In India a budget to be proud of

The free marketers are crying foul. In his budget speech on Monday, Minister of Finance, Pranab Mukherjee disappointed them by not detailing a plan for allowing foreign investment in the insurance sector, for privatization of public sector companies and of education.

Even as Mukherjee was making his budget speech, the Sensex of the Bombay Stock Exchange dropped.

To a large extent, big business led to its own disappointment by its euphoria after the re-election of the government of Prime Minister Manmohan Singh. Share prices soared on the stock markets as investors believed that the UPA, freed of its dependence on the Left parties, would now pursue a reformist agenda.

The term “Reformist” has usually been defined by business and the pro-business media in terms of free market policies that liberalize cross-border capital flows, open new sectors to private investment, and make labor markets more flexible (read ease out labor unions).

The evening after Mukherjee’s speech, the pro-business The Wall Street Journal is making a spectacle of itself, claiming interestingly that Mukherjee’s budget was ” a pretty dreadful spectacle”. Newspapers are expected to report and analyze, and not espouse causes, but that is a subject for another post, another time.

What industry and media like the WSJ mis-understood is that the Congress party, which is the main partner in the coalition government, has traditionally had a stand of its own on social policy, which is social democrat and far from pure capitalist.

Mukherjee used the budget speech to remind viewers that India was protected from the global financial meltdown because its large banks are government controlled and did not expose themselves to speculative activity, and stocking up on CDOs. He credited his former leader, the late Indira Gandhi, for nationalizing the banks when she was Prime Minister of the country.

By his focus on inclusiveness, on rural development, on expanding the economy through stimulus spending, Mukherjee has sent out a strong signal that social democracy is not dead in India.

By refusing to privatize education, and by in fact making a budgetary allocation for new IITs, Mukherjee is making the point that Pt. Jawaharlal Nehru’s strategy to spend on education and research as core competencies is still relevant.

Mukherjee’s budget in fact creates the opportunity for the emergence of more people from out of the pale of poverty, into becoming beneficiaries (and consumers) of the economic boom. The question is; will foreign investors decided this is a good market opportunity for them ? Or will they continue to demand what seems to be quite impossible in a country that is moving to its social democractic roots ?

There is some concern about the deficit in the budget, but at times of economic crises, deficit financing and government spending is the way out to stimulate the economy and create jobs. The challenge for Mukherjee is to rein in inflation when it happens, by a reduction of the deficit, and other appropriate fiscal measures.

There are also issues such as the implementation of the programs that aim to bring India’s vast rural poor into the mainstream of economic development. There will undoubtedly be leakages, corruption, and some of the money will not reach the target group.

But unbridled capitalism won’t solve that problem. Civil society and good politics can.

On nuclear deal, India’s communists move from “No” to “Maybe”

India’s communists, who had threatened to scuttle its coalition government with the Congress party over the nuclear deal with the US, is now softening its stance. The Left, which had earlier said that the government should not operationalize the deal, including negotiations with the International Atomic Energy Agency (IAEA), is now saying that the government can go ahead and negotiate with the IAEA, provided it does not finalize an agreement.

Communist Party of India (CPI) General Secretary A B Bardhan told Indian TV channel NDTV that the government could go to the IAEA, the UN’s atomic body as long as they don’t finalize any agreement, according to this report.

Now why should the Indian government and the IAEA go ahead and negotiate, when according to the Left there can be no deal ?

Clearly what the Left seems to be saying at this point is that in the interest of holding together the coalition government it may eventually go along the whole hog with the Congress on the nuclear deal with the US.

The reasons for the Left’s stance are quite obvious. One, it does not want to bring down the government. Traditionally its fear of the Bhartiya Janata Party (BJP) and other rightist parties have made it gloss over the flaws of the Congress party. Secondly, the Left’s opposition to the nuclear deal, and the underlying anti-American sentiment, has also not gone down well in the West. The Left, particularly in West Bengal, has been assiduously cultivating an image of being pro-business and investor friendly. So after the initial knee-jerk anti-American reflex, pragmatism has evidently got the better of the Left.

Even as the Left now finds it politically expedient to go along with the Congress on the nuclear deal, some of the substantial issues it raised against the 123 Agreement remain. These pertain to long-term national interests, and the Left cannot abandon them for its short-term political gains and for US investment in West Bengal.

As pointed out in an earlier blog, the Indo-US nuclear deal was flawed from the start.

I refer to “United States-India Peaceful Atomic Energy Cooperation Act” of 2006, which in fact forms the legal framework for the proposed 123 agreement, and was was devised to exempt a nuclear cooperation agreement with India from certain requirements of the Atomic Energy of 1954.

The Act does not however entirely protect India’s right to take decisions on its own on its non-civil nuclear program. It states for example that “a determination and any waiver under section 104 shall cease to be effective if the (US) President determines that India has detonated a nuclear explosive device after the date of the enactment of this title”. So if India detonates a device, the 123 Agreement goes up in smoke, and India will have to return nuclear fuel and other technology it obtained under the agreement.

So the 123 Agreement, in effect places limits on India’s ability to pursue a military nuclear program. When deciding to support the Agreement, the government and the communists should hence weigh the benefits for India’s civilian nuclear program against the risks for its military program. There may be no point in arguing that US supplies to India’s civil program will free nuclear resources for use in the defense program, if the defense program is itself circumscribed by US rules.

That we take the right call on this becomes all the more important in the wake of instability and unpredictability in Pakistan, which has nuclear bombs, and also China’s own nuclear arsenal.

Related article:

The Indo-US nuclear deal was flawed from the start

Mr. Bush, Cuba’s politics is none of your business !

US President George Bush’s commitment to promoting democracy worldwide has turned out to be no more than an opportunity for petty scoring of points with traditional foes.

Bush, with an eye to the Hispanic population of the US, is planning to issue a stern warning Wednesday that the United States will not accept a political transition in Cuba in which power changes from one Castro brother to another, rather than to the Cuban people, according to a report in the New York Times.

Bush will say that while much of the rest of Latin America has moved from dictatorship to democracy, Cuba continues to use repression and terror to control its people.

It is cynical that Bush is concerned about democracy and change in government in Cuba but not in Saudi Arabia, that he is concerned about suppression of democracy in Iran but not in Pakistan.

This selective concern about democracy makes a mockery of freedom and democracy, and attempts to manipulate it to serve the US’ pet peeves and geopolitical concerns.

It is embarrassing for us in the free world to find that the most vocal and often quoted advocate of democracy is a cheap trickster, who invokes people’s freedom only when it suits him, and his meddling in other countries’ affairs.

Bush is also violating principles of national sovereignty. What happens in Cuba is none of his business ! Cuba is a sovereign country, and the new government came to power in a revolution against the brutal dictatorship of Fulgencio Batista supported by the US.

Nor is the US record in promoting democracy in Latin America even-handed. The US used a variety of economic and political levers to replace the democratically elected government of Salvador Allende in Chile by that of the military dictator Augusto Pinochet.

Bush should also put his own house in order, before positioning the US as a beacon and advocate of freedom and democracy. The torture of detainees by the CIA (Central Intelligence Agency), the snooping on calls in the US, the growing impotence of Congress, and the emergence of an imperial presidency, do not speak well for US democracy. Probably the Castros and Bush have a lot in common after all.

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After WMDs , Bush is now talking about WW III

“It is not propaganda’s task to be intelligent, its task is to lead to success,” said Joseph Goebbels, the Nazi minister for Public Enlightenment and Propaganda from 1933 to 1945.

The latest we hear from Washington is that the President of the US, the largest superpower, is running scared that Iran will trigger of World War III.

The plot, as hinted by President George Bush, is that Iran, armed with a nuclear bomb, will attack Israel, which by the official line is unarmed and without nuclear capability. By some strange logic known only to Bush, the attack by Iran will spark off WW III.

The corollary to this twisted logic is that of course the US and/or Israel should preempt Iran by attacking the country, or destroying its nuclear capability.

Bush, at a news conference on Wednesday, said, “I’ve told people that if you’re interested in avoiding World War III, it seems like you ought to be interested in preventing them (Iran) from having the knowledge necessary to make a nuclear weapon.”

“The President was not making any war plans, and he wasn’t making any declarations,” White House Press Secretary Dana Perino quickly clarified Thursday. “He was making a point, and the point is that we do not believe – and neither does the international community believe – that Iran should be allowed to pursue nuclear weapons.”

Like in the run-up to the invasion of Iraq, when the world was mislead into believing that Saddam Hussein had terrible weapons of mass destruction (WMD), Bush and his coterie now intend to convince Americans and the world at large that the best way to protect the world from WW III is by attacking Iran, because one never knows when they will cross the threshold and make a bomb.

Bush’s theory of a belligerent and nuclear-armed Iran potentially leading to WW III is disingenuous and unintelligent. For one, Iran does not have a nuclear bomb. Also, self preservation would ensure that Iran will not use a bomb against Israel or any other country. The country knows it would be pounded by the nations of the free world, including the conventional and nuclear military power of the US.

Iran it looks like is going to get pounded in any case. The battle plans, it appears, are being drawn, and Bush and co. are just building up the hysteria preparatory to an attack, an attack that would unleash death on a whole lot of people in Iran, and spark off a backlash of Shia terrorism. Like in Iraq, George Bush is opening a Pandora’s box, and the whole world will suffer from it.

Unfortunately, what the public of the world think about the current administration’s actions matter little to Bush and coterie. We saw it in the case of Iraq when the US and allies occupied Iraq without a supporting resolution from the UN. This time too it is unlikely the Iran adventure will clear the vetoes of the Russians and the Chinese.

What is more surprising is that the opinion of the country’s people and its Congress seems to matter even less to the US president. As pointed out in my previous posts, by voting on partisan lines, rather than as statesmen and elected representatives of the people, Congress has rendered itself impotent as a countervailing force against a Presidency that seems very much out of control.

In search of an agenda, the Republicans are taking shelter behind Bush’s presidency. The Democrats have stolen the thunder from the Republicans on the Iraq war, on tax policy, and on welfare and other benefits aimed at revitalizing America’s middle class.

If the Republicans in Congress do not distance themselves from Bush now, Iran will be another millstone Bush will have passed on to the Republicans to shoulder.

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US Congress a lame duck !

Three of the largest US telephone companies declined to answer questions from the US Congress about President George Bush’s administration’s efforts to spy on Americans’ phone calls and e- mails, saying the government forbade them from doing so, according to a report in Bloomberg.

What that means is the in the US today the President, and agencies like the Central Intelligence Agency (CIA) can do what they want to undermine democracy, including undermine Congress, which by the way also consists of elected representatives of the people.

This is not the first time that information about the conduct of the executive branches of the government has been refused to Congress.

Verizon and Qwest said the Justice Department prohibited them from offering any substantive comment on their roles in the spy program. AT&T said Director of National Intelligence Michael McConnell invoked the state-secrets privilege to prevent the carrier from commenting, according to the report in Bloomberg.

Whether it is phone tapping or alleged torture of detainees by the CIA, the Congress seems to be almost always the last to know. Even when Congress has demanded information, the administration has procrastinated. And yet Congress votes typically along party lines, when Congress as a whole, as an entity has been belittled.

Earlier this month, the New York Times revealed the use of torture on prisoners by the CIA. The interrogation techniques endorsed by a 2005 Justice Department memo were some of the harshest ever used by the CIA, according to the New York Times. They included head-slapping, exposure to freezing temperatures and simulated drowning, known as water-boarding.

As shocking as the revelations, were the reactions from the elected representatives on Capitol Hill who knew nothing about what was going on.

“I find it unfathomable that the committee tasked with oversight of the CIA’s detention and interrogation program would be provided more information by The New York Times than by the Department of Justice,” Senator John D. Rockefeller IV, a West Virginia Democrat and chairman of the Senate Intelligence Committee, wrote to the acting attorney general, Peter D. Keisler, asking for copies of all opinions on interrogation since 2004, the New York Times said.

With centralization of power in the President and the executive of the government, democracy has been reduced in the US to a once in four years charade when the people elect their President, and surrender control of their lives to the person elected. Congress has become impotent.

More frightening is that in the name of fighting terror, the President of the US and his officials in government have consolidated, nay arrogated power, by a series of laws and regulations, including laws on surveillance of people, and a domestic spying program. Some of these rules, particularly the secrecy rules, have even deprived Congress of the right to know what is happening.

Make way for an imperial presidency and a lameduck Congress.

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