Coming soon: India steals a march on China!

The World Bank’s Global Development Finance 2009 report released on Monday was exceptional, not so much for predicting India and China would continue to grow fast and shore up the world economy. That’s old hat by now. But for one detail that seems to have escaped many observers, even in a China-fixated India: the report expects India to actually grow faster than China in 2010 and then match China’s growth (8.5%) in 2011!

If that happens, it will be for the first time in recent decades that India overtakes China in terms of the GDP (gross domestic product) growth rate. Of course India’s 8% rate of growth in 2010 will be only marginally higher than China’s 7.5%, quite unlike the wide gulf between China’s double-digit growth and our best performance of 9.2%.

But for those for whom these things matter, it is a huge ego trip. For years we have chaffed at trailing China. Sure, we’ve been increasingly clubbed with China – first as China and India, then as Chindia, - but it was seldom, if ever India and China ie with the positions reversed. Of course, it would be a huge mistake to get carried away by this – on almost every parameter, especially social indicators, we lag our eastern neighbour by a mile. Nonetheless, it’s hard to suppress a surge of pride at the prospect that we may, just may, be one up on China. Indichi, anyone?

China plays foul with ‘Buy Chinese’

Given the obsessive interest in China and everything Chinese in mainstream Indian public opinion, it is surprising the recent explicit ‘Buy Chinese’ clause of the Chinese government has not got much coverage in the Indian media.

In a lead story in the London Financial Times last Wednesday, the paper says a notification issued jointly by nine government departments, mandates that all government procurement will henceforth be restricted to Chinese products or services unless they are not available within the country or cannot be bought on reasonable commercial or legal terms.

The order, issued jointly by the legislative office of the State Council, the cabinet, China’s state planning agency, the national development and Reform Commission and various ministries, parallels the ‘Buy American’ clause in President Obama’s stimulus package.

Ironically China was one of the first countries to protest against the ‘Buy American clause’. Even more ironically, unlike the US that has a huge (though shrinking) balance of trade deficit, China has a trade surplus of euro 170 billion that needs to be pruned. It should be encouraging rather than discouraging imports. Indeed this trade surplus is part of the global imbalance that needs to be addressed if we are not to see a repeat of the on-going crisis (it is argued the resultant dollar earnings invested in US treasury bills contributed to keeping US interest rates low, encouraging both a borrowing binge and an asset bubble).

Clearly, the Chinese government is more concerned about domestic job losses than about shrinking its trade balance. While its anxiety is understandable from a narrow nationalist perspective, it is exceedingly damaging for the global economy and for international trade flows. As the manufacturing hub for the world and one of the most export-oriented economies, China has the most to lose if more countries follow its lead and that of the US.

China was the single largest source of imports for India accounting for 10.3% of total imports during April- December 2008; the US accounts for only 5.9%. Yet the sound and fury that accompanied the announcement of the ‘Buy American’ clause is strangely missing in the context of the ‘Buy Chinese’ clause. We need to change that; we have a much more powerful lever, we import far more from China than from the US, and must not hesitate to use it (read retaliate if China presses ahead).

Far from solving our problems, the Budget has compounded them

‘A single Budget Speech cannot solve all our problems,’ intoned Finance Minister, Pranab Mukherjee sanctimoniously at the beginning of his speech earlier in the day. Sure! But it can compound our problems. And that is precisely what Budget 09-10 has done. It has compounded the country’s problems many times over by carrying populism to an extreme.

Under the guise of leading the economy back to 9% GDP growth it has given the go-by to any pretence of fiscal prudence. Consequently total expenditure is budgeted to cross Rs 10.20 lakh crore even as revenue lags far behind at Rs 6.14 lakh crore. What is surprising is that far from being apologetic about such runaway expenditure, close to 40% of which is to be financed by borrowing and other liabilities, the FM seems to think it is a feather in his cap.

Departing from his written text (a rare feat), he pointed that it is for the first time that expenditure is to breach the Rs 10 lakh, mark up from just Rs 193 crore in the first budget after independence. It would certainly have been a matter of pride if he’d been able to finance this expenditure out of higher revenues. Alas! The reality is quite different.

The net result is a yawning gap in government finances with the revenue deficit (the difference between the revenue receipts and revenue expenditure) budgeted to go up a dramatic 412% from the budget estimates for 2008-09. At 70% of the fiscal deficit, as against 41% in 2007-08, the high revenue deficit is an ominous sign of the abysmal state of government finances. Revenue deficits, unlike fiscal deficits, only add to the interest and repayment burden without creating any assets and are therefore far more worrisome than fiscal deficits per se.

What makes matters worse is that in all probability the budget estimate of the fiscal deficit at 6.8% of GDP is likely to be an under-estimate. The reason is not only are oil and fertiliser subsidies treated as off-budget items and not included as part of expenditure, these have been estimated at just 10% of last year’s levels. Further no allocation has been made either for the Congress Party’s election manifesto promise of 25 kilos of rice or wheat per month at Rs 3 a kilo, or to meet the related expenditure. It’s the same story when it comes to obligations under the Unorganised Workers Social Security Bill. In all probability, therefore, we could be looking at a fiscal deficit of close to 9% for the centre alone.

Any wonder, then, that markets promptly tanked over 700 points and went on to end the day 870 points lower, the highest fall on any Budget day to date?

Union budget 2009-10: Highlights

Following are the highlights of Union budget 2009-10:

* Government plans to bring back the economy to a high growth of 9%
* GDP growth dipped to 6.7% in FY '09
* FM to make pre-budget talks with state FMs an annual affair
* Fiscal deficit up from 2.7% to 6.8% of GDP
* Return to fiscal prudence at the earliest
* "Aam admi" is focus of all programmes and schemes
* IT exemption limit raised; Rs50,000 for senior citizens
* Limit raised by Rs10,000 for tax payers, including women
* 10% surcharge on personal income tax scrapped
* Fringe Benefit Tax abolished
* No change in corporate tax
* Defence gets Rs1,41,703 cr, up 34%
* Total fiscal stimulus in 2008-09 amounts to Rs1,86,000 crore
* IIFCL to evolve mechanism for increased infrastructure funding
* IIFCL to re-finance commercial bank loans up to 60% in critical projects through PPP to the tune of Rs1,00,000 crore
* Allocations for highways being stepped up by 23%
* Funds for housing, amenities for urban poor, up Rs3,973 crore
* Funds for JNNURM up 87% to Rs12,887 crore
* Assistance for storm-water drainage project up by Rs300 crore
* Farm credit target up at Rs3,25,000 crore from Rs2,87,000 crore
* Interest rates incentive to farmers to repay loans on time
* Additional Rs1,000 crore for accelerated irrigation scheme
* Export Credit Guarantee scheme extended till March 2010
* 2% interest subvention (IS) scheme extended till March 2010
* IS scheme to cover seven job-oriented sectors, including textile, handicrafts and handlooms.
* Commodity Transaction Tax abolished
* New pension system trust exempted from STT; DDT
* Minimum Alternate Tax hiked to 15% from 10%
* Tax holiday on petroleum sector extended to natural gas
* 100% tax deduction on political donations
* Stimulus for print media for another six months
* Fertiliser subsidy to be nutrient-based, not price-based
* Expert group to form viable pricing for imported petroleum goods
* Banks and insurance firms to remain in the public sector
* Rs100 crore one-time grant to expand banks in unbanked areas
* Government committed to providing Rs100 per day as wages under NREGA
* * Allocation of Rs39,100 crore to be made for NREGA
* NREGA coverage increased to 4.74 crore households in FY '09
* Work National Food Security scheme has begun
* Allocation for Bharat Nirman being raised by 45%
* Rs2,000-crore rural housing fund under National Housing Bank
* Mission for female literacy with focus on minorities, SC/STs
* 50% of all rural women to be brought into SHG programmes
* Full interest subsidy for students in select institutions. Five lakh students to benefit
* Modernisation of national exployment exchanges
* Action for social security to unorganised sector workers
* New pension benefits for 12 lakh jawans and JCOs from July
* One lakh dwelling units for paramilitary forces
* Unique Identification Card to citizens in 12-18 months
* Provision of Rs120 crore for UIC project
* Rs2,113 crore allocated for IITs and new IITs
* Rs3,472 crore for Commonwealth Games, up from Rs2,112 crore
* Customs, excise and service tax base rates unchanged
* Allocation for Indira Awas Yojana increased 63%
* IT returns to be made simpler
* Eight missions being launched under plan on climate change
* Allocation for market development assistance scheme up 148%
* Allocation for Rural Health Mission raised by Rs257 crore above interim budget
* Rs500 crore for rehabilitation of Sri Lankan Tamils
* Rs1,000 crore for infrastructure in cyclone-hit area in WB
* Total expenditure crosses Rs10 lakh crore for the first time
* Share of direct taxes in revenue increased to 56% in FY '09


Budget expectations: A test match, not T20

For me, a Test match is still the real thing. T20 is fine for the occasional thrill and I have no quarrel with the place it has carved out in the hearts of cricket lovers. Yet I suspect that any serious cricketer will still measure his career against his Test track record. So it is, or should be, with policy making. The stock market may want instant gratification but it's prudent to shed that T20 frame of mind going into this budget. A dream budget will be like a flamboyant Yuvraj Singh century within a test match, supremely welcome but the bigger goal has to be to win the Test match. Never miss the woods for the trees.

Reams have been written about the significance of this electoral verdict for the Indian economy. This may have raised the bar of expectations for the first Union Budget of this government though interestingly the Sensex hasn't added any weight at all from where it was one day after the election result. That could well mean that investors hope that strong reform signals come through but have not positioned themselves for such an outcome. It's like admiring the shape of a horse and fancying it's chances of winning but not exactly betting on it. You see the difference? The market is going in fairly light, into the event. If it is a complete damp squib, and let’s discuss what would qualify as one, the Nifty could certainly retreat to 3800 kind of levels but that would hardly be a dire scenario. If it has some positive tones but not a lot, the Nifty may not even break 4000. That is, on the budget impact alone. And if it is a complete dream budget, it will certainly rush back to 4600-4700 levels, it's recent peak, and then wait to see what is going on in the global equity environment. That is my best guess of the budget impact; depending on how good or bad it is perceived to be, the nifty will probably go to 4000 or 4700. Only a terribly insipid budget will break it below 4000 or an outstanding one take it beyond 4700. After that the environment takes over. If global markets rally on, the S&P goes to 1100, the Nifty will head to 5000 plus. If global markets correct, something which can certainly not be ruled out and the S&P falls to below 800, then the Nifty too perhaps heads to 3600-3700. The budget is just one event, even something as unexpected as the election result got discounted by the market in one day flat. I doubt very much though that the budget is a 20% binary event. Seems more like 7-8% to me, either way.

But lets leave the market aside for a moment. The budget is, after all, much bigger than just the stock market. The only thing that one expects will shine through the budget speech is positive intent. The budget is not the best forum to push through sensitive policy reform. One cannot forget that it is, after all, a very political document. However, given that Prakash Karat will not be sniping at his heels this time, one certainly hopes that Pranab Mukherjee can unveil a roadmap that he will execute over his five year term. Heavens will not fall if FDI in insurance is not taken to 49% in this budget or if a Rs 40,000 crore divestment target is not set out for the current fiscal. The budget should not be judged on some of these litmus tests alone. Yes, the policy inaction of the last five years has fostered a lot of impatience. Some observers are waiting to stand up say "if you couldn't even do it this time, shorn of the Left, then when will you ever do it?" and there would be a grain of truth in that criticism too. Yet, my only submission is that having waited so long, another year or so will not kill us. The first message that the Congress government wants to send out would be to the people who voted it to power. Not to big business or investors. Sure, the two need not be mutually exclusive but the government will probably prioritise and in doing that, will lean closer to those large sections of our population who do not invest in the stock market. I say, that's fine. What's good for India, is eventually good for the stock market. So if the FM lays stress on issues like education or rural employment generation, collective groans of 'socialist/populist' should not come up from investors. The Finance Minister's job is not to spark a 300 point Nifty rally on budget day. If that happens, it will be a bonus.

So what are the issues on which will hinge the stock market's response. The most immediate items are STT/Capital gains, disinvestment, FDI and GST. Let’s take them one at a time. Long term capital gains tax regime has worked like a dream for investors. Yes, lower STT may benefit traders and arbitrageurs but any move to phase out STT and reintroduce capital gains tax will go down as a big negative. If no change happens, the markets will be fine. Any disappointment from traders will be very short-lived. Unless LTCG comes back, this is not such a make or break item.

Disinvestment. Let’s call it that without confusing it with privatisation. Given that this has been on the backburner for the last five years, the FM may want to start small and then scale up. So the first step may well be to sell small 5-10% stakes in large listed PSU companies and raise some money. This will help raising some money for the fisc but it is a drop in the ocean of our deficit, so macro watchers should not get too excited. It's not as if divestment will bring down our combined fiscal deficit from 12% to 8%. No way. And frankly, these partial stake sales have little positive implication for the stock market. It is simply fresh supply of paper into a market which is already facing too much supply from QIPs, in fact it may even crowd out private listed companies from the capital raising arena. Money is better raised by companies for productive use than by the government for putting in the fiscal deficit blackhole. The other thing that may happen is IPOs for unlisted government companies. In fact, NHPC and OIL are already in queue. This is positive. New PSUs getting listed at attractive prices will revive the primary market and some of these unlisted PSUs like BSNL and Coal India are so huge that they will end up raising serious money for the government. So the more the FM stresses about new listings, the happier the market will be. If he goes on to lay a firm divestment target for the next five years and that number is substantial, say 4 lakh crore or 80 billion dollars, investors will be very happy. Privatisation is too bold a first step, that’s just being too wishful. That is the stuff of the Economic survey, not the Union Budget. On the subject of capital raising, a firm mention of the 3G auction would be welcome.

On FDI, some caution is warranted. Yes, there is no issue with doing 49% in Insurance and I hope he does that at least but don't expect much more than that. Retail is too sensitive for a first budget. Aviation too may not happen and but that will only make Vijay Mallya unhappy. Eventually, all of this will happen, it has to.

The goods and service tax (GST) is truly important. I hope it does not get postponed by a year, though it is increasingly looking like that. Also, whether it is a dual structure or not is important. This is frankly, the only substantial and material tax reform sought in this budget. Other irritants like FBT or the education cess on corporate tax etc are marginal and any cut in corporate tax rates should not be expected. Nor for personal income taxes. Now of course there will be sector specific stuff like sops for exporters and more taxes for tobacco companies but that’s minutiae. That never makes a budget a dream or a dud. Its much better to focus on the big picture. In that, I truly hope that there is some out of the box thinking. A VDIS (voluntary disclosure of income scheme) like amnesty scheme has been spoken about to channelise resources into infrastructure, something that sounds like a good idea to me. A front on approach to tackle subsidies would be great but given the recent fuel price hike one suspects that the budget will give the thorny issue of administered price dismantling a pass. Global investors will want to see a firm timeline for bringing our high fiscal deficit under control. The FM cannot be silent on this, but I hope he speaks of a phased reduction aided by higher capital receipts and lower subsidies rather than making it sound as the immediate and top priority. The intent and resolve is important, not immediate steps to rein it in at the cost of growth. Growth is the priority, managing the deficit a compulsion that cannot be ignored, if that note is struck even fiscal hawks may grudgingly agree and rating agencies baying for blood, kept at bay.

Having said all of this, I must confess that I am as ready to be surprised as anyone else, by this budget. I doubt very much though that the impact of the budget will last the week out. Unless there are huge surprises, which I am not betting on, it will be priced in within 48 hours or two trading sessions. It may not be a total non-event like the previous 3 budgets, particularly because of elevated expectations, but it may not be a trend decider for the market. That I continue to believe will be the global market environment, where worryingly some disturbing signs are cropping up.

This weekend I recommend Wimbledon and Yoga. Try not to work yourself into a frenzy with budget expectations, in fact try to temper them. Remember the oldest rule in the book of life: don't expect too much, you won't be disappointed.

China: the way it has always been

Whether the West likes it or not, and whether the Chinese people like it or not, the reality is that China is a one-party state that we (and they) must live with for the foreseeable future.
So let’s separate politics from government for a moment, and take a look at China through the lens of this reality.
First, it is theoretically easier for any one-party state to manage a nation. With 20 per cent of the world's population, the advantage of this type of government for China is that it can get things done. Quickly.
For example: when a leader says "jump", we presume that everybody else will respond with "how high?", and "when can I come down?"
Although China’s leadership group has its own consultative bodies and think-tanks, it can exercise raw power without having to justify decisions or be accountable for them. It doesn't suffer the inconveniences of a nosy media, opposition parties, or elections every three or four years. It's a top-down hierarchical process where communication is downwards, upward communication is unwelcome, and the most common response to an instruction from the top is "Yes".
You will never hear a "Why?"
Second, China has a good leadership-selection process. It begins with training in party-controlled “law and politics” universities, then progresses upwards via ever more complex responsibilities: from the management of smaller counties in rural areas, to mid-level cities and provinces, and ultimately to the power-bases of economically important cities such as Shanghai, or politically sensitive postings on China's borders.
Play your political cards right, and the ultimate prize of Beijing is within reach. The Beijing leadership identifies exceptional talent via this process, and fosters and rewards it. This is how Hu Jin Tau made it to the top: via the poorer provinces and that culturally and politically “troublesome” province on the roof of the world.
A “Dubya” Bush would never get past mid-level management responsibility in China. Neither would a Lincoln, a Roosevelt, or an Obama rise to the top through the force of their personalities or ideas (a pity).
Everything is controlled in China. There are no wild-cards in the Middle Kingdom. Mavericks and “Type A” personalities are regarded as social misfits at best, and a danger to collective society at worst.
This is the way it has always been. Leadership succession is planned for. The alternative is violent revolution. Typically, throughout China’s long history, succession has been an orderly process, despite palace intrigues and the ambitions of those who thought that they could do the job better.
Every few hundred years or so, however, a peasant revolution, a palace coup, or a few politically ambitious generals might disturb the status-quo and steal the state (or parts of it) from a corrupt or ineffectual emperor. Once in power, though, the new regime, after getting there via bloodshed and/or deceit, would quickly demand that the population conform to the Confucian precepts of acceptance of their lot in life, and respect for authority. The virtue of a harmonious society would be promoted, and life would return to normal for the next few hundred years or so.
This system remains the same today as it was 2,000 years ago when the first emperor “Qin Shi Huang Di” defeated the other warring states and united China under one system of government. A system which remains basically unchanged today despite a modern veneer of concrete, glass, and internationalism. It has never been tampered with (Communist revolutions notwithstanding).
Chinese people have never known a different system. Chaos, civil-war, invasion, and warlords, yes: but a different system, no. Remember this. There is no alternative template for political leadership of government in their collective heads.
Participatory democracy, although wishful thinking for a few, is a foreign concept for most. Today's leadership-government model is mixed up with culture. Conservative-thinking, stability-valuing Chinese people find it difficult to separate the two.
This is one reason why, whenever the Western media criticises some sensitive aspect of Chinese government policy, the reaction from the intellectual neophytes in China’s universities is often so vitriolically anti-western. Shoot the messenger is the dominant paradigm. How dare the West criticise us! The West is anti-China!
So these days we should not look to this segment of society for alternative leadership models. This group had the courage knocked out of it in the late 1980s. Idealism is dead now. Stability is everything. Everybody just wants to be rich. The older guys are the ones to listen to.
So what happened to youthful idealsim, the anti-corruption demonstrations, and the desire for western-style democracy which was so strong during that brief Beijing Spring?
Today's loud young defenders of the status-quo are the product of an education system which has deliberately controlled information. A system which filters out “dangerous” western philosophies and which papers over embarrassing cracks in China's history.
A forgotten history which recorded demonstrations by students against their own Qing government for corruption and incompetence, as well as against the foreign powers for their carving-up of the motherland. And don't bother digging too deeply into the Cultural Revolution either. All you will learn is that you know more about this painful period in China's recent history than they do.
The fact is, these days China's students have a history and a truth already interpreted and packaged for them by the leadership in Beijing. They are products of a system which rewards memorisation and regurgitation of facts rather than intellectual honesty. A cynical system which produces graduates who can’t separate culture from politics and government.
Criticise China’s leadership, and you criticise Chinese culture. Criticise China’s government and you criticise the Chinese people. Criticise government policy, and you are disloyal.
The loneliest people I have met in China over the last five years have been those few brave, independent thinking individuals, who are intimidated by their own culture and government into the saddest of silences.
Only those old guys who can't be intimidated anymore dare open their mouths. Most recently those who are either near death and don't care, or those who have already died and are published posthumously.
What is the government frightened of? Why does it behave this way when it can rightly boast of a remarkable journey from a poverty-stricken rural economy to rapidly developing nation status with an economy which is weathering the worst world-wide economic downturn since the great depression in the 1930s.
An economy which the rest of the world hopes will lead it out of recession and into prosperity again once the worst is over. China has so much to be proud of.
Credit is due to the central government in Beijing. Credit due to its remarkable manipulation of the economic levers available to it, in the form of the stimulus program and the shift in focus away from a supply-driven export-oriented economy and towards a more demand-driven domestic economy.
Unlike the West, when Beijing wanted to change policy, all it had to do was to order the change. Premier Wen Jia Bao (representing the leadership collective) gave the instruction, and the descending levels of government authority all said, "Yes".
Nobody said "Why?"
No debate, and no time lag. Policy implemented immediately.
China should have more faith in itself and in its own people. There is no need to control information. Chinese people are capable of working things out for themselves.
In fact, if history is any guide, and if given the choice, Chinese people would be more likely to choose a benevolent Confucian-style of government rather than a Western style democracy. A Confucian style of government would still value centralised control, and respect for social stability and so on. In reality, not much would change.
There would just be more accountability to the people.
Come to think about it, maybe this is what really worries the guys in charge today. The party would be over.

About the Author
Brian is an Australian author, commercial consultant, and psychologist who has lived in China for the last five years. He has published on the topics of Vietnam, trauma, stress, anxiety, depression, and Chinese culture. He is married to a Chinese citizen, has four adult children, and his home is in Chongqing, a booming municipality on the Yangtze River above the Three Gorges Dam.You can contact Brian via his website for more information on China.

Pakistan's dirty laundry

The ongoing war with the Taliban has nothing to do with freedom and democracy: it is a distraction. Look beyond the curtain and you will find a lot of dirty laundry.
The war for civilisation, the war on terror, the war for oil, natural resources, control, freedom, whatever you want to call it, it is here and it has made itself quite comfortable in the minds, media and lounge rooms of the world.
Pakistan is now public enemy number one and the US are making no attempts at hiding the fact that they want to bring this nuclear armed Islamic Republic to its knees. The war with the belligerent Taliban has become a joke, a proxy, and a distraction. And of course, as always, it is the innocent civilians caught, quite literally, in the crossfire who suffer most.
Thanks to US pressure, and the basic ultimatum of “either you fix the problem, or we’ll do it for you - Iraq style,” more than two million people are now refugees, baking in the oppressive summer heat in makeshift camps. With no proper amenities, little to no medical services and living in appalling conditions, it won’t take long before serious disease and sickness sets in. Not such happy campers.
So what exactly is this indigenous Pakistani Taliban that we are so obsessed about? The reality is they are nothing more than an excuse, used by both East and West to justify more violence. Sure they have committed some heinous and barbaric crimes, but at this point in “the war” they are now seen as means to an end. Nothing more than pawns in a larger chess match for control.
“We are not fanatics! We want what everyone wants. We want to be able to live our lives in peace!” said Omar, a local Pathan businessman, as we sit in his office in the heart of Peshawar.
“The Americans continuously terrorise us with their constant drone attacks in the tribal agencies, the Taliban don’t make it any easier for us to live in peace and the media portray us all as terrorists! We are not terrorists!” he said with frustrated passion.
Another man then spoke up, telling me in broken English that most of what the West see are the actions of common criminals: “most of these men are not even Taliban,” he said, “they are criminals and miscreants who are bought by external agencies like the CIA and India’s RAW agents to further destabilise Pakistan”.
Later that evening Omar kindly offered to take me into the centre of the Swat Valley, a Taliban stronghold. I assured him that my fair Aussie complexion and somewhat pathetic excuse for a beard was no match for the trained eyes of Taliban spies.
“I like my head firmly attached to my body” I said jokingly. He laughed, “You will be perfectly safe when you’re with me. You don’t have to worry about security, this is our insurance plan” he said, handing me his Kalashnikov. “I drive into some very remote parts of the tribal belt and sometimes into Afghanistan as part of my job, so I need this (weapon) for my protection,” he explained.
Later we heard a huge explosion as we sat drinking sweet buffalo milk tea - a music shop had been blown up, it was just up the road from his office - the media reported it the next day as an act of terrorism and, of course, the Taliban were responsible. But Omar believed it was nothing more than the jealousy of a competitor who wanted to generate more business for himself. Who needs an expensive media campaign when all you need to do is blow up the competition and blame it on the Taliban?
So the Taliban have become scapegoats. One such incident came as no surprise as only a few days ago a friend told me about a mulvi (religious leader) from his village, who had been discovered as a Hindu agent working for India. The man had been posing as a religious leader; he taught Islamic scripture and led the prayers in the local mosque; but it wasn’t until the inquisitive minds of the local children began to probe that his elaborate ruse became undone.
They saw him dancing and listening to pop music in the mosque. On telling their parents they were quickly scolded and called liars, but as time passed and the so called mulvi began asking for food enough for 20-plus men each night, the villagers became suspicious.
When asked who the food was for he would reply “guests” but no one was seen entering or leaving the mosque, until one morning the villagers found a group of Taliban fighters’ asleep inside. So again, it begs the question: who are the indigenous Taliban if some of them are not even Pakistani? These faux Taliban fighters’ are an excuse; they are the perfect playing field for the political motives of external agencies bent on further destabilising an already unstable country.
(Cultural note to self: When posing as a religious leader in a village in Pakistan do not be so stupid as to have a Bollywood dance-off in the mosque!)
So why destabilise this third world country? What does it have that the rest of the world so desperately craves? It sure isn’t its open sewers and copious piles of garbage. You don’t think it has something to do with Pakistan being the geographic doorway to Asia and the Middle East do you? Unlike Iraq, Pakistan has nukes. Unlike Afghanistan it has Osama bin Laden. And of course, it has an oil and gas route that the US wants for its Trans-Afghan pipeline. Did I mention the nukes? Lucky Pakistan.
If left to its own devices Pakistan has the potential to become a very powerful and prosperous country. Agriculture would blossom in its extremely fertile soil; it has its own oil reserves, nuclear capabilities, strategic trade routes, and natural resources galore. But who are we kidding? The first world lives on the back of the third world. They carry us. Perish the thought of living in a world without sweatshops and soccer balls, fake Reeboks, child labour and bootleg DVDs. Without the third world we would have no first world.
To make matters worse, there are also whispers for the need to break Pakistan up into smaller nation states. If you take away the sovereignty of a country and it makes it a lot easier to control.
A good friend of mine recently had a gun held to his head and was robbed of all his personal possessions in Lahore, one of Pakistan’s major cities. A senior government official later told me that “when the crime rate dramatically increases in certain areas, it is usually a sign that the Taliban are on the move … They send out gangs of thieves to steal what they can as a means of funding their operations.”
Just like my friend in Lahore, Pakistan also regularly falls victim to the rule of the gun. But you have to ask yourself; what is the difference between a military dictatorship which oppresses its citizens and rapes the country via greed, power and fear, to that of another militant force that comes under the guise of religion? Both regimes share fundamentally flawed objectives. Pakistan cannot afford either if it wants to survive.
The sad reality now is that democracy has become a beggar in Pakistan: it lives, starving, in the minds of many while greed and corruption remain fat and opulent. The fanatical religious factions and corrupt politicians, who routinely bend to the will of external influence, are dividing the country and tearing shreds off any hope of Pakistan moving forwards.
Keep an entire country occupied with an internal threat and you’re well on your way to imposing pseudo democracy. Or maybe with President Zardari’s track record he has better credentials as a dictator. Either way, fear is a great medium for control.

-The names of interviewees have been changed for security reasons.


About the Author
Reuben Brand is an Australian Freelance Journalist, who has spent the first part of the year in living Pakistan. He is now based in the Middle East. He has an MA in Media Practice and a keen interest in global politics and current affairs, focusing closely on the Middle East and South Asia. This passion for politics is taking him into the heart of the Middle East and its neighbours in early 2009 to cover the events as they unfold and to film a documentary. For more information and regular updates please visit his website at: