but also from the experience of the French resistance and the Serb resistance under Tito during the second World War." It is not in the interests of India and other democracies that the US falters in Afghanistan and Iraq and is bloodied and beaten by the jihadis. India has been the worst victim of these jihadis since 1993. If the US fails to prevail over the jihadi terrorists, they will run amok all over the Asian region adding to the difficulties of India and the countries of South-East Asia. How one could help the USA without getting involved in a bloody counter-insurgency operation in Iraq is a question which needs the urgent attention of our policy-makers. This should also be discussed with Prime Minister Sharon of Israel during his expected visit to India next month. There is also an urgent need for mid-course policy corrections by the US. Its blind hatred of the Baath Party and witch-hunt of the Baath leaders and members are already proving counter-productive."

How would one characterise the present ground situation in Iraq?

Sustained insurgency-cum-terrorism, with no signs yet of any decrease in the flow of volunteers or any dilution in the motivation and determination of the insurgents to keep the US troops and their Iraqi collaborators bleeding. The insurgents-cum-terrorists still have the capability to assemble in large numbers undetected and mount attacks on the security forces. An example of this was seen in the Diyala province on March 21, 2006, when an estimated 100 insurgents attacked a police post, killed 15 police officers and freed nearly 30 detenus. While this is serious, this is not unusual in an insurgency-affected area. We ourselves saw an example of this in Bihar last year when reportedly hundreds of Maoist terrorists assembled undetected by the police and the intelligence agencies, successfully attacked a prison without being thwarted by the security forces, freed their arrested cadres and took them away.

How have the tactics and the modus operandi of the insurgents-cum-terrorists evolved ?

In the initial months after the US occupation of Iraq, the insurgents-cum-terrorists focussed their attacks on the American troops and the oil infrastructure. Attacks with mortars and hand-held weapons on the Green Zone and other areas were frequent. So too sabotage of oil pipelines and other installations. As the Americans strengthened the physical security for their own forces and the oil infrastructure, the insurgents-cum-terrorists turned the focus of their attacks on Iraqis collaborating with the US. Iraqi government servants and members of the newly-raised Iraqi police and Army became favourite targets of their attacks. Since the new governmental and security infrastructure is predominantly, if not totally, controlled by the majority Shias and the Kurds, who are the pro-US segment of the Iraqi Sunni population, most of the victims of the attacks were Shias and to a smaller extent Kurds. A large number of Shias were killed not because they were Shias, but because they were perceived as the quislings of the US. Since the beginning of this year, particularly after the explosion in a Shia shrine in Samara, which seriously damaged it, Shias are being attacked just because they are Shias, even if they are not employees of the present Government. The patriotic, nationalist motivation ----anger over the US occupation of their country---- which one saw in the beginning of the insurgency, is slowly degenerating into a sectarian motivation. Muslims killing Muslims not only because they are perceived as collaborating with the occupying power, but also because they belong to a different sect. Jihad with a sectarian motivation is not something new. One has been seeing it in Pakistan since the days of the late Zia-ul-Haq with the Sunni extremists frequently massacring the Shias and attacking their places of worship. One saw it in Afghanistan under the rule of the Taliban when hundreds of Shias (Hazaras) were massacred. During this period, there has also been an evolution in the modus operandi----from hand-held and heavy weapons to suicide terrorism of the Lebanese model, with the frequent use of the car bomb with devastating effect. The insurgents-cum-terrorists have proved themselves to be more adept in psychological warfare than the Americans. They have been making better use of the Internet than the Americans. Mr. Donald Rumsfeld, the US Defence Secretary, had also referred to this in a recent interview. There is no shortage of arms and ammunition and explosives for the insurgents. These are coming mostly from the secret caches stored in the Sunni areas by Saddam Hussein's Army before it evaporated from Baghdad on April 9, 2003, to take to insurgency. There is no evidence of large-scale smuggling of arms, ammunition and explosives from outside. There is no need for it. At the present rate of availability of volunteers and material resources, the insurgency is capable of keeping itself sustained for at least another five to eight years.

What has been the Shia response to the sectarianisation of the insurgency in Iraq by the Sunnis?

Shia leaders such as Ayatollah Sistani have genuinely tried to ensure that the Shias do not retaliate against the Sunnis for their attacks on their places of worship and on innocent Shias. Despite this, there have been many reprisal attacks by the Shias against the Sunnis. It is difficult to say how many of these attacks were spontaneous outbursts of anger and how many were instigated by the Shia leaders of the present Government. The predominantly Shia composition of the newly-raised security forces has led to many instances of disproportionate use of force against the Sunnis, serious violations of their human rights and consequent aggravation of the anger of the Sunnis. The newly-raised security forces have been formed partly by merging into them the various anti-Saddam militias of different anti-Saddam political leaders, who had been collaborating with the Central Intelligence Agency (CIA) before the invasion, and partly through new recruuitment, which has been mainly confined to the Shia and Kurdish communities. The merged militias have been a law unto themselves and have been responsible for many of the anti-Sunni reprisals. The new post-occupation recruits seem to be more disciplined than the pre-invasion militias.

Would it be correct to say that Iraq is already in a state of civil war or is on the brink of it?

The current debate in the US as to whether the present situation in Iraq could be characterised as a civil war is meaningless and could be counter-productive. There has been a very bad insurgency situation in Iraq. One had seen an equally bad situation in Afghanistan between the collapse of the Najibullah Government in April,1992, and the evaporation of the Taliban and Al Qaeda from the Afghan scene in October, 2001----with the Taliban and the Northern Alliance killing each other, with the Sunnis massacring the Shias and with different factions of the pre-1992 Mujahideen mounting attacks against each other. One has been seeing the beginnings of a similar situation in Pakistan---- with the Sunnis periodically attacking Shia places of worship and killing Shias in different parts of the country; with the tribals of Waziristan openly defying the military leadership and helping the Taliban, Al Qaeda and the International Islamic Front (IIF) and with the Baloch independence struggle in full swing. Yet nobody characterises the situation there as amounting to a civil war. Misplaced characterisations such as civil war could lead to over-reaction by the security forces and more serious violations of the human rights of the Sunnis. The situation should be seen purely as an insurgency, calling for a measured response.

Are the newly-raised Iraqi security forces capable of taking over the responsibility for counter-insurgency and counter-terrorism in the short and medium terms, thereby enabling the US to thin down its provocative presence?

No. On February 25, 2006, US Air Force Lt. Gen. Gene Renuart said in an interview that the number of Iraqi army battalions judged capable of fighting the insurgency without U.S. help had slipped from one to zero since September last year. But the number of Iraqi battalions capable of leading the battle, with U.S. troops in a support role, has grown by nearly 50%, from 36 to 53, and the number engaged in combat has increased by 11%, from 88 to 98, he said. He said he didn't know exactly why the one battalion previously rated as independent had been downgraded, but he cited the general inadequacy of the Iraqis' ability to provide their own transport and other logistical support. The total number of Iraqi security forces is estimated at present as about 232,000. One does not know how many of these are new recruits and how many are from the merged militias, how many are Arab Sunnis, what role the US has played in the recruitment etc. One gets the impression that the US kept its role confined largely to the training and arming of the forces and has left the recruitment to the Shia-Kurd dominated Government. There is very little Sunni representation in the security forces, the Police and other security agencies partly because the Sunnis themselves did not want to join the security forces and partly because even those, who might have wished to join, were kept out by the Shia-Kurdish political leadership. As a result, the security forces are seen largely by the Sunnis as a US-raised force of repression. The ground situation in Iraq calls for the exercise of three kinds of roles---static physical security and crisis management after a terrorist strike; active counter-terrorism and counter-insurgency to detect and neutralise secret insurgent/ terrorist cells and to thwart terrorist strikes; and counter-infiltration duties along the international borders to prevent cross-border terrorism. Presently, the Iraqi security forces are capable of performing only the first role. Their capability for the second role is weak. One does not know their capability for the third role. Even if it is judged adequate, the Americans would like to keep in their hands the responsibility for counter-infiltration tasks till Governments friendly to the US emerge in Teheran and Damascus.

Who exercises the leadership role over the insurgents/terrorists, what has been the composition of the resistance forces and is the sectarianisation of the insurgency the outcome of a conscious decision by Al Qaeda?

There are three distinct components---- the former soldiers of the Iraqi Armed Forces, including the Republican Guards, and the former members of the Baath Party; foreign terrorists of Al Qaeda and the International Islamic Front (IIF), with Saudis constituting the largest single group; and rogue and criminal elements. The rogue and criminal elements, who have been mostly involved in looting, kidnapping and other criminal activities, operate on their own and there is no evidence of any links with the first two components. Initially, the Iraqi resistance groups and the Al Qaeda/IIF terrorists operated separately, but in recent months there is evidence of some co-operation between them. While the Al Qaeda/IIF elements operate under the acknowledged leadership of Abu Musab al-Zarqawi, no details are available about the leadership of the Iraqi resistance fighters. There have been vastly differing estimates of the total numbers of Iraqi resistance fighters and Al Qaeda/IIF terrorists involved---with some estimates going up to 30,000. I will estimate their number on the basis of the available evidence of the details of the various incidents as 5,000 minus---- about 600 foreign terrorists and the rest Iraqis. Contradictory views have been articulated by different Al Qaeda leaders on the use of the sectarian card. In a message issued before the US invasion of Iraq, Osama bin Laden had stressed the importance of all sections of the Iraqi people----Sunnis or Shias, Baathists or non-Baathists--- fighting jointly against the Americans. Ayman al-Zawahiri, his No. 2, in a message of last year, had given indication of feeling uncomfortable over the anti-Shia direction of their jihad against the Americans. Zarqawi is perceived to be not averse to using the anti-Shia card tactically. The Iraqi resistance fighters themselves have been exhibiting more and more sectarian hatred because of the brutal methods used by the newly-raised Iraqi security forces against the arrested Sunnis. All these factors have contributed to the sectarianisation of the insurgency. However, it is difficult to say whether there has been a conscious decision and, if so, who took it.

What has been the role of Iran?

Devious. It facilitated the US invasion and occupation of Iraq by encouraging the Iraqi Shias to co-operate with the US. After the US occupation, on finding that the US attention has turned to Teheran as the next target for a regime change, it closed its eyes to Pakistan-based Al Qaeda and IIF terrorists infiltrating into Iraq via Iranian territory in order to keep the US forces bleeding and preoccupied in Iraq. As the US kept up its pressure on Teheran on the nuclear issue, it has offered to have talks with the US on Iraq in order to remove any suspicions the US might have about its hand in stoking the insurgency there. The US suspicions that Shia terrorists operating in Iraq have been getting materials for improvised explosive devices from Iran or from the Hizbollah, with Iranian complicity, have not been corroborated, but well-informed sources say that so many foreign terrorists, all Sunnis, would not have been able to reach Iraq without Iran's policy of conscious inaction against them as they transited Iranian territory. Iran's long-term objective is to have in Baghdad a Shia regime amenable to its influence, but its short and medium term aim is to work for the early restoration of normalcy in the Shia majority areas and Baghdad and to keep the Sunni provinces boiling in order to have the US troops tied up there.

What has been the role of Syria?

There is no evidence of conscious Syrian complicity with the insurgents-cum-terrorists. Syria had in the past given sanctuary to many foreign terrorist leaders, but there is no evidence that it has been stoking the insurgency in Iraq. Of all the countries in the Islamic world, only Syria and Libya might have some chance of exercising a moderating influence on the Iraqi Sunnis. All other Muslim countries in West Asia and North Africa are viewed with suspicion by the Iraqi Sunnis because of their close relations with the US and their failure to support the Saddam Hussein regime. One does not know much about the attitude of the Iraqi resistance fighters towards the Sudan. Because of its policy of demonisation of the Syrian regime in relation to its alleged activities in the Lebanon, the US has denied itself an opportunity to test out Damascus.

What is the source of funding of the insurgents-cum-terrorists?

Extortion, sale proceeds of the objects d'art stolen during the widespread looting in Baghdad after the entry of the US troops, contributions from Islamic organisations in other countries, including Saudi Arabia and Pakistan, and proceeds of the narcotics smuggling from Afghanistan.

What are the weaknesses/inadequacies of the US counter-insurgent campaign in Iraq?

(a). Continuing scarcity of actionable intelligence----human and technical---despite the double-fold increase in the total budget of the US intelligence community for its operations all over the world to US $ 44 billion. Compared to many important captures of Al Qaeda leaders operating from the Afghanistan-Pakistan region since 2001, the US has hardly made any significant arrest in Iraq. The intelligence capability of the Iraqi Government is non-existent. The US' own capability is improving, but not significantly.

(b). A weak psychological warfare campaign. Compared to the effective PSYWAR waged by the US intelligence against international communism during the cold war, their PSYWAR against international jihadi terrorism is very weak. It has not been able to make effective use of the Internet and the other modern means of communication. To wage an effective PSYWAR, the US agencies need not only good linguists, but also experts in pan-Islamism. It lacks them badly.

(c). Many Muslim countries of the world co-operated with the US against international communism which they viewed as apostate. Their co-operation with the US against international jihadi terrorism has been unsatisfactory.

(d). The US credibility damaged by its invasion of Iraq on the basis of fabricated/inaccurate/exaggerated intelligence has not yet recovered. Its projections of the ground situation in Iraq, even if accurate, are now disbelieved not only by large sections of the international community, but of its own population.

(e). Lack of adequate public support to the campaign of the Bush Administration against international jihadi terrorism due to its failure to convince the US public on the importance of the US prevailing over the terrorists in Iraq and Afghanistan. While the US public continues to look upon the operations in Afghanistan as necessary to root out jihadi terrorism and prevent another 9/11 in the US homeland, it has not yet realised that a similar connect exists between the US operations in Iraq and its efforts to prevent another 9/11.


Whatever might be the rights or wrongs of the US invasion and occupation of Iraq, it is not in the interest of the international community, including India, that the jihadi terrorists prevail in Iraq. They would become even more dangerous to the world than they are today. They have to be destroyed in Iraq. Only the US has the human and material resources to achieve this. Fortunately, President George Bush has been giving evidence of the required determination to stay put in Iraq and fight out the terrorists without succumbing to the clamour from large sections of his own public to work out an exit strategy. It is in India's interest to assist the US in whatever way it can without getting involved in actual ground operations in Iraq. This co-operation has to be covert and not open in view of its likely negative impact on our own Muslim community. Many Western countries clandestinely co-operated with India in its counter-terrorism operations against the Khalistani terrorists in the Punjab. They insisted on their co-operation remaining covert in view of its likely negative impact on their own Sikh population. India clandestinely co-operated with the US and other Western countries to counter the subversion campaign of international communism without making it public lest it damage the close State-to-State relations between India and the USSR. India and Israel clandestinely co-operated with each other for 24 years while openly maintaining a distance from each other. A similar policy on clandestine Indo-US co-operation against international jihadi terrorism in Afghanistan and Iraq is called for. We should not allow this co-operation to come in the way of our openly articulating our disapproval of incidents such as those of Abu Garaib and Guantanamo Bay. The US, which knows the importance of our keeping our Muslim community away from Al Qaeda and the IIF, should understand the compulsions of our openly articulating our disapproval.