Tuesday, August 30, 2016

History of US-India Relations

Indian Prime Minister Narendra Modi's decision to skip the upcoming Non-Aligned Summit in Venezuela sends a powerful signal of his Hindu Nationalist government's growing commitment to India's partnership with the United States.

The latest logistics deal allowing the US forces to use Indian military bases is an indication of how the Americans intend to play the India card against China after the Cold War,  just as they played the China card against the Soviet Union during the Cold War.

The US-India deal is part of the  US “pivot” to Asia designed to check rising China. The U.S. Navy plans to deploy 60 percent of its surface ships in Asia in the near future. Instead of having to build facilities virtually from the ground up, as in Afghanistan and Iraq, the U.S. has the benefit of simple arrangements for the tremendous Indian facilities, according to Forbes magazine. This deal will accelerate the unfolding post Col-War realignment taking place in South Asia.

Massive Western Aid to India:

US-India ties are not new. India has been the number one recipient of US aid since 1947, according to the US government data.   The country India's first Prime Minister turned to for help during the 1962 China-India war was also the United States.



India has received $65.1 billion in US aid since its independence, making it the top recipient of American economic assistance. Pakistan, with its $44.4 billion, is at number 5 on the list.  US data also shows that Pakistan is not among top 10 for military or total economic and military aid.



More recently, the US aid to India has been replaced by massive US investment in the country that keeps its economy afloat. Massive western money inflows help India, with its huge trade deficits, pay for its imports and help maintain significant foreign exchange reserves. U.S. investment in India has jumped 500% in the past two years, according to the Wall Street Journal.

US Help in 1962 Indo-China War:

Indian Prime Minister Nehru sought significant US material aid and diplomatic help as the Indian troops were in full retreat in the 1962 China-India war.  A former US intelligence official Bruce Riedel in his book "JFK’s Forgotten Crisis: Tibet, the CIA and the Sino-Indian War" notes that President John F. Kennedy played a “decisive role” in “forestalling a Pakistani attack” on India, even as Islamabad then was fully capable of going to war with India to wrest the disputed territory of Kashmir.

India's Pakistan Obsession:

The US efforts to partner with India are clearly aimed to check China's rise. However, India's actions and statements suggest that it expects to use this partnership to against Pakistan.

Anticipating questions about US-Pakistan ties during his India visit, here's what Carter told Council of Foreign Relation in Washington D.C. before leaving for New Delhi:

“I’m sure I’ll be asked about it in India, but I think the first thing one needs to say from an American policy point of view, these (India and Pakistan) are both respected partners and friends.”

"Pakistan is an important security partner", Carter added.

Pakistan-China Ties: 

While US is courting India to check China's rise, the China-Pakistan ties have now moved well beyond “higher than Himalayas and sweeter than honey,” as officials on both sides say. Chinese strategists openly talk of Pakistan as their nation’s only real ally. And China is investing heavily in Pakistan to build the Gwadar deep sea port as part of a much more ambitious and strategic China-Pakistan Economic Corridor (CPEC) that India is attempting sabotage.

The result is that Pakistan is drawing closer to China, a rising superpower, while its rival India is partnering with the United States, a superpower in relative decline on the world stage.

Let me conclude with a quote from from Brookings' Stephen Cohen on India-Pakistan power equation:

“One of the most important puzzles of India-Pakistan relations is not why the smaller Pakistan feels encircled and threatened, but why the larger India does. It would seem that India, seven times more populous than Pakistan and five times its size, and which defeated Pakistan in 1971, would feel more secure. This has not been the case and Pakistan remains deeply embedded in Indian thinking. There are historical, strategic, ideological, and domestic reasons why Pakistan remains the central obsession of much of the Indian strategic community, just as India remains Pakistan’s.”

Here's a video discussion on the subject:

https://www.youtube.com/watch?v=6sfliv7KJVM




http://www.dailymotion.com/video/x45590s_pak-leaders-in-london-us-india-defense-deals-trump-vs-gop_news



Pak Leaders in London; US-India Defense Deals... by ViewpointFromOverseas

https://vimeo.com/163190180


Pak Leaders in London; US-India Defense Deals; Trump vs GOP from Ikolachi on Vimeo.



Related Links:

Haq's Musings

India's Pakistan Obsession

Can India Survive Without Wester Money?

India's Superpower Delusion: Modi's Policy Blunders

Does Pakistan Really Need F-16s to Fight Terror? 

Pakistan-Russia-China vs India-Japan-US?

China-Pakistan Economic Corridor

Gwadar: Hong Kong West for China?

Indian Agent Kulbhushan Yadav's Confession

Sunday, August 28, 2016

Development Boom in Pakistan's Thar Desert

Thar, one of the least developed regions of Pakistan, is seeing unprecedented development activity in energy and infrastructure projects.  New roads, airports and buildings are being built along with coal mines and power plants. There are construction workers and machinery visible everywhere in the desert. Along with renewed hopes for the region and its people, development boom is also raising concerns about the environment and its impact on the residents.

Thar Coal Development. Photo Credit: Amar Guriro 


Thar Development Projects:

The Tharparker District or simply the Thar Desert is located in the southeastern province of Sindh. It is  receiving a lot of attention because the desert sands hide an estimated 175 billion tons of coal underneath.

In December 2015, China agreed to invest $1.2 billion to develop Thar coal and establish a 660 MW coal-fired power plant.

The coal deposits are divided into 12 blocks, each containing approximately 2 billion tons. In the first phase the Sindh provincial government has allocated block II to Pakistan's Sindh Engro Coal Mining Company (SECMC) to excavate 1.57 billion tons of coal and build a 660 megawatt power plant. The plant is expected to provide power to the Pakistani national grid by June 2019. Later expansion to produce 1,320 MW of power is also planned.

Muhammad Makki, a doctoral student at the University of Queensland in Australia, recently visited the region.  Makki saw "signs of a resource boom already animating the dull landscape of the region – roads, airports, site offices, power lines, guest houses and rising real estate price are evident".

Thar Population:

The region has a population of 1.6 million. Most of the residents are cattle herders. Majority of them are Hindus.  The area is home to 7 million cows, goats, sheep and camel. It provides more than half of the milk, meat and leather requirement of the province. Many residents live in poverty. They are vulnerable to recurring droughts.  About a quarter of them live where the coal mines are being developed, according to a report in The Wire.

Some of them are now being employed in development projects.  Makki saw an underground coal gasification pilot project near the town of Islamkot where "workers sourced from local communities rested their heads after long-hour shifts".

In the first phase, Sindh Engro Coal Mining Company (SECMC) is relocating 5 villages that are located in block II.  SECMC is paying villagers for their homes and agricultural land.

SECMC’s chief executive officer, Shamsuddin Ahmed Shaikh, says his company "will construct model towns with all basic facilities including schools, healthcare, drinking water and filter plants and also allocate land for livestock grazing,” according to thethirdpole.net He says that the company is paying villagers above market prices for their land – Rs. 185,000 ($ 1,900) per acre.

Impact to Date:

Islamabad-based Pakistani economist Dr. Pervez Tahir recently visited and found that "the impact of the road, augmented by mobile connectivity, is multidimensional" Here's an excerpt of what he wrote in The Express Tribune:

"Walking long distances has given way to motorbikes and overloaded buses have taken the place of kekras, the rickety shuttle truck-bus of the World War II vintage. Children suffering from malnutrition and other ailments are reported directly to the media as well as the hospital in Mithi on mobile phones. The high numbers of the suffering children had always existed; only the media was late in discovering these cases. The media attention did bring politicians and bureaucrats to the region, facilitated of course by the road. The hospital in Mithi is now much better staffed and well-stocked with medicines. It is now a thriving town with a good number of schools and a college. Even an English-medium private school was in evidence. A sub-campus of a university is also coming up. Locals complained about the lack of girls schools, especially at the post-primary level. This is a sign of growing awareness. There was also frustration that the locals are not given the party tickets for the National and Provincial assembly seats. Mobile connectivity and the road have linked the famous craftswomen of Thar with the main markets much more effectively. At a community meeting in Islam Kot, women were quoting prices that broadly corresponded with the prices charged in Karachi’s Zeb un Nisa Street."

Summary:

Thar development boom is part of Pakistan's efforts to solve its energy crisis as part of China-Pakistan Economic Corridor (CPEC) projects. It is stimulating a lot of economic activity in Tharparker region that will impact the local population and the environment. Sindh government and the companies working there claim that they are trying to maximize benefits for the region and the country while mitigating any problems associated with it. It's important that they live up to their claims.

Here's a video report by Amar Guriro:

https://vimeo.com/179874726

Pakistan’s coal expansion brings misery to villagers in Thar desert from thethirdpole on Vimeo.

Related Links:

Haq's Musings

Thar Drought

China-Pakistan Economic Corridor

Abundant, Cheap Coal Electricity For Pakistan

Mobile Connectivity in Pakistan

Pakistan Sees Robust Growth in Consumption of Energy, Cement and Steel

Politcal Stability Returns to Pakistan

Auto and Cement Demand Growth in Pakistan

Pakistan's Red Hot Air Travel Market

China-Pakistan Economic Corridor FDI

Mobile Broadband Subscriptions and Smartphone Sales

Pakistan in MSCI Emerging Market Index

Monday, August 22, 2016

Travel and Tourism Industry Growth in Pakistan

Pakistan's travel and tourism industry is booming with significant improvement in security situation. In 2015, it contributed 7% of Pakistan's GDP.  It includes foreign and domestic travel and tourism spending or employment in the equivalent economy-wide concept in the published national income accounts or labour market statistics.

There are are multiple indicators showing this industry will contribute more this year. Growth in air travel and hotel occupancy are among the top indicators of travel and travel and tourism industry growth.

Pakistan Hotel Occupancy Source: Express Tribune

Hotel Occupancy:

“The rate of hotel occupancy has surged to 80% across the country compared to 35% before the current calendar year started,” said Beach Luxury Hotel Director Business Development Rehan Wahid, according to report in the Express Tribune newspaper. “Hotels in Islamabad and Lahore are fully booked most of the days. However, this is yet to happen in Karachi,” he said.

Thanks to the ramp-up of China-Pakistan Economic Corridor  (CPEC) related projects, Gwadar is leading the way for new hotel construction with permits issued for least 5 new 5-star hotels so far in the new port city.   These include a 250-room hotel apartment project of the management of Pearl Continental Hotels and another one of the Bahria Group. Gwadar Airport growth of 73% was the fastest of all airports in Pakistan.

Air Travel: 

Pakistan air travel market is among the fastest growing in the world.  IATA (International Air Transport Association) forecasts Pakistan domestic air travel will grow at least 9.5% per year, more than 2X faster than the world average annual growth rate of 4.1% over the next 20 years. The Indian and Brazilian domestic markets will grow at 6.9% and 5.4% respectively.

Pakistan saw 23% growth in airline passengers in 2015, according to Anna Aero publication. Several new airports began operations or expanded and each saw double digit growth in passengers. However,  Gwadar Airport growth of 73% was the fastest of all airports in Pakistan.

The top 12 airports all saw large double digit increases. Multan  grew 64%, Quetta 62% and Faisalabad +61% all climbing one place as a result of all of them seeing a growth of over 60%. Turbat Airport in Balochistan is the newest airport to reach the top 12 in terms of traffic.

Security Situation: 

The key reason for travel and tourism boom is significant improvement in the security situation since the launch of Pakistan Army anti-terror campaign called Zarb-e-Azb. Civilian deaths have been cut from 2,378 in 2011 to 412 this year until August 14, 2016. Total number of deaths, including civilians and security personnel, have been reduced from 11,704 in 2009 to 1232 so far in 2016, according to South Asia Terrorism Portal (SATP.org)
Terrorism-Related Deaths in Pakistan Source: South Asia Terrorism Portal


Summary:

Hotel occupancy rates have risen from just 35% in 2015 to 80% this year. Air travel is growing rapidly with IATA forecasting Pakistan to be among the world's fastest growing air travel markets. All airports in the country, including several new ones, are seeing double digit increases in the number of passengers flying in and out of them. Improved security since the start of Operation Zarb e Azb and political stability are underpinning growing confidence in Pakistan.

Related Links:

Haq's Musings

Pakistan Sees Robust Growth in Consumption of Energy, Cement and Steel

Politcal Stability Returns to Pakistan

Auto and Cement Demand Growth in Pakistan

Pakistan's Red Hot Air Travel Market

China-Pakistan Economic Corridor FDI

Mobile Broadband Subscriptions and Smartphone Sales



Saturday, August 13, 2016

Is Modi's "Make in India" Campaign All Hype?

Some of Prime Minister Narendra Modi's supporters claim that his "Make in India" campaign has brought India to the verge of becoming a manufacturing behemoth 69 years after the nation's independence. Others claim India is already a manufacturing powerhouse. Let's examine these claims based on data.

Manufacturing Ranking:

While India now ranks 6th in the world in terms of total manufacturing output, it still sits at a very low 142nd position terms of manufacturing value added per capita, according to the United Nations Industrial Development Organization's Industrial Development Report 2016.  Pakistan's manufacturing value added is ranked 146th by the same report.


Manufacturing Output:

India's 3% share of the world's total manufacturing output puts it at a distant sixth position behind China's 24%, United States' 17%,  Japan's 16%, Germany's 7% and South Korea's 4%.

The UNIDO data shows that India's manufacturing value added (MVA) per capita at constant 2005 prices increased from US$155.73 in 2005 to $168.42 in 2014.   However, as percentage of GDP at constant 2005 prices in US$, India's MVA decreased from 15.10% in 2005 to 13.85% in 2014

UNIDO reports that Pakistan manufacturing value added (MVA) per capita at constant 2005 prices increased from US$135.03 in 2005 to $143.84 in 2014. Its  MVA as percentage of GDP at constant 2005 prices in US$ decreased from 18.05% in 2005 to 17.41% in 2014.

India's manufacturing output declined 0.7% in April-June 2016-17

Make in India:

Prime Minister Narendra Modi has recognized how far behind India is in the manufacturing sector. His government's highly publicized "Make in India" is designed to Change that.

What does India, or for that matter any other developing country, need to boost its manufacturing output? Most experts agree on two essential pre-requisites for industrial development:

1. Energy and Infrastructure

2. Skilled Manpower

China's rapid industrialization over the last few decades has shown that the focus must be on the above two to achieve desired results. Has India learned from the Chinese experience? Let's examine this question.

Energy and Infrastructure Development:

"Infrastructure is the biggest hurdle to the ambitious Make in India program of the government," Standard and Poor Global Ratings Credit Analyst Abhishek Dangra told reporters on a conference call,  according to India's Economic Times publication.

"The government is scaling up spending, but its heavy debt burden could derail its ambitions to improve public infrastructure," the Standard and Poor report said.

India suffers from huge energy deficit. Over 300 million of India’s 1.25 billion people live without electricity.  Another 250 million get only spotty power from India’s aging grid, with availability limited to three or four hours a day, according to an MIT Energy Report. The lack of electricity affects rural and urban areas alike, limiting efforts to advance both living standards and the country’s manufacturing sector.

Skilled Manpower:

“India doesn’t have a labor shortage—it has a skilled labor shortage,” said Tom Captain, global aerospace and defense industry leader at Deloitte Touche Tohmatsu, according to a Wall Street Journal report.

The WSJ report said that over 80% of engineers in India are “unemployable,” according to Aspiring Minds, an Indian employability assessment firm that did a a study of 150,000 engineering students at 650 engineering colleges in the country.

NPR's Julie McCarthy reported recently that ten million Indians enter the workforce every year. But according to the Labour Bureau, eight labor-intensive sectors, including automobiles, created only 135,000 jobs last year, the lowest in seven years.

Impact on Agriculture: 

Prime Minister Modi's focus on manufacturing is talking away resources and attention from India's farmers who are killing themselves at a rate of one every 30 minutes.

Majority of Indian farmers depend on rain to grow crops, making them highly vulnerable to changes in weather patterns. As a comparison, the percentage of irrigated agricultural land in Pakistan is twice that India.

More than half of India's labor force is engaged in agriculture. Value added per capita is among the lowest in the world. Pakistan's agriculture value added per capita is about twice India's. This is the main cause of high levels of poverty across India.

Chinese Experience:

China has shown that it is possible to make huge strides in manufacturing while at the same time achieve high productivity levels in agriculture.

On the manufacturing front, China has taken care of the basics like energy, infrastructure and skilled manpower development to achieve phenomenal growth.

As part of the China-Pakistan Economic Corridor (CPEC) development, Pakistanis are learning from the Chinese to replicate success in manufacturing.

The first phases of CPEC are focused on building power plants, gas pipelines, rail lines, roads and ports at a cost of $46 billion. At the same time, China and Pakistan are also focussing on skills training via vocational schools and Pakistan-China Education Corridor. These projects will lay the foundation necessary to ramp up manufacturing in Pakistan.

Summary:

Both India and Pakistan want to emulate the success of China in the manufacturing sector. The Chinese experience has shown that development of energy, infrastructure and skilled labor are essential to achieve their manufacturing ambitions. The South Asians must move beyond hype to do the hard work necessary for it. Pakistan is working with China via CPEC to make progress toward becoming a manufacturing powerhouse.

Related Links:

Haq's Musings

Auto Industry in India and Pakistan

UN Industrial Development Report 2016

Indian Farmer Suicides

China-Pakistan Economic Corridor

Robust Energy Demand Growth in Pakistan

Human Capital Development in Pakistan

Monday, August 1, 2016

Pakistan's Rising Economy; US Democratic Party Convention; Modi's Crackdown on AAP

How's Pakistan's economy doing? What do broad economic indicators of rising consumption of energy, autos, cement and steel show? Do these indicators confirm government's GDP growth figures? How are the investors responding to these indicators? What is the impact of China-Pakistan Economic Corridor (CPEC) projects on the economic activity in the country?

How do the two major party conventions in 2016 compare? Did one party do a better job of appealing to the broad electorate better than the other? Who's more ready to be the next US president? Hillary or Trump? Who's better for ethnic and religious minorities, particularly Pakistani-Americans and Muslim-Americans? How was the DNC speech by Pakistani-American Khizr Khan, the father of slain war hero US Army Captain Humayun Khan, received by the DNC delegates and the broader US public? Was it effective in fighting Trump's overt Islamophobia?

Why is the Modi government arresting nearly a dozen Aam Aadmi Party (AAP) MLAs? Why did the Indian government choose to do it now? Is AAP leader Arvind Kejriwal justified in fearing for his life? Are these AAP leaders' arrests and various forms of intimidation timed to hamstring AAP's chances in upcoming state elections in Goa, Gujarat and Punjab?

Viewpoint From Overseas host Misbah Azam discusses these questions with panelists Ali H. Cemendtaur and Riaz Haq (www.riazhaq.com)


https://youtu.be/RHB1GdVwusk





https://vimeo.com/177084238



Pakistan's Rising Economy; US Democratic Party Convention; Modi's Crackdown on AAP from Ikolachi on Vimeo.


Related Links:

Haq's Musings

Pakistan's Rising Economy

Trump Phenomenon

Trump's Muslim Ban

China-Pakistan Economic Corridor

Is Modi's Honeymoon Over?

Talk4Pak Think Tank

VPOS Youtube Channel

VPOS Vimeo Channel