May 16, 2009

Election 2009: BJP got what it deserved

Radha Rajan

17 May 2009

When ambition overrode ideology

Karan Thapar accurately summed up the election results in a telling one-liner – while both the Congress and the BJP faced a host of problems until three weeks ago, Congress’ problems dissolved into nothingness while BJP tripped over them. A truer thing was never said. What Karan Thapar did not say was that while all of Congress’ problems were external to the party, BJP’s problems were all from within. Behind Karan Thapar’s one line summary lurked a sordid tale of epic proportions.

The BJP suffers from seven problems – Advani, Jaswant Singh, Murli Manohar Joshi, Arun Jaitley, Sushma Swaraj, Narendra Modi and Rajnath Singh; each one’s coterie expanding their personal agendas in an oceanic circle, some of them expanding across the Atlantic and the Pacific and then coming back to Indian shores as returning currents with ambitious jetsam and flotsam riding on their crests. Venkaiah Naidu for some reason opted out of the race in 2004. They all think they are Prime Ministerial matter; after Vajpayee, Advani thought he had the automatic right of inheritance while the remaining six think they have automatic right of inheritance after Advani.

The Problem Seven, in the last 10 years have done two things – they have ruthlessly decimated or kept at bay other challengers to the throne in the states and in Delhi, while simultaneously doing everything to make sure that the other six in the group do not take even half a step in the direction of becoming party president which is the penultimate chair before the throne; and that is why, despite losing the elections in 2004 and now in 2009, Advani continues to remain at the top. Advani’s continuation is the only way to prevent the others from getting there. The top leadership is therefore septuagenarian or octogenarian, the second rung leadership is already aged and the third rung is aging fast and frustrated. This group has held the BJP hostage through their coteries, each coterie more cut-throat than the others.

These cut-throat operators have rivals in the camp even in the states; the results are there for all to see in Madhya Pradesh and Rajasthan where an ascendant Congress is pushing the BJP out. Cut-throat coteries and destructive overarching ambitions have destroyed the BJP beyond salvage in Uttar Pradesh, in Andhra Pradesh and Tamil Nadu where local cut-throats with personal patrons in Delhi have over-run the party; going by the fact that there are cut-throats waiting on the sidelines in Karnataka and Gujarat, these two states may well go that way, sooner than later. The degeneration of the BJP from the vibrant Hindu movement that it was in the 1990s, as a party with a vision and an agenda, to what it has become today – a vehicle for individual ambitions - can be best gauged by those whom the BJP has chosen as its face and voice, as its power-brokers, as its point-persons, and as its strategists.

Ask any ordinary political minded Hindu on the street what he/she thinks the BJP stands for and we will have the answer to why the BJP’s downward slide is unstoppable. The BJP’s descent was accelerated with Advani’s public pronouncement that good governance does not need ideology. This was as good as saying that a family is only an involuntary collective of individuals and can function efficiently without family values.

For all that the BJP claims it is different from the Congress, any one who has studied the freedom movement, not as insipid history in school text books, but as a real drama unfolding through its dramatis personae, would realize that the BJP today finds itself in the same position that the INC found itself repeatedly, first in 1908 when the Hindu nationalist leadership - Tilak, Aurobindo and Savarkar - had been decimated and the Congress floundered leaderless and clueless and without an identity until Gandhi began to use it as a vehicle for his agenda; then in the late 1930s decade when Gandhi had failed on all fronts but refused to relinquish control of the INC, and again in 1948 when after Gandhi, Nehru thought he had automatic right of inheritance.

From 1947, the Congress party was not driven by ideology; it was driven only by cult worship of individuals – first Gandhi, then Nehru, his daughter Indira Gandhi, her sons Sanjay Gandhi and Rajiv Gandhi, his wife and widow, Sonia Gandhi and now her son Rahul Gandhi. His sister Priyanka Gandhi, like Narendra Modi, is watchfully biding her time. Closet spouses of unknown nationality and grand-children are already positioned as future heirs to the mantle. The Congress today, manipulated by an Italian and her Italian/Indian children, has come full circle and is once again a creature of colonial intent.

The Gandhi family is willing to throw crumbs from their high table to those who they consider share the same pedigree lineage and who have therefore been allowed to come close to the table and sit at their feet, with smaller crumbs thrown to those waiting outside the gates, and have thus managed to silence murmurs of discontent. Undeserving and unworthy individuals have been placed after careful calculations, at the head of high national institutions, and invitations to periodic high-teas served on the lawns has subordinated the highest pillars of democracy to serve family interests.

The Gandhi family has used the crumbs of totalitarian power as an effective silencer within the Congress. The Congress party has been transformed into a willing mechanism of slave labour to oil the ambitions of one family. The role of the English electronic media and the leading English print media with regard to this usurper family and its steamrolling methods raises serious questions about the media’s integrity and nationalism.

The BJP began with the pious intention of positioning itself as a contrast to the Congress. It chose ideology to define its self-identity because it had no dynasty to define it. When the BJP stepped into the national political arena, it was still carrying memories of its previous nationalist incarnation, the Jana Sangh, and was driven by a Hindu nationalist ideology as embodied in Tilak, Aurobindo, Savarkar, and then in the RSS as conceived of by Dr. Hedgewar. The BJP’s political agenda was determined by Hindu nationalism and there was convergence of intent between the two most prominent of the RSS siblings – the BJP and the VHP.

The first steps in turning the BJP around on a deviant path, away from its defining ideology was taken by Atal Behari Vajpayee when he privileged coalition partners over party ideology. The slide was perceptible then and the writer used the platform offered by Vigil Public Opinion Forum to voice this concern. “Coalition Politics and the Death of Ideology” was a landmark public meeting in those times and the writer still remembers the anguish of a senior RSS pracharak over the choice of title. He refused to accept the possibility that the RSS (he, like many even today, did not make a distinction between the BJP and the RSS) could ever compromise or give up on ideology.

The Vajpayee years saw the rise of two or three individuals who influenced and later controlled not only the leadership within the BJP, but also within the RSS. Nothing could be thought, said or done without their approval. No decision could be made and no action executed without being micro-managed by these individuals. Ideology was what these individuals said it was, and it was during these years that the BJP began to package rank opportunism as some kind of brilliant Kautilya strategy, and this lemon was sold to the RSS leaders and the rank and file down the line by these two or three individuals.

One sold the lemon in the North while another sold it in the South. The RSS was convinced into accepting the argument that the BJP must be allowed to place its defining and exceptional agenda for the nation on the back-burner to keep its coalition partners. This was no Kautilya, Rasputin was more like it. The BJP’s slide acquired momentum with the rise of these individuals.

(to be continued)

The author is Editor. www.vigilonline



There has been a lot of discussion going on for the last 12 hours or more in the pro-Hindutva web sites in India and abroad about the stunning failure of the Bharatiya Janata Party (BJP) to do well in the just-concluded elections to the Lok Sabha, the lower House of the Indian Parliament, and the dramatic success of the Congress (I). The pro-Hindutva elements, which regularly visit these web sites and make their postings, are in an astonishing state of shock. There is more introspection already going on in these web sites than in New Delhi and State capitals and there is more loud-thinking than in the endless debates in our TV channels. It is more interesting and educative to read these postings in the web sites than to listen to the blah, blah, blah of the spokesmen of different parties and the so-called analysts who have congregated in New Delhi.

2. As one goes through these web sites, one is struck by the admiration of many pro-Hindutva elements over the way the Congress (I) has managed to give a youthful image to the party and over the quality of the intellect and powers of articulation of the youth brigade of the Congress (I). There is a grudging admiration even for Rahul Gandhi. Some admit that he has made an impact on the nation as a whole. Others insist that his impact is confined to Uttar Pradesh.

3. Many have compared the youthful image of the Congress (I) to the tired and aging image of the Hindutva leaders. Where are the young people in the BJP, the posters have been asking. The majority are agreed that L.K.Advani was a bad choice to lead the election campaign. They allege that instead of surrounding himself with youthful faces and intellects, he surrounded himself with old pensioners from different government services and the armed forces who were unable to read the mind of the Indian youth.

4. A perusal of many of these postings shows that the angry pro-Hindutva elements do not look upon younger BJP leaders such as Arun Jetley, Sushma Swaraj, Arun Shourie etc as repesenting the newly rising Indian youth. They dismiss them as middle-aged backroom manipulators and not genuine representatives of young India.

5. Many of the postings say that Advani made the election campaign a personality-based one and not an issue-based one, which was a serious mistake. Interestingly and significantly, many admit that the just-concluded election has shown that Narendra Modi, the Chief Minister of Gujarat, has no national stature. The fact that he has been able to galvanise the Gujaratis in Gujarat and outside does not mean that he will be able to galvanise the rest of India. They feel that one of the biggest problems of the BJP is that it has not been able to produce a leader of national stature after Atal Behari Vajpayee, the former Prime Minister. It has produced a number of good regional leaders, but they are not in a position to expand their appeal beyond their region and beyond their respective communities.

6. I am reproducing below some examples of the kind of comments I picked up from my browsing:

"I think BJP should dismantle, and regroup under a new name, new leadership, with a bit more conviction (I mean the mental kind, not legal) and spine. Bottom line: The BJP does not impress Hindus any more, and it manages to frighten non-Hindus. Not a combination to win India."

" How do old people like Advani answer to the aspirations of the youth and also how can they 'connect' to a grandfatherly figure when a much older figure like me sees him as an anachronism. Are you going to inspire the youth so that they will vote for Advani in 2014? I see it in simple terms: Manmohan Singh kept Advani engaged while the Congress youth brigade engaged the voters. This is a classic military tactic though I don't believe the Congress worked it out as a strategy. But that was the effect and people should learn from it and plan for the future. What worked in the 80s will not work with the voters today many of whom were not born then or were small children. The electorate is not static. As you going to take them back to the 80s? Also, the BJP is being ill-served by some of its 'intellectuals', who talk smoothly on TV and score debating points, but have no clue about the electorate. This is soothsaying, not problem solving. A defeat of this magnitude is due to a fundamental shift, not minor issues like whether Modi or Vajpayee would have made a better speaker. I already see futile talk that BJP made a tactical error by bringing in Narendra Modi as speaker and so forth. This is like a drowning man clutching at straws. This shows that the BJP doesn't know what hit them-- the youth brigade. Where is a BJP youth brigade that can engage Rahul, Sachin Pilot, Jyotirmayi Scindia and so forth? Why did the BJP fail to cultivate them even with its vast cadre? It has five years to focus on this issue. Bringing up a cadre of young leaders should be the first priority of BJP-RSS. It should allow them some freedom and not put them in an ideological straitjacket. That will nip talent in the bud. My concern is more for future generations than the fortunes of any political party. Where are the future leaders? I hope people are listening. I will bring this up with some people I know and also mention it in a couple of presentations."

" The BJP has to be a party for all communities if it has to be a truly national party. A party that has India's interests as its priority and delivers on development will have no problems getting the support of a large section of Christians and Muslims. All that the BJP has to do is remove the institutional bias against Hindus that exists in govt circles. That's all Hindus ask of them."
"I am not a Hindu though I have Hindu heritage. I was looking forward to INC's defeat mostly because I vehemently am opposed to the idea of dynasty. India is a republic not a monarchy. I am seriously disappointed by the disastrous performace of BJP.

You are in the trenches against an enemy more powerful and more organized moving against you and as you are running low on ammunition, you don't want traitors in your rank. You also don't want ultra patriots among you who might do serious damage to your battle plan. It is almost like giving the enemy your ammo stock even while you are running low yourself. Varun Gandhi played that spoiler. He may have made a tactical error in judgement but the moment the national and international media caught of that it brought about strategic implication. Sadly, the BJP's reaction was hew and haw without clear and concise action/reaction. Remember how GWB disowned Trent Lott? That is what leadership is. Does not matter how charismatic a person is and how popular he/she might be but the moment he/she steps out of line.....he/she however capable must be gone. In 1991 the Deputy Commander of all US forces arrayed against Iraq made a statement to the press about how the war would be waged. Norman Swarzkoff fired him even though he was said to be a brilliant war planner because he went to the press without approval. Despite being friendly with the Bush family he was fired nevertheless. BJP officials did not show leadership when it was needed. India has the world's largest twenty something population. Many of these are urbanized or dream of being urbanized. Many move to urban areas in search for that extra rupee. Many of these even in the country are fascinated by Bollywood and its regional cousins. Admit it. Materialism, westernization and its associated fashionals/influence is ever expanding. In light of these developments, it would have been prudent for BJP to endear itself among this demographic. Beating up couples on their Valentine dates or trashing pubs/nightclubs will alienate these folks. The Hindu forces should be geared to fight Talibanization and not become like the Taliban. Believe it or not, of all the good things you do one small infraction is all that is needed for the media to show you like a demon. The zealots played into the hands of the media like fools. For a youngster in Madras who has heard of BJP and other Hindu right movements, he would know little of what great work these movements are doing in Gujarat or Haryana. But he would hear from the media when a couple on a Valentine date get beaten up. That would be his impression of the HIndutva movement. Like the the old saying....a drop of ink is enough to spoil a bucket of milk. Also, in light of this twenty something demographics, where are the young blood faces in the BJP? This is the largest twentysomething population in the world and largest voting block in the country. Eighty-something year old Mr. Advani, no disrespect to him and his huge contribution to the country, but there is a disconnect and I don't think he instils much confidence among the young crowd. All these time Rahul Gandhi and his sister went around charming whoever that could be charmed. Lets admit it. We humans are visual animals. It is nature and no matter how indoctrinated we are otherwise this will forever be dominant. In 2009, the India voter wants to see someone like him/her. Regardless of MMS, Rahul was the featured face of the INC in this election. Then the allienation and division among Hindus. Given that Hindus are intrinsically secular, stealth must have been the operative word. You cannot charge around like a bull. People however worried about their Hindu religion will be seriously repulsed. You should win the heart and mind of people via stealth instead of repulsing them. Does the BJP stand for all Hindus or some Hindus only? If a man does not do his husbandly duties, his wife will not sit and wait around. She is bound to seek the arms of another willing man. And there are no shortage of men who will not think twice of doing the deed when a vulnerable or willing housewife arrives on the scene. This is the same with the controversy surrounding conversion. Why do people convert to another religion? Can we all agree that the reason they convert is because the new religion offered them hope and other related benefits that the original religion did not offer? You can cry till your lungs burst about the activities of the evangelists but as long as you have a vulnerable population that you hardly care except that they convert to another religion....the ants will keep moving to where the sugar is. Its the law of nature that you cannot change. Until HIndus themselves take the initiative to empower and help the downtrodden and vulnerable among them....these same vulnerable and downtrodden will be played for their votebanks by the cunning foxes.For a party that desires to change the nation, the party must first instil change in the party. Does not matter how INC does business or XYZ party does business....its about time the BJP does business differently and stand out as a force of positivity. Have a national referendum to select a party candidate just like the US primary. This will galvanize the rank and file and allow everyone a chance to vote their leader and give every party member a voice. Be the agent of change instead of giving lip service to it.On the whole all these news about goondas beating up people, color tv or sack of rice or money in exchange for vote stinks bigtime. What happened to the spiritual Indian? Does this prove that Hindu influence is depleting? No wonder HIndutva lost its appeal?Lastly, you cannot fight corruption by being less corrupt. You are either incorruptible or corruptible. BJP needs to stand as an incorruptible party that is for good governance."

A caveat: Not all these people who post in these web sites are necessarily Hindutva cadres or sympathisers. There are some who feel more comfortable with the strategic thinking of the BJP on national issues than with that of the Congress I(I), but they cannot be characterised as pro-Hindutva. (17-5-2009)

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

Black money: Notice to 50 Indians with LGT a/cs

13 May 2009, 0056 hrs IST, M Padmakshan, ET Bureau

MUMBAI: The government has made the first move to home in on individuals and entities who have stashed away black money in one of the offshore banks.

The Central Board of Direct Taxes (CBDT) has sent notices to at least 50 individuals figuring among a list of Indians who hold accounts with the LGT Bank, Leichtenstein, a tax haven which borders Germany.

“We have sent notices. Whatever action that can be taken under law would follow,” CBDT chairman SSN Moorthy told ET. The tax authorities have sought information on the source of the money lying in the overseas bank and whether the account holders have paid tax on the amounts.

The list, provided by the German government, reportedly contain the names of some prominent Indian businessmen and industrialists. However, the Indian government is under obligation not to make the names public as they were provided under the Indo-German Double Taxation Avoidance Agreement (DTAA).

The information exchanged under DTAA is confidential, but the government is free to act upon the information. In the run-up to the polls, the Congress has come under attack from the BJP for not doing enough to bring back the black money parked by several Indians in offshore destinations around the world. At a recent election rally prime minister Manmohan Singh has rubbished these allegations saying that the issue is nothing but a “election stunt”.

According to international reports, wealth stashed away by Indians in offshore banks could be $1-1.5 trillion. Tax Justice Network, an organisation that works towards fair tax treatment, says the wealth concealed in tax havens across the world at between $11-12 trillion. Indian IT laws have provisions to prosecute a taxpayer who refuses to pay tax after a crystallised tax demand.

A way to bring money to India

If a person who holds accounts abroad is served a demand notice but declines to pay, (s)he could be invariably prosecuted under I-T laws. Legal experts opine that prosecution is an ideal tool to bring back unaccounted wealth held by citizens offshore.

Mahesh Jethmalani, senior advocate, says the prospect of prosecution could be the most effective way of bringing such money back to India.

The government, in an affidavit to a public interest litigation filed by noted jurist Ram Jethmalani and four others, told the Supreme Court that it has the names of Indians holding accounts in LGT Bank.

However, tax experts and senior income-tax officials opine that there are roadblocks on the way to accessing accounts in LGT bank because of the limitation period that bars the I-T department to take up cases older than six years. Experts say the existing law on limitation needs to be altered. But to be effective, the law should be altered with retrospective effect.

http://economictime s.indiatimes. com/articleshow/ 4522426.cms? prtpage=1

Black money trail: Swiss ready to revise treaty
4 May 2009, 0329 hrs IST, TNN

NEW DELHI: The government has approached Swiss authorities to renegotiate its Double Taxation Avoidance Agreement (DTAA), a tax treaty between the two countries in force since 1995, to obtain details of bank accounts maintained by Indians in Switzerland.

The Swiss government has in the past refused to share bank information pertaining to Indians with New Delhi on the ground that such details were not necessary for application of the DTAA. Swiss authorities had expressed inability to provide details, citing their own laws, since India's requests were related to enforcement of its internal tax laws.

However, after the G-20 nations adopted a tough posture at their recently held London summit, seeking to bring tax havens and non-cooperating jurisdictions under close scrutiny, Swiss authorities expressed willingness to cooperate.

Just before the London summit, the Swiss confederation had told the Organisation for Economic Cooperation and Development (OECD) -- a Paris-based group with 30 member countries including the US, UK and many European nations -- that it was ready to withdraw its earlier reservation on sharing information and renegotiate its tax treaty with other governments.

But how effective the revised tax treaty will be is quite clear from a rider provided by the Centre in the affidavit it submitted before the Supreme Court on the subject last week. The affidavit said, ``Even as per the OECD standards, unless specific information about the depositors becomes available, fishing or roving enquiry is not permissible.''

India is part of the task force constituted by the G-20 at its London summit to formulate a ``global plan for recovery and reform which promises to take action against non-cooperative jurisdictions, including tax havens and also to deploy sanctions to protect public finances and financial systems''.

On alleged role of Swiss banks in the 2004 stock market crash, the affidavit said that Securities and Exchange Board of India had in 2005 barred Swiss financial institution UBS Asia from issuing and renewing any participatory notes for a year. But this was following its refusal to disclose information relating to an investigation carried out by Sebi, not for its role in the market crash.

http://economictime s.indiatimes. com/articleshow/ 4480371.cms? prtpage=1

India has got black money details from Germany: Government
3 May 2009, 0400 hrs IST, IANS

NEW DELHI: Assuring the Supreme Court that it was trying to retrieve black money stashed in tax havens abroad, the government on Saturday said it

has already secured significant information from Germany and income-tax sleuths were following it up.

The finance ministry disclosed this in a 27-page affidavit to the apex court in response to a lawsuit accusing the government of doing precious little to retrieve Indian black money to the tune of Rs.70 trillion stashed abroad.

In its affidavit, the government also told the court that its persistent efforts in collaboration with international community have also resulted in Switzerland agreeing to make its secretive banking laws and norms more transparent in tune with the global standards.

Reiterating its assertion that it is not sitting idle in this matter, Director Priya V.K. Singh of the Department of Revenue under the finance ministry told the court that following repeated efforts since Feb 27 last year, the government got the information on Indians with secret accounts in LGT Bank of Liechtenstein March 18 this year.
lso Read

→ Black money stashed in foreign banks should be brought back

→ Efforts on to retrieve Indian black money: Government

→ Black money issue 'good election fodder: Swiss Bankers Assn

→ Cong downplays, BJP inflates black money figures

The government, however, added in its affidavit that the information procured from Germany cannot be made public owing to the condition of strict confidentiality under which it was procured.

"On account of persistent follow-up by the union government, the German government provided the information (about Indians' secret bank accounts) on March 18, 2009," said the affidavit.

"The said information, however, was made available on the condition of strict confidentiality of contents under the Double Taxation Avoidance Agreement," it added.

"The information received from the German authorities has been forwarded to various taxation authorities concerned for action as appropriate under the provisions of the Income Tax, 1961 and the Wealth Tax Act, 1957," it said.

It added "the tax authorities have initiated the process of reopening the assessments (of those tax evaders) under the Income Tax Act, 1961 and Wealth Tax Act, 1957".

http://economictime s.indiatimes. com/articleshow/ 4476263.cms? prtpage=1

Government delayed affidavit on black money abroad: KPS Gill
6 May 2009, 1949 hrs IST, IANS

CHANDIGARH: Former Punjab director general of police KPS Gill on Wednesday accused the central government of causing an inordinate delay in

filing an affidavit in the Supreme Court about the action taken to bring back the black money stashed in foreign banks.

"We had filed a PIL (public interest litigation) in the Supreme Court of India, seeking urgent measures to bring back the black money to India last month. However, the government took a long time to file an affidavit, and did not honour their commitment to file it in 48 hours," Gill told reporters at a press conference here.

The petition was filed by Gill and five others, including former law minister Ram Jethmalani, April 22 and the government submitted its affidavit May 3.

"In fact, we are not satisfied with this affidavit as they have mentioned only about Pune-based businessman Hasan Ali Khan and also not mentioned the complete facts about his money laundering activities. The government is afraid of disclosing the other names," said Gill.

"This black money is estimated (to be) worth Rs.70 lakh crore (Rs.70 trillion) that was siphoned out of India in the accounts of foreign banks. We have come to know about this figure from newspapers and magazines reports," he said.

A huge portion of this money was deposited in undisclosed accounts of the UBS Bank at Zurich in Switzerland, outside the jurisdiction of India, Gill pointed out.

About their petition, he said: "The main aim of our petition in the Supreme Court is to track the progress made in the case of black money that is hoarded illegally in foreign banks. This is an important issue and so far development in the case is not at all satisfactory."

"We want to pressurise all the political parties to take up this issue seriously without involving politics into it. We want to bring that money back to India through the intervention of the Supreme Court and the government should spend it in the right channel."

The Supreme Court on Monday censured the union government for its failure to prosecute Pune businessman Hasan Ali Khan under the Money Laundering Act for stashing a huge sum of black money in UBS Bank in Switzerland.

http://economictime s.indiatimes. com/articleshow/ 4492289.cms

A battle is lost, but not the war

Kanchan Gupta

Atal Bihari Vajpayee was given to moments of jocular frivolity at times of great stress, for instance on the eve of election results. At the fag end of the 1999 election campaign, a senior journalist asked him what would rate as one of the most banal, if not asinine, questions: “Mr Vajpayee, who do you think will emerge winner?” Without batting his eyelids, Mr Vajpayee replied, “Of course the BJP.” That was contrary to what opinion polls, including one commissioned by his party, were saying: The Congress, according to pollsters, had an edge over the BJP. Later that evening, I made a passing reference to the ease with which he was predicting a BJP victory in the face of a concerted Congress assault. Mr Vajpayee laughed it off and then said, “Nobody can predict the outcome of an election, never mind what politicians and pollsters say.” Placing three fingers of his right hand face down on his left palm, he added, “Any election is like a game of ‘teen patti’ (three-card game). Till such time you turn the cards and see them, you can only guess what has been dealt to you. Similarly, till the votes are counted, nobody can say with any certitude what lies in store for the contestants.”

On the face of it, such wisdom may appear commonplace. After all, veterans of electoral wars would be the first to agree that no battle is won or lost till the last vote is counted. Yet, come election time and every politician and pollster tries to outguess the voter, more often than not coming to grief. The 1999 opinion polls, including the one commissioned by the BJP, turned out to be way off the mark. The BJP and its allies were returned to power with a majority of their own; the Congress had to eat humble pie. So also with the exit polls that were telecast 72 hours before the results of the 2009 general election were declared on Saturday — they didn’t quite forecast such a stunningly stupendous performance by the Congress and the BJP’s astonishing failure to meet its own expectations, fuelled by internal assessments that failed to reflect the popular mood. Whoever predicted on the basis of an ‘exit poll’, and thereby made the party look silly on Saturday, that the NDA would get 217 seats compared to the UPA’s 176 owes more than a mere explanation.

The Congress, no doubt, has won a splendid victory; not to accept this fact would be sheer cussedness. Having said that, it would be equally incorrect to subscribe to the view that at the moment the Congress is riding the crest of a tidal popularity wave which in the coming days will turn into a tsunami of support for the party. Yes, the Congress has made stupendous gains, but a close scrutiny of the results will show that they are not entirely at the expense of the BJP. Nor have the gains accrued to the Congress on account of either policy or programme. For instance, the Congress has picked up a large number of seats in Kerala and West Bengal for reasons that are entirely different. In Kerala, the Left has paid a huge price for infighting within the CPI(M) that has spilled into the streets: A divided cadre couldn’t get their act together. In West Bengal, the Left has been decimated because popular resentment with the CPI(M) for the various sins of omission and commission of the Marxists reached tipping point in this election, helped in large measure by the alliance between the Trinamool Congress and the Congress.

In States where the BJP has lost seats to the Congress, the credit largely goes to saboteurs within the party. It is no secret that a section of the BJP worked against the party’s nominees in certain constituencies in Madhya Pradesh. In Rajasthan, the reasons that led to the BJP’s defeat in last year’s Assembly election remain unresolved. In Uttarakhand, infighting has led to the BJP’s rout. In Jammu & Kashmir, the BJP could have won in Udhampur and Jammu if the local party units had not abandoned the candidates whom they saw as ‘outsiders’. In Maharashtra, the BJP failed to correctly assess the strength of Mr Raj Thackeray’s MNS which has turned out to be a spoiler in Mumbai’s urban constituencies where the party stood a good chance of winning. By default, the Congress has benefited on account of the BJP’s deficiencies. Nowhere is this more evident than in Uttar Pradesh where the BJP clearly failed to sense the shift in voter preference and ended up under-estimating its ability to pick up additional seats which have now gone to the Congress, swelling its national tally.

These reasons apart, at the end of the day what emerges is that the Congress has reached where it has on account of four factors whose impact could not have been predicted at any stage during the campaign when popular mood is palpable. First, the ‘Chiru factor’ has put paid to the TDP’s hopes of staging a comeback. The Congress has gained in the process. Second, the ‘Vijaykant factor’ has spiked the AIADMK’s electoral prospects. The ‘Black MGR of Tamil Nadu politics’ has turned out to be a classic spoiler. Third, the ‘Mamata factor’ was never seriously factored in, especially by the Left, while calculating the possible outcome of this election. Ironically, the amazing collapse of the Left has worked to the detriment of the BJP. Fourth, the ‘urban factor’ continues to elude logical interpretation. If the voting trend is any indication, we must come to the conclusion, and regretfully so, that India’s middleclass is no longer guided by the moral compass. Nothing else explains why corruption should cease to be an election issue and the brazen exoneration by the Congress of those who have looted India fetch no more than a cynical, couldn’t-care-less response. It is equally surprising that the middleclass should have chosen to overlook the mishandling of the national economy by the UPA Government and the pitiable state of internal security. We would have thought that these are concerns that agitate the middleclass the most since they shout the most about corruption, price rise and terrorism.

There is, however, no percentage in looking back. The BJP remains a national alternative to the Congress, more so after this election which has pushed regional parties and their identity politics to the margins of national politics. The BJP’s tally is nothing to scoff at. There is no shame in sitting in the Opposition and preparing for the next battle. Elections come and go, but parties remain. It is for their leaders to use the interregnum to reflect on mistakes, regain organisational strength and revive hope among the faithful. There are, after all, no full stops in politics, and life does not come to an end with the declaration of results.

-- Blog on this issue at: kanchangupta. blogspot. com, Contact Writer at: kanchangupta@ rocketmail. com

http://dailypioneer .com/176634/ A-battle- is-lost-but- not-the-war. html

BJP losing Youth: Thoughts on Election Results

-- N S Rajaram

It is all wishfull thinking. How do old people like Advani answer to the aspirations of the youth and also how can they 'connect' to a grandfatherly figure when a much older figure like me sees him as an anachronism.

Are you going to inspire the youth so that they will vote for Advani in 2014? I see it in simple terms: Manmohan Singh kept Advani engaged while the Congress youth brigade engaged the voters. This is a classic military tactic though I don't believe the Congress worked it out as a strategy. But that was the effect and people should learn from it and plan for the future.

If this 'cultural plane' (or pub culture) were so effective in getting young people to vote for the Congress, why did BJP do very well in coastal Karnataka winning all the seats and split with the Congress in Goa in spite of its substantial Christian population?

What worked in the 80s will not work with the voters today many of whom were not born then or were small children. The electorate is not static. As you going to take them back to the 80s?

Also, the BJP is being ill-served by some of its 'intellectuals' , who talk smoothly on TV and score debating points, but have no clue about the electorate.

This is soothsaying, not problem solving.

A defeat of this magnitude is due to a fundamental shift, not minor issues like whether Modi or Vajpayee would have made a better speaker. I already see futile talk that BJP made a tactical error by bringing in Narendra Modi as speaker and so forth. This is like a drowning man clutching at straws.

This shows that the BJP doesn't know what hit them-- the youth brigade.

Where is a BJP youth brigade that can engage Rahul, Sachin Pilot, Jyotirmayi Scindia and so forth? Why did the BJP fail to cultivate them even with its vast cadre?

It has five years to focus on this issue. Bringing up a cadre of young leaders should be the first priority of BJP-RSS. It should allow them some freedom and not put them in an ideological straitjacket. That will nip talent in the bud.

My concern is more for future generations than the fortunes of any political party. Where are the future leaders?

I hope people are listening. I will bring this up with some people I know and also mention it in a couple of presentations.

BJP losing Youth

I met with some RSS people this morning over something unrelated to the elections. My message to them was— you are losing the youth. With that enormous infrastructure, where are programs that appeal to the youth? Don't give me more Veda Pathashalas. (Incidentlly this is exactly what Swami Vivekananda told his follower Jamsedji Tata in 1902. He told him to start a science institute. Tata started the Indian Institute of Science in Bangalore instead of a Veda Pathashala.)

To take a more recent example, the RSS controlled (virtually) Mythic Society of Bangalore conducted a series of programs over the past year to observe its centenary. There were twelve Centenary lectures and seminars, one a month. The Karnataka Government had given a substantial amount of money.

The organisers might have felt good about themselves, but the results were pathetic. There was not a single speaker below 50! The audience was mainly composed of senior citizens. The lectures were unbearbly dull and pedantic. Out of more than 20, I can remember only a couple (one on dholavira and another on iron metallurgy) that was worth listening to. The publications, and proceedings edited by an 83 year old former bureaucrat were rushed through incomplete because the old man fell in the bathroom and could not complete the work, but held on to the manuscripts!

(He also wanted to revise all of them so that they could correspond to 19th century style and spellings, but that is beside the point.)

The BJP campaign showed similar signs. Will the youth of India look up to Advani? Where was a compelling youthful face in the BJP ranks? One can say Varun Gandhi, but even this was accidental notoriety, and not nurtured and presented as the future.

My message to BJP is the same as what I would give to any organization: don't bank on nostalgia. India is the youngest nation in the world. To them many voters, BJP like Advani, Shekhawat & Co are museum pieces. Present a youthful and vigorous image. Rajnath Singh said that BJP did poorly because it didn't have Vajpayee. Surely, you need more useful analysis.

the election was more about personalities than issues, and here BJP lost out badly, except possibly in Karnataka.

BJP lost because of six big reasons -- Analysis

Nachiketa Tiwari

Analysis of current results

These results will change the direction of current Indian politics. Prior to rise of ABV government, Indian political parties were classified in two broad categories. These were: Congress, and anti-Congress. Post NDA government, the nucleation started slowly getting transformed into parties around BJP and parties against BJP. So, anti-Congressism yielded to Secularism (or p-secularism or anti-BJP_ism) .

Look at the numbers. At the last count, compared to 2004, BJP has lost 15 seats, and Congress has gained about 55 seats. So, the extra forty odd seats have come at the expense of Left, BSP, SP, etc. This very important point, has been missed by most of the critiques of present election results.

During the pre-NDA years, folks like Mulayam, Naidu, Left, Lalu, BSP, etc. were competing a group of voters (Dalit/OBC/Muslim) which overlapped with the Congress electoral base (Harijan/Forwards/ Muslims). With passage of time, Congress became virtually dead in big states like UP, Bihar, WB, ... This provided folks like BSP, Lalu, Mulayam, Left to sleep with their enemies of past, and share power at Center.

This election shows that Congress can rise from the dead, as the Muslim voter, has started to gravitate back towards Congress. It will prove deadly for many, many, parties of 4th and 3rd fronts to support a Congress which is note very slowly rising from the dead. Ditto for Left in WB. A TMC-Congress axis in WB has decimated Left after 30 long years.

I have a feeling that the logic of self-preservation, will further strengthen the bonds between BJP and JD-U. Nitish competes for the same votes (Muslim, and Harijan) which are pursued by Congress.

So, the rhetoric of secularism will, I suspect, become less shrill, and will be replaced by the old slogan of anti-dynastism, anti-imperialism, etc. Old wine in new bottle.

I have a feeling, that the opposition this time, (a combo of Left, NDA, and 3rd front, and 4th front) will be shriller, and more coordinated, than what we saw in last five years: a pretend-opposition masquerading as BJP. Thus, when opportunities like Bofors arise, the opposition will lead a much more vigorous anti-Congress campaign this time, that what NDA did in last 5 years. What it means for BJP

BJP lost because of six big reasons

Pathetic Messaging: It had good messages, but its promises were not believed by the electorate. For instance, the issue of security was blunted by Congress, as it repeatedly brought up the Kandahar issue. As I watched several debates on TV, I saw BJP leaders squirm whenever Kandahar was brought up. Frankly, Shri LKA was not percieved as majboot netaa, and his actions in past were not considered to be nirnayak.

Weak Opposition: Over last five years, the BJP had done a pathetic job as an opposition. For instance, I have a feeling, that on the issue of nuclear deal, BJP actually bailed out Congress (several of BJP's members did not vote against it). Ditto for terrorism, corruption (Natwar Singh), Quattrochi, .... I really do not understand as to what constrained BJP to come out in total open against UPA over last 5 yrs.

Fratricidal Wars: Between diverse elements of Sangh parivar, and also within BJP. The loss of Rajasthan assembly (and now Lok Sabha) should be sufficient for illustrative purposes.
Zero Presences in UP: In 1997, BJP had 50 seats from UP. In 2004, it had 10. Today it has 12. Do you think that this does not matter!!! UP is a game changer. BJP can ignore it only to its own peril.

Cultural: Indian culture is seeing very fundamental challenges, as the really "cool" stuff is beamed down thru TV channels which promote extreme versions of Western lifestyles and values. While the average Indian has not yet adopted these mores in very large numbers, the cultural elite of India (which also imo includes regular IT folks) consciously or unconsciously set the aspirational standards and goals for the aam aadmi. And the image projected by BJP as a party is inconsistent with what is hip in the eyes of aam aadmi (remember Massey Sahib). Thus the regular urban school/college going youth, I have a feeling, is emotionally not engaged with Hindu organization/ ideology. THis is a long term challenge, which will only amplify with passage of time, unless an effective strategy is crafted and put in place to dull the impact of this importan element.

Why BJP lost : A view from David Frawley, a long standing friend of India.

David Frawley

My message to BJP is the same as what I would give to any organization: don't bank on nostalgia. India is the youngest nation in the world. To them many voters, BJP like Advani, Shekhawat & Co are museum pieces. Present a youthful and vigorous image. Rajnath Singh said that BJP did poorly because it didn't have Vajpayee. Surely, you need more useful analysis.

---Quite right. Rajnath is another museum piece. I remember speaking at the BJP Central office in Delhi in 1999 and finding that they had 11 Vice Presidents all above the age of 75, several of which could barely walk. I asked them why they didn't put young people in the job to prepare them and make them better known. They said that their policy was to honor the elderly. I told them they needed younger people, they shrugged it off.

Our books have succeeded because we can reach the youth. It is not just the message but how you frame it.

Advani at 81 should not have run and the attempt to repackage him was a failure. He had too much baggage. (Also irrelevant. NSR)

It is good that the left has collapsed, however, and the country has moved away from that. It is also good that the country is not hostage to some third front alliance.

Infighting was a big problem. BJP lost the most seats in Rajasthan. There Shekhawat helped pull down the Scindia government, hoping he could get in, which has now hurt the party in the national elections.

Bad governance at a state level was also there. BJP had a landslide win in Uttar Khand not long ago but the government, from what we have directly heard, has been run very badly. The result was the BJP lost all the seats.

the election was more about personalities than issues, and here BJP lost out badly, except possibly in Karnataka.

May 13, 2009

Use Of Soft Power In Counter-Terrorism---What I Wrote On

Use Of Soft Power In Counter-Terrorism---What I Wrote On November 17, 2007

By B. Raman

(According to a despatch dated May 13, 2009, from Aziz Hanifa, the special correspondent of in Washington DC, testifying before the Senate Foreign Relations Committee, Richard Holbrooke, the US special envoy for the Af-Pak region, said: "Concurrent with the insurgency is an information war. We are losing that war. The Taliban has unrestricted and unchallenged access to the radio, which is the main means of communication in an area where literacy is around 10 percent for men and less than five percent for women. Radio is broadcast from the backs of pick-up trucks and motorcycles. These are low-wattage FM radio stations. We have no counter-programming efforts that existed when we took office. We don't have jamming, we don't try to override, we don't do counter-programming." In this connection, I am reproducing below an article titled "Use of Soft Power in Counter-Terrorism" written by me on November 17, 2007. This is available at and also in my book titled "Terrorism: Yesterday, Today & Tomorrow" published by the Lancer Publishers of New Delhi ( in June, 2008---B.Raman)

My Article Of November 17, 2007

Anger is a common root cause of all terrorism---ideological, ethnic, separatist, sectarian or religious. Terrorist organisations exploit the anger to motivate the members of the community from which they have arisen to support them in their acts of terrorism. Such support can be in the form of volunteers for committing acts of terrorism, contribution of funds, logistic support etc. Extreme anger in individuals can motivate them to resort to terrorism as individuals without their belonging to any organisation. Anger containment and ultimate reduction has, therefore, to be an important component of counter-terrorism.

2. Terrorists use the soft power of the media----old and new--- to keep the anger sustained and make it increase in order to maintain a high level of motivation. The role of soft power in counter-terrorism is to neutralise the motivation through anger containment and reduction. Use of disinformation is counter-productive in counter-terrorism. For effective use of soft power in counter-terrorism, the causes of anger have to be identified and those, which are capable of being removed, have to be removed. Counter-terrorism itself often adds to the prevailing anger through disproportionate use of force, serious violation of human rights etc. These are tactical causes of anger and can be easily removed through corrections in the counter-terrorism techniques.

3. It is more difficult---often impossible--- to remove strategic causes of anger. As examples of such strategic causes, one could mention Al Qaeda's anger over historic wrongs allegedly committed to the Muslims. The objective of the soft power has to be to explain to the community supporting terrorism the untenability of such causes and wean the community away from terrorism---whether by organisations or by individuals. A mix of removal of tactical causes of anger through appropriate correctives in counter-terrorism operations and explanation of the untenability of the strategic causes is required if the use of soft power is to be effective.

4. An attribute of soft power---whether in a conventional war with State adversaries or in an unconventional conflict with non-State actors--- is the ability to convey a message to a targeted audience in a convincing manner through an appropriate instrument of dissemination suited to the targeted audience.

5. All media----the print media,radio, TV, audio and video cassettes, films and the Internet--- are weapons of soft power. The handheld gun and the improvised explosive devices (IEDs) are weapons of hard power. Just as weapons of hard power keep improving with the advent of new technologies, so too the weapons of soft power. The advent of the Direct-to-Home (DTH) TV and the Internet totally revolutionised the way soft power is wielded by making it possible to take a message to the targeted people in their living rooms over the heads of their rulers and censors.

6. All States use soft power---not only against State adversaries, but also against sections of their own people who take to insurgency or terrorism. Similarly, non-State actors----particularly the jihadi terrorist organisations--- too use soft power in their campaign against their state adversaries.

7. One has been seeing since 9/11 that jihadi terrorist organisations----particularly Al Qaeda and its associates--- have become more adept in their use of soft power against their State adversaries than their State adversaries in their use against the terrorists. This is one of the factors, which has contributed to the continued resilience of Al Qaeda and its associates and their ability to draw volunteers and support from the communities from which they have arisen.

8. The inability of the US-led coalition to use soft power effectively against the jihadi terrorists comes in the way of the campaign against terrorism making headway. The Western powers have had a long history of the effective use of soft power against adversaries. One would be aware of the role played by the British Broadcasting Corporation (BBC) during the Second World War against the Nazis and the Fascists. The broadcasts of the BBC helped in two ways. They kept up the morale of the British people and rallied them to supporting the cause of the war. They weakened the credibility of the Nazis and the Fascists in the eyes of their own people.

9. Similarly, one would be aware of the role played by the use of soft power by the US during the Cold War against the USSR and other Communist States in undermining their credibility and bringing about their collapse. Among the instruments of soft power used by the US for this purpose were the Voice of America, funded by the State Department, and the Munich-based Radio Free Europe and Radio Liberty, allegedly funded by the Central Intelligence Agency (CIA), and the publication and dissemination of books written by political dissidents from the Communist countries explaining why they ran away from their country. The Clinton Administration set up a Radio Free Asia to promote the cause of democracy in Asia.

10. One of the reasons the US was able to use its soft power effectively during the Cold War was the availability of a large reservoir of political dissidents from the Communist countries, who co-operated in the running of the radio stations and imparted credibility to their broadcasts.

11 Al Qaeda and its associates have shown some sophistication in their use of soft power against the US and its allies. The effectiveness of soft power depends on the contents of the message sought to be disseminated and the instruments chosen for their dissemination. The selection of the instruments depends on the audience to which the message is directed. Any research with regard to the instrument and the contents of the message to be used has to start with a research on the intended audience.

12. Any strategy for the use of soft power against Al Qaeda and its associates has to provide for two totally different kinds of audience. The first audience is the people in the spawning areas of jihadi terrorism. These are the tribal areas on both sides of the Pakistan-Afghanistan border. They are semi-literate, if not illiterate. They are highly Talibanised. They look upon visuals as evils and anti-Islam. They destroy TV sets, CDs, Video cassettes and computers. Hence, the use of the print media, the TV and the Internet in their case may not work. The only instrument of dissemination with which they feel comfortable is the radio. Moreover, they are so poor that radio is the only instrument which they can afford.

13. One finds the jihadi terrorist organisations extensively using FM radio broadcasts since 2002 to reach their messages to the tribal people. FM radio broadcasts are used for preaching, mobilisation, enlistment of volunteers, collection of funds, motivation and aggravating their anger against the US. It is reported that there are nearly 30 illegal FM radio stations operating from the mosques and madrasas in the tribal areas making anti-Musharraf and anti-US broadcasts.

14. The arguments used by these broadcasts are of a tactical nature such as calls for reprisals against the Pakistan army's raid into the Lal Masjid of Islamabad in July, 2007, against Musharraf for co-operating with the US and against the US for allegedly bombing mosques and madrasas and using the Air Force against the civilian population. Their arguments have no strategic content such as their vision of the Ummah of tomorrow.

15. The broadcasts of these radio stations have been effective till now because the US-led coalition has not thought of an effective counter. Jamming them cannot be the counter. Moreover, one can jam some broadcasts for some time, but not all broadcasts for all time. Hence, a more intelligent counter would have been for the US-led coalition to have its own broadcasting capability manned by Muslims speaking the language and dialects of the area, well-versed in Islam and in the ethnic and cultural mores of the area, who can gradually wean the population away from the terrorists. Such a broadcast strategy is nowhere to be seen or felt. It is time for the soft power experts of the US to think in terms of a Radio Free Islam or just Radio Islam and Radio Harmony, if they have not already done so, in order to make an impact on the tribals.

16. The second audience is the diaspora of Muslims across the Western world. The defining characteristics of this audience totally differ from those of the tribal audience in the spawning grounds of jihadi terrorism. They are educated, radicalised, but not Talibanised, and they are capable of tactical as well as strategic thinking. Issues relating to maintaining the pristine purity of Islam do not agitate them to the same extent as issues relating to Palestine, Israel, Afghanistan, Iraq and the war on terror as waged by the US.

17. While the second audience feels comfortable with all instruments of dissemination, it avoids the Western print media which it looks upon as controlled by Jewish money and interests. It will not be possible for it to own and operate radio and TV stations from the Western countries. It, therefore, relies almost exclusively on the Internet for its jihadi mission. Al Qaeda and its associates too use the Internet for rallying radical elements of the diaspora to their cause.

15. Internet activism is the most important component of Al Qaeda's use of soft power to win adherents to its cause from the diaspora. The Internet provides a variety of ways of reaching and influencing the targeted audience----the conventional E-mail and web sites, the chat rooms, the blogs etc. Many papers have come out on the use of the Internet by Al Qaeda and pro-Al Qaeda jihadi terrorist organisations and angry Muslim individuals for operational purposes, meaning, commission of acts of terrorism. There is an equally urgent need for a study of the use of the Internet by the terrorists as an instrument of soft power to mould opinion in the Islamic world in their favour and against their state adversaries.

16. They use the Internet with some effectiveness for keeping the anger in the Islamic world sustained, if not enhanced, and for motivating Muslims to join the global jihad in their own way and according to their own lights. They do not ask them to join any particular organisation. They merely ask them to rise against the enemy and martyr themselves for what they project as the cause of the Muslims. Many do by joining different organisations and some in their individual capacity without joining any organisation.

17. The focus of counter-terrorism experts till now has been on countering the operational use of the Internet by the terrorists for acts of terrorism. Not adequate thought has been given to countering the use of the Internet as an instrument of soft power. How States can use the Internet to demotivate the terrorists or potential terrorists? What role the Internet can play in making the civil society think about the damage being caused by the terrorists? Just as the terrorists seek to cause and enhance anger, counter-terrorism agencies should cause and enhance disgust against the terrorists, by making effective use of truth about the real nature of terrorism instead of indulging in disinformation and spins. One can use disinformation and spins against adversary States but not against non-State actors, which often consist of one's own people.

18. Right from the days of the Vietnam War, one has been talking of the silent majority, which is not able or willing to assert itself. There is an equally strong silent majority in all civil societies, which feels disturbed by the phenomenon of jihadi terrorism----which does not spare even fellow-Muslims. This silent majority is not prepared to activate itself through conventional means such as holding processions, writing articles in the print media, addressing audiences etc It is afraid of being targeted by the terrorists and killed.

19. The Internet provides an excellent means of empowering this inarticulate majority and encouraging it to come out against religious radicalism and the resort to terror, without fearing the consequences of their Internet activism. How to promote Internet activism by enlightened sections of the Muslim civil societies and communities against radicalism and terrorism is a subject, which needs attention from policy-makers and civil society leaders.

20. Mr. Gordon Brown, the British Prime Minister, told the House of Commons on November 14,2007, that " Britain will spend 400 million pounds abroad on fighting radicalisation. the first time, Britain would sponsor events in Pakistan to counter extremist propaganda."
He did not elaborate how this money will be spent and what events will be sponsored. A better way would be to make effective use of the available instruments of soft power in more imaginative ways. The extent of the funding is only one aspect of action. Bringing to bear an imaginative approach to the problem is an equally important aspect---if not more important. Six years after 9/11, one does not find much evidence of such thinking and such an imaginative approach despite a profusion in funding.

21. In the years after the Second World War, Mr. Northcote Parkinson told the British policy-makers who assessed the effectiveness of their actions in terms of the money spent:" When funds are limitless, the only economy made is in thinking." We can update this and say in the context of today's so-called war on terrorism: "When funds are limitless, a battlefield casualty is your imagination."

22. What one needs is not just more funds, but more imagination and innovation.

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

How Much the Balts Owe Russia?

Source: Strategic Culture Foundation


It took Latvia many years to calculate the damage that the nation suffered from the 'Soviet occupation', and in late April Riga officially announced that Moscow should pay Latvia more than 10 billion lats ($18,7 billion).

How all this can be explained?

A special 'counting commission' dealt with the issue for three years. They launched a database of Latvian citizens who were subject to forced resettlement on 25 March, 1949 (in all- 55, 580 people). The commission also focused on the damage to the Latvian economy in 1935 (?)-1940, when the country was under the Soviet rule, and also on the damage suffered from 1945 to 1990, when the Republic's economy was administrative. They also counted the demographic damage of 1940-1959. However, this part of the commission's report raises doubts and is very likely to be excluded from the final document as experts believe it does not reveal Europe's losses in WW II.

Members of the commission also conducted a thorough analysis of Latvia's environmental damage during the 'Soviet occupation' and also human casualties caused by the Afghan war and the Chernobyl nuclear disaster. Latvia says the Soviet authorities concealed the true scale of the accident and did not provide information on the spread of the radioactive clouds from Chernobyl.

The calculations show that “direct demographic losses due to the Soviet occupation” exceed 10 million man-years. In 1990 Latvia also calculated the damage caused by the Soviet regime, and then it was 120 billion rubles unadjusted for inflation.

Lithuania and Estonia also made efforts to assess their damage. In 2000 the parliament of Lithuania (then ruled by the conservative party) adopted a law on the negotiations with Russia about the damage due to the Soviet occupation. Lithuania demanded a 80 billion litas compensation (about $30 billion), while Estonia said it wanted Russia to pay only $4 billion.

In view of this, I would like to remind the readers that Ukraine also used to make similar calculations. In April 2008, members of the regional council of the city of Lviv decided to submit to the President of Ukraine and the parliament a draft law “On legal evaluation of crimes committed by the totalitarian Communist regime on the territory of Ukraine”. Ukrainians nationalists insisted that Russia owed Ukraine $2 trillion- “$100,000 to each victim of the Soviet regime”.

How do you think Russia should react to this?

In the first place, the current Baltic leaders seem to have forgotten that all international regulations were observed when the Baltic republics were annexed to the Soviet Union in 1940. On May 9, 2005, after the talks with the President of Latvia

Vaira Vīķe-Freiberga in Moscow, Vladimir Putin strongly recommended that Riga never raise this question again.

So, what 'Soviet occupation' are they talking about?

Secondly, in ealry 1990s Russia inherited all debts of the Soviet Union, including those to the Baltic republics.

Thirdly, in times of the Soviet rule, Moscow invested dozens of billions of dollars in each of the three Baltic Republics, and these sums can in no way be compared to those currently claimed by the Baltic officials. But I would not like to make refute allegations.

During 50 years of the “Soviet occupation” Estonia`s GDP increased 55 times! $6 billion were spent only on the deep-water port in Tallinn, to say nothing about numerous electric power plants, airports and industrial enterprises that were built under the Soviet rule and were used by Estonians.

The Lithuanian SSR received from the Soviet government over $66 billion in free aid. That money (without taking into account the post-war aid) was spent on the development of the republican industry, agriculture, science, education, culture, healthcare, sport, tourism. After all, this money could have been of much help to Russia as well.

After all- and this is the main argument- the Balts have forgotten that without the 'Soviet occupation' they would have hardly regained their sovereignty, they would have disappeared from the world map in the aftermath of the WW II.

The Soviet Union saved these nations from destruction. And now, instead of being grateful for the survival, they demand Russia 'a compensation'. For what? A compensation for being alive?

Actually, Russia could also make its own calculations and demand that Latvia, Estonia and Lithuania pay those billions of dollars they had received from the Soviet Union as free aid.

Russia would also demand that they show respect to the memory of the soldiers who died while liberating the Baltic republics from the Nazi invasion and compensate the families of the dead for moral damage. There are precedents in the international legislation. In August 2003 the Libyan government agreed to pay compensation to each family whose relatives died in the Lockerbie Boening-747 bombing in 1988 (then the accident claimed lives of 243 passengers and 16 crew members; besides, eleven people in Lockerbie, south Scotland, were killed as large sections of the plane fell in and around the town). Thus, each family received about $8 million of compensation.

150,000 of Soviet soldiers died liberating Estonia; 200,000 were killed by the Nazi in Latvia and 150,000 more lost their lives in Latvia.11 If we multiply the number of victims by $10 million for each person, we`ll get $1,5 trillion debt for Estonia, and $1,5 trillion and $2 trillion debt for Latvia and Lithuania. And this is only compensation for the dead Soviet soldiers. And if we add 'man-hours' to these calculations, the sum will be astronomical.

Of course, this is just a theory. But the Baltic states should understand that if they proceed with their absurd and insulting demands, Russia will be ready to show an adequate reaction.


"Pakistan Can Defy the Odds: How to Rescue a Failing State"

ISPU released its newest report on the future of Pakistan at a congressional briefing on Monday, May 11th on Capitol Hill. The briefing has been sponsored by Congresswoman Sheila Jackson.

Complete Report available at:

"Pakistan Can Defy the Odds: How to Rescue a Failing State" - Dr. Hassan Abbas


Is Pakistan collapsing? How far are the Taliban from Islamabad? Can al-Qaeda grab the country’s nuclear weapons? These are the types of questions raised every day by the American media, academia and policy circles. And these are critical issues, given the nature of the evolving crisis in Pakistan. The approximately two dozen suicide bombings in 2009 so far, 66 in 2008, and 61 in 2007, all of which have targeted armed forces personnel, police, politicians, and ordinary people not only in the country’s turbulent northwest but also in its major urban centers, indicate the seriousness of the threat. A major ammunition factory area located close to some very sensitive nuclear installations in Wah (Punjab) was targeted by two suicide bombers in August 2008, an act that sent shudders across the country’s security establishment.

Although certainly a matter of very serious concern, what is often ignored in this context is that terrorists need far more than suicide bombers to get hold of nuclear materials. More alarming, in fact, is the expanding influence and reach of the Taliban and similar groups in the Federally Administered Tribal Areas (FATA) and the North West Frontier Province (NWFP). The Swat imbroglio speaks for itself. Poor law enforcement capacity and inadequate counterinsurgency know-how on the part of Pakistan’s army are partly responsible for this state of affairs. Confused threat perceptions and popular conspiratorial thinking also encourages the denial of reality. The failing infrastructure and absence of good governance, as exposed through prolonged electricity shutdowns and declining economic and social indicators, further provides an overall dismal scenario. All of this, however, presents only one side – and a scary one at that – of the coin.

Close your eyes to the other side of the coin at your own risk. Pakistan, a country of roughly 170 million people, recently witnessed the fruits of a courageous and sustained lawyers’ movement that led to the restoration of the deposed Chief Justice Iftikhar Mohammad Chaudhry and about 60 other superior court judges. These judges were victims of former President Pervez Musharraf’s short-sightedness and selfishness in 2007 that, in turn, provoked a major movement that inspired and galvanized thousands of Pakistanis to struggle for the rule of law, an independent judiciary, and the supremacy of the constitution. The people stood up for those who defied a dictator – a rare development in the 62 year checkered history of Pakistan. The movement’s leading activists were connected through, an indication that the middle class and pro-rule of law civil society elements are also well networked.*
A vibrant and enthusiastic electronic and print media helped this cause immensely – though sometimes at the cost of objectivity – but for a progressive goal. There is no dearth of Pakistani writers, artists, poets, and intellectuals who are not only continuing with their creative work, but also are readying people to stand up to the country’s challenges – especially the monster of religious bigotry. Another relevant example is the many women who are joining Pakistan’s army and air force as soldiers and fighter pilots, something inconceivable for many Pakistanis just a decade ago due to cultural as well as dogmatic religious worldviews. Lastly, the gallant and heroic way in which Benazir Bhutto embraced death while challenging extremists publicly and repeatedly – knowing exactly how fatal that could be – presents yet another picture. This is the picture of hope and change that Pakistanis are calling "Umeed-e-Sehr," the hope of a new dawn.

Indeed, the question is which picture is the real Pakistan: those crazy militants who cherish beheading opponents and flogging women or those who stand for a pluralistic, progressive, and democratic Pakistan. The answer is both. Those who accept nothing but hard statistical data should just look at the voting pattern in the 2008 national and elections: the comparatively liberal Pakistan People’s Party (PPP), Awami National Party (ANP), and Muttihada Qaumi Movement (MQM) received significantly more votes than the religious political parties, all of which were trounced. Those parties are, of course, not without fault, and a large bloc of votes also went to such centrist parties as the Nawaz Sharif-led Muslim League, which runs Punjab, the country’s largest province. Although the overall political trends are on the positive side, there is certainly increasing stress and strain. And unless these forces are nurtured, supported, and strengthened, there is no guarantee that Talibanization and extremism will be confined to certain areas or eliminated.
In this scheme of things, American-Pakistani relations are a very important part of the puzzle. It is a puzzle in the sense that despite a long history of relations, including times when Pakistan was called the "most allied-ally" and occasions when it became "the most sanctioned state," both states distrust each other. The bilateral dealings are increasingly fraught with resentment, miscommunication, and a sense of caginess. Senate Foreign Relations Committee chairman John F. Kerry and ranking Republican Dick Lugar, while introducing legislation on May 4, 2009, to put into effect key elements of President Obama’s new strategy in Pakistan and Afghanistan, framed the problem aptly when they said: "The status quo is not working: the United States believes it is paying too much and getting too little - and most Pakistanis believe exactly the opposite.* The new bill, if approved by Congress, will triple nonmilitary assistance to Pakistan to $1.5 billion annually for the next five years to help the country stabilize.

An earlier bill with the same intent, the one introduced by chairman of the House Foreign Affairs Committee Howard Berman, had a long list of conditions attached to it. This list drew scathing criticism from Pakistani officials, who sent the clear message that they would not accept the aid package with such strings attached. One condition related to the terrorism issue read as: "Pakistan has to certify that there is no activity taking place against India.* Richard Holbrooke, the administration’s special envoy to Pakistan and Afghanistan, and Adm. Mike Mullen, chairman of the Joint Chiefs of Staff, visited Pakistan together in early April 2009 after these proposed conditions were made known to Pakistan government. The well-informed Shuja Nawaz, director of the Atlantic Council’s South Asia Center, explains what happened during the visit: "This is probably the worst-ever visit by an American team to South Asia in history. ... It was a complete disaster. And if this is how you want to win friends, I just wonder how you want to create enemies." He also cautioned Washington policy makers that, potentially, American-Pakistan relations were heading for a train wreck.* Thankfully, a crisis-in-the-making was duly averted.

However the question remains: How can one make certain that a legitimate and reasonable oversight of the funding and support is provided to those sectors where help is needed the most? To build a deeper, sustainable, and long-term strategic engagement with the people of Pakistan, the United States must learn from its past mistakes and should not shy away from accepting its past missteps. Secretary of State Hilary Clinton deserves credit for saying what Pakistanis have been expecting to hear since late 2001. In an appearance before a subcommittee of the House Appropriations Committee on April 23, 2009, she stated: "We can point fingers at the Pakistanis. … But the problems we face now to some extent we have to take responsibility for, having contributed to it. We also have a history of kind of moving in and out of Pakistan. … Let’s remember here … the people we are fighting today we funded them twenty years ago …"* While this honest acknowledgement made juicy news headlines in Pakistan, it should go a long way toward mending the relationship. From the American perspective, however, this also means more caution about which Pakistani institutions the United States will invest in and, at the end of the day, who will be held accountable for auditing and monitoring the funds’ disbursement.
This brief report seeks to propose exactly that, after first discussing the variables that are having a potent (both negative and positive) impact on the Pakistani polity, in order to understand the history and dynamics of the malaise afflicting the country today. This is not meant to be a short history of Pakistan, for I will refer briefly only to those factors, issues, and events that, in my view, define the Pakistani identity today. Understanding that context is an absolute necessity for those who wish to help Pakistan survive and emerge as a modern democratic Muslim state.

Pakistan is a divided nation today and, as Professor Adil Najam insightfully says, it is "a democratic society trapped inside an undemocratic state." In the West, Pakistan army is still seen as an institution that can stabilize things if need be. Perhaps, that is why TIME magazine profiled Pakistan’s army chief General Ashfaq Pervez Kiani as being among the most influential 100 people in the world today in the category of "Leaders and Revolutionaries."* The one who also deserves to be profiled internationally is Afzal Lala, a now-legendary Pashtun politician associated with the Awami National Party (ANP) who, despite all the threats, is staying in Swat in his home defying the writ of the blood-thirsty Tehrik-e-Taliban Pakistan (TTP).*

Some recently published reports by American think tanks are very useful, especially in terms of devising recommendations for directing Pakistan and American policy for this study. These include publications from Center for American Progress (A New Policy Towards Pakistan [September 2008]); Network 20/20 (A Different Kind of Partner: A Paradigm for Democracy and Counter-Terrorism in Pakistan [October 2008]); The Atlantic Council of the United States (Needed: A Comprehensive U.S. Policy Towards Pakistan [February 2009]); the Carnegie Endowment (Reforming the Intelligence Agencies in Pakistan’s Transitional Democracy [March 2009]), and the Asia Society (How to Stabilize Afghanistan, Pakistan [April 2009]). Three books that inspired this study’s theme are also worth mentioning here: Paul Collier’s The Bottom Billion: Why the Poorest Countries are Failing and What Can be Done about It (Oxford University Press: 2008); Ashraf Ghani and Clare Lockhart’s Fixing Failed States: A Framework for Rebuilding a Fractured World (Oxford University Press: 2008); and, finally, one edited by Robert I. Rotberg, When States Fail: Causes and Consequences (Princeton University Press: 2003).

A pertinent quote from Professor Robert I. Rotberg’s introductory chapter in the above mentioned book, provides a useful framework for this study: He maintains that weak states (or states in crisis) "may be inherently weak because of geographical, physical or fundamental economic constraints; or they may be basically strong, but temporarily or situationally weak because of internal antagonisms, management flaws, greed, despotism, or external attacks. Weak states typically harbor ethnic, religious, linguistic, or other intercommunal tensions... Urban crime rates tend to be high and increasing. … Schools and hospitals show sign of neglect, … . GDP per capita and other critical economic indicators have fallen or are falling… . Weak states usually honor rule of law precepts in the breach." As per these criterions, Pakistan is a weak state in essence. By definition, internal corrective measures and international support can rescue such states.




Afghanistan has seen a third Mumbai-style commando attack by suicidal terrorists on multiple targets. The previous two had taken place in Kabul and Kandahar. The latest---the third one--- took place in Khost in Eastern Afghanistan on May 12,2009. Three groups of suicidal bombers launched commando-style attacks on the compound of the local Governor, the nearby police headquarters and a municipal building. The multiple attacks, which began at around 10 AM ended only at 5 PM after US and Afghan security forces managed to eliminate the terrorists or some of them blew themselves up. Initially, the raiding Neo Taliban terrorists took 20 hostages, but the US and Afghan troops managed to free them. A Neo Taliban spokesman has claimed that the multiple attacks were launched by 30 of their men.

2.Eleven members of the raiding parties and nine members of the Afghan security forces and civilians are reported to have been killed during the seven-hour confrontation between the security forces and the raiding parties. There are no reports of any US fatalities. Earlier on the morning of May 12, there was an attack by a US unmanned Predator plane on a suspected terrorist hide-out in the Dray Nishtar area of North Waziristan. Ten unidentified persons were killed. This was the second US Predator attack in three days. Many people were killed in a similar attack in South Waziristan on May 9. Both attacks have been described by local sources as retaliatory for attacks on US forces in Afghan territory by elements which had infiltrated into Afghanistan from the two Waziristans. The two drone attacks did not specifically target any individual. They merely targeted the buildings or hide-outs from which these elements were suspected to have infiltrated into Afghanistan.

3. In the meanwhile, Robert Gates, the US Defence Secretary, announced in Washington DC on May 11,2009, the replacement of Gen David McKiernan, the US Commander in Afghanistan, by Gen Stanley McChrystal, who currently serves as the Director of US Joint Chiefs of Staff, and was previously a Director of special operations forces. Gen McChrystal was in charge of Joint Special Operations in Iraq. According to a report disseminated by the British Broadcasting Corporation (BBC), his forces were involved in the capture of Saddam Hussein and the killing of al-Qaeda's leader in Iraq - Abu Musab al-Zarqawi. Gates justified the replacement as necessitated by the need for new thinking on the strategy to be followed by the Army in Afghanistan.

4. Gen.McKiernan, who had also previously served in Iraq, was posted in Afghanistan for less than a year. He took over the responsibility for dealing with an unsatisfactory ground situation marked by a bleeding stalemate between the US-led NATO forces and the Neo Taliban. There was no end to this stalemate during his tenure. This stalemate saw the US-led forces and the Neo Taliban inflicting periodic casualties on each other without either of them being able to establish territorial dominance in any substantial area in Eastern and Southern Afghanistan.

5. Gen.McKiernan's strategy was more reactive than proactive----building effective defences and retaliatory capability to deny success to the Neo Taliban. It was not pro-active in the sense of the US-led forces going after the Neo Taliban and launching pre-emptive strikes before it was able to attack US and Afghan forces. A pro-active policy with emphasis on pre-emptive strikes is expected under Gen.McChrystal.The new strategy is expected to focus on "attack, disrupt and dismantle" instead of being merely content with denying success to the Neo Taliban.

6. The US faces a three-in-one security dilemma in the Af-Pak region--- counter-insurgency against the Neo Taliban and Gulbuddin Heckmatyar's Hizbe Islami in Afghan territory, counter-sanctuary operations against the safehavens enjoyed by Al Qaeda and its allies in the Federally-Administered Tribal Areas (FATA) and by the Neo Taliban in the Quetta area of Balochistan and counter- Pakistani Taliban in the FATA and the Malakand Division of the North-West Frontier Province (NWFP).While the US has to play an activist role against the sanctuaries of Al Qaeda and the Neo Taliban, the operations against the Pakistani Taliban are essentially an internal security task of the Pakistani security forces and Govt. While the new strategy of Gen.McChrystal is expected to add greater thrust to the counter-insurgency operations against the Neo Taliban and the Hizbe Islami, the counter-sanctuary policy against Al Qaeda and its allies and against the Neo Taliban in Pakistani territory is in a state of confusion with the Pakistan Army unable or unwilling to deal with them and with the US not showing any signs of fresh thinking. The present policy is focussed almost exclusively on drone attacks, which are yet to make an impact. Deniable covert actions against the sanctuaries in Pakistani territory is an option which has not been given a serious try les there be unciontrollable adverse reactions in Pakistan.

7. The Pakistan Army has been giving an impression of being serious now about its determination this time to wipe out the Tehrik-e-Taliban Pakistan (TTP) and its ally the Tehrik-e-Nifaz-a-Shariat-e-Mohammadi (TNSM) from their hide-outs in the Swat Valley and other areas of the Malakand Division of the North-West Frontier Province (NWFP). The TNSM has been adopting the same tactics as it did in 2007-08 when a similar offensive was launched when Pervez Musharraf was the President. This tactics consists of avoiding frontal clashes with the security forces, stepping up suicide attacks of terrorism, splitting into small groups, withdrawing into the mountains and inveigling the security forces to raid and attack them in their mountainous hide-outs so that they could inflict heavy casualties on them. Neither the Pakistani security forces nor their US advisers have been able to think of an alternative strategy of strengthening the control of the security forces in the areas vacated by the TNSM, building up their defences and inveigling the TNSM into attacking the security forces in their strongholds.

8. The large-scale exodus of Pashtun civilians from the areas affected by the counter-Taliban operations----now estimated at 1.3 million--- shows that there is not much public support for the TTP and the TNSM. Due to the weak capabilities of the security forces, the TNSM and the TTP have been able to intimidate the civilians into supporting them. Once the civilians had an opportunity to escape, they did so.

9. The protection of the civilians and humanitarian assistance to the internally displaced Pashtuns should be an important task. From the statements emanating from Mrs.Hillary Clinton, the US Secretary of State, and others in Washington, it is evident that US policy-makers realise the importance of humanitarian relief to the internally displaced. The US has already made an initial contribution of about US $ five million. The United Nations High Commission for Refugees (UNHCR) has also initiated action for humanitarian assistance.There are reported promises of assistance from Saudi Arabia and China.

10. The problem is that Pakistan does not have an effective Governmental infrastructure for humanitarian relief. One saw that during the earthquake, which ravaged Pakistan-Occupied Kashmir (POK) and some areas of the NWFP in 2005.The Government's response to the disaster caused by the earthquake was very unsatisfactory. It was the Lashkar-e-Toiba (LET), the terrorist organisation, and its political wing called the Jamaat-ud-Dawa (JUD), which were in the forefront of the disaster relief work. They mobilised volunteers and funds and organised the relief work in a manner which won the gratitude of the people. They were alleged to have pocketed for their own use part of the huge flow of funds from the Pakistani diaspora abroad and Saudi Arabia for quake relief.

11. Similarly, now, in the face of the lethargic response of the Government, it is the LET and the JUD and certain other Islamic fundamentalist parties such as the Jamaat-e-Islami (JEI), which have taken the lead in looking after the internally displaced Pashtuns with the help of money locally collected as well as flowing from the Pakistani diaspora and Muslim countries like Saudi Arabia. If the Government does not effectively take over the leadership role in providing humanitarian relief to the internally displaced Pashtuns and leaves the field free to jihadi and fundamentalist organisations, part of the money flowing from the Pakistani diaspora and Saudi Arabia would be diverted to their coffers and their humanitarian work would enable them to make more recruitment for acts of insurgency and terrorism. (13-5-09)

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

May 12, 2009

Total Innovation : UK report

Total Innovation

Why harnessing the hidden innovation in high-technology sectors is crucial to retaining the UK’s innovation edge

Innovation is vital to the UK’s future economic prosperity and quality of life. So it is crucial that we understand where innovation comes from, who does it, what stimulates it, and how it benefits our economy and society.

In October 2006, we published the first in a series of reports on what we call ‘hidden innovation’
– the types of innovation that tend to be neglected by traditional indicators. We suggested that an ‘innovation gap’ had opened up between these indicators, the reality of innovation in the UK, and the policy intended to stimulate and support it.
Much has changed since then: a new UK government department for innovation; a White Paper that explicitly recognises the importance of hidden innovation; and the announcement of a major new effort to measure innovation in ways that more accurately reflect the UK’s economy and society.

But much remains to be done. This report, the third in the series, focuses on high-technology sectors such as aerospace and pharmaceuticals. It reveals the increasing importance of hidden innovation in these sectors, and the surprising ways in which our most innovative firms have adapted to technological change and international competition.

What is clear is that, in this rapidly changing world, more of us need to be prepared to be innovative. We need, in particular, to rethink some of our most fundamental and long-standing assumptions about innovation, and to consider new, perhaps unfamiliar ways of responding. This is as much a challenge for our politicians and policymakers as it is for our firms and entrepreneurs.
We would greatly welcome your views on our proposals, and to hear your own.

Jonathan Kestenbaum
May, 2008



The Barack Obama administration’s policy of playing down the issue of the alleged violation of the human rights of the Tibetans in China has not had any impact on the US Congress. The Tibetan cause continues to receive the same support from both Houses of the Congress, despite their being dominated by the Democratic Party, as it was receiving during the administration of George Bush. This continuing Congressional support for the Tibetan cause on the same scale as during the previous administration is reflected in the budgetary allocations for the fiscal year 2009 and in the access enjoyed by various Tibetan non-governmental organizations to leading members of the two Houses, belonging to both the Democratic and the Republican Parties.

2. The budget for fiscal 2009 has allocated US $ 17 million for various Tibetan causes. The break-ups available are as follows:

(a). Funds for educational and cultural programmes inside Tibet ---US $ 7.3 million.

(b). Funds for Tibetan language broadcasts by Radio Free Asia and the Voice of America---- US $ 3.3 million.

( c ).Funds for Tibetan refugee programmes such as medicare, education of Tibetan children, transit assistance etc ---- US $ 2.5 million.

(d). Funds for running the office of the Special Coordinator for Tibetan Issues in the US State Department---US $ one million.

(e). Funds for a Tibetan Section in the US Embassy in Beijing to monitor developments in Tibet till the US is able to establish a consulate in Lhasa---US $ one million.

(f). Funds for Fulbright scholarships for Tibetan students for their higher education ---US $ 750,000.

(g).Funds to provide academic and cultural exchange opportunities to Tibetans—US $ 650,00.

(h). Funds for the Tibetan programmes of the National Endowment for Democracy (NED)—US $ 250,000.

3. The Congress has presently under consideration a new project meant to protect Tibetan identity, language, culture and religion. Funding for this project has not yet been approved. (12-5-2009)

( 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: )

May 10, 2009

Quote of the Day -- Rumi

“The minute I heard my first love story I started looking for you, not knowing how blind that was. Lovers don't finally meet somewhere. They're in each other all along.”

IT investment outlook

By Michelle Price | Published: 05 May, 2009

As the financial crisis forces banks and financial institutions to strip costs out of their budgets, it remains unclear how badly IT will suffer. The Banker surveyed the investment intentions of IT chiefs across the industry. Writer Michelle Price

The global financial services industry has long-been notorious for its bloated IT budgets, which far exceed those found in the majority of other sectors. But as the global financial crisis renders resources ever-scarcer, the financial services industry's well-provisioned IT departments cannot hope to escape unscathed.

Between February and April 2009, The Banker surveyed a group of 129 chief information officers (CIOs), chief technology officers (CTOs), IT directors and managers from across the banking sector in order to understand how their IT budgets have been affected by the downturn and how they intend to invest what funds they have over the next 12 months. Participants were asked about changes to their budgets, how much they intend to invest in different areas of the IT estate over the next 12 months, and which areas of the IT environment they regard as a priority.

The vast majority of respondents (32%) were based in Asia, western Europe (28%) and North America (12%), while just less than one-third of participants were based in eastern Europe (5%), South America (4%), the Middle East (11%) and Africa (8%). Some 30% of respondents worked at commercial/wholesale banks, 10% came from retail banks and 8% responded from universal banks. A small number (2%) came from investment banks, with a further 50% hailing from other types of financial institutions. The vast majority of participants (54%) were IT directors, while 9% were at the CIO level, 3% at the CTO level and 35% held managerial jobs responsible for IT spend.

The vast majority (84%) of the group managed budgets of less than $50m, with 35% of respondents saying that their budgets for the next 12 months had been cut. In an encouraging trend reflecting the global scope of the survey, a further 39% of respondents said that their budgets remained broadly the same at last year, while a whopping 26% reported that their budgets had actually increased for the next 12 months.

Where budgets have been cut, however, the reduction was often found to be dramatic: a worrying chunk of participants (27%) reported that their IT budgets have been slashed by more than 40%, while 4% of participants said that their budgets have been cut by between 30% and 40%. A further 13% of respondents said that their budgets have been reduced by between 20% and 30%, and some 16% reported cuts to their IT budget of between 10% and 20%. The second largest group of IT chiefs (22%) reported that their budgets have been cut by between 6% and 10%, with a combined 17% of respondents reporting cuts of less than 5%.

According to The Banker's research, the average reduction among firms reporting cut-backs amounts to a dire 21%, wiping tens of billions from the global IT industry. Taking the entire group of respondents as a whole, The Banker's IT Investment Intention Survey 2009 indicates that about one-fifth of organisations in the global banking and finance sector are experiencing sharp declines (of 10% and upwards) in IT budgets. This figure, twice the proportion reported by other sectors, clearly reflects the severe capital constraints under which the banking and finance industry currently labours.

Broad distribution

Of the funds that remain, which broad areas of the business and IT estate will receive the most investment? On average, The Banker found that basic maintenance or 'keeping the lights' on functions - which usually commands the vast majority of IT budgets - will account for just less than one-third (27%) of IT expenditure over the next 12 months. The result suggests that IT managers are aiming to drive costs out of what is traditionally a highly flabby area of the IT estate, a finding underlined by the 11% of funds devoted to rationalisation and cost-efficiency projects.

The Banker's findings also suggest that the operational failings exposed by the crisis have prompted many institutions to undertake wholesale IT systems overhauls, with some 17% of budgets dedicated to replacing specific IT platforms. In what may be regarded as a surprising outcome, however, only 9% of IT budgets over the next 12 months will be allocated to regulation and compliance-related projects, suggesting that most financial institutions are deferring such projects until the full extent of future regulation is established.

Less surprisingly, only 8% of funds will be spent on major business change programmes, as organisations seek to reduce unnecessary expenditure on internally facing projects. With a significant 14% of budgets dedicated to customer and client-facing IT projects, however, it is clear that while internal services may be under-resourced, financial institutions will continue to invest in services that impact upon their client and customer relationships. Finally, 14% of funds will be dedicated to other functions falling outside these areas, with respondents citing, most notably, personnel, IT education and 'emergency costs'.

Priority areas

In order to better understand which specific components of the IT stack are likely to receive investment over the next 12 months, The Banker asked respondents to indicate which types of hardware, software, services and human resources they regard as an investment priority.

When ranked on this basis, information and network security proved to be the outright winner. With some 63% of respondents regarding this area as a priority, information and network security ranked well above the second most important area of investment, systems upgrades, which garnered 53% of the vote. The Banker's findings clearly highlight how critical the issue of information security has become to the financial services community as security threats, including viruses, hacking, phishing, data theft, data loss and fraud, continue to proliferate and, in turn, target the financial services industry.

It is not entirely surprising therefore that the network itself - the key vector for security breaches within large organisations - also comes up trumps, with both networking upgrades and the purchasing of networking hardware regarded as a priority by some 48% and 45% of respondents, respectively. Increasing data storage and application integration also snuck into the top quartile, both of which consistently highlight among IT chiefs' ongoing problem areas. Attitudes to human resources were also noteworthy: fewer respondents (29%) regarded cutting back on in-house staff, consultants or contractors as a matter of priority than might be expected.

The biggest loser in the ranking was software-as-a-service (SaaS)/cloud computing, the method by which software applications once deployed in house are provided by an external provider over the internet. With only 9% of IT chiefs regarding the movement to SaaS as a matter of priority, it is clear the financial services industry remains apprehensive toward the proposition. But SaaS was not the only outsourced service to receive a lukewarm reception. Both business process outsourcing and IT outsourcing fell into the bottom quartile, suggesting that fewer IT chiefs than is popularly believed regard increasing their outsourced services and functions as a key resource management strategy for the next 12 months.

Note: Percentages have been rounded up to the nearest decimal point.