Thursday, July 30, 2015

Election Results Fuel Optimism For Economic Reforms in India

By Rama Lakshmi–

NEW DELHI – Two days after India’s Congress party was returned to power with a strengthened mandate, the country’s sagging stock market experienced a record surge Monday amid such euphoria that trading had to be suspended.

The joy in the market, which has barely abated since, was due not just to the surprise verdict, which defied exit-poll predictions of a period of fractious coalition-building. Business leaders and investors were also celebrating the fact that the new government would no longer have to lean on India’s communist parties for support and would be able to try again to launch far-reaching economic reforms that they had opposed.

“We now have the mandate for a renewed push for economic reforms,” said Kamal Nath, a senior leader of the Congress party who served as commerce minister in the previous government. “We have to open up more and take some hard steps to spur the economy because of the global recession.”

In 1991, after more than four decades of following a planned, socialist economic model, India began to cautiously restructure, embracing free-market reforms aimed at attracting foreign investment. That first stage, popularly known as the dismantling of the License Raj, and India’s subsequent emergence as a global technology hub generated a boom slowed only by the ongoing financial crisis.

“The new government is likely to introduce the second stage of reforms in the financial sector, retail and land and labor laws. We can take these tough measures now,” Nath said in an interview Wednesday.

For the first time since 1996, India will have a coalition government that is not fragile and unwieldy and that has a relatively strong center. The outgoing coalition government, led by the Congress party’s Manmohan Singh, 76, was sustained by a handful of communist parties that eventually withdrew support over a controversial civilian nuclear agreement concluded last year between India and the United States. Singh’s new government is scheduled to be sworn in Friday.

During Singh’s previous term as prime minister, the mild-mannered, Oxford-educated economist’s plans for further reforms were stalled by the communists’ bitter opposition to several economic measures, including proposals to privatize pension funds and encourage foreign investment in retail and insurance firms. Before the financial meltdown unfolded last year, many U.S. companies had lobbied for passage of some of those bills.

In the month-long national elections, Congress and its allies won 261 of the 543 lower house parliamentary seats. The party won 206 seats on its own, its highest tally in 18 years. The communists, however, saw their representation drop from 59 lawmakers to 24.

“Manmohan Singh will no longer be troubled by the pulls and pressures of smaller parties. The communists are out,” said Amit Mitra, secretary general of the Federation of Indian Chambers of Commerce and Industry. “The new government will have no excuse anymore. It has to go for the big-ticket reforms that will bring our annual economic growth back to 9 percent and bring long-term foreign money into India.”

“We urgently need this money for our large infrastructure projects,” added Mitra, who has prepared a wish list for the new government’s first 100 days. “The easy, low-hanging fruits are the banking, pension-funds and insurance-reform bills that the communists held back for years.”

Despite the weakening of the communists, Singh’s party could still find it difficult to pass the new measures. Many Indians, for example, continue to prefer government management of their savings and pension funds even if that means lower returns.

When the economic crisis surfaced last fall, almost every communist lawmaker said to Singh, “We told you so.”

“In the last government, we played a very important role in safeguarding social security measures and arresting the erosion of government regulation in the financial sector,” D. Raja, a senior leader of the Communist Party of India, said in an interview Wednesday. “That saved us when the global economy came crashing down. If the government goes forward with these bills now, people will not be happy.”

Singh faces another challenge, as well. One of his new coalition allies is the All India Trinamool Congress, a party from the state of West Bengal with a reputation for being anti-business. Last year, its leaders battled on behalf of farmers against the company that manufactures the Nano, the world’s cheapest new car. The factory was forced to shut down and move out of the state.

Analysts agree, however, that India desperately needs the political will to decentralize its slothful, flabby bureaucracy and restructure some of its archaic laws.

“There is a dire need for police, judicial, tax and other administrative reforms that do not make attention-grabbing headlines,” said Pratap Bhanu Mehta, president of the New Delhi-based Center for Policy Research. “This is the right time for it, because the new government’s energy will not be distracted in managing difficult coalition partners.”

Source: Washington Post Foreign Service

War’s End in Sri Lanka: Bloody Family Triumph

By SOMINI SENGUPTA–

NEW DELHI – The Sri Lankan president, Mahinda Rajapaksa, on Tuesday savored a victory that had eluded every Sri Lankan head of state before him: he declared on television that after more than 25 years, his troops had defeated one of the world’s most enduring guerrilla armies on the battlefield.

Behind that victory speech was a historic and bloody family triumph, guided by two of the president’s brothers: Gotabaya, the influential secretary of defense, and Basil, a so-called special adviser who devised the political strategy around the war effort.

Together, the brothers Rajapaksa defied international pressure to stanch civilian casualties, squelched dissent, blocked independent reporting of the war and achieved what many had thought all but impossible: they vanquished the Tamil Tigers, who had waged a pitiless war of terror and once ruled swaths of Sri Lankan territory as a de facto state.

With Gotabaya Rajapaksa in charge of the defense portfolio, the government sharply increased defense spending; bought new weapons, primarily from China and Pakistan; and nearly doubled the size of the armed forces, to roughly 160,000.

The political cunning of Basil and Mahinda Rajapaksa was put to use. The president asked India for weapons first. Only when it refused because of domestic sympathy for the Tamil cause did he turn to its rivals.

The military strategy paid off, too. Starting in 2006, the government forces staged intense air, sea and ground assaults against rebels in the east and the north, sustaining the attacks even though the two sides were still officially engaged in cease-fire negotiations. The government also adopted some guerrilla tactics from the Tamil Tigers, using small groups of troops to penetrate deep into the jungle and assassinate rebel leaders.

The brothers, who come from upper-caste landed gentry, are not part of the English-educated elite of Colombo, the capital. Snubbing pressure from the West did not hurt them; it helped them consolidate their southern Sinhalese nationalist base.

“There was no vacillation as there has been with previous governments,” said Nilan Fernando, the country director for an American nonprofit, the Asia Foundation. “Previous governments were always playing for a draw. This time, they were playing for a win.”

They won.

The victory, like Russia’s smothering of Chechnya’s separatist rebellion, comes at a high cost. The United Nations says 7,000 civilians have been killed since January alone, and more than 265,000 ethnic Tamils who fled the war zone are now interned in overcrowded camps. Some civilians are missing, including three government-employed doctors who worked in the rebel-held area and regularly spoke out about the shelling of hospitals there. Human Rights Watch has repeatedly said the government shelled civilian areas, even as the rebels held tens of thousands of ethnic Tamils as civilian shields.

Now, some of Sri Lanka’s erstwhile allies, including those that had banned the Tamil Tigers as a terrorist organization, are calling for an international commission of inquiry into possible war crimes. Sri Lanka desperately needs foreign aid for postwar reconstruction.

In prosecuting the war, President Rajapaksa, a lawyer and member of Parliament who was elected, narrowly, in 2005, cultivated tacit backing from India. Though India did not supply offensive weapons, it became less active in seeking to stop the fighting. Sri Lanka’s success in intercepting supply ships in the Indian Ocean is frequently attributed to Indian intelligence.

The chairwoman of India’s governing Congress Party is Sonia Gandhi, whose husband, Rajiv, a former prime minister, was assassinated by a Tamil Tiger suicide bomber.

The Sri Lankan president dresses in the traditional white tunic and sarong of the Sinhalese. In the 1980s, when anti-government ethnic Sinhalese activists were being abducted and killed, he was one of their most vocal champions, appealing to the United Nations for support.

After his election, however, he put defeating the rebellion ahead of protecting civil liberties. The Rajapaksas treated dissent as support for the enemy. Some journalists were jailed under an antiterrorism law; some were mysteriously killed, including one newspaper editor, Lasantha Wickrematunge, who in a chilling essay, foretold his death and blamed Mr. Rajapaksa for it.

Gotabaya Rajapaksa, the defense secretary and a former computer systems administrator in Los Angeles, accused international aid agencies working in Tiger-held territory of helping the insurgents. Last fall, he ejected nearly all of them from the area.

In June 2007, the defense secretary was instrumental in ordering the expulsion of nearly 400 Tamils living in low-cost hotels and boarding houses in Colombo, on suspicion that they were helping ethnic separatist rebels plot bombings in the city. Sri Lanka’s highest court later overturned the deportation order.

On Tuesday, in his speech to the nation, the president said a new political solution for minority Tamil rights could not be dictated from abroad. “We do not have the time to be experimenting with the solutions suggested by other countries,” he said.

He spoke in generalities about forging a peace settlement, but he gave few details beyond saying it had to be acceptable to everyone in Sri Lanka.

That is, of course, the Rajapaksas’ next challenge: reconciliation.

Paikiasothy Saravanamuttu, executive director of the nonpartisan Center for Policy Alternatives here, said the president had “struck the right notes by making the distinction between the Tamil people and the Tamil Tigers.”

“What was missing was more details about the post-conflict phase,” Mr. Saravanamuttu said. “I would have liked to have seen him make a real commitment to a political settlement and human rights by addressing some of the serious allegations that have been made against the military.”

The Tamil Tigers’ missteps contributed to their downfall.

They helped elect Mr. Rajapaksa by enforcing a boycott of elections in November 2005 in Tamil-majority areas. Almost immediately after he took office, they provoked his government with deadly strikes on his forces.

Their suicide bombers tried to kill Gotabaya Rajapaksa and his army chief, Gen. Sarath L. Fonseka. Friends say the attempted assassinations strengthened the Rajapaksas’ resolve.

On Tuesday, Sri Lankan television flashed an image the government had pursued for three decades: the corpse of a man the military identified as the ethnic separatist chief Vellupillai Prabhakaran, dressed in battle fatigues, his eyes wide open, his mouth agape, as though he, too, were in shock. There were no Tamils left in the homeland he had fought so fiercely to create, only plumes of smoke, and soldiers.

A reporter for The New York Times contributed from Colombo, Sri Lanka.

source: The New York Times

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