Diplomatist May 2013-Lowres

PUBLISHERS NOTE
Welcome to the May edition of Diplomatist!

Vol. I Issue 2 May 2013 Edited, Printed & Published by Linda Brady Hawke Owned by L. B. Associates (Pvt.) Ltd H-108, Sector 63, Noida - 201301 U. P. India Published from L.B. Associates (Pvt) Ltd H-108, Sector 63, Noida - 201301 Gautam Budh Nagar District Noida, UP, Delhi NCR, India Tel: 91 (120) 2427280, 2427419 Fax: 91 (120) 2427108 Email: info@lbassociates.com Websites: www.diplomatist.com www.lbassociates.com Managing Editor William Hawke
william.hawke@gmail.com
It is not just the people of Pakistan who await the dawn of May 11, the day when the country votes its next government into power. Focus goes beyond the heat and dust of electoral politics to determine the possible political future of the worlds fth largest democracy as well our immediate neighbour, Nepal. All this while the worlds largest democracy strengthens its links with Tajikistan and Libya at a time when its foreign policy approach is scrutinised at home. Indias Strategic Strengths gives an Indian perspective of the Arms Trade Treaty. As the European Union celebrates its foundation day on May 9, Spotlight turns its attention on the blocs history, its development policy and its future with India and the world. Indian Ocean Security discusses the responsibilities and challenges of the Marine Corps Forces Central Command (MARCENT) with its Commander, Lt Gen Robert Neller. The African Union celebrates its 50th anniversary in May 2013, a historic moment that calls for extended coverageand analysis. Beginning this month, Cover Story will relive ve decades of the African dream and will form part of the quest for redening Pan-Africanism. Global Centre Stage begins its journey on the challenging road to progress and stability in post-election Venezuela followed by a ringside view of the escalating crisis in Syria and North Korea. We nd out what it takes for Asian economies to achieve Asian Development Banks (ADB) goal of development through empowerment. Perspective is a tribute to the inspirational leadership of two of the greatest stateswomen of all time Baroness Margaret Thatcher and Indira Gandhi. The transformation of Goas capital city, Panaji, into a world-class, sustainable city is better understood in Indian States on a Platter. Public Policy debates the LBT conundrum; while Legal Forum understands the import and implications of international taxation. Happenings recounts the celebratory mood in the capital as Willem Alexander is crowned King of The Netherlands. As India continues to rise to prominence in world affairs, its bilateral relations are entering a new era of cooperation a fact underscored by this months special reports and supplements. Included are two colourful pages of Scrapbook for your viewing pleasure. Happy Reading!
Associate Editor Yamini Chowdhury Desk Editor Anusua Diya Chowdhury

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DISCLAIMER: The views and opinions expressed in this magazine are solely those of the authors and do not necessarily reect those of the editors or publisher. Although all efforts have been made to ensure the complete accuracy of text, neither the editors nor publisher can accept responsibility for consequences arising from errors or omissions or any opinions or advice given.
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International News Bilateral Notes
17 Prachandas Vision for Trilateral Harmony

The recent visit to India by Nepals former prime minister and president of Unified Communist Party of Nepal (UCPN), Pushpa Kamal Dahal Prachanda, raised many questions about the multi-faceted relations between India and Nepal.
27 Real Achievements of EU Development Policy

The European Unions development policy is very ambitious and has aimed at practically all of the major ills that affect the poorer states of the world (generally referred to as the South) for many years now (since 1959 as ofcial European Economic Community policy only two years after the Rome Treaties).
10 Corporate News
Focus
13 Pakistan Elections: Who Will Shape its Political Dynamics
At this point, many western policy makers see little hope in a stable Pakistan and are beginning to view the former ally as part of a new axis of evil.
19 India Reaching out to Libya

Every day is a holiday since we got rid of the regime, is the mood of the common Libyan in Tripoli, months after a bloody civil war.
30 India & the EU Strategic Partnership for the Future

The changing international politics, emergence of China, cooperation between India and the EU has, one may argue, has become of growing importance.
32 Global Impact of the European Union Today and Tomorrow

The European Union is a contemporary chapter in the economic and political integration of Europe that began after World War II. The tragedy and destruction that brought ruin to Europe saw a generation of leaders on the continent who tried to develop new political arrangements that would decrease violent conict and enhance political, economic, and cultural cooperation.
14 Fresh Impetus to India-Tajikistan Strategic Ties

India has enjoyed close and friendly relations with Tajikistan since its birth after the dissolution of the erstwhile Soviet Union. It is a strategic relationship based on mutual respect and understanding, convergence of interests and similarity of views.
Indias Strategic Strengths

23 Arms Trade Treaty: The Indian Perspective
Once again India has been forced to abstain from voting in favour of a discriminatory multilateral Arms Trade Treaty (ATT), following other treaties such as the Nuclear Non-Proliferation Treaty, Fissile Missile Cut Off Treaty and Comprehensive Test Ban Treaty in the past.
Indian Ocean Security Spotlight

25 Creation of an Organised Europe
The European Union today, comprises 27 member states with the motto of United in Diversity, has come a long way since the European integration process that laid the foundation for the EU. The Schuman proposal is considered to be the beginning of what is now the European Union.
34 Our biggest task is redeploying equipment in Afghanistan, back to the US

US Central Command (CENTCOM) is a US joint regional combatant command that brings together the US Army, Navy, Air Force, Marine and Special Operations components to support commanders in the CENTCOM area of operations (AOR). MARCENT is the Marine component command for CENTCOM.
16 Reassessing Indias Soft Foreign Policy Approach

It is the duty of a nation to protect and promote national interests.
EXTRAORDINARY AND PLENIPOTENTIARY DIPLOMATIST May 2013
Cover Story
36 Fifty Golden Years of the African Dream
Fifty years ago, at least politically, Africa was a very different place. I wasnt there, of course, but reliable sources tell me it would have been a journalists dream.
45 The Bluff Master

There is an inevitable escalation of tension almost every year when its time for the US-South Korean drills to take place. The considerable muscle exing by North Korea, though provocative, is more rhetorical and smartly restrained to lead to the brink.
Public Policy
55 The LBT Conundrum
Multiplicity of taxes on different sectors and activities over the years has resulted in a distinct competitive disadvantage for the Indian market. The prevailing complex and multi-layered indirect tax structure not only fragments the national market,but alsoenhances the chances of engaging in unfair trading practices that adversely affect competition.
37 Looking Ahead: Time for a Paradigm Shift for the African Union
Considering many people perceive Africa as a mash of aesthetic borders where tribal villages straddle political lines, and a place where constant internecine ghting retards real economic growth, many African nations have actually advanced signicantly since the African Union (AU) was created at the beginning of the millennium.
47 Asian Deliberations on a Global Stage

Knowledge and innovation play a vital role in shaping the economic growth and development of any country. The session, Asia: The road to becoming a knowledge economy - Game of Catch Up or Game Changers, was discussed by a panel of eminent speakers.
Legal Forum
57 International Taxation Import and Implications
Taxation is an integral part of every nations economic system. With globalisation and removal of cross border obstacles, the government levies taxes on citizens and residents, either on domestic income or on domestic and worldwide income based on the residential status.
Perspective
51 Saluting the Iron Ladies: Baroness Margaret Thatcher and Indira Gandhi
The funeral of Baroness Margaret Thatcher brought to an end one of the most compelling and important chapters in British and indeed global politics. She was a politician unlike any other; she won many battles and received loyalty and friendship from so many; yet there were many who didnt agree with her views.
Happenings
58 Orange Celebrations in New Delhi
As the Netherlands turned into a sea of orange while celebrating the swearingin ceremony of its new King, Willem Alexander, the Embassy of the Netherlands in New Delhi joined the global festivities with as much gusto and gaiety.
Global Centre Stage

39 Bumpy Road ahead for the Bolivarian Republic
Venezuela stands at cross-roads. The electoral victory of Nicolas Maduro, the Chavista candidate in the April 14 national elections, was by the narrowest of margins 50.6 percent to 49.07 percent for his opponent, Henrique Capriles Radonski, the coalition opposition candidate.
Indian States on a Platter

53 From Panaji to San Sebastian: The Making of a World Class, Sustainable City
Turning Panaji City into a world class sustainable city was the challenge that Spanish Company LKS Ingeniera, S. Coop accepted in January this year.
41 The Conspiracy behind Syrias Debilitating Civil War

Hopes that a new Egypt, not so caught up in the intrigues of the US and Israel, would help stabilise the situation in Syria without a long drawn-out bloodshed diminished during the past year.
Azerbaijan
60 Azerbaijan: A Country on the Move 61 Azerbaijan at a Glance 62 A Relationship that has Stood the Test of Time 62 Diplomacy thats Mutually Enriching 63 Trade & Commerce On the Rise 64 Developing Closer People-toPeople Contact 65 Discovering Azerbaijan
InternationalInternational NEWS NEWS

Capriles Formally Challenges Presidential Election Result
enezuelan opposition leader Henrique Capriles has formally challenged the result of last months presidential election. Nicolas Maduro won the vote by a narrow margin of 1.49 percentage points, or fewer than 225,000 votes. But lawyers representing the opposition coalition have filed a complaint at the Supreme Court, alleging a number of irregularities and calling for the result to be annulled. Maduro says the elections were fair. Hours after the poll closed on April 14, the authorities announced the victory of Nicolas Maduro. He was sworn in ve days later. Capriles denounced dozens of alleged cases of voters being coerced to cast ballots for the governments candidate. For more on the political and economic dilemmas facing the new government, please read Bumpy Road Ahead for the Bolivarian Republic in Global Centre Stage.
China Hosts Netanyahu and Abbas

alestinian leader Mahmoud Abbas and Israeli Prime Minister Benjamin Netanyahu are in China for separate talks with top ofcials. Abbas, who met President Xi Jinping in Beijing on May 6, said he would explain obstacles in talks with Israel. Netanyahu, who is visiting Shanghai before ying to Beijing later in the rst week of May, was due to sign trade deals and discuss the issue of Iran. The two men are not expected to meet while they are in China. China would assist if they wanted to, a foreign ministry ofcial said, but the two leaders were not expected to be in the same city at the same time. Abbas, who arrived in Beijing on May 5, signed agreements on technical cooperation and cultural exchange with Xi. The Palestinian leader was also expected to meet Premier Li Keqiang during his visit. Netanyahus visit is the rst to China by an Israeli leader in six years. He was expected to meet business delegates in Shanghai before heading to Beijing and is expected to sign a number of trade deals. He is also expected to raise the issue of Iran, which many nations, including Israel, believe is trying to build nuclear weapons - something Iran denies. Beijing is one of the biggest buyers of Iranian oil, and has opposed unilateral Western sanctions on Tehran.
International NEWS
North Korea Removes Missiles from East Coast Launch Site
orth Korea has removed two medium-range missiles from a coastal launch site, indicating a lowering of tension on the peninsula, according to US ofcials. Pyongyang was believed to be preparing for a launch last month, having threatened attacks in the region. The threats followed tough new UN sanctions imposed on North Korea in March after its third nuclear test. It had also been angered by wide-ranging annual US-South Korea military drills, which ended in the last week of April. The news that the missiles had been removed from the site on the east coast came on the eve of a summit in Washington between the US and South Korean presidents. Park Geun-hye is scheduled to hold talks with Barack Obama on May 7. For more on the crisis in the Korean Peninsula, please read Bluff Master in Global Centre Stage.
Russia & US Discuss Syrian Crisis
ussian President Vladimir Putin will hold talks with US Secretary of State John Kerry in Moscow to discuss the crisis in Syria. Kerrys visit comes after Israel launched two air strikes in southern Syria, which sources say targeted weapons bound for militants in Lebanon. Russia condemned the attacks as threatening regional stability. President Putin had spoken to Israeli Prime Minister Benjamin Netanyahu, the Kremlin said. Ahead of Kerrys visit, Russias foreign ministry called on the West to stop politicising the issue of chemical weapons in Syria and expressed concern that world public opinion was being prepared for possible military intervention. The United Nations has played down claims by one of its experts that there was evidence rebels had used nerve gas. Investigator Carla Del Ponte earlier said testimony from victims and doctors had given rise to strong, concrete suspicions but not yet incontrovertible proof that opposition forces had used sarin. But the Commission of Inquiry on Syria stressed that it had not reached any conclusive ndings. The colourless, odourless gas is classed as a weapon of mass destruction and is banned under international law. For more on the crisis in Syria, please read Conspiracy behind Syrias Debilitating Civil War in Global Centre Stage.
UK to Hold Somalia Peace Conference
K Prime Minister David Cameron will host an international conference in London to help Somalia end more than two decades of conict. The conference will focus on rebuilding its security forces and tackling rape - a largely taboo subject in Somalia. Somalia is widely regarded as a failed state, hit by an Islamist insurgency, piracy and a famine from 2010 to 2012. At least seven people were killed in a car bomb attack in the capital, Mogadishu, on May 5. Al-Shabaab, which is part of al-Qaeda, said it carried out the attack. The meeting - which Cameron will co-host with Somalias President Hassan Sheikh Mohamud - follows similar conferences in London and the Turkish city of Istanbul last year, amid growing international concern that Somalia has turned into a haven for al-Qaeda-linked militants.
Bilateral NOTES
Azerbaijan & India Welcome New Phase of Deeper Engagement
he Foreign Minister of Azerbaijan Elmar Mammadyarov paid an ofcial visit to India from May 2-5, the rst ever by a Foreign Minister from Azerbaijan. The visit marks the beginning of a new phase of deeper engagement and cooperation between the two countries. The minister held extensive delegation level talks with his counterpart, Salman Khurshid. The talks covered the entire range of bilateral issues. Views were also exchanged on regional issues and matters of global importance. The potential for India and Azerbaijan to be strong economic partners was acknowledged, especially in the area of energy security. The two sides emphasised the importance of connectivity and called for providing direct ights between Baku and Indian cities. They also agreed to work together towards re-energising the International NorthSouth Transport Corridor (INSTC) at the next meeting of the INSTC Coordination Council scheduled to be held in Baku later this month. They agreed to intensify cooperation in the IT sector. The two ministers signed an agreement for a visa-free regime for diplomatic and ofcial passport holders. Mammadyarov also called on the Vice President Hamid Ansari and discussed issues of global and regional concern.
Iran and India Discuss Bilateral and Regional Issues

ran and India discussed bilateral and regional issues of mutual interest at the 17th session of the India-Iran Joint Commission held in Tehran on May 4. Both sides discussed Indian participation in Chahbahar Port project, which will provide connectivity with Afghanistan and will give an impetus to Afghanistans economic development. They also discussed the developing situation in Afghanistan and reafrmed their support to its sovereignty and territorial integrity. The two sides also reiterated the importance of greater connectivity between Russia, Central and South Asia through the International North South Transport Corridor (INSTC).The two sides reiterated importance of enhancing cooperation in expanding trade and banking relations and agreed to study the prospects of joint investment in both countries. The two sides, while noting their capabilities in the industrial sector, agreed to diversify their cooperation in this regard. On developments in Syria, the two sides strongly expressed deep concern on the continuing and unabated violence and called upon all sides in Syria to abjure violence and resolve all issues peacefully through discussions taking in to account the aspirations of people of Syria. In this regard, they supported the Geneva Communiqu, which includes the 6-Point Plan of Ko Annan and welcomed the efforts of Joint Special Envoy Lakhdar Brahimi.
Bilateral NOTES
Libya and India Strengthen Ties of Democracy
Ahamed, Minister of State for External Affairs, paid an ofcial visit to Libya from April 14-16, at the invitation of Foreign Minister of Libya. The visit took place in the backdrop of new democratic Libya and was the rst high level visit after the visit of External Affairs Minister to Libya in 2007. India, being the largest democracy, greatly appreciates the onset of democracy in Libya and looks forward to further enrich it through cooperation in vital sectors that are essential for new Libyas stability, reconstruction, development and institution and capacity building. The Minister called on Dr Mohammad Yousef AlMagarief, President of the General National Congress, and Dr Ali Zeidan, Prime Minister, on April 15. Both leaders welcomed the return of Indian companies and Indians to Libya to partake in the reconstruction and development of new Libya. Both sides expressed satisfaction at the excellent bilateral relations as well as cooperation in the eld of health, education, IT, pharmaceuticals sectors. The President thanked Indias offer for providing assistance and expertise in drafting of Libyas Constitution and expressed desire to be beneted from Indias experience. They also assured of looking into the nancial losses suffered by the Indian companies. For more on this story, please read India reaching out to Libya in Focus.
Tajikistan & India Add Substance to Strategic Partnership

ice President M Hamid Ansari paid an ofcial visit to Tajikistan from April 14-17. He was accompanied by a high-level delegation. During the visit, the Vice President met the President and the Prime Minister of Tajikistan, and visited the Khatlon Province of Tajikistan. He also visited the Tajik Technical University during his stay in Dushanbe. Relations between India and Tajikistan have traditionally been cordial and close. During the last state visit of the President of Tajikistan to India in 2012, both countries elevated their bilateral relationship to the level of strategic partnership. During the same visit, the President had extended an invitation to the Vice President to visit Tajikistan. India and Tajikistan have had regular high level exchanges and signicant progress has taken place in strengthening cooperation in strategic areas and in development partnership between both the countries. India and Tajikistan continue to work together for peace, prosperity and security in the common neighbourhood and Tajikistan is one of Indias close partners in the international arena. For more on the visit and deepening bilateral ties between the two nations, please read Fresh Impetus to India-Tajikistan Strategic Ties in Focus.
Corporate NEWS Corporate NEWS

AT&T, Wipro Expand Relationship in M2M Space
T&T and Wipro Ltd announced on May 7 that they were expanding their relationship and would work together to offer machineto-machine (M2M) development services and systems integration across all major industries. The agreement focusses on building solutions on AT&T M2M application platform powered by Axeda, used by companies globally, a joint statement said. AT&T and Wipro are combining efforts to provide customers with the expertise and technical support they need to get machines talking, using the AT&T M2M application platform powered by Axeda, which can dramatically speed the delivery time and lower the cost of application development and maintenance for M2M applications, the statement said.
Car Makers See Future in Small Diesel Engine
ven as sales of small cars declined 13 percent in the last nancial year, leading car makers like Maruti Suzuki, Honda, Tata Motors and Hyundai are exploring options to develop or strap on diesel engines with reduced engine capacity to power vehicle sales in the category. Japanese auto major Honda Motor Company, which launched its rst major offensive in the Indian market with its diesel-powered entry-level sedan, Amaze, last month, is looking at developing a diesel engine with reduced capacity to power small car sales in emerging markets. Hondas initiative could throw a major challenge to heavyweights such as Maruti Suzuki and Hyundai, which have maintained a stranglehold on the smallcar market in India for over a decade. At present, Maruti Suzuki, with over half-a-dozen models, from the M800 to the Swift, commands 48 percent share in the compact car category. Hyundai, the Korean automobile major, has a market share of 22 percent. Both are reportedly working on bringing small diesel cars in the Indian market, where 58 percent of new car sales happen in the diesel category. Tata Motors, too, has been mulling over the launch of a diesel version to beef up Nano sales.
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Corporate NEWS
DLF to Sell 81 Million Shares; Mandates Eight Banks
LF Ltd is planning to sell up to 81 million shares and has mandated eight banks for the institutional placement sale, according to a term sheet. The price range and size are yet to be determined. DLF picked Bank of AmericaMerrill Lynch, Deutsche Bank, JP Morgan and Standard Chartered, along with CLSA, HSBC, Kotak and UBS to handle the sale. Kushal Pal Singh or KP Singh is the chairman and CEO of DLF Limited.
No Immediate Cut in Lending Rates: SBI
tate Bank of India (SBI) ruled out any immediate cut in lending rates even as the Reserve Bank had reduced policy rate by 0.25 per cent in the first week of May. RBI lowered the short-term lending (repo) rate to 7.25 percent from 7.50 percent, lowest since May 2011, while retaining the CRR for banks unchanged at four percent. The countrys largest lender SBI last reduced its lending rate in January by cutting it by 0.05 percent. Following the marginal reduction, SBIs base rate, or the minimum rate of lending, came down to 9.70 percent from 9.75 percent. Meanwhile, stateowned HUDCO reduced housing loan rates for individual borrowers under its Niwas Portfolio. Its lending rate for individual borrowers has been lowered to 9.95 per cent for loans up to `25 lakh.Housing nance company DHFL also has reduced its interest rate by 0.25 percent. The revised rate is applicable for all new loans.
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Writers Bloc
Dr Melvin R Schlein
Balaji Chandramohan
Lord Dolar Popat
Ambikesh Kumar Tripathi
Dr Zakir Hussain
Eric Walberg
Morris Mottale
Nathan Smith
Praful Adagale
Dr Mohammad Samir Hussain
Sergei DeSilvaRanasinghe
Sukalpa Chakrabarti
Dimpy Gulati
Usamah Andrabi
Ruby Pratka
Prof Riordan Roett
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FOCUS
Pakistan Elections
Who Will Shape its Political Dynamics

By Usamah Sha Andrabi
t this point, many western policy makers see little hope in a stable Pakistan and are beginning to view the former ally as part of a new axis of evil. Nevertheless, Pakistanis have not given up hope on their countryand for good reason. What many western leaders fail to recognise is the difference between the state of Pakistan and the extremists harbouring in the country. The problems of violence and fanaticisms are rooted in the Taliban that inhabit Pakistan. If Pakistan wants the international respect it so desires, then its government must identify the Taliban and its various offshoots as an enemy of peace and civility.
In the Hope of a New Pakistan

One of the many problems with the Pakistani government is its lack of control over domestic terrorism. Extremists know how inept their government is and can subsequently empower their supporters. However, this could all change with the recent dissolution of Pakistans legislative body and the forthcoming elections. Nevertheless, citizens are weary of the probability of change after years of hopes for a renewal of democracy has been shattered. From 20122013, Pakistan went through four Prime Ministers - Yousuf Raza Gillani, Makhdoom Shahabuddin, Raja Pervaiz Ashraf, and Mir Hazar Khan Khoso, the current interim PM. The former three were all sacked from their jobs through various corruption scandals or illegalities. So the Pakistanis may have good reason for their loss of hope. They need not look far for potential providers of a new Pakistan. The country chooses a new Prime Minister during parliamentary elections in May. The three likely candidates in the May election are Bilawal Bhutto Zardari, Nawaz Sharif and Imran Khan.
After waiting for years for renewal of democracy, Pakistanis are weary of the probability of change. But there exists hope that a new leader, unafraid of terrorists, international allies or the US, would emerge and establish an atmosphere of peace, permanence and progress
allegations. Now, his party has become a more moderate conservative party with a pro-business party platform. Sharif remains the frontrunner as his PML polls with the most support. Bilawal Bhutto Zardari, son of President Asif Ali Zardari and former Prime Minister Benazir Bhutto, is relatively new to Pakistani politics, thus little can be said about the co-chairman of the Pakistan Peoples Party. Nevertheless, his party has a colourful history in Pakistan championing various leftist ideologies, while being marred with corruption allegations (Bilawals mother), executions (Bilawals grandfather), and more corruption (Bilawals father). Imran Khan, the renowned cricket player turned politician and leader of Tehreek-eInsaf, is spearheading the newest national party, which thus far has been free of corruption or controversy. Tehreek-e-Insaf provides Pakistan with a fresh face for a country in turmoil. Imran Khan, though leading the least experienced party, has made decisive standpoints on the route Pakistan should take out of this disarray. Along with important social issues, Khan has made clear of his animosity towards Lashkar-e-Jhangvi, the Taliban, and other militant groups in Pakistan stating that there will be no future for the country if terrorism is not controlled. In addition, Khan and his party have proposed a completely revamped US-Pakistan relationship. Contrasting prior
Potential Leaders
Nawaz Sharif, leader of the Pakistani Muslim League, has been in power before and has been involved with a fair share of controversies in the past. During his tenure as Prime Minister, Sharif attempted to implement Sharia law and was ousted by a military coup after money laundering
politicians submission to US authority, Khan has been widely critical of US policy in Pakistan, particularly drone strikes. Khan maintains that drone strikes are a major stimulant to terrorism ensuring the opposite of their intent. He refuses to let Pakistan continue to be Americas puppet. For Pakistan, that is what is necessary. Pakistanis need a leader unafraid of terrorists, the US, or international allies. At this point in time, what Pakistan needs most is a leader who cares about his country rst and foremost. It remains to be seen if any of the three primary candidates will put their country rst.
Usamah Sha Andrabi is a Kashmir-Punjabi Pakistani student born and raised in Houston, Texas. He is currently a student at Cornell University in Ithaca, NY, studying Industrial and Labour Relations with a focus in International and Comparative Labour and a minor in Law & Society.
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FOCUS
Fresh Impetus to
India-Tajikistan Strategic Ties
By Dr Mohammad Samir Hussain
The geo-strategic signicance of Central Asia is well reected in one of the Ministry of Defence reports which states, due to its strategic proximity to the Middle East and South Asia, Central Asia has emerged as a distinct geo-political entity stimulating global attention and interest. The region has vast untapped potential of oil and gas and other strategic minerals. Engagement of the CARs is thus an essential component of our security.
Tajikistan: Gateway to Central Asia

India perceives Tajikistan as a gateway to the Central Asian region, where the former seeks to expand long-term strategic inuence for serving its geo-strategic and geo-economic interests. Tajikistan is just 20 kilometres away from Greater Kashmir of India. It is located in close strategic proximity to the Middle East and is surrounded by Kazakhstan and Kyrgyzstan in the north, Afghanistan in the south, China in its easternmost region and Uzbekistan in the west. Given its strategic location, engagement with Tajikistan in the context of the CARs is thus an essential component of our countrys security. Tajikistan also holds the key to expanding Indias strategic inuence in the region in the face of other major powers, such as the US, Russia and China. This recent visit gives an opportunity to both sides to discuss bilateral and regional issues of concern and even agree on working closely towards strengthening strategic ties. It is in the mutual interest of India and Tajikistan to work together for regional peace, prosperity and security in our common neighbourhood. Both sides held thorough discussions on the security scenario confronting Afghanistan and the need for cooperation on security issues as well as in countering cross-border terrorism and its related activities. The emergence of international terrorism as one of the primary threats to both countries has ushered in greater convergence in security perceptions. This has prompted both sides to forge closer security and defence related contacts, exchanges and cooperation and sharing of information, military training etc. After a detailed discussion on bilateral and regional issues, both sides agreed on the need to broaden the existing level of trade ties. They also identified the issue of fine-tuning connectivity between the two countries as a major barrier. In that context, both sides have agreed on opening the trans-Afghan corridor to facilitate easy access of trade to and from the land-locked country. This proposed route will come via Afghanistan and Pakistan. Besides, they have also reached an agreement over mining, information technology enabled services and medical sectors. India has decided to
Vice President Mohammad Hamid Ansari being received by the First Deputy Prime Minister of Tajikistan, Davlatov Matlubkhon Sultonovich, on his arrival at Dushanbe International Airport in Tajikistan on April 14
ndia has enjoyed close and friendly relations with Tajikistan since its birth after the dissolution of the erstwhile Soviet Union. It is a strategic relationship based on mutual respect and understanding, convergence of interests and similarity of views. The recent visit by Indian Vice President, Hamid Ansari, to Tajikistan from April 14-17 will, no doubt, strengthen the close strategic ties between the two countries. With Central Asia occupying an important place in Indias foreign policy, this visit assumes strategic significance and is a reection of the changing Indian perception towards Central Asian states. It demonstrates the great importance the Indian leadership attaches to countries of the region. It was during the landmark visit of Tajikistan President Emomalii Rahmon to India in September last year that he invited Vice President Hamid Ansari to visit Tajikistan. President Rahmons visit was important for not only providing an institutional framework for future cooperation, but it also envisaged the elevation of multi-dimensional bilateral ties to a strategic level. The key agenda of the visit was to discuss the future scope of cooperation in security, cross-border terrorism and energy security.
Connecting with Central Asia: Opportunities and Challenges

During the last decade, India and Tajikistan have made signicant progress in bilateral strategic ties, with regional and global ramications. The most recent visit is of strategic significance for two specic reasons. Firstly, India and Tajikistan have concluded the strategic partnership agreement, and secondly, because India has forged ahead with its Connect Central Asia Policy for a more robust geo-strategic engagement with this important region. The changing geo-strategic landscape has impelled India to develop energy, security and commercial interests in the region. Central Asia offers both opportunities and challenges for our country. Opportunities are in terms of the presence of huge untapped oil, gas and natural resources. Indias challenges in Central Asia arise both from within and outside the region. Since India considers the region as part of its extended neighbourhood, any negative developments in the region will have a crucial bearing on New Delhis strategic interests. So the biggest challenge before India arises from terrorism, separatism and aggressive nationalism, ethnic conicts and political instability.
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Geo-Strategic Location of CARs
We also have a joint working group on terrorism. Tajikistan is very sensitive on this issue and we are cooperating with it on ways to tackle this menace. Long-term cooperation between India and Tajikistan is central to peace and security in the region and the world at large. The policies and actions of both in the coming decades will go beyond mere short-term national advantages. India expanded its reach beyond South Asia when it established its rst ever air base in Ayni in Tajikistan. The base is being portrayed as Indias hard-fought effort to promote stability in Central Asia, and in particular, Afghanistan. Since 2002, India has spent a huge amount for the establishment of the base and has maintained a presence at the Ayni base. The airbase would gain strategic importance following withdrawal of the US troops from Afghanistan in 2014.
Consolidation through Soft Power

Source: Jim Nichol, Central Asia: Regional Developments and Implications for US Interests, Congressional Research Service, RL 33458, 9 January 2013, p. 66
set up a centre of excellence in Tajikistan with a super computer to promote IT enabled services. India has also proposed to set up an enterprise development centre in Tajikistan for skill development and creating more job opportunities for the youth in the resourcerich country. Leaders of both nations agreed to focus on the welfare of people with a common approach. The strategic partnership strengthened relations in the energy sector, health, IT, education and paved way for the establishment of small and micro industries in the country. While inaugurating the India-Tajikistan modern engineering workshop in Tajik Technical University, Vice President Hamid Ansari had said, I am happy to announce that the Government of India has decided to collaborate with the Tajik Technical University to create a centre of IT excellence with a super computer. I have no doubt that this centre will become the seat for developing IT expertise among young people in Tajikistan.
due to the global financial crisis. The major items of Indian exports to Tajikistan include organic and inorganic chemicals, iron and steel, pharmaceuticals products, electrical machinery and equipment and many others, while India imports aluminium, copper and cotton. Lack of easy access and transportation facilities has been the main hindrance to a robust trade partnership. The recent initiatives in transportation links such as the air link between Delhi and Dushanbe and vice versa would lead to greater economic and trade exchanges in the coming years. Given Indias economic success during the Past decade and more, it becomes imperative for Tajikistan to expand trade and investment ties with the former to deal with certain economic challenges, such as reducing dependence on foreign loans and aid to cover its budget, trade decits and enhancing employment opportunities for Tajiks. Greater physical connectivity would provide the impetus for Indias economic integration with countries of the region.
Greater Physical Connectivity for Enhanced Economic Integration

Politically, India and Tajikistan respect each others sovereignty, security, territorial integrity and support each others efforts in ensuring stability, ourishing economy and improving peoples livelihood. On the economic front, the total trade turnover moved from a meagre $4.09 million in 2000-01 to $41.33 million in 2010-11. But in 2011-12, it reduced to $28.37 million
Tackling the Scourge of Terrorism

From the defence and security point of view, there is tremendous scope for cooperation between the two sides. Terrorism is one of the most important areas of concern for both. Vice President Hamid Ansari also highlighted, As India has been a victim of cross-border terrorism, so has Tajikistan, which has also suffered in a similar manner. Terrorism emanating from Afghanistan remains a crucial concern and a live issue.
Socio-cultural cooperation and promotion of greater people-to-people interaction through increasing exchanges in culture, education, youth, human resource development and scholarly exchanges are areas which would further strengthen the existing level of strategic ties. Dissemination of knowledge about civilisational links between Tajikistan and India is another way forward. It was during President Rahmons visit to India last year that both sides signed a Programme of Cooperation between the Government of the Republic of Tajikistan and the Government of the Republic of India in the eld of culture for the year 2012-2015. Above all, the visit will further strengthen mutual trust between the two sides, enhance pragmatic cooperation in multi-dimensional areas and inject new impetus into the development of the India-Tajikistan strategic partnership in areas as diverse as economics, defence, security and culture. India has a huge task ahead in Central Asia before it achieves its strategic ambitions. There must be a well-planned strategy on how to capture the opportunities and tackle the challenges that affect the achievement of its strategic interests. In this context, it becomes imperative for India to eschew its traditional wait-and-see approach in favour of a more pro-active line. The India-Tajik bilateral relationship has the potential to not only serve the interests of both sides; it can bring peace, security and prosperity in the region.
Dr Mohammad Samir Hussain is a Research Associate in the Yashwantrao Chavan National Centre of International Security and Defence Analysis, University of Pune.
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Reassessing Indias
Soft Foreign Policy Approach
By Ambikesh Kumar Tripathi
t is the duty of a nation to protect and promote national interests. As noted American foreign policy scholar Hans J Morgenthau describes in his book, In Defense of the National Interest, remember always that it is not only a political necessity, but also a moral duty for a nation to always follow in its dealings with other nations but one guiding star, one standard for thought, one rule for action: The National Interest. Foreign policy is an instrument for a nation to encourage its national interests. India, under Jawaharlal Nehru, started her interactions with other nations. Nehru was the prominent figure among those who shaped Indias foreign policy. Hence, there is an obvious impact of his ideas on Indian foreign policy.
An ideal mix of a hard and soft foreign policy approach is needed to meet contemporary foreign policy challenges and enable India to attain global power status
civilisation and culture. Civilisational and cultural values are constitutive elements of the soft approach of foreign policy. At this juncture, Indian foreign policy is facing numerous challenges, all of which impel the need to re-examine the Nehruvian approach. Is it time for India to eschew this approach? Or, is there a need to re-dene this approach in the context of contemporary circumstances?
religion are most important recourses for soft power.This judicious use of soft power has neither changed Indias image in the subcontinent, nor has it helped to reafrm its status of a global power in international politics. So the pertinent question is does this soft approach meet to our realistic goals? The answer is no, especially in the wake of the recent Chinese incursion in eastern Ladakh, despite having close cultural and civilisational relations. But this also does not mean that the soft approach of our foreign policy is totally irrelevant, as Nye maintains that soft power is an important reality. It is time to rethink how various forms of soft power can be developed and used to attain foreign policy goals. It is time to understand the importance of values. Undoubtedly, hard power remains important to achieve strategic interests, but, in the present day, multi-pillar world, a hard or coercive approach will create needless tensions, while a soft or cohesive approach can serve strategic interests in a peaceful way.
Contemporary Challenges
Contemporary Indian foreign policy is faced with numerous challenges. These include balancing relations with global powers, building new partnerships with regional organisations, expanding the inuence in Asia, Africa and Latin America, making NAM more relevant according to new conditions, enhancing Indias economic and energy security, dealing with environmental and human security threats, UN reforms and permanent membership of Security Council. The foremost challenge however, is to determine the most comprehensive manner to exploit our soft power resources to achieve strategic interests.
Nehruvian Approach: Realistic Style Rooted in Idealism

Such is the pivotal role played by Nehru in shaping Indias foreign policy that it tends to, more or less, continue on the Nehruvian legacy. Nehrus approach about foreign policy was entirely idealistic, even though he showed a realistic tendency; for instance, as part of the non-alignment movement. Through the non-alignment policy, India received benets from both sides of a bipolar world and succeeded at balancing relations. He has often been criticised by foreign policy scholars for an idealistic approach and is even held responsible for Indias defeat in the 1962 war with China. Nehru adopted a realistic approach for security diplomacy when he signed a series of friendship treaties with neighbouring countries. Though he was keen to build relations on a realistic foundation, his realism was not based on a power game. He was perhaps the last moral realist of international politics and was a critic of Machiavellian politics. As Vice-president in the Interim Government, Nehru said, We shall take full part in international conferences as a free nation, with our own policy, and not as a satellite of another nation. We propose as far as possible to keep away from the power politics of groups, aligned against one another, which have led in the past two world wars and which may lead again to disaster on an even vaster scale. Nehru was a prophet of peace. He believed in peaceful co-existence and maintained that Indias foreign policy was rooted in its
Soft Approach & Strategic Interest

The term soft power, which came into prominent discourse after the Nehru period, was rst coined by Harvard Professor Joseph S. Nye, in his book, Bound to Lead: The Changing Nature of American Power (1990). He further developed the concept in another book, Soft Power: The Means to Success in World Politics (2004). He denes soft power, as the ability to get what you want through attraction rather than coercion or payment. To quote Joseph Nye, The soft power of a country rests primarily on three resources: its culture in places where it is attractive to others; its political value when it lives up to them at home and abroad; and its foreign policies when they are seen as legitimate and having moral authority. From the Nehru period to the present UPA government, civilisational, cultural and other historical links are much emphasised in Indias foreign policy, especially towards its neighbouring countries, even though the end of the Cold War raised several questions about Indias foreign policy priorities. Soft power is created partly by governments and partly by non-governmental actors. As Shashi Tharoor maintains, Soft power does not rely on governmental action alone, Bollywood movies, Indian food, spiritualism, yoga and
The Way Ahead

Indias dynamic long-term and shortterm national interests require the countrys foreign policy to be aligned with a realist approach. But it does not mean that the soft approach of foreign policy is irrelevant, or that there is a need to eschew the Nehruvian approach. It is time to re-explain and extend it according to new challenges. In dealing with new challenges like neo-colonialism, nuclear armaments and other threats to human security, Indias soft foreign policy approach plays a crucial role. But to attain a global power status, that is the foremost goal of foreign policy, India needs to adopt a pragmatic approach: a policy which would be an appropriate mix of hard and soft approach.
Ambikesh Kumar Tripathi is a PhD candidate at the Department of Political Science in Banaras Hindu University, Varanasi. He may be reached at abhimukto@gmail.com
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Prachandas Vision for Trilateral Harmony
By Pratiksha Srivastava
Before visiting China, Prachanda made it clear that his agenda was to appeal for a trilateral relationship between the three countries, which was repeated during his lecture at the Indian Council of World Affairs (ICWA) in New Delhi on April 29. Prachanda maintained that Nepal, located between the two economic giants of Asia, remained poor and under developed, and hence was in need of investments from India, in addition to support during his nations political transition. While meeting the new Chinese President Xi Jingping, Prachanda spoke of enhancing bilateral relations. Emphasising the very close relationship between the two nations, the Chinese President stressed the need for expanding relations between the two nations and two communist parties. He, however, reiterated that building bridges with China and proposing a trilateral relationship between the three nations did not in any way undermine Nepals bilateral relations with India.
Deepening India-Nepal Relations

Friendship between India and Nepal goes back to ancient times. Praising India for its civilisation and its role in Nepals sovereignty during colonial times, Prachanda said that there were several areas of friendship between the two that could be explored. He believed Gandhian politics continued to resonate across the globe, and remained relevant even in the current times. Nepal and India have been economic partners for decades, and the relationship was based on mutual cooperation in several areas. Since India was Nepals largest development partner, the UCPN chief appealed for more investments in the field of agriculture, tourism and other sectors. Expanding the trade basket with Nepal would not only provide a llip to the Nepalese government, it would also increase Indias regional hegemony. Indias resources create several opportunities for Nepal. Prachanda wished that India invest in education, agriculture,
he recent visit to India by Nepals former prime minister and president of Unied Communist Party of Nepal (UCPN), Pushpa Kamal Dahal Prachanda, raised many questions about the multifaceted relations between India and Nepal. The visit assumes signicance especially since it comes close on the heels of his visit to China. Known as a charismatic, cerebral and
dynamic leader responsible for a signicant change in the nations politics, Prachanda holds a reputation of exerting considerable inuence in his countrys foreign policy affairs. The objective of both his visits was to bring India, Nepal and China together on a common ground. Such a development would obviously accelerate Nepals progress and economic growth.
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tourism and technology sectors, not just at the government level; but at a nongovernment level too. This could provide new employment opportunities for the people of Nepal, while bolstering the existing education system. Prachanda mentioned the historic 12 point agreement which paved way for successful transition in Nepal. Nepal continues to face political chaos leading to social instability even after the end of monarchy and the establishment of democracy in the country. India, which backed the 2006 Comprehensive Peace Agreement that helped end the 12-year-old civil war in Nepal, supported the government headed by Prachanda. But ties between the two soured when he ordered the sacking of then Nepalese army chief, Rukmangad Katawal, in 2009. Nepal also sought assistance and intervention from Indias democratic system, and hoped that India would play a signicant role in instituting a federal and electoral political system. Prachanda emphasised the need for introducing new reforms and a constituent assembly. Prachanda has often resorted to antiIndia rhetoric regarding Indias anti-Maoist operations like the recent Green Hunt Operation. He has frequently accused New Delhi of interfering in Nepals affairs and dictating to its leadership. However, Prachandas pro-Maoist views have not found much of an audience with the Indian government. Despite his views, the UCPN chief called for greater participation with India, emphasising that Indias friendship was reliable and important for Nepals development. looking into ways to attract its neighbour through various development programmes. China has become an important investment partner for Nepal. In scal year (FY) 2007-08, China had stood in third position in terms of investment in Nepal, after India and South Korea, according to the data of the Department of Industry, Government of Nepal. From FY 2008-09 to FY 2010-11, China was consistently ranked second among the countries that brought the largest amount of foreign direct investment (FDI) in Nepal after India. China has stepped up its investments in Nepal in sectors of water resources and energy, infrastructure, agriculture, minerals and tourism. As part of its cultural diplomacy, APEC, a China sponsored NGO, has offered to develop Lumbini as a world class heritage and pilgrimage site with an investment of $3 billion. In recent times, Lumbini has seen a surge of Chinese tourists. Interested parties from both the countries are exploring the prospects of constructing a railway linkage connecting Lhasa to Nepal. Some of the other existing projects by China in Nepal include a $1.6 billion hydropower plant.
China-Nepal Relations: The Bond Runs Deep

Diplomatic relations between Nepal and China date back to the year 1955. Nepal shares its border with China and has been since seeking various aids. China believes the federal government system in Nepal can bring stability in the political system of the land-locked nation. China supports Nepals current government formation and has been
Friendship between India and Nepal goes back to ancient times. Praising India for its civilisation and its role in Nepals sovereignty during colonial times, Prachanda said that there were several areas of friendship between the two that could be explored
At the Crossroad of Transformation

Nepal, a friend of India and China, has always tried to balance its relationship with both countries. Pushpa Kamal Dahal insisted that Nepal played a leading role in connecting India and China, and did not want to alienate either of them. While maintaining that the India-China friendship would play a vital role in the economic development of Nepal, Prachanda was keen to see both countries resolve long-standing territorial disputes and other issues relating to market access and investments. He insisted that both countries could nd economic space to stand together. Prachanda felt that trade and commerce were areas where Nepal could act as a bridge, and advocated the revival of the trade routes linking India and China through the Nepalese territory. Prachanda has taken an initiative to appeal to both of Nepals neighbours to form a triad that stands to benet Nepal. Recently, the Chinese Ambassador to Nepal, Yang Houlan outlined Beijings vision of Kathmandu as a trade gateway to New Delhi in an op-ed article in Nepals Englishlanguage Republica newspaper, noting that the huge common market between China and South Asia provides great economic opportunities for both sides. This has bolstered Prachandas vision of the trilateral relationship, who envisions the hydropower plant in Nepal by China as a bridge between the three countries and terms Nepal as a crossroad of transformation.
Prachanda with Chinese President Xi Jingping
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India Reaching
out to Libya
By Dr Zakir Hussain
very day is a holiday since we got rid of the regime, is the mood of the common Libyan in Tripoli, months after a bloody civil war. The war of liberation, which started in February 2011, ended with the assassination of the corrupt and eccentric dictator Maummar Gadda, who ruled the country with Green Book since 1969. Although the dictator is gone, the country still grapples with the goals and aspirations of people who rose against the corrupt and autocratic regime. The priorities in Libya include, among others, uniting the various militia factions, securing stability and ending violence, restoring access to basic utilities and resuming and enhancing oil exports in order to secure much-needed revenues.
The time is ripe for both India and Libya to exploit existing political and economic potential and utilise social capital to usher in a new era of friendship and cooperation
b/d, it still needs to work on several issues. It has to launch reconstruction and capacity building programmes in order to achieve long-term inclusive growth and development. Achieving fast and comprehensive economic growth is imperative since 25 percent of the population and more than 32 percent (2010) of the youth is unemployed, exacerbated by the absence of redistribution of wealth as Gadda used the countrys vast oil wealth to co-opt tribes. Furthermore, disgruntled sections are yet to be linked up with the mainstream, and democracy lacks wider acceptance and legitimacy in the country. The world is cooperating with the present Libyan leadership and has promised to release $168 billion assets, which were frozen during the crisis. Tarek Mitri, head of the UN Support Mission in Libya, has aptly observed that many difcult decisions are yet to be
taken in the areas of constitution-formation, transitional justice, reconciliation and security sector reform. Present-day Libya faces both short and medium term challenges. Figures below show the short term and medium term challenges that the country is likely to face. The new democratic Libya needs to exude condence and receive much needed global support such as investment capital, technology assistance and supply of human resources to assist its developmental activities.
India & Libya: Deep and Cordial Diplomatic Ties since 1969
Although India took a principled stand of non-interference and abstained from voting during the passage of the UNSC resolution 1973 in 2011 aimed at creating a no fly zone, it was one of the rst countries to recognise the democratic National Transition Council (NTC). India has participated in all conferences, including the ones at Istanbul, Paris, London and New York, aimed at resolving the Libyan crisis, and has also provided $2 million for the humanitarian crisis in Libya. If one looks at the depth of bilateral relations, it is not surprising to note that despite being geographically distant, both countries enjoy a historically deep and cordial relationship. India forged its rst diplomatic ties with Libya in 1969 and established its diplomatic mission at Tripoli. In 1984, the visit of Indias Prime Minister Indira Gandhi
Challenges Ahead
Politically, Libya needs to restore peace and security beyond Tripoli, besides promptly drafting the constitution. It also needs to end the intra-tribal warfare and strengthen its security apparatus, particularly in the countrys eastern and southern parts. Libya also needs to work seriously on eradicating the divisions between pro and anti Gadda forces, hardliners and liberal pro-democratic forces. Economically, the country needs to increase the pace of reform and developmental and stabilise and promote inclusive growth in the country. Although Libya has achieved more than 1.6 percent growth in 2012, restored its oil production level of 1.6 million
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Short Term Challenges
Repairing transport infrastructure will also be crucial to getting the economy back on track, especially those which serve oil exports. Besides reconstruction, Libya also plans to augment its total oil production, which requires not only the release of frozen assets of $168 billion, but also technology and human expertise. For all this, Libya urgently needs to revamp its foreign relations.
Mutually Favourable Economic Relations

In this backdrop, India has offered to assist Libya with economic and commercial assistance. The recent visit (April 14-16, 2013) of E Ahmed was in this direction. India wants Libya to call back its 18,000 guest workers who had left during the civil war, besides granting compensation for the losses Indian companies incurred during that devastating period. Almost all the Indian companies were involved in the medical and IT sectors. Several of these Indian companies had to abandon the projects they had been awarded by the erstwhile Libyan government, when the civil war escalated. With the new regime in place and reconstruction underway, many of them are keen to return, while others are seeking compensation for the losses incurred. Both countries have deep understanding of each others economic signicance. Libyas rich hydrocarbons and mineral resources offered the much needed inducement to India, while Indias growing economy, both industrial and agricultural sectors, attracted the semi-arid Libyan counterpart to forge close trade and commercial ties with India. As a result, merely one year after the establishment of diplomatic relations, both countries signed a framework agreement on Protocol on Industrial, Economic and Scientic Cooperation in 1978. In order to
provided the much needed impetus to growing bilateral relations. Politically, India has always been an ardent supporter of Libya. In its rst opportunity in 2003, India supported the UNSC resolution 1506, which aimed at lifting sanctions imposed on Libya.
India as Libyas Political Role Model

Looking at the nature and intensity of challenges that democratic Libya faces, India, undoubtedly, can be Libyas political role model. India had, on the eve of its independence, faced most of the challenges that democratic Libya currently encounters. India cherished the ideals of unity in diversity and adopted a secular and pluralistic model of governance, where everybody with all their differences got space to live and enjoy constitutional safeguards. These constitutional principles indeed would be able to provide a common framework and give equal space to all 140 tribes, clans and ethnic groups, including 30 politically inuential ones. This would gradually help evolve a federal structure in the country, which is essential to restore peace, stability with equal responsibility in the countrys decision making and resource distribution. During his recent visit, Indias Minister of State for External Affairs, E Ahmad, offered to help Libya draft its new democratic constitution, which has been welcomed by both the President and Prime Minister.
Libyan economy and society; it accounts for 70 percent of the output and 95 percent of the export earnings, besides maintaining social peace and stability by meeting the cradle to grave subsidy programmes in the country, which is expected to grow from 11.9 percent to more than 15 percent, and wage bill from nine percent to 19 percent of the GDP between 2010 to the end of 2012 respectively. However, as estimated, 62 percent of the oil resources have already been utilised. Libya urgently needs diversication and development of the economys other sectors. Consequently, it needs to reconstruct and refurbish its existing mineral resources and build infrastructure on a priority basis. According to one estimate, Libya needs approximately $200-$480 billion over ten years to reconstruct its war-ravaged economy. The reconstruction priorities will include public and social infrastructure that provide crucial services, such as healthcare, education, electricity and water supply.
Medium Term Challenges
Rebuilding a War-Ravaged Economy

Libya needs fast economic recovery. According to the IMF, the Libyan economy contracted more than 50 percent in 2011, particularly after it witnessed a drastic decline in oil production between the second and third quarter of 2011, from 1.3 million b/d to mere 10,000 b/d. Oil plays a key role in the
Source: Ralf Chami Report IMF, 2012
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Total Bilateral Trade between India and Libya, 1996/97-2012/13
Year Import Export Total Trade Decit Year Import Export Total Trade Decit 1996-97 49.65 25.84 75.49 -23.81 2005-06 11.94 103.29 115.23 91.35 1997-98 29.33 38.66 67.99 9.33 2006-07 135.71 86.21 221.92 -49.5 1998-99 2.69 24.28 26.97 21.59 2007-08 1230.67 135.98 1366.65 -1094.69 1999-00 20.18 22.34 42.52 2.16 2008-09 684.61 128.68 813.29 -555.93 2000-01 7.79 8.07 15.86 0.28 2009-10 622.64 221.98 844.62 -400.66 2001-02 9.53 9.35 18.88 -0.18 2010-11 969.09 131.99 1101.08 -837.1 2002-03 2.94 17.64 20.58 14.7 2011-12 38.6 60.98 99.58 22.38 2003-04 10.38 18.73 29.11 8.35 2012-13 (April-Dec) 1201.31 145.41 1346.72 -1055.9
(US$ million) 2004-05 13.6 173.53 187.13 159.93
Source: Ministry of Trade and Commerce
boost and regularise their growing economic ties, India and Libya formed a Joint IndoLibya Commission, which has, till date, successfully completed ten sessions. To further their existing bilateral economic relations, both countries signed, the agreement on avoidance of double taxation and scal evasion in 1981. These two initiatives provided the much needed impetus to economic and commercial ties. Trade relations between India and Libya have grown substantially in a gradual manner. It only slowed down during the recent turmoil in Libya. Although bilateral trade has not been stable, it recorded a growth of more than 56 percent between 2006-07 and 2010-11; the total volume jumped from $221.92 million to more than $1.1 billion during the same period. However, the balance of trade is highly in favour of Libya. This is mainly because of the energy component as well as of rerouting of Indian goods to Libya after repacking and value addition in third countries. The main items of Indias export basket are electrical equipments, machinery, mechanical appliances, vehicle parts of turbines, boilers, iron and steel articles, project goods and pharmaceuticals; while Libyas items of export to India comprise mineral fuels, mineral oils and products of their distillations, bituminous substances, mineral waxes, etc.
Source: from the above table
Investment
Although the exact amount of capital investment made by Indian companies in Libya is not quantied, a number of Indian companies have, in the recent years, invested in different sectors in Libya. Before the turmoil, Indian companies had a presence in the entire spectrum of commercial activities such as hydrocarbons, construction, power and IT. Major Indian oil companies like Indian Oil, Indian Oil Corporation and OVL developed big stakes in upstream and downstream sectors in the Libyan oil and gas sector. Indias premier electrical company, BHEL (Bharat Heavy Electrical Limited) in
a joint venture with its Libyan counterpart ECCO, has successfully completed several power projects, including the Western Mountain Gas Turbine Power Project. I-ex Solution has assisted the Libyan Central Bank and ve others in core banking solutions. Over the past ve years, Indias private sector companies have also ventured into Libya. Companies such as Punj Llyod, KEC International, Dastur Engineering, Unitech, Shapoorji Pallonji International, NIIT, Global Steel Limited (Ispat Group Company), Sun Pharma and Simplex Infrastructure have invested huge amount of capital in Libya. Some of the companies continued investing during the turmoil. For instance, Punj Llyod was executing oil and gas and other infrastructure projects worth $800 million, which was approximately 16 percent of the companys total order backlog. Punj, which has halted its ve projects, is hopeful that the NTC would restore projects done with Egypt and Italy. Punj has also announced resumption of its construction and oil-eld work in the
Sirte Basin for Waha Oil Company. It is also planning to restart construction of a road and work on township upgradation in Tripoli. Another company which suffered from the uprising is Oil India, which left $46 million investment assets behind in Libya. Oil India is also looking forward to resuming operations under the new Libyan dispensation. In October 2012, a large business delegation under CII visited Libya with a hope to explore and participate in reconstruction programmes. The delegation comprised some of the major Indian companies such Punj Lloyd, 4G Identity, Apollo Hospital, Escorts Ltd, Finolex Cables, Jaguar Overseas, Mahindra Emirates Vehicle Armouring, Psychotropics, Shapoorji Pallonji and Simplex. Before the turbulence, Tripoli had showed interest to invite Indian companies in IT, health and pharmaceutical sectors. During his three day visit, Minister Ahmad assured Indias commitment to contributing towards Libyas reconstruction and development.
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He also raised the issue of considering the compensation of the loss of Indian companies, which was taken positively by the Libyan leadership on a case-by-case basis. Moreover, India has also offered to help war-aficted persons and announced to provide 1000 articial limbs. India has also announced the establishment of Vocational Training Centres as well as an Articial Limb Camp and Centre for injured Libyans. It has offered 25 scholarships to Libyan students under the Indian Technical and Economic Cooperation (ITEC) Programme. Besides, the Government of India will also provide short-term training and selected candidates are provided return tickets, gratis visa and other facilities. The Indian Ambassador in Libya, Anil Trigunayat, has also suggested that India could consider more specic requests for training in the traditional and new and renewable sources of energy at prestigious Indian institutes. In the post-Gaddafi Libya, Indias Bangalore-based nancial software company Subex bagged a contract from the Libyan mobile operator Almadar for developing revenue assurances, fraud management, credit risk management and inter-party settlement. According to the Chief Operating Ofcer of Subex, Vinod Kumar, Libya is an interesting telecom market with a lot of potential.
Sector Housing Oil & Gas Electricity Hospital & Health Education (including schools, universities, technology institutes) Defence Projects Water & Water Desalination projects Transport Projects
Amount (LD) LD 3.5 billion LD 1.99 billion LD 1.88 billion LD 1.01 billion LD 947 million LD 800 million LD 263 million LD 365 million (authorities maintain that an investment of LD 500 million is required) LD 1.0 million LD 334 million
Tourism Sector Legal Projects

Source: Libya Herald, Business Eye, April 2013
Prognosis
As evident, Libya is working on a comprehensive economic reconstruction programme. It needs to revamp its growth and development; improve its health, hospitals, and sanitation; build a huge infrastructure network, including roads, railways, airports, ports, bridges, housing, power and other utility sectors like water projects, colleges, universities, etc. The government is also keen to revamp the hydrocarbons sector. Renewable sources of energy are another important area with huge potential. Libya, which witnessed a decit of 500-600 MW electricity, is planning to shift its oil-fed power to gas and renewable sources. To meet the power requirement, Minister of Electricity Muhairiq has projected an investment of around $4.8 billion; however, less than half i.e. $1.89 billion has been allocated in the current budget. The banking and nance sectors have huge potential as the new government has emphasised the need to develop world-class banking and finance sectors, particularly Islamic banking and nance. The transport sector, according to Bashir Dow Boragta, will alone consume Libyan Dollar (LD)8.4 billion; of which LD4.85 billion will go to roads, LD3.46 billion to airport and LD0.57 billion to ports construction. To achieve these objectives, the General National Congress
approved in March 2013 a LD66 billion budget for the year 2013. Last year, the then Prime Minister Mohammad Jibril had estimated that rebuilding Libya was going to cost $400 billion (LD500 billion). However, investors maintain that more than the nances, it is important to have the legal system in place, particularly the issue of land registration. It is true that within one year Libya has shown a remarkable capacity to improve and attract global attention. According to the Ralph Chami report (IMF, 2012), Economic growth in 2012 exceeded 100 percent, reecting a strong recovery from its collapse during the revolution. Latest indicators are pointing to a restoration of hydrocarbon output later this year and a full recovery of growth in the nonhydrocarbon sector in 2014. Ination fell to six percent in 2012, and a further decline is expected this year. With a considerable pickup in reconstruction expenditure and private demand, non-hydrocarbon growth is expected to average 15 percent during 2013-18. The improved economic recovery and commitment of Libyan leaders to overcome bottlenecks, both economic and political, have instilled condence among global investors. Consequently, there is a greater chance of FDI ow in Libya, even better than Egypt, in the coming years. According to Michael Thomas, former DG of the Middle East Association and Chairman of Pace Group, The nancial services sector is a key area for FDI and an opportunity for development, particularly in the eld of legal services, banking services and insurance as well as to increase and develop some of the current institutional capacity constraints. Looking at Indias potential, Libya can rely on Indias private sector capital and manpower expertise. On its part, India ought to establish a direct ight to Tripoli since it is
currently going via Egypt, Dubai and some European countries. Besides, New Delhi has expressed hope to enter into direct long-term oil contracts with Libya, rather than routing oil trade through middlemen based in Western Europe. According to Anil Trigunayat, India has rendered all possible assistance in Libyas nation building enterprise. Major Indian construction and infrastructure companies have been actively engaged in the Libyan effort. During the revolution, their camps and facilities were placed at the disposal of the revolutionaries. While India has offered to help Libya draft its new democratic Constitution, the two sides have also reportedly discussed the possibility of reviving bilateral consultation mechanisms such as Joint Commissions. Since the end of civil war, trade between the two countries has increased, with exports to India hitting $1.2 billion and imports to Libya reaching $144 million in the second half of 2012/13 (Libya Herald, April 12). On the democratic front, India is committed to help the General National Congress, the legislative authority of Libya, develop the conduct of elections. Both countries need to exploit their existing political and economic potentials and cooperate with each other in order to build a new phase of friendship, bound by democratic principles. Both the Prime Minister and President of Libya have Indian connections. This is the most opportune moment for both nations to utilise their social capitals to promote and strengthen their bilateral relations at all the three levels, governmentto-government, business-to-business and people-to-people.
Dr Zakir Hussain is research Fellow at Indian Council of World Affairs. He is a politico-economist on the Middle East. Views are personal. He may be reached at shahabzakir@gmail.com
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indias strategic strengths
Arms Trade Treaty
The Indian Perspective
By Balaji Chandramohan
nce again India has been forced to abstain from voting in favour of a discriminatory multilateral Arms Trade Treaty (ATT), following other treaties such as the Nuclear Non-Proliferation Treaty, Fissile Missile Cut Off Treaty and Comprehensive Test Ban Treaty in the past. Now the new treaty, which is aimed at setting international standards on the sale of conventional arms, was passed by the United Nations General Assembly with 154 votes on April 3, with rogue states such Iran, North Korea and Syria voting against it, while China, India and Russia abstained. The treaty was passed by the 193-member UNGA 154-3, with Syria, North Korea and Iran voting against it. India, concerned over a possible negative impact on its defence contracts and agreements, was among 23 countries that abstained during the vote. Besides India, other notable abstentions came from Russia, which backed New Delhis stand, and China. Pakistan, in a surprise move, voted in favour of the ATT, though it had
India has consistently underscored the need for a strong treaty to curb illicit trafcking of conventional arms by terrorists and other unauthorised and unlawful non-state actors; and these concerns nd no mention in the specic prohibitions of the Arms Trade Treaty
earlier backed Indias stand that it favoured arms exporters and didnt protect the interests of importers. The ATT is supposed to cover tanks, armoured combat vehicles, artillery systems, combat aircraft, attack helicopters, warships, missiles and missile launchers, as well as
small arms and light arms. It aims to force nations to set up national controls on arms exports. States must also assess if a weapon can be used for genocide, war crimes, or by terrorists or organised crime before being sold by strengthening the end use agreement. The treaty will be open for signature on June 3 this year and will enter into force 90 days after the 50th signatory raties it.
Indias Objections
As the largest importer of arms in the world without a domestic industrial base so far betting a great power, India objects to the ATT on several fronts. First and foremost, India nds it difcult to accept that the treaty will enable arms exporting countries to impose unilateral conditions on the countries that import arms. Second, ATT has failed to address Indias concerns about the illegal transfer of arms to terrorist organisations, insurgent groups and other non-state actors who oppose democratically elected governments. India,
23
indias strategic strengths
having a defensive continental strategic culture, is not involved in exporting arms. Indias domestic arms production includes 39 ordnance factories owned by the government. Indias main concerns are the horizontal and vertical proliferation and easy availability of small arms and light weapons (SALW). Countries exporting arms have a responsibility to ensure that they do not provide weapons without strict end user verication or else SALW may be diverted to wage intra-state conict by non-state actors. The ATT should have refrained from imposing new norms; it should have reinforced the existing obligations and responsibilities of all countries under international law and should have provided a mechanism for their effective application to the trade in SALW. The priority of the international community should be to combat and eliminate illicit trade in such arms. From the beginning of the ATT process, India has maintained that such a treaty should make a real impact on illicit trafficking in conventional arms and their illicit use, especially by terrorists and other unauthorised and unlawful non-state actors. India has also stressed consistently that the ATT should ensure a balance of obligations between exporting and importing states. However, the draft treaty that is annexed to the resolution is weak on terrorism, insurgency and non-state actors and these concerns nd no mention in the specic prohibitions of the Treaty.
Understanding Indias Stand

To understand the issue from Indias perspective, it is important to ascertain the sequence of events. India has been an active participant in the ATT negotiations from its start. Indias argument is based on the legitimate right to self-defence, and there is no conict between the pursuit of national security objectives and the aspiration that the Arms Trade Treaty be strong, balanced and effective. India also argues that the ATT is not only awed but tilted against weapons-importing countries and is in favour of exporting countries. Indias primary concern is that the treaty has not put an embargo on transferring arms to terrorist armed groups and to nonstate actors, a clear indication that protecting interests of arms dealers in the US and the West was the primary objective of developed countries and relegating considerations of ghting war against terror to the background. Indias position is further strengthened by the argument that the international community has not evolved rules for the trade of guns and tanks. A global ATT to help prevent irresponsible arms transfers that fuel and sustain conict, destroy lives and undermine development, was therefore, long overdue.
It is now universally recognised that illicit trade in conventional arms is a major factor in armed violence by organised criminals and terrorists. India maintains that such a treaty should make a real impact on illicit trafcking in conventional arms and their illicit use especially by terrorists and other unauthorised and unlawful non-state actors. India has also stressed consistently that the ATT should ensure a balance of obligations between exporting and importing states. However, the treaty adopted by the UN general assembly is soft on terrorism and non-state actors and these concerns nd no mention in the specic prohibitions of the Treaty. Indias security interests are directly impacted by illicit and irresponsible transfers from outside the country. New Delhi had, therefore, every reason to look forward to an effective global pact on the issue. However, the ATT passed by the United Nations General Assembly clearly falls short of Indias genuine expectation. As Sujatha Mehta, head of Indian delegation at the UN, argued that the ATT is weak on terrorism and non-state actors and these concerns nd no mention in its specic prohibitions. Mehta insisted that the ATT does not contain any provision as to how to curb arms ow to religious extremists. As a result, even if the ATT is signed and ratied by members of UNGA, it will not help control the menace of religious extremism and terrorism. Indias concern is understandable as it has witnessed the devastating menace of terrorism
in its territory and effects of insurgency right from its independence. Russia and China too have suffered this menace. Keeping out this rising phenomenon from the ambit of the ATT may prove one of its weaknesses. India believes that the treaty should make a real impact on illicit trafcking in conventional arms and their illegal use, especially by terrorists. While New Delhis concern was about terrorists targeting the Indian state, the US and the UK ensured a exible language in this context so that they could continue to arm rebels in states such as Syria and the countries which suit them for a regime change.
In Conclusion
India, after having experienced the complex negotiation process involving CTBT, NPT and FMCT, has disagreed to the international arms treaty, which is aimed at curtailing its national security interests and primarily strengthening the position of western nations.
Balaji Chandramohan is associated with the Centre for Joint Warfare Studies, a think tank of Headquarters Integrated Defence Staff and handles the Communication Cell of the Bharatiya Janata Party, the principal opposition party in India. He is also a member of the Australian Labour Party and New Zealand Labour Party. Views expressed in the article are his own and not necessarily of his political afliations, his think-tank or this magazine.
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SPOTLIGHT
Creation of an Organised Europe

Praful S Adagale decodes the Schuman Declaration of 1950 and highlights the vision behind the creation of an organised Europe
Jean Monnet
Robert Schuman
The Schuman proposals are revolutionary or they are nothing. The indispensable rst principle of these proposals is the abnegation of sovereignty in a limited but decisive eld. A plan which is not based on this principle can make no useful contribution to the solution of the major problems which undermine our existence. Cooperation between nations, while essential, cannot alone meet our problem. What must be sought is a fusion of the interests of the European people and not merely another effort to maintain the equilibrium of those interests
Jean Monnet
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SPOTLIGHT
he European Union today, comprises 27 member states with the motto of United in Diversity, has come a long way since the European integration process that laid the foundation for the EU. The Schuman proposal is considered to be the beginning of what is now the European Union. In highlighting the vision for the creation of an organised Europe, the process of European integration is noteworthy. However, most EU citizens and the global community would agree that it is not one idea or plan that laid the foundation for the formation of EU and its integration process. To begin with, the 20th century proposal for European integration around a FrancoGerman axis was made in late August 1941, and was authored by Walter Rathenan, leading to the formation of a German-led custom union with France, Austria, Hungary and Belgium. However, his interest was more geopolitical in kind in order to weaken French ties with both the UK and US, and to the east with Russia. During the Pan European movement, French economist Francis Delaisi went on to publish an inuential plan for Europes future. Nazi Germany the oreticians of European Raum (space), notably geopolitics specialist Karl Honofer and philosopher jurist Carl Schmitt posited the need for a European great space. Their papers were presented at the high level European Economic Community (EEC) conference held in Weimar in October 1941 (Sutton: 2007). Similarly, French politician Georges-Augustin Bidault set up plans for an economic and customs union between the states. But it was the proposal by French Foreign Minister Robert Schuman to setup a European community in the form of a Ministerial Standing Committee that found success. The foreign minister, from 1948-1953, acted as a political advocate for the European Coal and Steel Community, which cemented the platform for the creation of an organised Europe. During this period, the US, which was aware of the current projects, provided the Economic Aid or the Marshall Plan to Europe.
meant that coal and steel manufactured in France and Germany were put under common authority, (Koops: 2011). The coal and steel was also chosen to resolve the Ruhr problem where coal was available at large scale. The Schuman Plan aimed to render war not merely unthinkable but materially impossible (Gowland et al: 2006). Jean Omer Marie Gabriel Monnet, French political economist and diplomat, regarded by many as a chief architect of European unity and one of the founding fathers of the European Union, adapted Schumans proposal of the French government to the rest of Western Europe, giving rise to ECSC (Schuman Declaration, 1950). The Schuman
the establishment of closer unity between European states in the post-war period. It also aimed to eliminate age old enmity between France and German. The rst step towards the EC came on April 18, 1951, when the Treaty of Paris was signed with six charter countries, leading to the formation of the European Coal and Steel Community (ECSC), boasting of supranational powers independent from national governments. (Gowland et al: 2006). This was followed by the treaty of Rome on January 1, 1958 called the European Economic Community (EEC). Europe was formed not just on the basis of institutions or treaties, but as a combination of ideas generated at every instance within Europe to restore and maintain peace.
In May 1950, French Foreign Minister Robert Schuman presented a governmental proposal to establish a new form of organisation of states in Europe, called a supranational community. This landmark event, commemorated as Europe Day every year, was instrumental in shaping the contours of the European Union of today
Declaration May 9, 1950 led to the formation of a new supranational organisation within Europe. The purpose of the declaration had a clear aim to maintain world peace. A number of principles were also highlighted in the declaration. European countries came together to share resources. It also stated that Europe would not be united all at once, or according to a single plan. It was to be built through concrete achievements by first creating de facto solidarity. The Schuman Plan for the pooling of coal and steel was the decisive French initiative in
Lending Economic and Strategic Depth

A major effort to liberalise the European community towards greater competition and wealth resulted in the creation of a genuine common market on July 1, 1987. It became clear that mere economic cooperation between member states would not lead to an organised Europe alone, nor would it assist in conict prevention. The formation of European Security Strategy (ESS) of 2003 paved way for a strategic partnership with other key actors in the international system, resulting in the building of a strategic partnership with ten key players in global affairs. The post Lisbon treaty of 2009 and its provisions are certainly meaningful both to the EU and the outside world. As the EU prepares to include Croatia as its 28th member state in July 2013, there is no doubt about the unity and the condence that the EU inspires as an institution. Its stellar role in the world affairs is the result of both its internal and the external policies of its member states. Its involvement in security sector reforms in the African region and its commitment to maintaining peace and international order is the outcome of the effort invested during the integration process. The EU will have a major role to play in the 21st century due its pragmatic approach in global affairs.
Birth of a Supranational Organisation

With the end of the World War II, a major concern for France was to prevent another invasion by Germany. Secondly, the desire for economic interdependence impelled the consolidation of production units of major states under one common authority. This
Praful S Adagale is Ph.D. Research Fellow at Yashwantrao Chavan National Centre of International Security and Defence Analysis, Pune. He may be reached at prafulresearch@gmail.com
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SPOTLIGHT
Real Achievements of
EU Development Policy
By Prof Melvin R Schlein
he European Unions development policy is very ambitious and has aimed at practically all of the major ills that affect the poorer states of the world (generally referred to as the South) for many years now (since 1959 as official European Economic Community policy only two years after the Rome Treaties). It has rightfully earned prestige as the most important donor of development aid in the world (over 50% of all development assistance comes from the European Union, either from member states directly or from EU institutions). In the early days of the European integration process, several of the original six member states, like France, Belgium and the Netherlands, were going through the process of decolonisation and relations with the newly independent former colonies were often problematic
(for example, French Indo-China, Algeria, the former Belgian Congo and Indonesia). The former mother states were looking for ways to maintain whatever was left of their inuence in these areas, while the governments of the newly independent states were anxious to break with the past.
Yaound Convention: Assistance to Former Colonies

The establishment of the common external tariff in the European Economic Community further complicated the issue, as the former colonies were now outside of the trading bloc and hence, could not receive preferential treatment for their exports without violating the General Agreement on Tariffs and Trade, the basic element of which required each signatory to give all the others most favoured nation treatment, to which all
source: http://internationaldevelopmenteu.les.wordpress.com /2013/03/globe20-20europe.jpg
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SPOTLIGHT
six of the EEC member states had adhered. The solution was found in the GATT treaty itself, in which an exception to the MFN rule existed to allow states to join into customs unions and free trade areas that would favour growth of overall trade. This exception was also permitted for states that entered into agreements that would lead to such types of economic integration. Thus, the Yaound Convention was born, that created an association status for 18 former colonies that theoretically would eventually enjoy full free trade with the EEC states. The EEC promised development assistance and trade preferences, permitting these states to export their primarily agricultural and mineral products to the EEC, but since they were now independent, of course, they would have to accept the principle of reciprocity, common to trading agreements among independent states. The former mother states were quite pleased with this arrangement, as it allowed them to maintain the trading patterns they had developed in the colonial period, importing agricultural products their citizens were used to and keeping the prices low while supplying industry with raw materials under similar conditions. The rst Yaound Convention lasted from 1964 to 1969 and was followed by a second Yaound Convention from 1971 to 1975, but there was continuous criticism from several sides. The frustration of the newly independent states, which saw their hopes to attain rapid prosperity quickly disappear and their ability to meet the expectations of their citizens vanish with them, led to loud complaints of neo-colonialism in the policies of the EEC, which, they asserted, kept them trapped in their former economic dependency on the mother countries and were thus responsible for their lack of success. On top of this, the former colonies of Great Britain complained bitterly of the disadvantages they suffered because of the preferences the Community gave to the associated francophone states. Similarly, the developing states of Latin America berated the Europeans for the discrimination they suffered.
The end of the Cold War opened the way for states of Eastern and Central Europe that had been part of the Eastern bloc, to apply and eventually join the European Union
development programmes. The Lom accords also included political cooperation, meetings of government ministers with members of the Council of Ministers and representatives of Parliaments of the associated states (now referred to as the ACP states African , Caribbean and Pacic states) and meeting with representatives of the European Parliament. In short, the Lom treaties put an end to the criticism of the European Community and enabled it to rapidly advance to a world leader, in both nancial aid and direct assistance to the developing world.
Post-Cold War: Rethinking the Development Process

scheme of preferential trading relations with the developing states with the exclusion of the principle of reciprocity. The EEC took the criticism and requests of the UNCTAD to heart, not to mention the effects of the rst expansion of membership from six to nine members in 1973, which brought another former colonial power into the club, the United Kingdom, which reasonably insisted on a change in the development policy and the inclusion of associated states in the group, like Anglophone developing states. What grew out of this was a series of Lom Conventions, of which there were several renewals (Lom I, 1976 - 1980; Lom II, 1981 - 1985; Lom III, 1986 - 1990; and Lom IV, 1990 - 1999). The number of participating states grew signicantly, from 18 in Yaound I to 46 in Lom I and to 70 in Lom IV. Development assistance from EEC also grew by leaps and bounds and reached over 12 billion ECUs (the European Communities accounting currency before the advent of the euro). Indeed, the EC also adopted the goal of expanding development assistance to one percent of GDP. The changes in the international system of the early 90s, especially the end of the Cold War, heralded changes in development policies as well. Besides generosity or guilt complexes of the former colonial powers, the chief incentives for development assistance had been enlightened self-interest and, of course, the competition between East and West for political support in the United Nations, strategic bases or other services. With the end of the Cold War, developing states lost the possibility of playing off one side against the other. Without this competition, interest in providing assistance in many of the donor countries waned. In addition, many people felt that most of the aid that had been given had been wasted, as there was very little visible progress. Beyond this, many of the developing countries had highly unstable political conditions that frequently led to military coups dtat and petty dictatorships. Corruption was an endemic in many developing states. The generosity of the IMF in the use of Special Drawing Rights to cover the losses of badly organised and governed states and the huge debt that had grown among the developing world borrowers as bankers, who had their loans guaranteed by governments, rushed to join consortia to lend more money, sending good money after bad. All contributed to a re-thinking of the development process throughout the world, and the EC, now the EU, was no exception.
Innovations to Existing Agreements

There were several interesting innovations in the Lom agreements. Reciprocity was done away with. The Communities opened their doors with a system of general trade preferences to products coming from the developing states and not just from the associated states (with some limitations, to be sure, but on the whole, an important change). Furthermore, they set up a fund to help states stabilise their export earnings from their agricultural exports (STABEX) and later another fund to stabilise their earnings from mineral exports (SYSMIN). The idea was that when participating states suffered shortfalls in terms of the expected earnings (due to a bad crop or drop in world prices), the EC would make up the difference and thus avoid interruptions in the states
Lom Conventions: A New Development Paradigm

In 1964, the United Nations Conference on Trade and Development, under the guidance of Argentine economist, Raul Prebisch, brought together the North and South and agreed that a new approach to development on the part of the North was necessary. He demanded multi-lateral development assistance (to replace bilateral trade agreements), increase in development assistance from the developed world to reach one percent of GDP, and a general
The Cotonou Agreement: Backbone of EUs Development Policy

The end of the Cold War also opened the way for the states of Eastern and Central Europe that had been part of the Eastern bloc, to apply and eventually to join the European Union as well. Contributing to their economic rebuilding after the long period of communist rule and the accompanying economic disaster seemed to be a more important and immediately useful way to allot resources, rather than
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SPOTLIGHT
what seemed to be throwing money down the drain in development projects in distant lands. Nonetheless, in spite of these negative conditions, the EU continued its policy of sustaining development, but undertook important revisions in its ways of doing this. The result of the revisions was a new convention, the Cotonou Agreement of June 2000, which was to last until 2020 and which has already undergone two revisions, in 2005 and 2010. It is presently the backbone of EU development policy and is based on the concept of partnership between the EU and the ACP countries. Presently, 78 countries have signed on to the agreement; Cuba, although a member of the ACP group, has rejected the partnership). The Cotonou Agreement dened as its prime objective: reducing and eventually eradicating poverty consistent with the objectives of sustainable development and the gradual integration of ACP countries into the world economy. The Agreement kept many of the features of the Lom system, but made some fundamental changes. The number of actors in the partnership was expanded by bringing in regional and local state organisations, NGOs, the private sector and others. The European Development Fund was kept as the main instrument for disbursing funds, but increased signicantly the total allotment to reach the present level of the 10th EDF (through 2013) of 22,682,000. This is the lions share of EU development funding at present and it is provided by member states, whose shares are determined by a contribution key. The Commission has tried several times to get the fund included in the EU budget, but member states have preferred to keep it separate. The EU budget, on the other hand, also allocates a signicant sum to development projects (about 30% of all EU development aid), but in general, budgeted assistance tends to favour the relatively better off ACP states (60%), whereas about 90 percent of EDF funding (about 70% of total EU development assistance) goes to poorer countries. That part of development assistance that consists of investments is funded through the European Investment Bank. The STABEX fund was done away with in the Cotonou Agreement, but the EDF has a FLEX fund that permits interventions to assist states whose export earnings drop unexpectedly. Similarly, the Commissions assistance often goes to budget support to the ACP states in need. On the whole, the Cotonou Agreement gave partner states greater responsibility and autonomy in running their own development programmes and offered EU cooperation. In reality, the benets of the preference systems had already become minimal in light of the EU General System of Preferences for
EU development policy has shifted to aiding trade, promoting regional free trade areas and assisting states in reducing and eliminating barriers to trade, with the expectation that what brought prosperity to Europe, should work in the ACP states
developing states outside of the ACP group and the general worldwide reductions in tariff levels, so that when the EU did away with the old preference system (2007), few regretted it.
Moving Beyond the Economic Realm

EU development policy has shifted to aiding trade, promoting regional free trade areas and assisting states in reducing and eliminating barriers to trade, with the expectation that what brought prosperity to Europe, should also work in the ACP states. Cotonou has also been characterised by a much stronger political content. Member states have all agreed to strengthen respect for human rights and democratic government and the EU has not hesitated to use the contingency clauses to threaten states that dont comply and actually deprive them of the benets of aid, if necessary. The EU has also promoted environmental sustainability in all of its development assistance programmes even before Cotonou, but this has become a formal part of the Agreement. The most recent revision of the Cotonou Agreement in 2010 reflected the widely felt need to increase coherence among EU sponsored development projects that are run by other parts of the EU, besides the Commission and the EDF, and also in terms of working together with other international organisations engaged in development assistance to nd synergies and reduce overlapping and sometimes even contradictory projects to make aid more effective. The new revision also calls for more controls of policy effectiveness. The question of security and peace is now an important part of the cooperation agreement as well. Concrete measures to combat climate warming and its effects have also found their place in the revision. There is no doubt that
the EU development programme has become extremely ambitious and aims for peace and security, the achievement of the eight United Nations Millennium Development Goals (starting with the halving of world poverty by 2015, promoting the role of women and equal treatment, extending education to the worlds poor, etc.), a level of development assistance equal to 0.7 percent of national income for the entire EU (the present gure is at about 0.44%), democracy, human rights, economic growth, investment and regional integration. The obvious question is whether this is all really attainable in the foreseeable future. The EU has pumped a huge amount of resources into its development programmes over the years. What do they have to show for it? According to their own estimates, their programmes have been effective and have served to save over 200 million human lives since their inception. So even if the problems of development and abject poverty still persist, including all of the negative and very visible characteristics usually associated with them, the EU can and does proclaim at least a limited success in their efforts. Whether and how much more could have been achieved with the same resources remains an empty question, given the conditions in which the EU has had to operate. Who, after all, would take upon himself the moral opprobrium of equating human lives to budget expenditures? And if the EU programmes over the years were over-ambitious and inadequate to meet their goals, still, when compared with the dismal records of other states, there can be no doubt that the EU record is one deserving of applause. To be sure, the recent agreement of the European Council to cut budget expenses generally will weaken their ability to even come close to achieving the ambitious goals they have set for themselves. If the EDF funds are kept to their present levels and cutbacks foreseen in the area of development assistance are limited - the projected needs of the EU programmes have called for an increase in spending from about 22 billion to 27 billion holding the line really means turning down a large number of projects, or as the Commission puts it, many more lives lost that could have been saved. The European Parliament is still debating the new budget proposal and seems intent on salvaging as much as development assistance as possible.
Prof Melvin R Schlein is Professor of International Relations at Franklin College, Switzerland
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SPOTLIGHT
Strategic Partnership for the Future

By Raphalle Khan
Substantial and increasing economic relations, which continue to determine the relationship, are the main engine of the relationship. While India is one of the EUs main Asian partners, the EU is Indias largest trading partner. In ten years, trade in goods more than doubled, reaching almost 68 billion in 2010. Bilateral trade in goods and services amounted then to 86 billion. In 2011, it was around 100 billion. EUIndia trade in goods reached 80 billion1. Trade in commercial services reached around 20billion 2. Despite the current economic turmoil, bilateral Foreign Direct Investments (FDI) has also increased; with the investment having reached 12 billion in 2011 3. Dialogues on macroeconomic policy and nancial services complete this economic relation. The increasingly political dimension of the partnership and the broadening of its areas of cooperation have rendered the relations richer and more complex. The partnership has developed into elaborate, multi-layered institutional relations. Signicantly, the EU and India concluded a Joint Action Plan in 2005, which, following an implementation report in 2007, was reviewed in 2008. Expressing a particular commonality of views between the two actors, it identied areas of developing cooperation: political dialogue and cooperation; trade, investment and economic policy dialogue; scientic and technical cooperation and cultural and people-to-people links. Importantly, it dened new activities for cooperation: peace and comprehensive security; sustainable development; research and technology and people-to-people and cultural exchange. This is a clear indication of the diversity of the planned cooperation. On the political front, India-EU cooperation extends to security, fight against terrorism, non-proliferation, crisis management, peace building and peacekeeping at the UN. In this respect, both partners have met for a Joint Working Group on counter terrorism in 2011. They have also
India & the EU
n the context of changing international politics and with the emergence of China as the second power in Southeast Asia, cooperation between India and the EU has, one may argue, become of growing importance. With China reinforcing its economic strength on the frontiers of India, and considering its own development domestically and externally, India needs strengthened partnerships more than ever.
Elements of the Multi-Faceted Relationship

The India-EU relationship is multifaceted. Official cooperation dates back from the 1994 Cooperation Agreement. Subsequently, a Strategic Partnership was signed in 2004. Being vaguely dened, it did not seem to offer a clear strategic direction.
Current geo-political evolutions and greater, positive political, economic and scientic engagements have enabled India and EU to add strategic dimension to their relationship
However, it covers areas of cooperation that have been increasingly broad and clearly dened in the past years. They have been often overlooked.
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SPOTLIGHT
cooperated on the occasion of the anti-piracy operation Atalanta on the Somalia Coast and in the Indian Ocean. In this eld, as in the others, progress has followed a slow step by step evolution: India and the EU released a Joint Declaration on International Terrorism in 2010; in 2011, an India-EU Security Dialogue was held in 2012, followed by an India-EU Joint Working Group on counter-terrorism. In parallel, an EU-India Human Rights Dialogue is held annually. At a regional scale, while India has become a member of the AsiaEurope Meeting (ASEM), the EU is today an observer of SAARC. Third, the EU has been a partner in research and technology. India has been the 4th largest partner under the 7th EU Framework Programme for science and technological development (2007-2013)4. The EU-India Science and Technology Cooperation Agreement was signed in November 2001 and renewed in 2007. It notably aims at creating networks and platforms for research. The rst India-EU Ministerial Conference on Science followed in New Delhi in February 2007, where both parties committed to funding joint research. As a result, coordinated calls for proposals were launched. The Project New Indigo, for instance, a consortium of European and Indian partner organisations, works as a networking platform implementing calls for collaborative research projects5. In 2009, the S&T agreement was extended. With the Joint Declaration on Research and Innovation signed on the 2012 Summit, both parties expressed the desire to see research and innovation become a pivotal part of Europe and Indias overall relationship towards the realisation of their broader objectives. The strategic agenda for research and innovation defined water and bio-resources, energy (security, safety, efciency and sustainable development), health and nally Information and Communication Technology as priority areas for cooperation6. On environmental issues, a Joint Work Programme on Clean Development and Climate Change was adopted in 2008, while a Joint EU-India call for proposals on solar energy was launched in 2009. Since 2005, India has been a partner of the International Thermonuclear Experimental Reactor (ITER) project, as well as the satellite navigation system GALILEO project. Energy cooperation has also been enhanced. An EU-India Energy Panel has met since 2005 as the main instrument of cooperation. Importantly, a Joint Declaration for Enhanced Cooperation in Energy7 was signed at the 2012 summit, including energy security as an area for
Economically speaking, trade volumes are signicantly smaller than in the China-EU partnership. A Free Trade Agreement has been in negotiations since 2007 and is today the main work-in-progress between the EU and India
collaboration. Priorities identified were: clean coal technologies; energy efciency of products and in buildings; smart power grids (including the integration of renewable energy sources); cost-effective ways to promote renewable energies; safety, notably regarding off-shore drillings and nuclear and progress in developing fusion energy. There is also a Higher Education Cooperation dimension.
New Impetus to the Strategic Partnership

Thus, the 12th EU-India Summit in February 2012 gave a new impetus and a particular focus to the partnership. The Joint Declarations for enhanced cooperation on Energy and Research and Innovation signed showed a shared consciousness of the importance of these areas for the future of India-EU relation. But still, the India-EU Partnership has delivered below its potentialities. While global evolutions let us believe that the partnership is more than ever important for India, there is still much to do to fully unfold the potential of cooperation. Economically speaking, trade volumes are signicantly smaller than in the China-EU partnership. A Free Trade Agreement (FTA) has been in negotiations since 2007 and is today the main work-in-progress between the EU and India. Disagreements and controversies remain between stakeholders on several points, for India notably liberalisation of market access for some sectors such as banking and diary. NGOS are concerned about the possible impact of the FTA on the Indian retail sector and the generic drugs industry. EU actors are worried about the state of the intellectual property regime in India. However, Commerce Minister Anand Sharma recently announced that negotiations (had) been intensied8. Politically, the EU could be more supportive in Indias neighbourhood. It could intensify its cooperation for regional stability. More importantly for its future of
an emerging global actor, India will need political support, from partners like the EU. India and the EU could cooperate more in formations such as the G20, on global issues such as nancial imbalances, regulation and improvements of global governance. From another point of view, there is also space for more mutual learning about democracy: Europe, wondering about its unity, could study the way India deals with its diversity. Facing the issue of important inequalities and the challenge of organising a fair society, there may be something interesting to think about for India in the way European countries develop welfare states. Cooperation in energy, climate and environmental issues, notably energy security through transfer of green technologies from EU to India, has a huge potential given the global challenges in this eld. The EU can also bring its expertise in infrastructure building. Ultimately, considering their experience and know-how, the two partners could together explore news ways of balancing economic development and the protection of the environment. Every field of cooperation has the potential for further development and synergies. India and the EU have become clearer on their shared priorities. Now, these natural partners have shape what is becoming a more strategic partnership, owing to current geopolitical evolutions and increasingly stronger positive engagement. Yet more means and people must be committed to allow a better understanding of how values and interests can meet and how new common interests can be pursued. Thereafter, only imagination and political will limits the scope of possible commitment and mutual benet.
Raphalle Khan is a PhD candidate at Kings College, London 1 Figures from the Delegation of the European Union to India, http://eeas.europa.eu/delegations/india/ press_corner/all_news/news/2012/20120607_en.htm. 2 Eurostat. 3 Figures from the Delegation of the European Union to India. 4 http://www.consilium.europa.eu/uedocs/ cms_data/docs/pressdata/EN/foraff/127832.pdf 5 h t t p : / / w w w. n e w i n d i g o . e u / a b o u t . h t m l . 6 h t t p : / / w w w. e u i n d i a c o o p . o rg / eu-india_st_priorities.php. 7 http://ec.europa.eu/energy/international/ bilateral_cooperation/doc/india/20120210_ joint_declaration_eu_india.pdf 8 http://economictimes.indiatimes.com/news/ economy/foreign-trade/india-eu-fta-negotiationshave-been-intensified-anand-sharma/ articleshow/19676689.cms
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SPOTLIGHT
Global Impact of the European Union
Today and Tomorrow
By Dr Morris M Mottale
he European Union is a contemporary chapter in the economic and political integration of Europe that began after World War II. The tragedy and destruction that brought ruin to Europe saw a generation of leaders on the continent who tried to develop new political arrangements that would decrease violent conict and enhance political, economic, and cultural cooperation. The protective umbrella of the United States made it possible for Konrad Adenauer in Germany, Alcide De Gasperi in Italy, PaulHenri Spaak in Belgium, Robert Schuman in France, and some other thinkers and statesmen to formulate ideas, structures and institutions to enhance the prospects of a united Europe. They were inspired by the history of the Holy Roman Empire and a German-French commitment to avoid the cycle of wars that had seen French and Germans slaughter each other in three wars from 1870 to 1945.
Rise of a United Europe

The Treaty of Rome signed in 1957, and effective in 1958, saw France, West Germany, Italy, Belgium, Holland, and Luxembourg commit themselves to a charter that, in time, has come to shape a powerful economic and political bloc, which has become a major player in world politics, international trade, development and cooperation. The culmination of such a union was the creation of a common currency in 2001 that has been adopted by many European countries since its inception. New member countries have come to peg their own currency to the euro, which is the ofcial tender for 17 member states of the European Union. In recent times, the union has come to include Balkan countries, such as Romania and Bulgaria, and will see the addition of Croatia in summer of 2013.
Doubts about European Integration

In the last two years, a significant economic recession in Europe and North America has seen the European currency
become the subject of a heated debate about the future development of the European Union and its financial, economic, and political integration. In principle, the substantive logic of the European Union is to bring about a sovereign institution with powers that supersede those of individual member states. The creation of the euro was the rst brick of such a construction, but as it is, the current economic crisis has highlighted the fact that the economic divide within countries and between countries of the Union, such as between Northern Europe and the Mediterranean countries, is the cause
of much controversy as the straight jacket of a common currency does not permit national governments to engage in exible economic policies to ght unemployment and stimulate growth. This has been the case in Greece, Cyprus, Spain, Portugal, Ireland, and possibly other countries down the road, such as Slovenia. These recent financial developments have seen the European Central Bank, dominated by Germany, imposing its guidelines on weaker countries, thus triggering political controversies, resentment, unemployment, and misery in Southern European countries.
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SPOTLIGHT
Undeniable Successes beyond Raging Controversies

These contemporary phenomena do not detract, however, from the fact that the European Union has been successful in many other respects. It has brought peace to Europe and it has managed to integrate, rather successfully, the economies of the old Soviet-Communist bloc, in spite of uneven development, political glitches, and economic dislocation. The original premise of the European economic union called for a common market, common external tariffs, and unrestricted continental labour and capital mobility. There are countries such as Switzerland, Iceland, or Norway, which have special arrangements with the European Union, while Britain has always been rather reluctant to back full economic and political integration. Sweden and Denmark, like Britain, have not joined the euro common currency. However, regardless of the controversies today, it is an undeniable fact that Europe as a bloc has been successful beyond the imagination of some of its founding leaders. The end of the Cold War and the defeat of communist systems allow now a European citizen from the Arctic to the Eastern Mediterranean and from Belarus-Polish border to the Caribbean and North America unfettered mobility and freedom. Common commitments to democracy, representative government, human rights, highlight its success. It is the most powerful economic bloc in the world and its GDP is superior to that of any other state in the world. No state in the international system can ignore the reality of European economic, cultural, and political inuence.
The success of the EU is illustrated by commitments to peace, democracy, representative government, human rights and the ability to successfully integrate economies of the old Soviet-Communist bloc, in spite of uneven development, political glitches and economic dislocation
of illegal immigration, human trafcking and narcotics trade. From this last point, the European Union has no common immigration policy, and if anything the soft underbelly of Europe sees large scale arrival of immigrants who then proceed to move to Northern Europe seeking employment and welfare benets. From a political standpoint, there are some areas with which the European Union has yet to develop systematic and consistent policies that involve integration in the European Union. The primary example is the issue of Ankara, as most European countries and leaders do not want Turkey to join Brussels. The entry of a major Islamic state and society in Europe is seen as conicting with Europes historical and cultural heritage, which includes Christianity. Additionally, expanding the EUs borders to the Caucasus and the Fertile Crescent seems to be a rather frightening prospect as the Middle East enters a new cycle of upheavals. Ankaras reluctance to ease the reunication of the island of Cyprus, where the northern part is occupied by its armed forces, is another critical factor in the European aversion to a Turkish component. A second and important issue is the relationship with Russia and Ukraine. Moscow is very reluctant to see Ukraine join a bloc that is sometimes perceived as being anti-Russian because of its integration within the American led military alliance shaped by NATO. Echoes of Caucasian countries such as Azerbaijan, Georgia and Armenia joining a European Union add to Moscows anxieties. President Obamas invitation to Brussels for the development of a free trade area between NAFTA and the European Union is another future challenge for Brussels,
Future Political and Economic Challenges

The future of the European Union, on the other hand, has become rather problematic, not only because of the problems associated with a common currency and the preeminence of the German state, but also because there are specific elements in the union that are missing. The European Union has not developed a common defence policy yet, there is no EU army, and to a large extent, France and Britain have kept an independent nuclear force and a foreign policy more consonant with their national interests. In fact, in defence matters, the European Union is basically protected by the American defensive umbrella through NATO. Brussels also has yet to develop a consistent policy in areas of security in the Mediterranean and its relationship with the Arab-Islamic world as the Arab Spring and the breakdown of political stability in that area have increased even more the threat
fraught with potentials for both trade conflict and cooperation. Europe and North America will be challenged in areas ranging from agriculture to tertiary services such as insurance and banking. Common regulatory standards in the economic and business dimensions will need to be negotiated for years. American relations with Brussels should also be considered from the standpoint of the reluctance of trading blocs such as MERCOSUR in South America to fully integrate their economic systems with what could be arguably perceived as American political and economic hegemony. As in these last cases, the rise of China in world trade inevitably will bring to the fore the issue of European relations with Beijing. For the time being rumbles about Chinese manufacturing competition with European rms and outsourcing by European companies in China and the Far East have been a local national affair rather than a common European concern articulated by Brussels. Such developments in the long run will also be matched by concerns with the economic developments that are now shaping India. A nal missing element in the European Union today is the development of a common energy policy where, regardless of the rhetoric about sustainability and a green economy protective of environmental concerns. Debates on the future of nuclear energy in Europe and the different approaches, seen for example in France where Paris is committed to nuclear energy and its expansion, while anti-nuclear sentiments have come to be articulated by German, Italian, and Swedish politicians, are symptomatic of the lack of coherent energy planning. Finally, the European Union has failed so far in re-socialising Europeans into accepting the pre-eminence of the union over sovereign national institutions and national political cultures. This last phenomenon is sometimes defined as a democratic deficit where European institutions are perceived as being unrepresentative and undemocratic by the vast majority of Europeans. Thus, today, the development of the union into a full-edged sovereign political body has been stalled by the scepticism of the majority of Europeans regarding the future of the continent as a unied entity. For the time being, it looks like the European Union will be at best a very loose confederation of sovereign states with common interests.
Dr Morris M Mottale is Professor of International Relations and Comparative Politics and Chair, Department of Political Science at Franklin College, Switzerland.
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INDIAN OCEAN SECURITY
Interview Our biggest task is redeploying equipment in
Afghanistan, back to the US

In the Middle East and Central Asia, the US Marine Corps is one of the main US expeditionary deployed throughout the region. LieutenantGeneral Robert B Neller, Commander of the Marine Corps Forces Central Command (MARCENT) spoke with Sergei DeSilva-Ranasinghe about the function of MARCENT, the responsibilities that the command entails, the status of MARCENT engagement programmes with countries throughout the region, and the situation in Afghanistan, especially the phased handover and withdrawal of US Marine forces.
Would you please describe what role MARCENT has within CENTCOM? US Central Command (CENTCOM) is a US joint regional combatant command that brings together the US Army, Navy, Air Force, Marine and Special Operations components to support commanders in the CENTCOM area of operations (AOR). MARCENT is the Marine component command for CENTCOM. Back in Desert Storm in 1991, component commands were still in their infancy and the Marine Corps realized they needed to pay more attention to component tasks. During Desert Shield/Desert Storm we dual-hatted the Marine Expeditionary Force (MEF) Commander as the Marine Component, and we found that there were too many issues at the component level that occupied the MEF commander and his staff and distracted them from focusing on the conduct of operations. So, when Operation Iraqi Freedom (OIF) commenced in 2003, Lieutenant General Hailston, the Marine Forces Pacic Commander, was also designated as the MARCENT commander. He deployed a staff to Bahrain to lead all Marine component operations for OIF. At the time, I was Director for Operations at the Marine Corps Headquarters in Washington, D.C. and my observation was that having a separate headquarters handle the component responsibilities for CENTCOM was extremely effective and allowed the MEF commander to lead and focus on war ghting operations. In 2004-05, the Marine Corps decided to change back to having the Commanding General of I MEF dual-hat again as the MARCENT Commander and it stayed that way until September 7, 2012, when it was decided that MARCENT would be a separate command and the Commanding General of I MEF would no longer also command MARCENT.
The MARCENT job is to meet the combatant commanders requirements and support deployed Marine units. On some occasions, MARCENT directly commands and controls Marine forces, while on other occasions such as in Afghanistan, it supports the commander of International Security Assistance Force (ISAF) who has operational control. In such cases, MARCENT is still involved in the Title 10 activities, namely, contingency planning, theatre security cooperation, and command and control opportunities for the Marines all year round.
Lieutenant-General Robert B Neller
weekly briengs with the staff from Bahrain and engagements with CENTCOM one or two days a week. In the afternoon I spend a lot of time reading. I try to educate myself on the history and the context of the countries we are engaged in, and there is a huge amount of information thats very complicated for a Westerner to understand. But its important to read all that to better understand whats going on. The standard day is never the same. Thats what makes it interesting.
Give us an overview of a standard day for you as commander of MARCENT and the scope of your responsibilities. Ive been here a couple of days past four months in Tampa, Florida, where the MARCENT headquarters is co-located with Central Command at MacDill Air Force Base. I usually travel 10 to 12 days a month in the CENTCOM AOR, but in those days I dont always go to Afghanistan. We have 161 people deployed in our forward headquarters in Manama, Bahrain, co-located with the CENTCOM naval component. Our forward headquarters is able to operate and work in the same region and time zone as our forward deployed Marine forces. The forward staff also has the capability to deploy to any contingency within the CENTCOM AOR and operate as the nucleus of a joint task force headquarters for the CENTCOM Commander. They also help maintain our engagement with the nations in the region by getting to know them better. When Im in Tampa, I usually start the morning talking to the intelligence ofcer. At 8 am, the principal staff ofcers update me on any issues that may have emerged in the last 24 hours and on anything I may not have read by then. We have a couple of detailed
Tell us about MARCENTs theatre reserve force and how it is deployed. The 15th Marine Expeditionary Unit (MEU) is the CENTCOM Commanders theatre reserve force. The MEU is comprised of three amphibious ships formed into an Amphibious Ready Group (ARG)-a large deck amphibious ship and two smaller amphibious ships. The current MEU is the 15th MEU, which is one of seven Marine Expeditionary Units currently in existence in the United States Marine Corps. The Marine Expeditionary Unit is a Marine Air-Ground Task Force with strength of about 2500 personnel. The MEU consists of a command element, a reinforced infantry battalion, a composite helicopter squadron and a logistics combat element. The 15th MEU is currently based out of Marine Corps Base Camp Pendleton, California with headquarters in Camp Del Mar. The MEU provides a rapid contingency response capability. It is not a large force but has the twin advantages of rapid manoeuvrability to come in quickly, do what it needs to do and leave and the ability to move throughout the AOR taking advantage of the sea as a manoeuvre space. The MEU, when it arrives, can stand off the
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INDIAN OCEAN SECURITY
coast and provide humanitarian assistance, disaster relief, embassy reinforcement, and contingency support without having to establish permanently onshore, which can sometimes cause issues with the sovereignty of a host nation. The MEU does have the capability to put forces ashore and sustain operations there, if needed.
security cooperation. Its denitely not as substantial as our contact with say the Gulf Cooperation Council nations. Is MARCENT involved in any engagement with Pakistan at the moment? No, not right now, but weve had a few opportunities to engage with their ofcers in the past couple of years. Pakistan does have a small naval infantry. There may be an exercise coming up where we might do some training with them. Pakistan also has a defence cooperation team that engages with the United States, but the problem is that we have many priorities and limits to our capacity. Certain nations currently have a higher priority, and we dont want to spread ourselves too thin not that Pakistan isnt important. I want to go there but its not a high priority right now. Finally, in the wake of the US withdrawal from Afghanistan, what is MARCENTs relationship with the country given the separate command structure? There is currently no other separate command relationship within the CENTCOM AOR that is similar to the command structure in Afghanistan. The MEU, which is the most recognisable Marine force capability, is also generally not under Marine Component OPCON within a geographic combat command. The MEU is a naval force by design and a maritime naval force by mission. So when it is in the CENTCOM AOR, the MEU is under the operational control of the naval component of CENTCOM, Commander 5th Fleet. MARCENT is not involved in actual operations in Afghanistan, but we monitor and track developments over there. So the time we spend on different tasks varies from section to section. The logisticians on the G4 probably spend more than half their time on Afghanistan, the intel guys less than a quarter of their time, and the ops guys about a third of their time. For me personally, the logistics of the force structure and the numbers that drive the movement of the gear in Afghanistan take a quarter of my time. The rest is spent equally on potential contingencies, theatre security cooperation with partners, and whatever pops up during the day. We at MARCENT act as a liaison between the Marine Corps Headquarterswhich provides the Marine forcesand CENTCOM. We also coordinate the deployment and redeployment of Marine forces to the AOR. With regard to the Marine Headquarters in Afghanistan, we ensure they understand the mission; are properly manned, trained and equipped prior to deployment; are supported while they are deployed; and eventually redeploy upon completion of their rotation. Right now, our biggest task is redeploying
Q Q
What can you tell us about MARCENTs programmes with Iraq, Yemen, Saudi Arabia, Egypt and Jordan? There is an Ofce of Security Cooperation in Iraq that coordinates training opportunities with the Iraqi military since the US withdrew all forces at the end of 2011. We have not engaged with the Iraqis although they have participated in some naval exercises in the Gulf in the last year. More Marines were sent to Yemen last September to reinforce the US Embassy during the period of increased violence and protests. Marines are still there conducting this mission. The United States, and particularly the Marine Corps, has a long-standing historical relationship with the Royal Saudi Navy, so they are a key partner for MARCENT in security cooperation. MARCENT keeps a small group of Marines there to facilitate, coordinate and assist the Saudis with their training. Recently, one of the 15th MEU warships conducted an exercise with Saudi Marines called Red Reef, which allowed the MEU to both exercise its force and work with our Saudi partners. Back in 2011 in Egypt, US Marines were involved in the reinforcement of the US embassy just south of Tahrir Square. We continue to monitor the situation in Egypt, but havent engaged much with their military. That said, CENTCOM has conducted, in the past, a very large exercise with Egypt called Bright Star through the years. It didnt happen last year because of the political unrest there. There is some discussion about putting Bright Star back on the exercise schedule, but we have to see how that plays out. The Marine Corps has been facilitating training with the Jordanian armed forces. The Jordanians are part of the 40 or so coalition nations that operate in Afghanistan, specically in Helmand. The Jordanian Army have been great partners in supporting the Marine regional command. We have a training cadre there of about 20 guys right now. One of our highest priorities is to remain engaged with the Jordanians and work with their army and naval forces. To what extent does MARCENT engage with Central Asian countries? The Marines have some contact and events with the Stans but not much on theatre
equipment back to the United States. There is a lot of our equipment in Afghanistan. We have gone down from 20,000 personnel to about 7000 in just a year, which means a signicant redeployment of equipment that includes mine-resistant ambush protected vehicles (MRAPs). Our bases, forward operating bases, and patrolling bases have to be either turned over to the Afghan Security Forces (ANSF) or torn down or de-milled. All the equipment has to be sorted and brought from different parts of Afghanistan to the ports, cleaned and put on ships back to the United States in an acceptable state. We have to make sure we leave behind no hazardous material or anything that can be turned into weapons by the Afghan insurgents. We are working through an organisation in Afghanistan that focusses solely on collecting and transporting such equipment. Our Marine logisticians, who are a pretty exible and innovative group, have distinguished themselves in planning the move out of Afghanistan. Redeploying large amounts of equipment and personnel is a problem not just for us but also the Australians, Brits, French, Germans, Spanish, Italians, Georgians and Poles etc. People sometimes forget how large and varied the coalition forces are in Afghanistan. We did this thinning process in Iraq, too. As a Marine, you try to leave the place better than you found it, so thats part of the mandate: to get our gear back, get full accountability, bring back the stuff that still has value and utility, properly dispose of the stuff that is no longer of use or has been partly used, and transfer to the host nation forces stuff they can still use. This is occurring on a daily basis in Afghanistan and will continue potentially into post-December 2014. Were working very hard with the security forces in Afghanistan, the service headquarters, and the transportation command to stay ahead of the game and get our gear out as the force continues to downsize there. As our forces in Afghanistan have reduced, the Afghan security forces have become bigger. Initially, there were very few Afghan police or security forces in Helmand Province compared to the Afghan Army soldiers. But now, there are more than 15,000 soldiers in Helmand and over 12,500 local police. That was the plan of our campaign create a secure environment, let the local forces take over, and for us to fade away. We are more of adviser-based force training, supporting and overseeing local forces in Afghanistan rather than a force with its own organic manoeuvre-based operations.
Sergei DeSilva-Ranasinghe is a security analyst, defence writer and a visiting fellow at the National Security Institute, University of Canberra.
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COVER STORY
Fifty Golden Years
of the African Dream

By Ruby Pratka Fifty years ago, the Organisation of African Unity (OAU) was established with the cardinal objective of promoting the unity, solidarity and cooperation of African states. Today, as Africa and the world commemorate the 50th anniversary of the establishment of the African Union, Diplomatist, in an extended series, pays tribute to those who planted the seeds of pan-Africanism and looks forward with optimism for the fullment of Africas renaissance.
ifty years ago, at least politically, Africa was a very different place. I wasnt there, of course, but reliable sources tell me it would have been a journalists dream. One by one, starting in 1957 with Kwame Nkrumahs Ghana, African countries fought or negotiated their way out of colonial domination (at least in the most literal sense). At the end of 1958, there were three independent African countries south of the Sahara Ghana, Liberia and Guinea, a former French colony run by another charismatic idealist, Skou Tour. By 1963, the year of the founding of the African Union, at the time called the Organisation of African Unity (OAU), there were 27. The Union was (and is) headquartered in Addis Ababa, Ethiopia, a city redolent with symbolism the Kingdom of Ethiopia was the only African state to avoid colonialism by defeating a European army (the Italians).
the AU ofcially replaced the OAU at a treaty signing in Durban, South Africa, one BBC analyst called the old grouping a dictators club. The OAU is the most difficult organisation I have ever seen, said, at the time, the organisations departing secretary general. Some nd it ironic that the dictators club was replaced at the initiative of Libyan ruler Muammar Gadda. But the eccentric Libyan leader was a strong believer in a united African front against Western interference; he spoke of a United States of Africa and used Libyan oil money to build a series of infrastructure projects in sub-Saharan Africa.
An African Dream Becomes Reality

The new African Union would have an armed force, expanded powers to censor member states, and eventually (some hoped) a common currency and central bank for Africa. Ten years on, the military force has won some praise for its peacekeeping operations in Somalia (a country which appears to be slowly getting back on its feet again after two decades of instability) and Darfur. The less visible aspects of the Unions influence in its citizens lives are hard to quantify. Jean-Marie Ntahimpera, a Burundian blogger and researcher currently studying in Russia, asked a few dozen Burundian students and young professionals, in an unscientic poll, where they could see the Unions inuence. The African Union is fundamental, says Elias, an engineer in the Burundian capital, Bujumbura. Its the main organisation on the continent for promoting faster socioeconomic integration and reinforcing unity and solidarity in African countries. Weve (in Burundi) gotten support (from the African Union) in a few different ways, writes Thierry Manirambona, a journalist. African soldiers came to our country to protect opposition leaders who
Humble Beginnings of a United Africa

The OAU was founded on a series of lofty ideals: to promote the unity and solidarity of African states, defend their territorial integrity and eradicate colonialism. But these ideals had little force to back them up. Slowburning civil wars continued in Nigeria, Angola and other hotspots for years, and the OAU, which unlike the current AU had no armed forces, could do nothing to stop them. A policy of non-interference in member state affairs also hampered its ability to address human rights abuses within member states. Hesitant comparisons have been made between the OAU-AU and the European Union. In the OAU era, these comparisons would have really stretched belief, as leaders of African states lacked even the most basic consensus on how a state should be governed, representatives of functioning democracies sat side by side with those of absolute monarchies, Communist states, military dictatorships and corrupt oligarchies of various stripes. In 2002, as
had returned to the country (in the context of a 2012 peace deal) after a long armed struggle. Weve also received loans from the African Development Bank. In daily life, the impact is very difcult to evaluate, he adds. Its only when I speak Swahili that I feel like a part of the African Union, because Swahili is one of the languages that unite Africans. Unites, and divides: tension between French and English-speaking blocs is part of life in the new African Union as well as in the old OAU. I notice the existence of the AU in my everyday life, for example, when I use the new and short-cut road that goes from Bujumbura to Kigali (in Rwanda) via Kirundo. This was funded by the African Bank of Development, says Alfred, a Burundian student studying in South Africa. The other example is how I live in perfect harmony with the people of neighbouring countries, who speak the same language as me, but we are of two different nationalities. The border is not a barrier at all. This is because we are all part of the African Union that has promoted a good neighbour policy. There are multiple benefits for my country as a member of the AU, he adds. They include the level of freedom and security provided by the organisation. This is a result of the good neighbour promoted by the OAU rst and then the AU, the resolution passed by all African states requiring them not to provoke each other and avoid inter-state wars and not to engage in new demarcation of frontiers between nation-states. If there was no common understanding and agreement over this issue, the continent (would have been) Balkanised. Stany, a Burundian student in a Peace Studies programme in Kenya takes pride in the bodys ideals and intentions. I know the AU as an African dream becoming reality. This is an organisation that holds the very hope of Africa and Africans. This is the dream of the founders taking root, (made) by Africans. I always feel the African pride grounded in the AU. When I happen to be in Addis Ababa, I always pay a visit to the AU HQ where I meet my fellow country people working there. While it is not easy to notice in everyday life, the AU is there and part of every Africans life. Not perfect, but Nkrumah may be proud.
Ruby Pratka is an American-born freelance foreign affairs writer based in Quebec City, Quebec. She speaks English, French, Russian and some Spanish and Kirundi. Her heart and mind are in East Africa.
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COVER STORY
Looking Ahead
Time for a Paradigm Shift for the African Union

By Nathan Smith
to establish Africa as a strong economic power. The union is designed to nurture political and economic cooperation between its member countries, and while it may still be too young to have a major inuence, it has taken some important steps towards these goals. Since the start of the new millennium, the AU is making signicant progress in areas including peace and security, trade liberalisation, food security, the maintainable use of natural resources and energy, climate change, and immigration. On a continent so geographically disparate and cartographically divided, it has been difcult for the AU to get consensus and cultural compromise on crucial issues. As a continent, and even taken as individual nations, Africa attracts greater interest from the international community as a region brimming with investment potential. To capitalise on a renewed vigour from Western and Chinese businesses, the AU is looking to strengthen its leadership to better deliver a unied voice for the international arena. The prospect of a politically integrated Africa, and the heightened prole of the AU centred in the rapidly modernising Addis Ababa metropolis, is encouraging a growing group of international powerhouses. The AU is now more widely seen as a political partner and actor on the world stage, rather than just on the regional stage. The slow speed at which the AU has developed political integration on the continent hints at the complex dynamics deeply entwined between member states. These divisions sustain significant trepidation among potential investors who are cautious to invest in a culturally riven country. Creating a functional African Union is, by denition, a long term and sometimes painful process, while massive contradictions and a broad spectrum of cultural differences will require calm management for years to come. The AU is still not in the position, after more than a decade, to call itself either inuential or truly effective. Despite the ending of harmful apartheid ideologies and closer security cooperation between member states, the AU faces stubborn challenges. Current issues for the AU include
South Africas economy showed a steady growth over the past decade since South Africas democratic government came into power
onsidering many people perceive Africa as a mash of aesthetic borders where tribal villages straddle political lines, and a place where constant internecine ghting retards real economic growth, many African nations have actually advanced significantly since the African Union (AU) was created at the beginning of the millennium. A new, healthier century is being envisioned for the troubled continent.
AU: Political Partner and Actor on the World Stage

As hopelessly disparate nations become more interconnected as globalisation gathers steam, sweeping scores of countries before it, a revival of motivation, integration and unity is leading the African Union to shoulder a larger role in intra-African affairs. This year, the union is celebrating its Golden Jubilee as African leaders gather in Addis Ababa under the aegis of the Year of Pan-Africanism and African Renaissance.
To achieve the ambitious objective of creating a United States of Africa, the AU must strive for greater African integration and promote agreement among member states on coherent mandates, competencies and powers as part of a larger supranational organisation
The AU, as a political structure, including almost all nations geographically located on the African continent, is attempting strong integration of the continent as a key objective
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COVER STORY
dangerous separatism in the two Sudans, security in Somalia, and the barely controlled international jihadist militancy in Mali. Presently, the African Union is made up of an intergovernmental ruling system, although it has been suggested that a proper supranational organisation would better assist AU goals. Following the model of the European Union, in other words, towards a true supranational organisation, would certainly give the AU more teeth when dealing with outside powers and organisations. But whatever integration it currently enjoys has only arrived by overcoming signicant obstacles. Much of this integration progress has been primarily a political process. And yet, despite these successes, huge problems still plague the continent, many of which now appear to be perhaps largely insurmountable. large portions of aid money, which rarely nds its way into the poorest parts of Africa. Other problems being addressed by the African Union include the barely contained insidious spread of AIDS, regional security issues, political instability, humanitarian crises, tribal tensions, poorly-developed social conditions and factional resistance to further integration into the AU. process. Small steps toward progress arise only from a handful of individuals, rather than from a sustained long-term effort overseen by a visionary leader and a stalwart supporting political cabinet. Finding a uniting gurehead in such a diverse and tribal continent is no simple task. And yet, to push the AU forward a charismatic, pragmatic leader who can deliver reforms will be crucial. There is also a lack of consensus over which organisation is best placed to further African integration. There is little clarication of the division of roles. Central institutions, so necessary for successful political amalgamation, need to be empowered and closer involvement of member states needs to be encouraged. It is widely agreed among various state leaders that the goal of creating a United States of Africa is worth striving for, but just how quickly this goal should be realised and exactly how the AU should get there remains extremely contentious. Before the continent can achieve greater integration, the various member states need to agree on coherent mandates, competencies, and powers as part of a larger supranational organisation. To achieve these goals, and many others, the AU would nd it useful to inspire the role of national parliaments. As with other intergovernmental organisations, some countries with larger populations or more favourable geography will take the lead in enacting changes. But even in the more democratically advanced AU member states, African media needs to entice greater debate among constituencies. The conditions for robust and free political debate are still yet to be put in place in any meaningful way. All of these measures might falter if institutional structures cannot be given requisite jurisdiction or adequate resources. African countries still struggle from a dearth of nancial resources and a distinct lack of human capital. With the increasing penetration of education, this is likely to change, but such alterations do not occur overnight. Foreign investment and a projected rise in pan-African trade should contribute to greater resources for the African Union institutions which will need them in the years to come. These are the issues the continental body must address. The future is still bright for Africa, but overcoming those obstacles will require political fortitude and greater democratic communication.
Nathan Smith is a geopolitical reporter writing for New Zealands The National Business Review. He has studied international relations and conict at Massey University and spent time working in SubSaharan Africa.
AUs Stellar Role in Regional Security

Taking positive steps in regional security, the African Union has mobilised relatively seamlessly to contain different security threats throughout the continent over the years. A sustained military reaction to the reinvigoration of instability in the Horn of Africa has signicantly reduced instability there in the past 12 months. The AU responded to the militant group al-Shabaabs extended campaign of terror, and assisted by international troops, has been able to contain the group and establish a transitional government in war-torn Somalia. Military cooperation has been a key development in east and central Africa. The AU has also played a large role in containing instability in conflict zones in Darfur, Comoros, Somalia, Democratic Republic of Congo, Burundi, Cte dIvoire, Central African Republic, Mozambique, Rwanda, and more recently, in Mali.
Insurmountable Challenges to Development

Geographically, Africa offers few easy or cheap methods of trade. Transporting goods overland is expensive and requires infrastructure which must be maintained. Rail and roads in Africa do not connect the continent as efciently as European or North American networks. Compounding this, Africa has very few navigable internal waterways, and those with potential do not stretch over long enough distances. Logistics using watercraft are orders of magnitude more efcient and economically more profitable. Without such natural networks, African nations will continue to struggle to develop quickly and will probably continue to rely on foreign aid for further advancement. But even this foreign aid can prove to be a double-edged sword, as the AU has pointed out. Studies suggest that while aid initially boosts a poor countrys economy, long-term reliance on aid or foreign trade subsidies can detrimentally affect the development and self-sufciency of developing nations. Poverty, a scourge which African nations are only too familiar with, can actually be exacerbated and extended by consistent offerings of large amounts of foreign monetary assistance. Many African Union members are now calling for foreign direct investment, rather than aid, even though the loss of aid money will constrict their economies painfully in the near term. A growing and encouraged move away from the endemic corruption of only a few decades ago as new democraticallyelected leaders step into ofces is a key objective of AU policies. These new leaders wish to see their countries leverage their abundant natural resources and drive their economies domestically, rather than live off
Working Towards a United States of Africa

All this adds prestige to the African Union as the main interlocutor for African affairs on the world stage. The 2009 resolution to create an African Union Authority (AUA), envisioned to be the chief pan-African body for further African integration, was a positive step on the road to greater African integration. The ultimate aim is to create something like a United States of Africa, with the idea that reform and renement of the AUs current governance structure should enable this ambitious objective to be achieved. Looking further into the future, a number of obstacles must be overcome if the African Union is to encourage further integration and answer serious questions about the direction of the AU. As in the European Union, there is a growing schism pulling intergrationalists and Euro-sceptics apart. Africa is becoming increasingly split between maximalists and minimalists as regards deeper integration. A question of ownership over the integration is being asked by many Africans. However, these worries may be unnecessary if no credible, motivating, and visionary leadership can be found to encourage deeper integration. Historically, momentum in policy progress is a slow
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Bumpy Road ahead for the Bolivarian Republic

It is unlikely that Nicolas Maduros recent election victory will be overturned, yet, it raises a number of political dilemmas for the new administration. Prof Riordan Roett underlines the challenges ahead for the new government of Venezuela
enezuela stands at cross-roads. The electoral victory of Nicolas Maduro, the Chavista candidate in the April 14 national elections, was by the narrowest of margins 50.6 percent to 49.07 percent for his opponent, Henrique Capriles Radonski, the coalition opposition candidate. Capriles and his coalition, the MUD, have challenged the results and have demanded a recount. Venezuelas electoral authority (CNE) reluctantly agreed to a full audit of the 46 percent of the ballot boxes that were not audited immediately after the election. This does not entail a full vote-by-vote recount; rather a relevant sample of the paper receipts of each ballot box will be compared with the ofcial electronic tabulation. The CNE has said it will take 30 days and the process should be completed by mid-May. The government proceeded with the inauguration of President-elect Maduro on April 19 for the remainder of the 2013-2019 term of office. It is highly unlikely that Maduros victory will be overturned, but it raises a number of political dilemmas for the new administration.
New Challenges for Chavismo

First, it is clear that Maduro is not Hugo Chavez. The deceased Presidents choice of Maduro as his successor was somewhat of a surprise. A faithful supporter of the Chavez regime, Maduro lacks charisma and he does not have a personal base of political support in the Chavista movement. His narrow victory interpreted by many analysts as an actual defeat, will require Maduro to demonstrate that he can govern. He will probably face challenges with the PSUV, the Chavez political machine, from other leaders who will rightly believe they would have been a
Venezuelan President Nicolas Maduro
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stronger and more legitimate candidate in the election. One obvious potential challenger is Diosdado Cabello, who controls the party and serves as President of the National Assembly. The government will confront another electoral challenge in 2015, when legislative elections are scheduled. Capriles has emerged as a commanding opposition leader. He demonstrated that a targeted campaign against the deteriorating social and economic situation is a viable strategy to challenge Chavismo and almost defeat it. Given the advanced state of deterioration in national affairs, some commentators have said that his narrow loss was a blessing in disguise. If Capriles had been elected, he would have had to govern in a totally Chavista institutional context. He now has the freedom to launch a national campaign for the 2015 legislative voting and for another national challenge in 2019. A young and appealing political leader, it is clear that Capriles will not retire from the political arena, and with almost one-half of Venezuela supporting his movement; he will need to be reckoned with by a weakened Chavista government. Second, it is highly probable that Capriles almost won because the average Venezuelan, in the absence of the mesmerising Comandante, Hugo Chavez, decided to accept reality and focus on day-to-day issues. Economic growth in 2013 will be sluggish at best (0.9% according to local consultancy, Ecoanalitica). Ination remains high (25% y-o-y in March). There are dollar and goods scarcity and the scal accounts are in total disarray. Oil production remains stagnant and new investment in the sector is unlikely, given the uncertain political environment. There have been two devaluations of the currency in 2013 February and March; there are rumours of the need for at least one more this year. Security is a growing concern homicides in the country are at an all-time high. Following his swearing-in, Maduro moved quickly to address some of these issues. He appointed Hugo Chavezs sonin-law as executive vice-president in an obvious effort to wrap the family mantle around his presidency. The most important appointment was that of Nelson Merentes as the new Finance Minister; he was the former head of the Central Bank. Merentes was also named as Vice President for the Economy on Venezuelas six-member Council of Ministers. The council barely functioned during the Chavez era; the Comandante made all important decisions, often without consulting the Cabinet. Given Maduros lack of economic and nancial experience, and the pending crises, the Cabinet may have greater relevance going forward. Merentes replaced Jorge Giordani, a hardliner, who
Sluggish growth, rising ination, shambolic state of scal accounts, stagnant oil production, currency devaluations, deteriorating security situation and a slew of tough strategic decisions Nicolas Maduro and his administration have their task cut out
was moved to a new position as Minister of Planning. He retains a seat on the Council (now as Vice President for strategic planning). Merentes, at first glance, is a more pragmatic voice in national economic affairs. Giordani was seen as a rigid Marxist academic whose interaction with the private sector and the market was extremely limited. Merentes has been consistently viewed by local economic actors as a more exible and reasonable voice. The concern of some analysts is that Giordani will prove a formidable opponent of a rapid move from Chavista orthodoxy and may attempt to defend his policies during his time at the Finance Ministry. The two ofcials were often at odds with each other over policy decisions in their former posts.
Diplomatically, the Maduro regime inherits a mixed bag. The United States has withheld recognition probably pending the results of the recount of the ballots; the Organisation of American States (OAS) has also supported the recount process. Maduro quickly adopted the harsh rhetoric of Chavez regarding the US in particular, and Washington, DC in general. Where relations will lead is unknown at this point in time. UNASUR, in a meeting in Lima following the election, endorsed Maduros election, but also endorsed the recount. At a regional level, Maduro will need to take some early strategic decisions. Will his government continue to support oil subsidies for Cuba and Nicaragua? Will Petro Caribe continue cheap oil prices for the small, vulnerable countries of the Caribbean region? As a new member of MERCOSUR, the regional common market forever in the making, will the Maduro administration attempt to follow Chavez bombastic policy positions or seek accommodation with the more centrist members such as Uruguay and Brazil? These were positions close to Hugo Chavez heart. It is becoming clear that these commitments are nancially unsound. But can Maduro afford, politically, to distance himself from them without suffering a political cost internally?
Prof Riordan Roett is Professor and Director Latin American Studies Program (LASP) & Western Hemisphere Studies (WHS) at the Paul H Nitze School of Advanced International Studies (SAIS) in Johns Hopkins University.
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opes that a new Egypt, not so caught up in the intrigues of the US and Israel, would help stabilise the situation in Syria without a long drawn-out bloodshed diminished during the past year. Not only has Turkey reconciled at least formally with Israel, where their common desire to overthrow the Assad regime in Damascus is now in sync, but Saudi and Gulf pressure at the Arab League has solidied support for the Syrian opposition as the legitimate representative of Syria, a legitimation that extends to the EU and the US. France and Britain have begun to circle Syria like preying vultures. They plan to save Syria from chemical bombs a surreal replay of Suez 1956, where France and Britain cooked up a pretext to invade Egypt with the US posing as the more restrained gang member, not to mention Iraq 2003, when they reversed their roles. The US has joined the Euro crowd. In an eerie replay of the US-orchestrated overthrow of Saddam Hussein next door, where the US tried to install its Iraqi migrs, the proposed new prime minister will be a US citizen, Ghassan Hitto, who was born in Damascus, but went to the US to study and stayed there, running his own electronics rm in Murphy Texas, until he moved to Turkey last year to help coordinate the funnelling of aid to rebelheld areas. Israel appears to be in a bit of quandary about Syria, though this is more apparent than real. Israeli policy during the past three decades has followed the divideand-conquer Yinon Doctrine, playing various forces among its Arab neighbours against each other - Maronite and Orthodox Christian, Sunni and Shia Muslim, Druze, etc - in order to keep the Middle East weak and unstable. In Syria, that even meant quietly supporting the Muslim Brotherhood during its ill-fated uprising in 1981, not because Israel wanted an Islamist Syria, but to keep the Syrian government off-balance. The secular and nationalist Baathist regime, together with Egypt, fought a war with Israel in 1967. These secular governments were a big threat, and it was only natural to try and cripple the regimes of Egypt and Syria, even if that meant working with Islamists. Today, that means keeping Syria in a debilitating state of civil war as long as possible. As Kissinger said of Iraq and Iran during their war in the 1980s, A pity they both cant lose. Or Truman when the Germans invaded Russia June 22, 1941: If we see that Germany is winning, we ought to help Russia, and if Russia is winning, we ought to help Germany, and that way let them kill as many as possible. Not only is Egypt
The Conspiracy behind Syrias
Debilitating Civil War

By Eric Walberg
Medics transport a Syrian Army soldier wounded in what they said was a chemical weapon attack near Aleppo
Fears over Chemical Weapons
The US-Euro-Gulf conspiracy to unseat Assad in Syria and divide it into weak states will create further chaos and conict in the heart of the Muslim world, beneting neither Muslims nor non-Muslims
now rediscovering its Islamic, very antiZionist roots making Egyptian Islamists the main enemy, but there still is no guarantee the SNC will defeat the Syrian army, and unlike far away France, Britain and the US, Israel must live chock-a-block with whoever is in Damascus - and Cairo.
What about US-Euro-Israel fears over Syrias chemical weapons? Syria is one of the few countries that have not signed the 1993 Chemical Weapons Convention (CWC). (Israel has signed, but not ratied it.) But Assad has made it clear that he will not approve their use on civilians. Saddam Husseins example is proof enough of the madness of that. The recent hype about chemical weapons is a blatant replay of 2003, when the US lied its way into invading Iraq. The real worry over WMDs is that whatever supplies the Syrian government has could soon fall into the hands of the westernbacked rebels, in particular, al-Nusrah Front (aka, al-Qaeda in Iraq). However, who can blame Assad if he drops a few on invading Brits, French, and yes Americans? It would be a perfect way to celebrate the centenary of WW I, where Germany, Britain and France pioneered
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their use, despite having signed the Hague Conventions of 1899 and 1907 banning them. Britain used chlorine against the Germans in 1915, but the wind blew back on the British trenches - a case of friendly gas. The US took their use to new heights in Vietnam with Agent Orange. Only the one-time US ally Saddam Hussein was ever brought to justice for using them. The US and Russia still have stockpiles (not to mention nuclear and biological weapons), despite their obligation under the CWC to destroy them all. The Syrians would get special satisfaction from gassing the French, who carved up and invaded Syria in 1920. Syria was promised France by Britain as its reward for the 1.7 million French who died in the WW I bloodbath that killed 16 million (Britain lost less than a million). The only positive outcome for the Allies was the destruction and occupation of the Ottoman Caliphate and the creation of a Jewish state there. This was an outrageous betrayal of the Arabs, who had arguably tipped the balance in WW I - at great loss - in Britains favour, on the promise of post-war independence. But, as the Spanish say, You dont dance with the devil; he dances with you. Britain wanted Iraq for its oil and Palestine for a Jewish state, the hill citadel of Jerusalem, according to geopolitical theorist Halford Mackinder - the last link in the British Empire. With a wink and a nod from Britain, France invaded Syria in 1920 and crushed a heroic uprising in 1925-1927, killing thousands. Greater Syria was divided into southern Turkey, French-occupied Lebanon/ Syria, and British-occupied Jordan/Palestine.
Animal carcasses lie on the ground, killed by what residents said was a chemical weapon attack, in Khan al-Assal area near the northern city of Aleppo on March 23
the power vacuum allows al-Qaeda to take root (it already has), it could be a problem for Israel. Look what happened to the Islamists in Gaza, where they surged and triumphed in elections in 2006 and remain strong. Israel has only to look south to Egypt to see how a revolutionary coalition can turn into an Islamic government, which is not nearly as pliable as the secular dictatorship it replaced. This is what keeps many Israelis rooting for Assad continuing to preside over a devastated, unthreatening Syria.
Canadas Supporting Role Future Prospects

It was not till 1946 that the French were nally booted out kicking and screaming. Post-WWII, Syrian politics is a litany of coups, egged on by the US, until the army and socialist Baathists finally settled on Haz al-Assad in 1971. Trying to pick up the pieces after the brutal French occupation and living next door to permanent nightmare Israel are not conducive to the charade of western-style pluralism, so the subsequent harsh dictatorship of Assad I and the newimproved Assad II are not surprising. The SNC alternative has no prospects for ruling a united Syria. Syrias future under the SNC is already being played out in Iraq, though Assad is far more popular and sensible than Saddam Hussein, and his demise will take down much of the Syrian social order with him. This is ne from an Israeli point of view as long as the Islamists are kept busy ghting their coalition allies within the SNC. But if the Islamists dominate in the SNC, and if When France was colonising Syria a century ago, Canada was already the great colonial success story as a white dominion, and was allowed to join the ranks of the imperial rich, unlike Syria et al. (Lawrence of Arabia lobbied Churchill to create a united Arab British mandate as the first brown dominion, with no success.) As a former colony of both France and Britain, the loyal white dominion of yesteryear, Canada, may look like the perfect intermediary today: Be nice and you too can graduate from colony to dominion. However, the ip side of white dominion status is that, like Israel or South Africa, you have build your society on the bones of the brown natives. Canadian Prime Minister Stephen Harper plays his supporting role in the NATOscripted drama unfolding in the Middle East, announcing his willingness to put Canadian forces on the ground there, even though he has not yet given the current opposition coalition, the Syrian National Coalition
(SNC), his formal blessing. The Canadian government does what it is told by its Israeli advisers, so the reason for Harpers coyness must be found there. This was not possible in Syria, just as it wasnt possible to dispossess hundreds of millions of Indians of their land. These were brown colonies, where poverty for the Syrian and Indian masses was the planned norm of the French mandate and British Raj, allowing a small native, neo-colonial elite to eventually take control. India, like Syria, valiantly tried the socialist path to assert real independence with mixed success. A hostile Pakistan and the Kashmir tragedy eerily parallels the Syrias Golan Heights, which the imperialists (now ably abetted by Israel in the case of the latter) orchestrated to keep Syria on a war footing, permanently crippling it. No good can come from supporting the imperialists in their games. The current manifestation of Israels Yinon Doctrine is to invade Syria on the pretext of chemical weapons, and then divide Syria into weak Sunni, Alawite-Shia, Kurdish and Druze states. Egypts slide towards supporting the US-Euro-Gulf conspiracy to unseat Assad in Syria will sadly encourage this, and continue to create chaos and conict at the heart of the Muslim world, beneting neither Muslims nor non-Muslims.
Eric Walberg is a Canadian journalist, and author of Postmodern Imperialism: Geopolitics and the Great Games - http://claritypress.com/Walberg.html. He may be reached at http://ericwalberg.com/
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The Bluff Master

Much of the hard talk engaged by North Korea is directed towards its domestic audience; something the rapidly-promoted-through-ranks Kim Jong-Un needs, to consolidate his military and political authority and gain public acceptance as a strong leader says Dr Sukalpa Chakrabarti
here is an inevitable escalation of tension almost every year when its time for the US-South Korean drills to take place. The considerable muscle exing by North Korea, though provocative, is more rhetorical and smartly restrained to lead to the brink. A closer look at the threats and actions partaken reveal that all the while North Korea has been harping on what possible grave damage it is capable of causing, in case of a rst attack by either South Korea or USA both highly unlikely events. Despite the dramatic threats, North Korea itself doesnt stand to gain by starting a war as it is sure to lose. Therefore, it is but obvious that all the hue and cry is part of a larger game plan wherein North Korea would like to take credit for being successful in maintaining a status quo for peace in the region, while painting a sorry picture for US and South Korea, in light of the Foal Eagle exercise coming dangerously close to invasive overtures. Also, there is no novelty to the provocations issued by Pyongyang. Be it placing the military, strategic rocket forces and artillery on a higher stage of alert, disconnecting the hotline with South Korea or sharing with the world its plans for preemptive nuclear strikes on South Korea and the United States all have been experimented with before and have died a natural death, post some diplomatic bargains. The only new angle has been disengaging cooperation at the Kaesong Industrial Complex it jointly operates with Seoul. However, given North Koreas nuclear capabilities and new leadership, it is not possible to scoff away entirely the worrisome chance of accidental escalation.
Impracticable high price for a peaceful negotiations

After weeks of heated threats and counter threats that elevated fears of armed conict, both sides seemed to agree to engage in talks to calm tensions. However, it is not as easy as it sounds, since there is a huge chasm between the two sides in terms of the preconditions for talks to resume. South Korea, alongside the US, is demanding a commitment to denuclearisation from North Korea before negotiating on long term solutions for the region. North Korea, on
Sen Pang, Director-General of the Arms Control and Disarmament Department in Chinas Foreign Ministry
The key issue here is the lack of security and the lack of mutual trust. Any one sides increase of military force will cause insecurity on the other side, and will cause a corresponding response
the other hand, has asked for the lifting of United Nations sanctions for North Koreas recent nuclear and missile tests and also guarantee by the US not to engage in nuclear exercises with the South. North Koreas National Defence Commission issued a statement1 that The denuclearisation of the Korean peninsula can begin with the removal of the nuclear war tools dragged in by the US and it can lead to global nuclear disarmament. US Secretary of State, John Kerry categorically stated that: I have no desire as secretary of state and the president has no desire to do the same horse trade, or go down the old road.2 -A view earlier reflected in President Barack Obamas statement, You dont get to bang your spoon on the table and somehow you get your way.
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South Koreas president, Park Geun-hye echoed a similar sentiment,We must break the vicious cycle of holding negotiations and providing assistance if [North Korea] makes threats and provocations, and again holding negotiations and providing assistance if there are threats and provocations.3 North Korea has rejected the recent offer from John Kerry to begin dialogue, claiming they would not talk as long as the US is swinging the nuclear club. Thus, given that both sides are demanding a presently impracticable high price for a peaceful negotiation, the game is likely to continue. Meeting any of the preconditions set by both parties will tantamount to political suicide for either.
Role of the US and regional powers

The UN Security Councils five permanent members have recently singled out North Koreas third nuclear test in February and Irans continued pursuit of certain nuclear activities as among the biggest threats to the 1970 Nuclear NonProliferation Treaty. It would be interesting to note briey the role US has played in nuclearising North Korea. In 1994, the Clinton administration had negotiated an Agreed Framework with North Korea, which succeeded in halting North Koreas nuclear programme for eight years and thereby easing the crisis on the peninsula. But the subsequent Bush administration rejected the Agreed Framework and instead added North Korea to an axis of evil.This resulted in North Korea reverted to being an isolated dictatorship, becoming more aggressive in pursuing a nuclear weapons programme, while the US was busy with the disastrous Iraq war. In fact, the Iraq war was a clear eye opener to states like North Korea that in order to evade any likely invasion by big powers, they had to step up their nuclear programme. In fact, with the successful nuclear tests and rocket launches, North Korea seems to be in a better position to bargain. Irrespective of UN Security Council resolutions, North Korea stands secure thanks to its long term ally China. While oflate Beijing has been increasingly frustrated with North Korea, a shift in policy could prompt instability in its neighbourhood -something that China would not welcome on its borders at this juncture given the discomfort with the United States strategy of rebalancing of forces in the Asia Pacic. Another regional power, Japan, is looking at Seoul, Tokyo and Washington boosting up military cooperation to pressure North Korea to back off its nuclear ambitions.
Gains for the North

But the policy of isolation by US and allies is something that has paid off for
North Korea in further strengthening the survival of the regime. Much of the hard talk engaged by North Korea is presumably directed towards its domestic audience. A major reason for this is that young Kim Jong-Un was promoted through the ranks of the Korean Peoples Army by his late father, without having done much to earn those qualications. Standing up to North Koreas enemies will help Kim Jong-Un consolidate his military and political authority and gain public acceptance as a strong leader. It is pertinent to note that ending the joint military exercises, and not repeating them, is one of the demands that North Korea has put forward for engaging in dialogue. It is quite possible that North Korea might wait until after the United States and South Korea end their joint military exercises towards the end of this month, and then make the proud claim to its people that it was the tough talk that successfully halted invasive exercises and pushed back the offenders. On the other hand, it is also possible that North Koreas underlying concerns that military exercises could be used as a shroud to prepare a surprise attack on it that may turn out to be true. The insecurities stem from Pyongyangs own malicious war games leading to the 1950 Korean War.4 Thus, whether the USSouth Korea military manoeuvres are aimed at reassuring a nervous South Korea or building up armed endeavour against North Korea is something that only time will tell. Sen Pang, director-general of the Chinese Foreign Ministrys Arms Control and
Disarmament Department, has rightly cautioned against a vicious cycle of confrontation with North Korea that could lead to war. The key issue here is the lack of security and the lack of mutual trust, he said.Any one sides increase of military force will cause insecurity on the other side, and will cause a corresponding response. But whichever side is playing the bluff, the hardest hit would be to fall over ones own bluff; since clearly, at present, the risk is not one of large-scale war or nuclear attack, but one of miscalculation based on misreading Pyongyangs intentions and misunderstanding its capabilities.
Dr Sukalpa Chakrabartiis Assistant Professor at Symbiosis School of Economics and may be contacted at sukalpa_c@rediffmail.com [1]Thursday, 18.4.2013,statement carried by the official news agency KCNA; http://www. reuters.com/article/2013/04/18/us-korea-northidUSBRE93H02Y20130418;accessed 20.4.2013 [2]http://www.reuters.com/ article/2013/04/18/us-korea-northidUSBRE93H02Y20130418;accessed 20.4.2013 [ 3 ] h t t p : / / w w w. c h i n a p o s t . c o m . t w / asia/korea/2013/04/18/376353/ South-Korea.htm;accessed 20.4.2013 [4]In June 1950, North Koreahad concealed largescale military movement towards the 38th parallel under the guise of training exercises. In the midst of these war games, several participating divisions headed south for Seoul, triggering the Korean War.
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Asian Road to a Knowledge Economy
Knowledge and innovation play a vital role in shaping the economic growth and development of any country. The session, Asia: The road to becoming a knowledge economy - Game of Catch Up or Game Changers, was discussed by a panel of eminent speakers. The panellists agreed that sharing of knowledge and ideas between nations creates common good, and initiatives in this direction must be taken. Increased connectivity between Asian countries and the top-down approach towards imparting knowledge can help in their economic upliftment and modernisation. K Varman Kamath said that the spread of technology can create economic revolution in the continent. He also said that good education was the most essential requirement in order to acquire knowledge based development. He stressed that a crisp and proper education system should be followed by schools in Asian nations. Andrew Sheng emphasised the reassessment of the education imparted to children because education is not about the elite or for the elite; it is about average students. Bindu N Lohani talked about his vision of Asia in year 2050. He expects Asia to contribute 50 percent of global GDP by the year 2050 with the help of sustainable development. He added that innovation and high quality education were essential for sustainable development. Frank McCosker listed the three enabling essentials of a knowledge economy as, connectivity, infrastructure and content, as all three would lead to innovation, accessibility and capacity building. The main question that arose from the discussion was the accessibility of technology to people. Of the three billion people living in extreme poverty in the world, about 1.7 billion originate from the Asia-Pacific region. In the world of revolution and technology, this population has been left behind. Contributing to half the worlds GDP by the year 2050 may remain
Economy
Asian Deliberations on a Global Stage

By Pratiksha Srivastava
The 46th Asian Development Bank (ADB) Annual Meeting 2013 concluded on May 5, after four days of deliberations. It was attended by over 4,000 people. Held at a sprawling venue in Greater Noida, the conference revolved around Development through Empowerment. Several issues, critical to inclusive growth in a developing Asia were discussed. The main concern of the annual meeting was to gure out the challenges and opportunities which play an important role in the multi-dimensional growth of the Asian countries. The following is a snapshot of some of the panel discussions reported by Diplomatist.
The India Expo Mart Limited in Greater Noida, venue of the 46th ADB Annual Meeting
Speakers
K Varman Kamath, non-executive Chairman, ICICI & Infosys Technologies Andrew Sheng, President, Fung Global Institute, Hong Kong Frank McCosker, GM, Global Strategic Accounts, Microsoft Corporation Bindu N Lohani, Vice-President, Knowledge Management and Sustainable Development, ADB Moderator: Sharanjit Leyl, BBC
an unfullled dream without the inclusion of these people. Another concern that emerged from the discussion was training of people to use latest gadgets.
Speakers
Armida Alisjahbana, alternate Governor for Indonesia, and Asian Development Bank Minister of National Development Planning Stephen Groff, Vice President for East Asia, Southeast Asia and the Pacic, ADB Emilia Pires, Governor for Democratic Republic of Timor-Leste, ADB Berne Ripoll, alternate Governor for Australia ADB, Parliamentary Secretary to the Treasurer, Australia. Moderator: Veronica Pedrosa, Journalist
Global Partnership for Addressing Development Challenges in the Asia -Pacic

The Asia-Pacific region includes countries mainly in East Asia, Southeast Asia and Oceania. To attain Millennium Development Goals (MDGs), cooperation and global partnership between all the countries of the region is essential.
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One of the seminars held at the meet revolved around Global Partnership for Addressing Development Challenges in the Asia-Pacic. The panellists introduced global partnership as a unique instrument for dealing with different issues, especially the economic development of Asian countries. The first section of the seminar dealt with challenges and priorities in global partnership. The global aid volume was not sufcient enough to meet the needs of all people living below poverty line, and hence, many countries of the region were left behind in economic success. The second section of the seminar focussed on the involvement of the public sector with the private sector to enhance global partnerships for sustainable development. Knowledge sharing between the public and the private sector can play a key role in the economic development of countries in the Asia-Pacic region. The panellists agreed that for such a partnership, the governments of all countries must take initiatives, including proper tax system, legal framework, and ght against corruption. Development cooperation, capacity building, sharing of knowledge and fair trade at all levels, are indispensable tools to run a public-private partnership (PPP) at the international level.
Asia-Pacic has recorded strong growth relative to other global economies, yet it remains vulnerable to risks emanating from the EU and the US
evolving situation in the EU, the recovery of the US economy, and the ability of AsiaPacic economies to ride through nancial storms originating in the West. The keynote speech by Paul Sheard stated, The growth in the three regions is a three-speed growth. However, any worsening of the economic conditions in the EU could increase contagion risk for Asia Pacic, given the regions open economies and sensitivity to capital ows and trade. The panellists noted that a signicant recovery was witnessed in several countries of Asia. In this context, Anoop Singh quoted Japan as an example and said that many other Asian countries were dependent on Japans economy for their progress. John Chambers felt that along with regulation, resolution and changes were also desirable in the Eurozone. This would help the Eurozone to avoid risks. Paul Gruenwald focussed on the signicant growth in ASEAN countries. ASEAN countries possess the ability to drive the economic zone, he said. Rajeev De Mello pointed out that Asia as a continent beneted from its economic policies. Elena Okorochenko said that easy domestic and monetary policies were required to manage the economic risks in the Eurozone. An economic research by Standard and Poor quoted that emerging Asia will grow, but it wont be ring on all cylinders. The balance sheets across households, corporate, financial institutions, governments and almost all the economies look ne. But the weak point of Asias growth is its reliance on demand from advanced economies Eurozone and the US. It further observes that the reliance of Asian countries is in varying degrees. For example, the Indian subcontinent is comparatively more reliant on higher economies in comparison to ASEAN-5 and China. Less reliant countries experience relatively more stable and continuous growth. Despite the pickup in growth of Asia this year, a balance of risks facing emerging Asia was on the downside. Two of the possible large deviations from the baseline of growth due to US and Eurozone economies include:
Speakers
A n to n i E s te va d e o rd a l , M a n a g e r fo r Integration and Trade sector, Inter-American Development Kapil Kapoor, Director of Strategy, African Development Bank Naina Lal Kidwai, President, FICCI Takehiko Nakao, ADB President Ana Palacio, Minister of the Spanish Council of State Moderator: Zeinab Badawi, Presenter, BBC News
US doubledip recession: This would lead to possibly another sharp downturn in emerging Asias export growth, which has recently turned positive. Standard and Poor s expect the ASEAN-5 countries and China to be relatively insulated from such an event. Another Eurozone debt-related areup: In Asia, countries with current account decits India and Indonesia both domestically led economies, would find their currencies and, to a lesser extent, growth coming under pressure.
Africa & Latin America for Inclusive Growth

Despite being rich in natural resources, Asia, Latin America and Africa account for a large population living below the poverty line. Mutual trust, cooperation, investments, sharing of knowledge and innovation and togetherness can help these regions ght all challenges in the path of achieving MDGs. At the ADB meeting, discussions on Partnership with Africa and Latin America for Inclusive Growth: Role of Developing Asia found a strong audience. The discussions were mainly about the possible expanded role of developing Asia as a driver of South-South Cooperation (SSC) or the South America-Africa Cooperation (SAC) within and beyond Asia. Sharing development knowledge and expertise through south-south cooperation in the areas of transport, urban development and social safety net, can lead to effective solutions to common development challenges, both within and across regions, noted the panellists. Developing countries in Asia have accumulated effective development practices, and achieved substantial results in various domains, but SSC remains largely uncharted territory, with enormous potential for further exploration. China sets a relatively good example by taking an initiative to invest in African countries and develop trade relations with the region, both at the governmental and nongovernmental level.
A Fillip to Asia-Pacics Growth: Healthy EU & US Economy

Asia-Pacic has recorded strong growth relative to other global economies, yet it remains vulnerable to risks emanating from the EU and the US. A seminar on Will the Eurozone and US Economies derail AsiaPacics growth? was organised by a set of distinguished speakers from Standard & Poor (S&P). Economists discussed the
Speakers
Oliver Bolitho, Chairman of Goldman Sachs, Asset Management, Asia Pacic John Chambers, Managing Director and Chairman of Global Sovereign Rating Committee, S&Ps Rajeev De Mello, Head of Asian Fixed Income, Schroder Investment Management Paul Gruenwald, Managing Director, Asia Pacics Chief Economist, S&Ps Elena Okorochenko, Managing Director, AsiaPacic Sovereign and International Public Finance ratings, S&Ps Anoop Singh, Director and Head of Asia and Pacic, IMF Moderator: Yu Tsang Chang, Executive Managing Director, Head of Asia Pacic, S&Ps
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SCRAPBOOK
Ninong Ering, MoS, Ministry of Minority Affairs raises a toast with Ambassador Alon Ushpiz at the National Day celebrations at the Embassy of Israel.
A cultural performance by De Stilte group from The Netherlands and Astad Deboo dance group from India at the Queens day celebrations at the Embassy of the Kingdom of The Netherlands.
Ambassador Alon Ushpiz addresses the gathering. Netherlands Ambassador Alphonsus Stoelinga raises a toast with the chief guest of the evening, Pinak Ranjan Chakravarty, Secretary (ER), MEA.
Glimpses from the National Day celebrations of the Royal Danish Embassy.
Glimpses from the National Day celebrations of the Royal Danish Embassy. EXTRAORDINARY AND PLENIPOTENTIARY DIPLOMATIST May 2013
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SCRAPBOOK
External Affairs Minister Salman Khurshid meets Foreign Minister of Finland Erkki Tuomioja in New Delhi (Photo Courtesy MEA photo gallery). The Royal Air Force plays an orchestra piece at the annual Queens Birthday Party hosted by British High Commissioner to India H.E. James Bevan at his residence in New Delhi.
Guests at the Queens Birthday Party.
High Commissioner Tariq A Karim, Naghma Karim, Purobi Mukharji and Ambassador Deb Mukharji at the National Day celebrations at Bangladesh High Commission in New Delhi.
Minister of Foreign Affairs of Azerbaijan, Elmar Mammadyarov and External Affairs Minister Salman Khurshid exchange signed documents of Agreements in New Delhi (Photo courtesy Mukesh, Photo Division).
Chief Guest Pawan Kumar Bansal, High Commissioner Tariq A Karim and Mani Shankar Aiyar at the National Day celebrations at Bangladesh High Commission in New Delhi.
50
PERSPECTIVE
Saluting the Iron Ladies

Baroness Margaret Thatcher and Indira Gandhi
Lord Dolar Popat, Conservative Peer in the House of Lords, pays tribute to two strong, determined and ercely patriotic stateswomen who changed the world with their pioneering approach and inspirational leadership
he funeral of Baroness Margaret Thatcher brought to an end one of the most compelling and important chapters in British and indeed global politics. She was a politician unlike any other; she won many battles and received loyalty and friendship from so many; yet there were many who didnt agree with her views. I was moved by the thousands of attendees in St Pauls Cathedral along with the enormous numbers who lined the route, paying tribute to one of Britains greatest Prime Ministers. The international dimension to Margaret Thatchers time in ofce is as signicant as any domestic achievement. Whilst she is fondly remembered in Britain as the leader who reclaimed the Falklands and secured a rebate for Britain from Europe, her role with President Reagan in defeating the Soviet Union and ending the Cold War is perhaps her most lasting and signicant achievement. She was a condent leader on the world stage; people were drawn to her even-handed, frank and knowledgeable manner that allowed her to build strong relations with many world leaders.
Two Stateswomen; One Pioneering Approach

In her own words, Baroness Thatcher was not a consensus politician, but a conviction politician. She believed in the importance of individuals and families; she wanted to spread the benets and advantages that had, for many years, been the privilege of the elite, and ensure as many people as possible received those benefits. Her desire was to tackle institutions and elites that were withholding power from people; she was, in many ways, an anti-establishment Prime Minister. The political establishment at the time was dominated by men. The Bishop of
London stated in his address to Baroness Thatchers funeral that when she entered parliament in 1959, she was part of a cohort of only four percent of women in the House of Commons; for her to become Britains rst and so far, only female Prime Minister within 20 years is a remarkable achievement. In this incredibly male-driven world of the 1970s and 80s, there were two major female political leaders who rose to the top. Indira Gandhi and Margaret Thatcher were allied in their pioneering approach; doing things in a new way, leading by example and changing the world at the same time. One of the leaders who was most drawn to Margaret Thatcher and vice versa was Indira Gandhi. Whilst
their political ideologies rarely if ever overlapped; their respective life-stories, leadership styles and personalities allowed the rarest of things amongst our political leaders to blossom friendship. I cannot imagine the loneliness of holding high ofce at the best of times; having so much responsibility for so many people; constantly being second-guessed and always uncertain of where the next threat or challenge will come from. To hold high office as a woman in a world surrounded by men who most likely resent your rise to power, must have been even more difcult; in a sense, it would have been even more surprising if Thatcher and
51
PERSPECTIVE
Gandhi hadnt been friends, or at least shared a strong understanding. But of course, it is never as easy as that; politics is driven by personalities and trust as much as by policies and respect, so the friendship of these two leaders remains fascinating.
Friendship beyond Frontiers

Their friendship began in the mid1970s when Thatcher was Leader of the Opposition and continued through the period when Gandhi had been voted out of ofce. Thatcher was one of those voices encouraging Indira Gandhi to run for office again in 1980, and her visit to Britain was believed to have boosted her domestic reputation. Thatcher and Gandhi were strong, determined and divisive leaders. They were both fiercely patriotic and proud of their respective countries. They led their countries in war, faced considerable domestic challenges and lived in a hostile world - Thatcher narrowly avoiding death at the hands of an IRA attack in 1984 and Indira Gandhi losing her life at the hands of her own bodyguards. Margaret Thatcher joined many prominent members of the international community at the funeral; paying her respects to one of her few fellow stateswomen and mourning the loss of a friend.
A friend to a million British Indians - Lady Thatcher with Lord Dolar Popat and other members of the British Indian community
Her Lasting Legacy for British Indians

Lady Thatcher wasnt just a friend to an Indian leader; she was a friend to nearly a million British Indians as well. Finchley her constituency in North London was and remains home to a large number of British Indians. It was in Finchley that I rst met Margaret Thatcher. I was one of a number of British Indians who was asked and encouraged to build an organisation that could bring together the Conservative Party and the British Indian community. I saw first-hand how she cared very deeply about her constituents in Finchley and was a great friend to the British Indian community. She understood and admired the values of the rst and second generation British Indian community, so often based around family businesses that were usually small retail outlets similar to her own background. The British Indian community has evolved considerably in the past thirty years, in large part due to the opportunities afforded to us by the Thatcher Governments. Her premiership helped to reshape the British economy and give so many entrepreneurs a chance to grow their rms and help the economy. Her lasting legacy for millions and many British Indians across Britain will
Lord Dolar Popat
be home-ownership; a chance to become a property owner and invest in their familys future. We owe our first female Prime Minister so much for helping to build a country that gave people opportunities and challenged the decline we had faced in the late 1970s. By tackling the excessive powers of trade unions which had caused so much damage to previous governments Baroness Thatcher helped to create an environment in which businesses could ourish. But it also
52
THE EXTRAORDINARY AND PLENIPOTENTIARY DIPLOMATIST May 2013
It was a surreal experience for me to see Lady Thatcher in the House of Lords; she and Sir Jay Gohel were the people who inspired me get involved in politics. I could never have imagined that I would be a member of the same House as her, and I must confess, I never felt worthy of such an honour
meant that the public no longer had to face the terrible circumstances of the late 1970s, with rubbish piling up in the streets and bodies remaining unburied. I would never argue that defeating the unions was without signicant negative impacts on many people, but it did help to restore order and democratic accountability to this great country. It was always a slightly surreal experience for me to see Lady Thatcher in the House of Lords; she and Sir Jay Gohel who she affectionately referred to as My Sir Jay Gohel were the people who inspired me to take an interest and get involved in politics. I could never have imagined that I would be a member of the same House as her, and I must confess, I never felt worthy of such an honour. Baroness Thatcher was and will forever remain an inspirational and pioneering leader who helped to save this great country. Her amazing accomplishments in government both domestically and on the international stage have been well discussed, but should never be forgotten. She built so many of the elements that make modern Britain so great; yet we must never forget how she remained a committed and conscientious MP to her constituents. She was a force of nature; unrivalled and unlike any we have known before, and probably will ever know again.
Lord Dolar Popat is a Conservative Peer in the House of Lords, Co-Chairman of the Conservative Friends of India and Vice-Chairman of the Commonwealth APGG.
INDIAN STATES ON A PLATTER
From Panaji to San Sebastian

The Making of a World Class, Sustainable City
urning Panaji City into a world class sustainable city was the challenge that Spanish Company LKS Ingeniera, S. Coop accepted in January this year. Part of the MONDRAGON Group European Multinational Corporation and largest cooperative in the world LKS Group is a multidisciplinary service provider with vast experience in design, detailed engineering and project management services for the infrastructure sector (railways, roads, highways and water), urban planning and architecture. With its headquarters in Spain and operations in several countries in Europe, South America, Africa and Asia, the group has its registered ofce in India in Pune since 2010 and ofces in Chennai, Panaji-Goa and Delhi. It is carrying out several public projects, including the Vyttila Mobility Hub in Cochin, the rst multimodal station, the eco-regeneration master plan for Cooum River in Chennai and project management for the New Central University in Jammu. When LKS senior urban planners viewed the tender oated by the Goa State Infrastructure Development Corporation (GSIDC) it became clear that their search for a holistic integrated master plan for the city was aimed at giving a much-needed boost to infrastructural development. Closer inspection of the main physical features of Panaji City revealed a distinct Portuguese planning footprint, which lead LKS to nd similarities with several Iberian cities. LKS chose San Sebastian, a former summer city for the Spanish Royalty located in the North of Spain, which underwent the same development and up gradation process 20 years ago.
Why San Sebastian?

This is a question often addressed to LKS professionals civil engineers,
When LKS senior urban planners viewed the tender oated by the GSIDC, it became clear that their search for a holistic integrated master plan for the city was aimed at giving a much-needed boost to infrastructural development
urban planners and architects, experts in heritage and preservation and branding designers especially in terms of size 186,000 inhabitants for San Sebastian and 1 lac for Panaji the outstanding natural environment in both cities, which boasts of an extraordinary symbiosis between nature and human action and the annual presence of top-rated international lm festivals, makes both San Sebastian and Panaji proverbial twin cities. Furthermore, similar infrastructure, challenging environmental and transport issues, emerging middleclass and booming economy impelled LKS to highlight the design philosophy in their proposal, jointly developed by Spanish experts and local
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INDIAN STATES ON A PLATTER
Milestones along the road from Panaji to San Sebastian LKS, along with GSIDC, has established seven main objectives of this project, which include: 1. To achieve a new mobility model in order to improve accessibility and welfare of the city. 2. To provide public and green spaces and upgrading the standard of existing ones. 3. To promote the optimal use of existing natural resources, a key component of Panajis transformation into a sustainable and efcient city. LKS brings innovative solutions totally respectful to existing hydraulicsystems and an appropriate road and pavement execution. In addition, there is need for promoting a maintenance culture through a city life cycle analysis. 4. To provide the required equipment network, based on a thorough analysis of the citys main features in order to match current and future needs of the population. 5. To preserve, spread and revitalise the cultural heritage in Panaji and Old Goa. Working with the local Heritage Conservation Committee, the master plan will include suggestions on private/public initiatives. 6. To attract culturally inclined interested tourists. 7. To create a global recognisable brand for the city in accordance to its own rich culture and heritage.
engineers and architects. The team working in Panaji is comprised of several experts in water and sanitation, urban mobility, heritage and tourism from Spain, bringing with them intricate details of similar solutions applied in San Sebastian.
The Strategy
The design philosophy is based on the awareness of the existing potential of Panaji City with respect to natural resources, environment and landscape, history and strong cultural heritage, tourism, quality of existing urban structure, entrepreneurial tradition and urban charm. Urban regeneration strategies based on policy making guidance, design and execution result from the methodology proposed for addressing specific urban challenges, including adequate storm water drainage, a holistic infrastructure and integrated utility system, mobility of the entire city, boosting existing open spaces and opening the city to the sea. These solutions will be determined by the role played by the city in achieving global sustainability objectives. The master plan pursues a sustainable urban model aimed at providing the best solutions in energy efficiency, urban compactness and right future growth density, urban complexity avoiding zoning, mixed and variety of urban public space. Achieving all this while preserving Panajis cultural identity was the real challenge. Recently, San Sebastian was appointed the European Capital of Culture for 2016, thanks to a unique project at the cultural forefront of Europe. The LKS team is indebted to the Strategy Office of San Sebastian City which willingly agreed to share their views during the development of
the holistic design of infrastructure and city branding for Panaji City.
Key for Success

After months of hard work and careful analysis of the technical solutions applied to the European city, the LKS team determined the key factors for successful application of the master plan. The plan also incorporated requirements of local authorities who clearly proposed a holistic approach to the project, integrating diverse public agencies and all stakeholders. This participatory approach
has been the working benchmark that has fuelled and streamlined the entire process. Even though the challenges are numerous, LKS has evolved a holistic, integrated, participatory approach based on the vision and direction of Chief Minister Manohar Parrikar work with locals and for locals. It is only a matter of time before Panaji, like its Spanish counterpart, will be transformed into a world class and sustainable city in India.
Source: LKS Group
54
PUBLIC POLICY
The LBT Conundrum

By Dr Sukalpa Chakrabarti
ultiplicity of taxes on different sectors and activities over the years has resulted in a distinct competitive disadvantage for the Indian market. The prevailing complex and multi-layered indirect tax structure not only fragments the national market,but alsoenhances the chances of engaging in unfair trading practices that adversely affect competition. Traders in Pune and Pimpri Chinchwad (Maharashtra) have embarked on a state-wide indenite strike from April 22, on the problematic issue of the local body tax system, which replaced the Octroi. The earlier indenite strike declared on April 4 was withdrawn after chief minister Prithviraj Chavan assured that suggestions to relax the rules could be considered.
Understanding LBT
So what is this Local Body Tax? LBT or local body taxes are taxes levied into the entry of goods in a local area for consumption, use or sale therein, on the basis of books of accounts like VAT. Thus, it is a tool for revenue generation in the hands of local municipal bodies. Till April 2013, Octroi was the main source of revenue of Municipal Corporations in Maharashtra, an exclusive state where Octroi is levied. The new LBT system is expected to cut down corrupt practices associated with Octroi and eliminate bottlenecks associated with the current methods of Octroi collection, thereby improving efciency in the movement of goods. It has already come into effect in the civic bodies of Kolhapur, Sholapur,Nashik, Thane, Navi Mumbai, Nagpur, Amravati, Akola, Ahmednagar, Ulhasnagar, KalyanDombivli, Chandrapur, Parbhani, Kalyan, Latur etc., where traders have felt the heat of tax. The state government has now started the process to introduce LBT in place of the existing Octroi system with effect from
April 1, 2013 in Pune(PMC) and Pimpri Chinchwad (PCMC). It is mandatory for all traders, who import goods worth over `5, 000 to register with the civic body and take the certicate or lose the license to operate in the city. There are also provisions to impose a ne and punish traders who fail to follow rules. Though local traders have registered in large numbers, they have gone on strike to oppose the move as they seek abolition of the local body tax. The traders wanted the government to wait till introduction of goods and services tax (GST) by the central government to avoid LBT. They are apprehensive of a return of the license raj
in the garb of license to operate under the LBT provisions. They feel that while the Octroi window gets sealed, the LBT regime will unleash thousands of new windows of corruption for local municipal ofcers. Some traders are in favour of the Gujarat model wherein Octroi has been removed and replaced with additional cess on VAT. But the Ahmedabad Municipality, faced with acute fund shortage, is reportedly undertaking a study of the LBT structure in Pune to check the feasibility of replication. Interestingly, everyone, right from the traders association and office bearers support abolition of Octroi, but does not want LBT.
55
PUBLIC POLICY
Arguments Favouring LBT

The Confederation of Indian Industry (CII) has welcomed imposition of local body tax. A statement issued by Ninad Karpe, Chairman, CII Maharashtra state council, said, The book-based taxation system will help in easing out Octroi issues, which are presently creating bottlenecks for industry in the state. The local body tax will certainly bring in transparency in tax collection and also reduce the burden of paying taxes at check nakas. The government has argued in favour of LBT on the ground that the process of levying the local body tax, as compared to Octroi, is simpler and even the tax rates are lower. Moreover, the cost of collecting LBT will be signicantly lower than that of collecting Octroi and will require far less physical infrastructure, which in itself will translate into huge savings for the administration. Also there are many exemptions under the LBT, which was not the case with Octroi. Exemptions from LBT include bicycles, tricycles, cycle rickshaws and its parts like tyres and tubes, newspapers, agriculture implements, school textbooks, handlooms, paddy, rice, wheat and pulses (in whole grain, split or broken form), cotton and silk yarn, buttermilk, earthen pots and red earth, rewood, fresh plants and saplings, garlic and ginger, bangles, idols, musical instruments, milk, national flag, organic manure, judicial and non-judicial stamp papers, eggs in shell, sheep, goats, poultry and cattle, raw meat, raw wool, seeds, lottery tickets, PDS foods, currency notes and coins, solar energy devices, aids and implements used by handicapped persons, contraceptives used for family planning and treatment of cancer and HIV & AIDS, electricity, water and human blood. Interestingly, LBT will accrue a distinct advantage to companies and distributors of alcohol due to the cap system provided in the Maharashtra Municipal Corporations (MMC) Act. According to the Act, LBT on any product cannot be above 10 percent. The Octroi on alcohol in the region is approximately 15 percent. Thus, there will be a reduction of 5 percent on alcohol rates causing some cheers! The state government has also reduced the prices of petrol and diesel by one percent in LBT, 2.5 percent in LPG domestic gas, electronics/electrical, food products and grains followed by many products directly concerning the common man. Prices of gold and diamond ornaments were reduced by nine times. Consumers, therefore, may have a lot to cheer with the local body tax (LBT) coming into effect, since the new tax will bring down prices of many types of goods. No wonder that the Consumers Forum opposes the traders strike
Key Features of LBT

The rates of LBT are decided by State Government which is usually recommended by the Commissioner of Corporation. All products are placed under different categories and rates of local body tax dened as per the category. Any goods (including livestock) which are imported into the Corporation area from outside the Corporation area for use, consumption or sale are liable for LBT. It is a tax on purchase and not on the sale of goods. LBT is payable if goods are purchased inside Corporation area from unregistered dealers LBT is not payable if goods imported are not brought in Corporation area and are directly sent to godown/ ofce/ branch and sold directly from outside Corporation limits. It is a self-assessment account based tax. Proper recording in books of accounts, inward-outward register, delivery challans and dispatch proofs are required. Maintaining a daily transaction book for a minimum of eight years. The Commissioner of Corporation has wide powers under the LBT Act. He can determine the fair market price if he feels that the cost of purchase is undervalued. He can inspect the goods in transit. No LBT to be levied on the goods imported into the city by State or Central Government (or on behalf ), on production of a certicate from an ofcer empowered by the government concerned in this behalf, certifying that the goods so imported belong to the government and are imported for public purpose and are not used or intended to be used for the purpose of earning prot.
and feels that traders should opt for other ways to register their protest against the government and not at the cost of the consumers. Still, the general feeling is that ultimately the burden will get passed on to the consumers, which in turn may lead to lowering of business volume and shifting of trading bases from Maharashtra to other states. context of Indias entry into plethora of free trade agreements (FTAs).With so many FTAs in operation, there is immense pressure on India to rationalise its local tax regime to ensure a level playing eld for domestic manufacturing. Moreover, with the central governments policy to allow FDI in retail, it is imperative to undertake a review of existing policies, laws and regulations from the competition perspective and simplify the tax structure to make way for a uniform, competitive tax system in the country. Therefore, rather than LBT or any other such exclusive local tax regimes that would exacerbate confusion, the policy makers should focus on creating a single window tax system that is easy to map and implement across the country.
Time for a Paradigm Shift in Institutional Arrangements

At the macro level, given that ination is posing a serious threat to the growth momentum affecting the poor and vulnerable sections, there is a strong case for waiving local taxes that hinder the smooth movement of essential commodities. As Prime Minister Manmohan Singh has rightly pointed out , there is a need for a paradigm shift in the institutional arrangements for improving the availability of various commodities to meet the higher levels of domestic consumption. This justies the Maharashtra governments decision to do away with Octroi, but replacing it with yet another cumbersome LBT may not be the right solution; especially when the country is gearing up for uniform tax structure in a single national market. A uniform tax structure on goods and services across India is essential in the
Dr Sukalpa Chakrabarti is Assistant Professor at Symbiosis School of Economics and may be reached at sukalpa_c@rediffmail.com. http://articles.timesofindia.indiatimes.com/201304-11/pune/38461967_1_local-body-tax-ashwinimalhotra-tax-collection; accessed 20.4.2013 http://articles.economictimes.indiatimes.com/201102-04/news/28433512_1_octroi-local-taxescommodities;accessed 20.4.2013
56
LEGAL FORUM
International Taxation
Import and Implications
By Dimply Gulati
axation is an integral part of every nations economic system. With globalisation and removal of cross border obstacles, the government levies taxes on citizens and residents, either on domestic income or on domestic and worldwide income based on the residential status. Under Section 6 of the Indian Income Tax Act, 1961, (ITA) the residential status of an individual is classied into three categories resident and ordinarily resident, resident but not ordinarily resident and non-resident. The residential status is determined based on the number of days present in the relevant and preceding nancial years. Section 6(1) of ITA defines that an individual is resident in India, if such individual satises anyone of the following two conditions - the individual is in India for at least 182 days in the relevant nancial year; or the individual is in India for at least 60 days in the prior nancial year and for 365 days or more in the immediately preceding four nancial years. Further, Section 6(6) of the Act provides that a person is said to be not ordinarily resident (NOR) if such person is an individual who has been a non-resident in India in nine out of the ten previous years preceding that year, or is not in India during the seven previous years preceding that year for a period of, or periods amounting in all to, seven hundred and twenty nine days or less. The reason for distinguishing between Resident and Ordinarily Resident (ROR) and Not Ordinarily Resident (NOR) is to determine the taxability of worldwide income. If an individual is ordinarily resident, then his worldwide income is taxable, but if he is not ordinarily resident, then only the Indian sourced income is
taxable. The residential status determination is important not only for taxability of just income, but also for a wide range of issues like dual residency, credit for foreign taxes paid, disclosure of foreign assets and accounts.
Dual Residency and Double Taxation

If an individual goes to a foreign country for an assignment and becomes a resident of that foreign country based on its local laws and is also resident of India, then he is deemed to be dual resident for tax purposes. Due to the dual residency, he is liable to pay taxes in both countries. Therefore, the individual is liable to pay taxes on the same income twice. In this scenario, the Double Taxation Avoidance Agreement (DTAA) comes into play, commonly known as tiebreaker rules. DTAA is a bilateral agreement entered into between two countries to avoid the taxation of income in both countries, i.e. double taxation of same income. India has DTAA with over 65 countries. For example, if an individual who is a resident of contracting state and derives income from performance of professional services in other contracting state shall be taxable in the rst mentioned state under DTAA, subject to the terms provided under the agreement. The individual is obligated to le returns in both countries due to dual residency and is subjected to the assessment of taxes as well. At this stage, the tax credit mechanism comes into play and becomes essential to eliminate the impact of double taxation. The individual who pays taxes in a foreign country can represent that the taxes have already been paid and can claim the credit in the home country.
In India, tax credit can be claimed under two sections of the ITA. If taxes have been paid in the country with which India has entered into DTAA, then credit under Section 90 of the ITA can be claimed. But if no treaty exists with the foreign country, then credit under Section 91 of the ITA can be claimed. Indian citizens living abroad and residents of a foreign country might have assets, financial interests, immovable property and bank accounts overseas. In order to combat tax evasion, the government has mandated the disclosure of foreign assets and accounts on a yearly basis. The Central Board of Direct Taxes (CBDT) has introduced Schedule FA which requires the resident assessee to disclose all particulars relating to overseas assets, like bank accounts indicating the location of the country, name and address of the bank, the account holders name and the peak balance maintained in the account during the year, nancial interests in an entity indicating the country name and code, name and address, nature of the entity where interest is held and the total investment, immovable property/other assets indicating country name and code, location of the property/asset and total investment and details of the accounts with signing authority that have not been included in the mentioned categories with the name and address where the account is held. There are multiple ways to plan and save money by avoiding multiple payments of taxes. However, it should not be construed as the means to evade taxes, as tax evasion has serious repercussions.
Dimpy Gulati is subject matter expert and tax partner in a Delhi based boutique law firm, L e g a l I m p e r i a l s . S h e m a y b e re a c h e d a t legalimperials@gmail.com.
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HAPPENINGS
Orange Celebrations in New Delhi

Embassy of the Netherlands celebrates crowning of King Willem Alexander in New Delhi
s the Netherlands turned into a sea of orange while celebrating the swearing-in ceremony of its new King, Willem Alexander, the Embassy of the Netherlands in New Delhi joined the global festivities with as much gusto and gaiety. Queens Day, as it has traditionally been celebrated on April 30, was very special this year as the Queen signed the instrument of abdication in the Royal Palace in Amsterdam. By this constitutional procedure, she formally relinquished the throne after having ruled for the last 33 years. The Netherlands hasnt had a king for more than 100 years. The swearing in and investiture of the King took place at the joint session of the two Houses of the States General in Nieuwe Kerk. The last two abdications, in 1948 and 1980, also took place in Amsterdam. Post abdication, the former Queen assumed the title of Her Royal Highness Princess Beatrix of The Netherlands, Princess of Orange-Nassau. From that moment on, the new monarch was referred to as His Majesty the King. His ofcial title will be His Majesty King Willem-Alexander, King of The Netherlands, Prince of Orange-Nassau.
Netherlands Ambassador Alphonsus Stoelinga with Sonia Gandhi at the event celebrating the crowning of the new King of the Netherlands, Willem-Alexander
Delhi Acquires an Orange Hue

As the world enjoyed the live telecast of the abdication ceremony and the subsequent investiture of King Willem-Alexander, H.E. Alphonsus Stoelinga, Ambassador of The Netherlands celebrated the historic event at his residence with more than 1,100 members of the Indian and Dutch community. The Chief Guest of the evening was Pinak Ranjan Chakravarty, Secretary (Economic Relations) in the Ministry of External Affairs. Also present at the occasion was Sonia Gandhi, Chairperson of the United Progressive Alliance. Speaking on the occasion, Ambassador Stoelinga said, The Dutch Royal Family has a long and good relationship with India. The new King will give continuity to those strong ties and intensify our fruitful cooperation. The evening also saw performances by the dance company of noted contemporary Indian choreographer, Astad Deboo, who, along with Dutch dance company De Stilte, presented a stunning fusion of the two cultures.
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Dedicated to the 28th May - Republic Day of
Azerbaijan
special supplement
Azerbaijan: A Country on the Move

ocated on the crossroads of West Asia and Eastern Europe, oilrich Azerbaijan is the largest country in the Caucasus region. The Caspian Sea laps the countrys shores. The countrys neighbours include Russia to the north, Georgia to the northwest, Armenia to the west and Iran to the south. A land steeped in history, Azerbaijan is famed for its oil springs and natural gas reserves. In fact, some interpret the name Azerbaijan to mean Guardians of Fire a reference to both the countrys Persian origin and the fact that in ancient times, Zoroastrians erected temples around burning gas vents in the ground. Against the backdrop of its rich cultural and historical heritage rises the capital of Baku. Almost a quarter of the 9.3 million population lives in this cosmopolitan and ultra-modern city. The towering facade of Bakus skyscrapers juxtapose against the historic Walled City recognised by UNESCO as a Heritage Site. Baku represents two equally fascinating sides of Azerbaijan a modern country raring to take its place in the global economy and an ancient Ilham Aliyev, the President of the Republic of Azerbaijan land which traces its history back to the ages. Azerbaijans economy has always revolved around its rich natural resources. Vast sums of money have been invested to explore the countrys oil reserves. The country has proven oil reserves of 15 billion barrels and proven gas reserves of 2.5 trillion m3. The country is a key oil exporter and a major shareholder in an oil pipeline that runs from the Caspian Sea all the way to Ceyhan in Turkey. However, the country has also successfully diversied its economy. Sectors like construction, real estate, banking and retail contribute to Azerbaijans GDP of $69 billion.
Map of Azerbaijan
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special supplement
Heydar Aliyev, National Leader of Azerbaijan
Azerbaijan at a Glance
Macroeconomic Indices
Independence Day Regained Independence Language Capital Territory Population (2012) Form of Government Legal System Head of State Head of Government Parliament Economic Strategy Economic System May 28, 1918 October 18, 1991 Azerbaijani Baku 86,600 sq km 9.3 million Presidential Unitary Republic Based on Civil Law System President Prime Minister Unicameral National Assembly (Milli Mejlis) Sustainable economic development and macroeconomic stability Market Economy Gross Domestic Product GDP Growth Rate Growth in Non-oil Sector GDP Per Capita GDP per Sector of Economy Industry Agriculture, hunting & forestry Construction Services Transportation
FDI Exports Imports: International Currency Reserves: Proven oil reserves: Proven gas reserves:
$69 bn 3.1% 11.4% $7500
47.3% 5.8% 7.5% 6.7% 5%

$9 bn $23.9 bn $9.7 bn $46 bn 15 billion barrels 2.5 trillion m3
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A Relationship that has Stood the Test of Time

he rich and deep relationship between Azerbaijan and India can be traced to a bygone era. The Great Silk Route has connected Azerbaijan and India from time immemorial. This historical interaction throughout the ages has contributed considerably to the cultural enrichment of both countries. After Indias independence all efforts were made to sustain this ancient relationship. Azerbaijan has hosted Indian leaders like the late president, Dr Sarvepalli Radhakrishnan and Indias rst prime minister Jawaharlal Nehru. Other high ranking ofcials also visited Azerbaijan late last century. These visits enhanced bilateral cultural and humanitarian ties. One of the highlights was the popularising of each others culture through the medium of lms. Outstanding actors and lm producers including Rashid Behbudov, Elmira Rahimova, Raj Kapoor, Narghiz and others worked with each other. In fact, the Days of Indian Culture held in Azerbaijan in 1970 is still remembered fondly by the older generation.
Azerbaijani scientists and oil engineers have contributed signicantly to oil and gas exploration in India. Famous Azerbaijani geologist Eyyub Taghiyev was one of the rst to nd commercial oil in India. The Oil Academy of Azerbaijan was popular among young Indians in the second half of the 20th century. Azerbaijans famed painter, Mikail Abdullayev visited India in 1957 and created a series of paintings named About India. He was awarded the International Jawaharlal Nehru Prize in 1969. The prominent Azerbaijani composer and conductor Niyazi composed music for Rabindranath Tagores Chitra and was bestowed with the International Jawaharlal Nehru Prize in 1974. The building of ties between Azerbaijan and India is a continuous process. The launch of the Hindi language department at the Azerbaijan State University of Languages in October 2012 is yet one more indication that both countries wish to ensure that this age old relationship ourishes in the future too.
Diplomacy thats Mutually Enriching

ndia recognised the independence of Azerbaijan on December 26, 1991 and diplomatic relationships were formally established on February 28, 1992. Consequently, India established her Embassy in Baku in March 1999 while Azerbaijan opened an Embassy in New Delhi in October 2004. The year 2012 was signicant as both countries celebrated the 20th Anniversary of the Establishment of Diplomatic Relations. There has been an exchange of high level visits between the two countries since then. The deputy foreign minister of Azerbaijan Kh Khalafov held consultations in New Delhi in March 2007. The next round of consultation was held from September 22-24, 2011 at Baku. The delegation from the Indian Ministry of External Affairs was headed by secretary (East) S Singh. India recognises the sovereignty and territorial integrity of the Republic of Azerbaijan. The two countries
have shared challenges and concerns as United Nations Security Council non-permanent members and have close cooperation on taking decisions against terrorism and aggressive separatism. Fikrat Mammadov, Minister of Justice of Azerbaijan visited India on April 4-5, 2013 at the invitation of A Kumar, Indian Minister of Law. F Mammadov also met E Ahamed, Minister of State for External Affairs and S Shinde, Minister for Home Affairs. Three agreements were signed during the visit. Samir Sharifov, Minister of Finance of Azerbaijan visited India to participate in the 46th annual meeting of the Board of Governors of the Asian Development Bank on May 2-5, 2013. The Minister of Foreign Affairs of Azerbaijan Elmar Mammadyarov paid an ofcial visit to India on May 2-5, 2013.
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Trade & Commerce

he economic cooperation between Azerbaijan and India has been on the rise in recent times. The trade turnover between the two countries was $1.96 billion in 2012. In April 2007, Indias former Minister of State for Commerce Jairam Ramesh visited Baku for the setting up of an Intergovernmental Commission (IGC) on Trade, Economic, Scientic and Technological Cooperation between Azerbaijan and India. The rst session of the IGC was held on November 26, 2009 at New Delhi. It was co-chaired by H Baghirov, Minister for Ecology & Natural Resources and Indias former minister of State for Commerce and Industry, Jyotiraditya Scindia. The second session of the IGC, co-chaired by H Baghirov, Minister for Ecology & Natural Resources and Indias former minister of State for Commerce and Industry, Jyotiraditya Scindia, was held in Baku on April 16, 2012. The Embassy of Azerbaijan participated in the International Trade Fair held from November 14-27, 2011 at Pragati Maidan in New Delhi. A CII delegation visited Azerbaijan on February 20-22, 2012 and held meetings with the Ministry of Economic Development of Azerbaijan and AZPROMO. The Oil and Natural Gas Corporation (ONGC) has reached an agreement to buy 2.72 percent stake held by Hess in Azeri-ChiragGunashli(ACG) oil-eld, the largest oil-eld in the Azerbaijani sector of the Caspian sea and 2.36 percent in the Baku-Tbilisi-Ceyhan (BTC) pipeline for $1 billion. A youth group led by Indias former Minister of Youth and Sports, Ajay Maken visited Azerbaijan for the 20th Anniversary of Establishment of Diplomatic Relations between the two countries. Their visit to Baku was from June 26 to July 1, 2012. Natig Aliyev, Minister of Industry and Energy of the Republic of Azerbaijan participated in the international seminar on energy access held in New Delhi from October 9-10, 2012. Indias Minister of Communication and Information Technology, Kapil Sibal attended the 7th Annual IGF Meeting on November 6-9, 2012 in Baku. An Azerbaijani youth delegation visited India on March 20-27, 2013 for a youth exchange program. An Indian youth delegation visited Baku in the framework of the celebrations for the 20th Anniversary of Establishment of Diplomatic Relations between the two countries.
On the Rise T
Oil Rocks EXT E EXTRAORDINARY XTRAO RA RD RDI DINAR NA NA AR ARY RY AND AN ND D PLENIPOTENTIARY PLE PL PLE LEN NI NIP IP I PO OTE OT TE T EN NT NTI TI T IA AR ARY RY R Y DIPLOMATIST DIPL DI PL PLO LO OMA MAT M AT A TI IST IS ST S T May Ma ay y 20 2 2013 01 13 3
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Developing Closer
People-to-People Contact
ndia and Azerbaijan have taken several steps to enhance and enrich people-to-people contact. Well known artistes from both countries regularly visit each other resulting in a greater appreciation of each others vibrant culture. The eminent Indian Carnatic vocalist V Badrinathan performed at the International Mugham Festival in March 2009 and the International Baku Jazz Festival in October 2009. She performed with Azerbaijans well known Jazz group, Bakustic Jazz. The Ensemble of Ancient Musical Instruments from Azerbaijan was present at the International Su Music Festival held in Kolkata on February 2-5, 2012. General Director of Doordarshan SM Khan, ICCR vice-president SS Mahdi, and professor of Mumbai University, V Badrinath participated in the 2nd International Humanitarian Forum held in Baku on October 3-4, 2012. An international conference Revisiting the Silk Road was held by Jawaharlal Nehru University on November 5-7, 2012. Embassy of Azerbaijan participated in the event. A conference and exhibition dedicated to the 870th birth anniversary of Nizami Ganjavi, the great Azerbaijani oriental poet, thinker and philosopher was held from November 29 to December 1, 2012 at the Indira Gandhi National Centre for the Arts. The conference was organised in the framework of the 20th Anniversary
Heydar Aliyev Centre
The 870th Anniversary of N Ganjavi, Azerbaijani Poet, Philosopher Celebrated in New Delhi
of Establishment of Diplomatic Relations between Azerbaijan and India. The celebrations also included an exhibition of paintings Colours of Azerbaijan by Ashraf Heybatov, organised jointly by the Embassy of Azerbaijan and ICCR, on December 7-13, 2012 in New Delhi. The Sumgait State Musical Drama Theatre participated in the 15th Bharat Rang Mahotsav, an international theater festival. The group staged a comedy Monsieur Jordan and Dervish Mastaly Shah on January 1-20, 2013 in New Delhi and Jaipur. A musical quartet led by Sakina Ismayilova participated in the 3rd International Su Festival organised by ICCR on February 1-9, 2013 in Kolkata and New Delhi. The Embassy held presentations on Azerbaijan at the Jawaharlal Nehru University, Jamia Millia Islamia University, Institute of Management Technologies, Indian Islamic Cultural Centre and IIMT Group of Colleges. A quiz-contest on What do I Know about Azerbaijan was organised at the Tagore International School. The Embassy also awarded the winners of the quiz contest at Modern School, New Delhi to commemorate the 90th birth anniversary of the National Leader of Azerbaijan Heydar Aliyev on May 1, 2013.
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Discovering Azerbaijan
By Fadela Bird
Baku Boulevard
he trip to Azerbaijan was a great deal of fun. We had a vague idea about the countrys historical past but were eager to discover this new destination. At the hotel, we were offered a programme. First, we were taken for a short drive along the main road discovering, with the help of our guide, the old and new Baku, public gardens, the Government Palace, a string of different styles of architecture, medieval walls, luxurious buildings and the magnicent view of the Caspian Sea. The planned programme was intriguing. Azerbaijan, known to us as a crossroads along the Silk Road, has been embellished from the Muslim era to the modern times. Several political changes, some painful, have affected the country since the break-up of the Spice Road trade. Different types of architecture spoke silently of past occupations. Friends or foes, those contributions gave us a hint of their impact. Today we were in a free country, ready to absorb all the information given to us. After breakfast on the rst day, a coach took us to the Alley of Martyrs and the Alley of Honor.
The roads in Baku, which means a City of Winds, are lled with olive, maple, pine and eucalyptus trees. A couple of centuries ago, the Nobel brothers decided that the bare land had to be covered with soil and plants. With the rise of the oil trade, wealthy entrepreneurs started to build houses in European and modern style. Despite the changes, the old city still stands proudly, recognised by UNESCO as part of the World Heritage List and a major tourist attraction. We walked through the 12th century ancient wall to discover the Shirvanshah Palace built for the 35th Shah. Built between the 15th and 16th centuries, the property was used as family quarters and as an important ofcial residence. A hundred meters away, in a caravanserai restaurant, we were welcomed by a group of musicians playing traditional Azerbaijani music. We carried on with a walk into the old city. The 12-centuries-old city was, after all, the heart of Baku. The mysterious Maiden Tower kept us intrigued. Judging by its share, it must have served as an enormous observatory.
Birds-Eye View of Baku
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The proximity of the long boulevard to the Caspian Sea was so inviting that some of us walked back to the hotel. We were not tourists but people who enjoyed a night sea breeze it felt like home. Next day, we were already looking forward to more discoveries. The 13th century Bibi-Heybat Mosque, has been restored to the highest standard. The Islamic stylistic genre of the dcor reminded us of how small the world could be when art travels. We were then taken to the Gobustan archeological site located at the foot of the Caucasian mountains and recognised as one of the oldest settlements in history. We watched different engravings depicting men and animals at different periods. Further up, there were Roman and Arabic inscriptions. In the evening we were invited to the State Philharmonic Hall to attend a folk performance. This hall was built in the renaissance style in 1912, As soon as the dances started, we were engulfed in an artistic pleasure, admiring the long oating dresses and head scarves of the girls moving with gracious gestures. As for men, their different costumes made them look both erce and handsome. Their battle with real swords required a lot of dexterity. We appreciated the performance of musicians playing traditional instruments. A visit to the modern art museum took place the next day. This ordinary construction did not appear very appealing. But as soon as we entered, the modern building embraced us. The rooms seemed disconnected from each other but still united in white with a denite Oriental touch. We carried on with a visit to the home of the Nobel brothers. In the late 19th century, over a period of 10 years, they built factories on oil elds, creating a real boom in Baku. Their restored mansion is lled with delicate furniture of the time, photos, documents and a prime garden as if they were still living here. The coach then took us to a Zoroastrian re temple Atashgah a few kilometres away the city. Arab geographer Ibn Ilyas wrote in the 16th century ... a mile from Baku there is a place with re burning without torches.... Azerbaijan used to be known as a country of re. Naturally, it attracted a group of Indian visitors who built a caravanserai as a pilgrimage site in the 15th century. We entered the site composed of 26 rooms for guests. There were also symbols, poems and formulas written in Sanskrit. Today, this historical place is open to visitors. Shaki, our next destination, is located at the foot of the Caucasus Mountains. We were in the heart of a country which has kept its landscape in prime condition, almost untouched by civilisation. We visited a silk manufacturer. The provider of silk breeding, threads, fabric and carpets, this industry is highly respected because of its links with the Great Silk Road. The industry maintains a complete
Icheri Sheher-Old City (XII th c.)
Fortress Walls of Icheri Sheher (XII th c.)
Azerbaijani authorities have worked wonders in creating many museums to preserve their national legacy. We met a group of children as we entered the State Museum of Azerbaijani Carpets and Applied Arts. On the rst oor, we were taken aback by the wealth of woven rugs carefully hung on the walls. Decorated costumes, jewellery and objects of daily life were a feast to our eyes. We made sure to visit the Theatre Museum upstairs.
Gobustan Rock Art
Shaki Khan Sarayi- Shaki Khan Palace (XVIIIth c.)
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set of environmentally friendly products. We watched different steps of weaving silk into delightful rugs. Along the road, we noticed many lilac trees lled with purple owers and magnicent irises before reaching the Shaki Khan Palace. The two story residence was erected in 1761. Inside the main rooms, we admired the artistic decorations on the ceiling and walls. The south-facing stained glass and geometrical panels forming the windows were letting the light enter like a rainbow of colours. The woodwork and structures of each room reminded us of those seen in Iran and India. Our guide described the philosophy behind a pomegranate, which was perceived as a symbol of the world, while the inside of it is associated with people (seeds) and society (skin divider). Below the ceiling, all around the room, a battle scene depicted men at war but each with unique features. Outside, we were offered a concert by local musicians who used amazing stringed instruments (Ud, Saz and Kamancha) backed up by singers and lovely dancers. We all enjoyed the offer of tea and sweets. At night, dinner was hosted in the caravanserai, a 17th century old hotel complex. It has around 300 rooms which used to house merchants centuries ago. Inside, there is an area that used to serve as a shelter for camels and horses, as well as a lovely garden and a fountain. Then a trip was organised to Kish, a small village nestled away from the main road. After crossing a rugged road, we discovered a 400-year-old Albanian church hidden among traditional houses. Its internal architectural features and fainted wall drawings show the early stage of Christianity. We reached Gabala and checked in the Caucasus Resort Hotel after enjoying a traditional meal in a nearby leisure centre where hot traditional bread was baked for us. The privilege of hearing a gentle tickle of a water spring outside our windows would certainly enchant the overseas visitors seeking a remote location, peace and an enjoyable environment. We returned to Baku, stopping in a local restaurant for lunch. Each restaurant, even in the middle of nowhere, could accommodate many visitors. We considered each restaurant as yet another cultural discovery. Centuries of trades along the spice road did spread culinary talents on to remote destinations. The amazing diversity of appetisers in the form of fresh herbs, olives and vegetables, pilafs, garnished chicken, grilled meat and sh were always tasty. Sweets and tea gave us agreeable breaks! Each town visited had something special to tickle our curiosity. As we reached Baku, in the evening, we were invited to the Opera and Ballet Theatre to watch Don Quixote. A crowd was already
Albanian Church in Shaki (I st c.)
queuing when we arrived. Inside, the dcor resembled that of the early 20th century French decoration with gilded features and big gures. We watched classical dancers moving like butteries under the spell of music. In the morning we visited the Carpet Palace. This Oriental-type house has been turned into a gallery selling magnicent rugs. The gallery oor was covered with priceless rugs unique pieces of workmanship no machine can beat. In the evening, we gathered in the lobby of the hotel to say goodbye to our guides. A visit to this part of the world lled us with pleasant and delightful surprises. For us, Azerbaijan was a missing thread linking this historical route to other countries visited previously. Was the experiment interesting? Yes, we loved it!
The author is an Algerian journalist Published courtesy IRS Heritage (2 (9) Summer 2012)
Shahdagh Mountain
Goy Gol Blue Lake EXTRAORDINARY AND PLENIPOTENTIARY DIPLOMATIST May 2013
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Azerbaijans First Telecommunications SatelliteAzerspace-1 Launched on February 7, 2013 Azerbaijan Won 2 Gold, 2 Silver, 6 Bronze Medals in London Olympic and 4 Gold, 5 silver, 3 bronze medals in Paralympic Games-2012
Bibi-Heybat Mosque in Baku
Synagogue in Baku
Catholic Church in Baku
Pravoslav Church in Baku

Diplomatist May 2013-Lowres

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PUBLISHERS NOTE

Welcome to the May edition of Diplomatist!

Associate Editor Yamini Chowdhury Desk Editor Anusua Diya Chowdhury

Consulting Editor Anil Bhat Business Development Director - Binoy Sahee

Manager - Maninder Kumar

LINDA BRADY HAWKE Publisher

International News Bilateral Notes

17 Prachandas Vision for Trilateral Harmony

27 Real Achievements of EU Development Policy

19 India Reaching out to Libya

30 India & the EU Strategic Partnership for the Future

32 Global Impact of the European Union Today and Tomorrow

14 Fresh Impetus to India-Tajikistan Strategic Ties

Indias Strategic Strengths

Indian Ocean Security Spotlight

34 Our biggest task is redeploying equipment in Afghanistan, back to the US

16 Reassessing Indias Soft Foreign Policy Approach

EXTRAORDINARY AND PLENIPOTENTIARY DIPLOMATIST May 2013

45 The Bluff Master

47 Asian Deliberations on a Global Stage

Global Centre Stage

Indian States on a Platter

41 The Conspiracy behind Syrias Debilitating Civil War

EXTRAORDINARY AND PLENIPOTENTIARY DIPLOMATIST May 2013

InternationalInternational NEWS NEWS

China Hosts Netanyahu and Abbas

EXTRAORDINARY AND PLENIPOTENTIARY DIPLOMATIST May 2013

Russia & US Discuss Syrian Crisis

UK to Hold Somalia Peace Conference

Iran and India Discuss Bilateral and Regional Issues

EXTRAORDINARY AND PLENIPOTENTIARY DIPLOMATIST May 2013

Tajikistan & India Add Substance to Strategic Partnership

Corporate NEWS Corporate NEWS

Car Makers See Future in Small Diesel Engine

EXTRAORDINARY AND PLENIPOTENTIARY DIPLOMATIST May 2013

No Immediate Cut in Lending Rates: SBI

Lord Dolar Popat

Ambikesh Kumar Tripathi

Dr Mohammad Samir Hussain

Prof Riordan Roett

EXTRAORDINARY AND PLENIPOTENTIARY DIPLOMATIST May 2013

Who Will Shape its Political Dynamics

In the Hope of a New Pakistan

EXTRAORDINARY AND PLENIPOTENTIARY DIPLOMATIST May 2013

Tajikistan: Gateway to Central Asia

Connecting with Central Asia: Opportunities and Challenges

EXTRAORDINARY AND PLENIPOTENTIARY DIPLOMATIST May 2013

Consolidation through Soft Power

Greater Physical Connectivity for Enhanced Economic Integration

Tackling the Scourge of Terrorism

EXTRAORDINARY AND PLENIPOTENTIARY DIPLOMATIST May 2013

Nehruvian Approach: Realistic Style Rooted in Idealism

Soft Approach & Strategic Interest

The Way Ahead

EXTRAORDINARY AND PLENIPOTENTIARY DIPLOMATIST May 2013

Prachandas Vision for Trilateral Harmony

Deepening India-Nepal Relations

EXTRAORDINARY AND PLENIPOTENTIARY DIPLOMATIST May 2013

China-Nepal Relations: The Bond Runs Deep

At the Crossroad of Transformation

Prachanda with Chinese President Xi Jingping

EXTRAORDINARY AND PLENIPOTENTIARY DIPLOMATIST May 2013

EXTRAORDINARY AND PLENIPOTENTIARY DIPLOMATIST May 2013