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Random Thoughts
The Perfect
Financial Storm � 3
(India and the Middle East)
by
Gaurang Bhatt, MD
Incredible and Shining India?
Around India�s independence in 1947, the world polarized into two major
factions under Truman�s America and Stalin�s Soviet Union. Nehru had a
natural antipathy towards the West because of the colonial experience
and was ignorant about Stalin�s atrocities and Mao�s massacres. He had
been partly brainwashed by Harold Laski during his college years in
England and the poverty and backwardness of India and the rapid
industrial progress of the Soviet Union naturally tilted his policies
toward socialism. Japan, Korea, Taiwan and even Europe gradually built
up their economies under the protective aegis of the US. Korea before
the Korean war and Japan after the second world war had the same per
capita GDP as India in 1947. Now India�s is about a thousand dollars,
South Korea around 25,000 dollars and Japan around 35,000 dollars.
During the sixty years Taiwan, Singapore, Malaysia, Thailand all
followed the same model and progressed. India was compelled to change
course after 1989 as its economy and the Soviet Union collapsed. China
had gotten wiser a decade earlier. India adopted the export dependent
development later and is now faced with the perfect storm and bankruptcy
of America and its consumer culture.
India has over 200 billion dollars of reserves and is not a basket case
like Pakistan, Nepal or Bangladesh but faces internal insurgencies from
the northeast, Maoists and Islamic terrorists. It runs huge budget
deficits and has large foreign debts unlike China with two trillion
dollar reserves. It runs large trade deficits unlike China�s surpluses.
Current account deficits are mostly covered by remittances from NRIs and
Indians working in the Gulf. Unfortunately Western NRIs are reducing
their accounts and withdrawing funds to cope with their personal needs
to survive in the current tsunami and tens of thousands of Indians are
returning from the Gulf due to job losses. Dubai had to borrow ten
billion dollars from Abu Dhabi and Gulf country sovereign wealth funds
have lost nearly 25% in the market meltdown. The falling price of oil is
wrecking the budgets of Iran, Saudi Arabia, Iraq and the UAE. It has
given a temporary reprieve to India but when the oil price goes up like
it did before and India�s exports don�t go up and workers lose their
Gulf jobs, India�s deficits and economy will become disasters. It will
take a decade for the West to become heavy consumers again.
In the meantime as I have written in my previous articles relating to
water scarcity due to global warming and China�s control of the Tibetan
origin of India�s rivers, India will face worse problems. Half of
India�s over 200 million households do not have access to a toilet.
Defecation in the open is a means of spreading disease like parasites,
hepatitis, typhoid, diarrhea and cholera. Lack of running water
compounds the problem. Safe potable water supply adds to disease
propagation. Storing water in containers at home breeds mosquitoes which
cause malaria, dengue and filariasis. Illiteracy (30 to 40%) leads to
becoming mired in menial and manual labor jobs with inevitable poverty
and absent family planning. 45% of India�s children are malnourished.
Childhood malnourishment causes higher child mortality and retards
mental development. Even Sub-Saharan Africa has lesser percentage of
malnourished children than India. Over a third of Indians do not have
electricity and over half don�t have a reliable supply. Primary
education is often unavailable, unaffordable or just plain inadequately
poor. This and the lack of roads and infrastructure reduces growth.
Poverty and a hopeless future breed crime. No woman can walk the streets
of the capital New Delhi at night.
The leaders and much of the bureaucracy are corrupt, incompetent, lazy
or stupid. The recent Mumbai terror attack for which there were supposed
prior warnings, the totally disorganized response of the NSG from Delhi
whose plane was stuck in Chandigarh and for which the Maharashtra
government had no rapid transport arrangement from the airport to the
hotels shows the incompetence and stupidity of those in charge. The
complacency and callousness were revealed in the public behavior and
statements of the state ministers. 80% of the internal security funds
are spent in protecting the VIPs while common people are killed or
maimed by repeated terrorist attacks. The idle bragging talk without any
concrete retaliatory steps towards Pakistani terrorist training camps,
partly because the Indian army chiefs lack necessary arms and planes due
to endless delays in procurement, DRDO delays and slavish subservience
to America to whom our leaders look at like dogs with hanging tongues
and wagging tails, shows their incompetence, stupidity. Their only
interest is to perpetuate their power, use it to get rich unethically
and bequeath the power to their children. Of course, we the voters are
indifferent, stupid and conniving. The high command of the political
parties decides who gets a ticket to run in the elections. There are no
open primaries to contest and no referendum to throw out the bums not
doing their jobs.
Middle East
Iraq is still a mess and
Obama just like the Democratic House and Senate has no intention of
leaving Iraq. Instead they want to escalate the unwinnable war in
Afghanistan. It has no roads, electricity, water, jobs or security, just
like Iraq. It gets 50% of its national income from poppies. The drug
trade supports and arms the Taliban and the transport Mafia of Pakistan.
Indiscriminate aerial bombing and torture of innocents help to increase
Taliban recruitment. Pakistan�s Northwest Frontier province is mostly
under Taliban control and supply routes for US soldiers from Pakistan
have become unsafe and unreliable.
The election of Netanyahu in Israel increases the likelihood of an
attack on Iran, the only easy supply route for the US troops in
Afghanistan. Obama still uses veiled threats against Iran on the same
pretext of nuclear weapons, previously used against Saddam, while not
even mentioning Israel�s huge nuclear arsenal. He is incapable of
stopping Israel�s annexation of the West Bank and doing justice to
legitimate aspirations of the Palestinians for an independent state
because of his campaign donors and much of his cabinet. As they say in
Texas, �You have to dance with them that brung you to the prom�.
Iran has legitimate security demands but instead of discussing the
differences, the US and Iran are stuck in a never ending Corsican
vendetta. The Mullahs having tasted power, privilege and wealth, are
unwilling to cede it to the population whose educated young are tired,
angry and jobless, instead, they find enough rural and urban less
educated poor and play their resonant chord of religious fervor to hold
on to power.
Turkey rebuffed by the EU by denial of membership is ruled by an Islamic
party. The recent economic downturn has put it in a precarious position.
It had to beg from the IMF. This has pushed the population more towards
religion. Its anger at the US is making it cuddle up to Russia. Israel�s
cruel behavior in Lebanon and Gaza has awakened religious fervor in
Turkey as have the US wars in Iraq and Afghanistan. While there are
enough grounds to indict the Sudanese president for atrocities in
Darfur, his crimes are minor compared to the W�s.
Lebanon is as always balanced on a wedge, but to the chagrin of the US,
Hezbollah is getting popular even amongst some Christians and Sunnis for
its social work and ability to stand up to Israel. Its real motives and
intentions are unclear and it does serve as an Iranian ally. Syria�s
illegitimate ruler being of the Alawite(Shia) minority in a Sunni
population faces a stagnant economy and has lost the blank cheque of
unlimited backing from the Soviet Union and is dependent on Iran. The US
is trying to wean Syria from Iraq but is unable to compel Israel to
return the Golan Heights. Thus nothing will come of recent US overtures
to Syria.
March 8,
2009
Also
See Part 1 (Europe and Central Asia)
Also See Part 2 (USA)
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