4 July 2016

*** Bangladesh Attack Is New Evidence That ISIS Has Shifted Its Focus Beyond the Mideast


Bangladeshi military officials and Prime Minister Sheikh Hasina spoke on Saturday about the terrorist attack at a popular restaurant in Dhaka that left 20 hostages dead and several injured overnight. By INTERNATIONAL TV, ATN, REUTERS and THE ASSOCIATED PRESS on Publish DateJuly 2, 2016. 
DHAKA, Bangladesh — The cook was crouching in a washroom, taking refuge from the gunmen who had invaded the Holey Artisan Bakery, when he understood that there was a logic behind the killing: The people in the restaurant were being sorted.
“Bengali people, come out,” one gunman shouted. When the cook, Sumir Barai, and eight other men opened the bathroom door, trembling, they saw two young men, clean shaven and dressed in jeans and T-shirts.
“You don’t need to be so tense,” one of the men told them. “We will not kill Bengalis. We will only kill foreigners.” At that, Mr. Barai’s gaze flicked to the floor of the restaurant, where he could see six or seven bodies, apparently shot and then sliced with machetes. All appeared to be foreigners.
The gunmen, he said, seemed eager to see their actions amplified on social media: After killing the patrons, they asked the staff to turn on the restaurant’s wireless network. Then they used customers’ telephones to post images of the bodies on the internet.

Friday night’s assault on the Holey Artisan Bakery in the diplomatic district of Dhaka, in which at least 20 hostages and two police officers were killed, marks a scaling up of ambition and capacity for Bangladesh’s Islamist militancy, which has until now carried out pinpoint assassinations, mostly of critics of Islam and members of religious minorities.Photo
Relatives mourn victims killed in the siege. At least 30 people were wounded. CreditEuropean Pressphoto Agency
Among the dead from Friday’s attack, the police said, were nine Italians, seven Japanese, two Bangladeshis, one American and one Indian.
The attack also suggests that Bangladesh’s militant networks are internationalizing, a key concern as the United States seeks to contain the growth of the Islamic State.

Bangladesh’s 160 million people are almost all Sunni Muslims, including a demographic bulge under the age of 25. This makes it valuable as a recruiting ground for the Islamic State, now under pressure in its core territory of Iraq and Syria. Western intelligence officials have been watching the organization pivot to missions elsewhere in the world, launching attacks on far-flung civilian targets that are difficult to deter with traditional military campaigns.
“We need to take serious stock of the overall threat,” said Shafqat Munir, a research fellow at the Bangladesh Institute of Peace and Security Studies. “There were all sorts of warnings and signs and everything. But I don’t think anyone expected anything as audacious and large-scale as this.”
It was a slow night at the restaurant. Eighteen people had reserved seats at the Holey Artisan Bakery, whose crusty flour-dusted loaves of bread and piles of homemade pasta offered a respite from the sticky, clamorous city that surrounded it.
Seven Italian friends had gathered around one table, and three or four at a second, recalled Diego Rossini, a chef who is from Argentina. Someone had just ordered an Italian pasta dish, and Mr. Rossini made his way to the kitchen, preparing for a much larger crowd that was expected at 9:30 p.m.

But at 8:45, a half-dozen young men entered, carrying heavy bags of weaponry, including grenades and long rifles. Mr. Rossini, the chef, fled to the roof. He heard screams, and shouts of “Allahu akbar,” as the gunmen sought out patrons who were hiding.
“There were a lot of foreigners,” he told Canal 5 Noticias, an Argentine cable news station. “That’s who they were particularly looking for.”
Even as they killed the foreigners, the attackers were unfailingly polite and solicitous with the restaurant staff and other Bangladeshis, Mr. Barai said.
They took the staff into their confidence, complaining that foreigners, with their skimpy clothes and taste for alcohol, were impeding the spread of Islam. “Their lifestyle is encouraging local people to do the same thing,” a militant said.
They asked the staff to make coffee and tea and serve it to the remaining hostages. At 3:30 a.m., when Muslims eat a predawn meal before fasting, they asked the kitchen staff to prepare and serve dishes of fish and shrimp, he said.

Mr. Barai recalls being puzzled by the attackers, who spoke cosmopolitan Bengali, and even some English, when conversing with the foreigners.
“They were all smart and handsome and educated,” he said. “If you look at those guys, nobody could believe they could do this.” In the predawn hours, the militants lectured their captives on religious practices, instructing the kitchen staff to say regular prayers and study the Quran.
Early in the morning, the gunmen released a group of women wearing hijabs and offered a young Bangladeshi man, Faraz Hossain, the opportunity to leave, too, said Hishaam Hossain, Mr. Hossain’s nephew, who had heard an account from the hostages who were freed.Mr. Hossain, a student at Emory University, was accompanied by two women wearing Western clothes, however, and when the gunmen asked the women where they were from, they said India and the United States. The gunmen refused to release them, and Mr. Hossain refused to leave them behind, his relative said. He would be among those found dead on Saturday morning.
In the hours after the gunmen appeared, hundreds of police officers massed outside the restaurant compound’s walls, but an attempted raid was repulsed by a grenade, killing two officers and injuring more than 20. Mr. Rossini, who was on the roof, frantically texted his location over social media.
“It was practically impossible for the police to get in,” he said later. The restaurant was like a little fort, and the police had to wait for the army.

A senior police official, speaking to a reporter on the condition of anonymity, said that the police tried unsuccessfully to establish contact with the captors, who never passed on any demands.
The night crept on with painful slowness in the crowded washroom, where Mr. Barai and the eight other men were again locked in, this time by the gunmen. At 1:44 a.m. Mr. Barai messaged a cousin, who was only a few yards away, outside the police cordon.
“What is the news on the outside?” His cousin typed back that a Rapid Action Battalion, Bangladesh’s elite counterterrorism squad, was now involved in the operation. “They are not doing anything right now so you people don’t become victims,” he wrote.

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Mr. Barai passed on the name of a co-worker who could lead authorities to the washroom. “We are here,” he typed. “If possible break the wall of the toilet and rescue us.”
As dawn approached, Mr. Barai feared that the men would suffocate in the cubicle, which measures about four feet by four feet. “Please come to the toilet quickly as it is very difficult inside the toilet.”
After that, when Mr. Barai’s cousin called his number, there was no answer; the cousin, seated on the sidewalk outside the restaurant, began to sob.

*** Army’s New Rapid Capabilities Office Studies Electronic Warfare Boost

By SYDNEY J. FREEDBERG JR.on July 01, 2016 

The Army’s NERO program tested a converted Navy jammer on a Grey Eagle drone, the Army version of the Predator.

PENTAGON: The brand new Army Rapid Capabilities Office is studying proposals to spend between $50 and $100 million on urgently needed electronic warfare gear, Breaking Defense has learned. The options include sensors to detect radar and radio signals, and jammers to block them, mounted on ground vehicles, soldiers’ backpacks, and drones.
Where will the money come from? It will probably have to be stripped from other Army budget lines, Col. Jeffrey Church, the senior officer in the Army’s small EW corps. cautioned yesterday during an interview in his Pentagon office.

Newly confirmed Army Secretary Eric Fanning has pledged to create a high-speed bypass around the Army’s notoriously troubled acquisition system. His choice is modeled on the Rapid Capabilities Office (RCO) in the Air Force, where Fanning served as acting secretary. TheNavy Department and the Office of Secretary of Defense have both created similar offices.
A former enlisted man who rose to two-star general, Maj. Gen. Walter Piatt, was named in April to head the Army RCO. However, Piatt’s not yet moved over from his old job on the Army headquarters staff, and ARCO’s funding and authorities are still being settled. This is the first we’ve heard that ARCO — or at least a proto-ARCO staff — is at work. (We’re waiting on more details from the Army on ARCO’s status).

The Army disbanded its Combat Electronic Warfare Intelligence (CEWI) units, like the one shown here, after the Cold War.

Why EW?
Why start on this particular project? Fanning has highlighted electronic warfare and cyber as top priorities. Russia and China are investing heavily in both areas and Russia has demonstrated devastating EW capabilities in Ukraine. Of course, the American military’s dependence on wireless networks makes it heavily vulnerable to both. Electronic warfare can jam the signals carrying data, cyber warfare can corrupt the data itself. A particularly sophisticated EW attack might in fact transmit a computer virus into an enemy system otherwise sealed off from cyber attack. The two ways of warfare are intimately intertwined.
Cyber is far sexier, however, and has gotten far more funding and attention. Electronic Warfare lags well behind, especially in the Army, which disbanded its EW units in the 1990s. The service invested heavily and hurriedly in specialized jammers to defeat radio-controlled roadside bombs in Afghanistan and Iraq. But on current budget plans, the more powerful, flexible equipment required to counter a sophisticated adversary — e.g. Russia — won’t enter service until 2023.

In Bangladesh, an attack aimed at foreigners and the country’s elite

By Joseph Allchin July 2  
DHAKA, Bangladesh — Bangladesh just realized one of its worst fears. The South Asian nation, no stranger to either vicious politics or targeted Islamist killings, this weekend experienced its deadliest and most sophisticated attack yet, in what appeared to be a calculated blow against the country’s elite, including its foreign residents.
The Holey Artisan Bakery and its restaurant, known as O’Kitchen, is a modest establishment that represents global dreams — and wallets. Located in the Bangladeshi capital’s diplomatic quarter, it has a handsome garden featuring some of the last green space in the city and is the only place in the country of 160 million to sell sourdough bread and Greek yogurt. Late Friday, 40 or so customers were in the restaurant, along with a large contingent of employees, including two foreign chefs.
Shortly after 9 p.m, a group of gunmen stormed the building, according to witnesses, precipitating a 12-hour standoff that left at least 28 people dead, including 20 hostages, six of the seven suspected gunmen and two police officers. Thirteen hostages were rescued, and at least one assailant was reportedly taken into custody.

Most of the slain hostages are believed to be foreigners. State Department officials confirmed Saturday that an American was among them, although the victim’s identity was not released. The dead included three students at U.S. colleges, those schools confirmed: Faraaz Hossain and Abinta Kabir of Emory University’s Oxford College and Tarushi Jain, a 19-year-old Indian student at the University of California at Berkeley.

Nine Italians and seven Japanese were also killed, the Associated Press reported their governments as saying, with one Italian still unaccounted for. According to local news reports, the gunmen divided people by nationality and asked people to recite verses of the Koran, sparing those who could.
An online media group linked to the Islamic State claimed that the militant organization carried out the attack, according to the SITE Intelligence Group, which monitors jihadist activity online. The extent of the Islamic State’s operational presence in majority-Muslim Bangladesh remains unclear, however.
Home Minister Asaduzzaman Khan said, however, that the attackers were members of a banned domestic militant group, not the Islamic State.
“They are all Bangladeshis. They are from rich families, they have good educational background,” Khan said of the attackers, according to the Associated Press.
Sumon Reza, a restaurant employee, told reporters that as the attack began, the assailants shouted “Allahu Akbar!” (God is great) and fired into the air. “They didn’t shoot or hit anybody,” Reza said. “Just to create fear. The guests were all lying on the ground under the chairs and tables. And we [employees] escaped in whichever safe way we could.”

Before long, security forces arrived, only to be met by a hail of bullets from the roof, according to a weary-eyed infantryman Saturday morning. Residents said an hours-long exchange of gunfire followed that echoed through the upscale neighborhood.
After phalanxes of security personnel surrounded the building, the shooting subsided and negotiations got underway. It was then that the horrors really began for the hostages. At one table sat eight Japanese consultants with the aid organization JICA; others were occupied by Italian garment entrepreneurs or young friends who had studied at the American school in Dhaka. Locals were also there, enjoying the start of the Muslim holiday of Eid al-Fitr.
A military spokesman, Brig. Gen. Nayeem Ashfaque Chowdhury, told reporters that “most of the victims were killed brutally with sharp weapons.” In video footage shot from a nearby building, a young man can be seen patrolling the restaurant’s interior, carrying what appears to be a foot-long blade. According to local media, those who couldn’t recite the Koran had their throats cut. The Islamic State shared on Twitter photos purporting to show victims lying in pools of blood.

The Naysayers Are Wrong. Here’s Why India Must Celebrate The Tejas

Mihir Shah - July 3, 2016,  

The Tejas aircraft is a bigger success than it is being credit for. A fourth generation fighter has been developed from scratch - there was very little technological or industrial backbone the developers could draw strength from.
We must learn to see the success of the Tejas program in the context of our industrial, economic and strategic environment.
Last week saw the formal induction of two Tejas aircraft into the No. 45 Flying Daggers Squadron of the Indian Air Force. The squadron will begin operating from Bangalore before eventually moving to Coimbatore where it will be permanently based. It will form the early adopters group which will evolve tactics and iron out early difficulties in maintenance. 
Twenty aircrafts will be produced in the current configuration. A hundred more may be inducted in an improved configured (Mk 1A) in the coming years if HAL and IAF stick to their commitments. But there are many who question the wisdom of continuing with the project. The argument is that the Tejas is quite late in the game, that it cannot hold its own against the sort of fighters that will be deployed against the IAF and that, technologically speaking, the Tejas is at least a generation behind aircrafts like Rafale that the IAF wants to acquire. Why continue with something that is do delayed and even out of date?

The arguments are not new: The jet is old, they say. 32 years in the making. There are 53 shortfalls in performance. 20 permanent waivers have been granted by Indian Air Force. The useful combat radius is only 300 kilometres. The Indian Air Force (IAF) is down to 35 fighter squadrons from a sanctioned strength of 42, and cannot afford the risk of inducting an unproven design.
While these figures are all technically correct, the absence of proper context makes them appear more damning than they should. More importantly, the narrow focus on cherry-picked performance parameters fails to take into account the larger picture: the one that puts the achievements till date (and there have been many) in the context of the industrial, economic, and strategic environment in which the project was undertaken. It also neglects longer-term economic and security benefits that have accrued as a result of this effort, the strategic implications of which go beyond any one individual program.

Why the 1972 Shimla accord was a disaster

July 02, 2016 
'Indira Gandhi proved herself a great war leader, but failed as a statesman,' says Colonel Anil A Athale (retd).

The 1971 India-Pakistan and the Shimla Agreement of July 2, 1972 are some of the most important events of the 20th century history of the Indian subcontinent.
While the 1971 war has been extensively analysed and commented upon, the Shimla conference that dealt with its aftermath has not attracted enough research as it ought to have.
Analysing the decision making process at the Shimla talks of 1972 is important. The decisions taken/not taken then continue to affect the Indian subcontinent and even more importantly the rationale, mindsets and logic on display then continues to be part of Indian decision-making on war and peace even 45 years after the event.
In 1999, after a first post nuclearisation skirmish at Kargil, Atal Bihari Vajpayee, another Indian stalwart leader, followed in the footsteps of Indira Gandhi.
The Indian syndrome of inability to exploit battlefield victory and frittering away the advantage gained at the cost of soldiers' blood continues. It is therefore of utmost importance for future and not merely of historical interest to analyse and understand the events of July 2, 1972.
It is necessary to understand the context of national euphoria that existed then. Indira Gandhi was the flavour of the season and as one senior Congress leader Dev Kant Borooah went so far as to coin the phrase 'Indira is India.'
At the Shimla conference in 1972, Indira Gandhi was at the zenith of her power. The Shimla agreement therefore escaped critical scrutiny.

During the 1971 war, Mrs Gandhi's strategic perception and control on the five fronts (diplomatic, political, economic, military and psychological) was superb. She used persuasion, hindrance and coercion on all five fronts without opening hostilities.
Military force was only used as a last resort. Men of the three defence services rose to the occasion and displayed tactical initiative and skill of a high order.
The war was a triumph for individuals who transcended an out-of-date institutional politico-military decision-making system. The 1971 war culminated in the capture of 93,000 Pakistani prisoners and a unilateral declaration of a cease fire by India after our ground forces had made minor incursions into West Pakistan.
The main agenda at Shimla was to deal with the aftermath of the 1971 War and usher in durable peace between India and Pakistan.
There was widespread concern and anxiety in Pakistan over the prisoners of war in India's hands. There were unanimous demands in the press and Pakistan national assembly for their early repatriation. Some Pakistani politicians said, 'Pakistanis are prepared to sacrifice their land for the sake of the prisoners -- it is better to have the POWs returned than to have the land back.'

GDP Growth by Higher Government Salaries?

Mohan Guruswamy
There has been a spate of commentaries about how beneficial the 7th Pay Commission mandated pay hikes, and now approved by the Union Government with retrospective effect will benefit the economy. Others have cheered this with comments like “you pay peanuts you get monkeys!” The metaphor is unfortunate, but illogical as the “monkeys” are already in place, only now the diet has become much more richer.
The high cost of wages has also slowed down intake into government and most departments are hugely understaffed. For instance the Revenue collecting departments are under strength by as much as 45.45%, Health by 27.59%, Railways by 15.15% and that the MHA is under strength by only 7.2% speaks volumes about how much has gone wrong in our system. We have a saying that the main business of government is to collect taxes so that they may be spent for the benefit of all the people. Thus we see the main business of government is now its least concern.

The sheer absurdity of the logic that higher government salaries are beneficial to the economy speaks volumes of the kind of stupidity that permeates our policy thinking at high places. By this logic if the pay hike was higher GDP growth would be even higher. But think of this in terms of money denied for critically needed infrastructure and social development such as rods, power plants, schools and hospitals. As if these don’t generate GDP growth? Higher salaries mostly benefit those who get them. Period.
This hike will benefit only Central government employees for now, but all states and PSU's will join the bandwagon soon (total 23 million) and the CII and FICCI members will hear the music louder and dance all the way to the bank.

Top industry and banking analysts have given a big thumbs up to the Union Cabinet decision stating the move will “boost consumption in the economy” and lead to higher GDP growth. Its their fond hope that the pay hike combined with continued public push to the capital expenditure will help steer the economy to higher growth levels of 8% and above. . “The pay hike of nearly Rs. 1 lakh crores for government employees will give a strong boost to the consumer demand and help uplift the growth of the economy,” said A Didar Singh, secretary general, FICCI. Singh has the added benefit of being in the IAS in his previous avatar and has personally too much to cheer about.
But has Didar Singh noticed the IIM, Ahmedabad study that has found the “pay in the government sector is distinctly greater than that in the private sector?” Arun Jaitely therefore thinks that this shouldn’t cause any protests from the beneficiaries. The 23.5% average hike in central government employees’ salaries will push up the government’s wage bill, including arrears, by an estimated R. 1.14 lakh crores in 2016-17.

India 'Goofed Up' The Handling Of IC-814 Flight Hijack Crisis In 1999, Says Ex-RAW Chief

HuffPost India | By Anirvan Ghosh
Posted: 03/07/2015 

The core response team that was put to action after an Air India flight was hijacked by Kashmiri terror group Harkat-ul-Mujahideen in 1999, majorly mishandled the crisis, resulting in the release of a terrorist who later attacked the Indian Parliament, a top intelligence official has said.Former Jammu & Kashmir chief minister Farooq Abdullah never wanted India to release militants in exchange for safety of hostages in 1989 and 1999, writes AS Dulat, former chief of intelligence agency Research and Analysis Wing (RAW), in his new book 'The Vajpayee Years.'

In the first instance, terrorists in Kashmir had kidnapped Rubaiya Sayeed, daughter of Mufti Mohammad Sayeed, the current chief minister of the state, who was then the union home minister. The Indian government had released five hardcore terrorists in exchange for her.
"How has it come from one to three to five militants? Even if it was my own daughter, I would not release them," Abdullah is quoted as saying in an Indian Express report.He was then convinced to change his stance by cabinet ministers IK Gujral (who later became prime minister), Arif Mohammad Khan and MK Narayanan, the intelligence bureau chief.
"If you want to go ahead and release them, do it. But I want to lodge my protest," Abdullah had said. Dulat said in a recent interview that India ended up releasing more terrorists than what the JKLF terrorists had asked for.

Abdullah was certain that if the government stood its ground, the terrorists would have released Rubaiya Sayeed unharmed. If the government caved, it would set a precedent. "We will have to pay for it," he told Gujral and Khan.
RAW is the external intelligence wing of the Indian government, responsible for gathering information outside India, while the IB is responsible for domestic intelligence gathering.

In the second instance a decade later, Harkat-ul-Mujahideen terrorists hijacked an Indian Airlines flight IC-814 in its way to Delhi from Kathmandu, Nepal. Atal Bihari Vajpayee was the Prime Minister then, heading a nationalist Bharatiya Janata Party-led coalition. The plane was parked in Amritsar for five hours, and then was allowed to fly out to Lahore in Pakistan from where it went to Dubai and finally to Taliban territory in Kandahar, Afghanistan. This is considered a major goof-up which strengthened the hijackers' hand considerably, a fact that Dulat has admitted.
Abdullah had again opposed releasing three most wanted terrorists, including Maulana Masood Azhar who later organized the 2001 attack on the Indian parliament. "I said then whatever you are doing is wrong, and I am saying it again. I don't agree with it," Abdullah had told Dulat, who was again in the thick of action.

Abdullah also told Jaswant Singh, the foreign minister, that releasing the terrorists was a wrong move. "Aap jo bhi kar rahe hain, galat kar rahe hain," he said in a phone call to Singh. A frustrated Abdullah then went to the governor GS Saxena, also a former RAW chief like Dulat, to hand over his resignation.
“These fellows want these terrorists released and I’ve told the RAW chief I won’t be party to it. I would rather resign and that’s what I have come to do. These bloody fellows don’t know what they are doing," he is quoted as saying. Saxena managed to change Abdullah's mind, saying that there was no other option but to do what the central government had decided.

Dulat says in the book that then foreign minister Jaswant Singh was a lonely man. He was roundly blamed for India's meek response, which had been decided in consultation with Vajpayee and the cabinet. “Jaswant was a very lonely man. He showed up in Kandahar for the swap, a lonely man on whom everybody who had felt frustrated in India with the whole incident, focused their frustration".
Dulat says India had wanted a commando raid on the plane when it was parked in Dubai, but the authorities there refused to cooperate. That was a striking example of how powerless India was at the time. "We tried to prevail on the Americans to put pressure on the UAE to allow us a raid, but India found itself isolated internationally. Nothing seemed to be going our way."

The terrorists were released later in exchange for hostages, one of whom was killed by the hijackers. The rest were flown back to Delhi on a Air India flight.

The contested legacy of Isak Swu

THE HINDUTHE ‘I’ OF THE IM: “It was to honour the veteran’s wish to see the Naga struggle bear fruit before he left this world that a ‘Peace Accord’ was hurriedly signed with much fanfare on August 3, 2015.” Picture shows Isak Chishi Swu (left) and Mr. Thuingaleng Muivah at a Naga reconciliation meeting in Dimapur, Nagaland. — FILE 

The NSCN(IM) leader’s death will not dampen the Naga peace negotiations, but the succession process could impact the group’s support base.
The death of Isak Chishi Swu, the Chairman of the National Socialist Council of Nagalim, Isak-Muivah (NSCN-IM) and President of the organisation’s Government of the People’s Republic of Nagaland (GPRN), opens a new chapter and new uncertainties for the former underground organisation now engaged in peace negotiations with the Government of India since 1987. The immediate question is, would Swu’s departure impact the negotiation process adversely? For very different reasons, the answer would be both a no and a yes.
The much loved and respected Sumi (Sema) Naga who passed away at a Delhi hospital on June 28, at the age of 87, had been ailing for a long time. Recall that it was to honour the veteran’s wish to see the Naga struggle bear fruit before he left this world, at a time he was thought to be on his deathbed nearly a year ago, that a “Peace Accord”, later explained to be only a “Framework Agreement”, was hurriedly signed with much fanfare on August 3, 2015, between the NSCN(IM)’s other towering leader, General Secretary Thuingaleng Muivah, and Government of India representatives in the presence of Prime Minister Narendra Modi and Home Minister Rajnath Singh at the Prime Minister’s residence in New Delhi.

India fenceless as Islamic State terror rises in Bangladesh

July 03, 2016  
West Bengal has a 2,200 km porous border with Bangladesh over 10 districts.
Ishita Ayan Dutt reports from Kolkata.
Hours after West Bengal Chief Minister Mamata Banerjee warned the North 24 Parganas administration on infiltration, one of Bangladesh's worst terror attacks occurred, killing 20 foreigners.
'What are you doing? Infiltration is increasing, law and order has touched a low, anti-socials are moving freely. I won't tolerate this. Arrest them. Don't see their political affiliation,' she told the district administration after a review meeting.
West Bengal's 2,200 km porous border with Bangladesh over 10 districts has been a problem that a blast in Bardhaman in 2014 brought to the fore.
Investigations linked the blast to the Jamaat-ul-Mujahideen, Bangladesh, JMB. Last year, the National Investigation Agency filed a chargesheet in the blast case, naming 21 people in a conspiracy hatched by the JMB.

"Stopping infiltration is a priority. A series of meetings have taken place with BSF (Border Security Force) officials on border fencing. The BSF will purchase land and we will help them," a West Bengal official said.
Yet, successive state governments lose interest in curbing infiltration before elections. West Bengal's Muslim population of 29 per cent can swing election results.
Union Minister of State for Home Kiren Rijiju recently informed Parliament that 437,958 heads of cattle were seized between 2013 and 2016.
But it is fake Indian currency notes that make West Bengal a safe transit corridor for terrorists.
Most of the attacks in India have had some tenuous link with Kolkata. Indian Mujahideen chief Yasin Bhatkal, believed to be the mastermind behind the Bengaluru stadium blast in 2010, Pune's German Bakery blast in 2012, and the Hyderabad blast in 2013, spent several years on Zakaria Street in central Kolkata.
The ammonium nitrate for explosives that killed 21 people in Varanasi in 2006 was bought from Kolkata. The attack on the American Centre in 2002 was the only aberration where Kolkata was targeted by terrorists.

What Swu’s death means for Nagaland

The passing of Isak Chishi Swu, chairman of National Socialist Council of Nagalim (Isak-Muivah), or NSCN (I-M), is a seismic event in several ways
Nagalim, or Greater Nagaland, is back with a bang on the negotiating table.
Isak Chishi Swu, chairman of National Socialist Council of Nagalim (Isak-Muivah), or NSCN (I-M), the largest and most powerful faction of Naga rebels, died on 28 June in a New Delhi hospital, aged 87, after a lifetime of battle to secure a future for the Naga people. At his premonitory insistence, last August NSCN (I-M) scaled up a ceasefire of 18 years with the government of India to a formal framework peace agreement.

Swu’s passing is a seismic event in several ways.
As his body lay in state at New Delhi’s Nagaland House on 29 June, attended by his family, comrades, senior politicians, media and, notably, India’s national security adviser Ajit Doval and R.N. Ravi, interlocutor for talks with NSCN (I-M), the loudest statement was the flag draping Swu’s coffin. Common to Naga rebel factions, it is of a light-blue background with three ribbons of red, yellow and green curving from about mid-section to the left and arcing to the right. A white six-pointed star of Bethlehem is at the top left corner of the flag that highlights one rebel slogan: “Nagaland for Christ”.
In a mourning period that is to last till 4 July—two days after Swu is expected to be interred in his home village of Chishilimi in Nagaland’s Zunheboto district, homeland of his tribe, the Sema—all such flags will fly at half-mast “throughout Nagalim”, according to an NSCN (I-M) communiqué. This idealistic geography includes, besides Naga homelands in Myanmar, all of Nagaland, Naga homelands in much of Manipur, and slices of Arunachal Pradesh and Assam. All such regions in India have witnessed a spontaneous outpouring of grief at Swu’s passing.

In a speech in Senapati town of Manipur on 29 June, Shürhozelie Liezietsu, president of Naga People’s Front, a canny political party, spoke bluntly of Naga integration. This conflates with an item of negotiation between the government and I-M. It strengthens the stand of the United Naga Council (UNC), the apex body of Naga tribes in Manipur, to administratively delink from Manipur—for long seen by Nagas in Manipur as being favourable to majority Meitei interest. This sentiment will spike in the run-up to elections to Manipur’s assembly in early 2017.

Dhaka Cafe Attack Exposes The Vulnerability Of Bangladesh

Jaideep Mazumdar - July 2, 2016, 

Thursday evening’s attack by Islamic terrorists on a cafe full of foreigners in Dhaka’s upscale Gulshan area should not have come as any surprise.
Although the Sheikh Hasina government has launched a massive crackdown on Islamic radicals and criminals, Thursday’s attack proves that the Islamic terrorists can strike at will.
Many foreign powers, including Pakistan and Turkey, are unhappy with the execution of war criminals and Bangladesh’s crackdown on Islamic radicals. 
Pakistan has deep tentacles within Bangladesh and has been engineering trouble in that country.
Thursday evening’s attack by Islamic terrorists on a cafe full of foreigners in Dhaka’s upscale Gulshan area should not have come as any surprise. On the contrary, it was surprising that such an attack took so long to happen in a country where Islamic fundamentalists have had a free run killing liberal and secular bloggers and academicians and religious minorities.
Although the Sheikh Hasina government has launched a massive crackdown on Islamic radicals and criminals, Thursday’s attack proves that the Islamic terrorists can strike at will. That is because, as has been stated in this article just last week, Islamic fundamentalists who support the terrorists are deeply entrenched within the security, political, bureaucratic and business establishments in Bangladesh. And it will be a difficult task to root them out. 
Though Prime Minister Sheikh Hasina renewed her vow to rid Bangladesh of Islamic terrorism in the aftermath of Friday’s attacks, she is sure to face tough resistance from influential sections of the armed, paramilitary and police forces, and powerful politicians, bureaucrats and businessmen from going all out against Islamic terrorists. In fact, she will have to tackle these powerful people and eliminate them if Islamic terrorism is to be rooted out of Bangladesh. Inevitable though such a harsh step is, it is sure to cause more turmoil in that country. 

** Behave or be like North Korea: former US diplomat Zalmay Khalilzad on Pakistan

Sunil Raman Jul 1, 2016  

Zalmay Khalilzad, who was born in Afghanistan, moved to the US as a teenager and rose to be President George W Bush’s points man for Afghanistan and Iraq, post-9/11 attacks. He was more than the eyes and ears of Washington DC; as a backroom man armed with extensive contacts, knowledge and cultural instincts, he was part of the nation-building exercise in these two volatile countries.
In his recently-published memoirs, The Envoy, Khalilzad shares his insights and offers a way ahead. Pakistan, he says, remains a spoiler as it provided sanctuary to Al-Qaeda and Taliban leaders, and President Bush ignored his (Khalilzad's) requests to put additional pressure on Pakistan to deliver. Sunil Raman caught up with Zalmay Khalilzad, on a visit to New Delhi, and sought his insights into how the US policy towards Pakistan and Afghanistan might shape up in the post-Obama world.
Will there be a change in US policy towards Pakistan post-Obama? How will the two presumptive presidential candidates, Hillary Clinton and Donald Trump, handle Pakistan?

On Afghanistan, there is not much disagreement between the two political parties. There is a broad agreement and not much disagreement, that the US must sustain its effort to help Afghanistan succeed, and a bipartisan agreement that Pakistan giving sanctuary to Taliban and terrorists is unhelpful. The question is, how specifically the two candidates, one of them as president, would deal with Pakistan and sustain effort on Afghanistan. On Afghanistan, I think they will sustain Obama’s efforts or perhaps raise it. Both Clinton and Trump are right of centre to Obama’s policies.
On Pakistan, Hillary Clinton (Secretary of State in Obama’s first term) has a history of believing that engagement with the country might produce results, but like other leaders post-9/11 she also ended with disappointment with what she achieved. The current trend in US policy to isolate Pakistan in order to incentivise and co-operate, is likely to remain or will become the dominant US policy. In other words, more negative incentive than positive engagement. So more pressure on Pakistan and on Afghanistan, will sustain the effort (of Obama administration) or increase the effort in Afghanistan.

Book Review - ‘India Vs Pakistan: Why Can’t We Just Be Friends?’

Jaideep A Prabhu - July 1, 2016, 

Provocative, sometimes insightful, and always simple and coherent- ‘India vs Pakistan’ makes for an excellent introduction for laypeople to India’s troubled relations with its Islamic neighbour to the west
Haqqani, Husain. India vs Pakistan: Why Can’t We Just Be Friends? New Delhi: Juggernaut, 2016. 200 pp.

More like a long essay than a book, Husain Haqqani’s latest book ‘India vs Pakistan: Why Can’t We Just Be Friends?’ is written for the layman. Yet its simplicity is deceptive- within its casually written and smooth-flowing narrative are a few insightful observations, by a man who has served his country at the highest echelons of power. Some of these views are not popular- if not on one side of the border, then the other. Haqqani has been hounded by many in his own country as unpatriotic, and some of his comments are bound to irk Indians as well. As an Indian myself, I cannot claim complete objectivity on the sensitive issue of India’s relations with its troublesome neighbour, Pakistan. That, however, may not be a bad thing for human affairs are seldom dispassionate and rational. If a policy does not appeal to the emotions and aspirations of a people, as Britain’s recent almost-exit from the European Union demonstrated, its rationality is unlikely to provide it much succour. Besides, such objectivity (closely observed) is a myth.
Much of what Haqqani narrates is not new to anyone who has even peripherally followed South Asian politics. However, the author highlights events and views that raise tantalising ‘what ifs’ of history and are often ignored in cynicism or frustration. For example, Haqqani reminds us of how nebulous the idea of Partition was, even after the fact that Muhammad Ali Jinnah wanted India and Pakistan to be friendly neighbours like the United States and Canada. It shows that the founder of the Islamic republic had not thought through the consequences of demanding a separate homeland for the subcontinent’s Muslims.

Another example is of Mohammad Ismail, the man Pakistan had nominated to be their first High Commissioner to India. Ismail refused to adopt Pakistani nationality or move to the newly-formed Pakistan, despite his nomination. Others, such as Chaudhry Khaliq-uz-Zaman- the leader of the Pakistan Muslim League- went back and forth several times, to see which country promised better prospects before settling down. Jogendranath Mandal, a Bengali scheduled caste leader, served as Pakistan’s first Law and Labour Minister and second Minister of Commonwealth and Kashmir Affairs before returning to settle down in Calcutta. Sajjad Zaheer, an Uttar Pradeshi Muslim who had become the leader of the Pakistan Communist Party, was arrested for sedition in 1951 and was deported to India after he reclaimed Indian citizenship.

Stephen Hawking: 'There is no heaven; it's a fairy story'

In an exclusive interview with the Guardian, the cosmologist shares his thoughts on death, M-theory, human purpose and our chance existence
Stephen Hawking dismisses belief in God in an exclusive interview with the Guardian. Photograph: Solar & Heliospheric Observatory/Discovery Channel
Sunday 15 May 2011

The belief that heaven or an afterlife awaits us is a "fairy story" for people afraid of death, Stephen Hawking has said.
In a dismissal that underlines his firm rejection of religious comforts, Britain's most eminent scientist said there was nothing beyond the moment when the brain flickers for the final time.
Hawking, who was diagnosed with motor neurone disease at the age of 21, shares his thoughts on death, human purpose and our chance existence in an exclusive interview with the Guardian today.
The incurable illness was expected to kill Hawking within a few years of its symptoms arising, an outlook that turned the young scientist to Wagner, but ultimately led him to enjoy life more, he has said, despite the cloud hanging over his future.

"I have lived with the prospect of an early death for the last 49 years. I'm not afraid of death, but I'm in no hurry to die. I have so much I want to do first," he said.

"I regard the brain as a computer which will stop working when its components fail. There is no heaven or afterlife for broken down computers; that is a fairy story for people afraid of the dark," he added.

Hawking's latest comments go beyond those laid out in his 2010 book,The Grand Design, in which he asserted that there is no need for a creator to explain the existence of the universe. The book provoked a backlash from some religious leaders, including the chief rabbi, Lord Sacks, who accused Hawking of committing an "elementary fallacy" of logic.

The 69-year-old physicist fell seriously ill after a lecture tour in the US in 2009 and was taken to Addenbrookes hospital in an episode that sparked grave concerns for his health. He has since returned to his Cambridge department as director of research.

The physicist's remarks draw a stark line between the use of God as a metaphor and the belief in an omniscient creator whose hands guide the workings of the cosmos.

In his bestselling 1988 book, A Brief History of Time, Hawking drew on the device so beloved of Einstein, when he described what it would mean for scientists to develop a "theory of everything" – a set of equations that described every particle and force in the entire universe. "It would be the ultimate triumph of human reason – for then we should know the mind of God," he wrote.

The book sold a reported 9 million copies and propelled the physicist to instant stardom. His fame has led to guest roles in The Simpsons, Star Trek: The Next Generation and Red Dwarf. One of his greatest achievements in physics is a theory that describes how black holes emit radiation.

In the interview, Hawking rejected the notion of life beyond death and emphasised the need to fulfil our potential on Earth by making good use of our lives. In answer to a question on how we should live, he said, simply: "We should seek the greatest value of our action."

In answering another, he wrote of the beauty of science, such as the exquisite double helix of DNA in biology, or the fundamental equations of physics.

Hawking responded to questions posed by the Guardian and a reader in advance of a lecture tomorrow at the Google Zeitgeist meeting in London, in which he will address the question: "Why are we here?"

In the talk, he will argue that tiny quantum fluctuations in the very early universe became the seeds from which galaxies, stars, and ultimately human life emerged. "Science predicts that many different kinds of universe will be spontaneously created out of nothing. It is a matter of chance which we are in," he said.

Hawking suggests that with modern space-based instruments, such as the European Space Agency's Planck mission, it may be possible to spot ancient fingerprints in the light left over from the earliest moments of the universe and work out how our own place in space came to be.

His talk will focus on M-theory, a broad mathematical framework that encompasses string theory, which is regarded by many physicists as the best hope yet of developing a theory of everything.

M-theory demands a universe with 11 dimensions, including a dimension of time and the three familiar spatial dimensions. The rest are curled up too small for us to see.

Evidence in support of M-theory might also come from the Large Hadron Collider (LHC) at Cern, the European particle physics laboratory near Geneva.

One possibility predicted by M-theory is supersymmetry, an idea that says fundamental particles have heavy – and as yet undiscovered – twins, with curious names such as selectrons and squarks.

Chinese Military Suffers From Critical Shortages of Qualified Recruits

Attrition: China Struggles To Find Better Troops
July 1, 2016

The Chinese armed forces continuous to suffer serious shortage of qualified recruits. Not just insufficient applicants for career officer jobs, but the military does not attract the most capable people for all sorts of technical fields. This has been a growing problem since the 1990s when the military set its sights on achieving parity with the educational and performance levels of Western armed forces. After the 1990s China was turning out sufficient college and high school graduates for this but the military found that these potential recruits were not interested. This despite the much publicized modern weapons and equipment, higher pay and much improved living conditions. Most of the best college and high school graduates opted for better paying, and more interesting, jobs in the civilian economy.

In response to this the military decided to adopt Western methods to get the people they wanted. Since 2005 there have been a series of pay increases for officers and troops and steadily escalating recruiting bonuses. For example in 2009 a $3,500 bonus was offered for college grads who were willing to join for two years. Since then the military has increased the bonuses and adjusted them to account for demand and standard of living in different parts of the country. Thus that $3,500 bonus offered in 2009 is now up to $28,500 for suitable recruits from Beijing (the national capital and very expensive to live in). Nearly as much money is offered for non-officer tech jobs. There are also bonuses for people willing to serve in remote places like Tibet or volunteer for long sea voyages. The bonuses are actually a package, with some of it cash for the recruit, some of it for his (or her) family and some in the form of hard-to-get permits for the recruit’s family to live in the capital as well as repayment of college loans. Another form of bonus is guarantees of preference in getting into graduate school of good government jobs.
In 2010 the military has established a web site for potential recruits, perhaps after noting the long, and extensive, American use of the Internet to attract high quality recruits. This web advertising continues with the production of music and other videos to attract recruits. Mostly the military wants to let potential recruits know that the military is willing to make deals.

‘Disciplined army, able to win’: China President Xi Jinping states strategic military goal

Chinese President Xi Jinping says China needs to create a modern and disciplined army that would defeat potential opponents. The Chinese leader said Beijing had no plans to attack anyone, but would continue its policy of active defense.
Xi was speaking on the 95th anniversary of the founding of the Chinese Communist Party. In a warning to potential enemies, he said that Beijing must create armed forces that are capable of defending its interests. 

"Creating an army that corresponds to the international status of our country is a strategic goal,” Xi stated, as cited by RIA Novosti. 
Read more

“We should put together economic and defense development, modernize the army to make it contemporary and standardized… We should comprehensively promote the military reform to create an army that will be disciplined and able to win," he added. 

The Terrorists the Saudis Cultivate in Peaceful Countries

Nicholas Kristof JULY 2, 2016
The Kater Llulla mosque in Prishtina (also known as “Hasan Beg” mosque). Built with funds from Saudi Arabia, the mosque has the reputation of being a hotbed of radical Islam. CreditAndrew Testa for The New York Times
PEJA, Kosovo — FIRST, a three-part quiz:

Which Islamic country celebrates as a national hero a 15th-century Christian who battled Muslim invaders?
Which Islamic country is so pro-American it has a statue of Bill Clinton and a women’s clothing store named “Hillary” on Bill Klinton Boulevard?
Which Islamic country has had more citizens go abroad to fight for the Islamic State per capita than any other in Europe?
The answer to each question is Kosovo, in southeastern Europe — and therein lies a cautionary tale. Whenever there is a terrorist attack by Muslim extremists, we look to our enemies like the Islamic State or Al Qaeda. But perhaps we should also look to our “friends,” like Saudi Arabia.

For decades, Saudi Arabia has recklessly financed and promoted a harsh and intolerant Wahhabi version of Islam around the world in a way that is, quite predictably, producing terrorists. And there’s no better example of this Saudi recklessness than in the Balkans.
Kosovo and Albania have been models of religious moderation and tolerance, and as the Clinton statue attests, Kosovars revere the United States and Britain for averting a possible genocide by Serbs in 1999 (there are also many Kosovar teenagers named Tony Blair!). Yet Saudi Arabia and other Gulf countries poured money into the new nation over the last 17 years and nurtured religious extremism in a land where originally there was little.
The upshot is that, according to the Kosovo government, 300 Kosovars have traveled to fight in Syria or Iraq, mostly to join the Islamic State. As my colleague Carlotta Gall noted in a pathbreaking article about radicalization here, Saudi money has transformed a once-tolerant Islamic society into a pipeline for jihadists.

In a sign of the times, the government last year had to turn off the water supply in the capital temporarily amid fears of an Islamic State-inspired plot to poison the city’s water.
“Saudi Arabia is destroying Islam,” Zuhdi Hajzeri, an imam at a 430-year-old mosque here in the city of Peja, told me sadly. Hajzeri is a moderate in the traditional, tolerant style of Kosovo — he is the latest in a long line of imams in his family — and said that as a result he had received more death threats from extremists than he can count.
Hajzeri and other moderates have responded with a website, Foltash.com, that criticizes the harsh Saudi Wahhabi interpretation of Islam. But they say they are outgunned by money pouring in from Saudi Arabia, Kuwait, Qatar, the United Arab Emirates and Bahrain to support harsh variants of Islam through a blizzard of publications, videos and other materials.

*** Living With The Islamic State

posted on 30 June 2016
from STRATFOR-- this post authored by Scott Stewart
After over a month of fighting, the Iraqi government has at last reclaimed the city of Fallujah from the Islamic State's grasp. Clearing the city of any remaining fighters could take weeks, and removing the booby traps left behind will almost certainly take months. Nevertheless, the June 26 defeat is a huge symbolic loss for the jihadist group and a significant victory for the forces trying to discredit and destroy it.
Fallujah has a history as a hotbed for jihadist insurgency. In 2004, the U.S. military had to invade the city twice to wrest it from the hands of the jihadists controlling it.The second attempt, an operation that lasted more than six weeks, resulted in some of the heaviest urban combat that American troops experienced during their occupation of Iraq.
It came as no surprise when, a decade later, Fallujah became the first Iraqi city to fall to jihadists trying to expand their territory. The Islamic State in Iraq and the Levantseized the town in January 2014, six months before it swept through Mosul. A few weeks after Mosul's highly publicized fall, the group declared that it had re-established the Islamic Caliphate and changed its name to one that better reflected its global ambitions: the Islamic State.
Finding Reality in the Quest for Utopia
At first, the people of Fallujah welcomed the jihadists as allies who could help them resist the oppressive policies of the Shiite-led government in Baghdad. But the past two and a half years of Islamic State rule seem to have changed their perception of the group. The speed with which Iraqi forces were able to retake the city, though partially a testament to their improving capabilities, also indicates that the population viewed the operation as one of liberation rather than occupation. The distinction is important, because like the rapid recapture of Ramadi in December 2015, Fallujah's fall reflects the alienating effect that the Islamic State's governance can have on its one-time supporters.
Islamic State leaders appear to have learned much from their predecessors' experience with holding and governing territory from 2004 to 2007. Even so, that knowledge has not made up for the fact that the group's utopian ideology is falling flat in the face of reality. In theory, the Islamic State's promises of a fair, just and prosperous society ruled by Sharia principles sound attractive. But in practice, those under the group's thumb have found themselves subject to severe and capricious regulations enforced by a cadre of sadistic and rapacious sociopaths.

That the group's actions have shattered the utopian vision it peddles to its disciples is nothing new. Populations in Yemen, Mali, Nigeria, Libya and Somalia have seen jihadist rule before and have bucked its austere laws, which ban smoking, prohibit beard shaving and restrict a host of other personal liberties and behaviors. The abuses that jihadist fighters often visit upon the people they feign to protect erode their legitimacy even further. Large stockpiles of Viagra are a common finding in Islamic State strongholds after they have been retaken, particularly in Iraq, Syria and Nigeria. Female sex slaves who have escaped captivity in these areas have confirmed that the group's members are heavy users of the drug. Any military organization that fuels itself with Viagra clearly cannot provide a safe and stable society for the people it is holding, quite literally, under the gun.

** Signs of Trouble for Deutsche Bank

July 1, 2016 A crisis in Germany’s largest bank would be felt by financial markets worldwide.

By Jacob L. Shapiro and Lili Bayer

The International Monetary Fund (IMF) issued a damning 63-page report on the German banking and insurance sector yesterday. It is a long and thorough report, with the key point buried on page 42: “Deutsche Bank appears to be the most important net contributor to systemic risks in the global banking system.”
Then, the U.S. Federal Reserve said that the U.S. subsidiary of Deutsche Bank was one of two banks (the other was Santander) that failed an annual stress test. Deutsche Bank failed the same test last year, and while the Fed noted that the U.S. subsidiary had strengthened its capital position since its previous failure, it said there was still much more work to be done. The markets punished Deutsche Bank, already reeling from Brexit, forcing shares down at one point to their lowest level in 30 years.
With all the news surrounding volatility in the markets due to Brexit, there is a temptation to dismiss this as more of the same. But in reality, these two developments, particularly the IMF report, are of far greater importance. If Deutsche Bank really is on the verge of a crisis – and we believe it is – the implications will be felt worldwide and the global financial system will shudder. First, however, the effects will be felt by Germany, and before we can explain why, Deutsche Bank’s unique and important role in Germany’s history and development must be placed in context.

Deutsche Bank is not merely Germany’s biggest bank. The political role it plays in Germany is unique when compared with other countries. There is no good historical antecedent with which to compare it in the U.S.; Deutsche Bank’s importance to Germany is many times greater than that of an investment bank like Lehman Brothers to the U.S. in 2008. Deutsche Bank is technically a private bank, but it is tied to the government informally and to most major German corporations formally. Its fate will be shared by all of Germany.
Deutsche Bank is technically a year older than Germany itself, having been founded in 1870, a year before Prussia declared that the German Reich had succeeded the Holy Roman Empire. It is one of the Big Three German banks – the others being Commerzbank (also founded in 1870) and Dresdner Bank (founded in 1872 and bought by Commerzbank in 2009) – that played the role of both capital provider and master puppeteer in the development of the German industrial machine over the last century and a half.
After its founding, Germany was extremely poor. Deutsche Bank provided short-term loans and in return received equity shares in the companies it bankrolled. By the mid-1980s, according to a German government study, the Big Three were estimated to control the voting authority of over three-quarters of the shares of most major German companies. A 1995 report by the U.S. Congress’ Federal Research Division estimated that the Big Three by themselves, not counting the shares they held for their clients, held 30 percent of the seats on the advisory boards of all German companies. Disaggregating Deutsche Bank from the German government’s political goals or the structure of German corporations is impossible. They are all inextricably linked.

How Merkel and Middle Eastern Migration Ensured Britain's EU Exit

by Michel Gurfinkiel, PJ Media, June 29, 2016
Originally published under the title "The Road to Brexit: How Merkel Thwarted Cameron's Smart Gamble."
Polls show mass migration was the number one concern of voters in the Brexit referendum.

There were many signposts on the road to Brexit. As early as 2001, the Swiss rejected access to the EU by an overwhelming 72.5%. Four years later, in 2005, both the French and the Dutch rejected a European constitutional treaty project in separate referendums. Polls indicated that similar referendums would have turned the same way in other places.
In recent years, anti-EU defiance increased. Radical anti-EU parties and more moderate Eurosceptic parties won higher and higher returns in most countries, either in national or European ballots. In some countries -- Hungary, Poland, Greece -- they simply won the election and took over the cabinet. In others -- Austria -- they almost won.
Brexit is thus not so much a revolution in European affairs as the culmination of a long and steady process.

United Europe had been popular among Europeans, and every European nation was willing to join it -- as long as it delivered prosperity, democracy, stability. Global security.
This was true of the six founding nations in the 1950s and 1960s, of Britain, Ireland, Scandinavia and the former Mediterranean dictatorships in the 1970s, and of the former Communist countries of Eastern Europe in the 1990s.
Things changed by the mid-1990s, however, when what had been known hitherto as the European Community was changed into the much tighter European Union. It soon became apparent, whatever the political class would say, that the more centralized the Union became, the less it could actually deliver.

Instead of the ever-increasing prosperity they had taken for granted for a half-century, many Europeans had to face zero growth, bankruptcy, and long-term austerity programs. Instead of more democracy -- free expression, the rule of elected and responsible governments -- they were getting more political correctness and more bureaucracy.
Instead of more global security, a new pervading sense of powerlessness in front of Russian imperialism and jihadist terror. Instead of more stability, more social disruption -- especially in such essential areas as family and national identity.

** Is Russia's Economy Doomed to Collapse?

Putin must undertake serious reforms to keep the country competitive.
Sergey Aleksashenko, July 1, 2016

“Russia is isolated with its economy in tatters,” said President Obama in hisState of the Union address on January 20, 2015. At that time, many thought it was true: the Russian currency was in free fall, while the federal budget was losing its revenues and beginning to extensively rely on reserves accumulated in previous years, and so many experts predicted the collapse of the Russian economy—an economic decline of 10 percent or more, comparable to the 2008–09 crisis. But though the Russian economy plunged into a crisis and could not halt its decline for six consecutive quarters, the real scale of the economic shocks was significantly smaller. The fall in GDP was 3.7 percent in 2015, and most experts foresee a drop of around 1 percent in 2016. Oil prices’ rebound from their nadir allowed the ruble not only to stabilize, but to gain a foothold. A 10 percent fall in private consumption has not led to any visible increase in social tension.

Short-term forecasts for the Russian economy are gloomy, and do not envisage a rapid post-crisis recovery. In the medium and long run, if the conflict in eastern Ukraine is not peacefully resolved and Western sanctions are not removed, the economic situation may worsen, but no collapse will occur. The primitive structure of the Russian economy and Putin’s pro-market economic doctrine will prevent chaos, and disasters will not be able to turn around the economy’s sluggish growth.

The Economy’s Surprising Stabilization
For many the biggest mystery of the past year was the relatively moderate drop in the Russian economy. In early 2015, many experts predicted an inevitable 8–10 percent decline, basing their projections on the fall of the ruble, falling imports and expectations of falling investment. However, nothing of the sort happened. Why? I see three reasons for this.
First, the base of the Russian economy is the production and export of raw materials and commodities. Unlike 2008–09, there is no crisis in the global economy, and the main consumers of Russian raw materials (Europe, China and Middle East) continue to grow, albeit unevenly; there has been no reduction in demand for Russian raw materials this time, as opposed to six years ago. Moreover, the key product of Russian exports—oil and refined products—recorded a slight increase, both in production and in exports. The stability of the Russian raw-material sector entailed the stability of railway cargo (more than 70 percent of its turnover is raw materials and commodities) and pipeline transportation volumes (which in terms of its effect on GDP is equal to railway-cargo turnover).
Taxation of the Russian oil and gas sector is structured such that the main part of the increase in world oil prices benefits the budget. And, vice versa, the decrease in oil prices hits the financial situation of oil companies at a much smaller scale than the revenue base of the federal budget. Moreover, all export-oriented industries benefited from the devaluation of the ruble (local production costs paid in rubles devalued in currency terms) and from the government's policy of freezing wages in the public sector; workers’ pressure to raise wages plummeted. All this has allowed the raw-materials sector to maintain production and keep the necessary investments.

Second, by 2015, the Russian government launched a full-throttle program to finance ambitious military procurement and reinvestment into the defense industries, which are mainly state-owned. On this basis, the production of military products in 2013–15 grew by 15–20 percent annually, and approximately the same growth should continue in 2016. The rapid growth of the military industry evidently benefited many industrial sectors and prevented the decline in industry as a whole.

Third, thanks to the reforms of the nineteen-nineties, the Russian economy became a market one, that is, it is inclined to restore equilibrium using a free-floating ruble exchange rate. We must acknowledge the Russian authorities, who not only did not freeze prices during the crisis, but did not even discuss this idea. As a result, the economy was able to quickly adjust to shocks both external (decline of oil prices and 50 percent devaluation of the ruble) and internal (a ban on food imports from Western countries). However, the price of this adjustment was the rise in inflation to 17 percent in spring 2015, a 10 percent decrease in the level of private consumption and 40 percent reduction in imports.

After ‘Brexit,’ Finding a New London for the Financial World to Call Home

London’s days as the pre-eminent global financial capital may be numbered.
The race is on to be the new London.
Unless Britain finds a way to undo its decision to leave the European Union, London’s days as the pre-eminent global financial capital, ranked even ahead of New York, may be numbered.
I spoke this week to several high-ranking executives at major financial institutions that collectively employ tens of thousands in London. While none of them have any immediate plans to move their European headquarters from Britain’s capital, all agreed they would eventually shift a significant number of highly paid employees to cities that remain in the European Union.
One executive in charge of relocation (who like the others, spoke only on condition of anonymity because of the political sensitivity of the issue) said the percentage of employees in his firm who might be required to move ranged from 10 percent to 40 percent. “Multiply that throughout the industry and it’s tens of thousands of people and their families,” he said. “And bear in mind that most of these people are millionaires.”

Others said it would take five to 10 years, but a new London would almost certainly emerge in one of the other prominent cities of the European Union. “When I moved to London years ago, it wasn’t exactly cosmopolitan,” said another executive. “It wasn’t a place for great restaurants. The infrastructure has improved dramatically. It will take time, but eventually one big hub will develop.”
Who might win this high-stakes financial sweepstakes?
To handicap the race, I asked relocation experts at major firms to describe what they are looking for in a replacement for London. I also spoke to Mark Yeandle, a director of the Z/Yen Group in London and lead author of the Global Financial Centers Index, which ranks cities based on their attractiveness to financial services businesses. (Before last week’s vote, London was far and away the winner.)

Here are the criteria most frequently mentioned: English-language facility, which is essential for attracting a global work force; a favorable regulatory environment, especially regarding employment; excellent transportation and communications infrastructure; availability of prime office space and luxury housing; good schools; good restaurants and cultural offerings; and finally, an intangible quality that includes a certain energy level and openness to an influx of highly paid, competitive City of London-Wall Street types.

I scored numerous cities in the European Union on a 60-point scale: five points for office space and housing, five points for restaurants and cultural offerings — because it’s easier for any city to build new offices and housing, and import talented chefs and entertainers — and 10 points for each of the others.