November 30, 2013

Canadian billionaire predicts end of US Dollar as world's reserve currency


Economist Caution:‘Prepare For 'Massive Wealth Destruction'

Thursday, 28 Nov 2013 05:20 AM
Take immediate steps to protect your wealth . . . NOW!

That’s exactly what many well-respected economists, billionaires, and noted authors are telling you to do — experts such as Marc Faber, Peter Schiff, Donald Trump, and Robert Wiedemer. According to them, we are on the verge of another recession, and this one will be far worse than what we experienced during the last financial crisis.

Marc Faber, the noted Swiss economist and investor, has voiced his concerns for the U.S. economy numerous times during recent media appearances, stating, “I think somewhere down the line we will have a massive wealth destruction. I would say that well-to-do people may lose up to 50 percent of their total wealth.”

When he was asked what sort of odds he put on a global recession happening, the economist famous for his ominous predictions quickly answered . . . “100 percent.”

Faber points out that this bleak outlook stems directly from Federal Reserve Chairman Ben Bernanke’s policy decisions, and the continuous printing of new money, referred to as “quantitative easing” in the media.

Faber’s pessimism is matched by well-respected economist and investor Peter Schiff, the CEO of Euro Pacific Capital. Schiff remarks that the stock market collapse we experienced in 2008 “wasn’t the real crash. The real crash is coming.”

Schiff didn’t stop there. Most alarming is his belief that daily life will get dramatically worse for U.S. citizens.

“If we keep doing this policy of stimulus and growing government, it’s just going to get worse for the average American. Our standard of living is going to fall . . . People who are expecting Social Security can’t get all that money. People expecting government pensions can’t get all their money . . . We simply can’t afford to pay them.”

Equally critical of the current government and our nation’s economy is real estate mogul and entrepreneur Donald Trump, who is warning that the United States could soon become a large-scale Spain or Greece, teetering on the edge of financial ruin.

Trump doesn’t hesitate to point out America’s unhealthy dependence on China. “When you’re not rich, you have to go out and borrow money. We’re borrowing from the Chinese and others.”

It is this massive debt that worries Trump the most.

“We are going up to $16 trillion [in debt] very soon, and it’s going to be a lot higher than that before he gets finished,” Trump says, referring to President Barack Obama. “When you have [debt] in the $21-$22 trillion [range], you are talking about a [credit] downgrade no matter how you cut it.”

In a recent appearance, Trump went to so far as to say the dollar is “going to hell.”

Where Trump, Faber, and Schiff see rising debt, a falling dollar, and a plunging stock market, investment adviser and author Robert Wiedemer sees much more widespread economic destruction.

In a recent interview to talk about his New York Times best-seller Aftershock, Wiedemer says, “The data is clear, 50 percent unemployment, a 90 percent stock market drop, and 100 percent annual inflation… starting in 2013.”
Editor’s Note: Watch the disturbing interview with Wiedemer.

Before you dismiss Wiedemer’s claims as impossible or unrealistic, consider this: In 2006, Wiedemer and a team of economists accurately predicted the collapse of the U.S. housing market, equity markets, and consumer spending that almost sank the United States. They published their research in the book America’s Bubble Economy.

When the interview host questioned Wiedemer’s latest data, the author unapologetically displayed shocking charts backing up his allegations, and then ended his argument with, “You see, the medicine will become the poison.”

The interview has become a wake-up call for those unprepared (or unwilling) to acknowledge an ugly truth: The country’s financial “rescue” devised in Washington has failed miserably.

The blame lies squarely on those whose job it was to avoid the exact situation we find ourselves in, including Bernanke and former Fed Chairman Alan Greenspan, tasked with preventing financial meltdowns and keeping the nation’s economy strong through monetary and credit policies.

Shocking Footage: See the eerie chart that exposes the ‘unthinkable.’ 

At one point, Wiedemer even calls out Bernanke, saying that his “money from heaven will be the path to hell.”

But it’s not just the grim predictions that are causing the sensation in Wiedemer’s video interview. Rather, it’s his comprehensive blueprint for economic survival that’s really commanding global attention.

The interview offers realistic, step-by-step solutions that the average hard-working American can easily follow.

The video was initially screened for a relatively small, private audience. But the overwhelming amount of feedback from viewers who felt the interview should be widely publicized came with consequences, as various online networks repeatedly shut it down and affiliates refused to house the content.

Bernanke and Greenspan certainly would not support Wiedemer publicly, and it soon became apparent mainstream media would not either.

“People were sitting up and taking notice, and they begged us to make the interview public so they could easily share it,” said Newsmax Financial Publisher Aaron DeHoog. “But unfortunately, it kept getting pulled.”

“Our real concern,” DeHoog added, “is the effect even if only half of Wiedemer’s predictions come true.

“That’s a scary thought for sure. But we want the average American to be prepared, and that is why we will continue to push this video to as many outlets as we can. We want the word to spread.”
Editor’s Note: For a limited time, Newsmax is showing the Wiedemer interview and supplying viewers with copies of the new, updated Aftershock book including the final, unpublished chapter. Go here to view it now.

November 28, 2013

Clash of economic traditions

On the wrong side of the divide… Montek Singh Ahluwalia and Raghuram Rajan.
On the wrong side of the divide… Montek Singh Ahluwalia and Raghuram Rajan.
On the wrong side of the divide… Montek Singh Ahluwalia and Raghuram Rajan.

Our policymakers are pushing a US-UK economic model, driven by financial markets rather than banks. But our people, like Germans and Japanese, would have none of it.
At the G20 summit in April 2009 where the world leaders were struggling to stem the financial tsunami, French President Nicolas Sarkozy threatened to wreck the summit in a rumpus over the “Anglo-Saxon model”.

The Anglo-Saxon model was till then a subject of debate in the guild of economists. But post 2008-meltdown, it turned into a political issue between France and Germany on one side, and the US and the UK on the other.

France and Germany blamed the Anglo-Saxon – read the US – model for the mess in the world economy. Sarkozy’s threat to walk out if the Summit did not devise steps to reverse the Anglo-Saxon policies and practices in financial markets led to the G20’s powerful campaign against the tax havens. The G20 also disowned the old Washington consensus which was the mother of the Anglo-Saxon financialism.

The Anglo-Saxon financial model evolved mainly in the US and was followed by the other English speaking nations — Canada, the UK, Ireland, Australia, and New Zealand. The model is “capital market based” — that is finance mediated mainly by stock markets “at arms length”.

The other financial model, known as “Continental” Europe’s, is mainly “bank-based” — that is, finance largely intermediated by banks. The financial model intermediated by banks operates on ‘relational’ basis.


The debate brings out a crucial fact not debated in India — namely that the financial model of the West is divided into bank-led model and market-led model. See how it translates into numbers. In 2002, the banks’ share of financial assets was 22 per cent in the US, against 72 per cent then in Germany. In 2011, the banks’ share in the US remained the same, while in Germany it was still high, but declined to 62 per cent — the effect of the Anglo-Saxon financial model on Germany.

Why do Germany and France accuse the US of dynamiting the world of finance? Here is the simplest of evidences. What brought down the world economy was the US sub-prime lending which created the housing bubble in the US — entirely a creation of the market-led financial model.

See how the housing price index inversely moved in the market-led US and the UK and the bank-led Germany. The 1989 housing index rose by 90 per cent between 2000 and 2006 in the market-led US and in the UK by 133 per cent. This house price inflation morphed and marketed as wealth torpedoed the US and UK finances, later the world’s.

But in the bank-led Germany, in the same period, the housing index fell — yes, fell — by 8 per cent. In Japan it fell, by more, 26 per cent. The bank-led Germany and Japan obviously knew more than the market-led US and UK that a housing bubble was incubating. Result. Germany and Japan were least affected by the global financial meltdown.

The world now wonders how Germany escaped the 2008-tsunami. The Bank of Japan proudly declared in 2009 that even as the world finance was in turmoil Japan was safe. So much for the all-knowing arms-length market’s knowledge about finance, as opposed to the relational bank system.


But in this divide between the bank-led and market-led financial thought and practices, where does the Indian financial model stand?

Indian policy makers Manmohan Singh, Montek Ahluwalia, P. Chidambaram and Raghuram Rajan are all admirers of, or trained in, the Anglo-Saxon economic theories and practices.

In his study along with Zingales (2001) Raghuram Rajan faulted bank-based models and celebrated market-led models. It needs no seer to say that the Indian establishment’s economic thinking is undoubtedly Anglo-Saxon. But are the Indian economic players — the savers, the entrepreneurs and the rest — Anglo Saxon in their outlook? Read on.

A study by Iowa State University in the US sees similarity between the Asian and the European — read Continental — models. It says that the Asian model is “closer in its institutional arrangements to the European model” and “it focuses on high rates of capital formation”.

A Brookings Institution economist Barry Bobsworth (2006) described the Asian savings model as ‘dynastic’ and trans-generational wealth accumulation, while the savings in the US is the ‘personal’ wealth of the saver. And more.

The Asian models trust banks more than stock markets. A paper (BIS Paper No 46, May 2009) by the officials of the Bank of Japan explained why Japanese households prefer bank deposits over risky financial assets, when all financial instruments are well-developed and heavily traded in Japan, unlike in other Asian markets.

In their ‘safe’ saving models Indians seem closer to Japan than to Anglo-Saxons. The bank deposit to GDP ratio was 34 per cent 1990-91, that is before liberalisation began.

In the two decades of liberalisation, bank deposit to GDP ratio almost doubled to 67.2 per cent when the Anglo-Saxon economic thinkers of India were counselling the Indian savers to go stock markets, not banks. (Economic Survey 2011-12).

In the year 2011-12, against the bank deposit of Rs 5.9 lakh crore, Indian savers divested stocks of Rs 2775 crore [net] – See National Income Statistics CMIE (August 2013). The safe bank-led Indian savings is far, far away from the Anglo-Saxon model.


Are things likely to change in future? Doubtful, if the study on Indian infrastructure financing (Global Economic Paper No 187) by Goldman Sachs is any indication.

The study says that household savings is the main source of funding the $1.7 trillion infrastructure investment need in India over the decade ending 2020.

Adding that the “thrifty” Indian households “prefer bank deposits”, it says that the annual financial savings of the household sector in India would top $800 billion by 2016 which is 150 per cent of the total current bank lending. How true is the Iowa State University study that the focus in bank-led economies is high rate of capital formation!

And more. India is not just bank-led. Financial inclusion in India is not limited to banks. According to the Global Financial Stability Report 2005, bank credit to private sector as a percentage of GDP was 38 per cent in India, 140 per cent in China and 156 per cent in the UK.

How then do the Indian businesses get funded? It calls for a deeper probe into small business financing India — without which India would collapse. There is a rainbow model of funding businesses in India, much of which is beyond the reach of organised banking. The National Economic Census 2005 found some 41.8 million non-farming enterprises operating in India providing livelihood and employment to 101 million persons. They grew annually at 4.7 per cent during 1998-2005. Of this, 90 per cent (37.6 million) is financed by families and local sources. They are not financially excluded. They are very much financially included, though not through the banking system. Therefore, financial inclusion in India does not mean banking.

Look at a few of the innumerable examples of informal and huge financial inclusion cited in the bookIndian Models of Economy Business and Management (Prof Kanagasabapathi, PHI Learning Private Limited 2012).

A study of 35 diamond exporters in Surat and Ahmedabad showed that 31 of them received 20-30 per cent of their initial capital from families and relatives. A study of the branded ghee business in Tamil Nadu revealed that almost all of them were funded by their families to start their businesses.

In Sankagiri, a small town in Tamil Nadu which has emerged as the second largest lorry transport cluster in the country, some 80 per cent of the truck owners of today were drivers and cleaners a few years back. Almost 90 per cent of them were from agriculture background and 20 per cent of them actually were engaged in cattle grazing. Only three per cent of the Sankagiri truck operators sourced their funds from banks.

According to a study of Karur in Tamil Nadu, home to two large scheduled banks and 54 branches of nationalised banks, out of the estimated Rs 2400 crore required by the exporters in 2001 only one-third was provided by banks.

In respect of the knitwear export cluster Tirupur, the World Bank noted that “large and diverse non-bank sources of credit including private finance companies, rotating credit unions called chit funds, money lenders, and forms of mutual assistance between friends family or kin” funded the business.

Yet, the entire range of small business financing in India, including the most efficient ones like the Shriram group which has just one per cent NPA, is trivialised and dismissed as non-banking finance — to be curbed rather than promoted.

Actually, we need more of them, not less. We need a regulator who understands them. We need an intense national discourse on the need for rainbow-like financial model for India.

Will the Anglo-Saxon economic thinkers come to terms with the Indian reality? Will they also look at Germany and Japan?

(The author is a commentator on political and economic affairs, and a corporate advisor)


Indian nuclear scientists haven't had an easy time of it over the past decade. Not only has the scientific community been plagued by "suicides," unexplained deaths, and sabotage, but those incidents have gone mostly underreported in the country—diluting public interest and leaving the cases quickly cast off by police.
Last month, two high-ranking engineers—KK Josh and Abhish Shivam—on India's first nuclear-powered submarine were found on railway tracks by workers. They were pulled from the line before a train could crush them, but were already dead. No marks were found on the bodies, so it was clear they hadn't been hit by a moving train, and reports allege they were poisoned elsewhere before being placed on the tracks to make the deaths look either accidental or like a suicide. The media and the Ministry of Defence, however, described the incident as a routine accident and didn't investigate any further.    
This is the latest in a long list of suspicious deaths. When nuclear scientist Lokanathan Mahalingam's body turned up in June of 2009, it was palmed off as a suicide and largely ignored by the Indian media. However, Pakistani outlets, perhaps unsurprisingly, given relations between the two countries, kept the story going, noting how quick authorities were to label the death a suicide considering no note was left.
Five years earlier, in the same forest where Mahalingham's body was eventually discovered, an armed group with sophisticated weaponry allegedly tried to abduct an official from India's Nuclear Power Corporation (NPC). He, however, managed to escape. Another NPC employee, Ravi Mule, had been murdered weeks before, with police failing to "make any headway" into his case and effectively leaving his family to investigate the crime. A couple of years later, in April of 2011, when the body of former scientist Uma Rao was found, investigators ruled the death as suicide, but family members contested the verdict, saying there had been no signs that Rao was suicidal.   

Trombay, the site of India's first atomic reactor. (Photo via
This seems to be a recurring theme with deaths in the community. Madhav Nalapat, one of the few journalists in India giving the cases any real attention, has been in close contact with the families of the recently deceased scientists left on the train tracks. "There was absolutely no kind of depression or any family problems that would lead to suicide," he told me over the phone.
If the deaths of those in the community aren't classed as suicide, they're generally labeled as "unexplained." A good example is the case of M Iyer, who was found with internal haemorrhaging to his skull—possibly the result of a "kinky experiment," according to a police officer. After a preliminary look-in, the police couldn't work out how Iyer had suffered internal injuries while not displaying any cuts or bruises, and investigations fizzled out.   
This label is essentially admission of defeat on the police force's part. Once the "unexplained" rubber stamp has been approved, government bodies don't tend to task the authorities with investigating further. This may be a necessity due to the stark lack of evidence available at the scene of the deaths—a feature that some suggest could indicate the work of professional killers—but if this is the case, why not bring in better trained detectives to investigate the cases? A spate of deaths in the nuclear scientific community would create a media storm and highly publicised police investigation in other countries, so why not India?
This inertia has led to great public dissatisfaction with the Indian police. "[The police] say it's an unsolved murder, that's all. Why doesn't it go higher? Perhaps to a specialist investigations unit?" Madhav asked. "These people were working on the submarine program, creating a reactor, and have either 'committed suicide' or been murdered. It's astonishing that this hasn't been seen as suspicious."
Perhaps, I suggested, this series of deaths is just the latest chapter in a long campaign aiming to derail India's nuclear and technological capabilities. Madhav agreed, "There is a clear pattern of this type of activity going on," he said.

INS Sindhurakshak (Photo via)
The explosions that sunk INS Sindhurakshak – a submarine docked in Mumbai – in August of this year could have been deliberate, according to unnamed intelligence sources. And some have alleged that the CIA was behind the sabotage of the Indian Space Research Organisation (ISRO).
Of course, the deaths have caused fear and tension among those currently working on India's various nuclear projects. "[Whistleblowers] are getting scared of being involved in the nuclear industry in India," Madhav relayed to me. Their "families are getting very nervous about this" and "many of them leave for foreign countries and get other jobs."
There are parallels here with the numerous attacks on the Iranian nuclear scientist community. Five people associated with the country's nuclear programme have been targeted in the same way: men on motorcycles sticking magnetic bombs on to their cars and detonating them as they drive off. However, the Iranian government are incredibly vocal in condemning these acts—blaming the US and Israel—and at least give the appearance that they are actively investigating.
The same cannot be said for the Indian government. "India is not making any noise about the whole thing," Madhav explained. "People have just accepted the police version, [which describes these incidents] as normal kinds of death."
If the deaths do, in fact, turn out to be premeditated murders, deciding who's responsible is pure speculation at this point. Two authors have alleged that the US have dabbled in sabotaging the country's technological efforts in the past; China is in a constant soft-power battle with India; and the volatile relationship with Pakistan makes the country a prime suspect. "It could be any of them," Madhav said.
But the most pressing issue isn't who might be behind the murders, but that the Indian government's apathy is potentially putting their high-value staff at even greater risk. Currently, these scientists, who are crucial to the development of India's nuclear programes, whether for energy or security, have "absolutely no protection at all. Nothing, zero," Madhav told me. "Which is amazing for people who are in a such a sensitive program."

November 26, 2013



After the five permanent members of the U.N. Security Council and Germany concluded a preliminary agreement with Iran on Sunday, it did not take long for regional critics of the deal to react. The Israeli Prime Minister, Benjamin Netanyahu, blasted the agreement as “a historic mistake.” Saudi Arabia, the other American ally in the Middle East worried about an opening to Iran, took a different approach, issuing a carefully worded statement that cautiously welcomed the deal.

The Saudis have no allies in American politics to rally against the Obama Administration, and no desire to set themselves against the other international powers who signed the agreement, including their security partners France and Great Britain, their fellow oil producer Russia, and their major oil customer China. But they are as unhappy as the Israelis, if for slightly different reasons. The Saudis are not merely concerned about Iran’s nuclear ambitions. They have a more profound fear: that geopolitical trends in the Middle East are aligning against them, threatening both their regional stature and their domestic security. The Saudis see an Iran that is dominant in Iraq and Lebanon, holding onto its ally in Syria, and now forging a new relationship with Washington—a rival, in short, without any obstacles to regional dominance, and one further emboldened to encourage Shiite populations in the Gulf monarchies, including Saudi Arabia, to oppose their Sunni rulers.

In recent weeks, that fear has been on display in a series of vocal complaints about American outreach to Iran and the Obama Administration’s broader strategy in the Middle East. Prince Alwaleed bin Talal, the superstar Saudi financier, is something of a black sheep in the ruling family, but a public criticism of Obama that he made last week reflects a strong sentiment among Saudi √©lites. “America is shooting itself in the foot,” Alwaleed told the Wall Street Journal’s editorial board. “It’s just complete chaos. Confusion. No policy.” A few days later, Saudi Arabia’s ambassador in London, Prince Mohammed bin Nawwaf bin Abdulaziz, called the negotiations with Iran “appeasement,” and indirectly threatened that Saudi Arabia would obtain its own nuclear weapons if necessary.

These very public denunciations of Washington reflect the same worries that motivated Riyadh to perform an extraordinary gesture of discontent at the U.N. in October. Famously low-key in their diplomacy, the Saudis drew attention to themselves by campaigning for a seat on the U.N. Security Council and then theatrically rejecting it, something no country has ever done. (The move even came as a surprise to Saudi diplomats, who had gone through extensive training to prepare for their new responsibilities.) “This was a message for the U.S., not the U.N.,” the Saudi intelligence chief Bandar bin Sultan, who spent twenty-two years as an ambassador in Washington, reportedly told a Western diplomat.

At that time, the immediate cause for Saudi displeasure was Syria. Riyadh had enthusiastically backed President Obama’s threat to use force against the Assad regime after a chemical-weapons attack on a Damascus suburb in August. The Saudis hoped that an American strike would draw the United States into greater and more direct military involvement in the campaign to bring down Assad. The deal negotiated between the U.S. and Russia to remove Syria’s chemical weapons—a diplomatic victory for the Obama Administration—was seen in Riyadh as not only a missed opportunity to deal a decisive blow to Assad but as an acknowledgement that the regime was a legitimate international partner rather than a pariah to be overthrown. With the U.N. Security Council committed to the chemical-weapons deal, the Saudis decided that it was a club they would rather not join.

When Secretary of State John Kerry went to Riyadh on November 4th to reassure the Saudis of the continuing American commitment to their security, the Saudi Foreign Minister, Prince Saud Al-Faisal, referred to Syria as “an occupied land.” No one had to ask the Prince, “Occupied by whom?” Since the mid-aughts, Riyadh has tried to check the growth of Iranian power in the Arab world, and almost all of its attempts have failed. The Saudis backed the anti-Syrian March 14th Alliance in Lebanon in two electoral victories, only to see Iran’s ally Hezbollah remain the dominant force in Lebanese politics. They were powerless to arrest Iran’s growing influence in Iraq, watching helplessly as Tehran orchestrated the coalition politics that kept Prime Minister Nouri al-Maliki in office after the 2010 elections. In 2007, King Abdullah brokered a deal between Hamas and Fatah, which was intended to draw Hamas away from Iranian patronage. But the deal broke down within months, after Hamas took control of Gaza and turned again to Iran for support. Across the region, the Saudis were losing and the Iranians were winning.

This was not simply a geopolitical setback for Riyadh. The Saudi leadership believes that increased Iranian power will lead to political mobilization by Shia inside the Sunni-ruled Gulf states. The Saudis and their allies in the Gulf remain certain that Iran meddles directly in their domestic affairs, but they are also convinced that Iran’s heightened regional role will inevitably inspire Shia discontent, which makes Iran’s ascendance an indirect threat to the stability of the Gulf monarchies.

It was through this lens that the Saudis viewed the sustained and peaceful demonstrations in 2011 against the Sunni monarchy in Shia-majority Bahrain, even though there was no objective evidence of an Iranian role in the protests. The Arab Spring also brought down Riyadh’s most important Arab ally, Hosni Mubarak’s regime in Egypt. But there was one bright spot for the Saudis amid the regional upheaval. The uprising against Assad in Syria, Iran’s closest ally in the Arab world, represented the best chance in a decade for Riyadh to roll back Iranian power.

For the Saudis, therefore, Obama’s refusal to take action against Assad was seen as another example of Washington’s inability to appreciate both the dangers and the opportunities of the Arab Spring. Standing aside while Mubarak fell—as the Saudis saw it—was bad enough, but embracing a Muslim Brotherhood government in Cairo, which was an unreliable partner against Iran and a challenger to Saudi authority over the interpretation of Sunni Islam, was even worse.

The Obama Administration views its opening to Iran as part of a broader effort to bring stability to the region, and sees an Iranian commitment to foreswear nuclear weapons as a benefit to allies like Saudi Arabia. But the Saudis, without a seat at the negotiating table, fear that Washington will ratify Iranian hegemony in Iraq, Syria, Lebanon, and the Persian Gulf in exchange for a nuclear deal.

Dealing with the United States, the Saudi Foreign Minister Prince Saud al-Faisal once said, “makes a sane man go mad.” There is no doubt that American policymakers have often felt the same way about Saudi Arabia. The current tensions between Washington and Riyadh, however serious, are hardly unprecedented: the unlikely allies have never seen eye-to-eye on regional issues. The Saudis did not like the Egyptian-Israeli peace treaty of 1979, the crowning diplomatic achievement of the Carter Administration; nor did they appreciate the American invasion of Iraq, in 2003. The Americans, meanwhile, have had their own complaints: on oil policy, the Israeli-Palestinian conflict, and Saudi funding for radical Islamic causes. The rhetorical volleys of the past few months are minor compared to the most serious episodes of tension between the two allies: the oil embargo imposed by Saudi Arabia in 1973 to protest American support for Israel during the Yom Kippur War, which sent a permanent shock through global oil markets, and the aftermath of September 11, 2001, when few Americans thought it a coincidence that fifteen of the nineteen hijackers were from Saudi Arabia.

The present disagreements between the Saudi and American governments will not lead to a permanent rupture in the relationship, as the Saudis themselves acknowledge. The core interest that has held the Saudi-U.S. relationship together for many decades—Persian Gulf security and the free flow of energy resources from the region—remains intact. But the nature of the recent disputes suggests an underlying conflict between the two allies. The problem is not that the U.S. and Saudi Arabia have divergent goals in the region: both countries want Assad out, an Iran without nuclear weapons and diminished regional influence, a stable Egypt, and a two-state solution to the Israeli-Palestinian conflict. The problem is that they have very different views about how important these goals are, and how much effort should be expended to achieve them.

Saudi fears that Washington will sell out their regional interests in a “grand bargain” with Iran are exaggerated. The American policy in the Gulf, for many decades, has been to prevent any other power from becoming dominant, and Washington is not about to turn the keys over to Iran. But the Saudis are correct to worry that the U.S. will not insist that any nuclear deal includes concessions from Iran on regional geopolitics. They are also right to conclude that Washington regards Assad’s ouster as a lower priority than Riyadh does, and that the U.S. does not see the Palestinian issue as central to its policy in the region.

The Obama Administration does think that the U.S. is overcommitted in the Middle East, and seeks to “pivot” at least some American foreign-policy resources and attention to East Asia. Substantial increases in domestic production have made the Middle East less important to American energy calculations, though Persian Gulf oil and gas will remain significant for decades to come. Saudi Arabia, Kuwait, and the United Arab Emirates have almost all the world’s spare oil-production capacity; only they can bring substantial amounts of oil onto the market in a short period of time to make up for production lost elsewhere. That is reason enough for the U.S. to maintain good relations with Saudi Arabia. But the overall trend is toward a diminished role for the Middle East in the global energy market.

Still, there are many common interests to keep the allies united, including shared worries about Iran’s regional influence and about Al Qaeda and its affiliates. The Saudis do not have any alternatives at present to the security provided by their ties to the U.S.: the Europeans are too weak militarily, Russia is in decline, and China has neither the capability nor the inclination to project power into the Persian Gulf. But over time, we can expect to see more periods of turbulence between Washington and Riyadh. The allies may not disagree on their goals, but their priorities will increasingly differ. When the end of the “special relationship” finally arrives—likely decades from now—it will end not with a bang but with a gradual drift apart.

F. Gregory Gause is a professor of political science at the University of Vermont and a non-resident senior fellow at the Brookings Doha Center. He is the author of “Oil Monarchies” and “The International Relations of the Persian Gulf.

Iran nuke deal has an Indian-American architect

Obama\'s nominee: Puneet Talwar
Yashwant Raj, Hindustan Times
Washington, November 25, 2013

First Published: 00:03 IST(25/11/2013)
Last Updated: 01:18 IST(25/11/2013)

Months of clandestine US-Iran bilateral talks preceded the first-step deal signed on Sunday in Geneva, and Puneet Talwar, an Indian-American, was at the heart of it.
US back-channel efforts are said to have started clandestinely in March, according to published accounts citing administration officials over past some weeks.
Undersecretary of state William Burns led these recent efforts, building on those by Talwar, National Security Council aide who has driven President Barack Obama’s Iran initiative for years.

Talwar, who holds the designation of assistant to the president, has been at the “center of the diplomacy (with, and on, Iran)”, The Wall Street Journal said in a recent article.

“He has represented the White House at all of the formal negotiations conducted between Iran and the global P5+1 powers, since 2009,” the article added.
Obama’s back-channel efforts began in 2009, through an exchange of letters with Supreme Iranian leader Ayatollah Ali Khamenei. But it did not lead to much.
Contacts between the two countries continued though, some of which were conducted at the UN by US ambassador Susan Rice, now Obama’s National Security Adviser.
The accord is the direct result, though, of recent talks taking place with the election of President Hassan Rouhani, followed by an exchange of letters with Obama, and a phone call.

Details of the accord were hammered out at secret meetings -- five, according to one count -- led by Burns. Some of these meetings took place in Muscat, Oman.
But the final deal was sealed in Geneva. Talwar, who has refused media interviews, was there as part of the US team. He will be happy to move on now, though, with the mission being accomplished.

Obama named him recently as the assistant secretary of state for political-military affairs, which, if confirmed, will make him the second Indian American currently of that seniority at state.

The other is Nisha Biswal, who was sworn in earlier this week as the assistant secretary of state for Central and South Asia, the most powerful US bureaucrat dealing directly with India

QUOTE OF THE DAY: Intelligence Vs. Journalism

."... intelligence differs from journalism in many ways. Perhaps the most important is that where journalism focuses on what has happened, intelligence also concerns itself with what will happen -- and even more important, why it will happen."

 Geopolitics is not simply a fancy way to say "foreign affairs." It is a methodology for understanding the world. It assumes that place matters a great deal and that place shapes people in nations. To understand how the world works, we don't simply concentrate on the decisions leaders make; we concentrate on the constraints geography and other factors place on those decisions. Constraints define what is possible.


Shutting his ears to change

Manoj Joshi   |   Mail Today  |   New Delhi, November 22, 2013 | UPDATED 09:16 IST

In July 2011, the government of India set up a task force to examine the processes and procedures related to national security in India and come up with recommendations to fix the problems and plug any gaps that emerged. Chaired by former Cabinet Secretary Naresh Chandra, the task force's aim was to deepen the reforms in the national security system begun by the group of ministers (GOM) in 2001.

In May 2012, the committee submitted its report to prime minister Manmohan Singh who turned it over to the National Security Council Secretariat for processing its recommendations and presenting them to the Cabinet Committee on Security. This writer was a member of the task force, but has had little or no official information on its status since then. But the bureaucratic grapevine suggests that the report is on its way to meet the fate of other similar endeavours: get shelved.


The reason for this is plain: The Ministry of Defence thinks there is no need for change, leave alone, horror of horrors, an overhaul. At first sight this may appear to be counter-intuitive, after all the sorry state of our defence modernisation is an open secret. Last year, the serving Chief of Army Staff wrote a letter to the Prime Minister pointing to shortages of vital equipment. The Air Force chief regularly bemoans the declining numbers of his combat force and the delays in the Navy's submarine and shipbuilding programmes are no secret.

The goal of the civilian part of the ministry appears to be singularly focused on how to retain its power and privileges. For this reason, the only public information of the Chandra Committee recommendations came through a leak of a portion of the report by the MoD itself. Their grouse, according to the media leaks, was apparent - they did not want changes in the way the system is run. Inefficient, incompetent, and wasteful, yes, but the command ought to rest firmly in the inexpert hands of the IAS fraternity. The Chandra Committee, on the other hand, was suggesting reforms - first of the manner in which the armed forces were run, and secondly, of how the ministry itself was functioning. In the case of the armed forces, following the GOM report of 2001, the committee suggested a chief of defence staff (CDS) like figure, a permanent chairman to the chiefs of staff committee, to promote integrated planning and organisations in the armed forces, as well as an expert defence bureaucracy to staff the MoD by cross-posting military officers to key bureaucratic positions.

These were minimalist suggestions, but vital. Most armed forces in the world operate on an integrated principle where planning an execution of combat operations is done through joint planning and command. That is why the GOM of 2001 recommended the beginnings of tri-service organisations and a CDS to head them.

The need for joint planning is crucial given the exponential rise in the cost of weapons systems. Currently, each service puts up its own demands and the Ministry of Defence has little or no expertise to prioritise them. The Long Term Integrated Perspective Plan (LTIPP) or five year defence plans have little integrity.

Take for example the case of the Mountain Strike Corps which has been approved by the government recently. It will require capital expenditure of Rs.90,000 crore (plus another Rs.30,000 crore for ancillary units), yet it does not figure in the 2012-2027 LTIPP which was approved with great fanfare last year. To get a perspective on this, consider that in the period 2009-10 to 2013-14, which includes the period of high economic growth the country spent something like Rs.300,000 crore in capital acquisitions.


The Army, of course, is not the only claimant here. The really capital intensive services are the Air Force and the Navy whose need for modernisation is dire. India needs new combat jets, submarines, ships, transport aircraft, artillery guns, helicopters and a host of other equipment in the next ten years. But what should be the priority? At present, there is simply no machinery to do this since each service feels its needs are the most important and the MoD lacks any expertise to pronounce on the issue.

But the MoD does not want another senior military figure because they think that the Defence Secretary and his IAS colleagues will be somehow diminished. Well, considering the current state of India's defence setup, they ought to have already been indicted for gross incompetence.


In view of this, the National Security Adviser Shivshankar Menon had pushed for the setting up of the Naresh Chandra Committee. Another group headed by Ravindra Gupta, was simultaneously asked to to look at the issue of defence manufacturing and indigenisation. But after the committees, comprised mostly of former government and military officials, had done their work they find that there are no takers within the government for their advice.

But that should not surprise. Bureaucratic resistance to reform is a given whenever there is talk of reform. What does surprise, however, is the spinelessness of the UPA II ministers who tamely allowed their bureaucrats to manipulate them into a paralysis. As long as P Chidambaram was there, the Home Ministry was supportive of reform, but with Sushilkumar Shinde at the helm, the donothing school prevails.

As for the Defence Ministry, the less said the better. AK Antony is happiest when he does not have to take any decisions whatsoever. This clearly suits his bureaucrats who have so far successfully blocked the passage of the Naresh Chandra Committee report to the Cabinet Committee on Security. Whether the CCS itself has the political gumption to tell the babus where to get off or not, remains to be seen if and when the report reaches them. But going by the record of the UPA II, there is not much hope. As for the PM, he has now given up on his political colleagues and is totally dependent on bureaucratic advice. It is not too difficult to guess what that advice is: Do nothing, there's nothing broke and there is nothing that needs fixing.

The problem is that not that the national security system is not broke, but that it is rapidly hollowing out from within.

- The writer a Contributing Editor of Mail Today was a member of the Naresh Chandra Committee and is a Distinguished Fellow at the ORF, New Delhi.

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November 24, 2013

Situation in Afghanistan may shift in India’s favour

Hindustan Times
New Delhi, November 25, 2013
First Published: 00:56 IST(25/11/2013)
Last Updated: 01:00 IST(25/11/2013)

The tortuous path being taken by Afghanistan and the United States to reach an agreement on a residual US military presence in that country is understandable. Afghan President Hamid Karzai has a two-fold problem as the US pulls out its main body of soldiers. One is a problem of legitimacy. His opponents, the Taliban, portray him as an American stooge. The other is a problem of military wherewithal.

The US continues to be unclear as to its post-withdrawal plans. Mr Karzai is understandably wary of carrying the burden of a US presence minus the benefits of adequate protection or money. Washington's on-and-off attempts to force a political marriage between Mr Karzai and the Taliban have not helped the US' credibility in Kabul.
Mr Karzai, on the one hand, has deliberately humiliated the US, sought to not appear too eager to have a residual US presence and postponed the final outcome. This helps counter claims that he is too close to Washington. On the other, he has sought to keep his options open as along as possible because so much of what is happening in Afghanistan is taking place on geopolitical quicksand. 

India has made it clear that it will support Mr Karzai, no matter what his policy decision may be. This is probably the best of a bad set of choices. New Delhi was once an unalloyed supporter of the US military presence in Afghanistan, seeing this as the best guardian against the Taliban's return and, as a spillover, jihadi violence in Kashmir.
This has been eroded by the US' determination to withdraw without giving much thought to the fallout of such an action, including the Taliban getting a foothold in Kabul and giving Pakistan a free rein in Afghanistan. India should be working to find an international coalition to help Mr Karzai keep the Taliban at bay. 

Unfortunately, with the Manmohan Singh government in intensive care unit and the US disinterested, this is a goal that looks presently unlikely. But the Afghan environment changes rapidly and it may shift in India's favour. Which is why New Delhi should have no problems that Mr Karzai has put off a final agreement with the US until next year.

U.S Should Support the Baloch Groups instead of removing Sanctions against Iran- Dr.Wahid Baloch

"Instead of removing sanctions against Iran the US should support the Iranian opposition groups and arm Baloch and other minorities to help them in their fight for freedom and justice" - Dr. Wahid Baloch

Dr. Wahid Baloch with U.S Vice President Joe Biden

WASHINGTON, D.C -- Dr. Wahid Baloch, President of Baloch Society of North America, said that "Instead of pacifying the Iranian mullahs by removing the sanctions against Iran the US should support the Iranian opposition groups and arm Baloch and other minorities to help them in their fight for freedom and justice," 

In an interview, talking to Zuber Hewrami, a journalist with Rudaw English Service, Dr. Baloch said, "the Obama administration is trying to pacify the Iranian Mullahs by removing the Iranian sanctions in exchange for Iran to give up its nuclear program, but these Mullahs, who are calling for the death and destruction of United States and State of Israel, are not going to give up of their nuclear program. He called upon the US government to support the Iranian opposition groups and arm Baloch and other minorities in Iran in their fight for freedom and justice.

He said "this will produce better and long lasting results for the peace and security of the entire region".  

Dr. Baloch said, "Baloch people, both in Iran and Pakistan, are fighting for their independence and they don't want to be a part of either country".

"Baloch people consider both Iran and Pakistan as foreign occupiers of their land (Balochistan), and they are fighting to free and unite Balochistan into one piece instead of being divided between Iran, Pakistan and Afghanistan", he said.

He asked the US Government to extend an helping hand to Baloch people to free their land from the occupiers.

"We strongly believe that a FREE, United, Democratic and Independent Balochistan is the answer to all the problems that the US and the world community are facing in the region. It will not only protect the US interests in the region but will also help to secure the Strait of Hormuz from Iranian threats, keep China off of persian gulf, help stabilize Afghanistan by eliminating and eradicating the Al-Qaida and Taliban terrorists safe heavens, provided to them by Pakistan's army. It will also help to build peace and stability in the entire region", he said.

Here is text of his full interview. 

What are the ultimate goal of Baloch resistant groups and dissidents in Iran and Pakistan?

Baloch resistant groups and dissidents in Iran and Pakistan are fighting for complete independence from both Pakistan and Iran. They don't want to be a part of Pakistan or Iran as their language, traditions and culture are completely different. Baloch consider both Iran and Pakistan as foreign occupiers of their land (Balochistan), and they are fighting to free and unite Balochistan into one piece instead of being divided between Iran, Pakistan and Afghanistan.

Could you kindly cite some of the major grievances of Baloch nation?

Major grievances are total discrimination, alienation and marginalization of Baloch people by both Pakistan and Iran, decades old injustices and genocidal policies directed against them, denial of their basic human rights and the rights over their land, coasts and natural resources. 

US congressman Dana Rohrabacher on the 2012 introduced a resolution in congress urging Pakistan to recognize the Baloch right to self determinations, any comments on that subject?

It was an historic joke with Baloch people. They were given false hopes that the US Government is on their side. Dana Rohrabacher's bill on Balochistan was dead on arrival (DOA). The Obama administration has distanced itself from Mr. Rohrabacher and his bill. In a statement issued by the American Embassy in Islamabad said that the United States "respects the territorial integrity of Pakistan," and that "it is not the policy of the administration to support independence" for Baluchistan, (New York Times). 

I heard that the Barrick Gold was behind that move, to stick it to Pakistanis, after losing the Reko Diq gold mines contract from Pakistan. 

Does your organization focus or help Baloch groups or organizations from Iran or your focus is primarily on Pakistan?

Our Organization, Baloch Society of North America (BSO-NA), primarily focuses on Pakistani occupied Balochistan, but we do support our Iranian Baloch brothers and sisters in their struggle for freedom and justice. 

Does the United States have a policy towards greater Balochistan or its opposition groups and where do Baloch stand in that policy?

I don't see any such policy at the movement, but it might change in the near future. This all depends on the geopolitical situation and how it evolves in the region. I'm sure the US is well aware that China-Iran-Pakistan nexus are working against the US interests in the region and US is not going to sit idle and watch all of this goes on un-noticed.    

Has the US at one point pursued a more serious policy of supporting, organizing, meeting Balochistan opposition groups?

Not that I'm aware of. In fact, the US government have supported Pakistan to conduct and continue its genocidal polices against the Baloch people with full impunity despite our protests and demonstrations. They don't see Baloch as their most important strategic assets and ideological natural ally and friends in the region against the US enemies. But, I'm sure one day they will and when they do, I hope it will not be too late. 

If not, why? Are the Baloch groups themselves to blame for not talking to the US more actively and selling their cause?

Unfortunately, there are many factors involved that why Baloch people have been less effective to sell their cause to the US. The most important thing is the lack of resources, hiring powerful lobbyist and influential think tanks to take up the Balochistan's case in to the US congress, compare to Pakistan and Iran who spends millions of dollars on US lobbyists firms every years to protect their interests. Baloch don't have that kind of money and resources. Then, there is the Baloch disunity among themselves. Most of it is due to the outdated tribalism and egoistic politics among Balochs, and then there is the Pakistani ISI factor. The ISI infiltrated Baloch agents in Baloch political groups, disguised as "Baloch leaders", are working day and night to keep Balochs divided and fighting among themselves. All these factors are contributing to this deficiency.

What can the US do for the Baloch and minorities in Iran?

US can do a lot if they want to but seems like Baloch and other minorities in Iran are not important for the US policy makers and that's why we don't see any help or support for them. The obama administration is trying to pacify the Iranian Mullahs by removing the Iranian sanctions in exchange for Iran to give up its nuclear program, but these Mullahs, who are calling for the death and destruction of United States and State of Israel, are not going to give up of their nuclear program. 

Instead of pacifying the Iranian Mullah by removing the sanctions against Iran, The US should do is to support the Iranian opposition groups and arm Baloch and other minorities to help them in their fight for freedom and justice. This will produce better and long lasting results for the peace and security of entire region than pacifying these Mullahs. 

We strongly believe that a FREE, United, Democratic and Independent Balochistan is the answer to all the problems that the US and the world community are facing in the region. It will not only protect the US interests in the region but will also help to secure the Strait of Hormuz from Iranian threats, keep China off of persian gulf, help stabilize Afghanistan by eliminating and eradicating the Al-Qaida and Taliban terrorists safe heavens, provided to them by Pakistan's army. It will also help to build peace and stability in the entire region.