US–India Strategic Partnership on Laser-Based Missile Defense

U.S.–India Strategic Partnership on Laser-Based Missile Defense. By Lisa Curtis and James Jay Carafano, Ph.D.
Heritage, January 27, 2009
WebMemo #2250

Last week, the Press Trust of India reported that defense officials intend to produce a laser capable of shooting down enemy ballistic missiles. The United States is a global leader in directed-energy defenses, including both low and high-powered lasers. American military research is also highly advanced in the technologies of acquiring targets as well as the command, control, and battle management systems necessary to identify and direct weapons to destroy missiles and other targets. In recent years, the United States and India have increased bilateral cooperation in a range of defense, counterterrorism, and homeland security areas. This cooperation is helping increase trust and confidence between the two nations while fostering security, stability, and prosperity in Asia. Working together on directed-energy developments offers a significant opportunity to strengthen the U.S.-India strategic partnership.


India Goes to Light Speed

The United States and India share many security concerns, such as the threat of ballistic missiles. V. K. Saraswat of the Defense Research and Development Organization rightly told the Press Times of India: "If you have a laser-based system on an airborne or seaborne platform, it can travel at the speed of light and in a few seconds, [and] we can kill a ballistic missile coming towards [India]." India's interest in developing directed energy defenses is understandable, as lasers have several distinct advantages. Such weapons:

• Can use a high-powered beam of energy to disable electrical components or detonate explosives, rendering the attack means such as the warhead or body of a missile useless;
• Come with an almost infinite magazine--as long as the weapons have power, they can be recharged and fired again;
• Can be aimed effectively using existing target acquisition systems (such as radars) and command and control systems (such as a computer battle management network); and
• Can be employed with a minimum of risk toward surrounding civilians, buildings, or vehicles (such as aircraft, cars, and ships).

In addition, lasers are versatile. While high-powered lasers address ballistic missile threats, low-powered lasers have a number of potential security uses, from disabling small boats to downing shoulder-fired missiles to intercepting rockets and mortars. All these uses have application to Indian security concerns.

It is also worth noting that missile defenses, such as high-powered lasers, limit the potential for regional conflict. Missile defenses serve as important deterrents, undermining the effectiveness of enemy threats. They also provide an alternative to massive retaliation in the face of an actual attack. The security provided by missile defenses actually limits the likelihood of armed escalation or an arms race and makes diplomacy more effective. It is no coincidence that the greatest strides in reducing the nuclear arsenals came in the late 1980s, at the same time the U.S. was pursuing the Strategic Defense Initiative. A world with effective missile defenses is safer and more stable.


American Arsenal

The United States has significant research and development capabilities regarding the application of lasers for national security uses. The Tactical High-Energy Laser (THEL) is one such experimental system tested by the U.S. Army. Development of the THEL began in 1996 as a joint program between the United States and Israel to develop a laser system capable of shooting down Katyusha rockets, artillery, and mortar shells. The THEL system uses radar to detect and track incoming targets. This information is then transferred to an optical tracking system, which refines the target tracking and positions the beam director. The deuterium fluoride chemical laser then fires, hitting the rocket or shell and causing it to explode far short of its intended target. More recently, the Army has experimented with low-power commercial solid-state lasers.

Another system under development in the United States is the Airborne Laser (ABL). The ABL is a system that uses a megawatt chemical laser mounted on a modified Boeing 747 to shoot down theater ballistic missiles. The megawatt-class laser was first successfully tested at full power in early 2006. The system is still under development.


A Shared Security Interest

The American record of military laser research and its many cooperative ventures with friendly and allied powers suggests that a joint U.S.-Indian directed energy program is certainly achievable. The shared interests of both nations in promoting security and stability in Asia also indicates they have a common cause in developing military technologies that would lessen the potential for conflict while effectively countering terrorism. The U.S. should explore opportunities for joint development of cutting edge directed energy technologies--lasers--with India as part of overall missile defense dialogue and deepening of military-to-military ties.

Lisa Curtis is Senior Research Fellow in the Asian Studies Center, and James Jay Carafano, Ph.D., is Assistant Director of the Kathryn and Shelby Cullom Davis Institute for International Studies and Senior Research Fellow in the Douglas and Sarah Allison Center for Foreign Policy Studies at The Heritage Foundation.

PPI: Asia Spends More on Research than Europe

Asia Spends More on Research than Europe
Progressive Policy Institute, January 21, 2009

The Numbers:

Spending on scientific research & development, 2007:
- North America: ~ $393 billion
- Europe: ~ $290 billion
- Asia: ~ $320 billion


What They Mean:

India's medieval mathematicians invented the zero and modern numerals around 500 AD. Engineers in neighboring China dreamed up paper, explosives, the compass, and movable type. But the 17th-century Scientific Revolution came not in Asia but the west, and so did the 20th century's medicines, airplanes, radio, computers, spacecraft, TV sets, and telecom gear.
Why? Albert Einstein, wondering about the issue in 1922, blamed Asia's high populations and low labor costs for slowing invention. ("In both India and China the low price of labor has stood in the way of the development of machinery.") A half-century later, British history-of-Chinese-science master Joseph Needham speculated that Europe had jumped ahead by inventing capitalism, which meant competition among businesses for customers and therefore innovation. The question remains interesting -- but only in an historical sense, because Asian science has roared back to life.

Asia's most sophisticated economies have been among the world's heaviest researchers for years. Japan's $130 billion in R&D spending amounted to 3.2 percent of Japanese GDP, far above the rich world's 2.1 percent average and topped only by Israel and Sweden. (The United States was at 2.7 percent, Australia 2.2 percent, Canada 2.0 percent, and Europe 1.7 percent.) Korea's $38 billion in research spending outstripped Britain's $35 billion, and made up 3.0 percent of GDP. Taiwan and Singapore are also well above the world's rich-country average.

Science is reviving in the two giants as well. Chinese research spending, relative to GDP, has doubled in a decade from 0.8 percent to 1.5 percent. In dollar terms, China's $85 billion spending ranks third or fourth in the world (depending on exchange rates), roughly at par with Germany. India's science spending is about $24 billion and about 0.8 percent of GDP. And within the last three or four years -- likely for the first time in four centuries -- Asia's research spending topped Europe's. The United States still tops the world, at $370 billion to Asia's $320 billion and Europe's $290 billion ... but for how long?


Further Reading:

Is Asia inventing, or just spending? In 1980, according to the U.S. Patent and Trademark Office, European researchers filed twice as many U.S. patent applications as Asians. By 2007, Japan's 79,000 applications alone outnumbered the 69,000 from all European countries combined, and Asia's total nearly doubled Europe. Korea's 23,000 applications were barely behind Germany's second-place 23,600; Taiwan, with 18,500, was above both Britain and France. India and China still file fewer patents than the top-tier Asian technological economies and the big European states, but are rising fast. Chinese and Indian researchers accounted for 30 patent applications in 1980, 900 in 2000, and 5,300 in 2007. The PTO patent records: http://www.uspto.gov/web/offices/ac/ido/oeip/taf/appl_yr.pdf


Science in Asia links:

Tokyo-based Asia Science and Technology Seminar trains young Asian scientists:http://www.jistec.or.jp/ASTS/asts_e.html

Indian Prime Minister Manmohan Singh speaks to the Science Congress in Shillong on India's high-tech future:http://pib.nic.in/release/release.asp?relid=46369

The Robotic Association of Japan insists that soft, weak, vulnerable humans have nothing to fear from its metallic, computerized and remorseless creations:http://www.rsj.or.jp/index_e.html

Korea's Ministry of Knowledge Economy (until last year the Min. of Commerce & Industry), perhaps missing the real threat, proposes an ethics charter meant to prevent human abuse of androids:http://www.korea.net/news/news/newsView.asp?part=100&serial_no=20080228018

China's Science and Technology Ministry:http://www.most.gov.cn/eng/

Taiwan's National Science Council announces bio-tech parks, cryptography, license-plate recognition, and more:http://web1.nsc.gov.tw/mp.aspx?mp=7 ASEAN's Science and Technology Network:http://www.astnet.org/

And San Diego's school system instructs America's youth on classical Chinese technology:
www.sdcoe.k12.ca.us/score/chinin/chinintg.htm


R&D around the world:

High end -- Israel is the world's most science-intensive economy, devoting 4.7 percent of GDP to R&D. Sweden is next at 3.7 percent, followed by Japan and Finland at 3.4 percent. South Korea ranks fifth 3.2 percent, with Switzerland sixth. Japan's commitment has risen from 2.0 percent in 1980, and 2.7 percent in the mid-1990s. America's 2.7 percent remains high on international rankings, but -- in contrast to Asian economies -- has not grown since the mid-1980s. American businesses spend heavily on R&D, and U.S. government investment in life sciences and medicine is high. The lag comes from low public funding for research on physics, aerospace, chemistry, and other hard sciences. The National Science Foundation has data on American research spending and other science matters over time:http://www.nsf.gov/statistics/infbrief/nsf08317/
And the OECD counts research totals by country for its members plus Argentina, China, Israel, the EU, Singapore, Slovenia, South Africa, Romania, Russia, and Taiwan:
http://www.oecd.org/dataoecd/9/44/41850733.pdf

Can do better -- The luminaries of European science would not be pleased. Galileo would blush to see Italy's low 1.1 percent of GDP; Archimedes would likewise fume to see Greece spending only 0.6 percent. Newton would be startled to learn that Korea spends more on research than Britain. (The U.K. government research budget is high, but British companies apparently do less research than some of their rivals.) Copernicus might feel worst of all, with Poland the only advanced country to have cut its R&D budgets in this decade. The highest research commitments are in Scandinavia and Germany. The European Science Agency:
http://sci.esa.int/science-e/www/area/index.cfm?fareaid=1

Developing world -- Latin America, the Middle East apart from Israel, Africa, and Southeast Asia are well behind East Asia as research powers. The World Bank's 2008 Development Indicators book finds the Latin average at 0.6 percent, led by Brazil's 0.9 percent. Tunisia is the Muslim world's most research-intensive state at 1.0 percent of GDP, followed by Malaysia, Morocco, and Turkey at 0.7 percent; Uganda's 0.8 percent and South Africa 0.9 percent are Africa's highest rates. Singapore tops Southeast Asia at a rich-world 2.3 percent, but larger ASEAN members could be doing more: the Philippines and Indonesia are at 0.1 percent, Thailand 0.3 percent and Vietnam 0.2 percent. Brazil's 0.9 percent is Latin America's highest rate, with Chile, Argentina, and Mexico next at 0.5 percent.

The Importance of India

The Importance of India, by Duncan Currie
Bush deserves credit for boosting relations with New Delhi
The Weekly Standard, Jan 15, 2009

BILL EMMOTT, a former editor of the Economist magazine, has written that George W. Bush's "bold initiative" to strengthen U.S. relations with India "may eventually be judged by historians as a move of great strategic importance and imagination." It "may turn out to be the most significant foreign policy achievement of the Bush administration," says historian Sugata Bose, an India expert at Harvard. Bilateral ties had improved toward the end of the Clinton administration, thanks largely to the efforts of Strobe Talbott, then serving as deputy secretary of state, and Jaswant Singh, then serving as Indian foreign minister. But "the big jump in relations came under President Bush," says Columbia economist Arvind Panagariya, author of the 2008 book India: The Emerging Giant.

By far the most controversial element of Bush's India policy was the U.S.-India civilian nuclear cooperation agreement, which Congress approved this past fall. It was announced in 2005 but then delayed for years by opposition from Democrats in Washington, left-wing parties in New Delhi, and an Indian nuclear establishment that was skeptical of U.S. intentions. "The determination of the White House was very important," says Panagariya, who believes the Bush administration played a "crucial" role in convincing the Indian government to fight for the deal.

Critics of the nuclear pact "really exaggerated the risks to the non-proliferation regime," says Stephen Cohen, an India expert at the Brookings Institution. As part of the accord, India has accepted new international safeguards on its nuclear program. In turn, the United States has lifted a longstanding ban on U.S.-India civilian nuclear trade. Cohen predicts that the deal will help New Delhi pursue a more sensible arms control policy.

Beyond the nuclear pact, the United States and India have also upgraded their broader strategic cooperation. After the 2004 Asian tsunami, they launched a joint relief mission with Japan and Australia. In June 2005, they signed a new defense framework which enhanced bilateral military ties and stated that "the United States and India agree on the vital importance of political and economic freedom, democratic institutions, the rule of law, security, and opportunity around the world. The leaders of our two countries are building a U.S.-India strategic partnership in pursuit of these principles and interests." In September 2007, India hosted and participated in multilateral naval exercises that included ships from the United States, Japan, Australia, and Singapore.

To appreciate where U.S.-India relations are today, recall how frosty they were during much of the latter half of the 20th century. The first prime minister of independent India, Jawaharlal Nehru, who served from 1947 to 1964, was an avowed socialist and champion of the Non-Aligned Movement. Throughout the Cold War, Indian scholar Ramachandra Guha writes in his 2007 book, India After Gandhi, the United States "tilted markedly toward" Pakistan while India "tilted somewhat toward" the Soviet Union. (During the 1971 India-Pakistan war, Richard Nixon groused to Henry Kissinger that "the Indians are no goddamn good.") It was not until the late 1990s, notes Guha, "that the United States moved toward a position of equidistance between India and Pakistan."

Today, the U.S.-India partnership seems to make perfect strategic sense: Both countries are English-speaking democracies; both are wary of a rising China; both are fighting against Islamic terrorism; and both have an interest in promoting bilateral economic cooperation. India wants to secure a permanent seat on the United Nations Security Council, and it needs America's support. Economic links between the two countries are now "so strong that they stabilize the overall relationship," says Cohen.

Then there is the cultural dimension of the relationship. Panagariya points out that most people in India have a relative, friend, or neighbor who is a member of the Indian diaspora. "They see so many Indians being successful in the U.S.," he says. India is a youthful country, and its younger generation has no serious connection to the anti-Americanism of the Cold War era. In a 2008 Pew Global Attitudes Project survey, 66 percent of Indians expressed a favorable view of the United States.

To be sure, the U.S. and Indian governments will not always be in harmony. Bose says that India probably took a more "strident" position than necessary in the Doha round of global trade talks, which collapsed in late July after a fierce debate over agricultural policy. He adds that Indian officials are worried about Barack Obama's commitment to free trade, given his repeated criticism of "companies that ship jobs overseas." American officials, meanwhile, are concerned about India's relatively warm relations with Iran. But Panagariya says the Iran issue will not prove a major hindrance to U.S.-India collaboration. After all, India is very friendly with Israel. "You don't hear a peep out of the Israelis about India's Iran policy," says Cohen.

As for Pakistan, it has always bedeviled U.S.-India relations. Now the war in Afghanistan is complicating things even more. In the aftermath of the recent terrorist attacks in Mumbai, "India and the United States are likely to come closer," says Bose, provided the Americans use their leverage with Pakistan and pressure Islamabad to reform its army, clean up its intelligence services, and clamp down on militant groups. Despite all the saber-rattling, Bose expects that New Delhi will stay focused on its international ambitions and act prudently.

"India wants to play a role on the global stage," he says. Right now, however, with a national election due by May, the South Asian giant is experiencing severe economic turmoil. The worldwide downturn has taken a harsh toll on India and disrupted its lengthy run of 9 percent annual GDP growth. World Bank economist Sadiq Ahmed reckons that the Indian growth rate will dip below 7 percent in the 2008-2009 fiscal year and below 6 percent in the 2009-2010 fiscal year. "Job losses are going to be enormous due to the global slowdown," Indian commerce ministry spokesman Rajiv Jain recently told Bloomberg News. Meanwhile, the Indian financial industry has been rocked by news of a massive fraud scandal at outsourcing giant Satyam.

Painful as they are, India's economic troubles should not be overblown. "It's not a disaster scenario by any means," says Ahmed, who thinks that Indian policymakers have thus far done "a very good job" in responding to the slump. He notes that inflation has fallen sharply, interest rates have returned to normal levels, and the domestic liquidity situation has stabilized. India is benefiting from its high savings rate. "We are not expecting a prolonged downturn," says Ahmed.

Whatever its current woes, India has remarkable potential. Its middle class is still dwarfed by that of China, but it will balloon over the next few decades. A May 2007 McKinsey Global Institute study estimated that between 2005 and 2025, average real household disposable income in India will nearly triple, the Indian middle class will swell from roughly 50 million people to around 583 million, and the country's consumer market will grow from the 12th largest in the world to the fifth largest.

Goldman Sachs reckons that India could have a larger economy than the United States by 2050. As Goldman economists Jim O'Neill and Tushar Poddar observed in a June 2008 paper, the United Nations has projected that India's population will increase by around 310 million between 2000 and 2020. "India will in effect create the equivalent of another U.S.," wrote O'Neill and Poddar, "and for those of working age between 2000 and 2020, India will create the equivalent of the combined working population of France, Germany, Italy, and the U.K. We estimate another 140 million people will migrate to Indian cities by 2020."

India's long-term progress is stunning. The 2007 McKinsey study pointed out that, "in effect, there are 431 million fewer poor people in India today than there would have been if poverty had remained at its 1985 rate." There is no question that "India's economic reforms, and the increased growth that has resulted, have been the most successful anti-poverty program in the country's history."

Long a bastion of socialism, India flirted with economic liberalization during the 1980s, under the leadership of Rajiv Gandhi, who served as prime minister from 1984 to 1989 (and was assassinated in 1991). But the reform process didn't begin for real until 1991, when India was facing an economic crisis. As Robyn Meredith of Forbes magazine writes in her 2007 book, The Elephant and the Dragon, some 110 million Indians "had been thrown into poverty in just the preceding two years," and "330 million people, or two of every five Indians, lived below the poverty line." Inflation had surged to 17 percent, and the country "was flat broke."

In response, the Indian finance minister, Manmohan Singh, embraced a bold agenda of deregulation, privatization, tariff reductions, and tax cuts. Singh devalued the rupee, removed obstacles to foreign investment, and expanded trade. "Early steps were also taken to open telecommunications and domestic civil aviation to the private sector," writes Panagariya. "These measures yielded the handsome growth rate of 7.1 percent between 1993-94 and 1996-97, and also placed the economy on a long-term growth trajectory of 6 percent."

The reform process stalled in the late 1990s but regained momentum during the third term of Prime Minister Atal Bihari Vajpayee, which began in 1999. As Panagariya writes, "the Vajpayee government systematically moved to open the economy to foreign and domestic competition and to build the country's infrastructure." Singh's Congress Party took power in 2004 as the leading coalition member of the United Progressive Alliance, and Singh became prime minister. Economic reformers had high hopes for the government, especially given Singh's record as finance minister, but they have been disappointed, as the reform process has stagnated.

Moving forward, further economic reforms will be critical. The United Nations Population Fund says that India will eclipse China as the world's most populous country by 2050. Will India's population explosion produce a "demographic dividend," or a demographic disaster? "That's the million-dollar question," says Bose. Indeed, a rising population does not guarantee that India will fulfill its potential. It will need to create millions of new jobs and also ensure that its workers are properly equipped to do those jobs. In their recent paper, O'Neill and Poddar outlined ten steps that India must take "to achieve its 2050 potential." These include strengthening its education system, containing inflation, liberalizing its financial markets, boosting trade with its neighbors, and improving its infrastructure.

India's biggest weaknesses are education and infrastructure. As Emmott writes in his 2008 book, Rivals, "The country's large, young population will not be an economic advantage unless it can be educated to the standards required by manufacturers and service companies." The current Indian education system "is grossly inadequate for that task, and putting that right will be costly." Consider these numbers: "Only 28 percent of India's schools had electricity in 2005; only half had more than two teachers or two classrooms." India has a significantly lower literacy rate than countries such as China, Vietnam, and Malaysia, Emmott notes.

As for the infrastructure problem, it remains a huge drag on Indian economic growth. According to the World Bank, more than half of India's state highways are in "poor condition." In its latest survey of global competitiveness, the World Economic Forum found that Indian business executives consider "inadequate supply of infrastructure" to be "the most problematic factor for doing business" in their country. The next four "most problematic factors" were (in order) "inefficient government bureaucracy," "corruption," "restrictive labor regulations," and "tax regulations."

Though India has come a long way since the 1991 crisis, its business sector remains heavily shackled. The latest World Bank report on "the ease of doing business" around the world ranks India a lowly 122nd out of 181 economies. By comparison, China ranks 83rd. Meanwhile, the most recent Index of Economic Freedom, compiled by the Heritage Foundation and the Wall Street Journal, ranks India 123rd out of 179 economies, barely ahead of Rwanda.

"Indians joke that India is like a drunk walking home: it takes one step forward, then two steps sideways, but eventually makes it home," writes Meredith. "Indian reforms, hampered especially by local politics, tend to lurch ahead, then jolt to a stop, only to hurl forward again." Besides local politics, Indian reforms have also been hampered by persistent social tensions, ethnic conflicts, and domestic security threats. As Meredith observes, "The advances of the glittering New India mask stubborn problems, such as high child-mortality rates, violence against women, caste-based discrimination, and religious strife."

The 2008 Mumbai massacre offered a grisly reminder that India has long been plagued by Islamic terrorism. (In December 2001, jihadists attacked the Indian parliament building.) It has also spent several decades battling Maoist rebels known as "Naxalites." Then there is the longstanding dispute over Kashmir and plenty of other spats with India's nuclear-armed neighbor, Pakistan. Tensions with Islamabad have been high in the aftermath of the Mumbai attacks. Though many Indians wish they could just disregard Pakistan, that is not a viable option. "When you have a neighbor whose house is falling down, you simply can't ignore it," says Cohen.

Barack Obama will inherit a dangerous situation in Pakistan, but he will also inherit a U.S.-India partnership that is stronger than ever. Over the coming decades, as global power continues shifting to Asia, the importance of that partnership will only increase. Embracing India may indeed prove to be a significant part of President Bush's legacy. As Bose puts it, Bush elevated the relationship "to a completely new level."

Duncan Currie is managing editor of The American.

Martin Luther King III, US Rep. John Lewis, and Herbie Hancock to Lead US State Dept Commemoration of Martin Luther King's 1959 India Journey

Martin Luther King III, U.S. Representative John Lewis, and Herbie Hancock to Lead U.S. Department of State Commemoration of the Rev. Dr. Martin Luther King's 1959 India Journey

Media Note
US State Dept, Office of the Spokesman
Washington, DC, Jan 16, 2009

The U.S. Department of State will support February 2009 celebrations in India to commemorate the tour by the Rev. Dr. Martin Luther King, Jr. 50 years ago to study Mahatma Gandhi. This tour deeply influenced the American civil rights movement. The delegation, including Martin Luther King, III; civil rights movement veteran U.S. Representative John Lewis; and legendary jazz musician Herbie Hancock, along with other distinguished Americans, will meet with counterparts in India to underscore the enduring importance of the King and Gandhi legacies.

The delegation will meet in New Delhi with government leaders, social activists, and youth, and will travel around India to some of the principal sites associated with Mahatma Gandhi’s work. There will be two special musical performances featuring Herbie Hancock and others organized by the Thelonious Monk Institute of Jazz. In Chennai, Indian musicians will conduct a special tribute, including performances of music on the theme of non-violence created by leading composer A.R. Rahman, widely acclaimed for writing the score to the current hit film “Slumdog Millionaire,” and a dramatic reading by film actor and director Kamal Haasan.

In February 1959, Dr. King and Coretta Scott King traveled throughout India in search of the roots of the nonviolent social action movement for Indian independence, studying Mahatma Gandhi’s ideals and meeting his followers around the country. Upon their return to the United States, Dr. King and other leaders of the civil rights movement drew on Gandhi’s ideas to transform American society.

2009/058

Oil Price Volatility and India’s Energy Security: Policies and Options

Oil Price Volatility and India’s Energy Security: Policies and Options. By Zakir Hussain
IDSA, January 09, 2009

The recent downslide in crude oil prices from a peak of US $147 a barrel to below $40 and speculated to fall further to $25 has evidently provided relief to oil importing countries, which have been triply inflicted by huge oil pool deficits, growing food prices and global economic downturn. But based on current oil market fundamentals and past experience, there is no reason not to believe that the current fall in oil prices is likely to be temporary. Sooner or later prices will rise and may even be higher than the recent peak because of two particular reasons. One, the fall in prices has been precipitated by expected cuts in demand as a result of the global economic downturn. In contrast, prices had fallen in the 1980s and 1990s because of an excess of supply over demand. Second, the steep fall in prices is unfavourable to current and planned investment in the oil industry. This would potentially constrict fresh supplies of oil and thus fail to meet the additional demand which is expected to be generated when the world economy in general and emerging economies like India and China in particular revive. The expected timeframe of economic recovery is around 12 to 18 months. These concerns and apprehensions were expressed by the Saudi Oil Minister Ali al-Naimi on December 19, 2008, during an address in London to oil producing and consuming countries. Al-Naimi stated that the steep fall in oil prices is causing havoc with investment plans in oil producing countries and is jeopardizing future oil supplies. He further stated that $75 “is the price that marginal producers need to maintain investments sufficient to provide adequate supplies for future oil consumption needs.”


What is the Fair Price to Boost Oil Production?

It is difficult to decide on an appropriate oil price that could induce or maintain a sustained inflow of investment capital in the oil industry. This is most likely because of the nature of oil, which qualifies as both an economic and strategic commodity, making price analysis truly complex and controversial. Nevertheless, there are two approaches to the ‘great oil price debate’ – structural and cyclical. Structuralists maintain that an abnormal spike in prices is the result of structural changes in the oil industry reflecting the huge investment gap in the past or expected in future, whereas the cyclical group believes in the ‘bubble’ analogy caused by certain mutually reinforcing adverse factors pushing prices upwards. The latter approach believes in physical shortages as a result of geo-politically influenced supply bottlenecks, excess demand and bull-run in the futures market. The current downturn in oil prices reflects the situation portrayed by the ‘bubble’ approach. The global recession has burst the bubble and pushed oil prices to one of the lowest levels. Prices have come down by 74 per cent in the last four months. This has depressed the fundamentals of the oil market and potentially circumvents the inflow of investible funds to the oil industry. This is not a good sign to ensure stable and adequate oil supply in the future. In fact, the global economic downturn is strongly expected to reverse in a couple of years. This scenario predicts possible structural limitations of the oil industry in meeting future demand.

In fact, before the current economic recession set in, some agencies like the International Energy Agency (IEA) had already assessed the future oil demand and estimated the possible volume of investments required, particularly under a business-as-usual scenario, to meet it. In a 2004 report, the IEA estimated that by 2030 the world would be consuming around 121 million barrels per day (mbpd) and, to achieve this, the global oil industry requires an investment of approximately $3 trillion. In a 2006 report, the agency revised the estimated investment volume upwards to $4.3 trillion to produce a little less quantum of oil, 116 mbpd, by 2030. This rise of 43 per cent in investment volume to produce 5 mbpd less oil for the same period has been attributed to the end of ‘cheap oil era’. This in turn is a function of the ageing of existing giant and super giant oil fields as well as the need to drill for oil in new and small sized wells, whose marginal cost would be much higher than that of existing giant and super giant fields.

Thus, under this scenario future oil prices would be in the range of $75 to $90 a barrel. This would perhaps be an appropriate price line to induce a sustained inflow of investment in the oil industry, at least for the foreseeable future. According to Goldman Sachs, 30 ongoing oil projects require $55 a barrel to break even. Due to the current comparatively lower prices, oil companies and those producing oilfield equipment are putting some projects on hold. As a representative of OPEC, Saudi Oil Minister al-Naimi has repeatedly asserted that $75 a barrel was a “fair and reasonable” price for crude oil. During his December 2008 speech in London mentioned earlier, he stated that “when oil is priced lower, such as it is now, there will be less investment and less future supply.” Lufkin Industries, a maker of oil and gas equipment has expressed the same apprehension. According to the median estimates of 33 analysts compiled by Bloomberg, “Oil may rebound next year to average $60 a barrel as the OPEC makes record production cuts to counter the deepest economic slump since World War II.” The IEA has projected that oil prices will rebound to more than $100 a barrel as soon as the world economy recovers, and will exceed $200 by 2030. This view was understandably shared by oil-producing countries, and was articulated by UAE Energy Minister Mohammad al-Hamli, who told reporters that "it is very important to continue investing to maintain and increase capacity in order to be prepared for the next [price] cycle." He characterized the decline as just a "price cycle", having structural implications.


What India Should Do?

India’s case is that of a severely crude oil deficient country. While domestic production has reached a plateau, the fast growing economy is strongly pushing up demand. In the foreseeable future, India’s oil dependence on outside sources would grow to more than 90 per cent of total oil consumption and the bulk of the supplies would be procured from Middle Eastern countries. What is required at this juncture is a plan that can deal with medium term price volatility. First and foremost, India should grab the opportunity created by cheap oil markets. Oil prices are expected to plunge even below the present rate owing to dismal consumption and ballooning stocks around the world. India should ‘lock’ or ‘bind’ supplying countries on medium to long term basis. It should sign long term agreements or bind the supplying countries through ‘contracts’, rather than continue the traditional practice of ‘spot’ market purchases. India should hedge its oil security though oil futures at today’s negotiated rates which have declined to $37.68, the lowest since July 1, 2004, and minimize tomorrow’s price shocks. This is one of three dimensions of ensuring ‘energy security’ at a cheaper rate. This is of utmost importance because oil accounts for approximately more than 42 per cent of India’s total commercial energy mix. At present, India consumes approximately 3.1 million barrels of oil a day and this is expected to grow to a couple of million barrels more, making India the third largest consuming country in Asia and the fourth largest in the world. Expenditure-wise, year-on-year basis, a rise in the price of oil by a single dollar costs the economy approximately Rs.17.7 million. Besides, it would trigger oil-induced cascading effects, including inflation, unemployment, and social unrest. The rise in oil prices witnessed over the last few years has caused havoc to Indian finance. According to the latest data released by the Reserve Bank of India, the current account deficit widened to $12.54 billion during the second quarter of the current financial year, as against $4.29 billion in July-September 2007; net trade deficit has widened to $17.2 billion in the second quarter of fiscal 2008-09 on account of a 45 per cent increase in oil imports partly due to increase in prices. This is an opportune moment for India to initiate and test non-traditional tools to minimize future losses.

It is significant to note that oil exporting countries are also equally anxious to manage the volatility of oil markets and stabilize their oil incomes. Because of ‘Dutch Disease’, their economies have failed to develop other sectors and are more dependent upon the hydrocarbons industry. For them, oil importing countries are very important and they too prefer ‘contracts’ with large oil importers. According to the International Monetary Fund (IMF), calculated in an annualized basis, a decline of $1 in the price of crude would translate into a loss in revenues of $3.5 billion for Saudi Arabia, $300 million for Qatar, $1 billion for the United Arab Emirates (UAE) and $960 million for Kuwait. A cut in demand has drastically reduced prices leading oil refineries to build up huge stocks, both stable and mobile. According to the Wall Street Journal (December 18, 2008) oil supplies are now building at such a rate that over 40 million barrels are being held in idle supertankers around the world. The size of the inventory floating in supertankers is sufficient to meet France’s monthly oil requirements. Thus, it is obvious that the present situation is opportune for both oil producing and consuming countries to enter into ‘contracts’ to hedge their losses from unforeseen shocks and spikes.


Another significant tool that is widely used to ensure uninterrupted oil supply is an integrated energy investment plan. The Government of India should develop a long term integrated energy investment plan with major oil producing countries. Signing of integrated energy agreements would bring a number of benefits: (i) ensure stable and uninterrupted flow of oil during both peace and crises; (ii) oil exporting countries would invest money in India’s refinery sector, thus ploughing money back and generating employment. In fact, this would be just like energy ‘offsets’ coming to India from oil exporting countries; once they set up refineries in India they would develop an economic stake and thus be averse to stopping crude supplies even in a crisis situation. China and Saudi Arabia have signed such integrated energy investment agreements. Saudi Aramco and Chinese Sinopec are in talks to construct a second line facility in Shandong province. The first shipments of Saudi crude arrived at Qingdao in May-June 2008.

As a part of the acquisition plan of oil acreages abroad, India should also invest in the gas sector in these countries. For instance, Gulf countries, except Qatar, have opened up their Gas sector for foreign capital and technology with the objective of feeding gas domestically and exporting oil for revenues in order to finance their economic development. ONGC-Videsh Limited should invest in the gas sector of Gulf countries, which would also enable India to develop the scope for increasing mutual co-operation and reciprocity in diversified fields over the long term.

In a nutshell, the present oil market situation posits both a ‘risk’ as well as an ‘opportunity’ to both oil importing and exporting countries. The fundamentals of the oil market suggests the maximum possibility of rising oil prices in the future, a risk that needs to be warded off by oil exporting countries. The present slump in oil prices offers opportunities to importing countries to hedge against future shocks. This, they can obtain through meticulous use of the commodity market instruments as well as through energy specific policies such as oil futures, forward trading, contracts, integrated agreements, etc. This obviously provides a common basis for interaction between oil exporting and importing countries to strike a balance between their risks and opportunities on mutually agreed terms and conditions. Thus, it is high time India adopts a pro-active hydrocarbons policy and secures its economy against shocks and distress. It is worthwhile to have a few contracts in hand at a few dollar losses today than to be left at the mercy of ruthless oil markets in the future.

Dr. Zakir Hussain is Research Assistant at the Institute for Defence Studies and Analyses, New Delhi.

Rushdie On the Bombay Attacks

FOR THE RECORD: Shalman Rushdie comments' transcription: 'Brutality, Incompetence And Cynical Duplicity'

OutlookIndia.com, Dec 19, 2008

The following remarks by Mr Salman Rushdie have been excerpted and transcribed from the audio recording of the panel discussion -- "Understanding the Mumbai Attacks" -- in which he participated along with authors Mira Kamdar and Suketu Mehta. It was organised jointly by the Asia Society, the South Asian Journalist Association (SAJA) and the Indo-American Arts Council. The discussion was moderated by Rome Hartman, executive producer for BBC World News America. The full audio, as well as the video of the conversation is available on the website of the Asia Society.

***

[Opening Remarks]

Well, first of all, I think, it is very difficult, as you said in the beginning, to articulate exactly how deeply we were affected by what we saw. I think there were many days when it was almost impossible to think, let alone to speak about what was happening, specially I think to those of us who grew up on those streets. And by the way, I think we have all agreed before hand that we are going to call the city by its proper name, which is Bombay. It is Bombay that was attacked and not Mumbai. And, by the way, I cannot say, and this is the only time I will say it, the words "Chhatrapati Shivaji Terminus". This railway station is and always will be VT. And so, because these are the names of love, the others are the artificial names imposed by the politicians. But these are the names of the city that we love.

I think it was something like a perfect storm that happened in Bombay, that you put together the incredible brutality of the killers, fuelled as we now know by industrial quantities of cocaine and other drugs that were found in their bodies and in their possessions. Combine that with, what I think is generally seen as a collapse of the Indian response, the Indian security response really was negligible. Three hours to get a fire engine to the Taj, a hotel that stands right next to the water. Twelve hours before the commandos were able to go in because they didn't have a plane to get to Bombay. Etc Etc. So that's the second part of it.

But I think the third part of it that has become increasingly clear is perhaps the dominant element and that is the absolute duplicity and hypocrisy of the Pakistani state. So much so that even today, the President of Pakistan, interviewed by the BBC said there is no evidence that Pakistan was involved in this. Even when the father of the surviving terrorist has identified his son as being a Pakistani, the President of Pakistan says that is not evidence.

So here you have these three forces coming together: Brutality, incompetence and cynical duplicity and what that did was to create this horror.

I wanted to read just a brief passage about -- since we are talking about our beloved place, so let's talk about that. This is a passage I wrote in my novel, The Moor's Last Sigh and it was written actually after another series of atrocities in 1993 explosions in Bombay which themselves were in the aftermath of the destruction of Babri Masjid and so it's in that context. But I think it applies, and it certainly applies to what I think about, about the city...

"Bombay was central, had been so from the moment of its creation: the bastard child of a Portuguese-English wedding, and yet the most Indian of Indian cities. In Bombay all Indias met and merged. In Bombay, too, all-India met what-was-not-India, what came across the black water to flow into our veins.

Everything north of Bombay was North India, everything south of it was the South. To the east lay India's East, and to the west, the world's West. Bombay was central; all rivers flowed into its human sea.It was an ocean of stories; we were all its narrators, and everybody talked at once. What magic was stirred into that insaan-soup, what harmony emerged from that cacophony! "In Punjab, Assam, Kashmir, Meerut--in Delhi, in Calcutta--from time to time they slit their neighbours' throats and took warm showers, or red bubble-baths, in all that spuming blood. They killed you for being circumcised and they killed you because your foreskins had been left on. Long hair got you murdered and haircuts too; light skin flayed dark skin and if you spoke the wrong language you could lose your twisted tongue. In Bombay, such things never happened. --Never, you say? -- OK: Never is too absolute a word. Bombay was not inoculated against the rest of the country, and what happened elsewhere, the language business for example, also spread into its streets. But on the way to Bombay the rivers of blood were usually diluted, other rivers poured into them, so that by the time they reached the city's streets the disfigurations were relatively slight. -- Am I sentimentalising? Now that I have left it all behind, have I, among my many losses, also lost clear sight? -- It may be said I have; but still I stand by my words. O Beautifiers of the City, did you not see that what was beautiful in Bombay was that it belonged to nobody, and to all? Did you not see the everyday live-and-let-live miracles thronging its overcrowded streets?

Bombay was central. In Bombay, as the old founding myth of the nation faded, the new god-and-mammon India was being born. The wealth of the country flowed through its exchanges, its ports. Those who hated India, those who sought to ruin it, would need to ruin Bombay..."

....

[On Pakistan's Dysfunctional Power Elite]

We need to say something about where they came from. And about the enormous resentment that the Pakistani power elite has felt about the success of India. There is this you know this thriving... I mean, I think of course we can all, you know, elucidate the many things that are wrong with India. That would be an interesting discussion but... another one. We don't have time.

But here you have this country that is, broadly speaking, democratic and, broadly speaking, economically successful and, broadly speaking, free. On the other hand you have this basket case, you know, where the Punjabis hate the Sindhis and everybody hates the North West Frontier and Balochistan is trying to get away.

Laughs

And half the country already got away, you know. So you have this decreasingly functioning society which has no institutions on which a free society could be built, in which the army is increasingly Islamicised, the army leadership is increasingly Islamicised, the ISI -- the Inter Services Intelligence, the Pakistani intelligence agency -- is totally out of control and the civilian politicians are not that much better. President Zardari, I remember, when, as Benazir Bhutto's husband, he was known as Mr 10 Per cent because of the amount of government money he had siphoned off. And then in Pakistan they decided that it was unfair, unjust to call him Mr Ten Per Cent. So they changed his nickname to Mr Twenty Per Cent which was a clearer reflection of his actual skills.

Here you have a country in the face of the world's agreement about what happened, just blindly refusing to accept it: "No, we don't know. What is the evidence? Where is the evidence? Show us the evidence. And we will fearlessly prosecute them..."

...

[Interjecting when a reference to root causes and justice came up]

Speaking of the roots, I think one of the, I think one of the most worrying developments in the aftermath of the attacks, has been the willingness of a number of commentators, particularly on the left, to place the question of roots in the concept of justice. People have said that the the reason for these attack was that there is injustice, that Indian Muslims are economically disadvantaged in India, that they have much lower educational qualifications, they have much higher unemployment rates and then of course there is the great injustice of Kashmir. As the argument be that while those injustices exist that is the thing from which these actions spring. And as our colleague Arundhati Roy wrote the other night, as she ended her article, she said: You have a very simple choice: Justice or civil war -- and you choose. As Suketu said, that is the entire spectrum of possibility from A to B.

[Suketu Mehta on his part agreed with what Rushdie had to say and pointed out that the attack on Parliament in 2001 for example predated the Gujarat pogroms]

[Laughs]

I want to really take issue with this. Because I mean, I think, anyone who knows what I have written in my life knows that I am quite seriously concerned with the condition of Kashmir. And I think that Indian authorities are culpable in the way in which they have treated the ordinary people of Kashmir but so are Jaish-e-Mohammad and Lashkar-e-Toiba.

And you have the people of Kashmir caught between a rock and a hard place. You know, you have a kind of fanatic Islam arriving from Pakistan which is not in keeping with the sufistic Islam that is traditional in Kashmir. So you have this Arabised Islam being forced upon people on the one hand, at the point of a gun, and on the other hand you have Indian security forces treating all Kashmiris as if they are terrorists, and often very brutally. So that's there.

But the point I want to make is that I do not believe that the terrorists such as these -- I do not believe that their project has anything to do with justice.

Ask yourself the question that if the Kashmir problem were resolve tomorrow, if Israel-Palestine reached a lasting peace, do we believe that al-Qaeda would disband? Do we believe that Lashkar-e-Toiba and Jaish-e-Mohammad would put their guns down and beat them into plough-shears and say we would now be farmers because our job is done.

I mean the point about is that is laughable, right? And the point about that is that that is not their project. Their project is power. This is a power grab by the most obscurantist, revanchist, old-fashioned, medievalist idea of modern culture that attempts to drag the world back into the middle ages at the point of modern weaponry...

[The moderator: "You mentioned Arundhati Roy. This leads me to a question that came from the audience and I want to make sure that we get to as many of these as we can. This question mentions another point that was made in this article, in which the phrase was "the Taj is not our icon" and a criticism that ... and I know you have written lovingly about the Taj... Address that criticism,that it may be somebody's icon but is not ours" [Arundhati Roy in her article had actually written: "We're told one of these hotels is an icon of the city of Mumbai. That's absolutely true. It's an icon of the easy, obscene injustice that ordinary Indians endure every day."--Ed.]

I thought that particular remark in her piece was disgusting. The idea that the deaths of the rich don't matter because they are rich is disgusting.

The idea that the 12 members of the Taj staff, who heroically gave their lives to save many of the guests, are to be discounted because they were presumably the lackeys of the rich -- this is nauseating. This is amoral. And she should be ashamed of herself.

[On the ineptitude of the response -- why the private sector is dynamic, efficient and responsive while the public sector is not]

Because of the venality and cynicism of so much of the political class in India, which I think now people in India feel an enormous amount of scorn and contempt for. You saw what happened after the attacks, that the father of one of the police officers who was killed, was was visited by the chief minister of a state, he threw him out. He didn't want to have anything to do with you. And that's a pretty general attitude towards politicians in India. I mean, look at the scale of how bad the response was.

We now hear that Indian intelligence had informed the coast guard on that evening that they were expecting an attack -- a Lashkar-e-Toiba attack by sea. That evening. And the coast guard had been alerted to go and find the ship. They failed to find it. The Taj hotel had been repeatedly told about an attack by sea and to beef up their security which they did for about two months and then nothing happens and so they took it down, the security down again. And then the attack happened.

The police officers who were wearing bullet-proof vests were wearing clothing so old that it could not stop the high velocity rifles that were being used and so three senior police officers were killed within moments of the attack beginning because the bullets just went through their protective armour.

The commandos who eventually went in were actually based in Delhi and had no dedicated aircraft. So they couldn't get to Bombay. It took them 12 hours to enter the buildings. And as I say, the fire engines. In a city that sits by the sea, hotels that sit by the water were allowed to burn for three hours before water got to them.

Well, this... People could of course with some legitimacy say that the United States was caught unprepared as well you know, and the radios didn't work in the wall street zone...and you could of course make a similar catalogue of errors about what happened on that day on Sept 2001...But it was awful to watch as this pile of mistakes grow, while meanwhile the city was burning...The fact that there were - four terrorists in the Taj - who could hold on the Indian army for four days...when they were coked out of their heads, you know, snorting coke in one nostril, while executing people...I mean, the idea that they were allowed to go on...for four days is unthinkable...

So yes, I agree with Mira that to change the emphasis to these kind of draconian security laws is wrong because what you need to do is clearly to fix absence of a security machinery, you know...You need armoured vehicles, you need proper body protection, you need aircraft to bring people to the scene of the crime, you need a coastguard which can guard the coast, you know... I mean, India has a very long coastline. And y'know Karachi is only a hundred mile away from Bombay... So the idea that there can be an attack by sea is obvious, you know... And as I say, there were warnings...American intelligence says it told the Indian intelligence, many times. Indian intelligence itself says that it told the Bombay police, many times about it pand yet there is this colossal failure. The problem is there and to put it in the other place is to put it in the wrong place.

And I do mean to say, that when Suketu was talking about the quality of the city is what annoyed people.

There is a wonderful remark by, I think, HL Mencken that "Puritanism is the haunting fear that someone somewhere might be happy"...And, and I do think that happiness is a part of the thing that really, along with Cocaine, gets up their nose. The idea that, as Suketu said, that this is a city of pleasure makes it, in the same way as the people who tried to bomb night clubs in England, y'know, said that it was legitimate because there were these slags in short skirts there, y'know, who deserved to die because of their sexuality, y'know, so there is in this whole area of the Islamic terrorist project a real dislike of open society, of the way people ordinarily live with each other. And they attack it.

....

[On the role of Media]

I think it is the wrong argument. I mean, what would you have the media do? To look away from the burning building? To look away from the slaughter in the railway station? Not to cover the siege of the Chabad House?

[Did the media end up aiding and informing the terrorists?]

Well there were one or two moments of clumsiness like that where it was reported on NDTV -- which I was, I was in London at that time and I was glued to 24 hours NDTV there... because you can get it on satellite ... and someone reported that they received a phone call from a room on such and such floor of the Taj .... which then informed the listening terrorists where people were... I mean that clearly was a blunder... and I think there were no doubt others, but I think on the whole it is the wrong argument. That's not where the problem was. I mean, you had the journalists doing their best, you know, and sometimes the best of journalism is not good enough...but that doesn't mean that that's where the problem was... the problem I think is elsewhere ...

...

There was a problem of the rolling news that an enormous amount of what was announced as news was almost immediately afterwards, we were told, was not correct... So one minute these killers were supposed to be British, y'know or some of them anyway, and five minutes later they weren't. And originally, there were 20 of them, then there 25, then it turned out that there were only 10 of them ... and maybe some got away... you know, They came by ship, No they didn't. The ship had been arrested by the coastguard which was supposed to have been the mothership. Oh, maybe there wasn't such a ship. They had a room in the Taj hotel. No they didn't. They were members of the hotel staff. No, they weren't. You know, so it was very difficult, I think, which is why I didn't know what to write at that time because the facts were changing so much.

[On the real issue: Pakistan]

These are not the causes of what happened. I mean, this is no doubt significant and We should debate how the media covers events, whichever country we are in. we can no doubt say, they got this wrong, they got that right, you know, but this is not the issue. The issue is -- and it is important as there is a new President due to take office in this country -- what should be the world's policy towards Pakistan? It is a very important matter right now. Because you have the British Prime Minister two days ago, Gordon Brown said that British intelligence, following up leads of various terrorists' activities, they informed him that 75 per cent of what they were studying led back to Pakistan. All the roads of world's terrorism lead to Pakistan.

....

But it needs to be very very tough, that argument. It has to be made with enormous force. Who makes it? Let's start with the President of the United States. For the last years, since the 911 attacks, the American government policy towards Pakistan was to give them a lot of aid and to treat them as an ally in the war on terror.

So billions of dollar have been handed over first, mostly, to the Musharraf government and now its successor.

Without any requirement that that money should come with, let's say an agreement that Pakistan is not going to house the terrorists that we are supposed to be fighting against. Instead, Musharraf very skilfully played both ends against the middle. He was a westerner to the West and a Mullah to the mullahs. You know this is the man, remember, when Benazir was in power, it was Musharraf who set up the Lashkar-e-Toiba and Jaish-e-Mohammad. When these groups were being created to fight in Kashmir, he was the general n the army who was given the task of monitoring and supporting those groups.

So we have treated Pakistan with this very velvet glove for a very long time and we have got in return is zero.

The headquarters of al-Qaeda, The headquarters of Taliban, the headquarters of Lashkar-e-Toba, the headquarters of Jaish-e-Mohammad, the world's centre of terrorism: Pakistan.To be fair, even the last days of the Bush administration I think Condoleeza Rice's visit to Pakistan was very significant. I mean, it is quite clear that she told them that if they did not ban these groups, Pakistan will be declared a terrorist state. And they more or less said that when they gave their reasons for having made these restrictions.

But the problem with what's happened so far, it looks, certainly I think from an Indian perspective, things look like a sham. We have seen before, these leaders placed under house arrest, who continue to move freely. We have seen before the closing of an account, when another one springs up round the corner.

When Zardari says of course we will prosecute them if we can locate them... you know, the SFX: horse laughing.

It is only two months, that the Zardari government authorised the purchase of an armoured vehicle to drive the leader of the LeT around. So he is driving around Pakistan in a state armoured car.

...

[On the ordinary Pakistanis and the power elite]

When you talk about what it is, Pakistan. The Islamic parties received less than 2 percent of the vote. When people in Pakistan are allowed - which they are not very often allowed - to express their opinion in an election that is not fixed, you know, when the ballots are not stuffed.. so this time the vote against Musharraf was so big that he couldn't fix the election actually. So you actually got a reflection of what people think. And they think regionally, you know --the Punjab votes for Nawaz Sharief, the Sindh votes for the PPP -- but they don't think like religious extremists. They do not vote for them. So on the one hand you have the mass of the people not being interested in the rhetoric of the jehad. But on the other hand you have the power elite being completely enthralled with it. That's the problem.

[Whether there is a continuing shadow of Partition over India-Pakistan relations?]

Only, in that if there hadn't been a Partition, there would be no Pakistan...

But, you know, I don't know. Yes, because people have long memories. But, I think, realistically no, I think what, the kind of things we have been talking about the political dynamic of what Islam is, what Islam has been turned into by certain groups in Pakistan...that has very little to do with 1947. So I am not sure it is a post-colonial problem, this. I think we have gone post post, I mean this is a next phase.

And I do think that one of the things that could be beneficial if people in India become more, let's say, in Bombay, become more politically aware about their pwn city and protection. I mean they are right to say they do not, cannot trust the federal, the central government to protect their city. It has not done so. So Bombay must be given the right to protect itself. It must have its own authorities. I mean the fact that you know there wasn't even a commando force in Bombay. It was in a suburb of Delhi. And what it mostly did was protect political big wigs. That's what it did. It drove around in motorcades, making politicians feel important. And suddenly it had a real job to do. But I think it is very important that this city, and as you say, Bombay is this entrepreneurial hub. It is efficient. It understands efficiency. It better be given the power, the power, localised political power, to reorganise its own defence.

Mumbai Attacks and the Need for Enhanced India-US Defence Cooperation

Mumbai Attacks and the Need for Enhanced India-US Defence Cooperation, by Arvind Dutta
India and US would benefit by sharing counter-terrorism expertise and increasing joint activities to address regional and global terrorist threats.

IDSA. December 11, 2008

The staggered attacks on Mumbai across seven places were extremely demanding on time and resources required for counter operations. The attacks have also amply demonstrated that there is no scope for any lacunae in India’s security apparatus. The guard has to remain up to prevent the real ‘9/11 of India’.

The overall role of Indian security personnel and their sense of dedication were exemplary as has been widely acknowledged. Most experts agree that a terrorist takeover of a hotel as large as the Taj Mahal Palace is a daunting task for any counterterrorism outfit, given the enormity of the place and the problems faced in effectively sanitising such an area. However, some analysts, especially from Israel, have been critical of conduct of the Indian security forces operations in Nariman House, where five Israeli hostages were killed by the terrorists. They also consider the 12-hour battle to liberate this building as "unreasonable".

In a complex hostage-type situation, it is essential that counter-operations are launched speedily and with surgical precision to ensure quick neutralisation of the terrorists and safety of the hostages. Towards actualisation of the same, it is essential that Indian specialised troops continuously hone their skills, remain well trained and respond effectively when facing a threat. To optimise on the expertise available with other nations, a series of defence cooperation events with suitable countries to enhance training standards and further strengthen Indian counter-terrorism capabilities should be undertaken on a priority basis. In this context, the news of the co-option of investigating agencies from the United States and the United Kingdom in the Mumbai probe is indeed a welcome step. To enhance synergy of action in the field of counter-terrorism between India and other countries, Indian defence forces must devote greater focus to co-operation in sub-conventional areas.

As far as the United States is concerned, its defence forces (including the Marines and the Special Forces), after their Iraq and Afghanistan deployments, have built significant skills. Indian security forces should endeavour to utilise this American experience to enrich their own combat capabilities. India currently has a large number of bilateral defence co-operation events with United States. In the wake of Mumbai, an added thrust could be given to the following to learn from the American experience, expertise and technological lead:

Brainstorming Sessions. These could be held between the perspective planners and representatives of Special Forces who may also get embroiled in such challenging tasks. Lessons from this incident could be gainfully utilised for brainstorming the Course of Action followed and better options, if any , available, with American counterparts. Additionally, the preferred course of handling similar challenges in future could also be discussed.

Command Post Exercises. Armies of both countries could conduct command post exercises, wherein mechanics of exercising optimal command and control over multi-organisational agencies involved in an incident can be debated. There is also a need to share ideas and experiences on the establishment of suitable Command Centres in such situations.

Intelligence Sharing. Counter-terrorist operations warrant rapid dissemination and sharing of intelligence. This calls for a paradigm shift from ‘Need to Know’ principle to ‘Need to Share’ principle, since terrorists invariably plan, train and strike in different countries. The exact methodology of intelligence sharing also needs to be crystallised. Though there are a number of joint working groups currently in place in this domain, there is however a need to make them more meaningful and shed the misconstrued image of symbolism alone. Therefore, sharing of quality intelligence, even in the mutually decided ‘Classified’ fields, may also have to be resorted to.

Military Operations in Urban Terrain. With trends of terrorist activities shifting to high value targets in urban areas, there is a need to share views on the conduct of such operations (especially operating in small teams), and the identification of ‘Friend or Foe’ to obviate fratricide occurrences. It is important that tactics, techniques, procedures and best practices available with American forces, as well as doctrinal innovations, where relevant, should be imbibed by Indian defence forces.

Employment of Non-Lethal Weapons. Many operational tasks in urban areas may necessitate the use of non-lethal weapons especially when there is risk to lives of own citizens with whom the terrorists may have mixed together. Non-lethal weapons may reduce non-combatant fatalities and collateral damage. The US Marine Corps Pacific conducts periodic Non-Lethal Weapons Executive Seminars, which, in addition to paramilitary personnel, should also be regularly attended by Indian Army representatives.

Technology Upgrade. It is prudent that India constantly upgrades the equipment profile, including night observation devices, of its forces likely to be tasked with counter-terrorist operations so that terrorists can are denied any technological advantage.

Miscellaneous Activities. Some of the other areas where India must undertake meaningful programmes are in the fields of amphibious warfare, counter ‘improvised explosive devices’ measures, management of casualties in case of terrorist strikes, simulated exercises for assessing own response and identifying weaknesses.

Considering the international dimension of threats posed by terrorists, both India and the United States would benefit by sharing their counter-terrorism expertise and increasing joint activities to address regional and global terrorist threats.

Colonel Arvind Dutta is Research Fellow at the Institute for Defence Studies and Analyses, New Delhi.