July 25, 2017

How Power Works in Pakistan


Prime Minister Nawaz Sharif of Pakistan earlier this year.



JULY 24, 2017

ISLAMABAD, Pakistan — Pakistan does not have a tradition of political parties that survive for long on the basis of their ideas. Every few years a new political party, mostly on the right, emerges with encouragement from the permanent establishment, dominated by the military. A revolving set of turncoats and some new defectors from other parties promptly join this new king’s party. It is then fiercely pitched against the party with the largest vote bank at that particular juncture.

Prime Minister Nawaz Sharif’s Pakistan Muslim League (Nawaz) came to power in 2013 with the largest share of votes. The cricketer-turned-politician Imran Khan and his Pakistan Tehreek-e-Insaf (P.T.I.) party seem to be playing the part of the king’s party, trying to unseat Mr. Sharif by using the Panama Papers’ revelations of graft and money laundering against Mr. Sharif and his family. A subsequent court-ordered probe, which included investigators from Pakistan’s all-powerful intelligence agencies, has delivered a scathing report against the Sharifs.

Here’s how to get filthy rich in Pakistan: manipulate the law, get bank loans written off, use irregular accounting practices, evade tariffs and taxes and exploit labor. Mr. Sharif and his family are no different from others who are filthy rich, some of whom have joined Mr. Khan’s P.T.I.

The Election Commission of Pakistan and a court are also scrutinizing the allegations of misappropriation against Mr. Khan, including that of foreign funding for his party, which is illegal under Pakistani law.

Though Mr. Khan may be shamefaced for his soft stance on terrorist groups, he is not in the league of Pakistan’s filthy rich and does not have a reputation for large-scale financial corruption. Yet there are doubts about the motivation and outcome of his campaign against Mr. Sharif and increasing fears that Mr. Khan’s P.T.I. is the latest version of the king’s party.

These doubts and fears appear because there are no evident signs of a break from an old, familiar pattern. Mr. Khan founded the P.T.I. in 1996, and it became a club of well-meaning middle-class professionals inspired by the raw sincerity that Mr. Khan exuded. This has changed dramatically in the past six years, with his adversaries making obvious references to his party’s garnering the support of bureaucracy, military and intelligence agencies.

At present, the right-leaning P.T.I. represents a sizable minority of the affluent urban middle class. It has welcomed turncoats and defectors from other parties, many with a history of corruption and wrongdoing. It has been agitating for Mr. Sharif’s removal through nonelectoral means for the past few years. Panama Papers leaks have only intensified its demand.

The despairing history of king’s parties in Pakistan began in 1955 with the formation of the Republican Party. Pakistan was then divided into two parts, flanking India in the east and the west. The Republican Party was formed at the behest of the bureaucracy and military in West Pakistan to demand an unfair parity with the more populous East Pakistan, in terms of representation in legislature and allocations of economic support. The seeds of injustice sowed by the Republican Party, our first king’s party, culminated in the secession of East Pakistan in 1971. It became Bangladesh.

The Republican Party dissolved in 1958, three years after its formation, when Gen. Ayub Khan imposed martial law. A few years later, General Khan formed his own political party to wear the pretense of democracy while running the country. General Khan’s political party disintegrated soon after he left the office.

A pattern was established. After every coup, the new ruling general would encourage the formation of a new party, inviting and accepting mostly conservative politicians. The party would work hard to bring a facade of legitimacy to the general. It would disintegrate or disappear as soon as the general left the scene.

In July 1977, General Zia-ul-Haq captured power, then decimated the ruling Pakistan Peoples Party and later hanged its leader and the prime minister, Zulfikar Ali Bhutto. The general formed a party. After falling out with the man he chose to run it, General Zia encouraged Nawaz Sharif, a leader of his party and the chief minister of Punjab, to lead his own faction. The Sharif faction later became the Pakistan Muslim League (Nawaz).

A chaotic decade — from the late 1980s to the late 1990s — followed General Zia’s mysterious death in a plane crash. Benazir Bhutto’s P.P.P. and Mr. Sharif’s P.M.L.N. were in and out of power. That was the time when Mr. Sharif played into the hands of the military to destabilize Ms. Bhutto’s popularly elected government. Mr. Sharif did to Ms. Bhutto what Mr. Khan is doing to him.

Mr. Sharif became prime minister a second time in 1997, but his relationship with the military establishment had turned sour. In 1999 Mr. Sharif tried to sack his army chief, Gen. Pervez Musharraf, but was instead removed in a coup.

Mr. Sharif was jailed after being charged with corruption and treason and was later sent into exile. In 2002, General Musharraf conjured up a new king’s party, which disintegrated with his resignation in 2008. Democracy was restored.

The Supreme Court of Pakistan has legally sanctioned every military coup in the country. The few judges who objected to such interventions were made to retire. It has endorsed the removal of elected governments and has sentenced one elected prime minister to death and disqualified another. Every democratically elected government has been removed on charges of corruption and incompetence.

The present case against Mr. Sharif will be seen as just if it leads to accountability for all: civil service, military, judiciary and big business, including those who flank Mr. Khan. If it is aimed solely at disqualifying Mr. Sharif, then there will be no rupture from our checkered past. A few years later Pakistan might see a new carriage for all the king’s horses to pull and all the king’s men to jump on.

Harris Khalique, a poet and essayist, is the author of “Crimson Papers: Reflections on Struggle, Suffering and Creativity in Pakistan

India's dollar diplomacy takes off, puts China's domination under threat


By Dipanjan Roy Chaudhury, ET Bureau | Updated: Jul 24, 2017, 09.50 AM IST

A non-traditional area where India has extended the line of credit during the past three years is the defence sector — Vietnam, Bangladesh, Sri Lanka and Mauritius.

NEW DELHI: Although a late starter, India is fast catching up with China in extendingcredit world over to build infrastructure and push economic ventures.

While Delhi extended LoC worth 10 bn USD to its partners between 2003-2014 the figure has now touched 24.2 bn USD since the Modi government came to power. 52 LoCs worth 14.2 bn USD has been granted since May 2014 and more are in pipeline when King of Jordan and President of Belarus visits Delhi later this year.

While correcting malpractices that had crept into India’s African endeavours, New Delhi had completed 20 major ventures in the past two years, official sources told ET. The focus under LoC extended through MEA’s Development Partnership Administration (DPA) wing is now on key infrastructure projects and not just capacity building ventures, sources said referring to two such endeavours in Africa – Presidential office in Ghana (symbol of Indo-Ghana friendship) and National Assembly building complex in Gambia.

Such iconic symbols of bilateral partnership have been hallmark of Chinese presence across continents. “This kind of infrastructure projects have political significance and contribute to overall strengthening of bilateral partnership between two countries,” pointed out an expert who has closely followed Chinese infrastructure projects across Asia and Africa. It is a common knowledge that while China dictates type and terms & conditions of projects for which it extends grants, Indian approach is consultative in nature keeping in mind local requirements and sentiments while extending LoC throughEXIM Bank.

A non-traditional area where India has extended LoC during the past three years is defence sector. Defence related LoC have been extended to Vietnam (500 mn USD), Bangladesh (500 mn USD), Sri Lanka (100 mn USD) besides Mauritius. India has been receiving requests for supply of defence equipment from friendly countries in SE Asia, Africa and Latin America. Defence related LoC extended by India is expected to grow in the coming years, according to an expert who has followed India’s defence partnerships across regions.

During the past one year alone 13 projects aggregating 925.94 mn USD across 10 countries have been completed under LoC mechanism. “Development Partnership is a key instrument in India’s foreign policy. Extension of LoC on concessional terms is an important component of India’s development cooperation policy in Africa, Asia and Latin America. The surge in LoCs since May 2014 reflects political commitment towards development partnership. LoCs are governed by IDEAS (Indian Development & Economic Assistance Scheme) guidelines which were revised by the Modi government in 2015 and these guidelines will remain applicable till 2019-20. The new guidelines have been able to check malpractices and nepotism in extension and implementation of LoC supported projects particularly in Africa,” pointed out one of the sources quoted above.

New IDEAS guidlines classify LoC recipient countries as per levels of their development and also specify rate of interest of concessional loans depending on income level of countries besides outling oversight mechanism and operational guidelines of LoC. Unlike India Chinese loans are offered at commericial rates and this has pushed certain countries in Asia and Africa into debt trap.

In the past most LoC contracts in Africa and other developing countries were won by 5-6 companies which had established good networks, alleged one the persons familiar with the issue. ET has learnt that these companies would undertake a wide range of projects through sub-contracting, even though they did not have much experience in executing projects in India. The Feasibility Reports for projects were often lacking in detail and clarity, leading to escalation of costs and leaving scope for ambiguity. Besides lack of scrutiny of tender documents and evaluation led to misuse of LoC, alleged the person quoted above.

The oversight mechanism put in place to check misuse of LoC funds include accompaniment of project proposal with Detailed Project Report (DPR) by companies willing to undertake projects, Pre-Qualification (PQ) exercise to identify experienced and competent companies for implementing LoC projects, closer scrutiny over vetting of DPRs, tender documents and bid evaluation by the lending bank, informed persons familiar with the process.

India’s EXIM Bank to ensure effective LoC implementation has undertaken empanelment of Consulting firms and EPC contractors. EXIM Bank has completed empanelment of 82 consulting firms in various sectors. A total of 117 firms have been empanelled as EPC Contractors.

Yet certain challenges remain in implementing LoC in some countries due to geographical constraints, according to domain experts. Some of India funded projects are in the most remote regions in the world where availability of material and skilled manpower are scarce. Besides such areas are also impacted by lack of electricity, water resources and proper connectivity

July 24, 2017

25 years of Indo-Isreal friendship , Event

Indian Superman who taught Chinese a lesson in 1962

ISIS’s Global Campaign Remains Intact


24/07/2017 Jennifer Cafarella Uncategorized

Image courtesy of Surian Soosay/Flickr. (CC BY 2.0)

This article was originally published by the Institute for the Study War on 12 July 2017.

ISIS’s first attack in Iran punctuated two stark realities: the group’s annual Ramadan campaign is alive while the US-led anti-ISIS campaign is on a path to failure. ISIS surges attacks every year during Ramadan in order to gain or increase momentum in its global campaign to maintain its declared caliphate, expand across the Muslim world, and win an apocalyptic war with the West. ISIS has conducted successful attacks in three new countries this year – the United Kingdom, the Philippines, and Iran – and will likely pull off more before the Muslim holy month is over. The jihadist group has sustained a global insurgency despite the considerable military pressure it faces in Iraq and Syria.

ISIS has been waging its global campaign in four separate “rings” since 2014. First, ISIS is defending and attempting to remain in and expand its territorial control in its “core terrain” in Syria and Iraq. Second, ISIS seeks to weaken the Middle East’s power centers of Turkey, Egypt, Saudi Arabia, and Iran. Third, ISIS is expanding in other Muslim majority countries through attack networks and, when possible, ground operations. Fourth, ISIS is conducting spectacular attacks in the non-Muslim majority world, or the “far abroad,” in order to polarize those communities and radicalize their minority Muslim populations. ISIS’s Ramadan surges set conditions in these rings, varying its main effort based on its circumstances and the capabilities in Iraq and Syria and of its networks abroad.

ISIS’s first Ramadan surges in 2012, 2013 and 2014 kick started its resurgent campaigns to seize vast swaths of terrain in Iraq and Syria and declare the caliphate. ISIS continues to strike offensively against anti-ISIS forces in Iraq and Syria each Ramadan. ISIS began its campaigns in the “far abroad” and Muslim world as early as late 2013, when the ISIS external operations wing in Syria began to recruit, train, and deploy foreign fighters to conduct spectacular attacks in Europe and across the Middle East and North Africa. In 2014, ISIS sent senior operatives to Libya and Sinai in order to cultivate new affiliates. ISIS’s success in the Muslim world in 2014 enabled it to recognize formal affiliates in Afghanistan and PakistanSaudi Arabia, AlgeriaRussia’s Caucasus, Nigeria, and Yemen before Ramadan 2015. ISIS did so in order to “remain” in Iraq and Syria and “expand” by creating resilience globally to counter pressure.

The main effort of ISIS’s Ramadan campaigns became the Muslim world and “far abroad” in 2015, after reaching its apex in Iraq and Syria by seizing the cities of Ramadi and Palmyra shortly beforehand. ISIS surged its campaign in the Muslim world, including spectacular attacks at a beach resort in Tunisia and a Shi’a mosque in Kuwait while continuing to deploy attack cells into Europe. ISIS struck a wide variety of targets across the Muslim world and the “far abroad” in 2016, including successful attacks in BangladeshTurkey, and Saudi Arabia. The same year a terrorist pledging allegiance to ISIS’s leader attacked a nightclub in Orlando, Florida, shortly after the beginning of Ramadan.

ISIS is expanding its reach even further this Ramadan, which began on May 26. ISIS conducted two near-simultaneous, complex, coordinated attacks against symbolic targets in Iran’s capital on June 7. These attacks are a major inflection point that signals growing capability in the second ring of strong Muslim states. ISIS is also gaining momentum in Southeast Asia, part of its third ring, where it launched a major ground offensive in the Philippines, seizing a city and defending it against a counter-offensive by Philippine security forces. ISIS also conducted its first successful suicide attack in the UK, a priority target in the majority non-Muslim fourth ring. This attack suggests ISIS has a growing network in Europe despite increasing European counterterrorism efforts. Other ISIS attack cells have been thwarted in areas with ISIS networks including Spain, Tunisia, and Russia. ISIS has continued to conduct a Ramadan surge in Iraq, though security forces have thwarted some of its attacks.

The scope of ISIS’s current global Ramadan campaign, its continuity with past campaigns, and its resilience within Iraq and Syria demonstrates that the US has failed to contain ISIS or to reclaim the initiative, much less destroy the organization. Secretary of Defense James Mattis has said America’s goals against ISIS are to “crush ISIS’s claims of invincibility, deny ISIS a geographic haven from which to hatch murder, eliminate ISIS ability to operate externally, and eradicate their ability to recruit and finance terrorist operations.” Current US-led operations in Syria and Iraq will not accomplish these objectives. These operations amount to chasing the ISIS external attack cell around the battlefield through successive linear, tactical assaults that tie up our military capability without achieving decisive results. The ISIS external attack cell has now moved from Raqqa, the main effort of U.S.-backed operations, to southeastern Syria near the Iraqi border, an area where America’s ground partners cannot now project force.

ISIS is globalizing its external attack capability in order to endure even a total loss of its terrain in Iraq and Syria, which even today extends beyond Mosul and Raqqa, respectively. ISIS is deliberately “[fostering] interconnectedness among its scattered branches, networks, and supporters, seeking to build a global organization,” according to an assessment released by the anti-ISIS coalition in March 2017. The US has increased the tempo of operations against high-value ISIS operatives, but has not disabled the external operations cell. ISIS has shifted to mobilizing prospective fighters in place rather than bringing them to Syria, Iraq, or Libya as foreign fighters. ISIS’s expansion in farther flung areas like Afghanistan and Southeast Asia also generates alternative basing options for command-and-control elements and potential fighting forces.

President Donald Trump’s supposed “acceleration” of the anti-ISIS campaign he inherited from his predecessor has minimally increased the speed of tactical gains in Raqqa and Mosul while doing little to ensure that the U.S. achieves its strategic objectives The liberation of Mosul and Raqqa in 2014 might have defeated the organization, but it no longer suffices. ISIS’s global attack network is now more robust, dispersed, and resilient than ever. ISIS will remain dedicated to its global objectives after Mosul and Raqqa fall and will continue to wage a calculated global campaign. ISIS’s global success generates a momentum for jihadism that will endure even if the US manages to defeat the organization, moreover. Al Qaeda is waiting to pick up the mantle of the global war against the West, and could be even more successful than ISIS. The threat the US faces from jihadism vastly overmatches its current hyper-tactical campaign in Iraq and Syria. The first step in placing the US and its allies back on a path to victory is to recognize that the existing strategy of tactics will not suffice.

About the Authors

Jennifer Cafarella is the Lead Intelligence Planner at the Institute for the Study of War.

Melissa Pavlik is a Counter-terrorism Analyst at the Institute for the Study of War

Foreign Direct Investment into Russia since the Annexation of Crimea

24 Jul 2017

By David Szakonyi for Center for Security Studies (CSS)

Did international sanctions and low oil prices stop multinational firms investing in Russia? Not completely, argues David Szakonyi. He also contends that while fundamental obstacles still prevent a complete rebound in foreign direct investment, recent months have even seen a renewed interest among multinationals in Russia. Read on to find out why.

This article was originally published by the Center for Security Studies (CSS) in the Russian Analytical Digest on 12 July 2017.


International sanctions and low oil prices have not fully stopped multinational firms from investing in Russia. This brief article analyzes the reasons why foreign direct investment into Russia has slightly rebounded in recent months and evaluates the prospects for future growth.

Over the last decade, foreign investors have been riding the roller coaster of doing business in Russia. For years, Russia has been viewed as a leading emerging market, boasting a huge consumer base, a highly educated workforce, and ample natural resources. But investor confidence in Russia plummeted in 2014 in the wake of a precipitous drop in oil prices and the imposition of international sanctions. Suddenly Russia was isolated both politically and economically from the West, and the volume of foreign direct investment (FDI) shrank.

Anecdotal evidence suggests the tide may be turning. Leading multinationals have announced expansion plans, while Russian officials have successfully courted large-scale investments from China, Qatar, and India. Which companies are braving significant political risk to invest in Russia under the sanctions regime? How successful overall has Russia been at reducing its reliance on Western financial investors?

Statistical evidence confirms foreign investors are dipping their toes back into Russian waters. This cautious optimism began before the most recent US presidential elections and extends into sectors beyond oil and natural gas production. Specific policies adopted by the Russian government are partly responsible. Incentives passed to localize production and the development of a multilateral investment fund have helped compensate for the drop from other investors spooked by political risk. FDI will continue to trickle into Russia as long as the economy remains relatively stable. But fundamental obstacles prevent a complete rebound in foreign investment. Tackling rampant corruption, further diversifying the economy, and reducing political tension with the West will unleash strong pent-up demand among multinationals to re-engage with Russia.

Withered Investment under Political Uncertainty

After a slow recovery from the 2008 financial crisis, foreign investors were already beginning to pile back into Russia by early 2013. Russia had finally joined the WTO the year before, and talks were underway to liberalize some of the restrictions on FDI into strategic sectors. Moreover, upon taking office for his third term, President Putin had set a target of dramatically improving Russia’s ranking on the World Bank’s Ease of Doing Business scale. Shortly thereafter, policymakers simplified procedures for starting businesses, eased property registration rules, and introduced electronic services for businesses to pay taxes and submit customs documents. In 2013, a United Nations report ranked Russia as the number three most attractive country worldwide for foreign investment (after the US and China).

But the overall investment atmosphere would soon darken. By the end of 2013, clear signs of stagnation were on hand, as fixed-capital investment slowed to a trickle and GDP growth barely registered. Analysts were concerned that the boom years of the mid-2000s had given way to an altogether more fragile and resource-dependent economy. The collapse in the price of a barrel of oil in 2014 proved them right. Russia’s economy sped downward, with the ruble rapidly depreciating and Russian policymakers scrambling to prevent a repeat of the 1998 financial crisis. Foreign investors fled seemingly overnight, as overall FDI into Russia dropped by roughly 50% in 2014 in comparison to the boom year of 2013.

International sanctions compounded the damage from the drop in oil prices. Beginning in March 2014, the US and the EU imposed several types of measures to try and compel Kremlin decision-makers to renounce the annexation of Crimea and enforce a settlement for the conflict in Ukraine. Foreign asset freezes and travel bans were imposed on individuals regarded as responsible for Russia’s policy towards Ukraine. Western governments severely restricted commercial opportunities available to politically connected Russian companies. These sectoral sanctions prevented key firms operating in the financial, energy, and defense sectors from taking on new long-term debt, as well as importing dualuse technology. Partnerships between oil companies were among the first to be put on hold. Western multinationals quickly withdrew from providing technology and services to Rosneft and Gazprom Neft, who were forced to hunt for substitutes, domestic or otherwise, to continue exploiting their reserves.1

The sanctions also caused a regulatory nightmare. From 2014–2016, Russian companies were regularly being added to the sanctions list and the language of the rules tightened, actions that could jeopardize preexisting loans and investments and reduced the appeal of entering into new ones. Although more and more parties included “sanctions clauses” in their business contracts, multinationals that didn’t know the ultimate beneficiaries of their Russian business partners, a difficult task for due diligence, were especially at risk. Sanctions increased the costs for a variety of multinationals operating in Russia, especially financial services firms, who were forced to devote more resources to ensuring compliance.

Russia’s own retaliatory measures further complicated the situation for investors. In August 2014, the Russian government imposed its own countersanctions, banning dairy, meat, and produce imports from the EU, the US, Canada, Australia and Norway. Longstanding trading relationships within the agricultural sector collapsed. In the midst of all of this tension, a row with Turkey over a downed fighter jet temporarily exacerbated economic relations with another important economic partner. By the end of 2015, FDI into Russia had plunged another 92% year-on-year, totaling just under $10 billion.

Turning the Tide

However, things would not stay at rock bottom for long. Russia’s Central Bank has appeared to have turned the corner on runaway inflation, and moved to taking over bad banks and cleaning up the financial sector. By the end of 2016, industrial production had exceeded expectations, and state officials are predicting small but positive GDP growth for 2017, a surprise to many analysts who had feared much worse.

Foreign investment has not been far behind. Official data from the Russian State Statistics agency confirms this renewed interest among multinationals in Russia. While total net FDI inflows were just $6.5 billion in 2015, just through the first three quarters of 2016, that number had increased to $11.1 billion. FDI stock in Russia surpassed $320 billion through the third quarter of 2016. A good portion of that upswing is due to “round-trip” investment from offshore sites such as Cyprus, Bermuda, and the British Virgin Islands, but companies solely based in major world economies also have jumped back in.

Figure 1 and Table 1 respectively plot foreign direct investment in-flows over the past four years for Russia’s six main partners (which are not offshore financial centers). Note that final data on 2016 is not yet available so statistics for that year reflect the total for the first three quarters. The overall picture is complex. German companies pushed ahead in 2015 despite the uncertain economic climate, but appeared to take their foot off the gas in 2016, ceding ground to U.S. companies. Both French and Chinese have maintained strong growth in their investment positions since the sanctions were introduced, though in the latter case, perhaps not at the levels many Russian officials had hoped for. China appears reluctant to jump headfirst into the Russian market, preferring instead to snap up key infrastructure and energy-related assets that help to extend its influence across Eurasia. Much more work remains for Russia to completely pivot to the East.

Figure 1: Foreign Direct Investment Inflows, Russia’s Six Main Partners (mln. USD, 2013–2016*)

* 2016: January – September

Table 1: Foreign Direct Investment Inflows, Russia’s Six Main Partners (mln. USD, 2013–2016*)

* 2016: January – September

Where specifically has investment continued to flow? First, long-term efforts to privilege locally produced goods have affected strategic decision-making by foreign firm managers. Culminating in the countersanctions on agricultural products, the Russian government for several years has embarked on an ambitious experiment to institute import substitution. Various incentives have been introduced both to spur domestic production of key goods and services, as well as to entice foreign firms to set up production facilities on Russian territory. In response, several multinationals have opted to localize their production facilities to avoid significant disadvantages in reaching consumers. Companies that have dragged their feet in complying with some new localization policies, such as LinkedIn, have even faced outright bans on operating in Russia.

The pharmaceuticals industry has been one of the few bright spots for investment under sanctions. Since the 2008 financial crisis, domestic drug producers have enjoyed substantial preferences under Russian state procurement, through which the bulk of medicines purchased are done.In late 2014, US-based Abbott Laboratories purchased Veropharm, a leading Russian manufacturer of generic drugs, for $306 million; the acquisition also included a newly completed factory. Indian giant Sun Pharma acquired an 85% share of Biosintez which operates a highly capable manufacturing facility in Penza.3

Progress attracting new localization by multinationals in the food industry has been somewhat slower. Large investments have been promised by Vietnamese and Thai companies into milk and dairy facilities, two key products falling under the counter-sanctions. Such new concerns hope to take advantage of the renewed emphasis on Russian food exports. Similarly, government officials are courting Italian dairy manufacturers hurt by the embargo, but still eager to compete with the vastly inferior domestic cheese substitutes popping up on the market. But given the rush of Russian-led investment into agricultural land, competition will be especially fierce. Concurrent with the food embargo in August 2014, Russia took steps to prevent foreigners from investing in agricultural land, either through their own subsidiaries or majority stakes in domestic companies.

The relatively slow trickle of money into the agriculture sector is evident in Figure 2 and Table 2 respectively, which depict net FDI inflows into Russia by sector. As before, the figures for 2016 reflect only the first quarters of the year. The communications and construction sectors have also suffered under the latest crisis, as state funds have been cut back and large scale projects such as the Sochi Olympics completed. Late in 2016, news broke that IKEA, Leroy Merlin SA, and other high-profile retailers were ramping up investment to take advantage of improving consumer sentiment.4 That would reverse a trend of rapidly dropping FDI in that sector witnessed over the last several years.

Figure 2: Net FDI Inflows into Russia by Sector (mln. USD, 2013–2016*)

* 2016: January – September

Table 2: Net FDI Inflows into Russia by Sector (mln. USD, 2013–2016*)

* 2016: January – September

Russian mining and manufacturing are enjoying increased attention from foreign majors over the last two years. Royal Dutch/Shell and Rosneft have begun work, finalizing a $10 billion LNG project on the Baltic Sea, while BP has created its own joint venture Ermak Neftegaz, also with Rosneft, to explore oil reserves in Siberia. The decision to sell stakes in oil reserves held by Rosneft subsidiary Vankorneft to Indian firms also marked a concerted shift towards opening strategic assets to new types of investors.5 Finally, German companies have led the way in opening new manufacturing plants, particularly automakers such as Volkswagen and Mercedes-Benz, who have eyed Russia as an attractive place to produce cars for further export.

Another government-sponsored initiative to spur foreign investment, the much-heralded Russian Direct Investment Fund (RDIF), has had a rocky ride. Started in 2011 with backing from the Russian government, RDIF was designed to channel (and match) foreign investment to deserving projects that weren’t clouded by political connections or influence. The fund quickly brought on board top Western executives and went on the offensive in raising funds from both the private sector and sovereign wealth funds worldwide. But questions arose about how distant RDIF truly was from the government. Loans were being granted to companies with direct ties to President Putin, and some saw the body as operating as little more than a subsidiary of the controversial Russian state development bank Vnesheconombank (which in actuality it was). The U.S. government soon agreed and added RDIF to its sanctions list. Western investors consequently backed away.

Despite this setback, the RDIF has still managed to raise considerable funds from countries in Asia and the Middle East. Its list of partnerships is impressive, totaling over $25 billion of foreign capital. In July 2015, Saudi Arabia committed to investing $10 billion over the next five years in Russia, making it the fund’s largest country partner and surpassing China. Furthermore, Kuwait, Japan and India have announced commitments of $500 million in investment that would be matched by RDIF. It is too early to assess how well these partnerships have borne fruit, but the injection of this small but growing volume of foreign capital is a first step to reducing reliance on the EU and US.

Foreign companies also have not shied away from debt instruments as an avenue into the Russia market. In many respects, Russia was the first internationally sanctioned country that had been an active participant in international debt markets. Once the picture became clearer on how the economy would weather the multiple storms it faced, many investors were eager to pick back up where they left off wherever possible. Data from Bloomberg indicates that the syndicated loan market is heating up with significant offerings made to Russian majors. Companies such as Norilsk Nickel and Gazprom both helped restart the Russian Eurobond market in 2015,6while the latter also secured a $2 billion loan from the Bank of China in early 2016. Even sanctioned firms such as Rosneft have gotten into the action by devising pre-payment plans to get around restrictions that no credit be extended beyond 30 days.7 Loan levels are still far off from the pre-sanctions period, but foreign investors appear to be gradually dropping their guard when it comes to lending to Russian firms.

Future Prospects

Investors have not soured on long-term growth prospects for Russia, in part because the boom times of the mid-2000s weren’t enough to satiate built-up Russian consumer demand. Above-average returns are hard to come by globally, and many investors are acclimating themselves to working in situations with heightened political risk such as Russia. Russian labor costs are also now relatively inexpensive given the prolonged drop in the value of the ruble. Geographic proximity to a number of critical markets with large growth upsides makes Russia an especially attractive place to build export-oriented production facilities. Large-scale investments made now will take years to come to fruition, and foreign firms may be hoping to time their completion with liberalization of the economy under a possible fourth presidential term for Putin.

Overall enthusiasm for jumping back into Russia though is still measured. The majority of foreign investors shy away from market volatility. Severe fluctuations in the ruble exchange rate, which is still closely tied to oil prices, can disrupt even investors’ best laid plans. Moreover, optimism over a grand reconciliation between Russia and the US under Trump has waned, as evidenced by the Russian stock market MICEX now having returned to November 2016 levels after a prolonged rally. Russia requires intensive foreign investment to upgrade technology and capital stock, improve productivity, and jumpstart economic growth. Although the Russian government has continuously made overtures and designed specific policies for foreign firms, only widespread institutional reform can reduce the risk involved with investing.


1 Pami Aalto and Tuomas Forsberg. 2015. “The Structuration of Russia’s Geo-economy under Economic Sanctions” Asia Europe Journal. 14 (2): 221–237

2 Tess Stynes. “Abbott to Acquire Russian Drug Maker Veropharm” Wall Street Journal. June 23, 2014. <https://www.wsj.com/articles/

3 ET Bureau. “Sun Pharma to Acquire 85 per cent Stake in Russia’s Biosintez” The Economic Times.November 24, 2016. <http://economictimes.indiatimes.com/industry/healthcare/biotech/pharmaceuticals/60-million-deal-sun-pharma-toacquire-russian-company-jsc-biosintez/articleshow/55576458.cms>

4 Ilya Khrennikov. Big Western Companies Are Pumping Cash Into Russia. Bloomberg. November 22, 2016. <https://www.bloomberg.com/news/articles/2016-11-23/bouncing-backputin-s-shrunken-economy-lures-foreign-investors>

5 Nicholas Trickett. “Russia Strengthens Energy Ties With India” Global Risk Insights. October 28, 2016. <http://oilprice.com/Energy/Energy-General/Russia-Strengthens-Energy-Ties-With-India.html>

6 Lyubov Pronina. “Gazprom Follows Norilsk Nickel With Russia’s Second Eurobond.” Bloomberg. October 8, 2015. <https://www.bloomberg.com/news/articles/2015-10-08/gazprom-follows-norilsk-nickel-with-russia-s-second-eurobond>

7 Neil Hume and David Sheppard. “Trafigura Becomes Major Exporter of Russian Oil”. Financial Times. May 27, 2015. <https://www.ft.com/content/93a4a466-048b-11e5-95ad-00144feabdc0>

About the Author

David Szakonyi is Assistant Professor of Political Science at the George Washington University

July 23, 2017

Pakistan China's new colony? Leaked papers reveal Beijing's stake in economy, key projects

India Today

Leaked documents reveal China's plans to gain a controlling stake in large swathes of Pakistan's economy, from farms and textiles to power projects, even the stock exchange.

By Ananth Krishnan in Beijing |

 July 20, 2017

When Mao Zedong's People's Liberation Army marched into the restive Muslim-majority region on China's western frontier in 1949, the Chairman decided to christen the People's Republic's newest province Xinjiang, literally meaning 'new frontier'- a historical name used intermittently for China's borderlands. Today, for many in Beijing, Pakistan is China's new new frontier. If the 20-year blueprint envisioned by China's leaders and Pakistan's current government comes to fruition, Beijing will soon have a say in how almost every aspect of the Pakistani economy is run.

In the three years since the China Pakistan Economic Corridor (CPEC) project was launched, this transformation has already begun to unfold. A draft CPEC masterplan, conceived of by China's National Development and Reform Commission and Pakistan's ministry of planning and published by Pakistan's Dawn newspaper, and the most sweeping Chinese assessment till date about the project- an internal review undertaken by Beijing's Renmin University and shared with India Today- both underline the enormous scale of the planned economic takeover, from roads and power plants to even agricultural projects.


Today, Chinese companies are building and managing the country's key transport networks, from national highways to Lahore's metro rail. China has bought a stake in Pakistan's stock exchange. It is building Pakistan's power sector, coal plant by coal plant, and will eventually, many experts believe, have a say in how much Pakistani citizens pay their government for electricity.

Ties between China and Pakistan go back to the early 1960s, a relationship forged in their mutual animosity towards India in the wake of their respective wars. Since then, both governments, and particularly militaries, have developed close relations. China has supported Pakistan as a counterweight to India in South Asia, most notably through its continuing support of the country's nuclear programme. China, however, fell out of prominence in the wake of America's 'war on terror' after the September 11, 2001 attacks. This also coincided with Beijing more carefully balancing its growing relations with India after the 1988 normalisation of ties. In the years following 9/11, the US began leaning heavily on Pakistan for its war in Afghanistan, emerging as the biggest financial donor.

That is now no longer the case. China has now replaced the US as Pakistan's biggest benefactor. The launch of CPEC has only further reinforced this position: China's trade with Pakistan has already risen threefold in the past few years, to $13.7 billion in 2015-16, up from just $4 billion in 2007. Today, China accounts for 40 per cent of Pakistan's foreign direct investment, which is only around $2 billion. According to the Pakistani government, it was China's $600 million that contributed to a 38 per cent rise in FDI in 2015-'16.


CPEC will usher in an even more sweeping takeover of the Pakistani economy. A draft masterplan says thousands of acres of Pakistani land will be transferred to Chinese companies to grow crops, build meat processing plants and develop free trade zones. Chinese garment factories will, en masse, be transferred to Pakistan, while China will manage and run tourism projects and special economic zones along the southern coast, with rather ambitious plans for even yacht clubs and hot spring hotels to develop an unlikely tourism hub in the restive Balochistan province, of all places.

"There are fears that Pakistan will become just another province of China, or will be reduced to being a 'vassal state'," S. Akbar Zaidi, a leading Pakistani political economist and professor at Columbia University's School of International and Public Affairs, has argued in a paper.

For Beijing, the stakes are high. The internal assessment by Renmin University's Chongyang Institute for Financial Studies, which sent scholars to visit Pakistan and study CPEC projects late last year, warned of numerous risks, from political infighting in Pakistan to terrorism. The report, however, came to the final conclusion that the only way for China to guarantee success is to assume even more sweeping control.

'Neither China nor Pakistan can afford the consequences of the failure of constructing the corridor,' the Chinese report concluded. 'If the current uncertainty was to continue, it would not only delay the opening of the flagship project but CPEC would end up becoming a burden on China and have a great negative impact,' it said, of President Xi Jinping's pet One Belt, One Road (OBOR) initiative.

The most surprising aspect of the draft masterplan is its revelation of the wide ambit of conceived projects. Previously, CPEC was thought to be limited to power and infrastructure projects in Pakistan. The $46 billion cited estimate of the total initiative envisages $11 billion investment in highways and transport networks, and $35 billion in coal and hydropower plants aimed at tackling Pakistan's energy deficit.

The draft plan, however, reveals that CPEC will eventually be far more sweeping than power plants and roads: it envisages a complete takeover of almost every aspect of the Pakistani economy. Agriculture, surprisingly, is the focus. Around 6,500 acres will be leased to China for agricultural demonstration projects, the masterplan draft says. It lists 17 projects, including a fertiliser plant with an annual 800,000 tonne output. Vegetable and grain processing plants with a 1 million tonne capacity have also been planned.

Power projects that will cut Pakistan's soaring energy deficit are also central to the plan. China has announced 17 projects with a total investment of $35 billion. The first of these, a coal-powered plant at Sahiwal in the Punjab, went online in May. Pakistan suffers an energy deficit of around 7 GW, with a capacity of 22 GW that, however, only produces around 12 GW a year. The total energy from China's projects, once they go online in the next few years, is an estimated 12.1 GW, which China says will end up bridging Pakistan's energy gap and ultimately contribute between 40 and 50 per cent of the country's energy needs. In addition to this, the Chinese are planning to overhaul Pakistan's road and rail infrastructure. Apart from upgrading the Karakoram highway that will serve as a key arterial link connecting Xinjiang and Gwadar, it is already being used to ship goods transported from Xinjiang by road, by sea to West Asia-China is also revamping the country's crumbling national highway and railway network, starting with upgrading sections of the Karachi-Peshawar road and rail line.


Essentially, the 'Xinjiang model' will be adopted in Pakistan. In the 1950s, Mao set up the Xinjiang Production and Construction Corps (XPCC), a state within a state tasked with carrying out agriculture and development projects in what was then China's wild west. The CPEC plan even conceives of a role for the XPCC. 'We will impart advanced planting and breeding techniques to peasant households or farmers by means of land acquisition by the government, renting to China-invested enterprises and building planting and breeding bases,' it says.

'China-invested enterprises will establish factories to produce fertilisers, pesticides, vaccines and feedstuffs' while 'China-invested enterprises will, in the form of joint ventures, shareholding or acquisition, cooperate with local enterprises of Pakistan to build a three-level warehousing system (purchase and storage warehouse, transit warehouse and port warehouse)'. China will even construct a national storage network of warehouses for Pakistan, starting in Islamabad and Gwadar and then in Karachi, Lahore and Peshawar.

The draft also outlines a move to transport China's waning textile industry, currently grappling with rising wages, to Pakistan. As a start, a cotton processing plant with a 100,000 tonne output has been planned. The longer-term plan, Renmin University's assessment suggests, is 'shifting China's garment industries directly to Pakistan'. Beyond the lower wages and availability of land, China sees the favourable export tariffs Pakistan enjoys as a motivation.

'With Pakistan in 2015 acquiring duty-free access to the EU even as China's tariffs increased from 9 to 12 per cent, this is worth considering,' the study advises. China is also planning to develop Pakistan's mineral resources, particularly in Balochistan and Khyber-Pakhtunkhwa, eyeing gold reserves as well as setting up marble and granite processing sites.


Gwadar, a dusty town of less than a hundred thousand people that sits on the Arabian Sea in Balochistan, is the CPEC hub. China has already built a port here that it is managing. Beyond the port, which will give China access to the Indian Ocean, it envisages a free trade zone and manufacturing hub that could serve as a launch pad for exports to West Asia and Africa. China has already secured a 23-year tax-free deal for its companies that will operate out of Gwadar.

The CPEC masterplan rather ambitiously even envisages a coastal tourism belt in restive Balochistan, planning 'international cruise clubs' in Gwadar that would 'provide marine tourists private rooms that would feel as though they were "living in the ocean''.' A coastal tourism zone will feature 'yacht wharfs, cruise homeports, nightlife, city parks, public squares, theatres, golf courses and spas, hot spring hotels and water sports', the Dawn report noted, running all the way to the Iran border.

China sees the Gwadar port as the heart of the plan. The Renmin University study forecasts an ambitious annual cargo throughput of 300-400 million tonnes, more than 10 times Pakistan's current biggest port, Karachi, and, the study pointedly adds, almost equivalent to India's total current throughput. The university's researchers found that Gwadar, still nowhere close to capacity, had been transformed under Chinese management. In February 2013, the China Overseas Port Holdings Limited acquired the rights to operate the port from the Singapore Port Authority, which left the port in a state of ruin, 'filled with rubbish and garbage', until the Chinese took over. Since then, a first shipping route was opened by the Chinese state-run Shipping Ocean Company (COSCO) in May 2015 exporting local seafood to Dubai. In November, the first CPEC export was flagged, as a convoy carrying 60 containers of a range of Chinese goods, from machinery to appliances, to be exported to West Asia and Africa, arrived in Gwadar after travelling 3,000 kilometres from Xinjiang along the Karakoram highway.


China is certainly more than aware that a lot can go wrong with this ambitious economic blueprint in one of the world's most volatile regions. A significant portion of the Renmin University assessment was devoted to assessing risks, the biggest of which, in the Chinese view, is Pakistan's unpredictable domestic political environment. For instance, it cited a project in Sindh that faced a lack of support from the local government. 'The project is ratified by the federal government but the Sindh government believes the centre does not have the authority,' it said. The report also noted the heated controversy between states over the CPEC's alignment, with widespread resentment that Punjab, where Prime Minister Nawaz Sharif and his brother Shahbaz, the chief minister, are dominant figures, was acquiring prime projects.

The Chinese study warned of 'ethnic and provincial conflicts in Punjab, Sindh and Balochistan', but was optimistic that most provinces and parties were supportive as 'except Balochistan no other ethnic group party opposes CPEC'. The report concluded that a government under Nawaz Sharif would ensure the project's progress, expressing concern about his weakening domestic position after the Panama Papers revelations. 'If there are no exceptions, the chances for PML-N (Sharif's party) to reassume power are high, and the continuation of the government can guarantee the continuation and support of the government to CPEC,' the report said.

Security is the other major concern, highlighted by the kidnapping and reported killing of two young Chinese from Quetta, Balochistan, in May. The Chinese study cited a number of other incidents that had targeted its citizens in 2016. In May, a Chinese engineer at the Kazmu project was targeted by a bomb attack claimed by an outfit called the Sindh Revolutionary Force. Two months later, a bomb attack in Quetta killed 74 people, while in November last year, a team from a Chinese oil and natural gas exploration company was targeted in an attack by a group called the Baloch Revolutionary Army in which two Pakistani security personnel killed.

The Pakistan army has deployed a special security division of 15,000 troops to protect Chinese personnel and assets, but the report argued that 'a troop size of 15,000 can hardly guarantee the safety of projects around the country.... And considering that Pakistan needs to deploy a large number of troops in its eastern borders adjoining India and now needs to deploy troops in Afghan border, allocating 15,000 is the largest capacity.' The wider concern was because of security, Chinese staff in Gwadar, for instance, will have to be 'cloistered within the Chinese zone as the situation around the city is not stable'. The Chinese report worried this will alienate the local population because 'Chinese personnel are carrying out work under the protection of armed forces and this inhibits improving relations with local people to the extent that it could lead to opposition and lack of people's support'.


Then there are the financial hazards. China's exposure, so far, is much less than the advertised $46 billion figure, with estimates that in the past three years, its total investments would be in the $5 billion range, spent largely on coal power projects that are being built, the widening of the Karakoram highway and sections of the Karachi-Peshawar expressway.

Chinese assessments suggest the $46 billion figure that Pakistani officials regularly cite may not materialise for a long time yet. The CPEC draft masterplan from China's planning agency noted, as the Dawn reported, that 'Pakistan's economy cannot absorb FDI much above $2 billion per year without giving rise to stresses in its economy....It is recommended that China's maximum annual direct investment in Pakistan should be around $1 billion'-a damning reality check to fanciful figures of $50 billion being invested in the country.

For some in Pakistan, the long-term fear is that this blueprint will, as economist Zaidi notes, render it a 'vassal state' deep in China's economic orbit. After one year of the project, bilateral trade was up 15 per cent to $13.77 billion in 2015-16, while Pakistan's trade deficit with China was a whopping $12 billion. There are already murmurs of discontent about the favourable terms for Chinese companies.

"Estimates range from Pakistan having to pay $3 to $3.5 billion annually back to China for the next 30 years for Chinese loans after 2020, to a probable severe balance of payments crisis," argues Zaidi, noting how in Sri Lanka and Tajikistan, "with rising costs and debts incurred by the host countries, large chunks of land were handed over to the Chinese in lieu of unpaid funds. Sovereign guarantees to Chinese power producers have been made, where the Pakistan government will, 'if the power purchaser defaults on payments, pick up the liability and pay 22 per cent of the bills of Chinese power producers upfront'". As he puts it, "CPEC is a Chinese project, for Chinese interests." And Pakistan, he says, just happens to be part of the geographical terrain.


What does it mean for India? On May 13 this year, India refused to participate in China's Belt and Road with a strongly-worded statement. "No country can accept a project that ignores its core concerns on sovereignty and territorial integrity," MEA spokesperson Gopal Baglay said. OBOR passing through Pakistan-occupied Kashmir is the primary reason New Delhi boycotted the project. For long, India has held the Kashmir issue as a bilateral dispute with Pakistan, with no room for outside intervention. China has now willy-nilly become a party to it. "Since CPEC was announced, Pakistan has stepped up its activities inside Kashmir. Funding to separatist elements has increased," says Jayadeva Ranade, former additional secretary in the Research and Analysis Wing (R&AW). The presence of Chinese personnel within Pakistan is something India must take into account in the event of hostilities, he says.

For instance, China and Pakistan have begun joint patrols in PoK near the Xinjiang border, Chinese media reports have said. Even as China now lambasts India as a "third party" with a "hidden agenda" for "intervening" in its dispute on the Doklam plateau with Bhutan, Beijing has quietly deployed its frontier troops on the soil of PoK, which India considers its territory. In the event of an Indo-Pak conflict, Indian officials do not expect China to intervene directly, but the infrastructure it is laying down in PoK can be used to back Pakistan with massive logistics support.

The larger concern is that collusion between the two countries is now assuming sinister dimensions. Gwadar is likely to become China's second overseas naval base after Djibouti near the Gulf of Aden. The port also sits astride the sea routes from where more than 55 per cent of India's energy needs flow in. China's clandestine backing of Pakistan goes back decades starting from the alleged transfer of nuclear weapon blueprints in the early 1980s. The 2016 sale of eight Yuan class submarines to Pakistan not only attempts to checkmate the Indian navy in its backyard, but adds another nuclear dimension. Pakistan is now working to equip them with nuclear-tipped variants of the Chinese 'Babur' land attack cruise missiles.

Then there is the diplomatic protection China offers Pakistan, which some in Delhi believe is emboldening Islamabad to hurt Indian interests. In the past, Beijing had largely kept away from issues such as the Kashmir dispute. That caution is now giving way to what some see as an open backing of Pakistan. This was evident in Beijing issuing stapled visas to Indian residents of Jammu & Kashmir-which subsequently ended after India stopped defence exchanges-even while it opened the door to Pakistani residents from Gilgit-Baltistan to freely cross the border into Xinjiang to open up trading offices in Kashgar, where ironically India had a consulate and trading presence until 1950.

This renewed China-Pakistan nexus has once again begun to cast a shadow on India's relations with China. In two issues that have recently strained relations-China's blocking of India's attempts to sanction the Pakistani terrorist Masood Azhar at the United Nations Security Council 1267 sanctions committee and India's failed entry to the Nuclear Suppliers Group-the Pakistan factor has loomed large in China's calculus. Beijing in 2016 stymied the bid to sanction Azhar, and once again in January placed another 'technical hold' on a fresh application backed by the US, UK and France. On the NSG, Beijing's officials have openly said that "other non-NPT countries" (those that have not signed the nuclear non-proliferation treaty) besides India also had legitimate aspirations to join the grouping, referring to Pakistan. Chinese nuclear negotiators pointedly visited Islamabad after talks in Delhi to underline how Beijing is linking India and Pakistan, despite the impeccable non-proliferation record of the former and the questionable track record of the latter. As Beijing further deepens its economic and strategic embrace with its 'iron brother', its relations with India are set to undergo a transformative shift. And for Delhi, confronting this renewed China-Pakistan nexus has become perhaps the most pressing diplomatic and military challenge.

(With Sandeep Unnithan

Rashtriya Rifles: The Story Of Independent India’s Finest Military Experiment


Syed Ata Hasnain

- Jul 23, 2017, 12:06 pm



The RR is well known as a specialist organisation created to fight terrorism in Jammu and Kashmir, but how much do people know about India’s finest military experiment since Independence.

Here’s a peep into an organisation, which is barely 25 years in being, yet has risen to become an icon in itself.

For a soldier the heart normally is where he has served with honour and where he has gained great experience. Thus for me, one of the organisations closest to the heart remains the Rashtriya Rifles, commonly referred as the RR. Within the Army, the RR is well known as a specialist organisation created to fight terrorism in Jammu and Kashmir (J&K), but this knowledge is mainly in layman terms. People outside the Army may have just heard of it and brushed it aside as something too detailed to know about the Army. Yet, when an organisation, barely 25 years in being, rises to become an icon in itself, there must be something about it which is worth knowing. This story is all about that organisation to which the Indian people owe much; an organisation about which little is known and much needs to be written.

It may pay dividends in terms of capturing the reader’s mind if I commence this piece with a single statement, which actually says it all. The RR is India’s finest military experiment in 70 years of existence as an Independent nation. I never fail to repeat this wherever I go, ad nauseum.

The Origin

There is nothing official about it, but it is a conjecture that the origins of the RR go back to the days of Operation Pawan, in the perceived botched experiment of India’s first out of area (OOA) operations in Sri Lanka. Four frontline divisions were involved in the OOA insurgent situation in Sri Lanka leaving behind an adversely affected force structure to respond to the ongoing insurgency in the North East and none too stable situation on the western borders. Immediately thereafter the Army was again involved in holding the periphery to boost the confidence of the Punjab Police while the Punjab militancy raged in 1990-91.

With the continuous deployment of the Army in OOA operations and counter insurgency (CI) duties, even as conventional threats loomed large in the form of the unpredictable Pakistan Army exercise Zarb-E-Momin, it became clear that a special force was required to deal with India’s turbulent internal security situation; a credible force which would prevent frequent deployment of the Army’s frontline formations and units on internal security. Raised with the Punjab situation in mind, the changeover to Kashmir and then the Jammu region was quick. Lending credence to this theory that it was never J&K which triggered the idea of RR, is the fact that Headquarters (HQ) 8 Sector RR along with its three units, 18 RR, 32 RR and 33 RR was initially deployed in the North East and moved to its current location in the Lolab Valley only in 1999, at the height of the Kargil crisis.

RR was raised as a specialised CI/Counter Terrorist (CT) Force in 1990 to relieve the regular Army of its CI/CT commitments, so as to ensure its ready availability at all times for its primary task. It was originally planned to constitute RR with personnel on deputation from the Army, along with lateral inductees for permanent absorption and suitable ex-servicemen volunteers. It was however, later decided that the entire manpower would comprise serving personnel on deputation from the regular Army. The RR was thus raised with hundred per cent personnel on deputation from all Arms and Services of the Army.

The Organisation

The first few units which were raised had no regimental orientation or links but someone in authority (and to him we owe much) decided that one of the strengths of the Indian Army, its regimental system, also needed to be infused into this force. Thus came about the unique experiment of basing an RR unit on an Infantry Regiment as the core with another Arm (Armoured Corps, Artillery, Engineers and Air Defence) providing supplementary manpower; the logistics and support elements were provided by the Services.

A look at a typical RR unit’s organisation will explain this little better to a layman. One of the high achieving units, 36 RR, is organised with a little over 50 per cent manpower from The Garhwal Rifles, 30 per cent from the Artillery and rest of the elements coming from Engineers (one Engineer platoon), Signals (a communication platoon), EME (one Field Repair Increment – FRI), ASC (one Mechanical Transport Platoon), Ordnance (storemen) and AMC personnel. The total manpower comes to about 1,200 all ranks (against 840 of an Infantry unit) but the capability to have six RR companies is a definite plus.

This affords an ideal six point deployment i.e. occupation of six company operating bases (COBs) with one of the companies being co-located with the battalion HQ. The logistics is kept to the bare minimum with specialists available in each field thus obviating any training of general duties personnel in specialist fields involving logistics. The Engineers complement is a major asset because it can be employed for anti-Improvised Explosive Device (IED) role, bomb disposal, demolition tasks in CT operations and very importantly for electrification, construction of habitat and maintenance tasks. Similar is the case with Signals.

In many ways an RR represents a battalion group which can be reorganised for tailor made tasks because of the inherent flexibility. It can latch on to any logistics node or specialist logistics establishment for its logistics needs and is completely self-contained in transport.

Two other aspects need to be known. First, that RR budget is additional to Army budget under a separate head. The budget operates on Payment Book Debit System. All financial rules as applicable to the regular Army are also applicable to the RR budget. Second, the manpower is supplementary to the authorised manpower of the Army and thus comes under Composite Table II. It means that it requires a special approval of its mandate for a fixed period after which the mandate has to be approved again and that too at the highest level. This has sometimes caused problems in functioning as such approvals are known to get delayed with resultant effects on the budget.

The initial organisational concept was based upon two to three RR units functioning under a Sector HQ (equivalent to a Brigade HQ). This was supplemented in 1994 with the raising of the two HQ Counter Insurgency Forces (CIF); Victor for the Kashmir Valley and Delta for Doda in Jammu region. The CI/CT grid came under the two Force HQ which too were lean and mean, devoid of all the add on supporting units associated with a division HQ. In fact, the first ‘light division’ concept in India had thus taken birth. With the expanding arc of militancy through the nineties, it was not possible to execute the CI/CT role over the large swathe of areas North and South of the Pir Panjal with these two Forces alone. The 8 Mountain Division (from North East) became a permanent asset in the Kashmir Valley (before its move to Kargil) with the Rajouri based division and another reserve Infantry Division doing service in Jammu region.

The void created by move of 8 Mountain Division to Kargil and the increasing pressure of counter infiltration and LoC management in the Jammu region forced the raising of the additional Force HQ for the Valley and south of Pir Panjal. Kilo, Uniform and Romeo Force HQ thus came into existence. That is where it rests today with the strength of units going up from 36 in 1999 to 63 by 2003. There are 15 Sector HQ to control these, along with the five Force HQ. The Directorate General of Rashtriya Rifles (DGRR), located as part of the Integrated HQ of the MoD (Army) at Delhi, controls the non-operational part of the management of the Force.

The Ethos And Mode Of Functioning

Keeping the North East model as the backdrop, interoperability between the RR and the regular Army was ensured. Thus RR units form part of regular Infantry formations just as an RR Sector HQ can have regular Infantry units placed under it.

The CO is mostly an Infantryman from the same regiment as the Infantry troops. While an officer may have his core competence based on his Arm or Service, no one denies him an operational role in the command of troops. This gives huge fillip to the self-esteem of officers who proudly wear the RR badge, shoulder titles and lanyard, temporarily casting aside their original embellishments. The Military Secretary’s branch has done its bit by ensuring that service in RR (usually 30 months) fetches the qualitative requirements (QRs) for consideration for foreign postings and career courses of instruction. While many an old timer from the Infantry may consider CI/CT operations as a purely Infantry domain based upon core competence of Infantry officers, the RR experience has proved beyond doubt that ultimately it is an officer’s personal involvement, willingness to learn and bond with troops from all Arms and Services and flexibility of the mind which makes him a competent CI/CT leader. I can say with confidence that besides numerous Infantry officers who perform outstandingly, there are an equal number of officers from Armoured Corps, Artillery, Air Defence, Engineers or Signals who perform exceptionally well under the most stressful conditions. Equally, I have found officers from the ASC who go about the operational task most competently. A Regimental Medical Officer (RMO) is a must, considering the fact that casualties are frequent and the rule of Golden Hour applying in most cases, necessitating the presence of an RMO at the site of operations.

The organisational ethos has refined over time with every effort to ensure that each RR unit has a fixed number of Infantry and other Arm units to subscribe the manpower. RR companies are a proportional mix of Infantry and the main Arm which provides the manpower. It should be noted that the Indian Army’s concept of service in an operational area is quite different to that of Western armies where a single tour of duty of its servicemen is no more than six months. Officers and jawans in RR units serve for approximately 30 months during which there is no absence for training, temporary duties etc; the only time an officer or jawan may not be present is during the period of his authorised leave. Every effort is made to ensure that these personnel proceed home on leave at least once in three months. There are no training courses or promotion cadres in the RR, which can keep jawans away from operations. The central government’s decision to provide two free railway warrants to personnel in operational areas has paid dividends in terms of morale. The various chartered flights to Srinagar have also contributed towards this.

A senior DG of a Central Armed Police Force (CAPF) once after spending a day with an RR unit at his request, expressed his perception. In his view it was the regimental system which was the glue which had the right portion to give these units a high. Of course, he had volumes to speak about the professionalism of the RR officers and men, the flexible yet firm control that the Sector and Force HQ ensured over all operational activities, the readiness to learn from mistakes and very importantly the continuity of presence in a given area of deployment where the unit gelled with the local population. He also observed how much importance was being given to intelligence gathering, briefings and debriefings.

A word on continuity. An RR unit turns over almost 50 per cent of its manpower every year, which means 600 men come and 600 go, making it an average of 50 a month. An RR CO may see as many as 2,000 personnel through his command tenure. At any time, there is transition which is on, but the fact that the unit remains static except for minor tactical redeployment contributes to its hold over its area. The terrain is well known, the sources are more loyal, the SOPs are easier to follow and lessons of the past are always applicable to the same ground. Besides a very simple direction is followed; no man can operate unless he undergoes pre induction training at the Corps Battle Schools (CBS) of either 15 or 16 Corps. These are very important institutions where the continuity factor is also ensured. Commonality of understanding the mission, the force ethos and the ramifications of various actions have to be starkly brought to the mind of every man. General Officers and Sector Commanders have to ensure they address their men right there at the CBS. It makes a world of a difference when you have such a focused command.

Operational Aspects

The RR has evolved over a period of time confronting first the hard core cadres of the Ikhwan (later a counter group), Hizbul Mujahideen, JKLF and Harkatul Ansar and then confronting the foreign terrorists who started to enter the Valley in droves. As cadres of the Lashkar e Taiba (LeT), Al Badr and Jaish-e-Mohommad (JeM) started to emerge in greater strength the degree of coordination from across the LoC enhanced exponentially. Operational concepts had to rely on large scale cordon and search operations (CASO) of urban areas bringing the RR into direct contact with the people. There was then little need for intelligence, so intense and dense was the presence of the terrorists. They employed IEDs at will and even confronted the RR troops frontally in encounters in the jungles of Rajwar, Hafruda and Rafiabad. It needed diligence and a degree of risk to move for operations. The terrorist cadres then used simple VHF radio for communications. This moved on to mobile technology before resting on satellite phones (Thuraya). The emergence of the jihadi radical as a modern technical whiz kid (4th Generation Warrior) employing social media and Skype for communication forced the RR to technicalise both with authorised equipment and a lot of jugaad. The RR today reflects the technical savviness of the modern generation. A major challenge that any RR unit faces today is the absolute need to ensure minimum collateral damage during an operation. The kinetic aspect of disproportionate use of force of which CI/CT units are often blamed remains a critical component of execution and operations may be delayed for long only for this need.

The RR has also travelled through the transforming conflict with aplomb. It is now also doing service in counter infiltration in the vicinity of the LoC in various areas and is optimised to be available for conventional role too. Its primary role in conventional conflict remains Rear Area Security. However, it has gone on to train and be ready for confrontation at the LoC itself. The transforming internal conflict scenario has also left many in a quandary about understanding the RR’s role in conflict stabilisation and conflict termination. For a professional, it is important to realise that with derived clarity of the continuously changing role of the RR this one aspect will remain constant. This is the original task; the mainstreaming of the people of J&K with mainstream India. It has never been articulated, but is the intellectually evolved role which should have been spelt out at the outset. Thus, while many may bemoan the fact that today in some areas in Jammu division there are very few terrorists for the RR to eliminate and the romanticised and gung ho role may be over, the more difficult task starts now; the task of continuity of stability. No organisation is better suited for this than the RR. With intimate knowledge of the socio-cultural landscape and sensitivities this Force now needs the right orientation to hold the periphery and assist in the integration effort which must be undertaken by the central and state governments in earnest. Its quasi-military experience of executing the hearts and minds game most innovatively over the years should give confidence to the various stake holders.

Last, the RR has the experience, the organisational capability and the leadership like no other organisation in India. If J&K has to be fully mainstreamed in mind and spirit a long continuation of the RR’s mandate is an absolute must.

(Adapted from the original in South Asia Defence & Strategic Review, by the author who wrote the original piece too)

July 22, 2017

Monsanto sway in Agriculture Ministry


In a major goof-up, GOI fails to submit before Delhi High Court on GMO involving Monsanto

By Sandhya Jain -


July 23, 2017


GOI fails to submit before Delhi High Court on GMO

In a shocking development, officials of the Union Ministry of Agriculture deliberately failed to submit the Government of India’s views on the Indian Patent Act and Protection of Plant Varieties & Farmers’ Rights Act, 2001 (PPV&FR) before the Delhi High Court closed for vacations on June 5, in a case in which the judgement could impact multiple litigations in which the Centre is involved, regarding seed patents and transgenic traits. Any ruling delivered without knowledge of the Centre’s views on points of law and interpretation in this matter could adversely affect the Indian farmer and consumer.

The lapse is inexcusable because the Proposed Affidavit and Written Submission were prepared well in advance by Additional Solicitor General Tushar Mehta, and discussed and finalized with joint secretary R.K. Singh and deputy commissioner D.S. Misra of the Ministry.

The case in question is a dispute between Monsanto Technology & others vs. Nuziveedu Seeds Ltd. & others, and the Delhi High Court has completed hearings in the matter. Hence it was imperative that the Union Government’s views be submitted to the Court in writing, before it closed for vacation on June 5, 2017.

The lapse is inexcusable because the Proposed Affidavit and Written Submission were prepared well in advance by Additional Solicitor General Tushar Mehta, and discussed and finalized with joint secretary R.K. Singh and deputy commissioner D.S. Misra of the Ministry. An Application was sent for affirmation by Shri Sunil Mathews, Advocate. Despite this, the concerned officials made no move to submit the prepared Written Submission, Affidavit, and Application, which action lay within the sole purview of the Ministry as the Government of India cannot be party to a dispute between two private parties.

RSS think tank Swadeshi Jagran Manch called the development a major blow to India’s fight against seed monopolies. In a letter to Prime Minister Narendra Modi on July 21, co-convenor Ashwani Mahajan urged that despite this setback, the Government of India should file the written submissions on questions of law, even if the Division Bench has begun to write the judgment during vacations in the absence of the government’s legal stand, because the judgement has not been delivered so far.

Essentially, the case involves a dispute over royalties of Bt Cotton seeds, between Monsanto Technology & others vs. Nuziveedu Seeds Ltd. & others.

This led to a situation in which every State fixed the cotton seed prices for its own State while Monsanto Technology fixed different ‘trait values’ for different States even as it challenged the said enactments by claiming patent rights.

BT Cotton Seed prices have been a contentious issue in India for over a decade and some State Governments and farmers associations had complained to the then existing MRTP Commission. Some State Governments enacted their own laws to regulate cotton seed prices and the ‘trait value’ to be levied. This led to a situation in which every State fixed the cotton seed prices for its own State while Monsanto Technology fixed different ‘trait values’ for different States even as it challenged the said enactments by claiming patent rights.

Given the adverse effects on Indian farmers, the Government of India intervened in their interest and promulgated the Cotton Seeds Price (Control) Order, 2015 [CSPCO] under the Essential Commodities Act, to fix the price of cotton seeds including ‘trait value’, which would be uniformly applicable across the country, and would also regulate the one sided monopolistic licenses agreements signed with Indian seeds companies, which were hurting Indian farmers economically.

The Union Ministry of Agriculture also filed a reference before the Competition Commission of India [CCI] against Monsanto and its subsidiaries for anti-competitive business practices. The CCI found a strong prima facie case of violation of Section 3 and 4 of the Competition Act and directed an investigation vide order dated 10 February 2016 against Monsanto and its subsidiary companies and the persons involved.

Simultaneously, Monsanto launched a spate of litigations by itself or through subsidiary companies before various forums, challenging the constitutional validity of Cotton Seeds Prices [Control] Order, 2015 in Writ Petition No.12069 of 2015 before the High Court of Delhi. Tushar Mehta and Sunil Mathews, advocate, appeared and filed a detailed reply on behalf of the Government of India.

Mehta came to the conclusion that while the Government of India does not have any locus standi in disputes between two private parties, there are several legal questions raised by both parties…

As the Delhi High Court did not give Monsanto any interim relief in the writ petition filed by its subsidiary company, a petition (Writ Petition No.15173) was filed before the High Court of Karnataka at Bangalore by an Association sponsored by Monsanto. Initially, the company secured an ex parte stay, which was later vacated by the High Court of Karnataka. The Government of India intervened and even the appeal filed by the said Association (Writ Appeal No.1125 and 1126 of 2016) was dismissed.

Monsanto and its subsidiary companies have also filed writ petitions against the investigation ordered by the CCI, which are pending before the Delhi High Court.

Sources said that when the Addl. Solicitor General learnt of the appeal before FAO(OS)(COMM.) No. 86 of 2017 filed by Nuziveedu Seeds & others, he studied the matter to ascertain whether any interpretation of law given by Delhi High Court in these proceedings could impact the legal stand of the Union of India in other pending litigations.

Mehta came to the conclusion that while the Government of India does not have any locus standi in disputes between two private parties, there are several legal questions raised by both parties which rest on an interpretation of the Indian Patent Act and Protection of Plant Varieties & Farmers’ Rights Act, 2001. Hence, any decision arrived at by the High Court on the interpretation of law and especially regarding interpretation of Section 3(j) of the Indian Patent Act (which says seeds and life forms cannot be patented) and the applicability of PPV&FR Act for transgenic plants, will directly impact pending matters in which the Union Government has taken or will have to take a specific stand on legal interpretation of various provisions being considered in FAO(OS)(COMM) No.86 of 2017.

Any view that the Court might take on the question of law on exclusions from Section 3(j) of Indian Patents Act will have nation-wide ramifications on agriculture, farmers and the entire population…

Accordingly, the Written Submission prepared for the Agriculture Ministry clearly stated that the law laid down in FAO(OS)(COMM) No. 86 of 2017 can be extended to other crops like rice, wheat, soybean, groundnut etc. and even animals like chicken, pig, sheep, goat etc., wherever a transgenic trait is introduced. Indeed, that is why it was so important that the Delhi High Court be informed of the Centre’s interpretation of the law.

Any view that the Court might take on the question of law on exclusions from Section 3(j) of Indian Patents Act will have nation-wide ramifications on agriculture, farmers and the entire population as their food security would be impacted by monopolies on seeds and plants. As India has nearly 600 million farmers and agriculture accounts for over 26 per cent of the nation’s capital GDP, the legal issue before the Court cannot and should not be decided without the stand of the Government of India being put on record regarding questions of law (and avoiding the dispute between private parties).

This failure to file submissions is probably the first major act of subversion of governmental objectives by officers of a Union Ministry. It remains to be seen what action the Centre takes against officials who have humiliated it before the High Court and risked the future of lakhs of Indian farmers and consumers. Their moral laxity and culpable negligence is self-evident

Sikkim standoff: Pentagon steps in


“We encourage India and China to engage in direct dialogue aimed at reducing tensions and free of any coercive aspects,” Gary Ross, a defence department spokesman said.Amidst the continuing standoff between Indian and Chinese forces in Doklam region, the Pentagon has expressed concern over the issue and asked both the countries to engage in a direct dialogue free of any “coercive aspects”. The military standoff in Bhutan is still going on even after a month it began. The tensions have escalated after Chinese troops were prohibited by Indian soldiers from building a road in the disputed area. Meanwhile, Indian External Affairs Minister Sushma Swaraj has said in the Parliament, “We are willing to talk, but both sides have to first take back their armies” but China has said that diplomatic channels with India remained “unimpeded” to discuss the military standoff in Sikkim sector and reiterated that the withdrawal of the Indian troops is a “precondition” for any meaningful dialogue. The three-nation Malabar Naval Exercise involving India, Japan and the United States maritime forces, has also reportedly worried China as the exercise is being held in the backdrop of border tension with China. National security advisor Ajit Doval will head to Beijing on July 27-28 for attending a meeting of BRICS later this month. Here are the five things to know what US has said:

1. “We encourage India and China to engage in direct dialogue aimed at reducing tensions and free of any coercive aspects,” Gary Ross, a defence department spokesman told PTI.

2. US state department, over the past week, too have been making similar statements, but this time Pentagon has sought direct dialogue between India and China on reducing tension “free of any coercive aspects.”

3. Interestingly, Pentagon has refused to take sides on the issue. “We refer you (media persons) to the governments of India and China for further information. We encourage India and China to engage in direct dialogue aimed at reducing tensions. We are not going to speculate on such matters,” Ross said.

4. A top Pentagon commander, a week earlier, had told lawmakers that China is exploiting its economic leverage as a way to its regional political objectives. “As China’s military modernisation continues, the United States and its allies and partners will continue to be challenged to balance China’s influence,” General Paul Selva, USAF, has said.

5. Selva added deterring war is an exercise in influencing China’s decision calculus, making diplomacy preferable to conflict and managing crises in such a manner that they do not unintentionally escalate