February 19, 2011




* Colonel Muammar Gaddafi has led since 1969
* Population 6.5m; land area 1.77m sq km
* Population with median age of 24.2, and a literacy rate of 88%
* Gross national income per head: $12,020 (World Bank 2009)

Latest reports indicate a state of civil war in the cities of Benghazi (1000 kms from Tripoli) and nearby al-Bayda in Eastern Libya with the protesters running into thousands and the Libyan army fighting each other with no holds barred. Despite the use of mortars and heavy guns by the Libyan Army, which has allegedly been using mercenaries from Pakistan, Bangladesh and Chad, the protesters, who are also allegedly aided by mercenaries from Egypt and other countries, have managed to overrun the local Brigade headquarters and capture large quantities of arms and ammunition with which they are fighting. Some reports, not yet confirmed, say that the armed opponents ofCol.MuammarGaddafi and the Arab mercenaries supporting them have managed to push out of these cities the Libyan army units deployed there and the mercenaries being used by them. Over a hundred persons are reported to have been killed in the fighting so far. There have been no reports of any major incidents in Tripoli, the capital.

2. The Libyan authorities have alleged that Tunisian, Egyptian, Sudanese, Palestinian, Syrian and Turkish mercenaries have entered the country to fight on the side of the protesters. They have claimed to have arrested dozens of them. The official Jana news agency has said that those detained in several Libyan cities were members of a "foreign network (and were) trained to damage Libya's stability, the safety of its citizens and national unity." It has hinted that Israel is behind the unrest. It said: "The people arrested have been charged with inciting acts of looting and sabotage, such as burning hospitals, banks, courts, prisons, police stations and offices of the military police, as well as public buildings and private properties, according to plans drawn up earlier. Certain Libyan cities have been the scene of acts of sabotage and destruction since Tuesday. Sources close to the investigation have not ruled out Israel being behind the network."

3.The protesters have destroyed a radio station in Benghazi. There have been large-scale jail breaks. There's a Facebook video of a captured mercenary from Chad http://www.facebook.com/video/video.php?v=1036972563772 .The mercenaries have been allegedly offeredbetween $12,000 - $30,000 each. Some of the latest Tweets originated by an organization called the “Democratic Underground” are given below:

This is exactly what I have been afraid of hearing. Where the fuck is the US, the UN, or any other ?
Come morning we'll learn just how much that oil is worth.
And then they'll escalate from concern to condemnation.
When world leaders respond decisively, it stops
"I'm not afraid to die, I'm afraid of losing the battle"
Youtube channel albayda2011 has selection of footage including shooting with automatic weapons.
Intl banks who hold Libya accounts, do the right thing and FREEZE these accounts.
Security forces in Al Bayda, Darna and Ajdabiya have joined protesters, strong tribal ties
There are bodies everywhere I've read.
Martyrs at Benghazi reached 500 and they will stay in the streets: no room
Chilling, but possibly the only thing better than them being
Special forces are executing doctors.
Tripoli "boiling like a cooking pot'
Women+children leapt from bridges to their deaths trying to escape Gaddafi thugs
This appears to be headed to be a complete genocide.
Do you remember what BP was allowed to do here? Libya is BP land now
Rwanda moment in Libya. This calls for international intervention now.
No electricity, water or medical supplies. Hundreds have been wounded by machine guns. We need aid.
in Darna- largest armory in the hands of the people. includes tanks
To the World, Gaddfi is using oil money paid by you, to pay mercenaries to kill his own people
No news or updates from inside Libya broadcast during the past hour.
SMS sent 2 mobile phones ‘We will hit w/iron fist all oppose (Qaddafi's) revolution’.
Egyptian brother and sisters smuggling sim cards into libya. Thank you Egypt
Youtube removing videos
Reports of a C130 sent from Austria with arms for Libya via Malta. Please write to Austrian Chancellor
UK based group aiming to set up a mobile medical centre for Libya
United Nations consider deploying peace keepers in Benghazi to prevent protestors from being shot
I misread that... thought they WERE deploying peacekeepers.
When the people grab the oil fields, watch how fast the UN will move in
Egyptians in Cairo are collecting medical supplies, a heart warming gesture in these dark moments
Protesters destroying Gov’t Property but…
Gaddafi is a psychopath, criminal & gutter snipe. And the governments that watch this murder in silence ..... (20-2-11)

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

ISI's tacit support to Haqqanis hampering CIA's anti-terrorism efforts in Pak: Report

By ANI | ANI – Fri, Feb 18, 2011 3:40 PM IST

Washington, Feb 18(ANI): Critical counter-terrorism efforts by US' Central Intelligence Agency in Pakistan's tribal region are apparently being hampered by the country's premier spy agency Inter-Services Intelligence (ISI), which seems to be covertly helping the Haqqani network escape CIA's drone strikes.The CIA has long used intelligence from the ISI to help identify targets for drone strikes in the tribal areas bordering Afghanistan, but now, as officials on both sides say, it operates largely autonomously, especially since it has been concentrating its fire on the Haqqani militant network in the North Waziristan region, The Wall Street Journal reports.

Faced with pointed questions from lawmakers about strained ties with Pakistan, CIA Director Leon Panetta acknowledged this week that relations between both nations' intelligence agencies were "one of the most complicated" he had ever seen.While the ISI continued to help America target al Qaeda leaders in the tribal areas, Panetta said that its policies in other areas were in direct conflict with the US, stoking frequent tensions.

The ISI has long nurtured ties with the Haqqani network, which it sees as a strategic asset that can help Islamabad fend off Indian influences in neighbouring Afghanistan, especially as US forces begin troop-withdrawal in July, the report said. In contrast, Washington sees the Haqqanis, who have been responsible for spectacular attacks in Kabul, as the biggest single threat to Western and Afghan forces, particularly in eastern Afghanistan, it added. "The [ISI has] no intention of helping the United States degrade the Haqqani network," a US official said.The CIA has not conducted any drone attacks in Pakistan's tribal areas since January 23, and while US intelligence officials attribute this drop to bad winter weather, other officials and experts say that the sharp drop in strikes also suggests that the CIA may be having trouble pinpointing new Haqqani targets, either because militants have gone deeper into hiding or have moved to new areas, possibly with the help of ISI, the report said.

The Haqqani network has long used Miranshah as its main base of operations in Pakistan. But US officials and outside experts say there are signs that the group might be moving to Kurram- possibly with the help of ISI agents- making it harder for the CIA to find targets to strike in North Waziristan, it added. In a clear sign of rising tensions between both intelligence agencies, meetings between ISI and CIA officials-earlier held every ten days or so- have become less frequent, a senior ISI official said.

Also, Pakistan quietly shut down at least two so-called fusion centres last year, which used to bring US and Pakistani military intelligence officials together.Intelligence Committee Chairman Senator Dianne Feinstein (D., Calif.) said that she now sees the CIA-ISI relationship as "something less than wholehearted partnership" because the ISI is "walking both sides of the street." (ANI




*Dear Friends:*

*The following article focuses on: "THE ARMS RACE INDIA IS LOSING, CHINA IS

*India need not necessarily lose. I HAVE SAID THIS BEFORE AND IT IS BAD NEWS
FOR CHINA'S AGENTS IN INDIA: **India has the ability to leverage on the
one great advantage she enjoys over China, viz. the access she now has to
the most sophisticated weapon systems of the US which are NOT available to
China AT THIS TIME*. *All that India needs to do over the next five-ten
years, is to equip its army, air force, and navy with weaponry* *which the
Chinese cannot match for a long time to come. Along with better planning and
training,* *quality can defeat quantity* *should the Chinese ever think
of repeating another "1962"........ *
*It doesn't matter what China spends on its military -- which is three or
more times what India spends . Let quality (supported by better planning and
better training) win over quantity.*


The Arms Race China Is Winning
*February 14, 2011: *

India no longer sees Pakistan as a major threat, and is now measuring itself
against China, and finding itself wanting. China spends more than three
times as much (over $100 billion a year) on defense, and has twice as many
troops (two million). Indian defense officials are calling for more
But China has nearly three times the GDP of India, as well as higher
literacy rates, a better educated
higher GDP growth. Worse, China is making a more vigorous effort to
with corruption. Both nations have long suffered from the debilitating
effects of corruption. While China is 78th on the list of least corrupt
nations, archrival India is at 87. China has been prosecuting far more
corrupt officials, and convict many more, than India. Moreover, corruption
is one of the reasons literacy in India is 72 percent, versus 98 percent in
China. Too many Indian teachers got their jobs as a political favor, and
don’t really teach. This sort of thing is much less common in China. The
Chinese leadership recognize that corruption is a threat to their (Communist
Party) rule in China, and the jobs of all those senior officials. So it's a
matter of clean up, or risk another revolution. India is a democracy, where
voters can keep electing politicians who promise to deal with corruption,
and never do. This is just another reason why the Chinese leadership sees no
big advantage in democracy.

China does see the advantages of having a big navy, to protect crucial
that pass through the Indian Ocean. Thus both nations are currently
engaged in something of a naval arms race, and India is losing. India and
China also share a long border. Responding to louder, and more frequent,
Chinese claims on Indian territory, India is in the midst of an army and air
force buildup to deal with any Chinese aggression against the northeast
Indian state of Arunachal Pradesh (which China claims as a part of Tibet.)
The Chinese claims have been on the books for decades, but in the last two
years, China has become more vocal about it. That's one reason India hiked
its defense spending over the last few years. That's not enough, for a
conventional war. But since both nations have nuclear weapons, a major war
over Arunachal Pradesh is unlikely. *But India fears that China might try to
carry out a lightning campaign (a few days, or a week), and then offer peace
terms (with China keeping all or part of Arunachal Pradesh). Since neither
country would be willing to start a full scale nuclear war over Arunachal
Pradesh (a rural area with a population of about a million people, spread
among 84,000 square kilometers of mountains and valleys), the "grab and
parley" strategy has to be taken seriously.*

India is seeing more Chinese warships in the Indian Ocean, and is alarmed at
Chinese plans to base warships in Burma, or at least obtain the right to
regularly refuel and repair Chinese warships in Burmese ports. That, and the
growing network of Chinese roads being built to the Indian border, and
movement of air force and army troops to Tibet (where most of the border
with India is), makes India increasingly nervous of the threat from the

India's Soft-Power:Call Comes From The East!

http://www.vifindia.org/article/2011/february/16/India-s-Soft-Power-Call-Comes-From-The-EastDr. Adityanjee,

Senior Fellow, VIF

There has been renewed fighting over the last few weeks between two Asian nations Thailand and Cambodia, in India’s near abroad region, over the 9th Century Hindu Temple complex situated on a mountain-top. Preah Vihear is a Shiva Temple constructed by the Hindu Khmer kings from 9th Century to 11th Century CE. Later on it came under Buddhist influence when Thailand ruled over the northwestern Cambodia from the late 18th century until the early 20th century. In the early part of the 20th century French colonialists expelled the Thais to current international border. The dispute between the two nations is longstanding and is based on different interpretations of a French colonial map. In 1962 the International Court of Justice in The Hague awarded the temple complex to Cambodia. In July 2008 the temple complex was declared as the World Heritage Site by the UNESCO. Thailand opposed it on grounds that the territory around the temple was never demarcated between the two countries. The current conflict is precipitated by the Thai electoral politics between the “red-shirts” and the “yellows-shirts” and possibility of electoral defeat of the Prime Minister Abhisit Veijajiva in the next general elections. Clearly, hyper-nationalism drives this
longstanding dispute between two of our neighbors. It would be naïve to presume that any international intervention would quickly resolve this complex problem with strong nationalistic overtones.

UN Role:
Cambodia has taken this serious issue to UN Security Council as it threatens the regional stability. The Cambodian Prime Minister Hun Sen has already written a letter to Ban-ki Moon and decided to take the dispute and the recent clashes to the UN Security Council where India is one of the non-permanent members. Thai Prime Minister Abhisit Veijajiva has demanded that “the Cambodian practice of stationing military forces at the temple must end entirely”. Cambodian Foreign Ministry has denied this charge and said “there have never been and there will never be Cambodian soldiers at the Temple of Preah Vihear”. Cambodia also called for UN peacekeepers to help maintain peace and tranquility across the Thai-Cambodian border and to prevent further military clashes. Both Cambodia and Thailand are the members of ASEAN (Association of South-East Asian Nations). The ASEAN charter mandates renunciation of force and use of military in solving bilateral disputes. Some persons of eminence from the region have called for ASEAN mediation in this intra-ASEAN conflict. All this prompted calls for restraint by the UN Secretary General Ban Ki-Moon who expressed “deep concern” at the emerging clashes between the two nations. UNESCO Director-General Irina Bokova also issued an appeal for calm and restraint around the temple in order to safeguard this World Heritage Site for all the humanity.

Temple is currently in dilapidated state and any further escalation of military hostilities might damage the structure. Any possible UN peace-keeping mission must start with an acknowledgement of the fact that this is a Hindu Temple dedicated to Lord Shiva where a large number of devotees still throng for religious services. It is worth noting that Islamic countries like Pakistan and Bangladesh have traditionally provided troops for various UN missions. The UN must avoid deployment of troops from countries that are either Islamic or Christian on the territories of a Hindu Temple. Considering the religious sensitivities involved, only Hindu and Buddhist peace-keeping forces should be deployed by the UN in order to prevent any possible intentional or unintentional desecration of an ancient and revered Hindu Temple by the uninformed UN peacekeepers.

Indian role:
Indian media is generally silent on this dispute in India’s neighbor-hood although this may have long-term geo-political significance. Except for a coupe of news-items in the Hindu from Chennai, there has been no media coverage. Indian media is more preoccupied with Egypt, Tunisia and broader middle-east related issues. Indian strategic community is equally silent on this dispute between two traditionally India-friendly nations in our neighborhood. The Ministry for External Affairs and the Government of India have not realized the geo-political significance of this dispute. No appeal for restraint has been issued so far. While we aspire to a superpower status and yearn to be permanent member of the UN Security Council, no mediatory efforts have been made so far by the Government of India. Perhaps, as a goodwill gesture, the Government of India and specifically the Archeological Survey of India (ASI) can take a lead in renovating this Hindu Temple just like the famous Angkor Wat was restored by the UNESCO. Perhaps, as a confidence-building measure, the government of India should announce allocation of $ 100 million immediately for the work on renovation and restoration of the Preah Vihear temple complex.

Apparently, Indian civil society has no time for another Hindu temple dispute with international ramifications. Indian civil society has been very vocal on the issues related to Palestine, sending relief ships to Gaza strip so as to defeat the Israel-imposed naval blockade of Gaza. In absence of any mediatory efforts by the government of India, there is a role for track II diplomacy on behalf of Indian civil society in immediate containment and long-term resolution of this dispute. Indian NGOs working in the related fields can take initiative and have a possible role in mediation between the two neighbours. Efforts should be made to use Dharma principles like peace, harmony and universal brotherhood to defuse the situation and avoid further blood-shed. Perhaps, it will make sense to arrange an international Yoga camp near the Preah Vihear Temple in order defuse the situation. Under Dharmic leadership, joint sovereignty could be considered as one of the possible solutions.

This regional Dharmic dispute has long-term geo-political implications. India needs to take pro-active steps to maintain and extend its soft-power. India could partner with Japan in the mediating and facilitating role as two ancient Asian civilizations. India’s role as a civilisational power is meaningless if we can not utilize our soft-power to the common good of humanity in resolving disputes in our near abroad region. India should enter as a suave and moderating influence in aiming to resolve this dispute. Enhancing peace and stability on the Thai-Cambodian border will go a long way in establishing India’s credentials as a benign power in the ASEAN region.

Dr. Adityanjee is the President of the Council for Strategic Affairs, New Delhi

Published Date : 16 February, 2011

An alarming South Asia powder keg

By Juan C. Zarate

Sunday, February 20, 2011


In 1914, a terrorist assassinated Archduke Franz Ferdinand in Sarajevo - unleashing geopolitical forces and World War I. Today, while the United States rightly worries about al-Qaeda targeting the homeland, the most dangerous threat may be another terrorist flash point on the horizon.

Lashkar-i-Taiba holds the match that could spark a conflagration between nuclear-armed historic rivals India and Pakistan. Lashkar-i-Taiba is a Frankenstein's monster of the Pakistani government's creation 20 years ago. It has diverse financial networks and well-trained and well-armed cadres that have struck Indian targets from Mumbai to Kabul. It collaborates with the witches' brew of terrorist groups in Pakistan, including al-Qaeda, and has demonstrated global jihadist ambitions. It is merely a matter of time before Lashkar-i-Taiba attacks again.

Significant terrorist attacks in India, against Parliament in 2001 and in Mumbai in 2008, brought India and Pakistan to the brink of war. The countries remain deeply distrustful of each other. Another major strike against Indian targets in today's tinderbox environment could lead to a broader, more devastating conflict.

The United States should be directing political and diplomatic capital to prevent such a conflagration. The meeting between Indian and Pakistani officials in Bhutan this month - their first high-level sit-down since last summer - set the stage for restarting serious talks on the thorny issue of Kashmir.

Washington has only so much time. Indian officials are increasingly dissatisfied with Pakistan's attempts to constrain Lashkar-i-Taiba and remain convinced that Pakistani intelligence supports the group. An Indian intelligence report concluded last year that Pakistan's Inter-Services Intelligence Directorate was involved in the 2008 Mumbai attacks, and late last year the Indian government raised security levels in anticipation of strikes. India is unlikely to show restraint in the event of another attack.

Lashkar-i-Taiba may also feel emboldened since the assassination in early January ofa moderate Punjabi governor muted Pakistani moderates and underscored the weakness of the government in Islamabad. The group does not want peace talks to resume, so it might act to derail progress. Elements of the group may see conflict with India as in their interest, especially after months of unrest in Kashmir. And the Pakistani government may not be able to control the monster it created.
A war in South Asia would be disastrous not just for the United States. In addition to the human devastation, it would destroy efforts to bring stability to the region and to disrupt terrorist havens in western Pakistan. Many of the 140,000 Pakistani troops fighting militants in the west would be redeployed east to battle Indian ground forces. This would effectively convert tribal areas bordering Afghanistan into a playing field for militants. Worse, the Pakistani government might be induced to make common cause with Lashkar-i-Taiba, launching a proxy fight against India. Such a war would also fuel even more destructive violent extremism within Pakistan.

In the worst-case scenario, an attack could lead to a nuclear war between India and Pakistan. India's superior conventional forces threaten Pakistan, and Islamabad could resort to nuclear weapons were a serious conflict to erupt. Indeed, The Post reported that Pakistan's nuclear weapons and capabilities are set to surpass those of India.

So what can the United States do to ratchet down tensions?

We need to build trust, confidence and consistent lines of communications between India and Pakistan. This begins by helping both parties pave the way for a constructive dialogue on the status of Kashmir. Steps toward progress would include pushing for real accountability of figures responsible for the 2008 Mumbai attacks and the handing over of wanted Lashkar-i-Taiba facilitators such as Indian crime lord Dawood Ibrahim.

The United States also needs to disrupt the terrorist group's fundraising and planning. The focus should be on unearthing names and disrupting cells outside Pakistan that are tied to Lashkar-i-Taiba, which involves pressuring Islamabad for the names of Westerners who may have trained at Lashkar-i-Taiba camps.

This is among the thorniest U.S. national security and counterterrorism problems. It requires officials to focus on imagining the "aftershocks" of a terrorist attack and act before the threat manifests - even as other national security issues such as unrest in the Middle East boil over. Yet without political attention, diplomatic capital and sustained preventative actions, a critical region could descend into chaos.

History shows that the actions of a small group of committed terrorists, such as the Black Hand in 1914 or al-Qaeda in 2001 - can spark broader wars. History could repeat itself with Lashkar-i-Taiba. Asymmetric threats that serve as flash points for broader geopolitical crises may be the greatest threat we face from terrorism.

The writer, a senior adviser at the Center for Strategic and International Studies, was deputy assistant to the president and deputy national security adviser for combating terrorism from 2005 to 2009.

Crisis of confidence

By M K Bhadrakumar


Grossman’s appointment is a tacit recognition that the US needs someone with experience, tact and tenacity to leverage the Pak military.

Full two months it has taken for the Barack Obama administration to find a suitable successor to late Richard Holbrooke, United States’ former special representative for Afghanistan and Pakistan. Of course, it isn’t easy to replace a titanic figure. But life ought to move on. Some speculate that the issue became the stuff of turf war between the White House and the State Department.

Be that as it may, the appointment of former career diplomat Marc Grossman as Holbrooke’s replacement indicates an element of ‘continuity’ insofar as the incoming special representative is broadly in the same mould as his predecessor. Grossman has some pluses as well, given the unusually long stint he had in the American embassy in Islamabad (1976-83) when, too, Pakistan was a ‘frontline state’ in the US regional strategies.

Grossman is familiar with the Afghan ‘jihadi’ culture and the ethos of Pakistan’s security and military establishment. Additionally, he has rich professional background of the North Atlantic Treaty Organisation and in Kosovo, in fact, he was a participant in the alliance’s first encounter with conflict situations in a post-cold war setting.

Grossman’s appointment gives away clues to US priorities. One, primacy lies in working with Pakistan. Two, despite the public US claim that the Pentagon’s ‘surge’ is working, there seems to be uneasiness that ground realities are stark and gains can at best be transient, which means political track needs to be opened. Three, US is strongly pitching for Nato’s presence in Afghanistan in the long term. (Grossman held the Nato portfolio in the state department at a turning point in the alliance’s evolution as a global security organisation.)

However, Grossman faces an uphill task ahead. Cutting across any plane in the Afghan situation, we have been witnessing a drift in the recent months — be it as regards the ground situation in Afghanistan, US’ equations with Hamid Karzai or US-Pakistan relationship.

Bluntly put, there is no convincing evidence to substantiate the claims by the US military that the Taliban momentum is being steadily broken. The brazen attack by the Taliban fighters on the headquarters of the Afghan police last week in broad daylight killing 15 policemen speaks volumes about the fragile security situation in the epicentre of the US’ ‘surge’. Again, Kabul city itself has become unsafe, as repeated attacks in the recent weeks testify.

The insurgency is spreading in the northern regions. The Afghan opinion is turning hostile to western occupation. While on the one hand Taliban has no dearth of ‘manpower’, western attempt to build up an Afghan national army seems to meandering. The much-vaunted ‘Afghanistaion’, too, has lost steam.

Sour relations

The US’ equations with Karzai have dipped to an all-time low point. Karzai has become extremely wary of the US intentions. The US attempt to prop up a ‘hostile’ Afghan parliament as a rival power centre checkmating Karzai’s authority and Washington’s overt dalliance with the former Afghan intelligence chief Amrullah Saleh (who was sacked by Karzai last July) have created a grave crisis in confidence between Washington and Kabul.

Meanwhile, the unravelling of Kabul Bank, legal proceedings against the president’s brother Mahmood Karzai in a US court, International Monetary Fund’s strictures providing alibi for the western ‘donors’ to refuse routing their aid through the Afghan government, the imminent ruling by the special court investigating fraud in the Afghan parliamentary elections — all these controversies are potential ‘time bombs’ waiting to explode. Things have become very messy, indeed. Some American commentators speculate on a ‘colour revolution’ to drive Karzai out of power.

The ‘standoff’ is quintessentially over the US push to secure a status of forces agreement that would legitimise American military bases. Karzai has misgivings about the idea despite sustained US pressure tactic and insists any such agreement will need to be ratified by the Afghan parliament and a Loya Jirgha, which is hard to obtain.

The US objective is to get the matter sorted out before an Afghan settlement (which may include Taliban) materialises. The ‘standoff’ lies at the root of the US’ discontent with Karzai. And it adds to the US paranoia that Karzai is steadily strengthening ties with Russia, Iran, China, etc and reducing dependence on Washington.

Far more important than all this is of course the state of play in US-Pakistan ties. The troubled relationship seldom touched such a low point. In sum, Pakistan cannot go along with the US’ surge policy and it refuses to undertake military operations against Taliban groups entrenched in North Waziristan. Pakistan is increasingly suspicious about the American agenda and regards Taliban as its ‘strategic asset’. Of late, Pakistan is linking up with Karzai on the basis of shared concerns to kickstart an ‘intra-Afghan’ dialogue even without US blessing. Indeed, Raymond Davis case highlights the covert US activities inside Pakistan.

To be sure, Grossman’s appointment is a tacit recognition that the US needs someone with experience, tact and tenacity to leverage the Pakistani military at the present crucial juncture of the war. But does diplomatic style and acumen alone suffice? The geopolitical reality is US-Pakistan relationship is riddled with contradictions, which are hopelessly intertwined, too. Even as the US boosts military ties with India, these contradictions can only become more acute. And their shadows on the Afghan chessboard will only be lengthening.

(The writer is a former diplomat)

Debasing the Dollar for the Greater Good

Rising Food Prices Through the Scope of Quantitative Easing

Eric Fry
Reporting from Laguna Beach, California...

If only the world's poor, starving masses understood the benefits of Quantitative Easing, they probably would not be rioting in the streets over rising food prices. We simply need to educate these people. Sure, the prices of wheat and corn are soaring, but so are the profits at Goldman Sachs.

These poor people just need to understand that debasing the world's reserve currency serves a greater good. It's not just about whether they can eat; it's also about whether we Americans can weasel out of our massive debts.

The momentary food problems of the poor people over there -wherever they are - are a small price to pay for our resurgent economic activity over here. And remember, if we don't make lots of money over here, we can't send any handouts over there.

Such is the logic that seems to inspire Chairman Bernanke's QE campaigns.

During this week's Congressional hearings, the Chairman abided no connection whatsoever between Quantitative Easing and soaring food prices. Blame the weather, Bernanke suggested, or credit the economic recovery...or both.

Bernanke's remarks before Congress echoed his defense of QE2 two weeks ago at the National Press Club in Washington. "Clearly what's happening [to food prices] is not a dollar effect, it's a growth effect," Mr. Bernanke explained.

During that high-profile Q&A session, Bernanke completely rejected any connection between his dollar-debasing policies and the subsequent "re- pricing" of foodstuffs and other commodities. "It is entirely unfair to attribute excess demand pressures [in the emerging markets] to US monetary policy," he insisted. "In some cases, some of the emerging markets are facing inflationary pressure because their own economies are growing faster than their own capacity." Furthermore, the Chairman pointed out, "As people's diets become more sophisticated, their demand for food and energy grows."

Translation: It's their problem; don't blame me.

To be fair, Bernanke is at least half right; it is their problem...and it is a serious one. As to where the blame should fall, that's open to dispute. Bernanke has already presented his defense, pro se, before the court of public opinion. On the other hand, the nifty little chart below testifies persuasively for the prosecution.

Agricultural commodity prices, as represented by the Rogers Agricultural Commodity ETF, seem to catch a stronger tailwind with each successive "QE" announcement.

Bernanke initially entered the bond-market-manipulation business back in March of 2009. The stock market was on its back, economic conditions were deflationary and fear was palpable. He announced that the Fed would buy $750 billion of mortgage-backed bonds, $100 billion of Fannie Mae and Freddie Mac securities, and $300 billion of long-term Treasury securities.

A handful of academics and a few fringy financial writers criticized this Zimbabwe-esque rescue effort. But most folks were happy to know that the Chairman was "doing something." At the time, the something that he was doing seemed to most folks to be a necessary one-off. So they did not trouble themselves with the potential inflationary implications of this rescue effort.

Since Bernanke's initial QE campaign seemed to go off without a hitch, he decided that more must be better. Thus, the initial QE campaign begat QE-lite in August of last year, which then begat QEII in November.

With every step down this slippery slope toward dollar debasement, the commodity markets reacted ever more violently.

Bernanke says the soaring prices of agricultural commodities are a "growth effect." We say they are a "dollar effect," or rather, a "dollar debasement effect." And with every step toward dollar debasement, the investment world reacts. Some companies win; others lose. Dan Amoss, editor of the Strategic Short Report, provides some additional insight in the column below...

The Food Crisis is a Dollar Crisis

Dan Amoss
The Daily Reckoning

At this week's hearing on Capitol Hill, Fed Chairman Ben Bernanke demonstrated a lack of understanding about what causes inflation. His comments reflected a belief that GDP growth causes inflation.

But true economic growth is production-driven, and adds to the supply of goods and services in the economy. True economic growth is not inflationary. Rather, inflation is driven by runaway government deficits and bloated central bank balance sheets. And right now, we have plenty of both. So we have every reason to expect the CPI, even with all of its window-dressing shenanigans, to soar past 2% in short order.

I'm surprised at how complacent the stock market remains in the face of obvious pressure building on the CPI. If the Fed doesn't react to a rising CPI by tightening policy, Treasury yields will keep soaring, and inflationary psychology will take root among most producers. If the Fed does react by ending QE and raising short-term rates, it doesn't require much imagination to guess what would happen to a stock market that's running entirely on fuel from the Fed. Either of these potential scenarios is bad for stocks. The only scenario that argues for further rallies in stocks is if - miraculously - even with unprecedented money printing and deficits worldwide, the CPI doesn't continue rising.

A rising CPI will give more ammunition to the growing chorus of Fed critics in Congress. At this week's hearing, when questioned about the building pressure on consumer prices, Bernanke answered that it would be easy to stop this trend by reversing his policies. But you know he's terrified at the prospect of tightening. He's an academic with his head in the sand.
When asked about the impact of QE2 on global food prices, Bernanke responded that the destabilizing spikes are due to weather and rapid growth in demand for grains in emerging markets. What a lame excuse! As an admirer of Milton Friedman, he must know that "inflation is always and everywhere a monetary phenomenon." Inflation isn't a "weather phenomenon."
Without forever-growing money supplies, price spikes in one set of goods, like food, would be offset by price declines in more discretionary goods. But in today's world, demand isn't limited to what one can produce and save; it's boosted further by what one can get from government handouts and what one can borrow at the Fed window at 0%.

Yet after all the experiences of recent years (including the early 2008 experience in oil and grains), Bernanke is still oblivious to the consequences of debasing the world's reserve currency. In his view, if the world doesn't conform to his personal Phillips Curve and output gap models, there must be something wrong with the world, not his models.
Bernanke has the intellect to understand the negative consequences of the Fed's radical policies, but he simply chooses to ignore them or rationalize them away. By pushing on the monetary accelerator last fall (rather than wait for another "deflation scare"), Bernanke is going to undermine public support for the Fed. As a result, Bernanke gambled that he could spark a stock market rally. He indeed sparked a rally, starting last August - one that looks very long in the tooth.

But the fact remains that there is no direct "transmission mechanism" from the Fed's balance sheet to the stock market. Speculators have to have a very specific, benign perspective on Fed policy in order for Fed policy to impact stocks. Today's misplaced faith in the omniscience of the Fed will soon fade, and when it does, the market will return to intrinsic value very rapidly. The day trading robots and speculators counting on a "Bernanke put" will all look to sell at the same time, and patient investors won't look to buy until prices fall much closer to intrinsic value. Using the most robust, back-tested historical valuation models, the best estimates of fair value for the S&P 500 that I've seen is somewhere in the range of 800-1,000 - 25% to 40% below current levels.
At times like these, it is often constructive to contemplate probable outcomes - to thoughtfully consider the likely winners and losers that soaring food prices will create. The shares of Ag equipment guys and fertilizer companies have been soaring. For example, the shares of Deere and Caterpillar have both more than tripled since Chairmen Ben announced his very first QE program on March 18, 2009. Fertilizer company stocks like Potash and Mosaic have also been on a tear. All these companies are on the receiving side of rising food prices - more or less.
But what about those companies who are on the paying side? Food producers and processors of all types are struggling to accommodate soaring food costs into their business models...and their share prices are showing the strain. Pilgrim's Pride, Tyson Foods, Sanderson Farms, Kellogg, General Mills and Safeway have all turned in conspicuously poor stock market performances during the last several months.
I recently issued a bearish call on another likely victim of rising food prices. This company is subject to many of the same food price stresses that have been buffeting the companies cited above. Yet, for reasons that are not completely intuitive, the shares of this particular company continue to trend higher. Nevertheless, I suspect rising food costs will put the breaks on this uptrend and cause the stock to reverse course.
This company is facing serious fundamental stresses that will cause similar problems for individuals as well. Inflation is here, folks...whether we like it or not. No use in complaining. Better to prepare.
Dan Amoss, for The Daily Reckoning

February 18, 2011



BASIC DATA (From BBC) * King Hamad, 61, a Sunni, has been in power since 1999
* Population 800,000 (70 per cent Shias); land area 717 sq km, or 100 times smaller than the Irish Republic
* Ranks 48 out of 178 on corruption
* A population with a median age of 30.4 years, and a literacy rate of 91%
* Youth unemployment at 19.6%
* Gross national income per head: $25,420 (World Bank 2009)

Latest reports from Bahrain speak of considerable tension marked by anti-King and anti-Government slogans shouted by thousands of Shia mourners attending the funerals of seven persons killed during a crack-down by the riot police on a group of young people demonstrating against the Government from the Pearl Square since February 14,2011.

2.The protest movement started as a movement of solidarity with the Egyptian youth on February 14, turned into an anti-Government movement on February 15 after the death of two Shias due to alleged use of force by the Police and then turned into an anti-King movement on February 17 after the brutal dispersal of the protesters from the Pearl Square by the riot police on the night intervening February 16/17.

3. Initially, the demonstrators were mainly shouting pro-democracy slogans calling for reforms and action to remove economic hardships. There was no religious or sectarian colour , but after the crack-down by the riot police it is tending to take a religious colour. Some of the slogans shouted during the funeral ceremonies on February 18 were : "Justice, freedom and constitutional monarchy," "victory for Islam", "death for Al Khalifa [the ruling family]", "we are your soldiers", "Revolution till victory." Many Shia women have participated.

4.The Government initially allowed the demonstrations to take place, but as they gathered strength the riot police moved in on the night of Februaty 16/17 and forcibly dispersed the demonstrators in the Pearl Square. This was followed by a ban on meetings, fencing of the Square to prevent demonstrators from gathering there again and deployment of the Army with tanks and armoured personnel carriers at key points in the capital Manama.

5. The Bahrain authorities have sought to project the demonstrations and the incidents of violence as largely organised by mischievous elements in the Shia community instigated from outside, meaning Iran. Bahraini Foreign Minister Sheikh Khaled bin Ahmed Al Khalifa told a press conference on the evening of February 17 that the police intervention was justified to prevent "a sectarian conflict and an economic crisis." He accused the demonstrators of "polarizing the country" and pushing it to the "brink of the sectarian abyss."

6. However, there have been some reports of the involvement of some Sunni youth also in the demonstrations. The BBC reports that the Shias formed "the bulk of the protesters" on February 18. Al Jazeera’s correspondents in Bahrain have reported as follows:”Hospitals are full of injured people after Wednesday night's police raid on the pro-reform demonstrators. Some of them are severely injured with gunshots. Patients include doctors and emergency personnel who were overrun by the police while trying to attend to the wounded.After several days of holding back, the island nation's Sunni rulers unleashed a heavy crackdown, trying to stamp out the first anti-government upheaval to reach the Arab states of the Gulf since the uprisings in Tunisia and Egypt. In the surprise assault, police tore down protesters' tents, beating men and women inside and blasting some with shotgun sprays of bird-shot. The pre-dawn raid was a sign of how deeply the Sunni monarchy fears the repercussions of a prolonged wave of protests, led by members of the country's Shia majority but also joined by growing numbers of discontented Sunnis.”

7. Even though the demonstrators initially took care not to project their protests as Shia protests against Sunni domination, the authorities, who have accused the Shia protesters of polarising inter-communal relations, have themselves contributed to the polarisation by encouraging the Sunnis, including Sunnis from South Asia living and working in Bahrain, to hold a counter demonstration in support of the King. The attempt of the authorities to encourage counter-demonstrations by the Sunnis and the reported participation of Sunnis from South Asia in them could turn the Shias against the Muslim migrants from South Asia.

8. The Shias have been enraged by the brutal dispersal of the protesters from the Pearl Square.A senior Shia cleric, Sheikh Issa Qassem, has condemned the attack on the protesters by the riot police as a "massacre" . According to Al Jazeera,in the wake of the crack-down by the riot police, angry demonstrators chanted "the regime must go," and burned pictures of King Hamad bin Isa Al Khalifa outside the emergency ward at Salmaniya Medical Complex, the main hospital in Manama

9.Bahrain's opposition has demanded the resignation of Prime Minister Khalifa bin Salman al-Khalifa's government in the wake of the raid.
"The opposition groups, including Al-Wefaq, have issued a statement demanding the government resign and calling for the formation of a new government to investigate this crime," said Al-Wefaq bloc's leader, Ali Salman. "We have decided to completely pull out from parliament," added Salman, whose bloc holds 18 seats in the country's 40-member elected house.

10. Iran finds itself in a dilemma. It cannot vociferously support the demand for democracy and political reforms by the Shias of Bahrain while ruthlessly suppressing demonstrators in Iran voicing similar demands and threatening to execute their leaders. The US has been greatly concerned due to the likelihood of the unrest spreading to Saudi Arabia and other Gulf countries and coming in the way of its support to the anti-regime demonstrations in Iran. How can the US vociferously support the pro-democracy demostrations in Iran while maintaining a muted response to the demonstrations in Bahrain? If the demonstrations succeed in Bahrain and a pro-Iranian Shia group comes to power, it could affect the operations of the US Fifth Fleet, the headquarters of which are located in Bahrain.

11. The spread of the unrest in the Gulf region could impact on oil security. Mrs.Hillary Clinton, the US Secretary of State, and Mr.Robert Gates, the US Defence Secretary, are reported to have contacted their counterparts in Bahrain and urged restraint.Obama's spokesman Jay Carney has said the President's view is that "we oppose the use of violence by the government of Bahrain." If the US is not careful in handling the issue, it may end up by playing into the hands of Iran. At present, both the US and Iran face an equal dilemma in Bahrain, but the ultimate advantage could be with Iran if the protest movement picks up further momentum

12. There is considerable nervousness in the Gulf Countries.Foreign Ministers of the Gulf Co-operation Council consisting of Bahrain,Oman,Qatar, Saudi Arabia and the United Arab Emirates held an emergency meeting in Manama on February 17 and said in a statement: "Our security is a collective responsibility and there is no question of accepting foreign interference."

13. The crisis in Bahrain poses a ticklish situation for Indian workers---particularly India Muslims, many of whom are believed to be Sunnis. If the Shias ultimately succeed, local anger could turn against the Sunnis from South Asia, who will be suspected of letting themselves be used by the Sunni rulers to suppress the movement. (18-2-11)

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

Pranab Mukherjee to attend G-20 finance ministers' meet in Paris


NEW DELHI: Union Finance Minister Pranab Mukherjee will leave for Paris on Thursday evening on a three-day visit to attend G-20 Finance Ministers and Central Bank Governors' meet from February 18.

During his stay in Paris, Mukherjee will hold his first meeting with his French counterpart Christine Legarde on Friday where the two leaders are expected to discuss both bilateral and multi lateral issues of mutual interest, including revenue related matters.

Later, he would attend BRIC Finance Ministers meeting which would be attended among others by the Finance Minister of host China, the Finance Ministers of Brazil, Russia and South Africa.

The agenda would include G 20 framework and mutual assessment, reform of the International Monetary System, preparations for BRIC Summit (Beijing) and BRIC economic co-operation. In the evening, a reception would be hosted by French President Sarkozy at Elysee Palace.

Mukherjee would be accompanied by Reserve Bank Governor Subba Rao and Secretary, Economic Affairs, R.Gopalan, at the reception. The first session of G-20 Finance Ministers meeting would be on the global economy and framework for strong, sustainable and balanced growth.

Mukherjee will also be a lead speaker along with Canadian finance minister Jim Flaherty at the conference, which is expected to open with a presentation on the global economy by the International Monetary Fund (IMF).

The main focus of the first session is expected to be on progress of the Framework Working Group (FWG) on developing indicative guidelines for assessing and addressing persistent global imbalances as mandated by Leaders in Seoul Summit under the Seoul Action Plan. India co-chairs the working group along with Canada

February 17, 2011



The Lucknow correspondent of Rediff.com has reported as follows on February 17,2011:

" The two-day India visit by Islamic hardliner and Pakistan's Jamiat-ul-Islami chief Maulana Fazlur Rehman is believed to be aimed at reinforcing the anti-Vastanvi forces at the Darul-Uloom Deoband seminary in Uttar Pradesh , where the recently appointed vice chancellor Ghulam Mohammad Vastanvi had drawn much flak for praising Narendra Modi's governance in Gujarat.

"Ostensibly, Rehman was in Deoband and New Delhi earlier this week to broker peace between the two warring factions of Indian Jamiat-Ulema-e-Hind led by rival Madnis -- uncle Arshad Madni and nephew Mahmood.

"However, informed sources at Deoband suspect that the Pakistani cleric's 'real intent behind bringing the Madnis together was to strengthen the anti-Vastanvi lobby.'

"Vastanvi's fate is to be decided at a meeting of Deoband's 'Majlis-e-Shoora', the highest decision making body of the institution on February 23.

"Considering that Mahmood Madni was responsible for mobilising support for Vastanvi against whom Arshad was known to have fuelled all the trouble, unity between the duo was aimed at weakening the seminary chief's case.

"The proximity between Pakistani cleric Rehman and Arshad Madni was always an open secret. And even during his 17- hour long stay in Deoband, the two were seen together every minute.

"Sources in Deoband claimed that Rehman's visit was planned by Arshad, who was clearly worried about his hold over Deoband.

"Rehman was therefore called to convince Mahmood to sink his differences with his uncle Arshad in the larger interest of maintaining the undisputed hold of the undivided Madni power over the seminary.

"Who does not know that the Madnis whose family has called the shots at the seminary for decades, were responsible for appointment of the previous vice chancellor Maulana Maghrubur Rehman who passed away last year," a senior faculty member told rediff.com over telephone from Deoband.

"Yet another young lecturer, who had hailed the appointment of a computer savvy and MBA qualified Vastanvi as the new vice chancellor felt, "Members of the Arshad Madni lobby were busy impressing upon all north Indians at the seminary that they must not allow Vastanvi to continue as he was the first non-north Indian to head the Deoband seminary."

"He went on to add, "Evidently, the whole idea was to prevent any progressive Muslim to take over the reins of this historic institution; and that was the reason that a Pakistani Islamic hardliner had come down all the way."

"The last time Rehman flew down to Deoband in similar circumstances was in March 2007, when he succeeded in bridging the divide between the Madnis."

2. In this connection, I am reproducing below an article titled SUPPING WITH THE MAULANA written by me on July 23,2003, when the Maulana had come on a visit to India, It is available at http://www.southasiaanalysis.org/%5Cpapers8%5Cpaper743.html. The Maulana continues to be close to the Pakistan People's Party. He has toned down his pro-bin Laden and anti-US rhetoric. His party is a member of the ruling coalition in Islamabad though there were recent reports of its having quit the Cabinet of Prime Minister Yousef Raza Gilani due to differences over portfolios. It is not a member of the new Cabinet formed by Mr.Gilani on February 11.

3. The Maulana, who has now come to India, is a sobered man compared to the Maulana of July 2003. Thus, one cannot find fault with the decision of the Government of India to issue a visa to him. Even the Government of former Prime Minister Atal Behari Vajpayee had issued him a visa. So did the Government of Narasimha Rao.

4.Recently, Mr.Gilani has been quoted in the Pakistani media as having talked of a religious solution to the crisis relating to the arrest and prosecution of Raymond Davis, a member of the staff of the US Consulate-General in Lahore, who allegedly shot to death two Pakistanis who were mysteriously following him on a motor-byke on January 27. A religious solution apparently meant Davis apologising to the families of the deceased and paying them a compensation in return for which the families would pardon him and tell the court they do not want him to be prosecuted. Senator John Kerry, Chairman of the US Senate Foreign Relations Committee, has been in Pakistasn to find a way out.

5. One would have expected the Maulana to play an important role in this. Instead of staying on in Pakistan during Mr.Kerry's visit he has come away to India, reportedly to lend a helping hand in sorting out the differences in Deoband and to ensure that nobody in Deoband deviates from the policy of opposing Shri Narendra Modi, the Chief Minister of Gujarat. This would show that L-Affaire Deoband has greater importance in his eyes than L'Affaire Davis. ( 18-2-11)

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



by B. Raman, CAMP US

The high-profile visit of Maulana Fazlur Rahman, the controversial leader of the Jamiat-ul-ulema Islam (JUI) of Pakistan, to India and the attention accorded to him in governmental and non-governmental circles in New Delhi are being viewed by many India-watchers in the US with a mix of bewilderment and concern.

2. Fazlur Rahman is a fundamentalist with a difference, known for his proximity to Mrs.Benazir Bhutto of Pakistan People’s Party Parliamentarians (PPPP). Despite his fundamentalist orientation, he supported her right to become the Prime Minister and opposed the campaign of the Jamaat-e-Islami (JEI) in the 1990s against a woman heading the Government of an Islamic country.

3. Benazir rewarded him by making him the Chairman of the Parliamentary Foreign Affairs Committee and allegedly asked the Inter-Services Intelligence (ISI) to place a large amount from its secret service fund at his disposal during his travels abroad.

4. He loves foreign travels and the good things of life and during her second tenure as the Prime Minister, he spent more time abroad than in Pakistan.

5. In 1993-94, Pakistan’s cotton crop was practically destroyed by insects for two years in succession and many textile mills were threatened with closure. Asif Zirdari, her husband, through a business crony in Hong Kong, entered into a contract with Turkmenistan for emergency supplies of cotton. The responsibility for transporting them to Pakistan by road via Afghanistan was given to the Hong Kong-based Pakistani businessman.

6. His cotton convoys were attacked and the cotton looted by armed followers of Gulbuddin Heckmatyar of the Hizb-e-Islami (HEI) and Ismail Khan, the pro-Teheran warlord of Herat.

7. Zirdari then asked Maj. Gen.(retd) Naseerullah Babbar, Benazir’s Interior Minister, to organize a special force to escort the cotton convoys through Afghanistan. Naseerullah, with the help of Pervez Musharraf, organized the Taliban by rallying round many of the dregs of the Afghan war of the 1980s against the Soviet troops under the leadership of Mulla Mohammad Omar, the Amir of the Taliban.

8. They were helped in this by Maulana Fazlur Rahman and his protégé, Mufi Shamzai of the Binori madrasa of Karachi. Thus, the Taliban came into existence in 1994. The role played by Fazlur Rahman in helping Benazir and her husband in creating the Taliban led to serious differences between him and Qazi Hussain Ahmed of the JEI, who was a strong supporter of Gulbuddin. Another person who was a strong critic of the Maulana’s soft corner for Benazir and Zirdari was Lt. Gen.Hamid Gul, who was the DG of the ISI during her first tenure as the Prime Minister.

9. The US started viewing the Maulana with suspicion in 1995 due to the proximity of the Harkat-ul-Ansar (HUA), then headed by Maulana Fazlur Rahman Khalil, to the Maulana. In March, 1995, Kamran Khan, the well-known investigative journalist, came out with a series of articles under the title “Jihad Worldwide” in the “News”, the prestigious daily. In these articles, he exposed not only the role played by the HUA in organizing terrorist operations in India’s Jammu & Kashmir (J&K), southern Philippines, the Arakan area of Myanmar and Chechnya, but also its attempts to carry its jihad to the US homeland by recruiting and training a group of Afro-American Muslims. It was suspected that the HUA could not have been indulging in such activities without the complicity of Fazlur Rahman.

10. This was followed by the kidnapping of some Western tourists, including two Americans, one of whom escaped, by the HUA in J&K under the name Al Faran. The Clinton Administration in the US sought Benazir’s help in getting them released. She and Zirdari asked Fazlur Rahman to go to India to persuade the HUA to release them.

11. At the request of the US Embassy in New Delhi, the Narasimha Rao Government, then in power, agreed to let him come. The Rao Government was hoping that he would keep his mission unpublicized, but Fazlur Rahman, who has a weakness for publicity, made the visit high-profile. After reaching New Delhi, he demanded that he should be allowed to visit Srinagar to which the Indian intelligence agencies were strongly opposed.

12. On coming to know of his visit, circles close to the present ruling coalition in New Delhi, which were then in opposition, strongly criticized the Rao Government for allowing the patron of the HUA to visit India. Thereupon, the Rao Government totally cut of all contacts with him and he went back to Pakistan.

13. In October 1997, the US State Department designated the HUA as a foreign terrorist organization under the Anti-Terrorism and Effective Death Penalty Act of 1996. Consequently, it is a crime for anyone in the USA to be associated with it and foreigners associated with it are not entitled to US visas. Fazlur Rahman, as the suspected supporter if not the mentor of the HUA, is covered by this ban. After the ban, the HUA ostensibly split into two organizations called the Harkat-ul-Mujahideen (HUM) and the Harkat-ul-Jihad-al-Islami (HUJI). The Maulana is viewed by many in Pakistan and the US as the patron of both.

14. After the explosions outside the US Embassies in Kenya and Tanzaniya in August,1998, the Clinton Administration exercised considerable pressure on the Nawaz Sharif Government and Lt. Gen.Ziauddin, the then DG of the ISI, to help the US Special Forces in organizing a commando raid into Kandahar to capture Osama bin Laden and take him to the US for trial.

15. This pressure was kept up during 1999 too. Nawaz Sharif, fearing an adverse reaction from Musharraf, his Chief of the Army Staff (COAS), was initially hesitant to co-operate. However, after a visit to Washington DC by Ziauddin after the Kargil war, Nawaz agreed to pressurize the Taliban to hand over bin Laden to the US and, if it refused, to co-operate with the US Special Forces in their planned raid.

16. Ziauddin met the Amir of the Taliban at Kandahar in this connection. While sticking to his refusal to hand over bin Laden to the US, the Amir agreed to consider expelling him to another Islamic country. On coming to know of this, Musharraf, who was not kept in the picture by Nawaz or Ziauddin, sent Mohammad Aziz, then his Chief of the General Staff, along with Fazlur Rahman to Kandahar to tell the Amir that he should not carry out any instructions received from Ziauddin. It was on coming to know of this that Nawaz decided to sack Musharraf and appoint Ziauddin as the COAS, triggering off the coup and his overthrow.

17. Following the visit of Ziauddin to Kandahar, there were many speculative reports in the Pakistani media that US Special Forces had already arrived in the North-West Frontier Province (NWFP) and were about to raid Kandahar. Fazlur Rahman issued a statement warning the US that if bin Laden was killed or captured, no American national in Pakistan would be safe. A senior US diplomat posted in Islamabad thereupon visited him and reportedly warned him that if any US national in Pakistan came to any harm, it would hold him personally responsible and act against him. Thereafter, he lowered his anti-US rhetoric.

18. After 9/11, Musharraf sent a delegation of Pakistani mullas headed by Mufti Shamzai to Kandahar to persuade the Taliban Amir to hand over bin Laden to the US in order to avert a war. The delegation was accompanied by Lt.Gen.Mehmood Ahmed, the then ISI chief.

19. Before going to Kandahar, the Mullas and the ISI chief had met Fazlur Rahman at Peshawar. They then met the Taliban Amir at Kandahar and came back and reported to Musharraf that the Amir had refused to co-operate. It was said that the USA came to know from one of its sources in the mullas’ delegation that instead of pressurizing the Amir to hand over bin Laden to the US, the delegation, in the presence of Mehmood Ahmed, congratulated the Amir for resisting US pressure and encouraged him to continue to do so.

20. It was after this that the US pressurized Musharraf to remove Mehmood Ahmed, known to be close to Fazlur Rahman, from his post. He did so on October 7, 2001, and appointed Lt.Gen.Ehsanul Haq, then Corps Commander in Peshawar and a close personal friend of Qazi Hussain Ahmed, as the new DG.

21. Musharraf’s decision to co-operate with the US against the Taliban led to a re-alignment in Pakistan. The JEI and the JUI forgot their past differences over the role played by Fazlur Rahman in helping the Benazir Government in the creation of the Taliban as a counter to Gulbuddin’s HEI and joined hands in backing the Taliban, the Al Qaeda and the HEI in their joint operations against the US forces in Afghanistan.

22. Despite the formation of the coalition of six fundamentalist parties called the Muttahida Majlis-e-Amal (MMA), of which the JUI and the JEI are the driving force, suspicions continue to mark the relations between the Maulana and the Qazi. Each suspects the other of continuing to maintain clandestine contacts with the military-intelligence establishment. There was also friction over the decision of the Maulana to nominate one of the members of his party as the Chief Minister of the NWFP without consulting the Qazi.

23. Since 9/11, US suspicions of the Maulana have worsened because of the active role played by the HUM under the name HUM (Al Alami—International) and the Harkat-ul-Jihad-al-Islami (HUJI) in the terrorist strikes against French and American nationals in Karachi and Islamabad. There were reports before the US invasion of Iraq that the HUM had sent its cadres to Saudi Arabia under the cover of haj pilgrims and that they were to infiltrate into Iraq to start a jihad against the US troops. When an injured bin Laden escaped into Pakistan from Afghanistan in the beginning of last year, Mufti Shamzai, the protégé of Fazlur Rahman, gave him shelter in his madrasa in Karachi till last August.

24. Five Pakistani jihadi organizations are members of bin Laden’s International Islamic Front (IIF)---the HUM, the HUJI, the Lashkar-e-Toiba (LET), the Jaish-e-Mohammad (JEM) and the Lashkar-e-Jhangvi (LEJ). Of these, the HUM, the HUJI, the JEM and the LEJ are close to the Maulana. The LET, despite its strong Wahabi orientation, is not. The Maulana’s perceived hobnobbing with India could act as a red rag to the bull and provoke an intensification of the terrorist strikes in Indian territory.

25. The questions being asked in the US are: Did the Maulana come on his own or at the instance of the Government of India or the Bharatiya Janata Party (BJP)? What was the motive? What would be its implications?

26. It is alleged by many here that the Govt. of India has been making overtures to the Maulana through PPPcircles close to Benazir in the hope of using his services for persuading the Deobandi leaders of India to react more positively to the proposals made by Kanchi Shankaracharya for a solution to the Ayodhya issue and to pressurize the jihadi organizations close to him to stop their terrorist activities in India.

27. There is concern that this exercise might prove counter-productive and lead to an aggravation of the ground situation in J&K. (23-7-2003)


The Threat of Civil Unrest in Pakistan and the Davis Case

February 16, 2011 1750 GMT

By Scott Stewart
"The Threat of Civil Unrest in Pakistan and the Davis Case is republished with permission of STRATFOR."

On Feb. 13, the Tehrik-i-Taliban Pakistan (TTP) issued a statement demanding that the government of Pakistan execute U.S. government contractor Raymond Davis or turn him over to the TTP for judgment. Davis, a contract security officer for the CIA, has been in Pakistani custody since a Jan. 27 incident in which he shot two men who reportedly pointed a pistol at him in an apparent robbery attempt.

Pakistani officials have corroborated Davis’ version of events and, according to their preliminary report, Davis appears to have acted in self-defense. From a tactical perspective, the incident appears to have been (in tactical security parlance) a “good shoot,” but the matter has been taken out of the tactical realm and has become mired in transnational politics and Pakistani public sentiment. Whether the shooting was justified or not, Davis has now become a pawn in a larger game being played out between the United States and Pakistan.

When one considers the way similar periods of tension between the Pakistanis and Americans have unfolded in the past, it is not unreasonable to conclude that as this current period plays out, it could have larger consequences for Davis and for American diplomatic facilities and commercial interests in Pakistan. Unless the Pakistani government is willing and able to defuse the situation, the case could indeed provoke violent protests against the United States, and U.S. citizens and businesses in Pakistan should be prepared for this backlash.

Details of the Case
One of the reasons that the Pakistanis have been able to retain Davis in custody is that while he may have been traveling on a “black” diplomatic U.S. passport, not everyone who holds a diplomatic passport is afforded full diplomatic immunity. The only people afforded full diplomatic immunity are those who are on a list of diplomats officially accredited as diplomatic agents by the receiving country. The rest of the foreign employees at an embassy or a consulate in the receiving country who are not on the diplomatic list and who are not accredited as diplomatic agents under the Vienna Convention are only protected by functional immunity. This means they are only protected from prosecution related to their official duties.

As a contract employee assigned to the U.S. Consulate in Lahore, Davis was likely not on the diplomatic list and probably did not enjoy full diplomatic immunity. He was probably considered a member of the administrative or technical staff. Protecting himself during a robbery attempt would not be considered part of his official function in the country, and therefore his actions that day would not be covered under functional immunity. So determining exactly what level of immunity Davis was provided will be critical in this case, and the information provided by the Pakistani Foreign Ministry will have a big impact on the Pakistani judge hearing the arguments.
In all likelihood, Davis was briefed regarding his legal status by his company and by the CIA prior to being assigned to post. He also would have been told that, while he had limited immunity, the U.S. government would do its best to take care of him if some incident occurred. However, it would have been made clear to him that in working as a protective contractor he was running a risk and that if there was an incident on or off duty, he could wind up in trouble. All security contractors working overseas know this and accept the risk as part of the job.
At the time of the shooting, of course, Davis would not have had time to leisurely ponder this potential legal quagmire. He saw a threat and reacted to it. Undoubtedly, the U.S. government will do all it can to help Davis out — especially since the case appears to be a good-shoot scenario and not a case of negligence or bad judgment. Indeed, on Feb. 15, U.S. Sen. John Kerry flew to Islamabad in a bid to seek Davis’ release. However, in spite of American efforts and international convention, Davis’ case is complicated greatly by the fact that he was working in Pakistan and by the current state of U.S.-Pakistani relations.

Over the past few years, relations between the United States and Pakistan have been very strained. This tension has been evidenced not only by public opinion but also by concrete examples. For example, in mid-December, the CIA station chief in Islamabad was forced to leave the country after his name was disclosed in a class-action lawsuit brought by relatives of civilians killed by unmanned aerial vehicle strikes in the Pakistani tribal badlands.

It was no coincidence that the Pakistani lawsuit against the CIA station chief occurred shortly after the head of Pakistan’s Inter-Services Intelligence directorate, Lt. Gen. Ahmed Shuja Pasha, was accused in a civil lawsuit of being involved in the 2008 attacks in Mumbai. The suit was brought in U.S. District Court in Brooklyn by family members of the American rabbi killed alongside his wife in Mumbai by Pakistan-based Islamist militants.

Like Iraq, Pakistan is a country that has seen considerable controversy over American security contractors over the past several years. The government of Pakistan has gone after security contractor companies like DynCorp and its Pakistani affiliate InterRisk and Xe (formerly known as Blackwater), which has become the Pakistani version of the bogeyman. In addition to the clandestine security and intelligence work the company was conducting in Pakistan, in 2009 the Taliban even began to blame Xe for suicide bombing attacks that killed civilians. The end result is that American security contractors have become extremely unpopular in Pakistan. They are viewed not only as an affront to Pakistani sovereignty but also as trigger-happy killers.

Activists from the Pakistani Islamist party Jamaat-e-Islami during a protest rally in Karachi on Feb. 11
And this is the environment in which the Davis shooting occurred. Even though some Pakistani civilians apparently came forward and reported that they had been robbed at gunpoint by the men Davis shot, other Pakistani groups like the Jamaat-ud-Dawah (JuD) — the successor to the Lashkar-e-Taiba, which was presumably banned by the Pakistani government — have demanded that Davis be hanged. The Jamaat-e-Islami (JeI), an Islamist political party, has also demanded that Davis be hanged and has called for large protests if he is released without a court order. As noted above, TTP spokesman Azam Tarik made a statement demanding that the Pakistani government either hang Davis or hand him over to them. Interest in this issue is not just confined to Islamist groups. There are some right-wing conservative nationalists and even some secular liberals who are asking: “If the United States can give CIA shooter Mir Amal Kansi the death penalty, why can’t Pakistan do the same thing to Davis?”

The result is that the Davis case has aroused much controversy and passion in Pakistan. This not only complicates the position of the Pakistani government but also raises the distinct possibility that there will be civil unrest if Davis is released.

Civil Unrest in Pakistan
Like many parts of the developing world, civil unrest in Pakistan can quickly turn to extreme violence. One example that must certainly be on the minds of the security personnel at the U.S. Embassy and the U.S. consulates in Pakistan is the November 1979 incident in which an enraged mob seized and destroyed the U.S. Embassy in Islamabad. While there were only two Americans killed in that incident — a Marine security guard shot as he stood on the roof of the embassy and an Army warrant officer who died when an apartment building on the embassy compound was torched — the fire that the mob set inside the building very nearly killed all the employees who had sought shelter in the embassy’s inner safe-haven area. Two local Pakistani staff members were also killed in the fire.

The 1979 attack was said to have been sparked by reports that the U.S. government was behind an assault on the Grand Mosque in Mecca by Saudi militants the day before. In reality, the mob that stormed and torched the U.S. Embassy was at least tolerated, if not orchestrated, by the Pakistani government, which was angry that the United States cut off financial aid to the country in April 1979. Not only did the Pakistani government facilitate the busing of large numbers of protesters to the U.S. Embassy, its security forces also stood aside and refused to protect the embassy from the onslaught of the angry mob. The embassy assault was Pakistan’s not-so-subtle way of sending a message to the U.S. government.

But U.S. diplomatic facilities have not been the only targets of civil unrest in Pakistan. Following the assassination of former Pakistani Prime Minister Benazir Bhutto, angry mobs attacked not only security forces but also foreign businesses, banks, shops and gasoline stations in the cities of Karachi, Rawalpindi, Islamabad and Quetta and throughout the province of Sindh, Bhutto’s home province.

Similarly, in February 2006 during the unrest generated by the Mohammed cartoon fiasco, mobs in Islamabad, Peshawar, Karachi and Lahore attacked a wide range of Western business targets. The worst of this violence occurred in Lahore, where a rampaging mob burned down four buildings housing the four-star Ambassador Hotel, two banks, a KFC restaurant franchise and the regional office of Telenor, a Norwegian cell phone company. The protesters also damaged about 200 cars and several storefronts and threw stones through the windows of a McDonald’s restaurant, a Pizza Hut and a Holiday Inn. Lahore, incidentally, is where the Davis shooting occurred.

Based on this history, the current tension between the United States and Pakistan, public sentiment in Pakistan regarding U.S. security contractors and the possibility of groups like JuD and JeI attempting to take advantage of the situation, there is a very real possibility that Davis’ release could spark mob violence in Pakistan (and specifically Lahore). Even if the Pakistani government does try to defuse the situation, there are other parties who will attempt to stir up violence.

Due to the widespread discontent over the issue of U.S. security contractors in Pakistan, if protests do follow the release of Davis, they can be expected to be similar to the protests that followed the Mohammed cartoon case, i.e., they will cut across ethnic and sectarian lines and present a widespread threat.

Physical security measures such as concrete barriers, standoff distances and security cameras can add to a facility’s defenses against a terrorist attack, but they really do not pose much of an obstacle to an angry mob intent on overrunning a property — especially if local and indigenous security forces are unwilling or unable to intervene in a timely fashion and the mob has the time and latitude to assault the facility for a prolonged period. The protesters can scale barriers and their overwhelming numbers can render most security measures useless. Barriers such as hard-line doors can provide some delay, but they can be breached by assailants who possess tools and time.

Additionally, if protesters are able to set fire to the building, as happened at the U.S. Embassy in Islamabad in 1979, a safe-haven can become a death trap, especially if the mob can take control of the secondary escape hatch as it did in that incident, trapping the Americans inside the safe-haven.

Commercial facilities are, by their very nature, far more accessible — and far more vulnerable — to mob violence than diplomatic facilities. A commercial facility can present a tempting soft target to those who wish to attack a symbol of America without tackling a hard target like a U.S. diplomatic facility, which is designed and built to comply with stringent security standards. If a mob storms a hotel, the local staff will be unable to protect the guests, and conceivably could leave the guests to fend for themselves in the confusion and chaos of a riot. Even worse, they could even facilitate attacks against Americans by pointing them out or providing their room numbers.

Any person identified as an American by such an angry mob could quickly find himself or herself in dire danger. While Americans working for the U.S. government can expect to have some security assistance in getting back to the embassy or to another secure location, non-officials may be left to fend for themselves, especially if they are not registered with the embassy. Non-officials are also not required to abide by the same security rules as officials. While many non-officials consider the U.S. State Department’s security rules to be onerous at times, during troubled periods these conservative security rules often serve to keep diplomats out of harm’s way.

Once a mob attacks, there often is little that can be done — especially if the host government either cannot or will not take action to protect the facility being attacked. At that point, the focus should be on preventing injuries and saving lives — without regard to the physical property. In most cases, when a mob attacks a multinational corporation, it is attacking a symbolic target. KFC restaurants, for example, have been frequent targets of attacks in Pakistan because of the company’s association with the United States. In many cases, multinational franchises such as KFC and even some hotels are owned by locals and not Americans, but that does not matter to the mobs, which see nothing but a U.S. symbol.

When an issue such as the Mohammed cartoons, the Bhutto assassination or the release of Raymond Davis spirals into violent protests, the only real precaution that many companies can take is to escape the area and avoid loss of life. The best defense is to use good intelligence in order to learn about the protests in advance, to track them when they occur and then to evacuate personnel before they can be affected by the violence.

U.S. diplomatic facilities and business interests in Pakistan are almost certainly reviewing their contingency plans right now and planning for the worst-case scenario. During such times, vigilance and preparation are vital, as is a constant flow of updated intelligence pertaining to potential demonstrations. Such intelligence can provide time for an evacuation or allow other proactive security measures to be taken. With the current tension between Pakistan and the United States, there might not be much help coming when the next wave of unrest erupts, so keeping ahead of potential protests is critically Read more: The Threat of Civil Unrest in Pakistan and the Davis Case STRATFOR

February 16, 2011

TVU issue: US assures Rao of ‘fair solution’

Ashish Kumar Sen in Washington


The Obama administration has promised a “fair solution” in the case of Indian students who were enrolled at a sham university in California, according to Foreign Secretary Nirupama Rao.

Indian officials have urged their US counterparts to find a solution that does not harm the students’ future and allows them to transfer to genuine universities in America.

“Our emphasis has been on seeking a solution that will help the students who have been affected by this unfortunate development and enable them to find alternative placements in bona fide universities without affecting their future,” Rao told reporters at the end of her two-day visit to Washington on Tuesday.

On January 19, Tri-Valley University became the target of a US Immigration and Customs Enforcement (ICE) criminal investigation. ICE officials said the TVU was a sham. At least 1,550 students have been affected. Most of them are Indian, and a majority from Andhra Pradesh.

Rao raised the issue at her meeting with Undersecretary of State for Political Affairs, Bill Burns, on Tuesday. She said the students who have not been involved in illegal activities should be allowed to transfer to other universities “without detriment or without any disadvantage.” Burns assured her that this is an option that the US government is looking at and will provide a “fair solution to this very, very real and critical problem,” she added.

Depending on how long they have been out of status, students have the option to depart the US voluntarily and avoid a five-year entry ban that comes with deportations, get a transfer to other schools or find a job and ask an employer to file an H1-B visa. Students who have approached other universities about transfers have been told that they cannot be accepted as they are illegal immigrants since their visas have been revoked. The option of applying for an H-1B visa is also ruled out because the cap for the year has been filled.In some cases where visa violations have allegedly been discovered, students have been forced to wear electronic monitoring ankle bracelets. Rao described the matter as a “very important subject” and said she had “conveyed our concern about the welfare of the students who have been affected by this unfortunate series of events involving the TVU.”
“I stressed our concern about the large numbers of bona fide students who have been adversely affected by the events surrounding Tri Valley University and the uncovering of this scam... Our concern was that the future of these students should not be affected,” she said.

On February 13, External Affairs Minister SM Krishna raised the matter with Secretary of State Hillary Rodham Clinton. Following that conversation, India’s ambassador in Washington, Meera Shankar, conveyed details of the case to Hillary.

Krishna sought Hillary’s intervention in the matter with a view to ensure that the interests of the students are protected and their future is not jeopardised, the Indian Embassy in Washington said in a readout of the call.

The US Immigration and Customs Enforcement (ICE) has instructed students to call the Student Exchange Visitors Programme (SEVP) and provide their specific details.

Sunil, a former TVU student who is based in the Washington area and declined to give his last name, told The Tribune on Tuesday that many students have received court notices and face deportation back to India.

Rao’s visit to Washington was intended to lay the ground for a second US-India strategic dialogue, which will be held in New Delhi on April 6. Hillary and Krishna will lead the dialogue.

At her meetings with a host of US officials and lawmakers, Rao discussed United Nations reform, export controls, maritime security and the political upheaval in the Arab world. She noted that President Barack Obama’s support for a permanent seat for India on an expanded U.N. Security Council is more than just lip service.

Rao came away from the meetings convinced that there exists a political will in both New Delhi and in Washington to take the US-India relationship to a higher plane.

Algeria, a Diplomatic Mistake

Javid Ghorban-Oghli, Iran’s former ambassador to Algeria.


Tsunamis have two defining elements: they are unpredictable and their ambit depends on their primary magnitude. Tunisia’s tsunami affected Egypt and ousted Mubarak from power in 18 days. If Mohamed Bouazizi’s immolation in the small country of Tunisia exponentially echoed in Egypt, then the political transformation in Egypt will resonate much more powerfully in other Arab countries. The time and intensity of these developments will, of course, differ according to state structure, level of public welfare, civil and political freedoms, level of corruption, and autocracy in each country.

For some Arab countries -including Algeria, Jordan and Yemen- the North African tsunami has had immediate impact. It will also leave a trace on other Arab countries, most of which witness citizen discontent with their autocratic rules –though in most cases this may bubble under the surface.

Despite their formal differences, Algeria, Jordan and Yemen share a common feature on governance, and that is lifetime presidencies. While a hereditary monarchy rules in Jordan, Ali Abdullah Saleh has presided over state affairs for more than three decades in Yemen (recently he recanted his determination for lifetime presidency and the appointing of his son as heir to the presidency). In Algeria, a similar case holds true. Abduleziz Bouteflika, veteran Algerian Independence War fighter whose second term ended in 2009, was tempted to alter the constitution and bid for a third term in an election in which his victory was predetermined.

The impact on Persian Gulf Arab states depends on various factors, including the rate of literacy and internet access, since poverty is not the initial challenge. For instance in Saudi Arabia there are three distinct classes. The royal family, consisting of about 3000 princes and princesses; the middle class who enjoy welfare, and the lower class who live mostly in the deserts and smaller cities, deprived of the internet. The wave of protests will lose strength when they arrive in Saudi Arabia, emphasized by the fact that the Saudi king boasts the title of “Custodian of the Two Holy Mosques” [in the sacred Islamic cities of Mecca and Medina.] Increasing civil and media freedom and granting further rights to women can help the Saudi family control the situation.

On February 7, 2011, newly appointed Iranian Foreign Minister Ali Akbar Salehi made an official visit to Algeria at a time when the country was clearly in a tense mood as affected by the developments in Egypt and Tunisia.

Diplomatic visits, particularly at the foreign ministerial level, take place either in response to a visit or within the framework of regular negotiations between countries. Joint committees for a project or agreements sometimes send off foreign ministers to another country. They can be also aimed at preparations for visit of a higher official. It is not clear on what basis Salehi’s visit took place, but whatever it was, considering the current circumstances in Algeria it was a miscalculated move and a grave mistake. Salehi made a diplomatic mistake at the onset of his ministerial appointment by making a trip to Algeria, a country that would be obviously shaken by the Egyptian tsunami.

Supporting Bouteflika should have never happened. The Algerian president is a respected Independence War veteran and the redeemer of Algeria from the 1990s bloodbath (ensuing after the military coup upon the Islamic Salvation Front’s victory in parliamentary election.) He should have handled power with decency after his two-term presidency ended in 2009, but against the spirit of democracy, he amended the constitution to stay in power. Lending support to Bouteflika tarnished our diplomatic image, especially considering that a few days after Salehi’s visit we had an outburst of unrest in Algeria following which hundreds of citizens, including four members of the parliament were arrested and the Algerian president had to announce a state of emergency to put a lid on the protests.

A consultation with diplomatic analysts of the ministry who were aware of the situation in that country would have helped Salehi make a better decision. The diplomatic apparatus should survey the situation before preparing for a trip, especially for a minister who is at the beginning of his term and has not regulated his –if any- agenda