Gobind Thukral

LAST weak the Empowered Committee of finance ministers of Indian states met in Chandigarh to find ways and means to overcome fiscal crisis they have been facing for long time. For example Punjab’s debt burden has reached 57,000 crore. It can not pay back even in 20 years. Many other states are in similar situation. The Committee urged the Union Finance Minister for a 50 per cent share in the taxes collected from the states by the Centre. Article 280 of the Constitution provides that 50 per cent of taxes collected by the Centre should come back to the states and form part of development expenditure. However, the devolution to states is only 30.5 per cent. The ministers also wanted the government of India to bear 50 per cent cost of the burden of the sixth pay commission as most of the states have no funds to pay it. Finance ministers Birender Singh from Haryana, Manpreet Singh Badal from Punjab and Sushil Modi from Bihar have lent total support.

Ashim Dasgupta, finance minister of West Bengal and chairman of the Committee, who has summoned an emergent meeting in December to raise this demand, before the country goes into a poll mode. He said “Most states want to take unified approach, as they will not be able to bear the additional burden, arising from implementation of the 6th Pay Commission recommendations.” Dasgupta said that the revenue raising powers of states was restricted, even as the total development expenditure of all states is 1.5 times that of the total expenditure of the government of India. The growing debt burden of the states was the main reason and the money coming to the states was only in form of loans, rather than as grants. This is worrisome. This had led to the burgeoning loan burden of the states. The Central government dictates on how to use the money coming in through the centrally sponsored schemes. Why it is not left to the states to implement its usage. Yet no one listens to this in Delhi which is always keen to give concessions to big industrialists.

Faulty policies

In March 2006 our economist Prime Minister Dr Manmohan Singh was telling the financial experts in Mumbai that Reserve Bank of India is preparing roadmap for full capital account convertibility. He and his government were keen to fully integrate India with global financial markets the mantra of liberalisation was like a heady drink. Now in September 2008 , the same prime minister has taken a u- turn, one of the many he has taken as an economist as for years he was a die hard socialist. He now wants “To insulate India from the ill effects of international financial crisis”. He is even saying that it is good that steps that were planned to open up the banks, insurance sector and pension funds besides other sectors to international financial players and go foreign governments. He has as yet not admitted that the mantra of privatisation and the state out of any welfare activity is ruinous.

This UPA Government was keen to dilute share holding and control of all public sector banks including the State of Bank of India. It wanted to dilute the ownership of the powerful Life Insurance Corporation of India and it also wanted to invest pension funds in share market. If pension funds had been deployed on the stock market, as the neo liberals had wanted, then the loss in their value would have meant either acute suffering for old-age pensioners or an inordinate drain on the government’s budget for rescuing pension funds. The communists, the trade unions and a section media did not support the moves. This opposition forced the government to postpone and not abandon the moves.

Now our prime minister says about the meltdown and fiscal crisis that originated from the most powerful American economy, “It was bound d to affect our economy. International credit has shrunk with adverse effects on our corporations and banks. Global uncertainty also tends to dampen investor sentiment”. Could not he see this as an economist of great stature? He now says, “Our first priority is to protect the Indian financial system from possible loss of confidence or contagion effect... the situation is abnormal and we need to be constantly on the alert. The situation is being watched on a day-to-day basis and more steps will be taken if required”.

India is taking a severe hit from global financial crisis with the stock market down over 50 per cent year to date. Foreign direct investment outflows crossing 10 billion dollars and the currency plunging over 20 per cent year to date. The Reserve Bank is injecting liquidity, easing bank credit and capital inflows, cutting lending rate to contain risks to the financial sector. The government is pushing public to save the financial market and the banks. Yet it is finding difficult to stop recession taking deeper roots. One export is suffering and second rupee is losing its value. Thirdly and more importantly the domestic demand is sluggish. The downtrend in asset markets, correction in the near terms seems inevitable. Double-digit inflation, high interest rates and global liquidity crunch will significantly impact domestic demand and industrial activity during next couple of years. It is now boom time and politically a costly affair. Deficit is approaching 10 per cent of GDP and it poses a challenge as forex reserves decline.

Ironically, Finance Minister P. Chidambaram has been shoring up the stock market by asking public sector banks to buy up stocks, an option that would have been denied to him if his own advocacy for privatising public sector banks had succeeded. Ironically, too, the most ardent advocate of privatising insurance in the country was the AIG, the world’s largest insurance company, which is at present in the doldrums and rescued only through a loan of $85 billion by the United States government. This is what is called privatisation of profits and Nationalisation of losses and public money for private purposes. It is happening all over the world.

Just see how even now the government is behaving. Take the case of alliance of two airlines companies that have made huge profits earlier. Within a week of Jet and Kingfisher airline illegal alliance and firing drama, Jet and Kingfisher airlines get government’s help[ Rs 1000 crore] in getting better credit terms for purchase of fuel, more time to pay for their current outstanding with respect to fuel outstanding and also in the ATF prices which will now be revised every fortnight. No such concession are available to millions odd debt ridden farmers or small industrialists and traders.

The country has been spared all this because of the stout opposition mounted by the Left and other progressive forces against neo liberal policies. Any economy is ill-served when its affairs are entrusted to a group of persons who are wedded to an ideology that is intellectually blank and serve the self-serving needs of international finance capital. Some steps could be: stop relaxing measures for capital inflows, tighten capital control and financial regulations, stop efforts to deregulate and opening up of banking and insurance sector, scrap the new pension scheme, provide uninterrupted credit to small and medium enterprises, ensure bank credit to farmers and weaker sections, and stabilise the Indian rupee.

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President Barack Obama and the beginning of history

Dr Amrik Singh writes from Sacramento

ON November 4, 2008, Americans didn’t have to wait long for results of the presidential election. The voting was still current in some parts when the news of landslide win struck the world. No more trammels that marked Al Gore’s election in 2000 and John Kerry’s in 2004. The mandate was loud and clear. African Americans’ expression of freedom became their inalienable right. They needed proof and it came after two centuries. Barack Hussein Obama’s name will forever resonate among the Firsts of human history. He turned out to be the bearer of a special knowledge of the black community that has now transformed into the unquestionable power of United State of America. A majority of ninety five percent blacks ardently stood behind their leader who first probed his roots before choosing to guide their relentless march. Their steps in unison convinced white America of change. The message went across the color line and all fears of the unknown were scotched. The rant of Rev. Jeremiah Wright, the lectures of the radical professor Bill Ayers and the black theology of Louis Farrakhan didn’t matter at all. The media hype of their association with Obama, in fact, only highlighted the urgency of changing America.

The longest ever campaign, first with Hillary Clinton, and then with John McCain helped only in electrifying the dormant regions of voters’ consciousness. A lot of soul searching by whites, Latinos, Asians and Native Americans created strong currents of change. Moving into that direction happened to be a sort of spiritual journey for many who wanted to shake off the dirt of stereotypes, color blindness, and genetic superlatives. Multi-million March to Washington, DC to the affirmation and the beat of black music had finally found a decent entry to the White House. It became ‘a carnival of desires.’ Shadrack, in Toni Morrison’s novel Sula provides blacks ‘a slit-in-the veil.’ Back then January stood as the “National Suicide Day” for blacks of Medallion. But at the moment it transformed into the “National Integration Day.” The journey from the fear of the White to the fight for the White House ended on a welcome note. All the pain suffered by black ancestors found its way in tears streaming down eyes of strong men like Collin Powell and Rev. Jessie Jackson. No more tearing of the ‘Bottom’ a derogatory label for Black neighborhood of Medallion in Morrison’s novel. It took four hundred years to build a man who was confident of his roots and knew how to engage his white counterparts in a nation building exercise.

African American writers though created black characters journeying towards faith, but in real life it still was a dream. When Bill Clinton was under a scathing attack for his clandestine escapades with his intern, media widely highlighted Toni Morrison’s comments. The Nobel laureate portrayed Clinton as the First Black President of America, the status he enjoyed until Barack Obama decided to run for the President. In February 2007, Toni Morrison endorsed Barack Obama clarifying her earlier metaphoric depiction of Clinton as imaginary. Clinton maybe allegorically black, but Obama is in reality intelligent (black) in his demeanor and destiny. Morrison emphasized in her letter to Barack Obama, “ that in addition to keen intelligence, integrity and a rare authenticity, you exhibit something that has nothing to do with age, experience, race or gender and something I don't see in other candidates. That something is a creative imagination which coupled with brilliance equals wisdom. It is too bad if we associate it only with gray hair and old age. Or if we call searing vision naivete. Or if we believe cunning is insight. Or if we settle for finessing cures tailored for each ravaged tree in the forest while ignoring the poisonous landscape that feeds and surrounds it. Wisdom is a gift; you can't train for it, inherit it, learn it in a class, or earn it in the workplace--that access can foster the acquisition of knowledge, but not wisdom.

There have been a few prescient leaders in our past, but you are the man for this time.” Academic circles were indeed mesmerized with so strong an endorsement.

The change first came in the corridors of universities and colleges. A host of black writers questioned white American literary giants for undergrounding black desires. Freeing the representation of African Americans from stereotypes of genetic inferiority, Black writers stressed on firmness of roots and consistency of character. Barack Obama’s story though is identical with Golden Boy of Morrison’s Jazz, he however has the strength of Son Green of Tar Baby. He is no more perturbed by Jadine Childes, the elusive black model. He achieved bonding with black men on galloping horses. They told him of Black beauty that he ultimately finds in Michelle Obama.

Nothing is separate from the whole. The American meltdown has demonstrated how the nations are interconnected. The meteoric rise of Barack Obama, a catalytic factor, is bound to touch the core of international relations. The credibility of United States in world affairs appears to be back on track. Analysts believe percept and practice as two nodal points of leadership will inform policymaking of Obama presidency. The superiority of US armed forces has given way to ideals of liberty and equality. The campaign run by President elect Barack Obama objectified many lessons for the rest of the world.

One of the most significant lessons is the renewal of hierarchical equations relative to the grassroots level. Barack Obama became the first African American nominee of a major political party. The contest between Hillary Clinton and Barack Obama had all the muckraking usual in politics, but Clinton’s unstinted support became unprecedented. Eighteen millions who voted for Clinton had explicit prodding from her to support Obama. Secondly, the battle between Sen. Obama and Sen.

cCain in spite of reaching feverish pitches, ended on a friendly note. McCain’s congratulations and promise of bipartisan support to historic change, symbolized American civility in political life. Obama’s presidency has emerged as a world leadership on the one hand and the ‘audacity of hope’ for Americans on the other. He is right in recognizing that the road is long and steep.

His success depends upon the kind of team he chooses to work with. Pundits always find a niche in the administrative circles with their keen analyses and fear parading. Along with these fortune-tellers move pressure groups, the lobbyists, and corporate houses. If Obama succeeds in reading only pro-people agenda in their proposals, he will change America for a long to come. He needs to be cautious of sugar-coated ideas which appear attractive and marketable, but actually may poison the whole advancement made in human relationships. If he stays the course for the next eight years with his vision, American Presidency will never be the same again.

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America needs a fundamental change

Sawraj Singh

AMERICA has created history by electing the first non white and the first black as the president. Barak Obama personifies multiculturalism. America has finally accepted its multicultural reality. However, the main reason Obama is elected president is the America’s desire for change. He got the votes of the majority of the youth, the minorities and the women, the segments of the society who want change. The deep economic crisis has forced the people to look for the change .However, to come out of the present crisis, America needs a fundamental change from its present consumerist capitalism.

There are four different types of capitalist systems in the World;
• American consumerist capitalism
• European utilitarian capitalism
• Indian bureaucratic capitalism
• Chinese socialist controlled capitalism

If we compare the trends in these countries, one fact becomes obvious that the degree of social awareness determines the degree of efficiency of the system.

Compared to the European utilitarian capitalism that is based upon the concept of a social welfare state, the American consumerist capitalism has proved far less efficient. American economic crisis is much deeper than that of Europe. Europe is also managing the crisis much better than America.

Compared to the Indian bureaucratic capitalism, which is a legacy of the British colonialism, the Chinese socialist controlled capitalism has worked much better for the majority of the population.

When I talk about efficiency of the system, I mean how the system has worked for the majority of the population.

The American and the Indian systems have not worked well for the majority of the population. They have polarized the society. They have widened the gap between the haves and have not’s. The upper strata of the societies have benefitted at the expense of the bottom majorities.

India has the fastest growing number of billionaires yet a growing number of people are being deprived from the most basic necessities of life. Forty percent of the children are living in poverty and are under nourished while the real estate in the Indian cities is skyrocketing yet millions are joining the ranks of the homeless.

Compared to Europe, America has been unable to provide the basic requirements such as health care and education for a very large section of the population. More than 45 million Americans have no health care coverage and many more have inadequate coverage. Whereas, the college and post graduate education is free in most of Europe, more than 90% of the American college and post graduate students have to take loans to pay for their education.

The American foreign policy has been based upon arrogance and going alone rather than consulting with the allies and the World community. America is being perceived as a stubborn policeman of the World.

The Chinese have been able to lift the basic standard of living for the majority of their population, particularly after 1978. By 2020, the vast majority of the Chinese population will have a standard of living comparable to the developed countries. By 2049, China will become a complete social welfare rate.

Senator Obama has created history by becoming the first non white President of America. He has to now bring fundamental change in the American domestic and foreign policies. Health care and education should have equal access to all. Europe and the rest of the World have high hopes from Obama to change the American foreign policy. He should reassure Europe and the rest of the World that he is not going to ignore them while making decisions which affect the rest of the World. It is high time that America abandons the consumerist capitalism and accepts the concept of a Welfare state.

[Sawraj Singh, M.D. FICS, Chairman Washington State Network for Human Rights]

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Obama pressured to back off Iraq withdrawal

Gareth Porter

THE promotion of Robert M. Gates as President-elect Barack Obama's secretary of defence appears to be the key element in a broad campaign by military officials and their supporters in the political elite and the news media to pressure Obama into dropping his plan to withdraw U.S. troops from Iraq in as little as 16 months.

Despite subtle and unsubtle pressures to compromise on his withdrawal plan, however, Obama is likely to pass over Gates and stand firm on his campaign pledge on military withdrawal from Iraq, according to a well-informed source close to the Obama camp.

Within 24 hours of Obama's election, the idea of Gates staying on as defence secretary in an Obama administration was floated in the New York Times, which reported that "a case is being made publicly by columnists and commentators, and quietly by leading Congressional voices of Mr. Obama's own party -- that Mr. Gates should be asked to remain as defence secretary, at least for an interim period in the opening months of the new presidency."

The Wall Street Journal reported Tuesday that two unnamed Obama advisers had said Obama was "leaning toward" asking Gates stay on, although the report added that other candidates were also in the running. The Journal said Gates was strongly opposed to any timetable for withdrawal from Iraq, and it speculated that a Gates appointment "could mean that Mr. Obama was effectively shelving his campaign promise to remove most troops from Iraq by mid-2010."

Some Obama advisers have been manoeuvering for a Gates nomination for months. Former Navy Secretary Richard Danzig publicly raised the idea of a Gates reprise in June and again in early October. Danzig told reporters Oct. 1, however, that he had not discussed the possibility with Obama.

Obama advisers who support his Iraq withdrawal plan, however, have opposed a Gates appointment. Having a defence secretary who is not fully supportive of the 16-month timetable would make it very difficult, if not impossible for Obama to enforce it on the military.

A source close to the Obama transition team told IPS Tuesday that the chances that Gates would be nominated by Obama "are now about 10 percent".

The source said that Obama is going to stick with his 16-month withdrawal timeline, despite the pressures now being brought to bear on him. "There is no doubt about it," said the source, who refused to elaborate because of the sensitivity of the matter.

Opposition to Obama's pledge to withdraw combat troops from Iraq on a 16-month timetable is wide and deep in the U.S. national security establishment and its political allies. U.S. military leaders have been unequivocal in rejecting any such rapid withdrawal from Iraq, and news media coverage of the issue has been based on the premise that Obama will have to modify his plan to make it acceptable to the military.

The Washington Post published a story Monday saying that Adm. Michael Mullen, chairman of the Joint Chiefs of Staff, opposes Obama's timeline for withdrawal as "dangerous", insisting that "reductions must depend on conditions on the ground". Along with Gen. David H. Petraeus, now the head of CENTCOM and responsible for the entire Middle East, and Gen. Ray Odierno, the new commander in Iraq, Mullen was portrayed as part of a phalanx of determined military opposition to Obama's timeline.

Post reporters Alec MacGillis and Ann Scott Tyson cited "defence experts" as predicting a "smooth and productive" relationship between Obama and these military leaders "if Obama takes the pragmatic approach that his advisers are indicating, allowing each side to adjust at the margins." But if Obama "presses for the withdrawal of two brigades per month," the same analysts predicted, "conflict is inevitable."

The story quoted a former Bush administration National Security Council official, Peter D. Feaver, who was a strategic planner on the administration's Iraq "surge" policy, as warning that Obama's timetable would precipitate "a civil-military crisis" if Obama does not agree to the demands of Mullen, Petraeus and Odierno for greater flexibility.

Underlying the campaign of pressure is the assumption that Obama's 16-month timetable is mainly posturing for political purposes during the primary campaign, and that Obama is not necessarily committed to the withdrawal plan.

Feaver, who has returned to Duke University, said in an interview with IPS that he did not believe such a crisis was likely, because, "It is unlikely Obama will come in and do what he said he would do during the campaign." Obama has given himself "enough wiggle room to change the plan", Feaver said.

Similarly CNN Pentagon correspondent Jamie McIntyre also reported Nov. 7 that Obama "gave himself some wiggle room" to respond to military demands for more flexibility. McIntyre said he had "pledged to consult U.S. commanders and adjust as necessary".

Obama's website makes no such pledge to "adjust" the timetable. Instead it says the "removal of our troops will be responsible and phased, directed by military commanders on the ground and done in consultation with the Iraqi government." It defends the rate of withdrawal of one or two brigades per month and offers to leave a "residual force" in Iraq to "train and support the Iraqi forces as long as Iraqi leaders move toward political reconciliation and away from sectarianism."

When Obama met with Petraeus in Baghdad in July, Petraeus presented a detailed case for a "conditions-based" withdrawal rather than Obama's timetable and ended with a plea for "maximum flexibility" on a withdrawal schedule, according to Joe Klein's account in Time Oct. 22.

But Obama refused to back down, according to Klein's account. He told Petraeus, "Your job is to succeed in Iraq on as favourable terms as we can get. But my job as a potential commander in chief is to view your counsel and interests through the prism of our overall national security." Obama defended his policy of a fixed date for withdrawal in light of the situation in Afghanistan, the costs of continued U.S. occupation and the stress on U.S. military forces.

Opponents of Obama's plan outside the Bush administration appear to be unaware of the fact that the Bush administration has already given up the "conditions-based withdrawal" that the U.S. military has called for in agreeing to Iraqi demands for complete U.S. withdrawal by the end of 2011.

Feaver, the former strategic planner for National Security Adviser Stephen J. Hadley, said he assumes that, "if the U.S. agreed to it, it preserves the flexibility that Petraeus and Odierno say they've needed all along."

But even the small loophole left in previous versions of the text, allowing the 2011 deadline to be extended if the pact were revised with the agreement of the Iraqi parliament, has now been closed in the "final" version which the Bush administration submitted to the Maliki government last week, according to a Nov. 10 report by Associated Press, which had obtained a copy of the text.

*Gareth Porter is an investigative historian and journalist specialising in U.S. national security policy. The paperback edition of his latest book, "Perils of Dominance: Imbalance of Power and the Road to War in Vietnam", was published in 2006. [Courtesy IPS]

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