US- Iran Agreement: Is the United States on the decline?

 

 

Pentagon chief, Chuck Hagel, has stated that the interim deal with deal to roll back its nuclear program was  a risk worth taking but that Western diplomacy must not be misinterpreted.  He added that, ‘diplomacy cannot operate in a vacuum and that the Pentagon will not make any adjustments to its military forces in the region or to its military planning as a result of its interim agreement with Iran. A senior defence official, in support of Hagel’s assertions, said that ‘Hagel had sent a message of solidarity to the Gulf allies  and that ‘any sort of mythology of American retreat was wrong headed’.

 

Both Hagel’s and the defence official’s remarks are meant as reassurance to the jittery allies of the United States in the wake of the deal with Iran over scaling back its nuclear ambition. The fear, for the mini Gulf statelets and Saudi Arabia is that this deal may signal the drawdown of US forces from the region and leave them vulnerable to Iranian hegemony. This could potentially have a ripple effect on nuclear proliferation in the region, impact its security structures and the end of extended deterrence in the region. In turn, this development could  alter the balance of power in the region in Iran’s or Shi’ite favour.

 

Some analysts have also taken the US-Iran deal to mean and imply the retreat and waning of US hegemony as a reaction to putative developments in the global system polarity and the attendant decline of American power. Hagel has debunked all the myths and rightly so.

American power, especially in the domain of hard power , remains pre-eminent and paramount. Yes: its prestige and soft power may have taken a bit of a hit after the second Gulf War ,the war in Afghanistan and the 2008 economic crisis but the fact remains that America is the uncontested hegemon of the world. The reserves of power it has and holds have no real challengers. The China bogey , used at times, to suggest either as an alternative to American power or as a competitor is a bit of a myth. Yes: China has made stupendous strides-economically and militarily- over the years but it is a stretch to believe that the country can match the United States either in terms of capability or influence as far as the eye can see. American hegemony and provision of security for the world has been good and salutary. Consider the Middle East. Without the American security umbrella, the region would have been in anarchy and potentially a war zone with constituent states of the region at each others’ throats. Or consider South Asia. American interventions or to use a more politically correct term, interest, may have kept peace in the region to a large extent. Similarly, American security guarantees to its allies in Southeast Asia have kept peace in this region too. In Western Europe, it is well known how peace was maintained and how the European Union was incubated and formed under the American security umbrella.

 

This peacekeeping( a term and practice usually associated with the United Nations but whose performance in this domain has been found wanting) role of the US is underwritten by American power, influence and capability. And , it is not in decline. American primacy is as strong as ever and no country or power can really supplant it.

 

Now consider Chuck Hagel’s remarks and the entente between Iran and the United States. The ‘deal’ between the two countries is a victory for diplomacy over war. In this sense, it reflects prudent and sagacious statecraft. War, hich means bad politics, has been shunted aside in favour of a diplomatic resolution of Iran’s vexing nuclear ambition. This has been made possible by the backdrop of America’s hard power combined with diplomatic overtures. Hagel’s remarks that diplomacy does not operate in a vacuum becomes pertinent here. A US troop drawdown from the region is not part of the deal. If this were the case, it would be a coup for Iran for who the field would then be open for pursuing its long held dreams of Persian and Shi’ite hegemony of the region. All in all then, the interim agreement while dealing with the nuclear issue maintains the balance of  power in the region with the United States holding the balance.

 

This naturally maintains the security situation and condition of the Gulf region; prevents nuclear proliferation; assuages the worries of America’s Gulf partners and maintains peace and stability in the region. Status quo ante is maintained and preserved but with the new development of roping or drawing in Iran towards normal politics. This is sanguine and , to repeat, a  tribute to diplomacy. Not only has war been averted but also the perils and dangers  of nuclear proliferation and all that this would entail in the region thwarted. How this could be an indication of American decline and the attendant drawdown of its forces in the region is rather inexplicable.

 

The United States continues to and will be the world’s pre-eminent and paramount power. This condition will obtain and endure for as far as the eye can see. American power has underwritten global peace and development and has been , by and large , benign. The prudent option for other states and countries may be not to confront the United States but cooperate with it for the sake of a more benign and peaceful world order. This may be the lesson of the Iran-US deal. All the rest is pure blarney.

Iftikhar Choudhary's Judicial Activism and the Pakistani state: Time for a rethink?

 

 

Choudhary, the 18^th Chief Justice of Pakistan, has stepped down. Choudhary Iftikhar  became famous after he resisted Pervez Musharaf’s manoeuvres and manipulations with Pakistan’s constitution and for leading or becoming an iconic figure for the lawyers movement in Pakistan. The former Chief Justice of Pakistan also was known for what could be called ‘judicial activism’ and the frequent suo moto notices he issued. (One notable example of Choudhary’s judicial activism was the disqualification of Pakistan’s 16^th prime minister, Yusuf Raza Gilani. Gilani was forced to resign after he resisted calls to reopen corruption and graft charges Benazir Bhutto and Asif Ali Zardari).

 

While Choudhary’s judicial activism did restore a degree of sanity to Pakistan, it came at the expense of other institutions and created an imbalance of power among the country’s institutions. This perhaps, along with the ideational and ideological confusion that defines Pakistan, goes to the heart of the country’s problems. Weak institutionalization has led to a situation wherein Pakistan can be termed as a weak state. Or more accurately a weak state with praetorian, patrimonial features. This institutional morass and torpor has affected almost every dimension of Pakistan’s polity and has led to dysfunctional governance, poverty and even its foreign and security policy which has come to be dominated by the Army and its allied intelligence agencies. Apparently and on the face of it, Iftikhar Choudhary’s judicial activism was mean to restore a semblance and patina of normalcy to the institutional fabric of Pakistan. This, besides being controversial , could only mean a short term palliative for Pakistan’s structural problems but , in the final analysis,  may have even reinforced the institutional imbalance of the Pakistani state. Pakistan, to become a normal state, at peace with itself and the world at large, may not need institutional tinkering but a wholesale rejigging of its institutional superstructure and substructure.

 

How can this be done? This is a billion dollar question. A good start may be to revisit the foundational premises of Pakistan and try to build a consensus over the nature and identity of Pakistan. Contemporarily, the pulls and pressures that bedevil the state and society of Pakistan perhaps emanate from an ideological confusion. Is Pakistan a theological state? Is it a secular state? Or is it a hybrid and synthesis between the two? Various quarters in Pakistan would perhaps offer different answers to these rather existential questions. However, a consensus answer would be that it is a Muslim state. This would be accurate and it would be almost impossible for Pakistan to be become a liberal democratic, secular state. Prudence then dictates that Pakistan conform and correspond to its Muslim identity but arrive at a consensus on the nature of this state. This may mean integrating modernity and Islam in both the state and society of Pakistan.(Hoping that Pakistan becomes a pure liberal state(if there is one in the world) is fantasy).

 

This may mean a distinct role for Islam in the state and society of Pakistan tempered and leavened by the ideas of modernity. If Pakistan succeeds in synthesizing Islam with modernity, it could serve as a model for the Islamic world and this would its very own idea and practice rather the imitating the so called Turkish model. This ideational and idealogical consensus over the nature and meaning of Pakistan wont be easy and will be challenged. But for the sake of becoming a normal state and perhaps even for existential reasons, Pakistan may have no other choice. The country is going through a painful churn  and an optimistic take on this may be that it is in transition and that these transition points need to be grasped by the political class in Pakistan to reorient and redirect the state to more salubrious directions.

 

This is a challenge that the Pakistani political class should not shy from. After arriving at a consensus on the nature and meaning of Pakistan, institutional rebuilding would be the next logical step. This would be rendered easy given that there would be a ideational consensus on the nature of Pakistan. Phoenix like Pakistan may emerge from the ashes and be a force for good at/on a range of levels- political, regional and security. The country would be doing favors to none but itself if it does embark on this exercise. If it continues with the drift that defines it contemporarily, then only gloom awaits the country. This can neither be good for the country nor for the region or the world at large given that a failed Pakistani state would pose insuperable dangers to all. It then behoves the thinking, sober  political class to rethink the nature of Pakistan and restore its institutional balance. The world and even India has a stake in this. Let Pakistan be encouraged to have and hold a dialogue with itself and last but not least redeem  itself in its own eyes. The consequences will only be benign- for the region, the world and above all Pakistan itself.

The rise and fall of Infosys: Is Indian capitalism flawed?

Infosys-the IT bellwether firm- which could be said to have been the face of Indian capitalism and the visage of the New India is in trouble. The pioneering firm took advantage of globalization , India’s meshing into the global economy and other germane structural factors is no longer the firm which animates and captivates the market. What accounts for this? Has the law of diminishing returns set in? Did the firm merely ride the tide of reforms that swept India after 1991 and given this, does this mean that it was destined to be second class? Has the firm reached its ‘strategic inflection point? Have its competitors been more nimble? Do cultural and sociological factors account for this?Or is it the Scumpeterian creative destruction kicking in?



It would appear that the catch all explanations that may explain the plight of Infosys are a combination of cultural and sociological explanations coupled with creative destruction. What does this mean?



Pared down, these assertions mean that India, sociologically and culturally, may not have capitalism wired into its DNA. As a corollary, dynamic risk taking and entrepreneurship may be missing in India. The reasons for this are manifold: the socialist legacy bears down heavily on the Indian psyche. However, more poignant reasons may be nature of Indian society and culture. That is to say that given that India is what may be called a communitarian society, the nature of society and its dynamic revolves around the group. This stifles creativity and the thrust of the group’s approach is toward seeking security and overall, in the main, the group is risk averse. Was Infosys an aberration then? Are Indian firms and potential entrepreneurs condemned to mediocrity?

No. Neither. The percolation of capitalism to India and India’s intermeshing into the global economy means that the country made its tryst with an altogether different, hypercompetitive, turbocharged capitalism. Infosys benefited and profited from this initial foray but may have reached or hit the law of diminishing returns. Can it recover?



The answer lies in creative destruction. By creative destruction, the reference here is not to apocalyptical , Marxian visions and prognoses of capitalism’s ultimate demise but the dynamism inherent in capitalism. The phrase creative destruction was popularized by the genius of geniuses, Joseph Alois Schumpeter. In Schumpeter’s schema, capitalism was defined by an inherent dynamism that destroyed the old and created the new. It is worth quoting Schumpeter here:



“Capitalism [...] is by nature a form or method of economic change and not only never is but never can be stationary. [...] The fundamental impulse that sets and keeps the capitalist engine in motion comes from the new consumers’ goods, the new methods of production or transportation, the new markets, the new forms of industrial organization that capitalist enterprise creates. [...] The opening up of new markets, foreign or domestic, and the organizational development from the craft shop and factory to such concerns as U.S. Steel illustrate the same process of industrial mutation [...] that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one. This process of Creative Destruction is the essential fact about capitalism. It is what capitalism consists in and what every capitalist concern has got to live in”( http://en.wikipedia.org/wiki/Creative_destruction).

This is what may have happened to Infosys. That is, while the firm itself was beneficiary of the creative destruction process, it too may have been overtaken by the same dynamic. Infosys may or may not recover its pivotal position. Whether it does or whether some other Indian firm takes its place or even goes beyond, the principles to bear in mind are that in the contemporary world, capitalism is turbocharged and hypercompetitive. Creative destruction them takes at a faster pace and speed. No firm can rest on its laurels and continue to survive let alone thrive.

To recover then, Infosys needs to rejig itself. This rejigging cannot and should not merely mean tinkering revamping its business model but realigning the entire concepts upon which it was premised upon. This means more entrepreneurial verve and risk taking which in turn means reviewing cultural assumptions and even creating new ones instead in the new Infosys culture. Once this is done, the rest-creating and crafting a new business model, and other issues of business structure and strategy- become mere detail.



India has made its tryst with capitalism. This is irreversible. To reach a level that is coeval or commensurate with the developed world, it is imperative that the country develops a culture that is aligned with the needs of capitalism. It is then that the country can boast of Bill Gates or Steve Jobs. Till then, the country and its firms can go only so far. Infosys demonstrated that India and Indians could compete. Now it’s time to demonstrate that India stands prepared for any challenge that capitalism throws at it.

The Iranian Sisyphus: Would nuclear proliferation in the region lead to peace?

Nobody can fault the Iranians for lack of subtlety. Be it the delicate dance over its alleged nuclear program or gradually and inexorably building a position of power and strength in the region or maneuvering deftly through the maze of international politics, Iran has done it all with adroitness. It amplified and intensified its nuclear program soon after the George Bush administration labeled it as a component of the ‘ axis of evil’, resisted pressure by the international community over its alleged program, and maneuvered deftly and adroitly in the changing equations and changed balance of power in the Middle East, post Gulf War II.



More recently, it held elections and elected Hassan Rohani with a landslide margin as the president of Iran. What is remarkable about the election of Rohani is that neither the reformists nor the hardliners murmured a word of protest or mumbled against his elections. Iran apparently is unified over his election. What all this tell about Iran, regional politics and Iran’s status?



First and foremost, despite numbers and statistics, that indicate a worrying state of the economy for Iran-30% inflation and over 40% of Iranians living under the poverty line- sanctions have not had the intended effect of splitting Iranians and making them rebel against the regime. To the contrary, Iranians seem to have become more unified with no major differences or splits emerging. What explains this apparent contradiction and counterintuitive theme?



Nuclear nationalism and Iranian pride may be the answers. Both go together. Nuclear weapons not only are the only security guarantors but can potentially- especially in the volatile Middle East region- provide and accord hegemonic status to a state that has a nuclear arsenal. Acquisition of nuclear weapons accord Iran hegemonic status in the region- a status it could never have despite being an Islamic Republic. (Being Shi’ite coupled with the fact that the centre of gravity of Islam remained Saudi Arabia on account of its custodianship of Islam’s holiest places- Mecca and Medina, Iran could not sate this aspiration). Nukes potentially give Iran the much coveted regional hegemonic status albeit in a convoluted way and not at the same level as Saudi Arabia in terms of prestige and standing in the Islamic world.



This along with the squeeze induced by sanctions and the occasional rhetoric of a pre-emptive strike against Iran appears to have unified the Iranians. A new nationalism overlain by Islam appears to be developing in Iran. This is ominous. How can this nationalism approximating what may be called Islamo-nationalism be accommodated by the world and above all what can be done about Iran’s alleged nuclear weapons capability?



Instead of viewing Iran’s emerging combination of Islam and nationalism as a threat, the international community(read the United States) should view it as an opportunity albeit in a qualified manner. Why? A rigid confrontationalist approach would only harden and solidify angst against the west. Moreover, a qualified acceptance of Iran as one of the regional powers would sate the grandiosity complex that Iran collectively suffers from. This may mean accepting Iran’s nuclear quest. This counterintuitive option that will appear bizarre to many in the west may be most prudent. The reasons are manifold: a pre-emptive strike is a non starter, war is a mugs game and continued sanctions useless.



The question now is what would prevent Iran from being an aggressor and a dominating force in the Middle East? Nuclear proliferation in the region may be the answer. Again, this is counterintuitive but may be the most prudent answer. Extended deterrence provided by the US nuclear umbrella in the region would not suffice in this schema. What may be needed is allowing Saudis to go nuclear and deepening the alliance structure with the mini Gulf statelets. This makes the balance of power in the region more even and also leads to a balance of force(s) in the region. Nuclear parity- as the Indo Pak deterrence paradigm so eloquently demonstrates- can lead to over improvement and increase in security. The same may hold true for Iran. What needs to be guarded against is the lapse into proxy wars under the shield of nukes. This can potentially be cancelled out again by engendering a balance of power in the region(this means arms racing) and removing the props for conflict in the region. The reference here is to the Palestianian-Israeli dispute and its resolution. The moribund peace process needs to be revived and a satisfiscing solution arrived at.



In combination, a focus on these factors and elements may lead to a more peaceful Middle East and may keep Iran in check. The price to be paid is proliferation in the region which , on balance, may not be a bad option. The world or the region cannot afford recrudescence into irredentist conflict with nuclear overtones. It is about time a new Iran strategy is formulated and implemented.

Digitization. Miniaturization and the Economy: the story of an MP3 Player

To lighten up and relax, or to use the contemporary slang, that is, the ‘in thing, chillax, I scoured a list of items. A friend suggested that I buy an MP3 player. Being a technophobe and a technological neophyte, I did not know what an MP3 player was. Overcoming my embarrassment, I asked the friend to explain to me the device. He said that it was small device on which music could be uploaded and then conveniently listened to. I formed a mental image of the device and held it to be akin to what I was used to in my younger days: a Walkman. In the evening, I ambled into a store and asked for an MP3 player. I pretended to be a knowledgeable person in terms of technology and technological gadgets and asked for an MP3 player. The sales assistant, could barely, hide his surprise, when he handed me the device. I asked,’ Is this it?’.I was referring to the size of the device and was surprised that an MP3 player was the size of a pen drive.

I took a trip down the memory lane and thought once again about the path breaking book written by the NY Times columnist, Thomas Friedman. (I apologize to my readers for referring to the book and the columnist again). Friedman , in his book, had among other things posited that in the era dominated by Keynesianism( economics attributed to the great economist, John Maynard Keynes), it was the heaviness and scale economies that informedeconomic theory and practice. However, in the current phase of globalization, which he referred to as the Schumpeterian era, it was the size and speed that determined the health, vibrancy and productivity of economies. Miniaturization,digitization , and speed were the mantras and buzzwords of this era.

This is almost a veritable truth. Gone are the days when heavy industry was the hallmark of an industrial and industrialized or even an emergingeconomy. Today the health, vibrancy and productivity of an economy is determined by innovation, connectivity (both technological and economic), and linkages to the global economy. The competition is informed by how lighter, smaller, user friendly and effective and efficient your product or service is. Everything is commoditized. (My more environmentally minded and romantic friends will take exception to this and argue with me). The rate and speed of obsolescence is stupendous. In Schumpeter’s phrase, ‘creative destruction’speaks eloquently to this condition. And to quote a business guru, in this environment, ‘only the paranoid may survive’

This is the hard reality of our times. The question then is: what are the implications of this for states like Jammu and Kashmir? How can we find a niche in this competitive atmosphere where speed and lightness are the requisites for success?

Given the nature of our political economy, it would appear that we may be lagging behind in these indicators and benchmarks of success. Our economy, still more or less an agrarian economy supplemented by centre state fiscal transfers and crafts oriented may even be said to be stuck in a bit of a pre –industrial paradigm. This, however, does not mean we are condemned to this state of affairs. It is globalization and the global economythat offers the antidote to our economic problems. The question now is what can be done to integrate the state into the sinews of the global economy?

The answer lies in the domain of public policy and an enabling environment that assists and nurtures individual initiative, entrepreneurship and innovation. The state may have to re-orient itself , focus on areas where it is indispensable and make room and space for the private sector in areas where the private sector can do a better job. This sounds like a typical World Bank prescription and may be attacked as a ‘neo liberal’approach. In fact, it is neither. It is an eclectic solution that acknowledges and encourages a role for the states and a role for the markets. In, then , is a synthesis. Or , more colourfully, it is where Keynes meets Schumpeter.

In this schema, the state can and should focus its energies on developing and nurturing human capital. This approach has been tried and implemented very successfully in the South East Asian countries which have consequently reaped great dividends from this. By making people skilled and empowering them through education, the state then leaves space and makes room for the magic of markets to work through.

This approach may then be supplemented by developing niche industries that have a premium in the global economy. This, in effect , means a tightened, and reinvigorated industrial policy where targeted subsidies and support may be given to promising and profitable industries.

The banks also have another role to play: that of vigorously supporting new entrepreneurship and funding ideas- even crazy ones. It is in combination and in sync that these policies can reorient our political economy and lead to both a qualitative and quantitative shift of our economy. It is then that we may be able to compete and flourish in an environment where speed and miniaturization and economies of scope triumph over size, heaviness andeconomies of scale. It is about time that we choose the latter. In the meantime, I will enjoy the range of music available on my MP3 player while doing other stuff simultaneously and acknowledge my debt to Schumpeter and Friedman.

Global Kashmir: Possibility or a Pipedream?

Global Kashmir: A Possibility or a Pipedream?

Many months ago, when I had freshly arrived from the West, I was thinking of setting up a business in Kashmir- the kind which would enable me to reap the benefits of globalization or what Anthony Giddens has called ‘time space’ compression. Inherent in Giddens’phrase or coinage was the revolution induced by the Information, Communications and Technology (ICT) revolution which had compressed both time and space. I can, for instance, talk to my sister living seven seas away and in a different time zone at the click of a mouse or touching the buttons of my mobile phone. Similarly, Australia, mention of which evokes great distance in peoples’ minds, is just a plane ticket away. The conjunction of advances in information technology, communications and transportation, in a nutshell, have brought about this structural transformation.

Coming to my now aborted business venture, I conceived and developed a robust business plan and I dare say elegant business model. The model, conceptually, was built to take advantage of this time and space compression. Alas, the plan and the model hit reality and floundered on its rocks. The structural conditions that obtain in Kashmir- landlocked place, distant from ports and lack of critical infrastructure – gave short shrift to my goal of profiting from globalization and I then thought of carving out a nice in what is a very traditional business in Kashmir: tourism. To cut a long story short, none of this transpired and I find myself doing what is close to my heart.

I, however, have not given up on formulating and devising a plan to help Kashmir globalize. It is desirable and eminently doable. How? The answer is simple. Kashmir’s tryst with globalization can be made possible if the infrastructural deficit in India is obviated. This means according impetus and momentum to the 3^rd generation reforms in India. If India embarks on an infrastructural overdrive, this would mean better, world class ports, airports, cargo facilities or , in short, the critical infrastructure and logistical superstructure essential for taking advantage of globalization.

How can Kashmir benefit from this? Kashmir can tap into what are called global supply chains wherein a product is made in multiple locations and nodal points in the world. Take your laptop or mobile phone: it stands as a metaphor and living symbol of the globalization and the magic of capitalism. It may be designed in the US , its components made in China , and its frame may be made in Taiwan where it may be put together as well. The firm is no longer a black box and is defined contemporarily by vertical disintegration and is spread across the globe. So if Kashmir can find a niche product and specialize in making that , the finished product can then be sent to China Taiwan or Europe or the United States. What is critical here is logistical support, critical infrastructure and access to world markets.

Here there is a role for powers that be in Kashmir. They can pitch in politically and support the reform process and use their voice in taking the reform process forward. This then needs to be buttressed by a vigorous , supportive and up to date industrial policies that helps entrepreneurs and industries to find a niche and help them. The government or the state can enter the picture by helping in skill upgradation and development. The name of the game for entrepreneurs would then be developing and conceiving ideas and work vigorously in drawing , say, Volvo, or Marks and Spencer or even enter into tie ups with behemoths like Wal Mart.

Wal Martization of Kashmir would axiomatically mean globalization of Kashmir. The state could then be part of the global economy and find a niche for itself in the sinews of the global economy. This can be an unalloyed good and would also impart pride and vigour to people. This is besides the very important economic benefits that would accrue to the people of Kashmir. The default fall back on handicrafts or tourism- important sectors in their own right- would be given short shrift and Kashmir would begin its tryst with industrialization and build an industrial base by following a template that would have stupefied the best of economists only a few years ago. Let then the powers that be in Kashmir offer their support to economic reforms in India , take advantage of coalition politics and lend their weight and voice to this. The benefits can only be salubrious. I can then, in the meantime, draw satisfaction from the fact that my hard work did not go in vain.