28 January 2016

NTI Index theft ranking

The NTI Index theft ranking includes two sets of data: countries with one kilogram or more of weapons-usable nuclear materials and countries with less than one kilogram of or no weapons-usable nuclear materials. Browse overall country scores or explore the data by category and indicator on the map below. The equal sign (=) denotes a tie between or among countries. All countries are scored 0-100, where 0 and 100 represent the lowest or highest possible score, respectively, as measured by the NTI Index criteria.

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Real Strategists Don’t Use Smartphones

Posted by Matt Cavanaugh on Jan 23, 2016 
Smartphones: the strategist’s most insidious insider threat.
Strategists are knowledge workers; attention is their scarce, sparse, spendable resource. Smartphones, and other mobile, ever-present, internet-linked devices, hijack human attention at the speed of “click.” These performance-degrading, digital dealers of info-dopamine consume the mind and deny the focus, rendering the hapless victim’s attention span lower than that of a goldfish. And devices for staying connected often ironically result in disconnecting users from their own judgment, which is the fundamental problem: smartphones obstruct strategists from “deep work.”
When your mind is your weapon, concentration matters. Just as great athletes don’t smoke as not to inhibit their lungs, great strategists don’t use smartphones as not to inhibit their minds.
Cal Newport, in his book, Deep Work, defines this title concept as “professional activities performed in a state of distraction-free concentration that push your cognitive capabilities to their limit. These efforts create new value, improve your skill, and are hard to replicate.” This is precisely what strategists provide. For strategists, engaged in deep work means writing, means reading, means thinking. When your mind is your weapon, concentration matters. Just as great athletes don’t smoke as not to inhibit their lungs, great strategists don’t use smartphones as not to inhibit their minds.
Craftsmen choose their tools wisely. Here are 10 reasons why strategists ought to exercise the moral courage to ditch these self-lobotomizers:
Smartphone use means constant multitasking; multitasking is not possible.
Google cannot provide a Theory of Victory (if use x resource, then achieve y outcome). Bing is even less likely.
Strategists do not spend thousands and thousands of precious mental moments Tweeting. Just as nobody will Tweet the revolution, nobody will Tweet a war winning strategy.
Sharp tools; dull minds: over-reliance on technology lapses into complacency.
Smartphones infantilize one’s sense of direction. Clausewitz considered terrain sense a part of military genius. Google Maps denies this skill’s practice.
Smartphones deliver information, never knowledge or wisdom.
Smartphone connectivity provides external networking at the cost of internal insights. The former can be accomplished with alternate means, the latter can never be replaced.
Strategists practice the strategic arts in human affairs, and therefore must be masters of the interpersonal. Smartphones block sincere, eye-to-eye, human engagement.
War is unending boredom punctuated by intense bouts of violence. As such, managing boredom impacts preparedness for combat, while smartphones prevent boredom through digital escapism. You cannot develop a “fingertip feel” for the battlefield if your finger never leaves a glass screen.
No smartphones were consulted or harmed in the making of this essay; this list was entirely conceived in pen and ink.
BONUS: This goes for general officers as well; the best thing you could do for that flag officer in your life is to execute that Blackberry with extreme prejudice. Ironically, trading up to a “dumbphone” might be the smartest decision you’ll ever make.

How technology transforms conflict

Kevin G. Coleman,  January 26, 2016
The art and science of modern warfare have been undergoing a dramatic change in recent years. You don’t have to go back 10 years, just look back at 2008. That was the year a USB flash drive inserted malicious code into a U.S. Central Command computer and spread into the classified systems of the military. The same malware found its way to some of our allies and disrupted a substantial part of one country’s fleet.
The convergence of the physical and cyber worlds was inevitable. Many are projecting this to occur over the next few years. In all actuality, it has already begun and appears to be accelerating. Technology has already created the need for many new jobs in the military and intelligence communities as well as the private sector. In fact, many of the top 10 in-demand jobs in 2010 did not even exist in 2004. All that adds up to a substantial amount of change that will befall the military and intelligence communities
The strategies and tactics employed in modern military conflict are extremely dependent on technology. Some have even gone as far as to say that military superiority demands technological superiority. They point to unmanned vehicles and robots used for patrolling and in actual combat operations. Some have even suggested complete combat brigades of armed robots.
As models of armed conflict change to ones that are much more technology intensive, some have expressed their concerns. The first concern is that we become less humane because the conflict will take place remotely with few soldiers being placed in harm’s way. The second concern deals with the magnitude of change that will take place over the next few years. All of us adapt to change in different ways and at various rates. How will we get those that adapt slower to pick up their pace of change? Or will they just be cast aside because they do not have the adaptability necessary in the military of tomorrow. Think of the magnitude of change the career military has already seen. That is likely to pale in comparison to the technological changes that will take place in the next 10 to 20 years.


“For almost twenty years we had all of the time and almost none of the money; today we have all of the money and no time.”
Those words were spoken by Army Chief of Staff George Marshall in 1940 as he was facing the imminent entry of the United States into World War II. He was lamenting the fact that when large conflicts suddenly arrive, all the money in the world cannot magically fix military shortfalls overnight. It is not hard to imagine a future Army chief of staff uttering those same words on the eve of a truly big war.
Between 1945 and 1989, the looming threat of global war between the United States and the Soviet Union informed every aspect of U.S. military preparations, from doctrine to organization to weaponry. But since the end of the Cold War, the U.S. military has not been sized, organized, and globally postured to fight a large-scale and bloody war.
Today, virtually no one serving below the rank of colonel or enlisted senior chief has ever served in a military facing a powerful peer competitor, nor have they faced a realistic prospect of fighting a global war to protect the nation’s most vital interests and perhaps even its survival. Yes, the United States has been at war for the past decade and a half. But even at their peak, U.S. military operations in Iraq and Afghanistan included no more than 171,000 troops and100,000 troops respectively. Compare that with the more than 537,000 troops deployed at the height of the Vietnam War in 1968 — which was considered a small and limited conflict at the time.
The likelihood that the United States will have to fight a really big war — one that requires many hundreds of thousands of troops, with high levels of destructiveness and casualties — remains low, but the consequences would be enormous. And in a world threatened increasingly by disorder, violent extremism, and more aggressive large states, those low odds may be increasing.
What could trigger a big war? A massive, direct attack on the United States certainly would, but other lesser crises could also escalate unpredictably. Imagine, for example, a Russian invasion of another eastern European state; a territorial miscalculation between the United States, China, or a treaty ally in the South China Sea; an explosive Sunni–Shia conflict spilling beyond the Middle East; a regional conflict in South Asia or on the Korean peninsula; or a large deadly terrorist attack in the United States. An initial U.S. military response to any of these scenarios could escalate into a greater, and potentially even global, conflict. The requirements of such a war would greatly exceed current contingency plans for Iraq, Afghanistan, or even the Korean peninsula.
The potentially devastating consequences of the next big war demands that the U.S. military (and the nation as a whole) prepare as much for this scenario as for the range of lesser challenges demanding attention today. Today’s wars, likely contingencies, and simply running the Defense Department all require time, energy, and resources. Choices and tradeoffs must be made. Nevertheless, the Pentagon must identify the gaps that would put the United States at the biggest risk in a large, prolonged conflict against a highly capable adversary, and mitigate those risks to the greatest extent possible.

An Expansive, and Dangerous, Chinese View on Cyber Deterrence

by Adam Segal, January 25, 2016
In most open source writings, Chinese analysts tend to discount the possibility of deterrence in cyberspace. Attribution, detection, and monitoring are hard. Attacks can come from state and non-state actors. Retaliatory cyber attacks have no certainty of outcome. All of these conditions combine to make it difficult to deter cyber attacks on national networks.
Given this skepticism, it was interesting to find a long, Sun Tzu-quote-filled discussion of cyber deterrence published on a website affiliated with People’s Daily. Like many other open source writers, Yuan Yi, a researcher at the Academy of Military Sciences, takes a very expansive view of deterrence in cyberspace. According to Dean Cheng, China traditionally views deterrence, or weishe (威慑), as both deterrence in the Western sense–threats intended to raise the costs high enough so a potential adversary does not act in the first place–and compellence–displays of military power or threats to use military power in order to compel an opponent to take an action or submit. In the vast majority of cases where Yuan’s article refers to deterrence, it appears to be talking about offensive cyber operations and compellence. So the strengths of cyber deterrence, in Yuan’s view, include the fact that cyberattacks are more humane than nuclear, chemical, or biological attacks; deterrence is cost effective because cyber weapons are cheap; deterrence methods are diverse because cyber weapons can target multiple types of systems; and deterrence uses are repeatable and flexible because, unlike nukes, cyber weapons can be used multiple times. Western analysts tend to associate all of these characteristics with cyber offense not deterrence.
The list of negatives that characterize cyber deterrence also mirrors what Western strategists have traditionally associated with the weaknesses of cyber weapons. Cyber deterrence, for Yuan, lacks credibility because cyber weapons have not yet been used in real warfare; the defense is dynamic and may eliminate vulnerabilities and thus make a weapon useless; the effects of a weapon may spread to connected networks and may even boomerang back to the attackers; states with low levels of connectivity provide few targets and are not easily deterred; and the distributed nature of networks makes the creation of a unified military force difficult.

27 January 2016

Time for a pause - Reflections on Pathankot

Brijesh D. Jayal
Now that the tsunami that swept through newsrooms and electronic channels during and after the recent terrorist attack on the Indian air force station in Pathankot has blown over, it offers an opportunity to pause and reflect on the deeper ramifications of the entire event and, indeed, the national response to it. At one level, it would appear that this was in line with a series of such storms that continue to buffet the national scene at an alarmingly regular frequency. While debates on these can be considered part of an ongoing political turf war or a healthy democracy at play with an inquisitive media playing its rightful role, the Pathankot episode concerns not just national security, but how we, as a society, respond to a new and still evolving threat of terrorist violence unfolding across international frontiers. Such an event should be considered beyond the pale of partisan politics, media hype and ill-informed debate and discussion. This is all the more important since this is not going to be the last of such happenings and just as the armed forces will hold incisive debriefs and learn lessons, other institutions of our democracy would also be well advised to do so.
One understands the fierce competition that prevails in newsrooms of the electronic media for viewership, so that some of the debates tend to be dramatic and even hysterical. While this may be of good entertainment or viewer-rating value it would be fair to accept a degree of seriousness when covering the national security domain. More so when operations are ongoing and minders of terrorists are monitoring the media to glean information and guide their foot soldiers in real time. Getting hold of veterans and others eager to face the camera and calling them "defence experts" when some were not even considered so by their peers when they were in service, is to be unfair to a subject as serious as national security.
There has been much criticism on how terrorists could make an entry into a military airfield little appreciating that military airfields are spread over large areas and while all have security perimeter fencing/walls and so on, these can measure up to 20-30 kilometres in length and are by no means impenetrable in warlike situations unless secured by the army. That is why passive air defence and ground defence of airfields (as indeed many other pre-designated civil and military vital areas and vital points) during a state of war is the responsibility given to army formations who along with the IAF or other concerned authorities carry out routine exercises to ensure seamless and coordinated action in the event of a cautionary for hostilities being declared. During peace time a plethora of intelligence, police and paramilitary forces are expected to ensure that war-like threats are unable to rear their head.

The legacy of Raghuram Rajan

Mon, Jan 25 2016. 
The RBI governor has reiterated his commitment to restore the central value to Indian business: trust. In time, when we look back on his term at the helm, this will be his enduring legacy
On the sidelines of the just concluded meeting of the World Economic Forum in Davos, Reserve Bank of India (RBI) governor Raghuram Rajan reiterated his commitment to restore the central value to Indian business: trust. In time, when we look back on his term at the helm, this will be his enduring legacy—something for which we will be grateful.
In a Walk the Talk session with Shekhar Gupta, the evergreen newsman, Rajan built his case around three astute and insightful observations on the wrongs of some segments of corporate India or what is less generously referred to as the cost of crony capitalism.
—If you flaunt your birthday bashes even while owing the system a lot of money, it does seem to suggest to the public that you don’t care. I think that is the wrong message to send. If you are in trouble, you should be cutting down your expenses.
—The system has been geared to favouring those who have the ability to work the courts. The policy that you (large businessmen) follow is that during good times, you take the upside; but in bad times, you go to banks and ask how much of a haircut (loan write-offs) are you going to take?
—It is not about being against big businesses or successful businessmen or businesswomen and neither is it a Robin Hood issue.
Rajan then went on to emphasize the objective of what he has pursued in his tenure since he took over as RBI governor in 2013. “This is an issue about the wrongdoers among the community who (have) raised the cost of borrowing for everybody,” he said.
Typically, most of these statements, also made in the past, have been taken up in the context of a clean-up of all that is bad in the system. Appealing while it may be sound, it is a case of missing the wood for the trees.

Why Thomas Piketty is wrong about capital in the 21st century

Economic View: European banks and capital markets abound in what Marx and Jefferson called 'fictitious' capital
Hernando de Soto, Friday 15 May 2015
Thomas Piketty’s book Capital In The Twenty-First Century has attracted worldwide attention, not because he crusades against inequality – many of us do that– but because of its central thesis, based on his reading of the 19th and 20th centuries, that capital “mechanically produces arbitrary, unsustainable inequalities”, inevitably leading the world to misery, violence and wars and will continue to do so in this century. So far, Piketty’s critics have offered only technical objections to his number-crunching without contesting his apocalyptic political thesis, which is clearly wrong. I know this because over the past few years my teams conducted research in the field, exploring countries where misery, violence and wars are rampant in the 21st century. What we discovered was that most people actually want more. rather than less, capital and they want their capital to be real and not fictitious.
Like many Western academics on a tight budget when faced with poor and nonsensical statistics outside Western nations, Piketty takes European indicators and extrapolates them on to such countries to draw global conclusions. This ignores the fact that 90 per cent of the world population lives in developing countries and former Soviet states, whose inhabitants produce and hold their capital in the informal sector, that is to say, outside of official statistics. This flaw has implications that go far beyond mere accounting: it turns out that the kinds of violence that erupted in places like Cairo’s Tahrir Square in 2011 occur where, according to our field studies, capital plays a decisive if hidden role that Eurocentric analysis cannot perceive.
At the request of the Egyptian Treasury, my team, along with 120 mostly Egyptian researchers, not only studied official documents but also acquired local information on the ground, going door to door, to get data that allows government to test its conventional statistics for truth and completeness. We discovered that 47 per cent of so-called “labour’s” yearly income was “capital”: almost 22.5 million workers of Egypt earned not only a total of $20bn in salaries, but additionally $18bn through returns on their unrecorded capital. Our study showed that Egyptian “workers” owned an estimated $360bn in real estate, eight times more than all of the foreign direct investment in Egypt since Napoleon’s invasion. It is no wonder that Piketty, looking only at official statistics, missed all those facts.
Piketty worries about wars in the future and suggests that they will come about in the form of a rebellion against the inequities of capital. Perhaps he hasn’t noticed that wars over capital have already begun, right under Europe’s nose, in the Middle East and North Africa. Had he not missed these events, he would have seen that these are not uprisings against capital, as his thesis claims, but for capital.

Harvard Study Places India On Top

Minhaz Merchant
The Harvard researchers predict that Indian GDP will expand at an average of 6.98 per cent till 2025. This means nominal GDP will nearly double to around $4.50 trillion in 2025 at current exchange rates
The Indian economy was left in a shambles by the UPA government in May 2014. GDP growth had fallen to 4.5 per cent. Jobs were scarce. Industry was stagnant, manufacturing weak.
The Narendra Modi government has swept some of these economic debris away. But much remains to be done. Economic reforms have come in baby steps. One minister justified this recently by saying incremental reforms when added up amount to big bang reforms.
Not quite. In a recent column for BusinessWorld, I suggested how, for example, sweeping tax reform could reignite the economy, drive consumption and revive investment. Recent numbers on industrial growth and corporate earnings make for grim reading. The stock market and the rupee have plunged. The slowdown in China is having a domino effect.
Not everyone is pessimistic though. A decade-long study by Harvard University's Centre for International Development, published last month, has concluded that India will be the world's fastest-growing economy over the next ten years.
The Harvard researchers predict that Indian GDP will expand at an average of 6.98 per cent till 2025. This means nominal GDP will nearly double to around $4.50 trillion in 2025 at current exchange rates.
By purchasing power parity, a norm the International Monetary Fund (IMF) and World Bank (WB) routinely use, Indian GDP is already $7.40 trillion. Employing Harvard's calculations, India's GDP (PPP) in 2025 will thus be around $15 trillion. 

This is what the Harvard study says: "India has the potential to be the fastest growing economy over the coming decade, according to new growth projections presented by researchers at the Center for International Development at Harvard University (CID). The researchers use their newly updated measure of economic complexity, which captures the diversity and sophistication of productive capabilities embedded in a country's exports, to generate the growth projections. The projections reflect the latest 2014 trade data available. The global landscape for economic growth shows greatest potential for rapid growth in South Asia and East Africa. Conversely, oil economies and other commodity-driven economies face the slowest growth outlook. India tops the global list for predicted annual growth rate for the coming decade at 7 per cent. This far outpaces projections for its northern neighbor and economic rival, China, which the researchers expect to face a continued slowdown to 4.3 percent growth annually to 2024."

Listen To Hernando de Soto, Not Piketty, To Address the Inequality Issue

Seetha, Seetha is a senior journalist and author
25 Jan, 2016
Indian policy makers tend to get overly influenced by western economists. In trying to address the very real issue of inequality in India , one hopes they listen to de Soto rather than Piketty. 
Thomas Piketty wants the Indian government to tax more. He particularly wants the rich and the corporate sector to be taxed more. He believes this is one way of addressing the sharp and growing inequalities in India.
There can be endless debate – and inconclusive debate – on whether Piketty is right in his conclusions about inequality in India, with the same set of data being used to buttress or junk his line. But even those who disagree with Piketty only question his statements about the extent of, and trends, in inequality.
But if we leave esoteric data and Gini co-efficients aside, there is a perception that refuses to go away that inequalities in India are pretty sharp and that something needs to be done about it.But is getting the tax man to do that the right way?
Piketty has been tirelessly pointing out in interviews that India’s tax-gross domestic product (GDP) ration is at a pathetic 10.3 per cent. This is not Piketty’s lament alone; it is shared by many in India. Comparisons in this connection are always made with developed economies, where the tax-GDP ratio is upwards of 20 per cent. Barring China with a tax-GDP ratio of 10.4 per cent, according to World Bank data for 2012, others too did better – Brazil (14.4 percent), Russia (15.1 percent) and South Africa (25.5 percent).

Niti Aayog member Bibek Debroy, in a television panel discussion with Piketty, questioned this 10.3 percent figure. This, he says, relates only to central government taxes; if one added state taxes, the ratio goes up to 17 percent. It’s not clear if the World Bank data covers central and provincial taxes for other countries (it has taken only the central taxes for India; many other countries too are federal in nature) but assuming it is just central taxes for all, then the next question that arises is, what is the taxpayer base of those countries?
The Indian taxpayer base is pathetically low. Only 3.5 per cent of the population pays tax. The Tax Administration Reform Committee (TARC) headed by Parthasarathi Shome had flagged this issue, pointing out that only 17 crore people had a PAN card and of these, only 3.6 crore file returns. Any increase in rates, as Piketty suggests, will fall, first, on this minority and second, on a section of this minority which is not that wealthy.
The TARC report notes that people in the lowest tax slab – up to Rs 5 lakh – account for 98 percent of the total taxpayers. The highest slab – over Rs 20 lakh – account for just 0.38 percent of taxpayers. No, this does not mean India does not have enough super-rich, but is probably a reflection of the fact that the wealth associated with them is not so much theirs as that of their companies. So on whom is a higher tax to be levied?

Why Bringing Vijay Mallya To Book Is Vital To Making Indian Capitalism Credible

R Jagannathan, Jagannathan is Editorial Director, Swarajya. 25 Jan, 2016
Proper running and creative destruction have to happen to help capitalism regenerate itself
If there is a really bad advertisement for capitalism and market economics, it must be Vijay Mallya. Businesses fail, and no one needs to lament the fact that Mallya made a hash of his investment in Kingfisher Airlines, especially after his ill-fated acquisition of Air Deccan. He got his strategy wrong, his finances wrong, and most other things wrong too. But what he got right was his belief that someone else will bear the cost of his failures. He is having a ball while banks are left holding his baby.
This is exactly what is wrong with Indian capitalism. It has been captured by cronies. If capitalism rewards success, it must also penalise failure, but that is what our system manifestly fails to do. Consistently. Which is why making Mallya pay for his mistakes is more important for Indian capitalism than funding a million new start-ups.

To put it simply, Wind-Up India is as important as Start-Up India.
If the Dharmic order is maintained by the Brahma-Vishnu-Mahesh trio, roughly standing for creation, maintenance and destruction, capitalism cannot work if we only worship Brahma – the creation of companies. Proper running and creative destruction have to happen to help capitalism regenerate itself. But Mahesh is Awol, and Mallya is off the hook.
Few people can thus disagree with Reserve Bank of India Governor Raghuram Rajan when he lamented the other day that “if you flaunt your birthday bashes even while owing the system a lot of money, it does seem to suggest to the public that you don’t care. I think that is the wrong message to send. If you are in trouble, you should be cutting down your expenses.”
It is unlikely that Rajan was railing against conspicuous consumption, though that is certainly a social issue in India. What he was indirectly referring to, though he did not name him, was to the fact that Mallya owes banks more than Rs 7,000 crore, and if he is genuinely unable to repay that money despite giving banks so many personal guarantees, he is basically cocking a snook at the system by celebrating his 60th birthday with great ostentation.
Mallya has used every trick in the book and many outside it to evade his responsibility to repay banks.
First, there is little doubt that banks were under pressure to keep on lending to him, or else there was no reason why they should have continued lending to him when it was manifestly clear that Kingfisher could not earn a return by mid-2011
That there must have been pressure to help Mallya should be obvious from who got out: private sector ICICI Bank, which too made a mistake with Kingfisher, sold its entire debt of Rs 430 crore in 2012, when the writing on the wall was clear. Not so the public sector banks. Why didn’t they act to protect their interests? Why are they still stuck with Mallya’s bad debts in 2016?

How one billion mobile phones can change India Such connectivity will level the playing field across jobs, ease rural-to-urban mobility, and catalyse gender equality.

Last month, India became the second country in the world after China to cross one billion mobile phone connections.
This makes the little device we hold in our hands and place by our bedside every night the most used technology gadget in history. Consider the numbers: there are 160 million television sets in India. And just 120 million radios.
As prosperity seeps through the countryside, even more mobile phone growth is possible. In advanced economies like the United States, France, South Korea and Finland, there are more mobile phones than people. For example, South Korea with a population of 50 million has 56 million cell phones.
While the number of mobile phones will eventually plateau in India, there's still room for growth in the next few years to around 1.40 billion mobile connections. (China currently has 1.27 billion mobile phone connections.) Driving this growth of course are the world's lowest handset and usage prices. New phones with basic features retail from Rs 1,500 ($22) upwards. Full feature smartphones start at around double that.
Average monthly usage is often as low as Rs 200 for 2G voice services. Even high-quality 4G packages cost less than Rs 1,000 a month. The national launch of Reliance Jio's 4G service in March could drive prices down even further.

India, however, remains a mobile-poor country in terms of internet speed connectivity. Call drops are frequent. Spectrum is in chronically short supply. Download speed is abysmal.
Despite these shortcomings, the mobile phone is today India's leading "enabler". It allows farmers to get the latest weather forecasts in realtime to help plan crop seeding, fertiliser use and harvesting. It enables them to get the latest mandi prices so that middlemen don't skim off excessive profits.
The direct benefit transfer (DBT) scheme, which sends subsidies to Jan Dhan Yojana bank accounts, bypassing intermediaries, is bedrocked on mobile phones. Once mobile payment banks and payment wallets enlarge their footprint, mobile phones will become part of a larger financial and social transformation.
Most start-ups are moving to mobile-only apps. The growth of taxi aggregators like Uber and Ola, food delivery companies like Zomato and Faasos and hotel bookers like Oyo Rooms and Zo Rooms depend on how quickly mobile usage moves from voice (2G) to data (3G) to advanced applications including video streaming (4G).
India's start-up ecosystem is meanwhile exploding. It is set to overtake Britain with the world's second largest number of annual start-ups behind the United States. As mobile phone usage surges, so will mobile apps across sectors.

Who’s afraid of cheap oil?

Low energy prices ought to be a shot in the arm for the economy. Think again Jan 23rd 2016 | 
ALONG with bank runs and market crashes, oil shocks have rare power to set monsters loose. Starting with the Arab oil embargo of 1973, people have learnt that sudden surges in the price of oil cause economic havoc. Conversely, when the price slumps because of a glut, as in 1986, it has done the world a power of good. The rule of thumb is that a 10% fall in oil prices boosts growth by 0.1-0.5 percentage points.
In the past 18 months the price has fallen by 75%, from $110 a barrel to below $27. Yet this time the benefits are less certain. Although consumers have gained, producers are suffering grievously. The effects are spilling into financial markets, and could yet depress consumer confidence. Perhaps the benefits of such ultra-cheap oil still outweigh the costs, but markets have fallen so far so fast that even this is no longer clear.

The new economics of oil
The world is drowning in oil. Saudi Arabia is pumping at almost full tilt. It is widely thought that the Saudis want to drive out higher-cost producers from the industry, including some of the fracking firms that have boosted oil output in the United States from 5m barrels a day (b/d) in 2008 to over 9m b/d now. Saudi Arabia will also be prepared to suffer a lot of pain to thwart Iran, its bitter rival, which this week was poised to rejoin oil markets as nuclear sanctions were lifted, with potential output of 3m-4m b/d.
Despite the Saudis’ efforts, however, producers have proved resilient. Many frackers have eked out efficiencies. They hate the idea of plugging their wells only for the wildcatter on the next block to reap the reward when prices rebound. They will not pack up so long as prices cover day-to-day costs, in some cases as low as $15 a barrel (see article). Meanwhile oil stocks in the mostly rich-country OECD in October stood at 267 days’ net imports, almost 50% higher than five years earlier. They will continue to grow, especially if demand slows by more than expected in China and the rest of Asia. Forecasting the oil price is a mug’s game (as the newspaper that once speculated about $5 oil, we speak from experience), but few expect it to start rising before 2017. Today’s price could mark the bottom of the barrel. Some are predicting a trough of as low as $10.
The lower the better, you might say. Look at how cheap oil has boosted importers, from Europe to South Asia. The euro area’s oil-import bill has fallen by 2% of GDP since mid-2014. India has become the world’s fastest-growing large economy.

Yet the latest lurch down is also a source of anxiety. Collapsing revenues could bring political instability to fragile parts of the world, such as Venezuela and the Gulf, and fuel rivalries in the Middle East. Cheap oil has a green lining, as it drags down the global price of natural gas, which crowds out coal, a dirtier fuel. But in the long run, cheap fossil fuels reduce the incentive to act on climate change. Most worrying of all is the corrosive new economics of oil.
In the past cheap oil has buoyed the world economy because consumers spend much more out of one extra dollar in their pocket than producers do. Today that reckoning is less straightforward than it was. American consumers may have been saving more than was expected. Oil producers are tightening their belts, having spent extravagantly when prices were high. After the latest drop in crude prices, Russia announced a 10% cut in public spending (see article). Even Saudi Arabia is slashing its budget to deal with its deficit of 15% of GDP.
Cheap oil also hurts demand in more important ways. When crude was over $100 a barrel it made sense to spend on exploration in out-of-the-way provinces, such as the Arctic, west Africa and deep below the saline rock off the coast of Brazil. As prices have tumbled, so has investment. Projects worth $380 billion have been put on hold. In America spending on fixed assets in the oil industry has fallen by half from its peak. The poison has spread: the purchasing managers’ index for December, of 48.2, registered an accelerating contraction across the whole of American manufacturing. In Brazil the harm to Petrobras, the national oil company, from the oil price has been exacerbated by a corruption scandal that has paralysed the highest echelons of government.

New Defence Procurement Procedure: A Stimulating Preview

Amit Cowshish, January 20, 2016
In the first meeting of 2016 held on January 11, the Defence Acquisition Council (DAC) took some policy decisions that will eventually get incorporated, along with other policy and procedural changes, in the much-awaited Defence Procurement Procedure (DPP), now expected to be released in the next two months. The following picture emerges in this regard from what has been reported in the media.
New Procurement Category

While the Experts’ Committee, set up by the Ministry of Defence (MoD) to review the existing procurement policy and procedure, had not recommended any change in the existing acquisition categories,1 the DAC has decided to introduce a new category of Indian Designed, Developed and Manufactured (IDDM) equipment. This will be the most preferred category, ahead of ‘Buy (Indian)’, which presently occupies the pride of place.
The equipment procured under the new category will be required to have 40 per cent indigenous content if it is designed indigenously. If the design is not indigenous, it should have 60 per cent indigenous content.
At present, the equipment procured under the ‘Buy (Indian)’ category is required to have a minimum of 30 per cent indigenous content. A note released by the MoD, however, says that this category requires a minimum of 40 per cent indigenous content. It is not clear whether this is a typographical error or the requirement even under the ‘Buy (Indian)’ category is being increased from the existing 30 per cent to 40 per cent. In either case, this will blur the distinction between the new category and the existing ‘Buy (Indian)’ category.
The existing ‘Buy (Indian)’ route is adopted for procurement of equipment that can be sourced straightaway from Indian companies. Since the new ‘IDDM’ category is being introduced as the most preferred category of procurement, it would be fair to assume that it is meant to be different from the ‘Buy (Indian)’ category on the one hand and the ‘Make’ category on the other.
Unless this difference is clearly brought out in the forthcoming DPP, the categorization of procurement proposals will become more challenging. The lack of clarity on this count would add a new dimension to the complexity of determining the extent of indigenous content in the equipment.
It may be recalled that ‘Buy (Indian)’ category was made the most preferred category in 2013. Apparently, this has not led to the increased sourcing of defence equipment from Indian vendors, in spite of the modest requirement as regards indigenous content. With the requirement of a higher percentage of indigenous content, it is difficult to visualise a spurt in procurement under the new IDDM category.
Presently, under the existing ‘Buy and Make (Indian)’ category, the indigenous content is required to be 50 per cent. This requirement is being extended to the ‘Buy and Make’ category as well.

Pakistan University Attack: Before the Recital, After the Bullets

The recent atrocities at Charsadda are a painful reminder of Pakistan’s lack of seriousness in combating terrorism.
By Kiran Nazish, January 26, 2016
The winter cold might have called for less of a melancholy in Charsadda, on the morning of Wednesday, January 20, had some young militants not used the cover of thick fog to scale the rear walls of Bacha Khan University and then kill 22 people,according to government reports. The attack was symbolic in many ways, especially given that it targeted a role model of Pashtun identity. Historically, Pashtun populations have been marginalized by the Pakistani state; recently, they have been a consistent target of the Taliban.
At around 9:00 am on January 20, several students at Bacha Khan University (BKU) were fired upon by terrorists just as they prepared to commemorate the anniversary of a legendary secular Pashtun leader and activist, Khan Abdul Ghaffar Khan, widely known as Bacha Khan. A close friend and disciple of Gandhi, Khan was also known as the Frontier Gandhi in British India for his activism and advocacy for the equal rights of the Pashtun people in the frontiers of the raj.
BKU was established few years ago by his followers in Charsadda, a small town that sits near the Durand line. It was to pursue his legacy of “peace and universal brotherhood” for young generation of Pashtuns, who in the post 9/11 world struggle to preserve their identity and history amid the confusion ethnically identical militant groups like the Taliban have created for people of the frontier.
On January 20, Khan’s poems were to be read in commemoration of the 28th anniversary of his death. Instead there was bloodshed in the classrooms and the dorms, where some students were still asleep. Security officials say dozens were injured and the death toll may rise. The army, in a statement, said four terrorists were killed and the ordeal was over in six hours.
It is not evident, however, that the perpetual ordeal of terror attacks in Pakistan will be over any time soon. The scenes and horror of last Wednesday’s attack in Charsadda are starkly similar to that of the Taliban’s unconscionable school attack in Peshawar in December 2014, when 132 children and a number of school staff were massacred. Targeting school children and educational institutions has been a consistent part of the Taliban’s strategy, with 30 such institutions having been targeted since 2011.

Paul Krugman Reviews ‘The Rise and Fall of American Growth’ by Robert J. Gordon

By PAUL KRUGMAN, JAN. 25, 2016
Back in the 1960s there was a briefly popular wave of “futurism,” of books and articles attempting to predict the changes ahead. One of the best-known, and certainly the most detailed, of these works was Herman Kahn and Anthony J. Wiener’s “The Year 2000” (1967), which offered, among other things, a systematic list of technological innovations Kahn and Wiener considered “very likely in the last third of the 20th century.”
Unfortunately, the two authors were mostly wrong. They didn’t miss much, foreseeing developments that recognizably correspond to all the main elements of the information technology revolution, including smartphones and the Internet. But a majority of their predicted innovations (“individual flying platforms”) hadn’t arrived by 2000 — and still haven’t arrived, a decade and a half later.
The truth is that if you step back from the headlines about the latest gadget, it becomes obvious that we’ve made much less progress since 1970 — and experienced much less alteration in the fundamentals of life — than almost anyone expected. Why?Photo
Robert J. Gordon in 2015.
Robert J. Gordon, a distinguished macro­economist and economic historian at Northwestern, has been arguing for a long time against the techno-optimism that saturates our culture, with its constant assertion that we’re in the midst of revolutionary change. Starting at the height of the dot-com frenzy, he has repeatedly called for perspective: Developments in information and communication technology, he has insisted, just don’t measure up to past achievements. Specifically, he has argued that the I.T. revolution is less important than any one of the five Great Inventions that powered economic growth from 1870 to 1970: electricity, urban sanitation, chemicals and pharmaceuticals, the internal combustion engine and modern communication.
In “The Rise and Fall of American Growth,” Gordon doubles down on that theme, declaring that the kind of rapid economic growth we still consider our due, and expect to continue forever, was in fact a one-time-only event. First came the Great Inventions, almost all dating from the late 19th century. Then came refinement and exploitation of those inventions — a process that took time, and exerted its peak effect on economic growth between 1920 and 1970. Everything since has at best been a faint echo of that great wave, and Gordon doesn’t expect us ever to see anything similar.
Is he right? My answer is a definite maybe. But whether or not you end up agreeing with Gordon’s thesis, this is a book well worth reading — a magisterial combination of deep technological history, vivid portraits of daily life over the past six generations and careful economic analysis. Non-economists may find some of the charts and tables heavy going, but Gordon never loses sight of the real people and real lives behind those charts. This book will challenge your views about the future; it will definitely transform how you see the past.

Why Is Pakistan Interested in Brokering Peace Between Iran and Saudi Arabia?

Pakistan needs a modus vivendi between Iran and Saudi Arabia to avoid a sectarian implosion at home.
By Ankit Panda,  January 22, 2016
It’s been a particularly interesting week for Pakistani diplomacy. In a rare display, both Nawaz Sharif, the country’s prime minister, and General Raheel Sharif (no relation), the chief of army staff, jointly traveled to Saudi Arabia and Iran, in what was billed as an attempt by Islamabad to mediate between the quarreling Middle Eastern giants.
Saudi Arabia’s execution of Nimr al-Nimr, a prominent Shia Sheikh, on January 2 led to massive protests against the Saudi embassy, which was ransacked by Iranian protesters. The incident led to the cessation of formal diplomatic ties between the two countries and intensified the underlying politico-sectarian divides in the Middle East.
Pakistan’s role in the Saudi-Iran split isn’t entirely obvious. The country is a Sunni-majority state with the second-largest Shia population of any Muslim-majority state after Iran. Pakistan shares close historical and diplomatic ties with Saudi Arabia, but shares a border with Iran. For Islamabad, maintaining good ties with both Riyadh and Iran is a priority for entirely different reasons.
Meanwhile, Pakistan’s leaders have no particular intention to be seen as siding with either Saudi Arabia or Iran and their highly sectarian geopolitical feud for influence in the Middle East. Nevertheless, ahead of the Nawaz and Raheel trips, the Pakistani foreign office issued a statement noting that “Pakistan is deeply concerned at the recent escalation of tensions between the Kingdom of Saudi Arabia and the Islamic Republic of Iran.”
Against this backdrop, the two Sharifs traveled this week, first to Riyadh and then to Tehran. In Saudi Arabia, where they arrived on Monday, the Pakistani leaders essentially continued the conversation that had been initiated by the Saudis days after the fallout from Nimr al-Nimr’s execution.
Mohammed bin Salman, the Kingdom’s deputy crown prince and defense minister, met with Pakistani officials, receiving assurances from Pakistan that it would stand with Riyadh. Gen. Sharif had assured Salman that Pakistan would stand with Saudi Arabia. In Riyadh, Nawaz Sharif exchanged views with the Saudi leadership about regional issues, including the diplomatic crisis with Iran. Sharif urged restraint and encouraged a peaceful solution to the dispute between the two states.

Tanzania’s President John Magufuli – The Hero of the Hour

Debnath Shaw, January 22, 2016
The largest country in East Africa with a substantial population of the Indian diaspora - about sixty to seventy thousand, has never evoked much interest in India, especially in the public discourse. Even the fact that India’s trade with Tanzania at around USD 4 billion in 2014, much of it exports of Indian goods and services, is at par or even greater than that of our trade with Canada, does not usually ring a bell even among trade and commercial interests in the country, except in the odd office in Udyog Bhawan. Yet, a recent news report titled “Rawandaization of Tanzania”, highlighting the unusual measures taken by Dr. John Magufuli, the new President of Tanzania, has been circulating in the social media. What has evoked such social media interest in Tanzania and its new President, Dr. John Magufuli?

Magufuli was sworn into office as the fifth President of the United Republic of Tanzania on 5th November 2015 at Dar es Salaam, soon after the Tanzanian delegation to IAFS-III had returned from Delhi. Magufuli was the official candidate of the ruling CCM party (founded by the iconic Julius Nyerere), which has been continuously in power since 1961, the longest ruling party in Africa. He won the presidential contest held on 25th October by a much reduced margin of 58 per cent against the combined opposition candidate’s much improved showing of about 40 per cent of the votes polled. In effect, Magufuli represents a party on the decline in the Tanzanian people’s perception, but one that could still prop up a winning candidate due to the candidate’s clean image, the party’s superior organizational structure, particularly in Tanzania’s vast rural and semi-rural areas, and the not so clean image of Edward Lowasa, the challenger who had crossed over to the opposition after failing to win the CCM’s nomination.
Domestic Agenda

Much like the Indian Prime Minister, President Magufuli started his Presidency on 5th November on a note different from that of any of his predecessors and in defiance of age old practices. While PM Modi revealed his master stroke in getting SAARC and neighbourhood leaders to attend his swearing in ceremony in May 2014, Magufuli swept away some of the pomp and pageantry surrounding the Tanzanian Presidency thereby effecting savings of precious resources to be used for more urgent public tasks. A few days after his swearing in, Magufuli showed up at the principal referral hospital in Dar es Salaam and found patients lying on the floor, in the absence of adequate beds, and key equipment dysfunctional. The director of the hospital was promptly removed and money sent to the hospital to get beds and equipment repaired. A visit to a department office revealed large scale absenteeism, which he promptly rectified. By these actions, the Tanzanian President signalled to the people that it was not going to be business as usual, particularly in the delivery of public services, a woe that afflicts the country seriously.