16 January 2016

India’s intelligence quotient: Is Pathankot a deflection or inflection point?

Jan 14, 2016
President Barack Obama posed four interesting questions in his final 
State of the Union speech on Tuesday. I reproduce three of them, because they could well be posed for Indians as well: How do we give everyone a fair shot at opportunity and security in this new economy? How do we make technology work for us, and not against us, especially when it comes to solving urgent challenges like climate change? And how can we make our politics reflect what’s best in us, and not what’s worst?
These are good questions for Indians in 2016. When we abandon rhetoric and posturing and put our heads together and start to think of what is going to make our economy better, then things start happening.
First, though, we have to get past the windbaggery. There has been a lot of that, especially after the New Year’s terrorist attack on the Pathankot Air Force base.
We have heard of intelligence failures, a poor tactical response, whether or not National Security Adviser Ajit Doval should have sent in the National Security Guard or whether the army ought to have been rushed into the airbase. There was also a premature claim by the authorities that all the terrorists had been ‘neutralised’ the very first day, January 2. As we know, it took three more days before all the terrorists were confirmed killed and the base secured. Even now, it is not clear if there were four attackers, or six. There were many lapses, including the ease with whih the attackers got into the base over an 11-foot fence and then rested a whole night in a disused equipment shed.
But it was not all bad. India lost seven men, and as Defence Minister Manohar Parrikar was at pains to stress, only one of them died in direct combat. It takes a long time to clear up after a terrorist incident – authorities are still piecing together evidence from the November 13, 2015 attacks in Paris. Nine of those attackers are dead but two are still on the run including purported mastermind Salah Abdeslam.

I counted at least 58 terrorist attacks in India so far this century. These are the major ones, the biggest one being the November 26, 2008 attacks in Mumbai that left at least 191 people dead at multiple locations. The question is, how many more attacks would have taken place if our intelligence agencies and the police were not vigilant? Every successful terrorist attack implies a failure of intelligence and security. But how prepared are we for large-scale terror attacks?

Give up past, work together

Jan 14, 2016
This time Pakistan has not reacted as in the past, denying its involvement and blaming India’s home-grown terrorists; nor have we blamed Pakistan... The US has been urging Pakistan to act against terrorists. These are very positive developments.
I recall the 1947 slogan, “Hans ke liya hai Pakistan, ladkar lenge Hindustan”. Within weeks of Partition, Pakistan invaded Kashmir on October 22, 1947. We defeated that invasion and the subsequent ones in 1965 and 1999. The 1971 war was a shattering defeat for Pakistan. They then evolved their strategy of thousand cuts and cross-border terrorism.

The origin and history of Pakistan has been of relentless hostility towards India. Kashmir has been the casus belli.
Pakistan has violated all agreements: Standstill Agreement of 1947, Ceasefire Agreement of 1949, Simla Agreement of 1972, Lahore Declaration of 1999 and Pervez Musharraf’s commitment to stop cross-border terrorism in 2004. Pakistan has been in permanent denial though it has been exposed in books by its own leaders: General Akbar Khan after 1948, Gen. Musa Khan after 1965 and Gen. Pervez Musharraf after 1999.

In 2014, Prime Minister Narendra Modi took the world by surprise by inviting all heads of government of neighbouring countries to his swearing-in ceremony, including Prime Minister Nawaz Sharif. They had a cordial one-to-one meeting and presented a sari to each other’s mother. The foreign secretary-level talks were called off because Pakistan insisted on dialogue with separatist Kashmiri leaders. Much stepped up cross-border terrorist attacks by Pakistan were countered with heavy suppressive fire.

The Army’s changing face and role

Jan 15 2016, Dinesh Kumar
Army Day, today, calls for stocktaking — especially of the internal health of the Indian Army. Even in the 21st century, basics such as bullet-proof vests, night-vision devices and thermal imagers are in short supply.
On January 15, 1949, barely a fortnight after the Indian Army had finished battling a newly created Pakistan for a year and two months over Jammu and Kashmir under the command of a British general, the Indian Army got its first Indian citizen as its Commander-in-Chief (redesignated Chief of Army Staff in 1955) in Field Marshal (then Lieutenant-General) Kodandera Madappa Cariappa. Since then, January 15 is observed as Army Day in post-Independence India. 
After a fiery start immediately after Partition, the 1950s turned out to be a relatively quiet decade for the Army although there was otherwise considerable disquiet on the geopolitical front. China's occupation of Tibet, followed by its aggressive posturing and cartographic aggression of questionably defined Sino-Indian land boundaries, Pakistan's brazen tilt towards the United States and forging of military alliances with that country along with its quiet befriending of China, and, within India, the secessionist movement in Nagaland were some of the causes for serious concern. The fallout from these developments defined the 1960s and the Army’s role. During that decade, the Army got heavily engaged in a series of military operations that included fighting three intensive wars within a span of just nine years. It started with liberating Goa from Portuguese rule in 1961, followed a year later by the Sino-Indian war in 1962 during which India lost territory in Ladakh. Less than three years later, in 1965, the Army was again fighting a war, this time with Pakistan, which first began with a smaller scale skirmish in Gujarat's Rann area and then a full-fledged war along the entire land frontier starting from Jammu and Kashmir. Six years later, in 1971, the Indian and Pakistani armed forces were locked in a fierce war which witnessed the dismemberment of East Pakistan from West Pakistan. 

But since the 1971 war, warfare in the subcontinent has undergone a paradigm shift. Other than the 1999 limited mountain war in the freezing heights of Ladakh's Kargil region, the Indian Army has not fought a conventional war. Neither is a conventional war likely in at least the near future. Indeed, from conventional wars, warfare has moved to various irregular forms such as proxy war, guerrilla warfare and other such forms of low-intensity conflict, and terror attacks. This has required the Army to considerably reorient itself and train differently which has come at a considerable price.

Call Pakistan’s bluff There can’t be business as usual unless it means business

Posted at: Jan 14 2016 5AMG Parthasarathy
Keep dialogue channels open, but the pressure on Pakistan to deliver must stay.
G Parthasarathy
THE attack by Pakistan based terrorists on the strategic Pathankot air base, located barely 35 miles from the International Border with Pakistan, was yet another transgression of India’s sovereignty by an ISI-supported terrorist group. It was akin to the attack on India’s Parliament in December 2001 and the 26/11 terrorist attack in Mumbai. In the days following the attack on our Parliament, the Musharraf dispensation vigorously denied any knowledge of, or involvement in, the attack. Yet, in March 2004, Lt Gen Javed Ashraf Qazi, a former ISI chief and then minister in the Musharraf government, acknowledged in Pakistan’s Parliament: “We must admit that the Jaish-e-Mohammed has been involved in the killings of thousands of innocent Kashmiris, the attack on the Indian Parliament, the murder of (Wall Street Journal journalist) Daniel Pearl and an attempt to assassinate General (Pervez) Musharraf.”

Pakistan’s behaviour was identical, when the Lashkar-e-Taiba attacked Mumbai in November 2008, killing over 160 persons. We once again witnessed the spectacle of blatant and false denials of any Pakistani involvement by the ISI, till the media traced the home of captured terrorist Ajmal Kasab in Pakistan’s Punjab province. India has only itself to blame for the rise of the Jaish-e-Mohammed as a vicious terrorist organisation by releasing its leader, Maulana Masood Azhar, during the IC 814 hijacking in Kandahar. Interestingly, yet another terrorist, Omar Saeed Sheikh, whom India released during the hijacking of IC 814, was associated with the perpetrators of the 9/11 attack on New York and Washington also. Nations, and indeed the world, pay a high price when surrendering to terrorist demands.

Even though a faction of the Jaish-e- Mohammed led by Masood Azhar is now back in favour with the ISI, the Jaish itself was in the ISI doghouse for years because of its association with the Pakistani Taliban, (Tehriq-e- Taliban). The relations of the ISI with the Tehriq-e-Taliban started to sour after Pakistani Special Forces laid siege to and attacked the Lal Masjid in the capital Islamabad, which was then run by Deobandi clerics, affiliated to the Jaish-e-Mohammed. The Jaish claims an ideological/sectarian affinity with the Afghan Taliban, who also label themselves as “Deobandi”. But, in the recent past, the ISI and the Jaish-e-Mohammed appears to have struck a deal, under which they will support each other in backing the Afghan Taliban and cooperate in terrorist attacks in Jammu and Kashmir and elsewhere in India. 

Stop singing this deshbhakti song

Jan 15 2016, Harish Khare
Time to demand professional accountability
This does not qualify as “breaking news”, but no one should be surprised if three months down the line during the West Bengal and Assam assembly election campaigns, some senior BJP functionary — say, Hon'ble Amit Shah-— were to puff up his chest and claim “victory” at Pathankot: “We killed six for six. In Mumbai, during the UPA days, six of them killed 200 of ours.” Even if a claim of this kind is not made in public, this guff has already become the accepted in-house wisdom. Indeed such self-serving delusions constitute the very core of the deshbhakti school of strategic machoism.

For over two decades now, perhaps dating back to the days of the Babri Masjid desecration, a sizeable section of our political leadership has misled and deluded the nation with its claims of being better at dealing with Pakistan. The argument is simple and has meretricious appeal: only a 24-carat deshbhakt can summon the courage and the will to take Pakistan on. In the 1990s, this was LK Advani's leitmotif. His most potent promise was that should a government of deshbhakts come to power, it would have the guts to publish a “White Paper” on the ISI. The country was invited to believe that all that was required to roll back Pakistan’s mischief-making was for a joint secretary in the Home Ministry to compile a “dossier.” Advani and company accused the Congress and, later, the United Front governments of being weak and pusillanimous. The subtext of the accusation was that because of their “vote-bank politics”, the Congress and the other pseudo-secular parties would not act decisively and aggressively against Pakistan. This argument, of course, was blatantly designed to cater to the Hindu vote bank, yet dressed up as a call to our patriotic allegiances and emotions.

As Home Minister in the Vajpayee government for six years, Advani failed to produce the much-dreaded “White Paper” on the ISI. Instead, on these self-advertised deshbakhts' watch, Pakistan's perfidy continued unabated. There was, first, a Kargil; then, a Kandahar and, then again, we had the attack on our Parliament House. Despite all these acts of Pakistani misbehaviour, Prime Minister Vajpayee ended up travelling to Islamabad to sign a joint statement with General Pervez Musharraf. The deshbhakts patted themselves, first on their “coercive diplomacy” after promising an “aar-paar ki ladai” and then on their “statesmanship” in putting, once again, faith in Pakistan's profession of good intent. 

Why Banks Love Lending To You And Me, But Hate Lending To Corporates

Vivek Kaul, Vivek Kaul is the author of the 'Easy Money' trilogy. He tweets @kaul_vivek 
12 Jan, 2016 
Regular readers of this column would know that I regularly refer to the sectoral deployment of credit data usually released by the Reserve Bank of India (RBI) at the end of every month. This data throws up interesting points that help in looking beyond the obvious. On 31 December, 2015, the RBI released the latest set of sectoral deployment of credit data. And as usual, the data throws up some interesting points.

What the banks refer to as retail lending, the RBI calls personal loans. This categorisation includes loans for buying consumer durables, home loans, loans against fixed deposits, shares, bonds, etc., education loans, vehicle loans, credit card outstanding and what everyone else other than RBI refers to as personal loans.

Banks have been extremely gung-ho in giving out retail loans over the last one year. Between November 2014 and November 2015, scheduled commercial banks lent a total of Rs 5,04,213 crore (non-food credit). Of this amount the banks lent, 39.4percent or Rs 1,98,727 crore were retail loans. Hence, retail loans formed closed to two-fifths of the total amount of lending carried out by banks in the last one year.

How was the scene between November 2013 and November 2014? Of the total lending of Rs 5,45,280 crore carried out by banks, around 27.7percent or Rs, 1,50,843 crore was retail lending. Hence, there has been a clear jump in retail lending as a proportion of total lending over the last one year.

The World's Most Generous Nations

by Felix Richter, Statista.com  -- this post authored by Niall McCarthy

India and the United States have the highest number of people who regularly donate to charity with 184 and 164 million respectively, according to the CAF's World Giving Index.

However, when the percentage of a country's population is measured, Myanmar comes first. When interviewed, 92 percent of people in Myanmar said they had donated money to charity during the past month while in Thailand, the figure was 87 percent. One of the main reasons for the extremely high donation rates in both countries is the high proportion of Theravada Buddhists practising Sangha Dana.

This chart shows the percentage of people who donated money to charity in the past month.

Cyber: The War India Never Fought, But Los

Posted: 14/01/2016 
As the year drew to a close, the cybersecurity industry was abuzz with a sensational disclosure whose geopolitical ramifications largely went ignored. With India so typically caught in the seasonal slumber, the global hacker community, which has never seen a dull day, tore into the networking hardware giant Juniper (its components power and protect the core of the Internet in many nations, facilitating the efficient routing of packets across networks).

The $10.5 billion American company coughed up a press release pointing towards the presence of "unauthorized code" within its line of firewalls --security devices deployed on the network boundaries -- which attackers could leverage to gain remote access or decrypt the Virtual Private Network (VPN) connections. VPN is generally used by teleworking employees to log into the internal network of an organisation via an encrypted channel. As sceptical researchers reverse engineered the software patches supplied by the vendor, the bits and bytes unfolded the sordid saga of state-sponsored subversion that had flopped quite terribly.
A recent trove of classified documents uploaded by journalist Glenn Greenwald has a map with pockmarks over India, depicting the many active "implants" of the NSA.
Sifting through the fog of plausible deniability under which the National Security Agency (NSA) operates, it is almost certain that the devices were backdoored at its behest. Ridiculous as it may sound, a theoretically unbreakable encryption algorithm was made weak by seeding it with known mathematical values, thus making the output predictable. The NSA must have arm-twisted Juniper.

However, this twist will go into the annals of cyberwar, as another actor lured the monster into its den when the backdoor was first detected and then covertly altered by a third-party. It modified the very seed number, like changing the combination key to an existing lock. To put it colloquially, the hacker got hacked. There's a reason why Juniper made the issue public in the first place. As the Federal Bureau of Investigation butts in, it is most likely at the "third party" was a rival country that trumped the US.

China’s economy The yuan and the markets

Strains on the currency suggest that something is very wrong with China’s politicsJan 16th 2016 | 
“WHAT if we could just be China for a day?” mused Thomas Friedman, an American columnist, in 2010. “…We could actually, you know, authorise the right solutions.” Five years on, few are so ready to sing the praises of China’s technocrats. Global markets have fallen by 7.1% since January 1st, their worst start to the year since at least 1970. A large part of the problem is China’s management of its economy.

For well over a decade, China has been the engine of global growth. But the blistering pace of economic expansion has slowed. The stockmarket has been in turmoil, again. Although share prices in China matter little to the real economy, seesawing stocks feed fears among investors that the Communist Party does not have the wisdom to manage the move from Mao to market. The rest of the world looks at the debts and growing labour unrest inside China (see article), and it shudders. Nowhere are those worries more apparent—or more consequential—than in the handling of its currency, the yuan.
Faulty forex

China’s economy is not on the verge of collapse. Next week the government will announce last year’s rate of economic growth. It is likely to be close to 7%. That figure may be an overestimate, but it is not entirely divorced from reality. Nevertheless, demand is slowing, inflation is uncomfortably low and debts are rising. The bullish case for China depends partly upon the belief that the government can always lean against the slowdown by stimulating consumption and investment with looser monetary policy—just as in any normal economy.

Yet China is not normal. It is caught in a dangerous no-man’s-land between the market and state control. And the yuan is the prime example of what a perilous place this is. After a series of mini-steps towards liberalisation, China has a semi-fixed currency and semi-porous capital controls. Partly because a stronger dollar has been dragging up the yuan, the People’s Bank of China (PBOC) has tried to abandon its loose peg against the greenback since August; but it is still targeting a basket of currencies. A gradual loosening of capital controls means savers have plenty of ways to get their money out.
A weakening economy, a quasi-fixed exchange rate and more porous capital controls are a volatile combination. Looser monetary policy would boost demand. But it would also weaken the currency; and that prospect is already prompting savers to shovel their money offshore.

China Is On A Collision Course with ISIS

Bejing’s ambitious plan to build links to central Asia and Europe will demand a better counter-terrorism policy.  
In November, when the Islamic State group executed Chinese hostage Fan Jinghui, a Chinese advertising consultant and self-identified “wanderer,” Chinese netizens quickly vented their frustration over the government’s limited response. One Weibo user wrote, “It’s time for China as a big power to stand up and act.” Although Chinese censors temporarily blocked keywords such as “hostage” and “IS,” the burst of online sentiment raised questions about how the Chinese government would react to the mounting threat posed by terrorism both abroad and within its borders. In particular, would the specter of the Islamic State lead China to change its regional security strategy as it expands its trade and investment presence under its “One Belt, One Road” initiative?

China’s “One Belt, One Road” (OBOR) policy is an ambitious effort to link the country through infrastructure, telecommunications, and finance to Central Asia, the Middle East, Africa, and Europe. Over the next ten years, Beijing aspires to achieve 2.5 trillion dollars in annual trade with the nations involved in OBOR. Chinese policy analysts are well aware of the security concerns posed by the project. Tsinghua University professor Zhao Kejin has noted, “As China becomes more involved in economic globalization and closely integrated with the world – especially with the ‘Road and Belt’ initiative and its underlying projects –ISIS is not an issue the country can get around.”
China has long claimed that it faces an externally supported terrorist threat inside its borders, particularly in the predominantly Muslim autonomous region of Xinjiang. With approximately 70 percent of the trade between China and Central Asia passing through Xinjiang, its stability is vital to the success of the Silk Road Economic Belt. Yet the region has been the site of significant ethnic violence. After the Paris attacks, leaders cited a September attack on a mine in northwest Xinjiang that killed fifty people as evidence of China’s domestic terrorist threat and Chinese foreign minister Wang Yi stated, “China is also a victim of terrorism.” However, a debate persists between foreign observers and Chinese officials over the sources of regional unrest and what constitutes terrorism.

These domestic concerns over violence and instability have led Beijing to collaborate closely with its Central Asian neighbors on antiterrorism efforts since the 1990s. Historically, this collaboration has occurred through the Shanghai Cooperation Organization (SCO), whose members already exchange information and practices through the Regional Anti-Terrorist Structure. Since 2002, China has also participated in fifteen military exercises and drills with the SCO and according to one report, “all but one of these exercises have focused explicitly on counterterrorism.” While these are not highly complex drills, they nonetheless help Chinese troops prepare to operate in foreign contexts and improve battlefield capacities, essential skills were China to adopt a more active military presence abroad. At an SCO meeting in mid-December, Chinese premier Li Keqiang advocated that the group collaborate even more closely in addressing the threat posed by the Islamic State. Separate from their SCO activities, China and Kazakhstan also made defense pledges in October that could help the two nations cooperate to fight terrorism, including through Chinese training of Kazakh special forces.
China’s rise as a regional and global power means more targets for terrorists and rising concern over the intentions surrounding large economic projects.

* Exporting the Chinese Model

Francis Fukuyama is a senior fellow at Stanford University and Director of the Center on Democracy, Development and the Rule of Law. His most recent book is Political Order and Political Decay.JAN 12, 2016 14
2016 begins, an historic contest is underway over competing development models – that is, strategies to promote economic growth – between China, on the one hand, and the US and other Western countries on the other. Although this contest has been largely hidden from public view, the outcome will determine the fate of much of Eurasia for decades to come.
Most Westerners are aware that growth has slowed substantially in China, from over 10% per year in recent decades to below 7% today (and possibly lower). The country’s leaders have not been sitting still in response, seeking to accelerate the shift from an export-oriented, environmentally damaging growth model based on heavy manufacturing to one based on domestic consumption and services.

But there is a large external dimension to China’s plans as well. In 2013, President Xi Jinping announced a massive initiative called “One Belt, One Road,” which would transform the economic core of Eurasia. The One Belt component consists of rail links from western China through Central Asia and thence to Europe, the Middle East, and South Asia. The strangely named One Road component consists of ports and facilities to increase seaborne traffic from East Asia and connect these countries to the One Belt, giving them a way to move their goods overland, rather than across two oceans, as they currently do.
The China-led Asian Infrastructure Investment Bank (AIIB), which the US earlier this year refused to join, is designed, in part, to finance One Belt, One Road. But the project’s investment requirements will dwarf the resources of the proposed new institution.

Indeed, One Belt, One Road represents a striking departure in Chinese policy. For the first time, China is seeking to export its development model to other countries. Chinese companies, of course, have been hugely active throughout Latin America and Sub-Saharan Africa in the past decade, investing in commodities and extractive industries and the infrastructure needed to move them to China. But One Belt, One Road is different: its purpose is to develop industrial capacity and consumer demand in countries outside of China. Rather than extracting raw materials, China is seeking to shift its heavy industry to less developed countries, making them richer and encouraging demand for Chinese products.

The Middle East’s sectarian divide on views of Saudi Arabia, Iran

JANUARY 7, 2016

The recent execution of Shia leader Nimr al-Nimr, along with dozens of other prisoners, by the Saudi Arabian government has sparked a furor in the Middle East. The storming of the Saudi Embassy amid protests in Iran, a predominantly Shia Muslim nation with long-standing animosity toward predominantly Sunni Saudi Arabia, has led to the cutting of diplomatic tiesbetween the two powers. Saudi allies in the region, such as Bahrain, have followed suit.

The tensions between Saudi Arabia and Iran are often characterized as sectarian – that is, Iran and its Shia allies versus Saudi Arabia and its Sunni brethren. And this characterization plays out to a large degree in public attitudes toward the two countries in five Middle Eastern nations Pew Research Center surveyed in spring 2015. In Jordan, a predominantly Sunni Muslim nation, 78% of the public have a favorable view of Saudi Arabia, compared with only 8% who have a positive opinion of Iran.

In the Palestinian territories, where again Sunnis predominate, about half (51%) have a favorable view of Saudi Arabia. Here, there is a split by location. Among Palestinians living in the Gaza Strip, 60% have a positive opinion of Saudi Arabia, compared with 46% among West Bank residents. Meanwhile, only 34% in the Palestinian territories express a positive opinion of Iran, with more support coming from the West Bank (40%) than from Gaza (24%).

Overall, 48% in Lebanon have a favorable view of Saudi Arabia versus 41% who like Iran. However, as is usually the case in Lebanon, opinion is divided among three main religious groups in the country: Christians, Sunni Muslims and Shia Muslims. An overwhelming number of Sunni Lebanese have a favorable view of Saudi Arabia (82%), while Iran’s favorability among Sunnis sits at 5%. An even greater divide exists among the Lebanese Shia population, with 95% saying they like Iran, while only 3% say the same about Saudi Arabia. Christians in Lebanon tend to have more favorable views of Saudi Arabia (54%) than Iran (29%).

In two other Middle Eastern nations surveyed, there is little support for either Saudi Arabia or Iran. In Turkey, around two-in-ten have favorable views of each power, although it’s worth noting that people in Turkey tend to have low ratings for many nations. And in Israel, even fewer like Riyadh (14%) or Tehran (5%). In Israel, the Arab population is about as positive toward Saudi Arabia (37% favorable) as it is Iran (34%), despite the fact that the Israeli Muslim population is predominantly Sunni. Jews in Israel, however, have little regard for Saudi Arabia (10% favorable) or for Iran – for which there is 0% favorability among Israeli Jews.
Note: See here for topline results on views of Saudi Arabia and methodology.

How American client states sponsor terrorism in West Asia NATO sides with Turkey and bombs Syria because Erdogan-owned BMZ helps the US sell stolen Iraqi oi

13-01-2016, KAMAL MITRA CHENOY @kamaichenoy
Now in bits and pieces, the real story of ISIS and the NATO policies is coming out. It is clear that the NATO attack on President Bashar al Assad had more to do with reordering the power structure, than being driven by getting a democratic regime. Syria has been providing arms and funds to Hezbollah.
In the Israel-Lebanon war some years ago, Israel suffered its first defeat since its inception. But if the Assad regime fell, Hezbollah would be critically weakened. The "regime change" - from Afghanistan to Iraq, Libya and Somalia - was to create pro-US governments.

Democracy in US allies has never been an issue. Saudi Arabia, Qatar, the Arab emirates are not remotely democratic or secular. Many of them fund ISIS, al Nusra, al Qaeda, among other terrorist outfits.
The real aim of the current war in West Asia is to establish and strengthen client states.
Corruption and collaboration as in Turkey, a NATO member, shows how fraudulent the "war against terror" is. Turkish President Recep Erdogan's son Bilal Erdogan owns several maritime companies. He has allegedly signed contracts with European operating companies to carry Iraqi stolen oil to different Asian countries. The Turkish government buys oil from the seized Iraqi oil wells.

Bilal Erdogan's maritime companies own special wharfs in Beirut and Ceyhan ports that illegally ferry ISIS-smuggled crude oil on Japan-bound oil tankers. The BMZ shipping company is a family-run business.
According to Gursel Tekin, vice president of the Turkish Republican People's Party, "President Erdogan's close relatives hold shares in BMZ and they misused public funds and took illicit loans from Turkish banks". Tekin goes on to allege that "Bilal Erdogan is up to his neck in complicity with terrorism, but as long as his father holds office he will be immune from any judicial prosecution".

The Fault Lines at Europe's Core

As we move well into 2016, let's take a quick look back to a column I wrote in December 2015, describing the experience of rolling through an anonymous border crossing in the integrated core of the European Union:
"From one hub to the other in the Benelux nations (Belgium, the Netherlands, and Luxembourg) and Germany -- Frankfurt, Utrecht, Antwerp, and away -- the idea of a real border, one where passports are checked and luggage inspected, seems absurd. This, the economic heartland of Europe, is a rare space on the continent, bereft of physical obstruction, traversed by rivers deep and navigable, and now crisscrossed by the most developed and interconnected of rail networks. A fully operational border reinstated there, say as an artifact of a broader breakdown in the Schengen system of open European borders, would show the blatant futility of small-scale national sovereignty reasserted in an age where going bigger is the only way to answer the questions posed by geopolitics."

Transition one month forward, and moving from a featureless Lowlands landscape to an iconic bridge in Scandinavia, one headline in early January showed how quickly the seemingly absurd can become an uncomfortable reality.The Economist:
"It is easy to find a Swede in central Copenhagen nowadays. About 9,000 Swedish workers commute every day to jobs in the bustling Danish capital, crossing the narrow strait that separates the two countries. Since the opening of the 8km (5-mile) Oresund Bridge in 2000, indeed, their cross-border journey to work has been quicker than the daily commute of many workers in London or New York. But that is changing.
"The new Swedish border checks, Madeleine and Sandra say, will add 30 minutes each way to their commutes. ‘It takes one hour door-to-door, and that's about the limit for me,' says Madeleine. Sandra nods in agreement. ‘I might have to look for work in Sweden instead,' she says."

Swedish border checks on the Oresund Bridge are a powerful symbol of how much has changed in a year. The measures are the first of their kind seen among Nordic countries in 60 years. If at the beginning of 2015, the European Union was muddling through chronic crises localized at its periphery, the beginning of 2016 sees the Union's very core challenged to hold together. The dynamics of local and national politics, ever less self-contained, are forcing frustrated supranational responses. Conflict exists at every level.
The question then is whether Europe is approaching a point of no return. To take a look at the core crisis, let's turn an eye to three countries at Europe's geographical center: Germany, Poland, and the Netherlands.

Oil Prices: What’s Behind the Drop? Simple Economics

The oil industry, with its history of booms and busts, is in its deepest downturn since the 1990s, if not earlier.
Earnings are down for companies that have made record profits in recent years, leading them to decommission roughly two-thirds of their rigs and sharply cut investments in exploration and production. An estimated250,000 oil workers have lost their jobs, and manufacturing of drilling and production equipment has fallen sharply. 
The cause is the plunging price of a barrel of oil, which has been cut roughly by more than 60 percent since the June 2014.
Prices have recovered a few times last year, but a barrel of oil has already sunk this year to its lowest level since 2004. Executives think it will be years before oil returns to $90 or $100 a barrel, pretty much the norm over the last decade.
What is the current price of oil?
Brent crude, the main international benchmark, was trading at around $30a barrel on Friday.
The American benchmark was at around $30 a barrel.
Why has the price of oil been dropping so fast? Why now?

This a complicated question, but it boils down to the simple economics of supply and demand.
United States domestic production has nearly doubled over the last several years, pushing out oil imports that need to find another home. Saudi, Nigerian and Algerian oil that once was sold in the United States is suddenly competing for Asian markets, and the producers are forced to drop prices. Canadian and Iraqi oil production and exports are rising year after year. Even the Russians, with all their economic problems, manage to keep pumping.
There are signs, however, that production is falling in the United States and some other oil-producing countries because of the drop in exploration investments. But the drop in production is not happening fast enough, especially with output from deep waters off the Gulf of Mexico and Canada continuing to build as new projects come online.
On the demand side, the economies of Europe and developing countries are weak and vehicles are becoming more energy-efficient. So demand for fuel is lagging a bit. 

Who benefits from the price drop?

As U.S. Modernizes Nuclear Weapons, ‘Smaller’ Leaves Some Uneasy


A jet fighter drops a mock B61 model 12 bomb that zeroes in on the target zone, as part of a $10 billion United States government program that seeks to build a smart atom bomb of great precision. By SANDIA NATIONAL LABORATORIES on Publish Date January 11, 2016.
As North Korea dug tunnels at its nuclear test site last fall, watched by American spy satellites, the Obama administration was preparing a test of its own in the Nevada desert.

A fighter jet took off with a mock version of the nation’s first precision-guided atom bomb. Adapted from an older weapon, it was designed with problems like North Korea in mind: Its computer brain and four maneuverable fins let it zero in on deeply buried targets like testing tunnels and weapon sites. And its yield, the bomb’s explosive force, can be dialed up or down depending on the target, to minimize collateral damage.

In short, while the North Koreans have been thinking big — claiming to have built a hydrogen bomb, a boast that experts dismiss as wildly exaggerated — the Energy Department and the Pentagon have been readying a line of weapons that head in the opposite direction.

The build-it-smaller approach has set off a philosophical clash among those in Washington who think about the unthinkable.
Mr. Obama has long advocated a “nuclear-free world.” His lieutenants argue that modernizing existing weapons can produce a smaller and more reliable arsenal while making their use less likely because of the threat they can pose. The changes, they say, are improvements rather than wholesale redesigns, fulfilling the president’s pledge to make no new nuclear arms.
But critics, including a number of former Obama administration officials, look at the same set of facts and see a very different future. The explosive innards of the revitalized weapons may not be entirely new, they argue, but the smaller yields and better targeting can make the arms more tempting to use — even to use first, rather than in retaliation.

Gen. James E. Cartwright, a retired vice chairman of the Joint Chiefs of Staff who was among Mr. Obama’s most influential nuclear strategists, said he backed the upgrades because precise targeting allowed the United States to hold fewer weapons. But “what going smaller does,” he acknowledged, “is to make the weapon more thinkable.” Continue reading the main story

A More Accurate Atom Bomb

The United States military is replacing the fixed tail section of the B61 bomb with steerable fins and adding other advanced technology. The result is a bomb that can make more accurate nuclear strikes and a warhead whose destructive power can be adjusted to minimize collateral damage and radioactive fallout.

As Mr. Obama enters his final year in office, the debate has deep implications for military strategy, federal spending and his legacy.

The B61 Model 12, the bomb flight-tested last year in Nevada, is the first of five new warhead types planned as part of an atomic revitalization estimated to cost up to $1 trillion over three decades. As a family, the weapons and their delivery systems move toward the small, the stealthy and the precise.
Already there are hints of a new arms race. Russia called the B61 tests “irresponsible” and “openly provocative.” China is said to be especially worried about plans for a nuclear-tipped cruise missile. And North Korea last week defended its pursuit of a hydrogen bomb by describing the “ever-growing nuclear threat” from the United States.

The more immediate problem for the White House is that many of its alumni have raised questions about the modernization push and missed opportunities for arms control.

“It’s unaffordable and unneeded,” said Andrew C. Weber, a former assistant secretary of defense and former director of the Nuclear Weapons Council, an interagency body that oversees the nation’s arsenal.

He cited in particular the advanced cruise missile, estimated to cost up to $30 billion for roughly 1,000 weapons.

“The president has an opportunity to set the stage for a global ban on nuclear cruise missiles,” Mr. Weber said in an interview. “It’s a big deal in terms of reducing the risks of nuclear war.”
Last week, Brian P. McKeon, the principal deputy under secretary of defense for policy, argued that anyone who looks impartially at Mr. Obama’s nuclear initiatives in total sees major progress toward the goals of a smaller force and a safer world — themes the White House highlighted on Monday in advance of the president’s State of the Union address.

“We’ve cleaned up loose nuclear material around the globe, and gotten the Iran deal,” removing a potential threat for at least a decade, Mr. McKeon said.

He acknowledged that other pledges — including treaties on nuclear testing and the production of bomb fuel — have been stuck, and that the president’s hopes of winning further arms cuts in negotiations with Russia “ran into a blockade after the events in Ukraine.” Photo

The new B61 Model 12 nuclear bomb. Credit Randy Montoya/Sandia Labs

He specifically defended the arsenal’s modernization, saying the new B61 bomb “creates more strategic stability.”

Early in his tenure, Mr. Obama invested much political capital not in upgrades but in reductions, becoming the first president to make nuclear disarmament a centerpiece of American defense policy.

In Prague in 2009, he pledged in a landmark speech that he would take concrete steps toward a nuclear-free world and “reduce the role of nuclear weapons in our national security strategy.” The Nobel committee cited the pledge that year in awarding him the Peace Prize.

A modest arms reduction treaty with Russia seemed like a first step. Then, in 2010, the administration released a sweeping plan that Mr. Obama called a fulfillment of his atomic vow. The United States, he declared, “will not develop new nuclear warheads or pursue new military missions or new capabilities.”

The overall plan was to rearrange old components of nuclear arms into revitalized weapons. The resulting hybrids would be far more reliable, meaning the administration could argue that the nation would need fewer weapons in the far future.

Inside the administration, some early enthusiasts for Mr. Obama’s vision began to worry that it was being turned on its head.
In late 2013, the first of the former insiders spoke out. Philip E. Coyle III and Steve Fetter, who had recently left national security posts, helped write an 80-page critique of the nuclear plan by the Union of Concerned Scientists, a private group that made its name during the Cold War, arguing for arms reductions.

American allies and adversaries, the report warned, may see the modernization “as violating the administration’s pledge not to develop or deploy” new warheads. The report, which urged a more cautious approach, cited a finding by federal advisory scientists: that simply refurbishing weapons in their existing configurations could keep them in service for decades.

“I’m not a pacifist,” Mr. Coyle, a former head of Pentagon weapons testing, said in an interview. But the administration, he argued, was planning for too big an arsenal. “They got the math wrong in terms of how many weapons we need, how many varieties we need and whether we need a surge capacity” for the crash production of nuclear arms.

The insider critiques soon focused on individual weapons, starting with the B61 Model 12. The administration’s plan was to merge four old B61 models into a single version that greatly reduced their range of destructive power. It would have a “dial-a-yield” feature whose lowest setting was only 2 percent as powerful as the bomb dropped on Hiroshima in 1945. Photo

President Obama’s pledge in Prague in 2009 that he would “reduce the role of nuclear weapons in our national security strategy” was cited when he was awarded the Nobel Peace Prize. Credit Todd Heisler/The New York Times

The plan seemed reasonable, critics said, until attention fell on the bomb’s new tail section and steerable fins. The Federation of American Scientists, a Washington research group, argued that the high accuracy and low destructive settings meant military commanders might press to use the bomb in an attack, knowing the radioactive fallout and collateral damage would be limited.

Last year, General Cartwright echoed that point on PBS’s “NewsHour.” He has huge credibility in nuclear circles: He was head of the United States Strategic Command, which has military authority over the nation’s nuclear arms, before serving as vice chairman of the Joint Chiefs of Staff.

In a recent interview in his office at the Center for Strategic and International Studies, in Washington, General Cartwright said the overall modernization plan might change how military commanders looked at the risks of using nuclear weapons.

“What if I bring real precision to these weapons?” he asked. “Does it make them more usable? It could be.”

Some of the biggest names in nuclear strategy see a specific danger in the next weapon in the modernization lineup: the new cruise missile, a “standoff weapon” that bombers can launch far from their targets. Continue reading the main story

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“Mr. President, kill the new cruise missile,” read the headline of a recent article by Mr. Weber, the former assistant secretary of defense, and William J. Perry, a secretary of defense under President Bill Clinton and an author of the plan to gradually eliminate nuclear weapons that captivated Mr. Obama’s imagination and endorsement.

They argued that the cruise missile might sway a future president to contemplate “limited nuclear war.” Worse yet, they said, because the missile comes in nuclear and non-nuclear varieties, a foe under attack might assume the worst and overreact, initiating nuclear war.

The critique stung because Mr. Perry, now at Stanford, is a revered figure in Democratic defense circles and a mentor to Ashton B. Carter, the secretary of defense.

Mr. McKeon, the Pentagon official, after describing his respect for Mr. Perry, said the military concluded that it needed the cruise missile to “give the president more options than a manned bomber to penetrate air defenses.”

In an interview, James N. Miller, who helped develop the modernization plan before leaving his post as under secretary of defense for policy in 2014, said the smaller, more precise weapons would maintain the nation’s nuclear deterrent while reducing risks for civilians near foreign military targets.

“Though not everyone agrees, I think it’s the right way to proceed,” Mr. Miller said. “Minimizing civilian casualties if deterrence fails is both a more credible and a more ethical approach.”
General Cartwright summarized the logic of enhanced deterrence with a gun metaphor: “It makes the trigger easier to pull but makes the need to pull the trigger less likely.”

Administration officials often stress the modernization plan’s benign aspects. Facing concerned allies, Madelyn R. Creedon, an Energy Department deputy administrator, argued in October that the efforts “are not providing any new military capabilities” but simply replacing wires, batteries, plastics and other failing materials.

“What we are doing,” she said, “is just taking these old systems, replacing their parts and making sure that they can survive.”

In a recent report to Congress, the Energy Department, responsible for upgrading the warheads, said this was the fastest way to reduce the nuclear stockpile, promoting the effort as “Modernize to Downsize.”

The new weapons will let the nation scrap a Cold War standby called the B83, a powerful city buster. The report stressed that the declines in “overall destructive power” support Mr. Obama’s goal of “pursuing the security of a world without nuclear weapons.”

That argument, though, is extremely long term: Stockpile reductions would manifest only after three decades of atomic revitalization, many presidencies from now. One of those presidents may well cancel the reduction plans — most of the candidates now seeking the Republican nomination oppose cutbacks in the nuclear arsenal.

But the bigger risk to the modernization plan may be its expense — upward of a trillion dollars if future presidents go the next step and order new bombers, submarines and land-based missiles, and upgrades to eight factories and laboratories.
“Insiders don’t believe it will ever happen,” said Mr. Coyle, the former White House official. “It’s hard to imagine that many administrations following through.”
Meanwhile, other veterans of the Obama administration ask what happened.

“I think there’s a universal sense of frustration,” said Ellen O. Tauscher, a former under secretary of state for arms control. She said many who joined the administration with high expectations for arms reductions now feel disillusioned.

“Somebody has to get serious,” she added. “We’re spending billions of dollars on a status quo that doesn’t make us any safer.”

Falling oil prices: Who are the winners and losers?

By Tim BowlerBusiness reporter, BBC News
19 January 2015 
Global oil prices have fallen sharply over the past seven months, leading to significant revenue shortfalls in many energy exporting nations, while consumers in many importing countries are likely to have to pay less to heat their homes or drive their cars.
From 2010 until mid-2014, world oil prices had been fairly stable, at around $110 a barrel. But since June prices have more than halved. Brent crude oil has now dipped below $50 a barrel for the first time since May 2009 and US crude is down to below $48 a barrel.
The reasons for this change are twofold - weak demand in many countries due to insipid economic growth, coupled with surging US production.
Added to this is the fact that the oil cartel Opec is determined not to cut production as a way to prop up prices.
So who are some of the winners and losers?
Russia: Propping up the roubleImage captionThe falling rouble and plunging oil revenue are some of President Putin's biggest challenges
Russia is one of the world's largest oil producers, and its dramatic interest rate hike to 17% in support of its troubled rouble underscores how heavily its economy depends on energy revenues, with oil and gas accounting for 70% of export incomes.

Russia loses about $2bn in revenues for every dollar fall in the oil price, and the World Bank has warned that Russia's economy would shrink by at least 0.7% in 2015 if oil prices do not recover.
Despite this, Russia has confirmed it will not cut production to shore up oil prices.
"If we cut, the importer countries will increase their production and this will mean a loss of our niche market," said Energy Minister Alexander Novak.
Falling oil prices, coupled with western sanctions over Russia's support for separatists in eastern Ukraine have hit the country hard.
The government has cut its growth forecast for 2015, predicting that the economy will sink into recession.


On January 20, 2017, you may be the one chosen by the American people to place your left hand on the Bible, raise your right hand, and “solemnly swear to protect and defend the Constitution of the United States against all enemies, foreign and domestic, and to bear true faith and allegiance to the same.” The Constitution sets out, clearly and unambiguously, the priorities on which you must focus: “establish justice, insure domestic tranquility, provide for the common defense, promote the general welfare, and secure the blessings of liberty to ourselves and our posterity” — in that order.
Today, you are one of over a dozen people competing to become the 45th president of the United States. But, it is never too early to demonstrate a clear grasp of what leadership at this level requires. Likewise, it is high time for the public and the media to demand clarity of vision and a holistic perspective from the entire slate of candidates.

Between now and Inauguration Day, you’ll be on the receiving end of thousands of policy proposals, issue papers, and all manner of expert advice. Each will attempt to tell you what to think and what to do, reflecting a variety of parochial and often conflicting agendas. This open letter, in contrast, offers a framework for how to think and how to act. It reflects the conviction that now is the time to focus on character, values, and strategic coherence. It urges you to develop a clear intellectual roadmap and explain to the electorate how you would approach the solemn responsibility of providing for America’s security and prosperity.

The next president will take office at a unique inflection point: an intersection of history and destiny, with lives in the balance. Learn now to own your decisions without searching for excuses or scapegoats. Never falter. The price of the mistakes you will inevitably make will be measured in blood, treasure, and America’s credibility. There are no do-overs. The clock cannot be rewound, and the conditions you will inherit at home and abroad will be your inescapable starting point. Blaming your predecessor’s policy choices will not change this reality, nor will it produce much of value. Look ahead and realize that how you act once you assume office will define the future in terms of both options and outcomes. Be awed, but not intimidated, by this responsibility. Your legacy starts today.

Ex-spy chief: Ukrainian cyberattack a warning sign for US utilities


Retired Gen. Michael Hayden, the former director of the National Security Agency and the CIA, says the US faces 'darkening skies' after malware linked power outages in Ukraine. 
By Paul F. Roberts, Correspondent January 12, 2016 
MIAMI — Former National Security Agency chief Gen. Michael Hayden warned that a recent malware attack on the Ukrainian power grid is yet another troubling sign that the US electric supply is vulnerable to hackers.
The Dec. 23 attack on utilities serving the Ivano-Frankivsk region of Ukraine appears to be the second confirmed incident of a computer-based attack to damage physical infrastructure. The attack led to blackouts throughout the region for several hours before power was restored. The Stuxnet worm that targeted the Iranian nuclear program is the only other such incident.
What happened in Ukraine is a harbinger for the kinds of cyberthreats the US faces, possibly from rival nations such as Russia and North Korea, the retired Air Force general told a crowd of critical infrastructure experts at the S4x16 security conference in Miami. General Hayden served as director of the NSA from 1999 to 2005 and served as CIA chief from 2006 to 2009.
"There a darkening sky," he told reporters after his speech Tuesday, referring to the increasing threat of malware infections leading to physical damages. "This is another data point on an arc that we’ve long predicted," he said, acknowledging that the Ukraine attack reinforces concerns in official circles about security of the American power grid.

From Ukraine to Kazakhstan, Avoiding Russia

Ukraine is going to try shipping via Georgia and Azerbaijan instead.
By Catherine Putz,  January 14, 2016
Ukraine has been one of Kazakhstan’s top five import partners fairly consistently over the past decade. That trade, however, has been increasingly imperiled by tensions between Europe and Russia, with Ukraine as the crux. Kazakhstan continues to be put in an awkward position between its wider economic interests, its close relationship with Russia, and the (perhaps unintended) consequences of Russia’s trade tussles with Europe.

Russia decided to respond to Ukraine’s entry into an association agreement with the European Union–which includes a free-trade agreement–by revoking Ukraine’s place in the Commonwealth of Independent States free-trade agreement. Further, as I noted last week, Russia said that as a result, all trade from Ukraine to Kazakhstan transiting via Russia must first pass through checkpoints in Belarus.

Ukrainian President Petro Poroshenko spoke via phone to his Kazakh counterpart, Nursultan Nazarbayev recently. According to the Ukrainian readout of the conversation the two discussed the the implementation of agreements signed in October, when Poroshenko visited Astana, and the impact of Russia’s embargo. Thesummary says that Nazarbayev “confirmed willingness to fulfill the effective bilateral and multilateral agreements with Ukraine in order to prevent any discrimination in Ukrainian-Kazakh trade.”

Letter from Amsterdam

Jan. 13, 2016 The immigration crisis highlights the European Union’s growing irrelevance in Europe.
By George Friedman
I am in Amsterdam, and yesterday I spoke to a group of senior business executives and a few diplomats about the state of the world, or at least my view of it. I made three arguments. First, Eurasia is in increasing turmoil, and since Eurasia is home to 5 billion of the 7 billion people on Earth, this is an extremely disruptive reality. Second, these regional instabilities are starting to interact: Europe and the Middle East, Russia and the Middle East, and Russia and Europe. In addition, the current crisis in China is likely to intersect with each of these areas. I described it as a storm gathering.
The third point I made was that the future of the European Union is untenable. The European Union is based on a treaty—it is not a federation. It is torn between member states on any question. Germany demonizes Greece and Greece demonizes Germany—a cycle that repeats itself over and over again. It is not just that there are disagreements within the EU, but that the disagreements are bitter. The EU faces problems that it can only solve if its member states stay together—a situation that has become impossible. In my talk, I used the example of Muslim migration, which, even if it eventually totals 3 million people still would equal only half of one percent of Europe’s population. Surely there are solutions to be had, ranging from blocking the migrants to fully integrating them into society. The problem is not insoluble, but no one can can agree on a solution, and lacking a consensus, nothing can be done.

What was remarkable in this meeting was that most of the audience took no exception, save a few mild souls who said there was some hope of a solution to Europe’s problem. This contrasted dramatically with previous such presentations to similar audiences. The people to whom I spoke were not a gathering of some radical anti-European party, but rather represented the center of gravity of the European establishment. A couple of years ago I made a similar presentation in Mexico, and the European Commissioner there (the equivalent of an ambassador) called my remarks scandalous. In Poland, a similar speech caused an EU staffer from Brussels to loudly condemn me for implying the EU was failing. He said that Europe had many solutions to its problems, and he personally was working on solutions right at that very moment. I urged him to hurry up, as the problems had needed solving for years, and it was time to see the solution.

None of that happened in this bastion of the European elite. There was no question that the majority there wanted the EU to survive, but part of the group seemed to agree that it could only survive with major adjustments, while another part seemed to feel that it was untenable. They accepted my argument that Europe can be divided into Mediterranean Europe, Eastern Europe (the eastern frontier of the EU), Germanic Europe and Maritime Europe (the United Kingdom and Scandinavia). And when I said these regions have few common interests and many oppose the others’ interests, there was no disagreement.