Posted by: John Elliott | July 22, 2015

Congress goads BJP government and blocks parliament

Until a few weeks ago, Shivraj Singh Chauhan was regarded as one of India’s most successful and responsible chief ministers. During the ten years that he has held that post in the central state of Madhya Pradesh, he has transformed its agriculture and introduced significant economic reforms, cared for the poor and for minority groups such as Muslims, and displayed a gentler Bharatiya Janata Party face than those of the nationalist prime minister Narendra Modi and tough party president Amit Shah.

Now Chauhan is at the centre of one of India’s biggest and longest-running corruption scandals that, together with another scam linked to an Indian cricket league, is being used by the Congress Party-led opposition to stop India’s monsoon session of parliament functioning.

Congress is calling for Chauhan to be dismissed along with two other top BJP politicians – Sushma Swaraj, the foreign minister, and Vasundharan Raje Scindia, the chief minister of Rajasthan, who are caught up in the scandal involving Lali Modi (no relation to the prime minister), founder of the glitzy high-rolling Indian Premier League.

Parl protest

In a tit for tat response, the BJP has made corruption allegations against an official close to the chief minister of the northern state of Uttarakhand, and has also against two other regional politicians.

Congress is blocking parliament (left) and its students’ branch has been staging noisy street protests in Delhi, not because it expects the three to be sacked or resign, but because this is a simple and high profile way of drawing attention to alleged corruption at the top of Modi’s party.

Reduced ignominiously in last year’s general election to just 44 MPs in the 543-member Lok Sabha lower house, Congress has been resorting with its opposition allies to disruption and sound-bite politics on many issues instead of generating debates.

This is not a new tactic – blocking parliamentary proceedings with protests has become a regular practice for 10 to 15 years. During the last Congress-led government, the BJP staged so many protests that between 40% and 80% of time was lost in the years from 2010 to 2014, according to PRS Legislative Research.

Arun Jaitley, then the leader of the opposition in the Rajya Sabha upper house and now the frustrated finance minister, was pleased with what he had helped to lead. “Parliament being used as a forum in more than one ways to expose the weaknesses of the government, I think, is a positive development,” he declared, after one session had been totally wiped out.

The tables are now turned and Congress MPs have become the rabble that storms into the well of the parliamentary chamber to stop proceedings – no business took place today for the second day running. This parliamentary session is only scheduled to last for 23 days and if little business is done, as seems possible because of Congress threats, progress will have been blocked on about 15 bills including long delayed measures on sales tax reform and land acquisition.

Shivraj-Singh-ChouhanThe Chauhan scandal shows how difficult, if not impossible, it is for politicians not to be tainted by India’s endemic corruption. Manmohan Singh, prime minister in the last government, is a prime example of how a basically honourable man felt he had to let corrupt deals on telecoms, coal mining and other subjects, wash around his desk.

Chauhan (right) similarly must have known about the scams but did little to ensure that official inquires actually made progress after they were started. Maybe it was simpler to allow the people involved to have their way.

Known as Vyapam, the scam engulfing Chauhan has involved masses of people obtaining civil service jobs, medical school places and false exam results for many years. Vyapam is an abbreviation of the Vyavasayik Pariksha Mandal, which is Hindi for the state’s professional examination board, founded in 1970, that from 2007 also conducted entrance exams for government jobs. Investigations are in progress and a total of some 2,000 people have been arrested.

The story has hit the national headlines and become a major political issue in recent weeks because it is alleged to have led to at least 26 (some reports say 40 and it could be far more) mysterious deaths of people involved in various ways including, earlier this month, a 38-year-old reporter and the dean of a medical college.

sushma-swarajMethods used in the scam, according to reports, have included an impersonator with a doctored admission card standing in for the student in the examination, plus an “engine and bogie” system (which starred in a Bollywood comedy Munna Bhai MBBS) where a clever guy sits between two other candidates who then copy answers from his (or her) paper – the examiners having been bribed to fix the seating arrangements. In a third system, candidates leave their answer sheets blank and are randomly given high percentages after the exam after which they fill in the answers

One of the first complaints were registered back in 2000, but its scale only seems to have attracted attention in 2009 when a book appeared on the subject, and it then took another six years for investigations and arrests to start in 2013.

The other scandal centres around the highly successful but tainted India Premier League cricket tournament and its original promoter, Lalit Modi who has been in living in London for the past five years to avoid court action in India.

Congress is demanding the resignation of Sushma Swaraj (above), the foreign minister, because last year she told the British government that her ministry had no objection to it issuing travel documents to Modi whose passport had been revoked by Delhi. The BJP argues that Modi was helped on humanitarian grounds because he needed to travel to Spain in connection with his wife’s ill health, and that Swaraj had done nothing illegal or immoral.

Vasundhra-Raje-ScindiaThe resignation of Vasundharan Raje Scindia (right), the chief minister of Rajasthan, who was close to Modi when she held that post a few years ago, is being demanded because she helped his application for residency in the UK four years ago when she was in opposition and not chief minister.

Neither of these two ministers is accused of any serious corruption of the type or levels of graft and extortion that enveloped the last Congress government.

But there are hidden depths to all such scandals, and Congress hopes that its campaign will undermine the prime minister’s over-stated claims that he is running a clean administration.

It might have seemed logical for Narendra Modi to want to damp down the controversies, which he has not done. Maybe that is because Swaraj, who has seen herself as a possible future prime minister, belongs together with Chauhan and Scindia to a faction within the BJP that was opposed to Modi becoming the party’s prime ministerial candidate last year.

There are few better ways of taming opponents than letting them be exposed to public scandal – and then protecting them, which is exactly what the government is now doing for Swaraj in parliament.

Posted by: John Elliott | July 2, 2015

Bajaj rickshaw sold for £100,000 in aid of wild elephants

London taxiIn India, the iconic Bajaj auto rickshaws or tuk-tuks cost around Rs200,000 or £2,000, Two nights ago, twenty were sold for up to £100,000 each in brightly coloured designs at a wildlife charity auction hosted in Lancaster House by Prince Charles and his wife, Camilla, the Duchess of Cornwall.

There was a London taxi lookalike, a bamboo framed vehicle suitable for the jungle, one with bodywork covered with splashes of fried eggs, and a fluffy looking model called Princess Tickey-Tuk.

A total of over £700,000 was raised in aid of Elephant Family, a charity set up by Mark Shand, a writer and colourful adventurer – and Camilla’s brother – who died after a fall in New York in April last year. His death meant that the cause of protecting wild Asian elephants lost one of its most vocal and passionate champions. 

His involvement began in 1988 when he bought a scrawny beggar elephant called Tara and rode her over 600 miles across India (right). He then wrote a best-selling book, Travels on my Elephant.

Mark Shand on TaraThe auction auto-rickshaws, built to the same engineering specifications as those in India with 198cc petrol engines, have been roaming the streets of London for the past month with a top speed of 35mph. They were launched by actress Goldie Hawn (below with the friend egg paintwork). 

The campaign will be continued in November when 40 more ordinary auto-rickshaws will race 500kms across the Indian state of Madhya Pradesh to Kipling Camp on the edge of Kanha National Park. The participants will come from the UK and elsewhere and each rickshaw team has pledged to raise £10,000 for the cause.

Several of the rickshaws went for between around £15,000 and £35,000 but top prices were achieved when between two and four determined bidders rivalled each other, encouraged by an enthusiastic auctioneer, Henry Wyndham, chairman of Sotheby’s Europe. 

They included an intriguing bunch of backgrounds. There was Sir Evelyn de Rothschild from the banking family, who was involved in farming and retail investments in India a few years ago. He paid the top price of £100,000 for the London taxi look-alike, conceived by Benjamin Shine, an artist and designer. 

image003Vijay Mallya, whose Kingfisher airline defaulted and stopped operations in 2012, and whose massive corporate debts have lost him control of his family’s market-leading liquor business and Kingfisher beer brands, bid unsuccessfully for Golden Voyager.

This stylish bronze coloured rickshaw sported the British and Indian flags (above, carrying Prince Charles and Camilla). Designed by The Paintbox, custom car specialists, it went for £40,000. That was just a step too far for Mallya, who later paid a more modest £15,000 for a bright blue and red rickshaw styled by Mulberry, a luxury brand.

image001Other bidders included Olivia Harrison, widow of ex-Beatle George Harrison, who bought one lot for £55,000, Hilary Weston, the owner of Selfridges department store, who bought two for a total of £80,000, and Garreth Wood, entrepreneur and charity-organiser son of Sir Ian Wood, a Scottish oil industry businessman. Wood bid for several of the vehicles and bought one for £45,000 plus a 10ft high model elephant (see below). He plans to use them at restaurants and pubs he owns in Edinburgh and elsewhere. 

Behind the party’s flowing drinks, the trays of canapés, the presence of royalty, and the flamboyant bidding, lies the plight of the wild Asian elephant – there are only 35,000, down 90% over the past 100 years.

This 10ft high model of an elephant, symbolising Tara, was also auctioned for £42,000

This 10ft high model of an elephant, symbolising Tara, was also auctioned for £42,000

These grand animals are under attack not only from poaching and accidents on railway track and from electrocution. A more serious threat is conflict with local people who attack the animals when they roam through their crops and villages.

Elephant Family, now headed as joint presidents by Prince Charles and Camilla, aims to create 100 elephant corridors within the next ten years, starting with a major one in the north-eastern state of Assam. A memorandum of understanding was signed by five non-governmental organisations to achieve what Prince Charles described as “an enormously important cause, particularly because of its human-animal dimension”. 

Since it was set up by Mark Shand in 2002, the Elephant Family charity has raised over £9m, often through art related events. In 2010,  £4m was raised by auctioning model elephants that were paraded around London.

Now about 55, Tara lives a gentle life (below) in Kipling Camp, the destination of the November rickshaw race. India’s first private wildlife camp, it is run by Anne Wright and her daughter Belinda, who founded the Wildlife Protection Society of India.

Elephant Family’s target is to raise £1m, and the £700,000-plus achieved at the auction, organised with the Quintessentially event-organising foundation, means that it is well on the way. And, as Prince Charles put it, the campaign will help to ensure that Mark Shand’s legacy is maintained and enhanced.

Tara in camp IMG_7515

Posted by: John Elliott | June 12, 2015

India’s old moderns keep the art auctions buoyant

Auction houses need to find something special to galvanise the hesitant Indian modern art market and make their sales a success, and that is what both Christie’s and Bonhams have succeeded in doing at their annual June sales in London this week.

A self-portrait painted by Amrita Sher-Gil in 1931 when she was only 18 - sold at Christie's for £1.8m ($2.7m) including buyer's premium

A self-portrait painted by Amrita Sher-Gil in 1931 when she was only 18 – sold at Christie’s for £1.8m ($2.7m) including buyer’s premium

Christie’s hit a winner on June 10 with a large historic work by M.F.Husain (below), one of the best known of India’s modern painters, who died four years ago this week.

The work sold for something of a record at £1.08m (US$1.67m), including buyer’s premium. Also in the auction, which totalled £7.23m ($11.15m) with 80% of the 76 lots sold, were memorable works by Gaganendranath Tagore (below) and Amrita Sher-Gil (right).

Bonhams scored yesterday with six Vasudeo S. Gaitonde drawings from the 1960s that rarely come to the market. They were sold for a total of £727,000 (including buyer’s premium) after keen bidding that included at least one established Indian collector and generated more telephone bidding chatter than is usual in auction rooms.

Also running at the same time was a two-day on-line auction by Mumbai-based Saffronart that totalled US$3.49m (Rs219.7m) including buyer’s premium, though only 67% of the 85 lots found buyers. Topping the sales was a work by another veteran modernist, S.H.Raza, titled Earth that fetched $1.23m (Rs77.6m).


Overall it was a successful week for the Indian modern art market that is still recovering from a slump in recent years. Christie’s best recent results have totalled $15.45m and $12.09m at its heavily marketed Mumbai sales in 2013 and 2014

Top collectors, dealers and a few artists gathered in London for the sales and a series of parties and gallery events.

Gaganendranath Tagore's unititled work, priced low as the Christie's auction opening lot, beat estimates by four or five times, selling for £56,250 (S86,738) including buyer's premium

Gaganendranath Tagore’s unititled work, priced low as the Christie’s auction opening lot, beat estimates by four or five times, selling for £56,250 ($86,738) including buyer’s premium

There has been a special emphasis on 89-year old Krishen Khanna, with the release of a film on his life and work, and an exhibition of his recent paintings at the Grosvenor Gallery in Mayfair (see his Bandwallas painting below).

He talked at the Courtauld Institute about his memories of Husain, F.N.Souza, Tyeb Mehta, S.H.Raza and others who gathered soon after India’s independence in 1947 around what was known as the Bombay-based Progressives Group.

The auction market still largely depends on Krishen Khanna’s generation of painters for its big sales.

Only one of Christie’s top ten works was by an artist born after 1925, and all of Saffronart’s top ten were born in the 1920s or earlier. Art Tactic, the art analysis firm, calculated recently that 20 of these artists generated 75% of India’s main auction sales last year.

There are of course younger modernist style painters, but they do not command top prices. Once-prominent contemporary artists are no longer in demand, having reached unsustainable prices during the mid-2000s boom years. ArtTactic says the top 20 only accounted for only 5% of sales last year. Even a work by the internationally-recognised Bharti Kher, estimated at £50,000-70,000, failed to find a buyer at the Christie’s auction, though a large depiction of pots and pans against an urban background by her husband, Subodh Gupta, sold for a hammer price of £90,000.

Strong demand for the most interesting moderns was demonstrated by the record-making Husain (below, and to the left of the auctioneer in the higher auction scene) that was bought by Kiran Nadar, one of the India’s top collectors, for her Delhi museum.

Originally shown in 1956 at the Venice Biennale, the work is more than 8ft wide. Ten panels depict ideas and subjects such as a village woman, a triumphal elephant and galloping stallions that became Husain’s trademarks in later years, representing says Christie’s “a political testament to a progressive India”.
CKS_10247_0027Competition against another strong bidder drove the hammer price to the top pre-estimate figure of £900,000. Including buyer’s premium that came to the dollar equivalent of US$1.67m, which is almost three times the $602,000 paid for it by a dealer at a Sotheby’s New York auction just four years ago.

Christie’s says that this is a record for an Husain, which it is, just – $1.61m was achieved at its New York auction for the artist’s Battle of Ganga and Jamuna in 2008, when it was also an all-India record. This week’s figure is only slightly bigger, and that is more than offset by currency depreciation, but it does demonstrate the prices than collectors such as Nadar are prepared to pay for significant art. The sale is also important because Husain has lagged since 2008 behind record prices set by others of his generation, led by Gaitonde, Mehta and Souza.

Lot 31 - Vasudeo S. Gaitonde - Composition No. 3Gaitonde’s ink on paper drawings (left) of about 28in x 20in, reminiscent of Japanese sumi-e works, rarely come to the market – some are in a collection at Delhi’s National Museum of Modern Art.

The fact that Bonhams had six for sale drew international attention. The works were originally acquired directly from the artist by an American abstract painter, Morris Graves, who visited Gaitonde’s studio in 1963 and described him as “one of the finest painters I have ever seen”.

Estimated between £20,000-35,000 each, they went for hammer prices between four and five times higher at £110,000 to £130,000. Including buyer’s premium, that put the highest price at £158,500 for one of the works and the lowest £134,000.

The auction houses were happy with their results this week – Christie’s Deepanjana Klein said they showed that “collectors are coming back”. The next tests of that trend will be Sotheby’s annual London auction in October and Christie’s in Mumbai in December. Meanwhile, maybe, someone will find a way to persuade collectors to broaden out beyond the original modernists!

Krishen Khanna's 'Untitled' (Bandwallas in White and Blue), 2012

Krishen Khanna’s ‘Untitled’ (Bandwallas in White and Blue), 2012

Images of Christie’s auction works © Christie’s Images Limited 2015

Image Gaitonde work, courtesy Bonhams

Image Krishen Khanna work, courtesy Grosvenor Gallery

Social media is awash today with messages marking the first anniversary of Narendra Modi’s swearing in as prime minister. Modi himself is celebrating with tweets to his on-line followers (below, and his letter further down) and others that make exaggerated claims about his government’s successes.

narendra-modi-one-yearAmid all the trending, it is worth noting that the prime minister’s communications with his electorate, and the wider world, are a one-way street where he speaks and others receive the message. People can of course reply through tweeting or other statements, but Modi has avoided on-the record questions from the media, and amazingly has not dared to hold a press conference that would be attended by Indian and foreign journalists to mark his first year in office today. Nor has he done a television interview.

This lack of a willingness to expose himself to media questions has been widely criticised, but Modi might be surprised by the fact that even Lance Price, the British writer who he personally selected to be the chronicler of last year’s election victory, says he should open up.

 Lance Price Modi Effect front cover“I believe it is a fundamental principle of a democracy that an elected prime minister should be accountable through the media,” says Price, whose book The Modi Effect: Inside Narendra Modi’s Campaign to Transform India, was published in March. “That means answering legitimate questions put freely by journalists on a fairly regular basis.”

This is what Modi has resolutely refused to do since becoming prime minister, preferring to tweet one-liners that do not lead to journalists’ questions. He has also relied on his considerable skills at oratory to mass audiences where no journalist can question him, and on his able all-purpose finance and information minister, Arun Jaitley, to face the press.

Price, who used to be a spokesman for prime minister Tony Blair, voiced his criticism during a session on Modi’s first year that I was moderating at the Jaipur Literary Festival’s JLF at South Bank in London on May 16. I asked him at the end of the session to imagine he was again a prime ministerial adviser – for Modi – and comment on his chances of winning a second five-year term in 2019.

He thought Modi could be re-elected if he made more progress, and was very critical of him for not making himself available to the media. Later he gave me the comment I’ve quoted above. He also said, “I was given exclusive access to Narendra Modi for my book, but unusually for a journalist it is an exclusive I would gladly give up”.

Lance Price was head-hunted

Lance-PricePrice (left) says he was head-hunted for the job of writing a book on Modi’s victory, and that he had about five hours of interviews with prime minister in three sessions last year. No other writer has had anywhere near that access. Rajdeep Sardesai, who wrote 2014 The Election that Changed India and who was also on the JLF panel, had no meeting, even though he has known Modi for some 20 years and talked with him till the election.

At first glance, it seemed odd that Modi should choose to provide the opportunity for long and exclusive book interviews with a writer who, though he had visited India several times, had never written about the country – nor was he in India during the election, so he had to start his research from scratch. 

But maybe that was the exactly the detachment and lack of background knowledge that Modi wanted because it would limit what the author could achieve in terms of critical analysis and comment, revisiting history such as the Godhra 2002 riots in Modi’s Gujarat.

Price says in his book that Modi may have chosen him because he wanted to be recognised on the world stage and be compared “as a consummate genius of electoral tactics” with people like Blair, But, he adds (and I agree), the more likely reason is that he “came with no prejudices or preconceptions”.

Modi is probably pleased with the book, which does not have the personal revelations and insights one might have expected after five hours of interviews. Instead there is a workmanlike history of the man and a very detailed account of the election campaign, with special emphasis on social media and mass communications.

Modi's tweeted letter - click on the image to enlarge

Modi’s tweeted letter – click on the image to enlarge

Apart from Price’s five hours, there seem to have been no other long interviews, though Modi has recently met (with Jaitley) a few carefully selected groups of editors and economics correspondents, and one or two foreign correspondents, who are then not allowed to report what is said.

Modi has given only two on-the-record to the Indian media – with the Hindustan Times last month and Dainik Jagran (in Hindi) on May 11. [June 1: There have now been interviews with the government-controlled Press Trust of India news agency, the UNI and ANI agencies, and Hindusthan Samachar .] Internationally, here was one with Time magazine, which ran internationally as a cover story on May 7 and one with The Economist.

These interviews were mostly reported as questions and answers, enabling Modi to be reported saying what he wanted without being seriously pursued by follow-up questions. The Economist however only published selected quotations in a special ten-article report with the somewhat negative headline Modi’s rule – India’s one-man band – The country has a golden opportunity to transform itself. Narendra Modi risks missing it. That cannot have been what Modi was hoping for, though he knew what he was getting into because the magazine couldn’t bring itself to recommend him and the BJP in the general election last year and fell back lamely on Rahul Gandhi and the Congress Party

There are strong criticisms, including this paragraph towards the end, which is scarcely what a Modi interview is supposed to generate: “He has not done enough to promote other talented individuals. In the course of a long conversation he never once refers to any of his ministers. He tends to say things like ‘I have created a ministry’ or ‘my government is acting’. When speaking about world affairs, he focuses on his personal rapport with other leaders. He seems to think he is the government.”

Earlier this month there were what looked like well informed reports that Modi would hold his first press conference on May 23 to mark the first anniversary today of his swearing in. But he decided not to do so, and instead Jaitley was fielded at a big press conference to deploy his suave and agile lawyer’s mind to advocating and defending the government’s record. Jaitley is a good spokesman, but he is not the prime minister, and Modi’s decision not to appear in person was a setback for his image as a strong and confident leader.

Other prime ministers of course have given very few media conferences, notably Manmohan Singh and Atal Bihari Vajpayee who led India’s last two governments. But Singh was naturally withdrawn and wary of upsetting Sonia Gandhi, his party leader, while Vajpayee was ageing and spoke little.

Modi by contrast is a consummate extrovert who loves performing in public and does it well. He is doing neither himself nor his government any favours by standing aloof from the media and it looks as if his tweet-based public relations is not working because opinion poll surveys have found that only a small minority (20% in one survey) felt that Modi effectively communicated through social media and even fewer (17%) felt his big speeches made a substantial impact. 

It is widely known that Modi’s distaste for the media stems from reporting after the 2002 riots, for which he was widely-held responsible. But if he expects everyone to forget those riots and treat him on his current record, shouldn’t he put his 2002 views of the media behind him and deal with reporters, as Lance Price says, in the way that one would expect a prime minister to do in an open democracy?

For earlier blog posts analysing Modi’s first year see:


Two days after Narendra Modi ended his trip to China at the weekend, the state-ruGlobal Times ran a critical article on Modi’s Make in India campaign, saying  that the  “private business sector skeptical about the whole idea” and that “even if New Delhi keeps persuading investors how promising it is to do business in India, the current situation is far from reassuring”.

Make in India lionThis damning verdict, albeit from a newspaper that ran a critical piece on border issues last week, underlines the failures so far of Make in India which, with its strange lion logo made of old fashioned engineering cogs, has been the main slogan drummed out by Modi and his ministers and bureaucrats for many months.

It surely time for India’s prime minister to adopt a personal slogan to Make Things Happen because there will not be many foreign investors responding to his call until he personally focuses on making India’s rules and regulations operate more easily.

That thought must have been in the minds of many people who played a part in Modi’s three day trip to China at the end of last week, and maybe also on his visit yesterday to South Korea as part of a three-country tour that included the first visit by an Indian prime minister to Mongolia.

“For the moment, there is little evidence of success for foreign investments from private enterprises,” the Global Times stated in an opinion piece titled Economy a dilemma for globe-trotting Modi. “In the end, if any country tries to encourage investments to India, most of the programmes will be led by the government itself, with most of the private business sector skeptical about the whole idea,” .

Modi Shanghai May 16 '15  2-5

Modi spent the first anniversary of his general election victory on May 16 doing one of the things he does best – wowing a huge crowd of several thousand adulating overseas Indians in a foreign country. Previously he’s done this in friendly places like America, Australia and Canada, but this time he was in potentially enemy territory – Shanghai, China’s commercial capital, where some 5,000 Indians had been encouraged to flock to hear the political rock star perform.

He was a little more restrained than his earlier shows that began in New York’s Madison Square Gardens with some 20,000 people last September. He was also more soberly dressed in a buttoned up dark Indian style formal suit instead of the salmon pink sleeveless jacket and yellow shirt he wore in New York. That reflected his more conservative style since he was mocked for wearing pin stripes with his name stitched in gold when he met President Obama in Delhi four months ago.

Foreign trips to some 17 countries have been the high spots of Modi’s first year. His energy and focus, and the charm and friendly informality that he displays on these tours, has broadened India’s international relationships.

Narendra Modi's selfie with China's Premier Li Keqiang selfie

Narendra Modi’s selfie with China’s Premier Li Keqiang

Conversations, including those with Chinese leaders, are more direct, and personal relationships seem to be stronger, though there is little to show yet in terms of concrete outcomes.

A Delhi businessman said to me last week that the only significant result so far from all the trips was uranium supplies from Canada that are urgently needed for India’s power reactors.

The China visit tested Modi’s skills of mixing tough diplomacy, especially on the two countries disputed Himalayan border, with his main target of rapidly expanding business links with Chinese infrastructure and other investment in India. As usual, a multi-billion investment target was rolled out – $22bn on this occasion for 21 projects, which was slightly more than the $20bn when President Xi Jinping visited India last September, but far less than the $46bn Xi promised Pakistan on a visit last month, and less than the $50bn-plus that Brazil expects on a visit by Chinese Premier Li Keqiang that began today.

Indian sources said that Modi did some straight talking about India’s unease over aspects of China’s foreign policy, telling Beijing that it should “reconsider its approach on some of the issues that hold us back from realising the full potential of our partnership” – by which he mainly meant the two countries’ disputed 4,000km (2,500-mile) Himalayan border that Chinese troops frequently cross.

India formally complained on the eve of the visit about the $46bn Pakistan investment because it includes infrastructure for a trade route through territory that India officially claims. That complaint may have been in response to an authoritative Chinese writer complaining that Modi in February had visited Arunachal Pradesh, an Indian state that China claims, two days before he went to Beijing. This squabbling did not seem to do anything to spoil the visit, but it enabled India to show more toughness than it might have done in the past.

Modi examines Xian’s world-famous terracotta warriors and horses of Qin Shi Huang, the first Emperor of China

In Xi’an, Modi examines world-famous terracotta warriors of Qin Shi Huang, the first Emperor of China

There was no real progress on the defining the border, despite expectations among some China watchers in Delhi a few weeks ago that Xi had a dramatic new proposal to unveil. There was however agreement on military exchanges and expanding direct links between both sides’ army commanders. There also seems to have been no change on China’s intentionally provocative way of only issuing visas stapled into passports of Indian’s from Arunachal.

Modi did however surprisingly agree to introduce e-visas for Chinese visitors, making it the 77th country to get that facility. Modi announced it addressing students and faculty at Tsinghua University in Beijing even though, just a few hours earlier, his usually well-informed foreign secretary, Subrahmanyam Jaishankar, had briefed journalists that “no decision has been taken yet”. Jaishankar chooses his words carefully and the “yet” maybe should have led journalists to realise that it was still possible Modi would over-rule objections from security officials in the Home Ministry. It is not clear however what if anything he got from the Chinese in response to the controversial decision.

Like the oratory and official statements, the dollar investment figures do little to indicate how many projects will come about, and statements during the visit implied that there is little sign yet of the ease of doing business in India really easing.

That is something that Japanese companies are complaining about after Modi’s apparent failure after he visited Tokyo last year to set up a special investment management team, with two Japanese nominees, in his own Prime Minister’s Office – the team has been moved to the industry ministry’s investment promotion department.

This all indicates that, while Modi has done well on his foreign trips, he has failed in his first year to work hard enough in India to clear investment blockages and ensure that bureaucrats at all levels implement the changes that have been made. He was elected a year ago primarily to make India work better. As I wrote here on May 11, he now needs to have fewer grandiose trips abroad and personally focus on running India.

Narendra Modi visiting the Daxingshan Temple, in Xi'an

Narendra Modi visiting the Daxingshan Temple in Xi’an

America’s ambassador to India certainly did not mean to deliver a verdict on the first year of Narendra Modi’s time as prime minister when he referred on May 6 to the “potentially chilling effects” of current government threats to restrict or close organisations such as the Ford Foundation and Greenpeace.

Modi Time cover - May 6 '15But as I sat listening to a speech that the ambassador, Richard Verma (below, left) was making in Delhi, it occurred to me that “chilling” is as good a word as any to describe at least half of the reasons why the government has lost a lot of its appeal in the past few months.

Next Thursday, May 14, is the first anniversary of the vote count that produced the Bharatiya Janata Party’s landslide victory, and Modi will be in the Chinese city of Xian with President Xi Jinping at the start of a three-day country visit. The timing is appropriate because it is on the world stage that Modi has performed best, though there are few concrete results yet to show after all the razzmatazz in Japan, the US, Australia, Canada and elsewhere.

At home Modi is perceived to have achieved far less than had been hoped, even after discounting for the fact that expectations generated by his election campaign a year ago were euphorically unrealisable. But, even though people ranging from small farmers to big company businessmen are unhappy with what he has done, his popularity seems to be intact – an opinion poll published on May 11 by Mint newspaper showed his approval rating has only dropped from 82% to 74% in the year.

What has been achieved is being under-valued partly because Modi’s egotistical persona has not morphed well from being the chief minister of Gujarat and presidential style general election campaigner to the post of prime minister. His autocratic style has upset fellow ministers, MPs of his own party, and bureaucrats, and he has not emerged as a leader with the measured authority of a potential statesman.

He seems to frighten more than inspire which, reports suggest, makes many ministers and bureaucrats reluctant to take decisions – a development accentuated by the centralisation of decision making in the prime minister’s office (PMO), and by Modi bypassing many ministers to deal direct with top bureaucrats.

Ambassador Verma AnantaThat authoritarian approach fits with the “chilling” aspects of the past year where religious tolerance has been undermined and attempts have been made to curb freedom of expression. The autonomy for educational and other institutions has been under attack and, as the ambassador (left) mentioned, there have been recent curbs on the Ford Foundation – plus Greenpeace and, more understandably, several thousand other (often spurious) non-governmental organisations (NGOs).

Two authoritative and widely differing views on the first year have appeared in the past ten days – one from a former BJP minister and the other from Modi himself. Both are worth reading in detail.

The first was a tv interview (click here for the video) on May 1 with Arun Shourie (below, right), a distinguished former newspaper editor and minister in the last BJP government, who expected to be finance minister or have some other post, but was sidelined by Modi. He delivered a formidable (click here for text) critical analysis on the Headlines Today tv channel, which hit all the right points.

He praised Modi’s energy and efforts but “didn’t know “what other ministers” were doing or what was happening. On foreign policy he gave “very high marks for focus and energy”, but was concerned about a lack of real effects. On the economy he said the government was “directionless” and a “great disappointment”. On my “chilling” theme, he had “great anxiety” about social relations and “anxiety bordering on apprehension” on institutions.

Time magazine cover story

The second, on May 7, was a cover story and interview (click here for text) given by Modi to Time magazine. This was only his second big media interview, though there may be another one soon, and he is expected to hold his first prime ministerial press conference on May 23 as part of an anniversary public relations blitz in the coming days.

In Time, he described his first year in positive terms that gently countered the sort of points made by Shourie and other critics. He claimed a “meeting of minds” on what he described as “federal government structures” (which however is far from apparent), and he bypassed allegations of his autocratic style by saying the country did not “need a powerful person who believes in concentrating power”. His government would “not tolerate or accept any discrimination based on caste, creed and religion” (though of course his party’s activists think and act otherwise).

He then said that “so far as the expectations of the people are concerned, both in the country and internationally, we are moving very rapidly to fulfil those expectations” (which is certainly not the perception).

Arun ShourieThe government’s image problems began towards the end of last year when arch Hindu nationalists within the BJP’s Sangh Parivar (family of organisations) voiced extreme views about minorities such as Muslims, which Modi took a long time to rebut. One minister implied that everyone apart from Hindus were born illegitimately. There were also mass conversions of Christians and others to Hinduism, and a government minister turned the December 25 traditional Christmas religious and public holiday into a working day for many bureaucrats.

This was the first bad patch that Modi had hit since the general election, and it gave opposition parties a base on which to build up criticism to his government, which spread to economic and other subject. The BJP then unexpectedly lost badly to the Aam Aadmi Party (AA) in Delhi state-level elections and did not do as well as it had hoped in Jammu & Kashmir, further harming its image as an effective government.

The Congress Party, which was devastated after its electoral defeat last year, began along with other parties to put the government on the back foot. Rahul Gandhi, the re-energised Congress deputy president, is now leading an attack on the government for being anti-poor and pro-corporate – an image that stems from insensitive proposed land-use legislation  (now blocked in parliament) and other measures, plus a sense that the days of crony capitalism are far from over. Modi has done nothing to hide his closeness to the Adani group from Gujarat, and even apparently to Anil Ambani, one of the two Reliance brothers.

The Ford Foundation and other NGO’s troubles are the latest example of authoritarianism and intolerance of dissent that is expected in totalitarian regimes but not the world’s largest democracy. The issue stems partly from the government’s need to get investment moving on stalled projects, and its opposition to organisations that raise objections. It claimed Greenpeace, which can be controversial in the way that it opposes projects such as mining in rural areas, had allegedly “prejudicially affected the economic interest of the state”. Its bank accounts were blocked a month ago, and there is a risk that its registration as an NGO might be cancelled. The Ford Foundation has backed social and other organisations since the 1950s, but the government apparently objects to it funding an organisation that helps victims of the 2002 Godhra riots in Modi’s Gujarat, and now wants to vet its financial allocations.

Make in India lionSuch moves have done serious damage to India’s international credibility and are undermining attempts to attract investment.

At the same time, multi-billion dollar tax demands on international companies long-established in India, plus unexpected $6.4bn historical revenue charges against global investment funds, have further worried investors. In the past few days, this has led to serious falls in the stock markets, and the value of the rupee dropped to 2013 levels (prompting Arun Jaitley, the finance minister, to set up a committee to defuse the matter).

Jaitley has repeatedly said he is trying to stop what has become dubbed as “tax terrorism”, which seems to suggest that parts of the finance ministry are acting against the policies of the government.

I have heard many reports from businessmen of bureaucrats that tax and other officials at all levels in the ministry act on their own, and this fits with other conversations I have had about bureaucrats in many ministries failing to change their old blocking and restrictive tactics, despite Modi’s promise of change.

It is not clear whether the finance ministry problems are exacerbated by Jaitley, whose health was not good last year, having too many wide-ranging government responsibilities to be able to focus his able lawyer’s mind on detailed financial and economic policies. He is also information minister and the government’s chief spokesman.

Image problem

India is therefore suffering from an international image problem, both for “chilling” social issues and because it is still not regarded as an attractive place for investment in many areas.

The government has of course got several achievements to its credit over the past year. It has tackled the policy paralysis that developed under the Congress-led government, and various long-delayed measures have been introduced including higher foreign direct investment limits in defence manufacturing and insurance. Diesel prices have been de-regulated and natural gas prices have been raised, and new rules have been introduced for controversial coal mining leases. A major tax reform that has been under discussion for 15 years could also come about if the government can persuade the opposition to approve new goods and services tax (GST) legislation.

Spurred by lower international oil prices, the fiscal deficit has eased. Inflation has fallen and economic growth is picking up – the IMF and other international observers are forecasting 7.5% both this year and next, beating China.

Various high profile schemes have been introduced by Modi such as cleaning India, spreading financial inclusion and involvement, cleaning the Ganges river, and more are being announced. All of them are well meant, but he has not shown how some of them are or will be implemented.

amit_shah_reuters_360_22A key Make in India campaign (logo above), which is intended to make the country an easier place to set up and run manufacturing and allied businesses, has seen few results.

It was undermined last month when Modi cancelled a potential contract to make 126 Rafale fighter jets in India and instead ordered 36 to be made in France. Defence preparedness and manufacturing arms in India should have been a relatively easy subject for Modi to tackle, but far from enough has been done – the Comptroller and Auditor General (CAG) has just reported that a massive ammunition shortage means that stocks are 50% below requirements and would barely last 20 days of intense fighting.

Overall the image of the government one year on is of an unreformed bureaucracy performing far below its potential, despite some improvements at the senior levels. Many ministers lack experience and authority and are topped off by a troika that exerts overall control – Modi and Jaitley plus Amit Shah (above), the BJP president, who packs a tough image personifying the “chilling” theme.

The responsibility for that rests with Modi, who was elected last year to change the way India is run. That of course was a totally unachievable goal in the short term, and Modi said he would need ten years to “take India into the 21st century”.

He has not however in his first year shown how he is going to drive that change through the national government and the states, and generate an investment-friendly image. Maybe he needs to have fewer grandiose trips abroad in the four years he has left before the next election and personally focus on running India in India.

photo CNN-IBN

photo CNN-IBN

Nepal’s devastating earthquake, with over 5,000 people reported dead so far, was a disaster waiting to happen.

This small and impoverished country of 28m people lies in a prime earthquake zone – international experts were in Kathmandu just over a week ago predicting an imminent disaster.

And it happened in and around a city with a population of over one million that is crammed with vulnerable old structures, many new buildings that have been inadequately designed and badly constructed, masses of shantytown slums, and narrow inaccessible alleyways. Beyond the city are many crippled villages. There are fears the death toll could reach 10,000

The story has been building up in Nepal for decades, confounding international aid agencies and others who have tried to tackle social, environmental and other challenges. Now the government is not equipped to handle the effects of the disaster.

Nepal quakeWhen I first visited the country 30 years ago, I wrote (in The Financial Times) that “deep-rooted corruption siphons off a large proportion of international aid and cripples the country’s economic growth and public administration”.

Members of the now-ousted royal family were heading the plunder, and one aid worker told me the leakages were so dire that his country would only provide equipment, not money. Since then Nepal, which is a buffer state between India and China, has been wracked by relentless political instability, a Maoist uprising and civil war.

Governments have not even been able to begin to tackle macro economic development, let alone the intractable problems that made the earthquake and its after-shocks so serious. The good news is the way that international help was quickly mobilised over the weekend. India led the way within hours of the quake, flying in supplies and support teams in an operation personally led by Narendra Modi, the prime minister who showed, perhaps for the first time since he was elected a year ago, his ability to swing a cumbersome government machine into immediate action.

 Nepal is prone to earthquakes because it is at the junction of the Indian and Eurasian tectonic plates. The Himalayas were created when the plates collided millions of years ago, and the still-moving Indian plate pushes the mountains a few millimeters higher every year.- Washington Post

Nepal is at the junction of the Indian and Eurasian tectonic plates which collided millions of years ago – Washington Post

The earthquake, measuring 7.8 on the Richter scale, had been forecast to happen because it is 80 years since the last such disaster which demolished large areas of Kathmandu and killed over 17,000 people.

It is the result of what is known as the Indian tectonic plate moving northwards at the rate of 5cm a year into central Asia and the Eurasian plate. Originally this threw up the Himalayan mountain range, and the fault line has triggered a series of quakes, most recently in Kashmir in 2005 when over 70,000 people were killed in Pakistan and neighbouring countries.

Just a week ago, 50 earthquake scientists from around the world met in Kathmandu to discuss how the area would cope with such  a disaster. “Physically and geologically what happened is exactly what we thought would happen,” seismologist James Jackson, head of the earth sciences department at the Cambridge University, told the Daily Mail. “I was walking through that very area where that earthquake was and I thought at the time that the area was heading for trouble,’ said Jackson, lead scientist for Earthquakes Without Frontiers, a group that tries to help Asian cities prepare for disasters.

There is of course extreme grief in Nepal, and across the world, for the loss of those who have died, and concern for those who have been injured or have not yet been found. Government ministers join in the expressions of sorrow and pledges to provide aid, but it often seems that life in this region is not valued highly. Little is done once the crisis has past, beyond slowly rebuilding people’s lives, their homes and places of work. nepal-quake-mapPublic services are allowed to decay, and there is scant concern for public safety.

Two years ago, there were some 6,000 deaths when devastating floods hit the northern Indian state of Uttarakhand adjacent to Nepal. The floods were caused by torrential rain but they were exacerbated by the reckless construction of buildings, dams and roads in a fragile environment. Many settlements had been built next to the rivers in blatant violation of corruptly administered environmental laws – but little or nothing has been done in the past two years to improve the situation.

The Nepalese are sturdy strong people and they will rebuild their lives, haphazardly. But they have little opportunity to plan further than their immediate needs. The sort of action taken by, for example, Japan to construct buildings that can withstand earthquakes is beyond what most can even dream about.

That then is the challenge for international aid agencies, and for Narendra Modi at the head of Nepal’s largest neighbour. From Afghanistan across to Bhutan and Bangladesh and down into India, a new approach is needed to handling natural disasters and, in particular, trying to ensure that buildings can withstand earthquakes. That is a huge challenge for governments, but in India it is just the sort of thing that Modi was elected to achieve, by making government work.

See Comments below for two examples – in Bangladesh and Orissa – of governments showing that it is possible for them to learn from crises.

Back from a mysterious 56-day “sabbatical” abroad, Rahul Gandhi, the Congress Party’s reluctant leader, has seized on a political battle over India’s land legislation, and the financial plight of poor farmers, as key subjects for re-establishing himself as a possibly credible politician.

He has made two major public appearances – at a public rally in Delhi on Sunday April 19 and in parliament the following day, and has also spoken in parliament since then on a net neutrality (equality of access to websites) issue. This has put him in the headlines with a series of sound bites aimed at projecting Congress as the guardian of the poor against the allegedly pro-corporate government led by Narendra Modi.

But he has failed to get to grips with the main current policy debate about the government’s proposed changes to land acquisition legalisation passed by the Congress-led government in 2013.

Rahul Gandhi and Sonia at the farmers' rally

Rahul Gandhi and Sonia at the farmers’ rally

Gandhi left for unknown destinations on what his party called a “sabbatical” just as the first part of the parliamentary Budget session was starting on February 23.

He has reappeared, nearly two months later, without any explanation of where he had been or what he was doing, nor any apparent concern for the controversy and speculation that he has caused. He flew in from Bangkok, which suggests he may have been in Myanmar, reportedly one of his regular secret retreats.

At a large but not very energising farmers’ rally on April 19, he played second fiddle to his mother, Sonia Gandhi, who made a more substantial speech. He did his usual quick energetic waves of his hand to people he apparently had spotted in the crowd, flashing his dimpled smile, and fiddled with his mobile phone.

In parliament on April 20, as the Budget session resumed, he played to the gallery. He taunted what he called Modi’s “suit-boot ki sarkar”, or suited and booted government, pausing on the word suit to show he was referring to the rather ridiculous suit with “Narendra Modi” named pin stripes (below) that the prime minister wore when President Obama visited India in January.

That was a self-confident, combative and sometimes jokey speech, delivered in both English and Hindi. There was however little sign that he had returned with more substance and gravitas from what was billed as a period of political self-examination though, as a columnist put it a few days later, “for the first time he was speaking like a genuine, and cynical, parliamentarian: witty, with well-timed pauses and delivery, a calculated punch here, a jab there and of course many jibes”.

modi-stripeThis was only the fourth speech that Gandhi has made in parliament since he became an MP in 2004. The earlier ones (first on nuclear power and later two on anti-corruption measures) demonstrated both a lack of parliamentary confidence and the supreme confidence of being heir apparent to lead the ruling dynasty.

Now that the dynasty is no longer ruling, Congress having lost last year’s general election, Gandhi seemed to enjoy being in opposition, skirting details and making jibes at Modi and the government, for which he drew roars of applause from opposition MPs.

He accused Modi of rewarding top industrialists, who had helped to finance last year’s general election campaign, with favourable legislation on the land issue. Mocking Modi’s achche din (good times) general election promises, he dwelt on the current plight of farmers whose crops have been hit by unseasonal heavy rains at harvest time after an earlier poor monsoon. Taken together with falls in prices and reduced government support, this has affected rural incomes and has led to a recurrence of the spate of suicides by destitute farmers that have also happened in earlier years.

Gandhi used these problems to spice up his speech during a debate on the government’s land legislation, but he failed to tackle the primary issue of how to frame laws and regulations that protect poor people who are moved from their land for infrastructure and industrial projects, while not seriously impeding economic development.

The Modi government has drawn up amendments to the last government’s land acquisition legislation that proved far too rigid in terms of prior approvals, including the need for projects to obtain the consent of at least 70% of affected owners and pass a social-impact test.

The amendments exempt five types of public sector development from the provisions of the act – defence projects, rural infrastructure, affordable housing, industrial corridors, and infrastructure projects – which critics understandably say is far too wide-ranging. The amendments passed through the Lok Sabha, where the government has a majority, but have been blocked in the upper house, the Rajya Sabha, which is dominated by Congress and other opposition parties. This has led to the government introducing the amendments through an ordinance, which is now being renewed and was the subject of yesterday’s parliamentary debate.

Congress is using the land legislation as the basis for its attacks on Modi and his government, portraying it as an administration that has little concern for the poor and is mainly concerned with helping companies make profits. That is unfair because Modi needs to get the economy moving, but he is however developing a crony capitalist image and his egotistical style does nothing to boost his appeal at home – even though he is a success on his trips abroad.

It is now up to Rahul Gandhi to capitalise on the government’s problems and show that he is a worthy potential successor to his mother who has bound Congress together for over 15 years. She is ready for him to take over her party president’s post, but he has delayed making a decision on this, though he was expected to be anointed maybe this month or later in the year.

While he was away however, Sonia re-emerged as an effective party president, and this led several older party leaders publicly to state that she should remain. Most of them are worried that they will be pushed aside by Rahul in a generational change of top posts, but they also have a valid point since Rahul has not proved himself.

He now needs to appear in public regularly, as he has done in the last three days, and stop vanishing on unexplained trips (which has been his habit for years). He also needs to show that he has a real grasp of policy issues and can contribute to debates. But above all he needs to turn his charm and public speaking ability into the sort of soundly based political leadership that the party needs if it is to recover from last year’s devastating general election defeat.

Dassault coup to make 36 Rafale fighter jets in France not India

Narendra Modi has taken India’s defence industry by surprise with a totally unexpected decision to buy 36 Rafale fighter jet aircraft (below), probably costing around $4.5bn, from Dassault Aviation in a deal that is being negotiated directly between the Indian and French governments.

rafale-fighter-jet-2Modi is on an official visit to France. He said after holding talks with President Hollande in Paris on a range of subjects that included nuclear energy co-operation and Euros 2bn French investment into India, that he had asked for 36 Rafale multi-role combat aircraft (MMRCA) “in fly-away condition as quickly as possible”.

This means that the planes will be completely made in France, which is a temporary blow for Modi’s Make in India campaign that has been relying on defence orders for early successes that have yet to materialise.

The Indian Air Force (IAF) however is seriously depleted of serviceable fighter jets, just as other branches of India’s defence forces are deplorably under-equipped. It has only 32 working squadrons compared with a requirement of about 40 and the total is expected to come down maybe to as low as 20 – half what is needed – within three years when old Russian MiG and other aircraft are taken out of service.

That has led Modi to cut through the red tape of defence acquisition procedures to initiate a quick deal, even though three years of tortuous negotiations to buy 126 Rafales have failed to reach agreement. The first 18 of those planes would have been made in France instead of the new 36 (two squadrons) figure.

Negotiations will, it is understood, now continue separately for 108 aircraft to be made as originally planned in Bangalore at Hindustan Aeronautics (HAL), the Indian public sector’s aircraft builder. The deal was originally priced at around $13bn when the Rafale was selected by India in 2012, but the figure demanded by the French company has risen to $18-20bn. It is not now clear how urgently India will pursue these negotiations, though there seems little operational or financial logic in having only 36 aircraft in the airforce.

Narendra Modi arrives in Paris

Narendra Modi arrives in Paris

The proposed purchase of 36 “fly away” aircraft, for delivery after two years or so, can be presented as an example of Modi’s willingness to spring unconventional surprises when that is in the national interest – and clearly there is an urgent need to buy aircraft quickly if the IAF is to look a viable fighting force.

But it is also a coup for France and Dassault, which have played hardball since 2012 when India controversially picked the Rafale, after five years of tenders and evaluations, instead of the European EADS consortium’s Eurofighter. Three other contenders – Boeing’s F-18 and Lockheed’s F-16 jets from the US, and Sweden’s Saab Gripen – were elimitated earlier.

First, Dassault refused to accept HAL as the lead Indian production agency because of the government company’s questionable delivery and quality reputation. Instead it wanted the lead role to be played by Reliance Industries, run by Mukesh Ambani. Reliance has no engineering manufacturing experience but has soaring ambitions and strong finances, plus some political clout (especially with the last Congress government).

HAL successfully mobilised support within the defence establishment and side-lined Reliance, but Dassault then refused to bear responsibility for the quality and quantity of aircraft produced by HAL, and it also raised the price.

A.K.Antony, the Sonia Gandhi loyalist who was the non-performing defence minister in the last government, could not cope with such pressures and ducked taking a decision, so the Modi government inherited tortuous negotiations that were stuck in bureaucratic rules and procedures, and an air force urgently needing aircraft.

The new defence minister, Manohar Parrikar, has been pushing for an order to be placed but Arun Jaitley, the finance minister, has been saying that there are not sufficient funds available for 126 aircraft. That led India’s defence industry and most analysts to believe that the negotiations were going nowhere and that there would be no Rafale contract.


Narendra Modi and Francois Hollande before their talks

Instead, Modi took the decision to do the new government-to-government negotiated deal, which is the usual structure for defence contracts with Russia and is sometimes done with the US.

Earlier today it was widely reported that he would ask for 63 jets.

It is not clear whether that was incorrect or whether the number came down during the talks, possibly to blunt criticism that the deal went against the Make in India policy..

The government can now try to push down the price of the aircraft because Dassault desperately needs work at its French factories for the Rafale – it has no overseas orders apart from 24 aircraft for Egypt.

It will probably have to face renewed criticism that the Rafale is not the best choice for the IAF because of its high cost and its lack of other significant orders. The US, which was seriously annoyed when Boeing and Lockheed aircraft were dismissed, will probably argue for its aircraft to be reconsidered. Others will argue that both the Saab Gripen and even the Eurofighter would be lower-cost alternatives.

Many experts have been puzzled why India chose the Rafale in the first place. Today’s developments do nothing to clear the air on that.

….and Beijing makes moves on possible Afghan Taliban peace talks

China is winning, of that there can now be no doubt at a time when most world powers are falling in with its plans, either in kow-tow mode like the UK or with a somewhat more upright stance like India, or somewhere in-between. The weakest-looking country in this scenario is the US, whose super-power status is being challenged rather faster than it expected, causing it  to lose influence over its allies including the usually-eager UK.

The trigger for this assessment is not renewed Chinese aggression in east Asia, the South China Sea or the borders of India, nor is it China’s power plays in established international organisations or financial markets.

Instead it is China’s plans for a new Asia Infrastructure Investment Bank (AIIB), plus its growing interest in becoming involved, maybe rather more precariously, in Afghanistan’s expected peace talks.

Both initiatives demonstrate the diversity of its growing international self-confidence and ambitions under President Xi Jinping, who took office a year ago. The initiatives fill gaps that China has spotted in existing arrangements – Asia’s need for massive infrastructure investment, and the diplomatic vacuum left in Afghanistan at a time when talks with the Taliban seem likely and the US gradually withdraws.

DavidCameron XiJinping Beijing Dec '13Tomorrow, March 31, is the deadline that China has set for countries to apply for founding membership of the new AIIB, and nearly 30 have already done so.

The UK hit the headlines when it said it would join, prompting a US official to issue a rare criticism of a long time friend. “We are wary about a trend toward constant accommodation of China, which is not the best way to engage a rising power,” the un-named official told the Financial Times.

David Cameron, Britain’s (possibly out-going after the May 7 UK general election) prime minister, deserved the kow-towing reprimand because he has constantly followed a pro-China line since Beijing side-lined him as a punishment for meeting the Dalai Lama in London in May 2012. He mended his ways in Beijing’s eyes and met President Xi in the Chinese capital in December 2013 (above) with a posse of other British ministers. In practical terms, Cameron hopes that doing what China wants will increase investment in the UK, though there is little evidence yet of that happening.

The UK was the first of America’s European allies to line up and was followed later by France, Germany and Italy. Others saying they want to become members have included Russia, Denmark, South Korea, the Netherlands, Brazil and Turkey. America’s staunch ally Australia held out till March 29, then caved in.

The US is now having to reassess its position. The only significant ally it has left after losing Australia is Japan, which fears Chinese domination of the bank’s decisions and a lack of attention to environmental protection and controls over fundraising and quality of projects. Japanese businessmen are however lobbying for the country to join and it is forecast in the FT to do so by June. Australia said yesterday that no one country should control the bank.

modi-xi-swing1 - IndianExpressIndia became involved last year when the bank was first mooted, demonstrating prime minister Narendra Modi’s pragmatic approach to dealing with China. When President Xi visited India last September (right), Modi secured pledges of $20bn investment in (unspecified) infrastructure projects over five years.

The AIIB is a potential challenger to the World Bank and Asian Development Bank, over which the US and Japan exert extensive influence. The US and others have resisted reforms in the control of those two banks, and of the International Monetary Fund, so it is scarcely surprising that China is creating an alternative Asian power centre for infrastructural investment.

Meanwhile China’s initiatives in Afghanistan are more tentative. There have been various moves since President Ashraf Ghani took office in Kabul last year and these have included Chinese meetings with Taliban leaders in Beijing as well as Pakistan and Quetta (where the Taliban has an office).

This is somewhat unknown territory for China, which has no track record in international diplomatic mediation, but it fits in with Beijing’s wish to become more established on the world stage. Chinese leaders are also concerned about civil unrest in Muslim-dominated areas of its eastern province of Xinjiang increasing if the situation in Afghanistan worsens.

Both the US, which wants to be rid of its Afghanistan role, and India which would like a larger say in the country, seem content with China’s initiatives. The semi-official line from Delhi is that Afghanistan needs all the help it can get and, if that can usefully come from Beijing, so be it.

This does not mean that India will trust initiatives that China takes, any more than it trusts it to make much progress in talks on its border dispute (there was little movement when the two sides met in Delhi last week).

India has in the past often bowed to Beijing’s wishes, but under Modi it is being more robust, strengthening its defence installations and infrastructure on the mountainous border and speaking out when necessary, while welcoming Xi Jinping last year and trying to boost economic co-operation.

The lesson that India has learned, but does not always apply, is that China respects toughness that is soundly based. Where it detects weakness, based for example on economic self-interest (as with the UK), it responds toughly and expects more favourable treatment.

“India is probably one of the last countries to accommodate China on anything – and at the end of the day, they work very well together,” a Mexican diplomat told The Guardian .

Many of those who have flocked to the AIIB also do not trust China to influence the bank along ethical lines – any more than the US has in the World Bank. Martin Wolf, the Financial Times leading economic commentator and a one-time World Bank employee, put this rather neatly in a recent column, when he wrote:

“Jack Lew, US Treasury secretary, has voiced American concerns that the Asian bank would not live up to the ‘highest global standards’ for governance or lending. As a former staff member of the World Bank, I must smile. Mr Lew might like to study the Bank’s role in funding Mobutu Sese Seko of Zaire, one horrifying example among many”.

‘This is a fallen world’

“It would be good if China’s lender were as pure as the driven snow. But this is a fallen world,” said Wolf. He approved of all the countries joining the AIIB because it “would be better with a broad membership than without it”.

Wolf’s “fallen world” presumably referred to corruption and other declining ethical standards that are widespread internationally, and not to a world increasingly influenced by China.

The lesson however of China’s AIIB and Afghanistan moves is that the world – and especially the US – needs to be ready for President Xi’s next initiatives, whatever they may be. He clearly intends to use his time in office to spread his country’s power and influence, weakening those who stand in his way, as the US has been weakened over the AIIB.

Older Posts »



Get every new post delivered to your Inbox.

Join 2,611 other followers

%d bloggers like this: