October 08, 2011

INDIA-PAKISTAN-UK

B.RAMAN

The following are my answers yo E-mailed questions on the above-mentioned subject received from a UK-based analyst:

1) In your view, what is Pakistan's goal in Afghanistan? Do they want their interests to be respected in any peace settlement or do they want their interests to be the settlement? What is the view of the Indian government, officially and unofficially?


PAKISTAN'S GOAL IN AFGHANISTAN IS A GOVERNMENT WHICH
  1. WOULD NOT CREATE PROBLEMS FOR ISLAMABAD IN THE PASHTUN BELT,
  2. WHICH WOULD NOT TAKE SIDES WITH INDIA IN ANY INDO-PAKISTAN MILITARY CONFLICT,
  3. WOULD PROTECT PAKISTAN'S ECONOMIC LINKS WITH THE CENTRAL ASIAN REPUBLICS AND
  4. WOULD KEEP INDIA AT A DISTANCE.PAKISTAN REGARDS AFGHANISTAN AS WITHIN ITS SPHERE OF INFLUENCE AND WANTS A GOVERNMENT IN KABUL
  5. WOULD KEEP AFGHANISTAN THAT WAY.

2) In your view, what are India's strategic objectives in Afghanistan? How does it differ from its stated policy, if at all?


INDIA'S STRATEGIC OBJECTIVES IN AFGHANISTAN ARE A MULTI-ETHNIC,PLURALISTIC,MODERN,DEMOCRATIC AFGHANISTAN
  1. WHICH WOULD PLAY ITS DUE ROLE IN THE SOUTH ASIAN REGION WITHOUT COMING UNDER THE MALIGN INFLUENCE OF THE PAKISTANI ARMY AND ITS ISI AND
  2. WHICH WOULD REMAIN IMMUNISED FROM PAKISTAN'S JIHADI VIRUS.
  3. INDIA WOULD ALSO HAVE A KEY INTEREST IN CONTRIBUTING TO A PREVENTION OF A RE-TALIBANISATION OF AFGHANISTAN AND THE RETURN OF AL QAEDA TO ITS OLD SANCTUARIES IN THE AFGHAN TERRITORY.THE STATED POLICY AND THE GENUINE OBJECTIVES ARE IDENTICAL.

3) How do you rate the MI6-ISI intelligence relationship? What is the view of the Indian government? Is there a similarly strong relationship with RAW?


I DON'T KNOW THE VIEWS OF THE INDIAN GOVERNMENT.BASED ON OPEN SOURCE INFORMATION, MY ASSESSMENT IS THAT THE ISI'S CO-OPERATION WITH THE MI-5 AND THE MI-6 HAS BEEN AS UNSATISFACTORY AS ITS CO-OPERATION WITH THE CIA AND THE FBI. WE SAW A GOOD EXAMPLE OF ISI FOOT-DRAGGING IN THE CASE OF RASHID RAUF, A MIRPURI FROM BIRMINGHAM WHO WAS WANTED IN A CRIMINAL CASE IN THE UK AND WHO HAD LINKS WITH THE JAISH-E-MOHAMMAD AND SUSPECTED LINKS WITH AL QAEDA.


4) Given David Cameron wants to build a "special relationship" with India, what would the UK need to do vis-a-vis Afghanistan and Pakistan to help build such a relationship?


BOTH INDIA AND THE UK HAVE A COMMON INTEREST IN ENSURING THAT PAKISTAN WINDS UP THE JIHADI TERRORIST INFRASTRUCTURE IN ITS TERRITORY AND ACTS AGAINST THE LEADERS OF THE TERRORIST ORGANISATIONS SUCH AS THE LASHKAR-E-TOIBA AND THE JEM WHICH POSE A THREAT TO THE NATIONALS AND INTERESTS OF INDIA AND THE UK. IN AFGHANISTAN, THEY HAVE A COMMON INTEREST IN PREVENTING THE RETURN OF THE TALIBAN TO POWER IN KABUL AND OF AL QAEDA TO ITS SANCTUARIES IN AFGHAN TERRITORY. INDIA AND THE UK SHOULD WORK JOINTLY FOR PROMOTING THESE COMMON INTERESTS.


5) What could India offer the UK to make such a relationship reciprocal? Could RAW fill the vacuum of an ISI break from MI6?


THE RELATIONSHIP IS PROGRESSING. THERE IS NOW A GREATER APPRECIATION IN LONDON OF THE ROLE OF PAKISTAN IN FOMENTING TERRORISM IN INDIAN TERRITORY. SIMILARLY, THERE IS A GREATER APPRECIATION IN LONDON OF INDIA'S LEGITIMATE INTERESTS IN AFGHANISTAN. BUT THE PROGRESS HAS NOT BEEN AS SATISFACTORY AS INDIA WOULD HAVE WISHED BECAUSE THE UK IS NOT PREPARED TO USE THE STICK AGAINST PAKISTAN DESPITE ITS UNHAPPINESS OVER PAKISTAN'S FOOT-DRAGGING AGAINST TERRORISM ORIGINATING FROM ITS TERRITORY. THE CONVERGENCE OF INDIAN AND BRITISH INTERESTS IN RELATION TO PAKISTAN CONTINUES TO HAVE LIMITS. THIS COMES IN THE WAY OF A STRONGER RELATIONSHIP BETWEEN THE UK AND INDIA ON STRATEGIC ISSUES.

6) What is your view of Cameron's remarks last year about Pakistan "exporting terror"?


TOTALLY JUSTIFIED AND FACTUALLY CORRECT.

7) How do you rate the idea of a UK-India "special relationship"?


THE IDEA IS GOOD, BUT THE PROBLEM IS IN IMPLEMENTATION. ANY SPECIAL RELATIONSHIP, TO BE WORTHWHILE, HAS TO BE BASED ON A QUID PRO QUO. THERE IS NO QUID PRO QUO IN THE RELATIONSHIP BETWEEN INDIA AND THE UK.

( The writer is Additional Secretary (retd), Cabinet Secretariat, Govt. of India, New Delhi, and, presently, Director, Institute For Topical Studies, Chennai, and Associate of the Chennai Centre For China Studies. E-mail: seventyone2@gmail.com . Twitter : @SORBONNE75 )

Musharraf hires US lobbyist for $25,000 a month

"A monthly payment in the amount of twenty thousand US dollars ($25,000.00) will be paid to Advantage (the lobbying firm) for a period of seven months beginning on September 1,2011 and ending on March 30, 2012. All monthly payments must be made on the first of each month. However, for the last two months and the first month, seventy five thousand US dollars ($75,000.00) will be paid upon the signing of this agreement,"

Daily News Report
WASHINGTON, Oct 8: Former President Pervez Musharraf has hired a US lobbyist at 25,000 dollars per month, official US record on lobbyists reveals. According to the official documents of the Foreign Agents Registration Act (FARA), the firm would approach US officials, senators and congressmen to lobby for Gen Musharraf.

The document registered as 6062 with the Justice Department, Gen Musharraf remains a political and public figure in Pakistan and throughout the world. The agreement was signed on Sept 1, 2011 and will be good until March 2012, amounting to $175,000 for services provided by the firm.

Gen Musharraf's representative who signed the agreement with the firm is named Raza Bokhari, according to the Justice Department record. Raza Bokhari has a Doctor of Medicine degree from the University of Punjab. He was elected as the national president for the Pakistani American Public Affairs Committee (PAKPAC) for the years 2006-07.
http://www.dailynews.net.pk/oct2011/08-10-2011/mushhire.asp
Musharraf hires US lobbyist for $25,000 a month

By Our Correspondent | From the Newspaper Yesterday

Former president Pervez Musharraf speaks to the press in Hong Kong on September 15, 2010.—AFP

WASHINGTON: Former chief of the army staff Gen (retd) Pervez Musharraf, currently visiting North America, has hired a firm for $25,000 a month to lobby for him in the US capital.


A copy of the contract obtained by Dawn shows that a formal agreement between Mr Musharraf and the Advantage Associates International Ltd. was signed on Sept 1.


The contract letter identifies the firm as a specialist in “helping clients with governmental, political and international matters.” Raza Bokhari, a prominent member of Mr Musharraf’s party in the US, will work as “point of contact”.


“For purposes of this agreement, Mr Bokhari and the office of Gen (retd) Pervez Musharraf shall retain joint rights,” the letter says.


The Advantage Ltd will work with Mr Bokhari to “develop a strategy to represent the interest of Gen (retd) Pervez Musharraf in the US” and the firm will assist Mr Bokhari “in any other area that would be of benefit to Gen (retd) Musharraf”.


The agreement, which began on Sept 1, 2011, ends on March 30, 2012.


The parties “acknowledge awareness and stated preference that this is an agreement for services as an independent contractor. The parties will exert all manner of good faith and take all reasonable efforts to ensure performance and prevent repudiation by other parties connected with its activities which could affect its performance under this agreement”.


The total fee for the services to be provided to by Advantage is $175,000.00. A monthly payment in the amount of $25,000.00 will be made to Advantage for a period of seven months beginning on Sept 1, 2011. All monthly payments must be made on the first of each month. However, for the last two months and the first month, $75,000.00 was paid upon the signing of this agreement.


Mr Bokhari also agreed to reimburse Advantage for all reasonable expenses arising out of this agreement, with any expenses over $250.00 approved in advance.


Meanwhile, Mr Musharraf’s office in the US issued a statement on Friday, noting that the relationship between Pakistan and the US was on a declining trend due to many reasons.


To explain Pakistan’s position, Mr Musharraf met a number of senior US lawmakers in Washington, the statement said.


“As a member of diaspora community, we all feel compelled to play our roles in improving the bilateral relationship between the two countries,” the statement said.

He was scheduled to meet the former speaker, and a senior member of the US Congress, Nancy Pelosi, on Friday.

http://www.dawn.com/2011/10/08/musharraf-hires-us-lobbyist-for-25000-a-month.html
Musharraf paying $25,000 per month to lobbyist to promote interests in US

ANI | Oct 8, 2011, 12.09PM IST
WASHINGTON: Former Pakistan President Pervez Musharraf has hired a US lobbyist at $25,000 per month, according to an official US record on lobbyists.


According to the official documents of the Foreign Agents Registration Act (FARA), the lobbying firm would approach US officials, Senators and Congressmen to promote the interests of Musharraf in the United States.


The document, having registration number 6062, says that Musharraf "remains a political and public figure in Pakistan and throughout the world."


Musharraf's representative who signed the agreement with the firm is named Raza Bokhari, according to the justice department record.


The agreement was made on Sept 1, 2011 and will end on March 30, 2012, unless the parties agree to extend the term.


The total fee for the services to be provided to the lobbying firm is one hundred and seventy five thousand ($175,000.00) US dollars.


"A monthly payment in the amount of twenty thousand US dollars ($25,000.00) will be paid to Advantage (the lobbying firm) for a period of seven months beginning on September 1,2011 and ending on March 30, 2012. All monthly payments must be made on the first of each month. However, for the last two months and the first month, seventy five thousand US dollars ($75,000.00) will be paid upon the signing of this agreement," the agreement said.


"Bokhari agrees to reimburse Advantage for all reasonable expenses arising out of this Agreement, with any expenses over $250.00 preapproved in advance. Source of payment for funds under this agreement may come from Bokhari or General Musharraf," it added.


The lobbying firm, Advantage Associates International is owned by former congressman Bill Sarpalius from Texas, The News reported.


It is known that almost everyone in this firm is an ex-congressman, it added.

http://timesofindia.indiatimes.com/world/us/Musharraf-paying-25000-per-month-to-lobbyist-to-promote-interests-in-US/articleshow/10276881.cms
Related Links:
http://www.thenews.com.pk/TodaysPrintDetail.aspx?ID=71458&Cat=2
http://gulftoday.ae/portal/09f25692-8674-4608-8744-302fa64198ea.aspx
http://www.gopusa.com/news/2011/07/20/fbi-pakistani-spies-spent-millions-lobbying-the-white-house-and-congress/
http://www.reuters.com/article/2011/05/05/us-binladen-pakistan-lobbying-idUSTRE7445GK20110505
http://www.lockelord.com/msiegel/
Pakistan Hires Stephen_Payne_(lobbyist)
http://en.wikipedia.org/wiki/Pakistan_lobby
http://www.timesonline.co.uk/tol/news/world/us_and_americas/article4322719.ece

Pearls of Wisdom: US Economist On Indian Education

The silliest India commentary comes from Indians in the West. Usually. Exceptions apart.

Indian education system has been a matter of interest for the last 10 years at least. (Cartoon by Stuart Carlson, 2005).

Indian education system has been a matter of interest for the last 10 years at least. (Cartoon by Stuart Carlson, 2005).

The failure of the Indian education system must count as the Indian government’s greatest failure. Over 90 per cent of students drop out of school by the 12th grade; only 6 per cent go on to tertiary education, to cite just one dismal statistic. (via Swiping without reading – Indian Express).

Amusing

Cut your nose, to spite your face.

A product of Indian education system, at least partially, Atanu Dey lacks the grace to admit his debt. Even if he lacks the grace, he must be honest to admit his ignorance and /or expertise. Atanu Dey, by implication, is implying that other State education systems are better.

For instance, that of the USA.

Which is simply not a fact. At least from 1983, during the time President Reagan, the state of the US education system has been a matter of great concern. And if he not implying that, he must state how things are equally bad in the rest of the world.

Why just pick on India.

This may not quite be the State of US Education - but only an anecdote.

This may not quite be the State of US Education - but only an anecdote.

Numbers talk

Another angle.

Remember the US is dealing with around 50 million children in the US school system.

And India?

Dealing with 500 million of chidren, is the task that the Indian education system has to handle.

US is the largest economy of the world. India is 10% of the US economy (in nominal terms). Little more actually.

So, we are talking of a 1000% bigger task with 10% of the GDP. Roughly. Exact numbers will be somewhat different.

Size matters – in case Atanu Dey forgets.

Interestingly, there are some 500 Indian teacher’s in Japan, teaching children, using methods that the Japanese want to learn.

From Indian teachers.

What Atanu Dey does not know or forgets

The issues with Indian education are really the use of English language in higher education. English language closes doors to higher education, for all native language users – which is roughly 90% of India.

The other related question is how long will the dominance of English language last? What after that. Now, these are questions that Atanu Dey should ask and answer.

Being an economist?

vUS education is 'blinkered' seems to be the popular opinion. (Cartoonist - David Horsey; 2008 cartoon). Click for larger image.

US education is 'blinkered' seems to be the popular opinion. (Cartoonist - David Horsey; 2008 cartoon). Click for larger image.

I am not forgetting

The real issue is the delivery model for education that the world must adopt.

The answer, my friend (figure of speech!) is what Shri (Sir) Philip Hartog, Vice Chancellor of Dhaka University (then Dacca) learnt from Gandhiji.

Something that research by Dharampal confirmed – and of late, a British researcher discovered again.

Indian private sector education model is the best.

INDIA: Swiping without reading

New York Times Posted online: Sat Oct 08 2011, 01:42 hrs


In the information technology sector, the two well-known categories of goods are hardware — the stuff you can hold in your hands — and software — the bits that have no weight. The third category is termed vapourware: hardware that exists only in the fevered imagination of their promoters, and which will never hit the stores.

The government of India recently unveiled a tablet computer that they claim will revolutionise education. Perhaps vapour does not translate well into Hindi, and therefore they settled on the word for sky, or Aakash, for the tablet.

Vapourware does not condense into hardware because it fails the pitiless test of the marketplace: that the product’s benefits exceed its costs. That constraint does not apply to the government-sponsored Aakash, because they can choose to ignore inconvenient costs through the simple expedient of spending other people’s money. The Aakash can be priced at any arbitrarily low number but that does not change the cost. The difference will be paid for not by Kapil Sibal but by the average citizen of India. And for what? To eliminate digital illiteracy, an entirely artificial malady, conjured out of thin, blue air.

The failure of the Indian education system must count as the Indian government’s greatest failure. Over 90 per cent of students drop out of school by the 12th grade; only 6 per cent go on to tertiary education, to cite just one dismal statistic. We have to understand that the failure is primarily due to flawed policies that the government has consistently imposed on the education sector. Aakash, like its predecessor, the “$10 laptop”, is just another distraction — but a very costly distraction.

It is costly in many ways. First, the government should not be subsidising consumer electronics. Electronics is the most competitive industry in the world, and huge, extremely competent corporations are constantly innovating — with the result that costs move downwards monotonically. Governments are incapable of choosing winners in technology, and the Indian government has demonstrated particular ineptitude in that regard.

Second, the lack of real commitment to fix primary education is especially hard on the poorest sections of society. Promoting digital gizmos at immense public cost only widens the gap between the haves and the have-nots. Where 100 million suffer illiteracy, attempting to promote digital literacy cannot but be a cynical exercise in self-promotion and aggrandisement.

A press conference saying that India has invested in providing blackboards and teachers in 100,000 schools that lack them would not be as headline-grabbing as one which parades a me-too device hyped as an “iPad killer.” A policy of funding toilets in schools (needed to alleviate the suffering of girl children especially) does not have the sex appeal of a policy of handing out digital gizmos. But the production and distribution of hi-tech gadgets offer immense opportunities to profit for the producers and the government — never mind at what cost to the public.

Press releases that repeat the claim by the government that the Aakash tablet will be sold in tens of millions of units fail to do basic arithmetic. The subsidy costs could run into billions of dollars. Like so many other government schemes, the Aakash tablet, in the unlikely event that it is actually produced, will ultimately be funded by the poor through increased inflation. Unlike Sibal, the poor suffer when the government runs the printing presses at the mint overtime.

Our focus has to be on the urgent and important matter of education. The government has a critical role to play, which is to provide the regulatory environment for needed massive investment by the private sector. That role is as a facilitator and not as a competitor to the Apples and the HPs of the world.

Perhaps digital illiteracy should be a cause for concern, but I doubt it. Like tens of billions of others, I too was a digital illiterate but that did not interfere with my education in the least. However, basic illiteracy is a critical concern, the weakest link in the chain. Strengthening any other link will not make the chain stronger. A government that has failed to achieve universal literacy cannot be trusted to eliminate digital illiteracy.

When entrepreneurs and start-ups peddle vapourware to get funding, the losers are private investors that are taken in. The rough and tumble of the marketplace eliminates the incompetent or the simply greedy, and rewards true innovators. But when the government gets into the game of funding vapourware at massive public costs, it adds one more chain around the citizens, already imprisoned by the shackles of inflation and government control.

Atanu Dey is an economist at the University of California, Berkeley

New phase in India-Afghan ties: Pakistan feeling uncomfortable

by Harsh V. Pant

http://www.tribuneindia.com/2011/20111008/edit.htm#4

THE Af-Pak story takes another turn with the visit of the Afghan President, Mr Hamid Karzai, to Delhi earlier this week. In Afghanistan’s first strategic pact with any country, Kabul and New Delhi signed a landmark strategic partnership agreement during Mr Karzai’s visit. As part of the new pact, bilateral dialogue at the level of National Security Adviser has been institutionalised to focus on enhancing cooperation on security issues. New Delhi is hoping that Kabul will take the lead in defining the exact terms of this engagement.

Along with this strategic pact, two other agreements on India-Afghan cooperation in developing hydrocarbons and mineral resources were signed further underlining India’s role in the evolution of Afghanistan as a viable economic unit. The two nations agreed to enhance political cooperation and institutionalise regular bilateral political and foreign office consultations.

The strategic pact that commits India to “training, equipping and capacity building” of the Afghan National Security Services will certainly raise eye-brows, especially in Pakistan. Not surprisingly, Islamabad was quick to remind the Karzai government that it should behave responsibly. For a long time, India had been rather cautious in taking a leap into this realm so as not to offend so-called Pakistani sensitivities. The West further supported this posture by encouraging India to be a player in Afghan reconstruction efforts but actively discouraged India from taking on a more forceful security role.

But Pakistan’s machinations continued with or without Indian provocation. Its proxies kept on targeting Indian interests in Afghanistan. As NATO forces leave Afghanistan over the course of next few years, no one expects the Afghan security forces to be able to face the challenge of the Taliban and other extremists without any outside help, and Indian training would be very influential in this regard. And India cannot be expected to ignore its genuine interests in Afghanistan just to keep Pakistan in good humour. So, the plan to train Afghan forces that was first mooted six years back by Kabul has become a reality now.

Meanwhile, as Pakistan decides to up the ante in Afghanistan, the Afghan government is seeking international support in tackling Rawalpindi’s growing sense of adventure. The pact with India is Afghanistan’s way of trying to deal with an increasingly menacing Pakistan. During his visit to New Delhi, Mr Karzai was categorical in suggesting that South Asia faced “dangers from terrorism and extremism, used as an instrument of policy against innocent civilians.” He is seeking strategic pacts with the US and the NATO as well to ward off the challenge from Pakistan.

Mr Karzai’s position has changed significantly in recent months. After calling the Taliban “brothers” and encouraging the insurgents to reconcile with the Afghanistan government, he has become more hardnosed in his appraisal of the Taliban and its sponsors in Pakistan. The Afghan President has now suggested that peace talks with the Taliban are futile unless they involve the Pakistani authorities who are the real masters behind the shenanigans of the insurgent groups. Mr Karzai’s attitude has been particularly affected by the killing last month of former Afghan President Burhanuddin Rabbani, the Afghan government’s chief peace negotiator, by the Taliban. Kabul has been categorical that this assassination was plotted in the Pakistani city of Quetta with the active support from the ISI. The reconciliation effort, as a result, is in tatters.
Ever since the death of Osama bin Laden in May, the US-Pakistan ties too have been in disarray. The security establishment in Pakistan wants to retain its central role in the negotiations with the Taliban and to prevent the US from having any long-term military presence in Afghanistan. Meanwhile, Washington has been signalling that it would not tolerate the continuing use of terrorist groups, aided and betted by the ISI, to kill Americans and their allies in Afghanistan. In a radical departure from the long-standing US policy of publicly playing down Pakistan’s official support for insurgents operating from havens within Pakistan, Admiral Mike Mullen, the just-departed chairman of the US Joint Chiefs of Staff, described the Haqqani network as a “veritable arm” of Pakistan’s ISI.

Much of the blame for the current turmoil in the Af-Pak area lies with the Obama Administration that made it clear that it wanted to exit Afghanistan as soon as it could without any concessions to the rapidly changing ground realities Pakistan’s sponsorship of the Haqqani network has been an open secret for quite some time as has been the fact that the Haqqanis have been responsible for some of the most murderous assaults on Indian and Western presence in Afghanistan. The US was reluctant to take on Pakistan on this issue till such time as their interests did not come under direct attack.

As the Western forces prepare for a pullout, New Delhi is right in strengthening its partnership with Kabul. Strengthening the security dimension of the India-Afghanistan ties is extremely important for India as it is in New Delhi’s interest to help Kabul preserve its strategic autonomy at a time when Pakistan has made it clear that it would like the Haqqani network and the Taliban to be at the centre of the post-American political dispensation in Kabul. It is true that given the logic of geography and demography, Pakistan cannot be ignored in the future viability of Afghanistan.

Mr Karzai was assuaging Pakistani anxieties when he suggested that “Pakistan is a twin brother” while “India is a great friend.” But India and Afghanistan can certainly change the conditions on the ground, forcing Pakistan to acknowledge that its policy towards its neighbours has not only brought instability in the region but has also pushed the very existence of Pakistan into question.
The writer teaches at King’s College, London

Indian Gold Reserves. Forgotten History! New Opportunity?

Quiet Progress

http://2ndlook.wordpress.com/2007/11/10/india-the-worlds-richest-economy/

Private Gold Reserves - IndiaFor the last 20 years, World Gold Council has shown India’s annual gold consumption fluctuating from 400 tons to 800tons. Estimated Indian gold reserves at 25,000-30,000 are double of the next largest country – the USA with 14,000 tons. India has 20% of the world population and also 20% of the world’s above-the-ground gold.

Which is quite unlike China!

India and the World

For much of the last 2000 years of recorded history, India has been the largest buyer of gold. Roman historian,Pliny, lamented some 1800 years ago, how India, the sink of precious metals, was draining Rome of gold – an appellation that resonates even today.

In the Indian North West (modern Afghanistan), Greco-Bactrian coins were made (seemingly) from the “Roman gold coins, which poured into India.” To “manage” this drain of gold, Romans reduced the gold content in coins.Septimuis Severus, (193 AD-211) further debased the currency. Roman coins after Septimius Severus are rarely found in India leading to the belief that Indians just stopped accepting the debased coin – and Roman coins were melted to make payments in pure gold.

In mid 17th century, a Superior of the Capuchin Mission at Isfahan, friar Raphael du Mans wrote (in 1660), an authoritative paper, Estat de la Perse, which was used by the French Minister Jean Baptiste Colbert, to form the French East India company (1664) – and in modern times, as a source book for tobacco habits in medieval Iran. This Christian missionary in Iran, Raphael du Mans thought that India is “where all the money in the Universe is unloaded as if into an abyss.” Central Asian invaders, looking for slaves and gold, aimed at सोने कि चिडिया (loosely, the ‘golden goose’). Their partly successful raids, were deemed as invasions by colonial historians.

The Byzantine Empire, successor to the Assyrian-Achmaenid-Macedonian-Roman lineage, similarly found that their reserves of precious metals were ‘again, leaked away to India.’ A significant part of Indian royal treasuries, when these hoards “fell a prey to European invaders, it was found that the gold coins of the Byzantineemperors formed no small part of their treasures”

In 1748, Baron de Montesquieu, warned Europeans that …

Every nation, that ever traded to the Indies, has constantly carried bullion, and brought merchandises in return. … commerce of the Romans to the Indies was very considerable … this commerce was carried on entirely with bullion … They want, therefore, nothing but our bullion, to serve as the medium of value, and for this they give us merchandises in return … that bullion was always carried to the Indies, and never any brought from thence. (ellipsis mine).

Above: 1st edition Jonathan Cape hardback (UK). Artwork by Richard Chopping.

The Ottomans put restrictions of export gold to Iran, from where gold exports to India were made. Safavid Iran, in turn, put restrictions on gold exports from Iran to India. No help at all.

Even modern writers resent the fact that despite the “absence of indigenous sources of gold and silver” the “very favourable export-import balance” resulted in “inherent strenghth of the Indian economy”.

Further, it has been correctly observed that in “our period the subcontinent drew vast amounts of gold and silver, exceeding previous periods and exceeding all other parts of the contemporary world so far.”

A French visitor to India Francois Bernier enviously wrote how

It should not escape notice that gold and silver, after circulating in every other quarter of the globe, come atlength to be absorbed in Hindostan. (from Travels in the Mogul Empire By François Bernier, Irving Brock)

Another current day writer describes how

“in exchange for textiles, spices and other Indian agricultural and industrial products, merchants from across Europe and Asia flooded India’s bazaar’s with dinars, tangas, ducats, guilders, reals, francs, rixdollars (reichthalers) and countless other varieties of coins, all of which were minted into rupees.(from The Indian diaspora in Central Asia and its trade, 1550-1900 By Scott Cameron Levi)

Moving away from Central Asia, the general European economy, was simple -

Europe had a net balance in the difference between the arrivals of precious metals (mostly from the New World after the sixteenth century) and export of the same (mostly to the Far East for the purchase of luxury commodities).(from Economic systems and state finance By Richard Bonney, European Science Foundation)

It was not surprising to find that Ian Fleming, pitted Western fiction’s best secret agent, James Bond against Auric Goldfinger – who was smuggling gold out of a declining, post-war Britain to India.

And Indian exports were not only textiles, spices and indigo. Students came from all over the world – and paid largesums of money to Indian teachers for education!

The Pre-WW2 Currency Crisis

During various collapses of temporary gold standards in history, Indian gold reserves (usually unwillingly)stabilised world economies. In recent history, Indian gold reserves went out to stabilise the American currency during the Great Depression and the German currency during the post-Wiemar drift. Indian silver reserves broke the Hunt Brothers’ back and their silver gambit in the 1980′s.

After (colonial) India’s accession to the world gold standard in 1898, India, especially during WWI, rapidly built up a export surplus. British reserves of gold started drying up – in spite of gold export restrictions to India by the USA, Britain and much of the Western world. There was hysteria in popular press and politicians on the subject of India and its appetite for gold.

Crash in silver prices

Between 1800-1900, new mines and increased silver production saw a crash in silver prices. Abundant silver discoveries and mining had flooded the world with silver, depressing prices. Germany’s move to the gold standard in 1873, released even more silver in the world markets. The Opium trade further released vast amounts of silver from China – which was opened to ‘free trade’, giving rise to some of the biggest Western fortunes (of the Roosevelts, for instance).

With increased silver supplies, US silver coinage was depreciating.

On the other side, Britain had a large debt due to WWI – principally to the US of A and India. Groaning under the weight of WWI debt, Britain took the easy way out to assuage the impatient creditor – US of A. Britain and America stuck a deal at the cost of the Indian subjects of the British Raj. They paid the US in gold – sourced from South Africa, Ghana, Australia and Canada – and instead bought silver from the US at inflated prices, to settle Indian debts.

Britain decided to settle Indian debts with silver. Large US silver reserves were released when the US passed the Pittman Act which mandated silver sales at more than a dollar per ounce – double the 50c per ounce prevailing price of silver. The resulting payment crisis was averted, and it was decided to pay India in silver released by the Pittman Act. Silver prices which were ruling at o.50p an ounce in the London market, was sold to the Indian colonial Government for more than US$1.0 under the Pittman Act.

Gold prices were deflated. Interest rates in India were increased. Restrictions on gold (and even silver) imports on were placed and gold demand in India was ‘normalized’. Subsequently, even payments in silver became difficult. India then started getting paid by Bank Of England credit notes.

So, finally, it was the Indian native, who was forced to finance the WWI!

But of course, the Indian native was ungrateful to the Congress of the US of A who, “by passing the Pittman Act, … gave India an opportunity to obtain silver” (from Our silver saved India from crisis - New York Times, Published, August 23, 1918; ellipsis mine).

Modern restrictions on gold exports to India

Between WWI end and the start of the WWII, it was clear that India would not stay a colony for long. Indian independence would happen sooner than later. Between 1920-40, in a series of measures, policy decisions were taken, which made Indian interests subsidiary and inferior to Western interests. Central bankers from the USA, Britain, France and Germany had many meetings to “coordinate monetary policy.” The agenda – gold flow management between themselves and an obvious understanding - don’t let Indians get the gold.

Indians were paid, with inflated and abundant silver stock, instead of gold. This silver was the same silver released by the Pittman Acta “buffer to protect Western gold reserves against the Indian drain …” Of course, later the British Raj decided to settle Indian debts with promissory notes – and not even silver. It was this Indian ‘sacrifice’ which enabled the recovery of the West.

They (Hjalmar Schacht, Governor, Reichsbank, Charles Rist, Deputy Governor, Banque de France, Benjamin Strong, USA Federal Reserve, Montagu Norman, Bank Of England) agreed that Indian demand for gold had a “…deflationary effect on global liquidity,” therefore Indian demand for gold had to be regulated.”

in the spring of 1926, when Norman induced Strong to support him in fiercely opposing a plan of Sir Basil Blackett’s to establish a full gold-coin standard in India. Strong went to the length of traveling to England to testify against the measure, and was backed up by Andrew Mellon and aided by economists Professor Oliver M.W. Sprague of Harvard, Jacob Hollander of Johns Hopkins, and W. Randolph Burgess and Robert Warren of the New York Reserve Bank. The American experts warned that the ensuing gold drain to India would cause deflation in other countries (i.e., reveal their existing over-inflation) (from America’s Great Depression By Murray N. Rothbard, Chapter 5, The Development of the Inflation; Ludwig von Mises Institute)

The New York Times wrote how “it was most important for the Allies to agree on a policy that would prevent the Huns from capturing the very valuable raw materials which can be obtained in India, and sometimes in India alone.” Further, The New York Times went on and stated “how without Indian products there would be greater difficulty in winning the war.”

So, as the West traded, profited and consumed Indian production and goods, when it came to paying for the goods, they caviled – and ‘regulated’ Indian demand for gold – and even silver!!

How millions of Indians died

Like much of Western history, the British Colonial administration (Lord Willingdon, Montagu Norman, Neville Chamberlain, Winston Churchill, the Chancellor of the Exchequer) executed a scorched earth policy in India. (After all what is brown life worth?)

They implemented a series of economic and administrative measures, (significantly, under Churchill’s baleful influence) that killed millions in the Bengal Famine, would impoverish India – and sustain the empire. The result –Bengal Famine of 1943 which killed 40 lakh Indians. The Bengal Famine of 1943, of course had may other layers to it – but nett, nett, as Gideon Polya has pointed out, Australian sheep have lower mortality rates.

The Bengal-Burma link of the ages was broken. After being demonized, the Chettiar money lenders were thrown out of Burma, the role of Chettiars (for e.g. in Singapore) was wiped clean. From being a granary of Asia, Burma started declining – and there was no rice for exports. Result – The Bengal Famine of 1943. Tally – 40-50 lakh deaths.

Cabinet ministers, August 1931. Back row (left to right): C Lister, J Thomas, Rufus Isaacs, (Lord Reading), Neville Chamberlain and S Hoare (Viscount Templewood). Front row (left to right): Philip Snowdon, Stanley Baldwin, prime minister Ramsay MacDonald, H Samuel and Lord Stanley. Photograph: Getty

Cabinet ministers, August 1931. Back row (left to right): C Lister, J Thomas, Rufus Isaacs, (Lord Reading), Neville Chamberlain and S Hoare (Viscount Templewood). Front row (left to right): Philip Snowdon, Stanley Baldwin, prime minister Ramsay MacDonald, H Samuel and Lord Stanley. Photograph: Getty

After the fall of Singapore, and the rapid Japanese advance, with Subhash Chandra Bose in the vicinity, a revolt by Bengal would have had catastrophic effect on the colonial administration. Howard Fast, in his novel ‘The Pledge’ believes that the Bengal Famine was a deliberate creation – possibly to weaken the local population and deter support for Subhash Chandra Bose.

Crisis in Britain

Britain in the meantime, returned to the gold standard under Montagu Norman and Winston Churchill (then the Chancellor of the Exchequer) – with the famous prediction by Keynes that this action would result in a world-wide recession – of which, much came to pass.Churchill confessed “I’m lost and reduced to groping” but went along with Montagu Norman, united by their racism.

On October 27th, 1931, the Ramsey Macdonald led “National” Government (Conservatives and Liberals coalition, fearful of the rising Labour Party) in Britain won a huge majority of 554 MPs of 615. The economic crisis of September (misnamed as the Indian Currency Crisis), ensuing Depression era problems in the US, the Weimar Republic problems – and other issues pushed this ‘National’ government to ram through a series of measures (page 130-131) that depressed silver and gold prices and raised interest rates in India.

Done over the protests by Gandhiji, trade bodies and merchants and threats of resignation by the Viceroy and his Executive Council, the resulting ‘money famine’ (page 155) had the Lord Willingdon ecstatically sayIndians are disgorging gold.’ Indians have a different reason to revile Neville Chamberlain, who with great satisfaction said “…The astonishing gold mine that we have discovered in India’s hordes has put us in clover …” after impoverishment of the Indian serf.

More currency and less gold

More currency and less gold

The Nixon Chop

On August 15th, 1971, President Nixon after a two-day huddle with 15 advisers at Camp David, delivered the Nixon Chop to the world.

The Nixon chop (my name for this event),one month after his China breakthrough, cut the convertibility peg of US$35 to gold as US gold reserves were severely depleted. The French had been regularlyredeeming gold for their dollar earnings – and for this ‘perfidy’ the US had not forgiven France. This was much like the pre-WWII French methodology of devaluation, new peg, old debt for new gold routine which got the US hacklesup. Many decades have passed since these redemptions by France, and the new French President, Sarkozy believes it is now possible to renew US-French relations again.

On the opposite side of the world, a beleaguered Indian Prime Minister was celebrating 24 years of Independence with a “ship-to-moutheconomy, dependent on PL-480 grain. Private gold reserves in the Indian economy after nearly 25 years of post-colonial rule, were steadily rising. Over the next 10 years, the Western world (and most of the rest) blamed OPEC for post-1971 inflation, gold scaled US$800 an ounce; the Hunt Brothers launched their bid to corner the silver market; stagflation made an entry and Soviet power grew. Nixon Chop, itself the result of many years of gold reserves erosion, was one in many steps that brought the US$ to its knees – only to be saved by the Oil-dollar tango.

The Greatest Crime Wave … Ever?

From the 1960-1990, the Big Issue for people across large parts of the world was Big Crime. The 1960-1990 peak in organized crime, globally, is interesting due to the synchronized time frames – across USA, Europe and India.

In India, the rise of the underworld was delayed by a decade – as was its decline. India’s underworld, centred in Mumbai, at its peak, intruded into trade unions, films and entertainment, gambling, real estate, extortion and smuggling. The specter of Dawood Ibrahim haunts India-Pakistan Governmental relations – even today.

Roosevelt had earlier in 1933, during his New Deal years, nationalized all American gold. This restriction was finally eased only on December 31st, 1974, with Executive Order 11825 by Gerald Ford. It was Roosevelt’s gold nationalization which allowed the US to wage WWII and create the Bretton Woods system.

From 1939, (the start of WWII), gold imports into India, the world’s largest market and also the largest private reserve of gold, were controlled or banned. Not only the largest, but Indian reserves of gold, are also the only significant reserve in the world without a history of war, genocide, slavery or loot, (unlike US, UK, Canada, Australia) or due to nature’s bounty (unlike South Africa, China, Peru, Ghana, etc.).

The first effect of restrictions on gold imports in India was on prices. Indian gold prices, on an average, were 30%-40% higher than international prices. The other thing that happened was that gold imports went underground. Gold imports (illegal), called smuggling, spawned the biggest criminals that India has seen.

The common threads in this were, of course, America, drugs, underworld, war, corruption, warlords – but what made all this possible was Indian appetite for gold.

All this was made possible by the Indian hawala system of money exchange. Hawala made money transfers safe, instantaneous, at a low-cost. Traditional Indian ships from a thousand ports in Goa, Maharashtra and Gujarat sailed with this contraband and brought back gold.

Golden Triange & Golden Crescent
Golden Triange & Golden Crescent

The countries comprising these Golden Triangle /Crescent are India’s neighbours. The Indian underworld transported drugs through India. These drug shipments originated, were acquired, grown and traded from the Golden Crescent and the Golden Triangle.

The US eliminated gold ownership restrictions in 1975. India followed. In 1992, India started its first hesitant steps towards legalizing gold imports. By 1995, these import control laws had been diluted to near non-existence. With the dilution of restrictions on gold imports came the abatement in the biggest crime wave in modern history.

Today, the abatement in organized crime is ascribed to vigourous efforts by the police and legal systems. The earlier lack of success is conveniently forgotten. Many ‘encounter’ specialists claimed credit for the reduction in the power of the India’s underworld. Much like the fading away of the mafia in the US and Italy, in India too, after the gold trade was legalized, the mafia’s source of power, liquidity, earnings, profit were taken away. With it came the underworld’s loss of power and influence. And that coincided with the reduction and control of organized crime from the US and Europe and India. And an end to the greatest crime wave in the modern history.

So, why this desperate poverty

With global monetary system in a flux and the decline of the dollar (especially after the Plaza Accord), the perceived utility of gold and the price outlook of gold has been positive. After the Nixon chop, at an estimated 15,000-18,000 tons, India was in a position to create instruments, obtain leverage and create wealth from the world’s largest gold reserves.

It is the failure of the Indian economic minds – that they have not found any instruments and means. Some 35 years after the Nixon Chop, and with Indian gold reserves approaching 30,000 tons mark. Some other countries triedfeebly, and failed. Japan and ASEAN tried setting up the Asian Monetary Fund – after 1997, currency crisis – and were arm twisted by the US to drop the idea.

Indian demand for goldIs the US likely to give up the central role?

Unlikely! Let me correct myself! Pretty damn unlikely!!

Will the Western world share its pre-eminence with Japan, China and India. Bet your bottom yuan, yen, rupee or gold – they wont. Especially since the Anglo Saxon Bloc control nearly 80% of world gold production.

What are they likely to do! Some of the older measures by which gold was transferred from the old (and the new) world to Western world are no longer possible.

But if any central bank (or monetary authority) were to: -

  1. Mask purchases
  2. Build up gold positions
  3. Take physical possession of gold (Avoid Czech Gold, Montagu Norman & BIS Scam)
  4. Look at a positive outcome to a war scenario

then that country will be able to bolster their gold reserves position by: -

  • About 10,000-15,000 tons
  • Limit the cost of purchase
  • Make it economically unviable for anyone else to match them

The only country that can (currently) match these criteria is the USA – and China.

The US GATA Committee has been running a low profile campaign on gold price manipulation. This attempt, if successful, at increasing gold prices will possibly make it difficult for Indians to buy gold in larger quantities. The Indian Central Bank, preoccupied with a developmental agenda, is in no position to take up this challenge.

From an Indian standpoint

While the silver lining is private reserves, we have a blinkered RBI & GOI response. India has one of the lowest monetary reserves of gold in the world. Against a global average of 10.5% RBI holds only 3.4% of its reserves as gold. The EU holds 40% of its reserves in gold and USA – 70%.

And while the RBI and GOI gently sleep, the Chinese have grown their gold purchases. China has become world’s 3rd largest consumer of gold – up from a 100 tons to 350 tons. Shanghai Gold Exchange has made it easier for individuals to invest in gold by reducing the transaction size from 1 kg to 100 gm.

Importantly: -

  1. Is India in a position to militarily defend these reserves
  2. Does the GOI and the RBI have any strategic intent vis-a-vis gold

Making the job easier for the GOI and the RBI are Indian economic habits of the centuries that have allowed this build up of gold reserves. India stands at a historical cross-road. Are Indian economic and political minds at work toexploit this window of opportunity. Or will it be a wasted chance.

Gold and War

Alexander’s campaign started with the gold reserves that his father had built from the mining operations at Mount Pangeus. The Macedonians were the first in the Hellenistic world to keep standing army – a luxury and a big expense, in Greece, at that time. The Roman empire was similarly funded by gold mining and loot. Julius Caesar’sEuropean conquests were funded by Gaellic loot. The Punic Wars with Carthage were fought over Spanish Gold. Roman conquest and love affair with Egypt was motivated by grain and Nubian gold.

Carolus Magnus, Karel de Grote, Karl der Grosse, Carlomagno, Charles the Great – or more commonly known as Charlemagne (ruled between 768-814) waged war for 30 years, spread over more than 50 battles. Charlemagne’sconquests were funded by gold and silver from the Saxony mines, the Haartz mountains, etc. During Charlemagne’s rule, gold and silver mines (S-Chemnitz, Kremnitz etc.), were also re-opened for mining. His victory over Avars, (modern Hungary) gave him treasures which needed 15 carts, pulled by grey steppe oxen for transport.

The British loot from Canada, Australia, South Africa – and India, gave the world, numerous wars andbrought humanity “under the heel by means that will not bear scrutiny.” It is these very same Gold reserves whichgave birth to the Bretton Woods – and we know what happened after that! Roosevelt gave a New Deal to the Americans. He took away all their gold. WWII followed soon after.

This short look at Western history makes the linkage plain. The main cause is the pattern of gold ownership by Governments and war becomes a fait accompli.

Private Gold Reserves - Global

Gold Reserves - Global (2ndlook estimates)

What Should We Do With Gold

Just sell it to people. From all the countries of the world.

The world financial organization should limit control of global gold output by any mining organization to 10% or a single mine – which ever is lower. Gold holding should be widely dispersed, as widely as possible, among individuals – like the Indian gold possession model. No national government, in the new financial architecture should be allowed to have more than 250 tons of gold – to progressively reduce to 50 tons.

What this will do, is disperse gold holdings among the citizens of the world – and dilute the ability of nations to wage war! National Governments (like the US), have used gold looted from their own citizens (and others) to deprive other peoples of the world of gold – and wage war.

What we should not do?

Good Ole’ Gold Standard

In the last few decades between the Nixon Chop and the Bush Whack, the Western academic world, has floatedanother ‘hot air’ balloon. It is the revival of the ‘pure,’ Gold Standard. The story goes that in the ‘olden’ days of 19th century, in the golden age of Western civilization, there once reigned the Gold Standard.

The simplistic logic of this theory is that the world should ‘go back’ to the Gold Standard - or as some put it, improve the ‘corrupted Gold Standard’ of the 19th century, and then everything will be fine. All currencies of the World, should be indexed to gold, currency can be redeemed against gold – and gold reserves equal to currency should be kept as reserves. This will kill inflation, stop war, make politicians honest, make tax payers honest, citizens hard-working and business efficient.

In short a magic bullet.

The last time, we saw this, it was called the Bretton Woods. The US and the Anglo-Saxon Bloc came together and said we will administer the new world currency system. The world agreed – once again. And we know what happened.

Two years ago …

This post had estimated that the Chinese could possibly (and they have) increase their monetary gold reserves. On April 24th, 2009, Bloomberg reported that China had increased

its (gold) reserves by 454 tons to 1,054 tons through domestic purchases and refining scrap metal, Hu Xiaolian, head of the State Administration of Foreign Exchange, said in an interview with the Xinhua News Agency today. China, the world’s biggest gold producer, has increased its holdings before, Hu said in the interview carried on the administration Web Site. They rose from 394 tons to 500 tons in 2001 and to 600 tons in 2003. The U.S. has the world’s biggest gold holdings at 8,134 tons, followed by Germany with 3,413 tons, World Gold Council data show. France has 2,487 tons and Italy 2,452 tons, while the IMF has 3,217 tons, according to the council.

Another report, from Market Watch, a WSJ web publication added,

The increase makes China the world’s fifth-largest holder of gold, just ahead of Switzerland, and among the six nations plus the International Monetary Fund that have reserves of more than 1,000 metric tons. Although Hu did not elaborate on where China had sourced the additional bullion, her comments were interpreted as meaning they came from domestic sources and may included refining of scrap metal. Traders also say the gold was accumulated systematically over a number of years. Last year China ranked as the world’s largest gold producer with 12.2% of world output, equivalent to 288 metric tons. The U.S. ranked second with a 9.9% share, or 234 metric tons.

What are the future plans of the Chinese? A report quotes an analyst

China should increase its gold reserve from 600 tons to about 2,500 tons in a short term and to 3,000 tons in a long term to cope with the versatile exchange rate risks, said Teng Tai, an economist of China Galaxy Securities Company.

Of course, this really does not mean much – except that it may keep gold prices on boil. Whether a currency is backed by a 5% or a 10% gold reserve may not mean much, in this era of rampant use of (not just by the US of A) “atechnology, called a printing press” as an economic tool. For long term economic stability, gold needs to be in the hands of individuals – and not Governments