Monday, October 20, 2014

Angela Merkel - Subdued Style with Subdued Results?

German Chancellor Angela Merkel overshadows American President Barack Obama who tends to 'over promise under deliver' in her eyes. Having assumed chancellery 3 years earlier than Barack Obama and definitely outlasting him in office as well, Angela Merkel is a powerful politician on planet earth; one of the most powerful. That is why it matters what she does and she does not.

During the early years of 2008 recession, she only gave in partially by allowing limited bank guarantees collectively. Contrary to advise of many Keynesians for Debt Relief, she remained unenthusiastic for such prospects. On the strength of American Economy, Global Financial Markets bought into a belief that worst is over for Europe.

But worst is not over for Europe. We do not know how much structural reforms of consequence, countries in Europe have adopted. With persistent high unemployment, France and Italy; rightly so; are on the verge of busting deficit band allowed by EU. With continued economic contraction, Europe is on the verge of 3rd recession in last six years. Needless to say Europe has done badly.

When the right prescription for getting out of this funk is both QE as well as stimulus by government / EU; Angela Merkel is precisely resisting and triangulating the policy of substantive economic intervention by Government. Neither she has taken pains to expend her political capital in educating German voters nor she has given free hand to Euro wide policy makers. At the heart of it is the same thing as what Rick Santelli purported at the dawn of Tea Party in USA - resentment in giving anyone free hand. Germans are acutely vigilant about anyone trying to ride on their success as they naturally feel it is all 'earned by them' and by their discipline. There is some truth in that, but one cannot ignore the downward draft exerted by non-German economies on Euro exchange rate which essentially benefits German Export. In other words, poor Spanish and Italian economies keep Euro down which makes BMW and Audis cheap enough in China in turn soaring the German Export. Those export gains translate to welfare of German workers (all credit to German system) at the expense of essentially Italian or Spanish workers.  All this, of course Angela Merkel, wants to forget conveniently. 

That is why one wonders what judgement History would render - a feckless, over promising American President having delivered, having used all his political capital or an immensely popular German Chancellor having been at the heart of European power allowing Rome to burn while she plays the fiddle of keeping intact ideological misunderstanding of her voter base? 

There are forces in German which are unsettled with this prospect and there are political forces which are pulling Germany towards extreme policy positions. Essentially German equivalent of Tea Party is campaigning further right of Merkel by demanding introduction of Duesche Mark in liue of Euro. May be Germany should indeed get out of Euro. That way not only the fantasy of AfD will be exposed but failure of Merkle regime will be exposed too while liberating Spaniards and Italians of Europe to pursue a sensible economic policy along with French. In that sense, a failed regime of Barack Obama is far positively consequential in the longer term than 'sooth talking', ideologically driven Merkel era in Europe.

Sunday, October 12, 2014


As the case of second Ebola infection comes to light, suspicion in minds of Americans grow - that bulky, expensive American Health Care System is 'not' geared to handle spreading Ebola cases, that we are getting empty promises from public officials, that these officials and elected representatives are actively misleading Americans when they claim everything is under control. Very likely American system will not be immune from the usual problem of lack of co-ordination among various local, state and federal agencies. When officials insist that 'the system has worked', that seems like a joke when in reality the second patient was not even on the watch list in Texas! The infected health worker was undertaking self-monitoring and reported possible infection on her own. Given this, it is clear that:
- procedures used by American health worker are not full proof and
- CDC directed procedure of identifying possibly impacted patients and monitoring them, that all seem inadequate as well.

The Texas Hospital already lost the credibility when first it blamed its computer system to hide the incompetence of its staff. Now more details are coming about how the first patient was treated for sinus while completely ignoring possibilities of Ebola early on! This is a poster symbol of 'stupidity of American Health System'.

But it might not remain only about incompetence of American Health System when serious allegations are hurled about knowing negligence of the first patient because of his skin color or African origins. If this 'meme' gets hold; it can quickly become a ugly political football given that we are in the last stretches of mid-term elections.

Already racial tensions are showing up in America. When you have a tone deaf white police officer wearing 'I am Darren Wilson' bracelet in support of the policemen who killed the African American in Saint Louis, when another African American is killed there after; we have a charged environment.

Given this background, President Obama and White House need to show alertness in being pro-active. Already President Obama has been criticized being indecisive and the danger is real that President Obama remains passive and his Administration would exhibit dereliction of duties. His order for more federal help is a start, but he needs to keep the focus on sustained basis, have his cabinet sectaries take follow on actions and more importantly keep Americans informed with facts. We need leadership which will neither hide lack of competencies nor spare anyone from holding accountable.

Longer term, America needs explanation in terms of why it is taking time to develop vaccine for this disease and how it will not be caught in racketeering by American Pharmaceutical companies. Creating vaccine is one thing, but putting in place a system which distributes it quickly and in affordable manner to masses is another. (Hopefully, Americans will not be held at ransom for such medicines when other nations successfully force American Pharma to sale drugs at affordable prices.)

Americans also need to be politically educated to understand the importance of helping other countries battling Ebola since in the end it comes to our shores. Inspection of Airline passengers is one response (why did it take so long and why did it not start at many ports simultaneously?); but helping those affected countries earlier and effectively should have been America's response.

In a globalized world America cannot be an isolated island and educating Americans about that is the job of our political leadership. American public will trust our leadership only when the leadership is alert and is effective in executing the job it is expected to do - protecting Americans. So far Ebola saga in Texas is anything but that. 

Sunday, October 05, 2014

Hong Kong and People's Republic of China

Typically a closed authoritative political system like China changes when it gets sympathetic top leaders. Mikhail Gorbachev comes to mind. But the Chinese boss Xi Jinping is in no mood to entertain any kind of political reforms. Under the name of 'fighting corruption' (which is good) Xi seems to be very busy in removing his political opposition without much legitimate, coherent ideas about how to advance China further and make China at ease and at peace in comity of nations. There is a real danger, now that his honeymoon period is over, that he simply becomes a tool of a powerful faction of PLA and in some sense 'keeper' of vested interests of Chinese Crony Capitalism - the businessmen enriching themselves on the largesse of State or hyper nationalists who preserve their own fiefdom / profit sources under the veneer of Nationalism. Given all that, political freedom of any kind will be the last thing on his mind regardless of what Beijing spin masters say.

Now, it is true that everyone knows what happened after Gorbachev undertook perestroika. Soviet Union joined History Books and suddenly you got more sovereign states in former USSR. Xi Jinping does not want to preside People's Republic of China (PRC) as the man who allowed Uighur to become independent. Of the 3 immediate 'centrifugal forces'  vibrating in Chinese System - Uighur separatism, Tibet resistance and unfinished business of peaceful assimilation of Hong Kong - only the Uighur problem is serious one (and Beijing is not on a right track there). The province of Xinjiang has substantial native Uyghur population - around 40+% - which mostly are Sunni Islamic. Ethnic identity among Uyghur is strong with checkered history of independence. Given that background, it is a right question among Communist Party Leaders in Beijing that what kind of autonomy would establish a political equilibrium? So from a Communist point of view, any concession in political freedom will be a slippery path culminating in dangers of Xinjing or parts of it sleeping away from PRC. And that is the danger Communists in Beijing do not want to feed into, whether it Uighur or Tibet or Hong Kong.

But the problems of Tibet and Hong Kong are different. With Tibet, Dalai Lama has maintained to work within the framework of PRC Sovereignty (even though his own people might not be with him at times as well as PRC would not be buying his argument). It is more the question of retaining autonomy, cultural identity and most important demographic balance within Tibet. What PRC is failing is to find a viable path here, the necessary step of which is to engage with Dalai Lama and his cohort and avoid chauvinistic Sinicization of Tibet

The problem of Hong Kong is even more clear. PRC absorbed Hong Kong on the basis of an international accord where PRC signed that it will allow universal suffrage. China and Xi Jinping are simply reneging on their legal commitments here. To blame protesters being non-patriotic and anti-China is simply Mao-style propaganda. Nethier the argument that Hong Kong never had full democracy under British rule nor Hong Kong needs to wait until entire PRC gets universal suffrage; are valid arguments. Why not Hong Kong be the leading light in bringing true democracy to entire China? Clearly Xi Jinping is too busy to entertain any such thoughts. (*)

The question for protesters is what can they do to change this situation? They have shown clearly that they can bring millions of Hong Kong residents on streets. But this will not be sustainable. As it starts damaging local economy, sympathy among Hong Kong mainstream residents (parents of kids on street) will dry up. That is exactly Hong Kong's current rulers and Beijing want. Given that, these protesters have to find a rhythm in keep bringing crowd on the street at regular interval while minimally disrupting livelihood of Hong Kong People. Every resistance movement needs to find creative ways in keeping the political pressure because the very nature of such conflicts is asymmetric - there are no channelized ways to register the opposition in authoritative closed political systems and the whole point of such resistance is to change the very system suppressing people's freedom. On this background advice from veterans 'to take break' is appropriate; least it ferments social tensions and violence.

Equally, these Hong Kong protesters need to become more cohesive from an organizational perspective given that their fight is for a long haul. Xi Jinping and Beijing Bosses are with thick skin and a stick (and with a gun and a tank as Tienanmen Square incident demonstrates vividly). No political movement can achieve substance unless structurally it is organized coherently and tightly, especially against such a behemoth adversary. There are many in Beijing who are in glee looking at this Hong Kong protest as they see how Hong Kong pulls itself down in its economic interests (and as a result opens door for Shangahi to further itself as the premium global financial center; though many argue that the real winner will be Singapore). So Hong Kong protesters need to navigate their longer term resistance in a manner which is not perceived as detrimental to Hong Kong's business. Some price these businesses have to pay (and those with weak heart may indeed flee Hong Kong too); but these protesters will have to be mindful of these bread and butter issues.

The more these protests portray how Beijing is subverting an international treaty, more are chances that rest of the world (and Taiwan in particular) becomes more vigilant in dealing with PRC. That is the price which these protesters can make Beijing to pay (unless Xi Jinping adopts the dirty and cheap path of Vladimir Putin - hell with international laws). May be when the price becomes sufficiently high, Xi Jinping would come around and may open the path of political freedom for Hong Kong residents.  Till then a smart and sustained resistance is what these protesters have to undertake.

* - One argument nationalists are forwarding is what is wrong in insisting vetting of candidates by Beijing before hand, after all Beijing intends good for Hong Kong? But similarly any freedom loving person can argue that why Beijing needs to have then any such insecurities? If a freely elected Hong Kong chief does not behave in accordance to PRC's national interest, PRC can simply prosecute the chief on charges of treason and even remove that chief in extreme situations in the name of national security. 

Saturday, September 27, 2014

What is Consequential for India?

India celebrated enthusiastically the success of India's maiden satellite mission to Mars. Taking pride in this achievement is understandable and ISRO clearly deserves this praise. It also means globally as how SW outsourcing started to change global Computer Industry around year 2000, this is a shot by India in Space Industry also. India is brandishing her potential to bring down costs of Space Engineering in demonstrable manner. Any Space Mission where substantial Engineering is involved, those Engineering hours can be bought at much substantial lower price from India. What 'outsourcing' did to Global SW Engineering, we are looking at similar potential in Space Engineering. 

Having cheap and capable engineering talent is one thing but translating that advantage and capabilities into a successful industry is another issue. Component manufacturing, network of whole sleuth of private sector enterprises providing necessary products & services and stronger capabilities in rocket technology; all these things will need to happen before Indian Space Industry can take off on its own. In general, liberalized trade will be overall prerequisite for all this to happen (contrary to what Indian government stalled at WTO)

It might be easy to compare ISRO costs with NASA costs; but within USA itself, there are companies like SpaceX which have been making tremendous headway in rocket technology and space exploration. Company like SpaceX has built rocket technology on backs of less than 4000 engineers within a decade what armies of engineers for decades  can barely come up with in many countries, India included. NASA has taken notice of these private sector abilities and is actively vacating areas for private enterprise. Obama Administration and American Congress both are actively looking to lower costs and increase the participation of private enterprises. In some sense, NASA being the global pioneering organization, it always had to share the burden of costs in paving ways for new technologies (even though clearly American engineering hours cost way more to NASA than ISRO).

Given all this, though Mangalyaan is a nice breakthrough for Indian Space Technology and Engineering abilities; the overall journey is a long way. Indian's are likely to overrate this achievement while ignoring the stupendous achievement what it's Legal System attained this week - convicting Tamil Nadu Supremo Jayalalitha on corruption charges. In my mind, neither Mangalyaan, nor Modi's proposed rock star like performance tomorrow at Madison Square Garden would have as much long term impact as what this conviction of a political boss after around 2 decades of legal fight portends for India. 

It shows a nation which is finally summoning 'the will' to correct what has been fundamentally ailing India all along - her Politicians without accountability and not subjected to rule of law. 

Tuesday, September 23, 2014

Bombing IS in Syria

"A terrorist preoccupied with his own survival has less bandwidth to threaten yours.
It is true that there exists no strategy for victory, and no definition of victory.
This struggle is now owned by the United States."

Apart from bringing on few significant Arab Allies, what struck to me is timing - President Obama did not hesitate for this bombing when he is taking a center stage at UN. In a way, he has not hesitated to assert American Leadership role in today's chaotic world. Good or bad, successful or not; seems like some American role in world affairs is better than complete withdrawal; least because no other nations want to have anything to do with this mess. (America contributed to the mess, but there is more to that than simply blaming America here.)

Having thrown cobwebs of 'rudderless leadership', question is how skillfully and in sophisticated manner this administration brings some real progress. In my view, progress will be determined to what an extend 'skin in the game' is increased for Turkey and to what an extent America stands behind Kurds while continuing to strengthen Federal Government of Iraq. 

Setting expectations for a long haul is critical. Administration has started on that, but they will still have to continue this policy of 'having feet on ground'. Prof. Drezner rightly characterizes that the'initial air attack' is generally the high water mark of America's power projection and there after it is all downhill. He also thinks that chances are more that things on ground will not change in next 3 to 4 months.

Again 'price of not doing anything is high' and having started to do something does not mean America would be firmly on the path for victory. The least what President Obama can do is to continue to be honest with Americans about all this (apart from keep whacking any other bad guys intending to harm America). There is a chance that Americans would understand all that.

Thursday, September 18, 2014

United Kingdom

With Scotland voting No for independence, UK remains a single country. Many Western Capitals in the world would have sighed, I am sure Washington definitely. UK is the stalwart, indispensable component of the Western Alliance and it remaining united and together is vital from NATO, EU to UNSC. 

As many in the losing side have said, Scotland and UK have changed for ever after this referendum. Yes voting edging past No in a last week's poll was a wake up call for London Power brokers. The old guard of Labor Party - Gordon Brown - helped deliver the No vote. In the end though, people thought about the unanswered questions as JK Rowling explained eloquently in her post.

What next? Interesting question will be whether UK Politicians think about a truly Federal System where Scotland is helped to stand on it's own while keeping strong UK on the world stage as well as overshadowing of Scottish MPs in English affairs is rolled back in fair manner. UK needs to undertake constitutional reforms and to gear its political structure to a truly Federal structure so as it can draw strengths both from a federal structure as well as decentralized polity. Hopefully win for 'better together' argument moves UK in that direction.  

Sunday, September 14, 2014

Obama's Offense against a JV Team

I am late to the commentary on this topic, nevertheless the development is serious enough with consequences for many years to come.

The first question Americans want to know is why bother Islamic State when President himself has admitted in his speech that we are neither aware of any plans getting cooked to attack homeland nor we see any imminent capabilities developed by IS to attack America. Remember President Bush also argued that to prevent Mushroom cloud triggered by Saddam Hussain, he wanted America to take the preventive action. Brief answer to this question is though IS does have not any capacities to harm USA directly today; IS is getting stronger if un-checked and its intentions of harming everyone who are not Islamic in its own interpretation is clear enough to take precaution. Killing of two Americans and another of Scottish aid worker are proofs of these evil intentions. The other simple aspect is, sure America can wait till IS gets stronger and actually plots against America; and sure enough American military might can take off IS then too. But that would mean expending much more than when America can degrade IS much before at lower costs. Equally true is also the case that determining intentions of IS is not that complicated as determining whether Saddam Hussein possessed nukes. As President Obama very rightly said IS kills children, rapes women and in general prides itself in bringing Barbarism to Internet world. One of the most powerful statements in President's speech has been 'IS is neither Islamic nor it is a state'.

The important question is, given the danger IS poses; degrading it to a point where it does not pose any risk for USA and its allies is enough or eventual complete eradication of IS is needed. Because if later is the goal we are basically facing 80-20 rule: you expend 20% efforts to eradicate 80% of a terrorist organization like IS while you need 80% of efforts to eradicate remaining 20% of the organization. In other words, stopping IS is relatively less resource consuming but eradicating it completely will need lot longer time and more resources. Given that, it seems rather than claiming to say 'degrade and destroy IS'; it could have been lot more prudent for President to say our objective will be to ensure that IS or any derivative of that would not have any capacity whatsoever to harm Americans and legitimate interests of America. This is important because once you say you want to eventually 'destroy' IS, why not 'boots on ground' at sometime when it is needed? It is the quagmire Sec. Kerry finds himself in - whether it is 'war against IS' or not. But in common folklore, war means deploying all our resources until the adversary is completely and thoroughly vanquished. Folks on Right will find it a ludicrous idea to state that one can ever only 'degrade' organization like IS but not 'destroy completely'. In minds of American hawks, complete destruction of IS is the only path. However, prudence is not to set the debate of 'rallying America against IS' in those polemical terms.

When one frames the debate as 'complete destruction at all costs as the only choice'; America essentially commits herself again to a unity Iraqi State which will take over once Americans have done their job of eradicating IS. But we know from History that, once Zarqawi was vanquished and Sunni Awakening was complete; Shiite of Iraq simply squandered all that hard work. Regardless of all the talk of unitary Iraqi Government, for America to base its strategy to fight IS on the precondition of united Iraqi Government is essentially asking for more trouble. Safer for America is to pursue a strategy which does not have the pre-requisite of Iraq without sectarian fights. Iraq has shown the inability to grow leadership needed to remain together. But that does not mean, America let loose the pressure on Iraqi Politicians to overcome sectarian divide. That is good in itself and longer term. But what it means, there is no need to set goals which rest upon nation building; the exercise which has proven to be outside the releam of doable things for mighty America.

Powerful American role in international relations is badly needed. Degrading IS and cultivating conditions to eradicate it eventually (like President will rally the world opinion in containing human traffic of Jihadis flocking to Middle East war theater); is a legitimate exercise in America's power projection. So President Obama was right to extol America's exceptional duties and responsibilities there in his speech. One can perfectly imagine a world in absence of Uncle Sam, the menace of IS will be allowed to grow and then the world comes to deal with it haphazardly. Dealing with IS resolutely and effectively is something America can do and it needs to do it to protect her own citizens and her allies.

Many in this regard then question President Obama's decision 'now' to help Syrian Opposition apart from IS to wage a fight against Bashar Assad. These critics ask, if these resistance forces are good to 'arm now and support now'; why were they not good earlier when immediate response and intervention would have been lot more efficient? These critics have a point, but  a simple answer to that is 'you take a risk appropriate to the context'. Back then IS did not warrant the risk of arming desperate Syrian opposition while today that risk pales on the background of 'critical mass' attained by IS evil. Hence, America would need to undertake all options available to stop IS, regardless whether that helps Bashar Assad or not.

Sunday, September 07, 2014

Scottish Independence

"The best case scenario would be devo-max or the federalization of the UK, but Westminster would not allow either to be on the referendum ballot. The prospect of full scale constitutional reform is not even under consideration outside of a few Lib Dem committee meetings. Scots have been put in a position where the status quo is unacceptable to them, and in which viable alternatives - devo-max and federalization - have been expressly refused as options. It is often said that, if devo-max were on the ballot, it would win. It isn't on the ballot, because Westminster knew that and hoped that by denying a third choice, Scots would choose the status quo. Is that manipulation the kind of government you would want to live under?"

-- James Fallows, The Atlantic

"But Canada has its own currency, which means that its government can’t run out of money, that it can bail out its own banks if necessary, and more. An independent Scotland wouldn’t. And that makes a huge difference.

Could Scotland have its own currency? Maybe, although Scotland’s economy is even more tightly integrated with that of the rest of Britain than Canada’s is with the United States, so that trying to maintain a separate currency would be hard. It’s a moot point, however: The Scottish independence movement has been very clear that it intends to keep the pound as the national currency. And the combination of political independence with a shared currency is a recipe for disaster.

I find it mind-boggling that Scotland would consider going down this path after all that has happened in the last few years. If Scottish voters really believe that it’s safe to become a country without a currency, they have been badly misled."

-- Paul Krugman, NYT

I am with Paul Krugman. Scottish Independence Leaders must spell out what transition they want to propose from British Pound to their own currency. Whether Independent Scotland can take its fair share of British Debt is secondary - what is primary is Independent Scotland is going to have its own currency very soon or not. Otherwise I am all with Krugman's analogy between Spain and Florida.

For all the talk of enlightened talk of this debate, as a friend of James Fallows indicate in his post; it is amazing how Scottish Independence folks have not been grilled about this Spain versus Florida dichotomy. 

Above all, what amazes me most is the mendacity of London and Westminster in not being more accommodating and more federal. There were few last minute announcements, but one gets the feeling of too little too late. In absence of wholesale reforms of UK, Britain as is in a trouble. British Empire was never accommodating to its subjects all over the world. The British Queen and her forefathers lost not just America, but crown jewel India; failed to keep Canada and Australia. But still the House of Windsor and Ten Downing Street do not get the message - how to be federal to keep the United Kingdom intact.

If in coming days Scots indeed vote to be independent, sure they will face misery; but the bigger failure will be of London due to its arrogance. UK will be lot more diminished power on the global stage, kind of mere City State of London (like Singapore or say Dubai). It should loose its UNSC seat in that scenario and more humiliation will be in order.

Friday, September 05, 2014

Obama and Terrorists

"...we will not forget, and that our reach is long, and that justice will be served"

As many experts understand, this administration has not been 'light on terrorists'. That is what is expected from this administration and good to know that President Obama is not relaxing there. 

Same should be the fate of IS in coming months and years.

Monday, August 25, 2014

Thuggery of Imran Khan

The scheme is fairly straight forward - once you fail to win elections outright (which Imran Khan failed in 2013 Pakistani elections) claim that it was fraud, argue that ruling government has no legitimacy, then bring frenzied crowds on streets (how hard it is to exhort few thousands on streets?) and essentially bring riots to de-legitimize duly elected government. 

One cannot compare this with Arab Spring. At least folks there were revolting against dictators. Here in Pakistan Imran Khan is railing against an elected government. In Ukraine, folks revolted against Russian Imperialism and after that they did elect the President by an outright majority. In Egypt, Army eventually moved against incompetent government of Muslim Brotherhood Morsi; though it was democratically elected.

What is not clear is whether one can blame Nawaz Sharif government for all that ails in Pakistan. In that sense Imran's charge that it is all Sharif government's problem is hard to accept. It is so because, it is guaranteed that tomorrow even if Imran Khan becomes Pakistani Prime Minister (not that another opposition figure Quadri will easily back him); Pakistan's problems will not be solved. 

One has to understand, no government can run when only 1% or so people are paying tax while rest of the Pakistan simply pilling on freebies. On top of it Imran Khan is exhorting Pakistan to stop paying taxes and utility bills! Pakistan is  ruled by a feudal system where huge land holding landlords and their crony business partners are controlling all of Pakistani Economy. Pakistan does not have any cushion like Saudi Ghawar Oil Field nor North Field Gas like Qatar to roll out 'totally on government tab' lifestyle to most in the society. Imran Khan himself is the poster child of such a feudal mentality. Never proven in the field of business nor has led any constructive political movement; he behaves as someone who cannot overcome the lust of 'power'. He is the prominent 'mud thrower, rabble rouser' of Pakistan. Sure Nawaz Sharif is a land lord too, but at least he has ran a successful business empire providing jobs to many Pakistanis. Apart from defeating India and England on their home grounds to win Cricket Test Match Series first time for Pakistan in 1987 and then lifting World Cup in 1992, Imran Khan does not have any worthwhile achievements under his belt which can help common Pakistanis. He was responsible for killing of innocent Pakistanis just because allegedly someone flushed Kuran in a toilet and otherwise is essentially a 'play boy Pathan' charming ladies all over the world. 

One suspects that as PM Nawaz Sharif entertains a sensible policy of peace with India and against Talibans in Pakistan; many powerful Pakistanis would see that as an attempt to correct the fundamental 'imbalance of Pakistani State': substantial resources going to Army instead of development for common and poor Pakistanis. And that is the danger that disgruntled Army may side with Imran Khan. Clearly Imran Khan is aiming for such an implicit backing and that is why he is playing increasingly with fire. Hardly any of these developments are helpful for Pakistan.