October 06, 2007

Gas stored in Ukraine to be transferred to Gazprom

06.10.2007, 13.06

KIEV, October 6 (Itar-Tass) - A protocol will be signed on October 8 to transfer gas stored in Ukraine to Gazprom's possession to settle a part of the Ukrainian debt, Ukrainian Fuel and Energy Minister Yuri Boiko said in a televised interview on Saturday.

The debt exceeding 1.3 billion dollars owed to Gazprom was formed as companies working in Ukraine did not pay for gas stored in Ukrainian underground tanks. Companies have the gas, but they have not paid money for it to Gazprom, the minister said.

Stored gas is usually sold in autumn and winter, and then payments are made or a loan is taken for payment, he said.

Gazprom will sign a protocol on October 8 on the transfer of the gas in Ukrainian underground storage tanks to the Russian company's possession, and it will be counted as repayment of about 600 million dollars of the debt.

The gas volumes were not destined for use on the Ukrainian market, Boiko noted.

On Friday, the Russian company's press service said in Moscow that Gazprom head Alexei Miller and Ukrainian Fuel and Energy Minister Boiko would meet in the Russian company’s office on October 8 to continue talks on settlement of the debt for the gas supplied to Ukraine in 2007.

On Tuesday, Gazprom sent a notification to its European partners about the Ukrainian debt of more than 1.3 billion dollars for gas. Taking into consideration the Ukrainian side's systematic failure to carry out contracts, Gazprom will have to begin to reduce gas supplies for Ukrainian consumers if the debt is not settled in October, the notification said.

On October 3, Miller and Boiko had a working meeting in Gazprom's central office, and an agreement was reached that the current Ukrainian government would take control of solution of the problem to settle the debt before November 1, this year

CSTO to receive RF weapons at internal prices

CSTO to receive RF weapons at internal prices

06.10.2007, 20.51

DUSHANBE, October 6 (Itar-Tass) - Russian President Vladimir Putin said member-countries of the Collective Security Treaty Organisation (CSTO) would receive Russian armaments and special hardware at internal prices.

President Putin told journalists on Saturday, “Serious concrete results have been achieved with the CSTO. They are mainly related to military-technical supplies. We coordinated and approved a list of all documents under which CSTO members would receive Russian armaments and special hardware for their Armed Forces and their special services at internal prices.”

On September 25, CSTO General Secretary Nikolai Bordyuzha told President Vladimir Putin that a set of documents concerning military-technical cooperation and some other spheres would be presented at the CSTO summit in Dushanbe.

“We will present seven agreements to the presidents. They will concern the peacekeeping potential, the protection of intellectual property in the joint design, manufacturing and maintenance of military hardware, preferential terms of the supplies of specialized equipment for law enforcers, and exhibitions,” Bordyuzha said.

“We are ready to present two protocols concerning the urgent assistance to countries that experience an aggression, and the mechanism of joint response to emergencies,” he said.

In his words, the organisation is successfully containing drug trafficking and illegal migration.

“The organisation should eventually transform from a military-political entity into a multifunctional one, which would handle security problems,” Bordyuzha said.

He welcomed the restored membership of Uzbekistan in the organisation.


By B.Raman

In the run-up to next year's Beijing Olympics, China has been keen to project itself as a facilitator of solutions to long-standing problems in the Asian region.

2. Its quiet role in persuading North Korea to give up its military nuclear capability and to respond positively to South Korean overtures for a normalisation of relations between North and South Korea is widely recognised. If North korea is showing signs of wanting to come out of its years of international diplomatic isolation, a large part of the credit should go to Beijing.

3. Since June last, there have been indicators that Beijing has mounted a similar initiative to nudge the military Junta in Myanmar to come out of its isolation and respond to international concerns over its policies. The first indicator was its facilitating a low-profile meeting between senior officials of the US State Department and the Myanmar Government in Beijing in the last week of June. The meeting was reportedly attended by U.S. Deputy Assistant Secretary of State, Mr. Eric John, and Myanmar's Ministers of Foreign Affairs, Culture and Information.

4. The recent large demonstrations spearheaded by young monks all over Myanmar, its violent suppression by the Junta and the international outrage over the brutal suppression brought out a sophisticated response from China. Even while openly sticking to its traditional position of no interference in the internal affairs of Myanmar and no coercive diplomacy through economic sanctions and orchestrated condemnations of the Junta, China made it clear to the Junta that it cannot go on defying the international community.

5. China's public reactions to the recent events were more forthcoming than in the past. While talking to Mr.Gordon Brown, the British Prime Minister, over phone on September 29,2007, the Chinese Prime Minister, Mr. Wen Jiabao , was reported to have said: "China hopes that all parties concerned in Myanmar show restraint, resume stability through peaceful means as soon as possible, promote domestic reconciliation and achieve democracy and development." Significantly, his comments over phone to the British Prime Minister were immediately released to the media by the Chinese Foreign Office in order to reassure the international community that it has been responsive to the international opinion on this subject.

6. The initial Chinese efforts were directed towards urging moderation in the use of force by the Junta and preventing a repetition of 1988, which might have made the situation more complicated than it has been. Subsequent Chinese efforts have been directed towards nudging the Junta to shed its rigidities of the past and respond appropriately to the international concerns. The decision of the Junta to receive Mr.Ibrahim Gambari, the UN Special Representative, who met Daw Aung San Suu Kyi twice and Senior General Than Shwe, the head of the Junta,once, the subsequent indications in the State-owned media that the General might not be averse to meeting Suu Kyi provided she gave up her support to international sanctions against Myanmar and her so-called confrontational attitude and the invitation to Ms.Shari Villarosa, the US chief of mission in Myanmar, to visit Naypyidaw, the new Capital, for a meeting with as yet unspecified members of the Junta are tentative indications that the Junta might have realised the untenability of continued rigidity in its policies. The credit for this should go in no small measure to the Chinese prodding. Mr.Nyan Win, a spokesman of Suu Kyi's National League For Democracy (NLD), was reported to have stated on October 5,2007, that she would consider the offer in a positive light. There have been indications that Mr.Gambari might be visiting Myanmar again shortly to continue his mission to urge the Junta to talk to its opponents.

7. These developments have come in the wake of unconfirmed reports about unhappiness among junior ranks of the Army over the use of brutal force against the monks, who were demonstrating peacefully. Are these moves by the Junta merely tactical to soften international criticism and to quieten its junior officers without making any substantive changes in its policies or do they presage a significant shift in policy? It is difficult to answer this question at present. But, one can expect that China, which has been keen that its Myanmar-related policies do not cast a shadow over next year's Olympics, will continue its prodding of the Junta to step out of its self-created shell of international diplomatic isolation .

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

RUSSIA : New Foreign Intelligence head , Fradkov to be appointed SVR new director

06.10.2007, 17.11

DUSHANBE, October 6 (Itar-Tass) - Russian President Vladimir Putin said Former Prime Minister Mikhail Fradkov would be appointed new director of the Foreign Intelligence Service.

President Putin told journalists on Saturday, “As for the director of the Foreign Intelligence Service, you know this man very well. It’s Mikhail Yefimovich Fradkov.”

Incumbent director of the Foreign Intelligence Service Sergei Lebedev was appointed CIS executive secretary on Friday.

World’s shortest war lasted for only 45 minutes

The Anglo-Zanzibar War was fought between the United Kingdom and Zanzibar on 27 August 1896. With a duration of only 45 minutes, it holds the record of being the shortest war in recorded history. The war broke out after Sultan Hamad bin Thuwaini, who had willingly co-operated with the British colonial administration, died on 25 August 1896, and his nephew, Khalid bin Bargash, seized power in what amounted to a coup d’état. The British favoured another candidate, Hamud bin Muhammed, whom they believed would be easier to work with, and delivered an ultimatum ordering Bargash to abdicate. Bargash refused. While Bargash’s troops set to fortifying the palace, the Royal Navy assembled five warships in the harbour in front of the palace. The British also landed parties of Royal Marines to support the “loyalist” regular army of Zanzibar. Despite the Sultan’s last-minute efforts to negotiate for peace via the U.S. representative on the island, the Royal Navy ships opened fire on the palace at 9 am on 27 August 1896 as soon as the ultimatum ran out. With the palace falling down around him and escalating casualties, Bargash beat a hasty retreat to the German consulate where he was granted asylum. The shelling stopped after 45 minutes. The British demanded that the Germans surrender the erstwhile Sultan to them, but he escaped to sea on 2 October 1896. He lived in exile in Dar es Salaam until captured by the British in 1916. He was later allowed to live in Mombasa where he died in 1927. As a final act, Britain demanded payment from the Zanzibar government to pay for the shells fired on the country.

The Indo-Pakistani War of 1971 was a major conflict between India and Pakistan. The war is closely associated with Bangladesh Liberation War (sometimes also referred to as Pakistani Civil War). The Bangladesh liberation war was a conflict between the traditionally dominant West Pakistanis and the majority East Pakistanis. The war ignited after the 1970 Pakistani election, in which the East Pakistani Awami League won 167 of 169 seats in East Pakistan, thus securing a simple majority in the 313-seat lower house of the Pakistani parliament. There is an argument about exact dates of the war. However, the armed conflict on India’s western front during the period between 3 December 1971 and 16 December 1971 is called the Indo-Pakistani War by both the Bangladeshi and Indian armies. The war ended in a defeat for the Pakistani military in a fortnight.

2. 6 Day War lasted for 6 days

Following Israeli threats against its Syrian ally, Egypt amassed 1000 tanks and 100,000 soldiers on the border of the Sinai Peninsula, closed the Straits of Tiran to all ships flying Israel flags or carrying strategic materials, and called for unified Arab action against Israel. On June 5, 1967, Israel launched the an attack against Egypt’s airforce. Jordan then attacked western Jerusalem and Netanya. At the war’s end, Israel had gained control of eastern Jerusalem, the Gaza Strip, the Sinai Peninsula, the West Bank, and the Golan Heights. The results of the war affect the geopolitics of the region to this day. Overall, Israel’s territory grew by a factor of 3, including about one million Arabs placed under Israel’s direct control in the newly captured territories. Israel’s strategic depth grew to at least 300 kilometers in the south, 60 kilometers in the east and 20 kilometers of extremely rugged terrain in the north, a security asset that would prove useful in the 1973 Arab-Israeli War six years later.

1. Anglo-Zanzibar War lasted for only 45 minutes

Since Biblical times and before, man has been constantly fighting. It seems that never a year goes by without one war or another starting or finishing. Some of these wars take many years and have very high death tolls, but there have also been some extraordinarily short wars. The following is the list of world's shortest wars ever taken place.

5. Georgian-Armenian War lasted for 24 days

Georgian-Armenian War was a border war fought in 1918 between the Democratic Republic of Georgia and the Democratic Republic of Armenia over the parts of then disputed provinces of Lori, Javakheti, and Borchalo district, which had been historically bicultural Armenian-Georgian territories, but were largely populated by Armenians in the 19th century. By the end of World War I some of these territories were occupied by the Ottomans. When they abandoned the region, both Georgians and Armenians claimed control. The dispute degenerated into armed clashes on December 7, 1918. The hostilities continued with varying success until December 31 when the British brokered ceasefire was signed, leaving the disputed part of Borchalo district under the joint Georgian-Armenian administration which lasted until the establishment of the Soviet rule in Armenia in 1920.

4. Serbo-Bulgarian War lasted for 14 days

The Serbo-Bulgarian war was a war between Serbia and Bulgaria that erupted on November 14, 1885 and lasted until November 28 the same year. Final peace was signed on February 19, 1886 in Bucharest. As a result of the war, European powers acknowledged the act of Unification of Bulgaria which happened on September 6 1885. On November 28, the Viennese ambassador in Belgrade, count Kevenhueller-Metsch, visited the headquarters of the Bulgarian Army and demanded the ceasing of military actions, threatening that otherwise the Bulgarian forces would meet Austro-Hungarian troops. Bulgaria’s victories on the battlefield played the main role in defending the Bulgarian unification. They spread Bulgaria’s name and infused respect towards united Bulgaria on behalf of its neighbors.

3. Indo-Pakistani War lasted for 13 days

The Indo-Pakistani War of 1971 was a major conflict between India and Pakistan. The war is closely associated with Bangladesh Liberation War (sometimes also referred to as Pakistani Civil War). The Bangladesh liberation war was a conflict between the traditionally dominant West Pakistanis and the majority East Pakistanis. The war ignited after the 1970 Pakistani election, in which the East Pakistani Awami League won 167 of 169 seats in East Pakistan, thus securing a simple majority in the 313-seat lower house of the Pakistani parliament. There is an argument about exact dates of the war. However, the armed conflict on India’s western front during the period between 3 December 1971 and 16 December 1971 is called the Indo-Pakistani War by both the Bangladeshi and Indian armies. The war ended in a defeat for the Pakistani military in a fortnight.

2. 6 Day War lasted for 6 days

Following Israeli threats against its Syrian ally, Egypt amassed 1000 tanks and 100,000 soldiers on the border of the Sinai Peninsula, closed the Straits of Tiran to all ships flying Israel flags or carrying strategic materials, and called for unified Arab action against Israel. On June 5, 1967, Israel launched the an attack against Egypt’s airforce. Jordan then attacked western Jerusalem and Netanya. At the war’s end, Israel had gained control of eastern Jerusalem, the Gaza Strip, the Sinai Peninsula, the West Bank, and the Golan Heights. The results of the war affect the geopolitics of the region to this day. Overall, Israel’s territory grew by a factor of 3, including about one million Arabs placed under Israel’s direct control in the newly captured territories. Israel’s strategic depth grew to at least 300 kilometers in the south, 60 kilometers in the east and 20 kilometers of extremely rugged terrain in the north, a security asset that would prove useful in the 1973 Arab-Israeli War six years later.

1. Anglo-Zanzibar War lasted for only 45 minutes

The Anglo-Zanzibar War was fought between the United Kingdom and Zanzibar on 27 August 1896. With a duration of only 45 minutes, it holds the record of being the shortest war in recorded history. The war broke out after Sultan Hamad bin Thuwaini, who had willingly co-operated with the British colonial administration, died on 25 August 1896, and his nephew, Khalid bin Bargash, seized power in what amounted to a coup d’état. The British favoured another candidate, Hamud bin Muhammed, whom they believed would be easier to work with, and delivered an ultimatum ordering Bargash to abdicate. Bargash refused. While Bargash’s troops set to fortifying the palace, the Royal Navy assembled five warships in the harbour in front of the palace. The British also landed parties of Royal Marines to support the “loyalist” regular army of Zanzibar. Despite the Sultan’s last-minute efforts to negotiate for peace via the U.S. representative on the island, the Royal Navy ships opened fire on the palace at 9 am on 27 August 1896 as soon as the ultimatum ran out. With the palace falling down around him and escalating casualties, Bargash beat a hasty retreat to the German consulate where he was granted asylum. The shelling stopped after 45 minutes. The British demanded that the Germans surrender the erstwhile Sultan to them, but he escaped to sea on 2 October 1896. He lived in exile in Dar es Salaam until captured by the British in 1916. He was later allowed to live in Mombasa where he died in 1927. As a final act, Britain demanded payment from the Zanzibar government to pay for the shells fired on the country.

Source: listverse.com

03.10.2007 Source: URL: http://english.pravda.ru/society/stories/98112-world_shortest_war-0

Intelligence failure: Tales which sting

7 Oct 2007, 0007 hrs IST,Rajeev Deshpande & Vishwa Mohan,TNN

NEW DELHI:/TNN/ "We need to go far beyond conventional responses in facing severe terrorist threats. We need superior intelligence capabilities which can alert us to impending threats. On internal security, we face formidable challenges" - Prime Minister Manmohan Singh while addressing the conference or directors-general and inspectors-general of police in Delhi last week.

At a time when the role of intelligence in prevention and containment of terrorist and other security threats is recognised more than ever before - not the least by the PM himself - India's covert agencies are handicapped by a thick curtain of institutional opaqueness and a culture of obsessive secrecy. This, often enough, leads to incessant turf battles, little or no accountability and costly glitches.

Even 60 years after Independence, India's primary intelligence agencies - the Intelligence Bureau (IB) and Research and Analysis Wing (RAW) - are largely immune from any scrutiny. In the absence of a Freedom of Information Act or parliamentary oversight, failures and lapses can remain secret forever.

Along with a shadowy existence, agencies are not obligated to communicate at all, leading to a double deficit. On the one hand, the layers-within-layers functioning breeds inefficiency and makes it easier to bend rules, and on the other, anonymity of IB and RAW prevents them from presenting their points of views.

The recent case of V K Singh, a career army officer, who retired from RAW after a deputation with the agency, underlines both aspects.

His book, India's External Intelligence: Secrets of RAW, has resulted in Singh being booked under the Official Secrets Act. He has run afoul of his former colleagues by allegedly outing a serving middle-level officer, mentioning an on-going project, as also discussing the PM's security communication system.

But even as his "crimes" are investigated by CBI, RAW bosses are fighting shy of listing the reasons for recommending action against him.

Typically of RAW, no official account is available apart from leaks in the media. Even CBI finds it bizarre, with sources saying that it may be difficult for the investigating agency to make the case against him stick.

While an OSA case has been registered against Singh, RAW has clamped a gag order, requiring those who retire to seek official permission before writing a book. But while RAW cracks down, there is no response to queries raised by Singh such as whether his "demi-official" letter to PMO did indeed lead to a re-evaluation of the PM's security communication.

On loan from army, Singh was not really a RAW "insider", but he dealt with telecom, being a Signals expert who could spot the slackness marked by listening posts in disrepair, antennae lying unused years after procurement and anomalies in procurement prices.

But no less worrying is the clamp down which may nip the refreshing trend of former sleuths throwing some light on how IB and RAW function: a first tentative step towards filling the gap in the nation's understanding of security and intelligence matters.
In the West, this is hardly novel - former CIA chief George Tenet's "At the Centre of the Storm" is about his seven years as agency chief in which he rubbishes US vice-president Dick Cheney.

But the trend is just catching on in India. Former RAW additional secretary B Raman provides a revealing account of Indira Gandhi's security before her assassination and of the Bofors investigations in Geneva. Former IB joint director Maloy Krishna Dhar underlines the unceasing demands by his political bosses to provide "dope" on government rebels and Opposition leaders.

Former RAW chief Vikram Sood has regularly contributed articles on security issues as has former IB boss Ajit Doval. This growing band of professionals has slowly but surely lifted some of the mist over our covert agencies and, importantly, educated public opinion about the issues and factors influencing India's security. Even if they sometimes offer sectional insights, they help experts and ordinary citizens understand complex issues.

Dhar told TOI, "I have written my account as I feel that there is need to bring out certain accounts in the public. This may not have made me popular with politicians." Similarly, Raman said that there was a strong case for bringing information out of IB and RAW closets for the benefit of researchers and experts. V K Singh said that the OSA case against him seemed intended to discourage others from penning their accounts.

While the faint ray of sunlight offered by these accounts is crucial for educating public opinion, those enamoured of the status quo are wary of the dent into the "classified culture" that allow security czars to evade responsibility and run agencies as their fiefs.

Not all are unhappy over the door being pushed ajar, however. Some serving intelligence officers TOI spoke to also felt that slamming OSA cases and imposing gag orders do not answer important questions: will issues of indiscipline, inter-agency rivalry, profit-making, political interference, seniority battles, misuse of slush funds and flawed approaches to intelligence collection, analysis and counter-intelligence raised by former sleuths be addressed?

Spy versus shy

Saturday, October 06, 2007 at 0000 hrs

Time for senior government figures to call for major reform of Intelligence agencies?

In their spare moments our country’s spies must be feeling sorry for their counterparts in other democracies. The CIA, for example, is not only answerable to the US legislature’s Intelligence oversight committees, its files can’t remain classified for ever and the American media has a good record of analysing and exposing the agency’s more bizarre and questionable methods and operations. RAW, in contrast, does not have to suffer from institutionalised parliamentary scrutiny. All of us in the Indian media should acknowledge that our Intelligence agencies have got away lightly as far as investigative reportage goes. And, the biggest advantage of all, RAW has the Official Secrets Act that many eminent leaders over the years have apparently found reprehensible but no one has found the time to amend it, far less kill it, which is the fate it deserves.

That is why the appalling official conduct over V.K. Singh’s book — the retired major-general and ex-RAW officer wrote about the spy agency’s byzantine ways in our op-ed page yesterday — must become a rallying point for thorough reform. It is frankly astonishing that senior government figures have been mute spectators as the RAW brass has used the OSA to humiliate, raid and browbeat a citizen. The CBI told the courts that although it found good reason to confiscate Singh’s computer and papers it hadn’t found time to read the book that is supposed to have put national security at peril. This would have been funny had the issue of brute suppression of freedom of expression not been so serious. As Singh argued in this paper yesterday, if RAW found his allegations on corruption unfounded it could have arranged for the government to sue him.

Instead, the government is seeming to be complicit in arguing that information about RAW officials presiding over allegedly dodgy contracts and tenders is something citizens mustn’t know about. This is not an issue to be left only to the Administrative Reforms Commission. ARC’s head, Veerappa Moily has publicly called for reforming the OSA. That is welcome. But the proposal won’t receive political traction unless senior government figures take ownership of it. It is entirely valid to ask why the PMO isn’t letting its views be known. It is the nature and strength of democracy that silence on such issues begins to look like either endorsement or inability to alter the status quo. But the status quo must be challenged. Not just the OSA but the cosy, convenient norms under which Intelligence agencies function, as detailed by our columnist today, must be reviewed.


5 Minutes Over Islamabad

By A.H Amin
26 September, 2007

There appears to be a strong evolving consensus in the USA as well as its NATO allies that Pakistan is the centre of gravity of the Islamists in the ongoing so called war on terror.This idea gained currency in various high US policy making circles as well as think tanks around 1987-89 and then assumed a solid shape in the decade 1990-2000.After 2001 it was adopted as a policy and concrete albeit top secret planning was started to deal with Pakistan which at the ulterior level was seen as part of the problem rather than a solution.

When the Spaniards landed in Mexico their main collaborators were indigenous Mexicans themselves ! In Pakistan thus the USA made use of indigenous collaborators ! Generals whose sons had a US passport ! Bankers who were US nationals but also dual Pakistani citizens ! Thus these leaders justified collaboration with the USA after 9/11 on the grounds that what they did was the only guarantee for the survival of Pakistan !

The Pakistani military junta in 2001 was isolated internationally so it was very easy for the USA to overawe it with one telephone call ! The typical career army officers life consists of aiming to get a good annual report from his boss ! Pakistan's military leadership grasped this opportunity to get a good pat from their geopolitical strategic boss the US president and with open hands provided airbases and all logistic support to the USA ! This was a short term measure so that Pakistani military junta's survival in power was ensured ! It had no connection with survival of Pakistan as a state ! Compare how Iran is surviving as a state despite defying the USA since 1979 ! Later on a fiction that USA threatened Pakistan with bombing it to the stone age was invented ! Thus irresolution was rationalized as supreme strategic brilliance ! Ironically some so called media men who are also running private businesses were in the forefront in praising this strategic timidity as strategic brilliance !

What happened in " Real Strategic Terms" was that with Pakistani military junta's active collaboration i.e logistic support and air bases the USA was able to occupy Afghanistan very cheaply and with minimum casualties ! This was no mean strategic achievement as it placed the USA right below the soft underbelly of China as well as Russia ! More significantly it reduced the flying as well as striking time to the Pakistani nuclear as well as missile installation.Close proximity to Pakistan also enabled the USA to conduct intelligence operations inside Pakistan in a far more optimum manner than ever before.

It was theorized in secret sessions of the highest level US decision making circles that although the Islamists fighting the USA had no fixed centre of gravity which could be attacked and eliminated, Pakistan with its sympathetic pro Islamist populace and nuclear and missile assets was at least a provisional centre of gravity of the Islamists.Note that US feared , not the ISI , not the tinpot Pakistani military junta , but the sentiments of the vast bulk of the Pakistani populace and its arsenal of nuclear warheads and missiles !

Thus Afghanistan was seen as a potential US base to carry out a 5 minutes over Islamabad or Kahuta just like the Israelis with US cooperation destroyed Iraq's nuclear reactor in 5 minutes over Baghdad in 1981.

In 1945 the USA had bombed Hiroshima and Nagasaki not for any direct military purpose but to overawe the USSR that no one could match US military might.The USSR had faced the challenge and developed a fine nuclear arsenal to counter US aspirations to control the world.Later China also emerged as another challenger of USA ! Thanks to USSR help many South Asian countries as well as African countries fought and won wars of liberation ! The Arabs were able to confront Israel only because of Soviet aid till the collaborator Sadaat sold his soul to the USA and Israel !

The USA was all set to reduce Pakistan to size in 1977 when it financed the anti Bhutto agitation in 1977 ! This plan was delayed because of the Soviet invasion of Afghanistan from 1979 till 1989 when the USA had but no option other than using Pakistan as a base for assisting the anti Soviet War in Afghanistan.

Change of posture came very quickly when after 1990 the USA started talking that Pakistan is a terrorist state or was on the brink of being a terrorist state.This was basically a war of nerves the decisive point of which was one telephone call which made Pakistan's tinpot military junta take the so called " brilliant strategic decision" of collaborating with the USA !

After the disintegration of the USSR , strategically speaking the US military targets were the littoral states of the Indian Ocean .Thus the Iraq War of 1990 , the Invasion and capture of Iraq of 2003 and the invasion of capture of Afghanistan in 2001.

Interestingly Iraq and Afghanistan were not ultimate objectives of US onslaught but merely initial bridgeheads.This was only Phase One ! Phase Two may include Pakistan and Phase Three may include Iran ! Phase Four being Chinese Singkiang and/or Central Asian Republics ! Somewhere the Americans call it Orange Revolution whose first good example was the anti Bhutto agitation that they financed in 1977 in Pakistan ! Sometimes they call it a war on terror or war against weapons of mass destruction !
History has proved that generals fail as statesmen ! In 1936 all of Hitlers generals opposed his decision to march into Rhineland ! This is so because generals think only in tangible terms ! They do not appreciate the value of intangible factors like resolution etc ! Thus after 9/11 when Pakistan's tinpot junta wargamed being invaded by USA it only thought in military terms ! It failed to appreciate that the USA was humbled in Vietnam and in Iran in 1979 ! In the process they allowed and facilitated the USA to occupy Afghanistan in very cheap military terms ! Pakistan shall pay a heavy price for this ! Whether Armitage said it or not , the USA will bomb some parts of Pakistan to the stone age in order to denuclearize Pakistan.
Pakistan is in a strange strategic situation ! It is led by a military dictator whose sole aim is to stay in power ! Its number two the so called prime minister is a US citizen and in case he dies naturally or unnaturally his successor i.e the Chairman Senate is also a US citizen ! So politically the USA is dominant in Pakistan ! But this does not make the Americans happy ! Their aim is denuclearization and complete submission of Pakistan !

Imagine the following scenario ! Pakistan's military dictator is killed in a mysterious air crash or assassinated by a common soldier on duty like Indita Gandhi ! The USA immediately issues an ultimatum that it fears that Pakistan's nuclear arsenal may fall in the hands of extremists ! A surgical nuclear strike is launched on Kahuta and Islamabad !Another general takes over power in Pakistan and capitulates to all US demands dismantling the Pakistani nuclear arsenal and its missiles ! Rationalising this on the ground that if he did not do so the USA would bomb Pakistan to stone age ! In next ten years Pakistan is Balkanised with an independent US supported Baluchistan and an independent puppet Pashtun state in NWFP and Northern Pashtun majority districts of Baluchistan ! An independent Sindh in the South , an independent Kashmir and Northern Areas with US bases for future operations against Singkiang on the Deosai Plateau and only Punjab left as Pakistan ! No nukes , no missiles , no resolve ! Just like the Christians reduced the Muslims to Granada in Spain and finally eliminated even Granada in 1492.
This is not a pessimistic view of things but a hard strategic reality ! The writing is clear on the wall ! The war which USA is fighting is not against the Pashtun tribes of Waziristan but against all Muslims ! Bagram , Khost,Jalalabad and Kandahar airfields are being developed not against the Taliban or against the Al Qaeda but for 5 minutes over Islamabad !

In strategy everything moves very slowly and it is the greatness of a statesman and military commander to assess what will happen in next 5 or ten years ! Here in Pakistan we have a situation where our military leaders are overawed by just one phone call ! From leaders of such a caliber little resolution or strategic insight can be expected !

From 1979 to 1988 Pakistan's military junta after seizing power through the backdoor , provided the USA with an active base to destabilize and destroy Afghanistan's defacto government . All infrastructure of Afghanistan was destroyed as well as all its institutions between 1979 and 1992 .Now if the Afghan state allows the USA to do so it should not be a surprise ! And why did Pakistan's military junta of 1977-88 support the so called Afghan Jihad ! So that General Zia stays in power ! The characters were different in 1979 and 2001 , but the motivation was the same !
Someone may skeptically view the above presented scenario ! The following arguments support the presented scenario ! If Saddam was destroyed on the mere suspicion that Iraq possessed Weapons of Mass Destruction why is Pakistan not a perfectly legitimate target for USA , because it is a Muslim country and posseses WMD without any doubt ! Saddam was more secular than any Muslim leader in modern history yet his country and he himself were targeted and destroyed ! What is the aim of this so called enlightened Islam espoused by Musharraf ! To act as anesthesia for USA and destroy all resistance power of the Pakistani nation ! If not strategic brilliance at least we have good anesthetists at the top ! In war surprise is the key so the USA will not politely announce its intentions before it reduces Pakistan to size ! Musharraf , Benazir and any other general that may emerge are merely pawns in the game which can be removed by air crashes or assassinations ! Waziristan , Al Qaeda and terrorism are merely hollow slogans ! The Pakistan Army is being forced into Waziristan by the USA not to attack the Al Qaeda but to create an internal divide in Pakistan ! There have been many cases of desertion of soldiers in units in Waziristan as well as cases of refusal of officers for carrying out duties seen as against their conscience ! What kind of liberalism does Musharraf want us to practice when the enemy is at the gates and even inside the Pakistani citadel of power ! What can be expected from leaders whose sons are US citizens or who consider USA safer for their families to live than Pakistan ! What can be expected from US citizens now enjoying high political office in Pakistan after having a good time in Bank of America or CITI Bank ! What respect will the army jawans have for leaders more distinguished for deciding not to fight a battle after one telephone call or more interested in privatizing the PSO , PTCL or the Steel Mill !

5 Minutes over Islamabad is a distinct possibility ! This is the irony of a nation who supplied many pilots who were blood brothers of Syrian,Iraqis and Jordanians in downing many Israeli aircrafts over Golan , Amman and Iraq ! Today the Pakistani leaders are practicing sycophancy with Israel to gain a good pat from USA !

The conclusion is that Pakistan is led by collaborators who will go to any extent to survive while its nuclear and military assets would be destroyed with partial or active cooperation of its own leaders ! Fear made men believe in the worst but here in Pakistan we have a scenario in which Pakistan's leaders are trying to sell the idea that timid strategic collaboration is strategic brilliance ! A secret clause of Vision 2030 propaganda of Pakistani sitting leadership is that by 2030 Pakistan would be a Balkanised state with no nuclear and missile assets and kicked by all its neighbours ! Good luck to vision 2030 !

Division of the people More Disastrous Than Partition

Justice Dr. M. Rama Jois

Under our Constitution, there is no necessity at all to classify the citizens into majority or minority for the reason that Article 14 mandates the State to give protection to all the persons and to ensure equality before law for all of them. Article 15 prohibits the State from discriminating against any citizen on the ground of religion, race or caste.

After we secured political independence for the truncated motherland, we framed and adopted a Constitution describing all of us as “We the People of Bharat” meaning that we are one nation bound by the feeling of fraternity as stated in the Preamble of the Constitution.

The partition of our motherland carving out Pakistan out of our motherland on the basis of two-nation theory and communal hatredness is the greatest tragedy of the 20th century nay in the history of the world. It is estimated that number of persons killed on the eve of partition and immediately thereafter, far exceeded the killings during the World War-II. The ‘memory of horror’ of partition is a nightmare. It is extremely painful to think of it. But the fact remains that the division of the country was the worst crime perpetrated in human history, on a peace-loving nation which had never invaded on any other territory. It was the worst man-made disaster. It has created problems which perhaps will continue forever or at least for a few centuries.

However, after we secured political independence for the truncated motherland, we framed and adopted a Constitution describing all of us as “We the People of Bharat” meaning thereby that we are one nation bound by the feeling of fraternity as stated in the Preamble of the Constitution. Dr. Ambedkar, the architect of our Constitution, attached great importance to fraternity. He said:

“What does fraternity mean? Fraternity means a sense of common brotherhood of all Indians—of Indians being one people. It is this principle which gives unity and solidarity to social life. [B.R. Ambedkar and Human Rights, p.15]

Therefore, we made equality and non-discrimination on the ground of religion as basic structure of the Constitution. We adopted a democratic system of governance based on periodical elections. But unfortunately, the democratic system which is considered the best system began to be abused by selfish politicians to divide the people on the very communal lines on the basis of which the country was divided with the object of getting elected to political positions again and again on account of power-mongering attitude. Such division of the people on communal lines at the hands of our government as is being done is more disastrous than partition, for, by partition we lost a portion of our territory but by division of one people on communal lines would be fatal to our existence as a nation.

In this regard, it is important to refer to the words of wisdom in the Mahabharata [Shanthiparava 56-35]. Having regard to the facts and circumstances of those periods, the Mahabharata stated that for protection of the country there were as many as six forts namely:

(i) Marudurga [protection by deserts] (ii) Jaladurga [protection from water mass] (iii) Bhoodurga [protection from vast extent of land] (iv) Aranyadurga [protection by forests] (v) Giridurga [protection by mountains] and (vi) Naradurga [protection in the form of fort of people].

Finally, it is stated that “Sarvadurgeshu manyante naradurgam sudustharam” which means that among all the six forts Naradurga [people’s fort] is formidable for the protection of the country. This statement is very significant. The message is that the greatest protection for any country is its own people. This is an eternal and universal truth. If people of a country are united by the feeling of patriotism and fraternity that constitutes the greatest protection to it. This is one of the objectives of our Constitution as expressly stated in the Preamble to the Constitution in the following words: “Fraternity and unity and integrity of the nation.” This objective is incorporated in the fundamental rights to equality and prohibition against discrimination on the ground of religion in Articles 14 and 15 of the Constitution.

But, it is unfortunate that despite the bitter lesson of partition brought about on communal basis, every attempt is being made by our government to destroy this formidable fort from within by dividing the people into minority and non-minority and to weaken the nation by pursuing what is popularly called vote bank politics.

This divide-and-rule policy which was commenced from the first general election in 1952 itself which has been continuing unabated as it was found to be electorally advantageous to those practicing it has now reached dangerous proportions. The importance given to such divisive policy is the sole reason for not achieving reconciliation between Hindus and Muslims even though such reconciliation is fundamental requirement as Hindus and Muslims have to live in this land for all times to come. But unfortunately, our so-called secular politicians place their political interest above national interest and even the Constitution despite their taking oath to abide by the Constitution. For example, despite the judgment of a Constitution Bench of the Supreme Court in Shah Bano’s case holding that if Constitution has any meaning, a uniform civil code should be enacted obeying the directive in Article 44 and in particular uniform law for marriage and divorce should be enacted and thereby rule of monogamy shall be made applicable to Muslims, it is not being done. Article 48 of the Constitution, which directs total ban on cow slaughtering which is dearer to the hearts of Hindus who constitute 85 per cent of the population, is not implemented just to please Muslims.

In fact under our Constitution, there is no necessity at all to classify the citizens into majority or minority for the reason that Article 14 mandates the State to give protection to all the persons and to ensure equality before law for all of them. Article 15 prohibits the State from discriminating against any citizen on the ground of religion, race or caste. Similarly, Article 16 ensures equal opportunity in the matter of employment under the State and also prohibits discrimination on the ground of religion, race, caste or any of them. Therefore, whenever an individual is subjected to any discrimination in the matter of employment or admission to any educational institution or in respect of any other matter, he can claim relief under Article 32 before the Supreme Court or at the hands of the High Courts under Article 226 of the Constitution. The Courts are not going to ask whether the petitioner belongs to minority or majority but they will examine whether he has been subjected to discrimination compared with other citizens and whether he is entitled to get the relief at the hands of the court. There is no need to plead that he belongs to minority or non-minority. This being the position, dividing the people into minority and majority is inconsistent with the basic structure of the Constitution. It is high time that creating rift between the citizens on the ground that some belong to minority and some belong to non-minority should be stopped as all are entitled to equal protection under Articles 14 and 16 of the Constitution without reference to their religion. In fact, the word ‘minority’ is not used in the Constitution except in Article 30 which was intended for a limited purpose namely, only to ensure protection to linguistic and religious minorities in a State in the matter of establishing and administering educational institutions and not to create a right to them which was not available to other citizens.

This aspect has been placed beyond doubt by the judgment delivered by an eleven-judge bench of the Supreme Court in TMA Pai’s case in which the Court said at para 138 of the judgment thus:

“The whole object of conferring the right on minorities under Article 30 is to ensure that there will be equality between the majority and the minority.”

(The writer is former Chief Justice of Punjab & Haryana High Court and former Governor of Jharkhand and Bihar.)

Balochistan maps

Indian Air Force Eager To Hold Military Exercises With USAF

Dated 6/10/2007

The Indian Air Force (IAF), which has turned 75 years old, wants to expand its 'reach' in future up to the South China Sea to secure the country's energy needs, due to the changing global scenario.

The IAF wants to have facilities that would help the force to operate away from homeland for purposes as varied as disaster relief operations and securing country's energy need, said Chief of Air Staff, Air Chief Marshal F H Major. He said that with many significant changes taking place in our environment, roles and organization, the IAF is adapting to reorient itself to the country's expanding strategic boundaries.

The endeavor is to acquire long-reach aircraft, persistence, all weather precision, networked and space-enabled capabilities, he added. Air Chief Marshal Major's reference of South China Sea indicates the growing concern about the security of the oil vessels passing through the crucial Strait of Malacca, due to the growing activity of non-state actors in the region. He also said that the IAF wants out participate in the 2008-Red Flag Nellis joint exercise with the NATO forces, which is a 'highly regarded' air exercise in the world.

He said that the IAF had an enriching experience during the recently held multilateral naval exercise "Malabar" in the Bay of Bengal, where Jaguar aircraft of the IAF also took part. The Red Flag exercises, held periodically at the Nellis Air Force Base in Nevada in the US, since the Vietnam War, are very realistic aerial war games with the purpose to give pilots from the US, NATO and other allied countries an opportunity to practice and refine their skills for real combat situations.

The IAF has been regularly participating in joint air exercises with countries like the US, the UK and France. In 2005, IAF took part in one joint exercise with the US and in 2004, there were two joint exercises with the US Air Force. In October 2006, Indian and British Air Force jointly participated in air exercise in Agra in India, followed by the recent joint exercise by the air forces of the two countries in UK this year.

The Chief of Air Staff today also said that the depleting force level, presently at 32 squadrons down from the authorized 39 and half squadrons, is a "cause of concern but not a cause of worry." "Progress is noticeable in all fronts", he, however, added. He disclosed that negotiations are on to acquire the fifth generation aircraft, which will be formalized "pretty soon." He added that indigenisation of key weapon system is essential as no country would provide their best weaponry to other country.

He said that purchase of 126 Medium Multi-Role Combat Aircraft (MMRCA), deployment of indigenously made Light Combat Aircraft (LCA) and induction of new Sukhoi fighter would help in bridging the 'gap', and would play a significant role in the country's plan to have a comprehensive air defence system.
Copyright © 2007 India Defence. All Rights Reserved.

Source: http://www.india-defence.com/reports/3566
Strategic Forces Command Conducts User Trials Of Agni Ballistic Missile
Dated 5/10/2007

The Strategic Forces Command successfully conducted the user trial of Agni Missile A-I at Chandipur at Sea near Balasore in Orissa at 10.35 this morning. The performance parameters of the 700 km range missile were as expected and the desired objectives have been met.

The earlier version of the Agni Missile (Agni-I) is a single stage, solid fuel, road and rail mobile, short-range ballistic missile (SRBM). It was the successor to the prototype "Agni-TD". It is propelled by solid fuel, giving it a shallow re-entry angle and manoeuvering RV body-lift aerodynamics gives it the ability to correct trajectory errors and reduce thermal stresses.

The MRV has a velocity correction package to correct launch trajectory variances. Some Agni RV versions use a set of solid fuelled thruster cartridges of predetermined impulse, allowing the onboard guidance controller to trim velocity, using discrete combination of impulse quantum along desired spatial orientation.
Copyright © 2007 India Defence. All Rights Reserved.


Saudi Arabia : Ghawar Oil field running dry ?

by James D. Hamilton


No country is more important to oil markets than Saudi Arabia. The kingdom produced roughly 9.2 million barrels of crude a day in 2006, and accounted for 19 percent of world oil exports. Many analysts expect it to supply a quarter of the world’s added production over the next few years. And as the only producer with significant excess capacity, it has played a crucial role in alleviating temporary supply disruptions, increasing daily production by 3.1 million barrels during the first Gulf War, for example, when oil production in Iraq and Kuwait dropped by 5.3 million barrels.

[Click here to view a larger image of the chart above.]

The Ghawar oil field is the kingdom’s crown jewel. Stretching for more than 150 miles beneath the desert, it is the largest known deposit in the world. It produces perhaps twice as much oil as any other field, and has doubtless accounted for more than half of Saudi Arabia’s oil production. Yet the Saudis have been removing oil from this reservoir for half a century. Sooner or later, its production must fall.

The Saudis do not release data on how much oil they are extracting from individual wells, or on the remaining reserves of individual oil fields. But the total amount that the kingdom produces has been declining, down a million barrels a day over the last two years of data.

The Saudis have claimed these cuts have been in response to weak demand. However, the big drop in production began in the spring of 2006, when the price of oil was rising from $60 to $74 a barrel; the claim that no one wanted to buy Saudi Arabia’s light crude strains credulity. The drop in production has also coincided with a huge new Saudi effort to find and pump more oil: The number of active oil rigs in Saudi Arabia has tripled over the past three years.

Frustrated by the lack of hard data on Ghawar, Stuart Staniford, a computer scientist with a doctorate in physics, has conducted a painstaking study of publicly available information. His research has been reported at theoildrum.com, a Web site that analyzes energy markets.

The Saudis have developed Ghawar by using peripheral water injection— water is pumped into the reservoir, driving the remaining oil to the surface. More details about Saudi production were available before 1980, allowing Staniford to infer that the depth of the remaining oil column in northern Ghawar at that time was about 500 feet. Evidence from many sources suggests that the water level has been rising at about 18.4 feet per year. If you extrapolate that trend, this would mean that the northern part of Ghawar is by now quite depleted.

Staniford has also built a detailed computer simulation of the Ghawar reservoir, based on its size and shape, the porosity and permeability of its rock, and the assumed oil-extraction rates. The results of this simulation line up remarkably well with Staniford’s other calculations. Oil production from northern Ghawar has likely peaked.

Southern Ghawar still holds a lot of oil, and perhaps the kingdom’s push to find new fields will bear fruit. But northern Ghawar was developed first because it was by far the most promising field. Its production cannot be easily replaced. At about the same time that Saudi production began its decline, the new Haradh project in southern Ghawar began producing perhaps an additional 300,000 barrels a day. The Saudis have also made a huge investment to reopen the Qatif field on the eastern coast, which they had abandoned in 1995; it is now producing an estimated half-million barrels a day. With Saudi production falling despite these new contributions, the situation could be serious.

At a bare minimum, the era when excess Saudi capacity could cushion geopolitical disruptions in oil supplies may well be over, even though the threat of such disruptions is greater than ever. And if Saudi production continues to decline even as world demand keeps growing, in a few years we will look back at the summer of 2007 as the last of the days when gasoline—even at $3.50 a gallon—was still plentiful and cheap.

James D. Hamilton is a professor of economics at the University of California, San Diego; his analysis appears regularly at www.econbrowser.com.

Inflation and the Federal Reserve

by Richard C. Cook

Global Research, October 2, 2007

No term in the “dismal science” of economics is more misunderstood than “inflation.” The word means “rising prices,” but is used at different times by different people to describe totally different phenomena.

The most predominant type of inflation is natural and occurs as raw materials are used up and must be replenished. It’s akin to the law of diminishing returns, or entropy, and is overcome by technological innovation. Another type of inflation is expressed through constantly changing conditions of supply and demand, including the fluctuating cost of labor. Yet another type results from the predatory pricing practices of monopolies such as the worldwide oil cartel which has jacked up the cost of petroleum to over $80 a barrel.

Of an entirely different order are the inflation induced by central banks such as the Federal Reserve in creating financial bubbles or by the federal government in taking inflationary actions such as annually compounded increases in government employee salaries to reduce the real cost of servicing its astronomical debt. These instances might actually be viewed as “high crimes and misdemeanors” which violate the due process clause of the Constitution by unlawfully destroying the value of citizens’ property.

In any case, inflation is a fact of life that is almost impossible to control, let alone understand in all its complexities and details. This article focuses on inflation as it is treated by the official monetary system.

So let’s talk about money. Money is obviously an indispensable component of our economic system. If it is properly constituted and managed, it has the ability not only to command goods and services produced and traded within the system, but also to encourage and call forth new types and quantities of production. The presence or absence of sufficient quantities of money, how it is created and introduced into circulation, how its value is established and maintained, and how it is used or not used to further the ideals of society are critical issues that properly should fall within the purview of political debate.

Unfortunately, these issues are not debated at all within the American political system, which is thereby failing in some of its most fundamental responsibilities.

These issues are not debated because people make the mistake of believing that money is, or should be, a thing of value in-and-of itself, or that this value is created by “market forces,” so is somehow a “given.”

Many also believe that monetary policy is a technical subject understandable only to experts, so should be immune from political oversight.

But history shows that money serves its socially-beneficial purposes only when it is regarded as an instrument of law and an economic medium-of-exchange and when it is regulated by a government which can responsibly direct its benefits to the common welfare of all citizens. Such is not the case with the U.S. and other Western nations today.

That the Founding Fathers held a progressive view of money is proven by the fact that the Constitution gave Congress the power “To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures.” During the nineteenth century, the Supreme Court confirmed in cases involving the famous Greenbacks that this authority includes the issuance of paper money.

Through much of our history, the monetary power has been implemented through a variety of methods, though since the creation of the privately-owned Federal Reserve System in 1913, it has been exercised primarily by the private banking system which lends credit into circulation and charges interest for its use.

Today it is the political power of the banks and financiers that prevents monetary matters from being examined and debated the way they should be. This power is also the basis of our retention of a medieval relic in the destructive and corrosive system of fractional reserve banking.

Fractional reserve banking under a privately-owned central bank is not ordained by our Constitution. It is an extralegal construction resulting from abdication by Congress of its own lawful prerogatives. This system has resulted in a condition of growing debt slavery fixed upon our population which is afflicted with a chronic shortage of purchasing power sufficient to absorb our national production.

If examined closely, this system could likely be declared unconstitutional, as indicated above. A system which forces citizens into ruinous debt is clearly in violation of the Constitutional guarantees of due process and equal protection under the laws and might even be found to violate the Thirteenth Amendment, which states that, “Neither slavery nor involuntary servitude…shall exist within the United States.”

Philosophically, the way money is viewed in the eyes of the banking system is to confuse it with “wealth.” “Wealth” to them means cash or bank deposits. “Wealth” is regarded as belonging to private individuals, not the government. Granted, the government has the power to commandeer private wealth through taxation, or borrow it through the sale of bonds and other securities. Also, the government holds the title to certain assets, including land, buildings, equipment, etc.

But the government does not, in this view, originate wealth. Therefore, money, viewed primitively as a commodity with intrinsic value, not as an instrument of exchange created by law, cannot be created or originated by the government. This is the presumption on which today’s bank-oriented monetary system is based, which is why it is so inadequate to meet the needs of society.

Present dogmas overlook the fact that at critical periods of our history, such as during colonial times, the Revolutionary War, and during and after the Civil War with the issuance of the Greenbacks, the government did in fact directly issue its own money without resort either to debt instruments marketed to banks and/or the public or to collection of taxes as backing for the currency. That is to say, the government exercised the power at these times to utilize its sovereign prerogative to create “wealth” on behalf of the public from which it derived its authority. It then used this wealth to meet legitimate public objectives, such as to wage the war that won our independence or the one that preserved the Union. The fact that this wealth was “real” was reflected in the ability of the government to receive such monetary tokens as payment-in-full of taxes.

Also, the government has circulated wealth in the form of metallic coinage, though its monetary value has been virtually eliminated by inflation of the Federal Reserve Notes which, since their introduction, have destroyed ninety-five percent of the value of the dollar.

An even broader view of wealth sees it as the total productivity of the nation’s economy, both present and potential. This includes the skills and ability of the people who produce that wealth, as well as the laws, institutions, and traditions which serve to unlock their creative potential. Money is then a mere token used to facilitate exchange within this complex of factors. Under this definition, the “wealth” of the United States includes our Declaration of Independence and Constitution, including the Bill of Rights.

Unfortunately, the present course of affairs as defined by the current Federal Reserve System which oversees our monetary system falls short of these rightful uses of money. With the participation of the financial industry, the Federal Reserve mainly assures as its first priority that the wealth held by the banks will never be relinquished by them and, if possible, will not be diminished.

Rather this wealth will perpetually increase through the interest charged for its use. Of course money borrowed from the banks may be used by debtors to create new assets or may simply be spent on consumer goods. But the wealth of the banks themselves must never be compromised.

Thus the banks have become the primary focus of power within our nation. This is implied whenever the word “stability” is used with reference to the financial system. Businesses, households, and individuals may be subjected to the “creative destruction” of market forces, but not the banks. Also, given compound interest, a monetary system based on lending must result in the migration of all a nation’s wealth into the hands of the lenders within a few generations. This is what is happening in the U.S. today.

The current crisis dates to 1979 when the Federal Reserve initiated a severe recession in order to fight the inflation which had built up in the aftermath of the Vietnam War and by the 1971 removal of the gold peg for international currency transactions. The situation was similar to what happened during the run-up to the Great Depression, starting well before the 1929 stock market crash.

Since the recession of 1979-83, the concentration of wealth in the hands of the nation’s upper income groups, i.e., those with money to lend or invest, has been increasing, all the way through the economic resurgence of the mid- to late-1990s up to today. Claims during this period by the Federal Reserve that inflation has been brought under control are called into question by everyday experience, during which individuals and families have seen large increases in prices for such necessities as housing, utilities, fuel, health care, education, insurance, etc.

In fact, an examination of the Consumer Price Index (CPI) published by the Bureau of Labor Statistics indicates a record of relentless and unabated price inflation since 1965. The rate of increase slowed somewhat during 1979-81, when the Fed-induced recession began, but it resumed its climb and has continued upwards since then. In fact, prices have been virtually out-of-control for the last thirty-eight years despite official disclaimers to the contrary. For this the Federal Reserve has offered no explanation.

The question of why this inflation has occurred is one that requires intensive study. There is a disconnect in the policy of the Federal Reserve through its assumption that the inflation it did not necessarily seem to have caused could be corrected by its periodic actions in raising interest rates and so contracting the currency. In fact, the Fed has never had any reason to believe it could regulate the economy through interest rates—the essence of monetarism—except through the most simplistic interpretation of its role. In fact, it seems to have been a kind of hubris for it to think it could solve a problem which it obviously has never fully understood.

As stated in its own 1994 publication, “The Federal Reserve System: Purpose and Functions,” the first duty of the Fed is “conducting the nation’s monetary policy by influencing the money and credit conditions in the economy in pursuit of full employment and stable prices.”

What does it mean that since the Fed came into existence, neither of these two objectives has ever been achieved? Can it be that given the way our monetary system under the Fed is constituted, the two goals of full employment and stable prices are contradictory? Might some even say that the chief method the Federal Reserve uses to reach for price stability has been to create, or at least tolerate, un- and underemployment? In fact the Fed in its actual operations, at least since 1979, has treated full employment and price stability as being mutually exclusive. Otherwise it would not have created a major recession at that time, where unemployment increased by sixty-five percent and many businesses and even some major industries were decimated or destroyed.

In fact, the ability of the Fed to act so destructively is one of the bedrock principles of monetarism. The Fed attacks inflation by constricting consumer demand through reducing pressure on prices from potential wage and salary escalation. Therefore it is the workers of the nation who are unwittingly and without their consent the foot-soldiers in the Fed’s price stability battle strategy.

The Fed exercises its powers by expanding and contracting the currency through the three tools of buying and selling U.S. Treasury securities through open market operations, operating the discount window at the Federal Reserve Bank of New York, and establishing reserve requirements for financial institutions which are engaged in fractional reserve lending.

The Federal Reserve says that by altering the quantity of currency in circulation it is not creating or eliminating wealth. Rather it says it is merely affecting the amount of “liquidity” available to meet current economic needs. It does this, it says, by moving money from stored wealth; i.e., interest-bearing forms such as savings accounts, to cash and checking accounts used to meet immediate financial requirements.

Admittedly, the ability of the Fed to control the amount of money in circulation and to influence economic outcomes is limited. Even though investors believe that the key to a sound investment strategy is to gauge accurately the effect of the Fed’s actions on the economy, expectations should never be raised too high. The Fed cannot directly dictate such measures as how much unemployment should be tolerated. And while the tools at its disposal are powerful and effective and have been honed through decades of practice, they are still awkward and difficult to manipulate in order to prevent undesirable or even catastrophic effects. But these effects have nevertheless taken place.

Returning to 1979 when the Fed sought to squeeze out the inflation from the economy that had built up during the years following the Vietnam War—partly through the loose money policies of Arthur Burns, Chairman of the Fed under President Nixon—it did so by raising the federal funds rate for borrowing by member banks. Under Chairman Paul Volcker, who was appointed in 1976 by President Jimmy Carter, interest rates soared at times to above twenty percent over the next several years, rates unprecedented in the nation’s history.

These actions had only a slight impact on reducing inflation, but at a terrible cost to the American economy and to American workers, farmers, and small businesspeople. Also devastated were the poorer areas of America’s cities which had been steadily climbing out of poverty. Examples were the destruction wrought in places such as Baltimore or Detroit, where huge sections turned into “death zones.”

Since that time, the U.S. economy has not recovered. These were the actions that wrecked our manufacturing industries and produced the so-called “service economy.” The nation languished in this condition as sub-par economic conditions lingered through the Reagan years and into the term of President George H.W. Bush. Continuing poor economic conditions contributed to Bush’s defeat by Bill Clinton in 1992, with relief coming later through the boom of the mid- to late-1990s, during the so-called dot.com bubble.

At this time, huge amounts of investment capital, particularly from abroad, went into building the technology firms that were leading the microcomputer and internet revolutions. But with the recession triggered by the crash of the stock market in 2000, this presumed prosperity was exposed as an illusion. Today we find ourselves again in a serious stage of economic stagnation, marked by rising un- and under-employment and massive increases in consumer, business, and government debt. And inflation marches on.

Faced with such circumstances, the Federal Reserve does not seem to know what to do. By its own admission, it lacks measures and targets by which to regulate the currency. During the early 1980s, the Fed went through a period where it tried to set interest rates based on quantitative monetary targets. Under the influence of the monetarists, the Fed tried to gauge the amount or money needed in the economy from such measures as M1, M2, and M3. This policy failed, so that today, no one, including leading economists, pays any serious attention to the “Ms” as a guide to monetary policy.

A major reason for this failure was the proliferation of different types of financial accounts resulting from financial institution deregulation. This proliferation was made possible by the growth in electronic funds transfer, where money became a mere electronic blip, rather than a check, cash, or some other paper instrument. Using computer processing, the money supply changes abruptly every night through the use of cash management tools such as “repos,” or repurchase agreements.

The growth in complexity through electronics has also made possible many new types of crime, including electronic theft, diversion of funds, and money-laundering. Also complicating the situation was the widespread use of corporate stock as money through such actions as mergers, leveraged buyouts, and payment of compensation with stock options.

While the Federal Reserve has a general sense that the money supply must be kept sufficient to meet the needs of the economy, it finds it difficult to compare the growth of the two or define how they relate to each other. So rather than watching monetary targets, the Fed says it is steering by what it calls an interest rate “smoothing” policy. It says it chooses a currency level consistent with economic growth with the intent of supplying enough money to fuel the economy. Thus the Fed claims that it wants to get the price of money right for the economy at any given time, though the target is elusive.

In other words, the Fed doesn’t know what it is doing. What it mainly seems to do is to watch the same economic indicators everyone else does, and if it thinks the economy is “overheating” it raises interest rates. When liquidity contractions appear to be too destructive and the screams from individuals and businesses get too loud, it will then lower them. Unless of course foreign investors start screaming, when the Fed will raise rates again or leave them steady.

Unable to quantify either the money supply or actual economic activity, the Fed supposedly uses inflation as a surrogate. Unable even to gauge inflation accurately, it uses worker wages as a surrogate for that. So if individual earnings go up, the lid on the economy comes crashing down, as though people who work for a living have been caught with their hands in the cookie jar.

After starting to raise interest rates around 1994 to slow down the economy during the dot.com boom which had been engendered by a “strong dollar” policy by the U.S. Treasury to attract foreign investment, the Fed later began to lower them in an attempt to revive the economy when recession began in 2001. But this never really produced the hoped-for recovery.

In particular, housing mortgage rates were lowered to the lowest rates in four decades, thereby increasing available cash to consumers through refinancing of existing mortgages and through new home equity loans. These actions maintained activity in an economy which now relies for three-quarters of the value of its transactions on consumer spending. Of course such an economy is highly susceptible to variations in consumer confidence, which was why, after the stock market plunge following the terrorist attacks of September 11, 2001, President George W. Bush told the public to go shopping.

As the deflating housing bubble has made clear, even this rare bright spot in the declining U.S. economy scarcely improved the employment picture except through low-paying service jobs. Meanwhile, the ability of consumers to support the economy has been weakened by the further decline of manufacturing due to NAFTA, free trade policies, and the globalization of industry. The strong dollar of the 1990s led to massive increases in the trade deficit and even more reliance on foreign purchase in the U.S. bond, stock, and Treasury markets. Now with the value of the dollar falling, purchase by foreigners of securities is also slipping.

But again, inflation when gauged by the long-term CPI is not low—its cumulative effect since 1965 has been devastating. Yet by trying to target inflation as its chief measure of success, the Fed is clinging to what can only be described as a fetish of “price stability.” Nor is Congress taking any action to challenge this interpretation of the proper goals of monetary policy. Indeed, Congress seems totally passive in the face of the Fed’s own confusion.

Congress’s commitment to so-called price stability was shown by a series of analyses produced in the late 1990s by the staff of its Joint Economic Committee (JEC) and by the absence of any attempt by anyone in Congress to challenge the Fed’s policies. What Congress should be addressing is that in order to achieve price stability, un- and under-employment has become the tool of choice both of the money managers at the Fed and of their supporters in Congress. Price stability is in fact a tool of “class warfare” directed by the moneyed interests from the nation’s banks, as well as by the Fed itself, against the workers, farmers, and responsible businesspeople of the nation. The dichotomy between price stability and unemployment is another relic of the Dark Ages out of which our system of central banking has emerged.

These points show that the goal of monetary policy should be neither price stability nor full employment. Not only are the two goals contradictory, but they both postulate a static state of the economy where change simply does not occur. Such a state, however, can never be truly realized, except perhaps in death. As said by Heraclitus, “There is nothing constant but change.” Nothing alive is without change, as everyone knows. And a nation’s economy is undoubtedly alive.

This leads in turn to an assessment of what really should be the goal of monetary policy. Given the irrefutable presence in life of ceaseless change, price stability as an anchor which by itself can remove uncertainty is an illusion. Of course, price stability is only a surrogate for what the Fed is really trying to achieve, which is stable profits for those who lend money at interest, whether institutions or individuals. As stated earlier, money itself is thus viewed as a commodity and a mathematical constant. This philosophy of rigidity raises money to the status of a heathen idol to which all other economic values, and all human beings as well, should be sacrificed.

In actuality, money is, or should be, also as stated at the outset, an instrument created by law to act as a medium of exchange in facilitating the legitimate trading of goods and services within the economy. The Federal Reserve and the financiers do not view money this way. The term of art for a commodity definition of money is “store of value.” It implies that money is essentially the same whether it is being used or not. But this can never be.

Returning to price stability, it is clear that such a state is also unattainable due to the laws of physics. Rather prices must continuously tend to rise, unless restrained by unnatural force, due to a) the physical principle of entropy, or the law of diminishing returns; and b) the consumption of resources devoted to production. This will happen until technological breakthroughs are achieved which improve productivity through the application of human intellect and creativity. Such breakthroughs create efficiency and productivity gains, and, in many cases, quantum changes through entirely new product lines and industries. So prices must always fluctuate.

This happened, for instance, through Edison’s harnessing of electricity, Henry Ford’s mass production of automobiles, the development of airplanes and air travel, and the creation of a microcomputer industry through the manned space program. Indeed, the example of quantum physics is instructive, as it postulates a universe of endless creativity in contrast to the medieval dogma of scarcity and struggle between social classes for the right to exist. The more optimistic view of human possibilities exemplified by modern science has produced the explosion of world economic development starting with the discoveries of the European Renaissance beginning about 1450 A.D.

This discussion also raises some philosophical questions about the nature of man. From this standpoint, all ideologies associated with the concepts of Social Darwinism, for instance, must be viewed as an assumption of an essentially animalistic level of consciousness, as expressed historically through the barbarism of the European Dark Ages. According to this ideology, which may have given rise to both the current banking system and the laissez-faire school of economics, people are animals who fight over finite resources like half-starved dogs.

But if it’s the biggest, baddest, meanest dogs that survive; i.e., “the fittest,” mankind must of necessity be on a downward evolutionary spiral. This, however, is contrary to human experience, where a progressive trend can clearly be discerned through a long-range survey of human history. Mankind does seem to be learning something, though it often seems like we learn the hard way and that for every step forward we take a half-step back. In contrast to ideologies based on human savagery—and any ideology which sees man’s potential as less than infinite falls into that category—a quantum approach to economics defines a world that is truly human by looking to the endless possibilities expressed in the material environment for creativity, imagination, and evolution. A monetary system worthy of support must therefore facilitate these characteristics.

A humanistic approach to economic development does not mean that full employment should then become a graven image for worship, replacing price stability. Full employment can never be attained, as all economists know, because jobs will constantly become obsolete, also due to the same forces of change. Thus a certain level of “structural unemployment” has proven acceptable as a practical matter. This is only common sense. But it also leads to a social obligation to support displaced workers until they can be retrained or relocated to work at new locations using improved tools and processes.

It also means that the aim of monetary and economic policy must be shifted from the present paradigm based first and foremost on the profits of lenders to one that can facilitate adaptation to change and overcoming of entropy by supporting the human needs of the workforce. It may also mean reforms so that people can finally begin to enjoy the leisure dividend that should result from technological development and will not be obligated to work all the time.

How can this be done? Precisely through the methods implied or set forth in the founding documents of American culture, such as the Declaration of Independence, drafted by Thomas Jefferson, which says, “All men are created equal.” Therefore all must be given an equal opportunity to live, grow, and adapt to change and to do so without trespassing on the rights of others to do the same.

Further, the Preamble to the Constitution sets forth the principle of the general welfare, not only for existing society, but for posterity. Therefore the government is required by law and conscience to provide the means for such attainment. Through experience we can clearly see that this includes a decent education, access to water and sanitation facilities, a clean and wholesome place to live, access to energy resources, adequate health care, transportation, etc. It is the responsibility of adult individuals to contribute to making all this available, not only to themselves and their families, but to the entire society.

These elements of social infrastructure thereby become a requirement of common life and are the duty of representative government at all levels to provide. People can then build the economic life they are entitled to enjoy through the competitive system of private enterprise which helps to define the American economy. Any successful modern nation has a combination of robust public infrastructure and a dynamic private sector, not one based on increasing “privatization” of public services.

It is the duty of those in charge of monetary and economic policies to facilitate the development of such a society. But today, neither the Federal Reserve, nor other authorities such as Congress, the Treasury Department, or the Executive Office of the President are doing the job they should be doing. Instead, they are operating the monetary system to the advantage and benefit of private banks and the private financial markets. This is wrong, and it must be changed.

We might look at the inflation issue from another angle, in that economists have pointed out that periods of inflation seem to coincide with those of war. The causes of this confluence appear complex and may include price gouging by those who sell to the government, fear and panic which cause people to inflate prices to secure their economic position, a premium built into prices to compensate for a general atmosphere of economic uncertainty, or the sudden influx of new money due to precipitate government borrowing. Probably all these factors play a role. If we look again at the history of price inflation since 1915, we discern a pronounced increase in prices during the periods of World War I and World War II. This would tend to confirm the hypothesis of a link with inflation.

But what about the wave of higher inflation since 1965? What is unique about this period is that the nation has been in a state of permanent war mobilization since the Vietnam conflict. A considerable amount of economic research would be needed to test the hypothesis that the high level of defense spending has in fact caused the high inflation, but such a study would be worthwhile.

Another hypothesis might be added which would be difficult to measure but which should also be considered. This is that money spent on permanent war mobilization is essentially non-productive in terms of producing goods and services of value to the larger civilian economy; i.e., it has a relatively low multiplier effect. Wartime spending may also be less able to call forth the type of scientific research and development needed to improve the economy in most aspects of everyday life. We never got the “peace dividend” we were told would result from the end of the Cold War. Instead, the military-industrial complex pressed forward without missing a heartbeat until now the War on Terror and possible future wars against Iran and other nations offer new justification for perpetual war mobilization.

The economic question is whether a society permanently at war or always preparing for war has the ability to overcome the natural entropy that will make its production processes less efficient over time. If it cannot, then no amount of reform can solve its problems. We know that no culture in history which has had warfare as its main preoccupation has long survived, unless and until it has seen the error of its ways and changed, or unless it simply was destroyed.

Ancient Greece never really recovered after the Peloponnesian Wars. The debt-riddled, socially-stratified Roman Empire exhausted itself in a blaze of military conflict, then saw defeat and dissolution. The British Empire went bankrupt in a single generation from 1914 to 1945. The U.S. is teetering on the edge of a major financial collapse right now. In fact, those with money are quietly trying to secure their wealth while the unfortunate ones who are heavily mortgaged or locked into inflexible retirement accounts may be left holding the bag. Can the American Empire survive the economic forces that doomed the empires of the past? Or will what some call the “New American Century” turn into the “No American Century”?

Richard C. Cook is a retired federal analyst, whose career included service with the U.S. Civil Service Commission, the Food and Drug Administration, the Carter White House, and NASA, followed by twenty-one years with the U.S. Treasury Department. His articles on monetary reform, economics, and space policy have appeared on Global Research, Economy in Crisis, Dissident Voice, Atlantic Free Press, and elsewhere. He is the author of “Challenger Revealed: An Insider’s Account of How the Reagan Administration Caused the Greatest Tragedy of the Space Age.” His website is at www.richardccook.com.

Richard C. Cook is a frequent contributor to Global Research. Global Research Articles by Richard C. Cook

October 05, 2007

Babalog’s day out The battlefield of 2009

Barkha Dutt

October 05, 2007
First Published: 22:33 IST(5/10/2007)
Last Updated: 22:44 IST(5/10/2007)

Babalog’s day outThe battlefield of 2009, claim political pundits, will pitch youth against age, the new against the old and India’s future against her past. In an overwhelmingly young country that is bustling with energy and is adamant about taking a seat at the global high table, strategists in the Congress believe that Rahul Gandhi’s 37 years will sparkle in comparison to L.K. Advani’s 80 years and more.

Of course, it’s not fully clear yet that the next election will be Rahul’s Big One. Much will depend on the outcome and if it’s a coalition formation like the present one, Manmohan Singh may well be back as Prime Minister again. And next year, this time, Singh will be 76 years old.

Even so, there’s no question that as elections approach, the Congress will stomp onto the playing field with a swagger that belongs only to the young. It’s also true that the formal elevation of the younger leaders within the party has infused it with a new energy and exuberance that has made an already dispirited Opposition nervous. ( REALLY ????)

Old-timers within the Congress are getting nostalgic about the 1980s when Rajiv Gandhi lowered the voting age from 21 to 18 years and held out the hope of a New India. (Forgot to mention that Rajive Gandhi was kicked out of office) And the new entrants to the party’s decision-making circles finally have a sense of purpose.

At one level, it’s natural to intuitively equate youth with progress. In a world where Bill Clinton was only 55 when he left office after two terms as President and Tony Blair just 54 when he resigned as Prime Minister earlier this year, it’s only in India that at 50, politicians still get to call themselves young and aspiring.

( Do you think Rahul is a material of Tony Blair, Bill Clinton calibre ? One can check open records and get figures of his parliamentary records , about how debates he did participated , the least , how many questions he asked in the Parliament ? Just 3 Questions , here are they Question 1 , Question 2 ,Question3 ) ) . DEBATES : Nill Check Official Report of the Proceedings of the House ( Check yourself) . He is yet to establish himself as an able parliamentarian , forget about leading the country . There are many able youngster who "sparkle in comparision to" Mr.Rahul Gandhi . Regarding his remarks about Pakistan , see reaction of Pakis

So, the Congress has been clever (albeit, belatedly) to try and create a distinct identity for itself by dragging in its many talented younger politicians from the margins. The next step, before the elections are announced, would logically be some drastic cobweb cleaning for the union cabinet.

But here’s a question that the party may want to seriously ponder over. Is age the only marker of modernity? Surely smart politics isn’t just about people; it’s about ideas. In other words, what is more likely to dazzle India? The biological fact of being a below-40 politician, or the ideological inspiration that could come from a thought process that is innovative and forward-thinking?

LOAD OF TRASH ! "The Congress has usually come up with new ideas. What does Rahul have? If there is something, it is a closely guarded secret. What has emerged so far from Rahul is too little." When Sanjay Gandhi and Rajiv Gandhi got into party affairs, the Congress had majorities on its own. So it will be much tougher for Rahul Gandhi. The Congress is a pale shadow of its previous self.--Political analyst Mahesh Rangarajan

Just by itself, with nothing else to recommend it, youth can end up being entirely inconsequential, even naïve, unless it represents something that makes it stand apart.

Till recently, perhaps, the people most bored with the phenomenon called ‘Young MPs’ were the young MPs themselves. In private conversations, most of them would concede that after the initial catapult into the political mainstream, their youth had dissipated into a cliché of the seminar circuit and a staple of television debates. Their interventions in Parliament were rare, and when they were allowed to get in a question or two, they almost always faithfully echoed the party line. If my generation, and those younger than me, looked towards the ‘Young MPs’ to speak for us, to give our dilemmas and debates a voice, that almost always never happened — at least not officially.

The structure of our polity has demanded that they blindly inherit conventional wisdom, rather than be given the space and width to evolve a new way of thinking. In short, from afar at least, our young MPs appeared to be exasperatingly conformist.

Fortunately for them, appearances aren’t always what they seem. Those of us who have had the chance to get to know and meet the younger politicians in more informal settings and conversations are aware that many of them are buzzing with opinions and ideas that are unique to their generation. Rahul Gandhi, Milind Deora, Jitendra Prasad, Jyotiraditya Scindia, Sachin Pilot, Priya Dutt — if you go down the roster of younger names within the Congress, you can see that they have much more in common than just their age.

They are all from roughly the same socio-economic background; they have all had global exposure in education and work, and they are all stubbornly individualistic, very opinionated, and in some cases, even endearingly eccentric.

MISSED ONE IMPORTANT POINT : Their parents passed on the baton to them ,unlike Tony Blair , Bill Clinton .

What a pity it is that outside the power circuit of politics and journalism, their voters may never get to see this side. What’s even more tragic is that many of them seem cynically convinced that the very idea of creating an ideology that can be ‘owned’ by India’s young, is a concept thought up by an elite English press that doesn’t know the first thing about realpolitik. It’s almost as if they are apologetic for the worlds they come from and diffident and defensive about how they really think. So, whether it’s the inflammatory issue of reservations or the debate around Aids and legalising homosexuality, or the more sensitive question of whether religion should influence government policy, how many times do you remember any of the young MPs making a statement that stood out as their own?

Rahul Gandhi, who will lead his colleagues into the next election, remains famously reticent and shy — so most of his voters don’t even know what he really thinks. (What does Rahul have? If there is something, it is a closely guarded secret. What has emerged so far from Rahul is too little
) The one time his view publicly asserted itself against the establishment’s orthodoxy was on the issue of private universities in India and the need for corporate investment in higher education. It was an issue on which he passionately clashed with the Marxists and held his own. And no matter, whether you agreed with him or not, it was a provocative, contemporary opinion that got you thinking, at the very least. But for the most part, other than generic press statements made by him on the election trail in Uttar Pradesh, most of India — especially most of young India — can claim no knowledge or access to what Rahul Gandhi really thinks. He remains determinedly enigmatic, which can be charming from afar, but only up to a point. After that, argumentative Indians will demand to know what makes him and his workmates different from the rest.

The Congress’s motley crew of bright young men and women can be its natural advantage in 2009. But if, and only if, the voters get to know them beyond the magazine cliché of laptop savvy, glib under-40s. The party needs to unlock the cage and set the young and the restless free. Otherwise their age, and their exuberance may well end up being entirely irrelevant.

Barkha Dutt is Managing Editor, NDTV 24x7.


© Copyright 2007 Hindustan Times