Inside Kazakhstan I: Indians take big strides in Kazakh steel town

31 October 2004
The Hindu

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Inside Kazakhstan-I

Indians take big steps in Kazakh steel town

By Siddharth Varadarajan

TIMERTAU: The irony is unavoidable and virtually everyone you meet — Kazakh, Russian or Indian — in this gritty, crumbling town in the heart of Kazakhstan's Karaganda region will mention it at least once with a smile: Here, in a place that was once a key blast furnace of the U.S.S.R. which first helped India make steel in the 1950s, an Indian company staffed by a small band of desi expats has helped convert this former Soviet republic's ageing steel plant from a rust heap on the verge of closure to a dynamic enterprise with a bright future.

Set up in 1958, Karmet — short for Karaganda Mettalurgical works — churned out 6 million tonnes of liquid steel in its heyday. But when the U.S.S.R. collapsed, the factory slowly went down the tubes. Production fell to 2.5 million tonnes. With no assured markets, products piled up. Workers stopped receiving salaries, the ageing plant began to fall apart, and the town, which grew up around the massive plant, ground to a halt. Civic services, including heating, packed up — this in a region where temperatures plunge to minus 40 degrees Fahrenheit in the winter.

In November 1995, Karmet was acquired by NRI and British resident Lakshmi Niwas Mittal for $400 million and renamed Ispat Karmet (Earlier this week, the parent concern, LNM, was rechristened the Mittal Steel Co.) A further $600 million was invested, and another $600m is now being pumped in.

Modern management

Today, Ispat-Karmet is thriving and Karaganda's leaders are thrilled by the turnaround. "The company runs our tramway on which Karmet workers travel free, is revamping the town's central heating system, and helps finance the local hospital, university, stadium and cultural centre," says Oral Bitybaev, deputy mayor in the Akimat, or town council, of Timertau. "The plant had specialists and technology but was weak in management," he says. "The Indians have brought us the best of modern management."

Ispat Karmet produces 5.2 million tonnes, a little less than the Soviet peak because the open-hearth plant was shut down for environmental reasons, say company officials. "But we will hit 6 again, and then 7 million," says S. Balasubramanian, director of modernisation. A tall man with extensive PSU experience in India, `Balu' wears vibhuti on his forehead and speaks fluent Russian.

No job losses

"With 52,000 employees, we are Kazakhstan's biggest employer", says N.K. Choudhary, General Director and CEO of Ispat Karmet. He stresses that the increases in production and efficiency have been achieved without any of the job losses normally associated with privatisation. "Kazakh president Nursultan Nazarbaev, who was once a steelworker in Karmet, made us promise there would be no job losses," he says. "There is a guarantee of social welfare from cradle to grave. We don't want to disturb this."

In the plant's main control room, besides the clunky computers that monitor the charging of the blast furnace and the flow of molten steel and slag, are archival photographs from the early days. One of them shows a slimmer but still stocky Mr. Nazarbaev in 1962 as part of `Brigade No. 2, Blast Furnace 2.'

Asked how Ispat Karmet had managed to save jobs when most companies which privatise look to slash them, Mr. Chaudhary said he had used the existing workforce more efficiently and had expanded the business.

"We have added iron ore mines to the coal mines we already had and are now fully vertically integrated. But now, we are looking at a VRS for some of the older workers." By law, there is no retirement age and it is not uncommon for elderly workers to receive both a salary from Karmet and pension from the state.

Wages issue

Wages may have doubled since the Ispat group came in but at a monthly average of $250 (Rs. 11,000), they are low by international standards. Mr. Chaudhary acknowledges this and the fact that wage demands are his main source of tension. He says Ispat Karmet cannot afford to pay more and be competitive internationally, given the distance of Kazakhstan from most steel markets barring China, which buys more than 30 per cent of the company's output.

"We are the best pay masters here outside of the oil industry." Other company officials say the Kazakh Government will not be too pleased to see wages in one company rise far above the national norm.

Whatever the truth about the wage debate, there is no doubting the fact that the Mittal role in Ispat-Karmet has generated enormous goodwill across Kazakhstan for India and things Indian — this despite the fact that the parent company is actually registered in the Dutch Antilles. L&T and Punj Lloyd are cashing in on this but most Indian companies have been slow to get off the mark here, especially in the energy sector.

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Dateline Almaty: Asian conference approves CBMs

24 October 2004

The Hindu

Asian conference approves CBMs

By Siddharth Varadarajan

ALMATY, OCT. 23. Sixteen Asian countries — including India — took a significant step towards cementing strategic ties with each other by committing themselves to a number of confidence-building measures (CBMs) in the military, political, economic and cultural spheres.

The catalogue of CBMs adopted by the meeting of Foreign Ministers of the Conference on Interaction and Confidence-Building Measures in Asia (CICA) here on October 22 is far-ranging but Indian officials said the process under way should not be thought of as one only focusing on security issues.

"We are not looking here at an Asian model of the Organisation of Securityand Cooperation in Europe," said a senior official, "but one which has anequal focus on socio-economic and cultural priorities. We don't think the OSCE, with its excessive focus on military CBMs, is something which is appropriate for Asia."

`Shift towards Asia'

In his speech at the CICA meet, the External Affairs Minister, Natwar Singh, noted that "since the early Nineties there has been a steady shift in power and influence to Asia. The centre of gravity of global geopolitics and geo-economic affairs is gradually but surely shifting towards Asia and it has been widely acknowledged that the present century could be the `Asian'century."

The ministerial declaration adopted unanimously by CICA — which includes India, Pakistan, Israel, Palestine, Iran, Russia, China and a number of Central Asian States — was an earnest attempt at critiquing

Washington's emphasis on unilateralism in its approach to international problems. "Recent developments in international relations demonstrate that multilateral approaches based on the widest possible international support are the most effective way to address the challenges of the contemporary world," the declaration noted. "We emphasise the need for reform of the UN system to make it more responsive to traditional and new challenges."

In an oblique reference to the controversy over the standoff between Iran, on the one hand, and the United States and the European Union on the other, the CICA Foreign Ministers reaffirmed "that proliferation of nuclear, chemical and biological weapons and their means of delivery pose a threat to international peace and security, and call upon all states to fulfil their respective obligations in the sphere of disarmament and non-proliferation. We emphasise that international efforts to prevent nuclear proliferation should not affect the rights of States to access and use nuclear technology."

`Exchange of information'

Among the catalogue of CBMs which CICA countries have agreed to realise in practice "on bilateral and/or bilateral basis" is the exchange of information "in accordance with their national laws" of components of armed forces, and defence budgets, inviting observers from member-States to military exercises, encouraging mutual visits between armed forces, preventing the activities of "separatist and extremist organisations" and taking measures to share information on proliferation of weapons of massdestruction and their means of delivery.

In the cultural sphere, CICA countries have committed themselves to the "promotion of dialogue among civilisations, including dialogue among religions."

According to the "rules of procedure" adopted on October 22, membership of the body has been restricted to those countries having " a part of [their] territory geographically located in Asia."

On October 21, Thailand was formally inducted as a member. The U.S. and Japan only have observer status.

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Kazakhstan beckons Indian investment

22 October 2004
The Hindu

International - India & World

Kazakhstan beckons Indian investment

By Siddharth Varadarajan

By Siddharth Varadarajan

ALMATY, OCT. 21. The Kazakhstan President, Nursultan Nazarbayev, has expressed a keen interest in India getting involved in his country's energy, information technology and construction sectors, Indian officials said here on Thursday.

Kazakhstan, a country of 16 million people with a landmass equal to 86 per cent of India's area, is the world's 13th largest oil and gas containing region.

During a courtesy call he paid on Mr. Nazarbayev, the External Affairs Minister, Natwar Singh, said that India was extremely interested in cooperation in the energy sector.

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India-U.S. negotiations entering crucial stage

18 October 2004 The Hindu National India-U.S. negotiations entering crucial stage By Siddharth Varadarajan NEW DELHI, OCT. 17. With India and the United States beginning talks here on Thursday on Phase II of the `Next Steps in Strategic Partnership' (NSSP), Indian officials say that the negotiations on facilitating high-technology trade are entering the most difficult and crucial stage. "The U.S. is looking to discuss changes in our domestic laws to tighten export controls," a senior official told The Hindu . Washington not only wants stricter controls on possible diversion of its high-tech exports but is keen on India placing restrictions on export of indigenous dual-use products too. Finally, the U.S. is expected to formally flag the contentious issue of "human resources." The U.S. side believes that Indian scientists are valuable to would-be proliferators because they represent the only pool of talent familiar with the "start-up stage" of nuclear weapons and missile programmes. Russian scientists, in contrast, inherited running programmes. For this reason, Washington wants to devise ways to prevent a poorly-paid or retired "Indian A.Q. Khan" from offering his services elsewhere. Sanctions on scientists Asked whether the recent U.S. decision to impose sanctions on two Indian nuclear scientists — Y.S.R. Reddy and C.H. Surender — for allegedly assisting Iran was the opening salvo of a campaign to control the movement of scientific talent, officials said that any attempt to link this issue to supposed security lacunae in India will not be accepted. "You can even say we are pleased the U.S. took this action because it proves how faulty their intelligence is," said one official. "They rushed into this. Surender has never been to Iran. We would like to see what proof the Americans have to the contrary." On general export controls, the Indian side believes that the existing legal framework is robust. "Of course, the Directorate General of Foreign Trade is seeing how it can be toughened," an official said, adding that recent reports about explosive projectiles being imported as scrap "are not helping the optics." Four benchmarks In their review of the NSSP, South Block officials have a more positive view than the Indian scientific community. The former U.S. Deputy Secretary of State, Strobe Talbott, too has criticised India for treating the NSSP as a kind of "nirvana." But South Block is sanguine. "You cannot get everything in one shot," said an official involved with the process. "And don't forget we got what we have without budging on Talbott's four benchmarks — which was earlier their precondition for cooperation." The four benchmarks are: India must sign the Comprehensive Test Ban Treaty, stop production of fissile material, curtail missile development and enforce "state of the art" export controls. Asked what India had conceded in Phase I, the officials said there had only been a strengthening of the existing commitments on export control. India signed an End-Use Verification Agreement (EUVA) with the U.S. in 1984, allowing the U.S. Commerce Department officials to make site visits to verify if dual-use products are being used for the purpose stipulated. A U.S. export attaché was stationed here till 1989. "There was a natural growth in our high-tech relationship which got interrupted because of the 1998 tests," said an official. "What you are seeing is things returning to normal." Though the updated EUVA will allow expeditious verification, the Indian side disputes the suggestion made last week by the Under Secretary of Commerce, Ken Juster, that inspectors could make "spot checks" at space and nuclear establishments importing U.S. dual-use items. Mr. Juster said that the U.S. would carry out "periodic end-use checks on a spot basis." While the EUVA signed in Washington on September 17 is a secret document, Indian officials dismiss the idea that an American inspector can pick-up the phone and say, `I'm arriving at the Solid State Physical Laboratory in 15 minutes.' "The Indian system doesn't allow such things," an official said. "There is no walk-in." Responsible Indian officers will supervise the visits. "But please understand," said the official. "It's in my interest to have pre-licence checks and post-shipment verifications done quickly since delays only slow the arrival of high-tech imports." Ironically, in a study of post-shipment verifications (PSVs) released by the U.S. General Accounting Office in January 2004, India received a more favourable review than China or Russia, especially for cooperation from May 2003 onwards. "India restricts Commerce from conducting PSVs to a limited extent," the GAO states. "According to our review of trip reports from India, India denied Commerce access to some facilities and items for PSV checks through 2003; however, the U.S. access to Indian facilities improved during 2003. In May 2003, the Government of India allowed PSVs and gave Commerce's special agents access to all the facilities they requested." In April, China signed a new `end-use visit understanding' with the U.S. but this is not thought to include spot-checks. Only Russia allows U.S. inspectors to make unannounced visits to its enterprises using dual-use imports. © Copyright 2000 - 2005 The Hindu

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Business cycles and free markets: A critique of Kydland and Prescott

15 October 2004 The Hindu Opinion - Leader Page Articles Business cycles and free markets By Siddharth Varadarajan The contribution of Professors Kydland and Prescott, who won the Economics Nobel this year, was to reconcile the empirical reality of recessions with the assumptions of New Classical economics. IN AWARDING the Nobel Prize for economics this year to Edward Prescott and Finn Kydland, the Bank of Sweden has honoured a body of work that seeks to answer one of the fundamental paradoxes of `New Classical' economics. This is the presence of cyclical fluctuations in output and employment that persist, often for long periods of time, despite the supposed efficiency of market forces. Business cycles have been with us as long as capitalism has. Their explanation does not pose a particular theoretical challenge for either Keynesian or Marxist economists, who, to varying degrees, consider periodic crisis to be endogenous to the system. But for the New Classical economists who currently dominate the economics profession, the persistence of unemployment in a recession does not sit well with the comforting assumption that prices and wages automatically adjust to return an economy to "equilibrium." The issue is one of politics and not merely logical consistency. For, unless this paradox is resolved, it is difficult to defend the fiscal and monetary conservatism that has become the defining feature of the ruling policy dogma. New Classical economists like Robert Lucas took from the classical tradition the belief that markets are efficient and added the assumption of "rational expectations" — that the outcome of any given economic event such as a policy change does not differ systematically from what individuals and firms expected it to be. In such an environment, increasing government expenditure to reduce unemployment below the "natural rate" or expanding the money supply has no effect on the real economy. The conclusion: budget deficits are verboten and monetary policy has to be left in the hands of an independent central bank insulated from democratic control and wedded to a predictable pattern of behaviour (`rules' rather than `discretion', to use the terminology of a seminal 1977 article by Professors Kydland and Prescott) aimed at keeping inflation low no matter how high unemployment may rise. Recessions, in this fairytale world, occur only because of "temporary confusion." The contribution of Professors Kydland and Prescott was to reconcile the empirical reality of recessions, which lasted too long to be considered the product of "temporary" confusion, with the assumptions of New Classical economics. In their 1982 version of a class of models known as "Real Business Cycles", capitalist economies are subject to exogenous shocks — typically technology shocks which affect labour productivity. "If a shock shifts the constant growth rate down, the economy responds as follows: market hours fall, reducing output, a bigger share of output is allocated to consumption and a smaller share to investment, and more time is allocated to leisure," Prof. Prescott explained in an article on the Great Depression in the Federal Reserve Bank of Minneapolis Quarterly Review in 1999. "Over time, market hours return to normal", helping the economy converge to a new equilibrium. Recessions, thus, are the rational (`pareto-optimal') product of utility-maximising individuals. "The Keynesians had it all wrong," he wrote. "In the Great Depression, employment was not low because investment was low. Employment and investment were low because labour market institutions and industrial policies changed in a way that lowered normal employment." Here, the entire model pivots around the notion of "intertemporal labour substitution." In plain English, the argument is that when wages fall, workers substitute leisure for labour. This "preference" for leisure resolves the unemployment paradox for New Classical economists because it suggests the unemployed are not really so. They are merely taking time off. Willem Buiter called this reasoning the `economics of Dr. Pangloss', the reference being to the philosopher who kept telling Candide whenever disaster struck, "Surely this is the best of all possible worlds." Paul Samuelson, in a 1998 lecture, was equally withering. "The phoenix of Real Business Cycles has been whistled up anew... What is new, and a little foolish, is the concept of a Pareto-Optimal real business cycle, like the one not in the history books, where at one time in 1929, folks everywhere developed a desire to substitute leisure for good paychecks." Critics have punched other holes in real business cycle theory. Prof. Prescott says his model accounts for 70 per cent of observed post-war fluctuations in the U.S. economy. In a 1996 interview, Prof. Prescott was asked to point to specific technological shocks that led to specific recessions. "Can we identify specific shocks," he replied. "My answer is no." Instead, he said his theory was really that business cycles are "the result of the sum of many random causes." At the end of the day, then, the `real' business cycle model seems to possess as much explanatory power as the mathematically less elegant theory of Stanley Jevons in the 19th century that economic fluctuations were caused by sunspots. Today, most economies, including India, are beset by a number of problems — jobless growth, structural unemployment, rising inequality, periodic overproduction and insufficient demand. The very persistence of these problems suggests the causes are not random, or temporary or exogenous, but endemic. New Classical economics offers us no answers. Its chief policy prescription — that the state should let the economy take care of itself — has little relevance for advanced industrial countries. In India, this suggestion is positively dangerous. © Copyright 2000 - 2005 The Hindu

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U.S. taking no chances with Afghan Presidential polls

8 October 2004
The Hindu

U.S. taking no chances with Afghan Presidential polls

By Siddharth Varadarajan

NEW DELHI, OCT. 7. When the people of Afghanistan go to the polls on October 9 to choose a President from a field of 15 men and one woman, another Presidential candidate in another country half a world away will be hoping the results allow him to declare victory in at least one front of his `Global War on Terror'.

Though the United States has pulled out all the stops in backing the incumbent, Hamid Karzai, for the top job — including trying to get rival candidates to back down — the Bush camp is evidently taking no chances. In a `coincidental' act of scheduling, the U.N.-Afghan Joint Electoral Management Board has decided to delay till after the U.S. Presidential election is over on November 2, the announcement of results in the event that no candidate wins at least 50 per cent of the vote. If there is a clear winner in the first round, the result will be announced on October 30. If not, the results will only be disclosed on November 6 with the run-off between the top two candidates set for November 20.

Apart from Mr. Karzai, the other well-known candidates are Younus Qanooni, an ethnic Tajik and leader of the erstwhile Northern Alliance, Abdul Rashid Dostum, the Uzbek leader who is strong in the provinces of Jowzjan and Balkh, and Mohammad Mohaqiq, leader of the mainly Hazara Hizb-i-Wahdat from the central Bamiyan region. Last month, Mr. Mohaqiq accused the U.S. Ambassador in Kabul, Zalmay Khalilzad, of indirectly putting pressure on him to withdraw.

"We cannot be sure Karzai will pick up 50 per cent," a senior Indian official told The Hindu Thursday, "but there's no doubt he'll win in the second round."

India's stand

Publicly, India has been careful not to take sides, in part because of its old ties with the Northern Alliance and also because of misgivings about the U.S.-driven "all or nothing" centralised state structure. "Of course we support Karzai", said an official. "There is no Pashtun leader stronger than him and having a Pashtun at the centre of the power structure is necessary for the stability of Afghanistan. But we have been advising him to get the Northern Alliance, the non-Pashtuns, into a coalition-type structure." When the Prime Minister, Manmohan Singh, met the Afghan President in New York last month, the same message was repeated. "Karzai said he had no problem but that it was the other side (i.e. the Tajiks) which was not listening", the official said. He added that the feedback India had received from Kabul was that Mr. Khalilzad, the U.S. envoy, was aggravating divisions between Mr. Karzai and the Northern Alliance leaders. Mr. Karzai is expected to win the largest number of Pashtun votes and is hoping his Tajik Vice-Presidential running mate, Ahmed Zia, who happens to be a brother of the late Northern Alliance leader, Ahmed Shah Masood, will pull in Tajik votes. Even so, hitting 50 per cent in the first round might be difficult. There is also the problem of violence, with the Taliban and the militia of Gulbuddin Hekmatyar opposing the elections.

In the past, say Indian officials, the centre in Afghanistan stabilised the country through equations with regional commanders and power brokers. "But this time, a centralised system is being imposed by the Americans and the regional and ethnic commanders fear a victorious Karzai will clip their wings forever". Whether he wins by a large or small margin, therefore, New Delhi believes the prospects for peace and stability are "dicey". Nevertheless, India remains fully committed to the rehabilitation of Afghanistan. "We have relief or construction projects in 27 out of 29 provinces and have committed $400 million till 2008," said the official. "Our engagement will continue," he added.

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Sorry, you're not part of the plan

October 6, 2004 http://www.thehindu.com/2004/10/06/stories/2004100601841000.htm/">The Hindu Opinion - Leader Page Articles Sorry, you're not part of the plan By Siddharth Varadarajan The debate over the composition of the Planning Commission panels was really a battle over the direction of the economy. And the outcome suggests the electorate's concerns do not count. RIGHT IN the midst of the high-profile controversy over the inclusion of representatives of the World Bank and McKinsey in the formal deliberative process of the Planning Commission, an act of exclusion was being played out in distant Noamundi, a part of Jharkhand's West Singhbhum district that is rich in iron ore. Several hundred villagers who wished to take part in a public hearing on the proposed expansion of mining leases were not allowed inside to air their views. In New Delhi, it is comforting to know that Montek Singh Ahluwalia believes in keeping the Government's "doors and windows open" to all influences. But at the grassroots, where the struggle for economic betterment is being waged, the gates are usually tightly bolted for all those who are poor or landless or tribal or likely to be displaced by some big project or the other. In Noamundi, the September 25 public hearing was held inside the premises of the Tata Iron and Steel Company — something which was a violation of the Environment Ministry's statutory norms. According to Chokro Khandait of the Chaibasa-based Jharkhand Organisation for Human Rights (JOHAR), the villagers fear TISCO's expanded mining operations will lead to the loss of their lands. They wanted to speak out in the public hearing, to air their views, he told me. "But the police stopped us before we could come near the premises." Asked who were the "300 people from nearby villages" who attended the hearing — as claimed in the official Tata press release — Mr. Khandait, whose organisation now plans to move the High Court, alleges they were mostly TISCO employees. So there we have it: At the very moment when Dr. Ahluwalia was elegantly arguing that World Bank and McKinsey people had to be part of Yojana Bhavan's planning process because of the "perspective on global practice" these agencies would bring to the table, another more local argument over planning and perspective was being settled with the help of bamboo staves and Section 144. In India, multinational consulting companies and banks have a right to full representation in public bodies but the public has no right to attend public hearings, especially since they tend to be held inside private premises. Though cast in the unfortunate form of a debate over sovereignty and the propriety of "foreign" experts serving on quasi-official panels, the question at hand was never really about their ethnicity or domicile but the utility and quality of the advice they brought with them. During the early days of Planning, nobody objected to the Dutch economist Jan Tinbergen (who was actually on the Dutch Government's planning board at the time), the Norwegian Ragnar Frisch or the Polish-American Paul Rosenstein-Rodan being regularly consulted. Under P.C. Mahalanobis, the Indian Statistical Institute and its journal, Sankhya — which provided crucial intellectual inputs to planning in India — opened their doors to economists like Oskar Lange, Michal Kalecki, N. Georgescu-Roegen and Branko Horvat. The econometric model for India's fourth Five Year Plan drew heavily upon the `consistency model' of Alan S. Manne of M.I.T. and Ashok Rudra. And the Ministry of Finance threw open its most confidential files for Nicholas Kaldor to produce his 1956 report on Indian Tax Reform. Nobody objected to "foreigners" then and with good reason. For none of them allowed the advice they proffered to be weighed down by any institutional or corporate baggage. This does not mean their advice was always correct but it was delivered without the slightest trace of an ulterior motive. If Prof. Frisch influenced Indian planners with his export pessimism — something the young Manmohan Singh took on in his D.Phil — this was not because he had shares in a South Korean export house and wanted to leave the trading field open for his clients. In some cases, the advice was so good, Indian policymakers baulked at implementation: The "philosophy of taxation" Prof. Kaldor developed to deal with India's resource imbalance was described by Sukhamoy Chakravarti in the Cambridge Journal of Economics more than 30 years later as "fully relevant today." If Mahalanobis' "foreigners" had no ideological or vested interest to promote and no great institutional backing behind them, what of the expertise Dr. Ahluwalia wanted to foist on the Planning Commission? When multinational management consulting companies like McKinsey and the Boston Consulting Group push a certain policy or outlook, can we really be confident that this is disinterested advice? Or that when an ideologue like John Briscoe, the World Bank's senior water adviser, pushes one-size-fits-all schemes of water privatisation, the fact that he is from a key donor agency like the World Bank will not give his views undue weightage and influence in any deliberative process? Though the Left was right to object to the inclusion of such individuals in the Planning Commission's consultative groups, the retort that State Governments like West Bengal regularly employ McKinsey and others to produce vision documents and reports did catch them a little off balance. Objections to the World Bank or McKinsey cannot be confined to the formal or legalistic domain; what has to be challenged is our tendency to let institutions like these provide us with `visions' of where we want to be as a nation 10 or 20 years from now. Whether he attends a Yojana Bhavan panel or not, do we really want Mr. Briscoe — who told the Third Water Forum in Kyoto last year that it was a "fantasy" to say water is a human right — influencing the direction of our economy? Or McKinsey, whose dystopic Vision 20-20 plan for a privatised Andhra Pradesh has put that State in the `Bimaru' category as far as its peasant population is concerned? On the issue of water, there is need for a broad reform of the entire system of water resource management in India. Most of our urban water authorities are inefficient and corrupt, leading to excessive ground water depletion and high costs for the poor, who must depend on private water tankers for their daily needs. There is need for greater public investment in water, as well as for decentralisation and democratic accountability of the jal boards at the local level. Instead of going down this route, however, there is a danger that politicians will look at privatisation as a quick fix, in part because of World Bank pressure. In Chhattisgarh, a 23.6-km stretch of the Sheonath river has been `privatised', creating problems for the communities which live alongside its banks. "We lent Jordan money to improve the water sector," Mr. Briscoe said a few years ago, adding that the World Bank told Jordan "it must bring someone else" (i.e. a private company) to run the water rehabilitation programme of the Greater Amman municipality. Of course, once private companies come in, water prices tend to rise well beyond the reach of the poor — as in Cochabamba in Bolivia, Ghana and South Africa. The defeat of the Bharatiya Janata Party-led National Democratic Alliance at the polls earlier this year has been read by different political parties differently. But there can be no denying the fact that the verdict reflected, at least in part, the growing public uneasiness over the economic policies followed by the Vajpayee Government. The election saw the electorate in virtually every major urban centre voting in favour of parties that either openly criticised privatisation and fiscal cutbacks or promised reforms "with a human face." In rural areas, the fact that inequality has either not fallen as dramatically in the reform years as the BJP claimed or has even increased is now fairly well established (See Abhijit Sen and Himanshu, `Poverty and Inequality in India, I and II', in Economic and Political Weekly, September 18 and 25, 2004, for the most comprehensive and thorough review of the statistical evidence so far). Against this backdrop, it is unfair for the Left parties to be pilloried for demanding that the Manmohan Singh Government pay attention to the electorate's fears and concerns in drawing up its policies, even if their mode of argumentation has not been the most effective. The debate over "foreign experts" has now been aborted by a clever if shabby compromise in which Dr. Ahluwalia has scrapped the consultative process altogether. It is almost as if the Government feels that if the World Bank does not get a say, neither should anyone else. Of course, this controversy was only a `proxy war' in the larger battle over the direction of the economy. The electorate voted for the parties that today form the United Progressive Alliance because of the economic promises made during the campaign. Some of these promises — such as the right to employment — have already been watered down, but the fact that the Prime Minister has made a commitment to begin its phased implementation in the country's poorest districts suggests it is possible for social movements and Left parties to influence policy, if only partially. But that is not enough. What is needed is an acknowledgement of the fact that in a democracy, it is the aspirations of ordinary people — and their vision of what they want their lives to be — which should guide economic policy. India needs to stop listening to the McKinseys of the world. And start tuning in to what people in Noamundi are saying. © Copyright 2000 - 2005 The Hindu

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Inside Nepal II: Uneasiness about the 'Hindu' tag

2 October 2004 The Hindu Inside Nepal - II Uneasiness about the 'Hindu' tag By Siddharth Varadarajan Kathmandu: When an angry mob attacked and burnt a historic mosque in the heart of the city on September 1 last, many here wondered how such an incident could have occurred in a high security zone so close to the Royal Palace and Army headquarters. The country was in mourning over the execution of 12 Nepali hostages in Iraq but some political parties saw an opportunity to further their own interests. There are unconfirmed reports that goons from the Nepali Congress were the first to arrive on the scene but they were soon outnumbered by activists from the Hindu extremist Pashupati Sena and Shiv Sena. The police idled nearby and their refusal to act is now the subject of an inquiry. ``We are taking action against those who did this,'' the Nepal Prime Minister, Sher Bahadur Deuba, told The Hindu . ``But until the inquiry report is complete, I can't say anything about the role of the police.'' Unprecedented ``In the 700 year history of the mosque, there has never been such an incident,'' says Madhav Kumar Nepal, leader of the Communist Party (UML), adding that the Pashupati Sena had openly bragged about its role. At least one leader of the Hindu Swayamsevak Sangh is already behind bars. A day after the killing of the hostages in Iraq, Ashok Singhal of the VHP wrote a provocative letter to King Gyanendra in which he said the killers were ``particularly brutal because the victims were Hindus.'' Asked about the increasing profile of extremist groups linked to the Indian Shiv Sena, the VHP and the RSS, Mr. Deuba said: ``Nepal is a liberal, tolerant country. We can't afford to tolerate extremism, whether it is Hindu or ideological.'' Hindu extremism ``Hindu extremism has entered the head — the state machinery — and is going slowly to the ground,'' says Shyam Shrestha, editor of Mulyankan magazine. During the Vajpayee Government's rule in India, King Gyanendra openly patronised the Vishwa Hindu Parishad. His honorary ADC, Gen. Bharat Keshari Simha, is convener of the Indian outfit's Nepali offspring, the Vishwa Hindu Mahasangh. Political observers say the King's decision to emphasise his `Hinduness' — he took great pride in being felicitated this January by Mr. Singhal and others as King of the World's Hindus — is exposing another faultline in the country's fragile polity. The country's Buddhists and Dalits resent the Hinduisation of the State, as do the janjatis, or linguistic minorities, who dislike the compulsory teaching of Sanskrit. ``The King is not a guarantor of the unity of Nepal, as pro-palace politicians like to say, but a symbol of imposed division because of the non-recognition of those who are not Hindu or whose language is not Nepali,'' says Mr. Shrestha. Ethno-linguistic biases Scholars such as Deepak Thapa argue that the ethno-linguistic biases of the modern Nepali state are partly responsible for the growth of Maoists. He says it is not a coincidence that the Maoist strongholds are in the western districts of Rolpa and Rukum, where the Magars are dominant. The Maoist demand for a Constituent Assembly thus finds an especially sympathetic echo with those who feel excluded by the formal, constitutional primacy accorded to Hinduism and the Nepali language. A Maoist leaflet written in 1996 to explain the need for `People's War' said that ``to maintain the hegemony of one religion (i.e., Hindusim), language (i.e., Nepali) and nationalist (i.e., Khas), this State has for centuries exercised discrimination... against other religions, languages and nationalities and has conspired to fragment the forces of national unity...'' According to Mr. Thapa, author of `A Kingdom Under Siege', the 1990 Constitution did not provide true representation to all population groups despite popular demands at the time for Parliament's upper house to be turned into a `house of nationalities.' ``The janjatis, Buddhists and others are demanding the restructuring of the state so that there is equality,'' says Mr. Shrestha. ``The Constituent Assembly may be a platform which can unify the divided communities of Nepal.'' (Concluded) © Copyright 2000 - 2005 The Hindu

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Inside Nepal I: Thinking aloud about kingdom without a king

1 October 2004
The Hindu

Inside Nepal - I

Thinking aloud about rule without a King

By Siddharth Varadarajan

Kathmandu: It is a paradox of political life in Nepal that of all the
demands raised by the Maoist insurgents in the past few years, their
call for a democratically elected Constituent Assembly has proved to
be the most subversive one. It has animated the traditional supporters
of democracy and republicanism and drawn fresh support to their side,
especially amongst the youth. But it has also infuriated the defenders
of the monarchist order – the King, the Army, and a section of the
traditional political elite – who have no intention of leaping into
the constitutional unknown and are determined to resist any talk of
change, even if this means delaying the possibility of a ceasefire and
a negotiated end to the decade-long civil war which has wracked the
kingdom.

In his famous 'Six Questions', Maoist leader Prachanda asked Prime
Minister Sher Bahadur Deuba last week whether his government was
really committed "to making the people sovereign through an election
to the constituent assembly". Prachanda's question is a ploy, a
tactic, Mr Deuba told The Hindu on Wednesday, adding that he could not
agree to any proposal which might compromise the country's system of
constitutional monarchy and multiparty democracy. "The monarchy is
widely respected… we need constitutional monarchy for the unity of the
country." When reminded that most parties – including the Communist
Party of Nepal (UML) and the G.P. Koirala faction of the Nepal
Congress – had broadly endorsed the idea of a Constituent Assembly, Mr
Deuba said the question could only arise if there was "a national
consensus".

Though the Maoist demand has been around for years, what seems to have
tipped the scales was King Gyanendra's October 2002 decision to
dismiss the democratically elected government and his subsequent
refusal to compromise with the political parties. "After the King's
takeover of power, the youth of all the democracy loving parties has
gone over to the republican movement", says Shyam Shreshta, editor of
Mulyankan magazine and a former comrade of the Maoists until he broke
with them on the question of violence. Pointing to the results of a
'referendum' organized earlier this year by the student organizations
of the UML, Nepal Congress and others in which 85 per cent of college
students 'voted' for a republican state, Mr Shreshta says that if the
King delays the handover of power, "the probability is that most of
the people will go over to that side". Pressure from below is even
pushing a traditionalist like Mr Koirala towards this demand, he says,
with Nepal Congress district presidents in 48 out of the country's 75
districts issuing a statement favouring a Constituent Assembly.

Mr Shreshta says the Maoists want the Constituent Assembly to abolish
the monarchy and establish a republic "but will accept the outcome if
the Assembly says no". Others, however, are not so sure. Madhav Kumar
Nepal, leader of the UML, told The Hindu the Maoists "need to give
assurances that they will really respect the sovereignty of the
people, human rights, the supremacy of the Constitution". "They have
no tolerance at all", he said. "They are killing the cadres of other
parties. The social-fascism of the Maoists has crossed the limit. They
really have to change their attitude towards others, and be prepared
to co-exist."

A Constituent Assembly is acceptable to Mr Nepal, whose UML is part of
the Deuba-led coalition, provided it is part of a peace process and is
preceded by a round-table conference and the formation of an interim
government. But Mr Nepal feels the Maoists should not raise this
demand as a precondition. "They should not ask so many questions, one
after another. This type of quiz contest is not so good. If they feel
the Deuba government has no legitimacy, that it is so beholden to the
King or Army that it cannot do anything, let them test this by sitting
at the table".

For republicans like Mr Shreshta, who do not accept the official line
that the monarchy is central to Nepal's unity, a Constituent Assembly
would also provide the King with a chance to restore his legitimacy.
"Because of the palace massacre, Gyanendra does not enjoy the same
legitimacy as the late Birendra", he says. "But nothing prevents him
from getting fresh legitimacy through a Constituent Assembly if, for
example, the people of Nepal are really for constitutional monarchy".

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