Monday, May 23, 2005

should India do more business than politics with Bangladesh?

Indian Big Business may be at odds with the traditional approach of its political leaders towards Bangladesh. Could this herald a sea change in the way the two foreign establishments interact? Or is this merely a temporary smokescreen, a phoney entente cordiale, to sign some deals before reverting to the ‘normal’ adversarial state of affairs? As it is, border clashes and the erection of a fence are raising the temperature. This ham-fisted policy may be populist but will be ineffective. It provides yet another exploitable issue. Against this background, is Big Business telling the External Affairs Ministry to “cool it” and smooth the ruffled feathers of its neighbour? Is that one reason why India is suddenly anxious to come to the SAARC summit?
The conventional view holds that relations were somehow better under the current opposition, rather than the present regime. If one ignores the posturing, it can be argued that it is actually the other way round. After all, the big industrial and energy deals are closer to fruition under the present government. There may have been more empathy with the previous government, for historical reasons, but hard business negotiations are more likely to lead to actual signatures on agreements under this administration. In other words, is it possible that, politically, relations are at an all-time low but that, in terms of business, relations are the warmest for a generation? Can this dichotomy continue? “Big Business” India operates under its own steam and may not always work in tandem with its foreign ministry.

Friends again, for now?
Somewhat surprisingly, given the controversy over gas, the Bangladeshi government has been able to agree in principle with the Indian and Myanmar governments to a pipeline to transport gas from Myanmar to India, via Bangladeshi territory. The agreement has not been signed yet and border casualties and perceived sleight, on both sides, can still scupper the deal.
Moreover, TATA Steel has just completed its feasibility study on setting up a 2.4 million tonne steel plant, and power & fertiliser complex in NW Bangladesh. This 100-year-old company is taking a $2 billion gamble that it will be able to utilise Bangladesh’s gas or coal for over a decade to produce low cost steel flat slabs. TATA will not be making this decision lightly and must have made a long-term forecast. It no doubt expects stability in fuel supply and an export exit for its steel products for years to come.
Indian Big Business therefore will have two enormous stakes in seeing a stable relationship between India and Bangladesh. The resurgent economy of West Bengal will be the prime beneficiary of the gas pipeline and will not want any disruption to supply.
Thus, one could say, India’s politicians are temporarily being forced to look for a more amicable state of affairs to ensure that its economy can move forward.

One-off or more to come?
At present, no further Indian investment proposals are officially in the pipeline. TATA Steel is aiming to be a 15 million tonnes producer by 2010 and planning a 6 million tonne project in iron-ore rich Orissa. The 420,000 tonne Bangladesh project may be the biggest industrial venture of all time in Dhaka, but is dwarfed in comparison. Since steel production is an energy intensive operation, cynics may see this as merely a clever way of sidestepping the issue of gas export from Bangladesh. If the gas won’t come to us, we will come over instead. Perhaps.
So what will it take for India’s major conglomerates to take a different slant on the investment climate in Bangladesh?
Apparently, Reliance has seriously considered entering the booming Telecom market in Bangladesh. Is it inconceivable that it, or its competitors, might follow Egypt’s Orascom Telecom in buying into this sector? A clutch of private fixed line licenses has been dished out. Hardware equipment supply agreements were signed with the Chinese, during Prime Minister Wen Jinbao’s recent visit. Is it impossible that some experienced Indian Telecom Operators would be invited to transform Bangladesh’s expensive call market into the low cost mass-market Indian equivalent?
Agro-processing is another potential sector. The abundance of sugar, jute, rice and vegetables might suggest a ready supply in the minds of some entrepreneurs. Finally, there is the issue of ‘transhipment’, i.e. using Bangladesh’s road and rail infrastructure to move goods and services to the almost land-locked Northeastern states. Would India merely utilise the dilapidated infrastructure, weakening it further? Or would it be prepared to invest in the highways and rail-track needed to handle such volumes of traffic?
It will be fascinating to see whether “Political-India” or “Big-Business-India” prevails in setting the parameters.

Wednesday, May 18, 2005

Why economists should look back to 1964

In 1964, in undivided Pakistan, the then dictator of West and East Pakistan, General Ayub Khan began a dialogue with the leading economists of the eastern wing. History tells us that East Pakistan became an independent nation seven years later. But that was all far away and unthinkable at the time. Ayub Khan had grabbed power in 1958 at the height of the Cold War. Needless to say he made Pakistan one of the most loyal allies of the USA and was in supreme confidence. A sparkling new capital, called Islamabad, was created in the middle of nowhere. The export dollars from East Pakistani jute were ploughed into industries in the Western wing. East Bengal or Pakistan was relegated to the status of a farm. A hinterland with useful cash-crop farmers and grain producers. The traditional link of East Bengal’s rural economy to the centre of India’s industry in West Bengal had been broken in 1947 with the departure of the British.
Now, the plan was for West Pakistan to become industrialised and take the place of West Bengal. The economic relationship or exploitation was shifted a thousand miles to the west. Things were stirring in Dhaka or Dacca, as it was then known. The Language movement had not died down from the massacre of 1952. The middle class Bengali saw there was a glass ceiling to advancement in the professions and business. The intellectuals had cottoned on to the economic injustice in this neo-colonialist structure. They wanted a better deal.
Bengali economists therefore were at the vanguard of this thinking by default. It was their specialisation. They were supposed to understand how this all worked. In those days, lawyers monopolised politics. They didn’t have strong links to business or finance. Development planning was in vogue all round the world, even in Western Europe. Economics was still unscarred by its failures in the 1970s. Most Third World countries still had hopes of a prosperous future.
It was against this background that Ayub Khan decided that he needed the cooperation of Bengali economists in his strategic thinking. He wanted to meet the leading economists on an individual basis, influence a handful of them and use them as spokesmen for the current economic policy. He met an unusual wall of resistance from the then ‘East Pakistani Economic Association’ who would meet as one or not at all. Divide and rule did not work. Reluctantly, Ayub Khan went ahead and met them. The economists united on one point: each wing of the country would develop its economy on the basis of the resources present within each province or wing. In other words, East Pakistan would use it resources to invest in East Pakistan. The same would go for the West.
The logic was simple. But it wasn’t too simple. The implication was devastating to the existing political set-up. No longer could resources be siphoned out from the East to feed the West. If each wing were economically autonomous, then there would be an inevitable move to political autonomy. Looser links would then weaken the overall political entity and could even lead to ‘secession’. The economists were therefore indirectly talking politics. Geo-politics.
An attempt was made to move the debate to less contentious issues but the economists refused to discuss any other matters until this vital issue was resolved.
This success in nationalist terms then turned into failure several years later. This had been a massive breakthrough in consciousness in the mid 1960s. It could have then led Bengali nationalist economists to produce a coherent economic plan and vision. Politicians would then have known what kind of society and economy was in store for them. The leadership would have been ready not just for an autonomous province but an independent country or state.
We now know that across the board the leaders of the new nation of Bangladesh were unprepared to lead 75 million people to prosperity. The debate had remained confined to the politics of identity and language. Slogans about self-reliance were not backed by concrete plans on how this would be implemented. The major sectors such as agriculture and land, water, education, health and industrialisation were untouched. The movement had not been made aware of what needed to be done. Moreover, it was preoccupied with the (then) seemingly impossible task of liberation. Economics could wait.
Of course, it couldn’t. After liberation, some economists did tell the new leaders in clear and graphic terms about radical economic changes needed but by then the politicians were not prepared to listen. More than forty years later, the number of people living below the poverty line today is equal to the entire population in 1971. Kind words from donor agencies about ‘successful indicators’ cannot mask the failure to provide the very basics in literacy, health, jobs and security to the people. The propaganda won’t wash anymore. Now there is no visible over-arching enemy to aim for. There is no single, external exploiter to justifiably blame out troubles on. The problem lies within our borders.

Tuesday, May 17, 2005

Is Sylhet to get its very own Farakka?

Sylhet is a small district at the North Eastern tip of Bangladesh. It holds the bulk of the gas reserves of the country. It also has a large proportion of its people working abroad, sending Euro 300 million of remittances annually: vital to an import-dependent economy. Moreover, Sylhet has borne the brunt of a series of political bombings and killings over the last few years, even within the most sensitive of religious shrines. This is the one district that least needs a new controversy. But it seems it is going to get it.

The Dam
Recently, Bangladesh witnessed a series of rallies and a “Long March” against the imminent construction of a 1500MW dam at Tipaimukh, in Manipur state, one of the Seven Sisters of North-eastern India. It may not have made it on the radar screens. Still, environmental politics is rising up the agenda and will produce a major foreign policy headache later this decade.
The Seven Sister states have suffered from decades of insurgencies. A prime cause has been the neglect by the Centre in faraway Delhi. So the attraction of building a dam that generates electricity for these states seems politically irresistible. Dams and rivers, however, have complex implications for lower-riparian countries. The Tipaimukh dam will devastate two rivers, the Surma and Kushiyara in Sylhet. These feed the gigantic Meghna River downstream.

Alternative thinking for the North-East
Yet one has to ask why India, on the one hand, wishes to build a dam to generate electricity for the northeast, and at the same time send gas from the same region (Tripura) hundreds of miles to the West? Would it not be more cost- effective to utilise that gas for power generating plants to produce electricity? Could that electricity not be distributed to the energy-starved states lying between Bangladesh and China?
In other words, Tripura could set up gas power plants and send electricity to the nearby states of Manipur, Mizoram and Meghalaya via a transmission network.
Moreover, why not use some of Myanmar’s gas for the same objective, if there are insufficient gas reserves in Tripura?
India will have to decide on the priorities it sets between its state of West Bengal and those of the Northeast. Or should one assume Bangladesh is meant to be the fall guy?

The limits to Protest
The long march against the Tipaimukh Dam looks like being the opening salvo of a bitter feud over the next few years. Dams are controversial in Bangladesh, ever since the establishment of the Farakka Barrage in West Bengal in 1974. The first long march by revolutionary leader, Maulana Bashani, in the seventies, saw tens of thousands join together.
Today, there is a new dimension in play. Influential quarters in India and the West have been warning about the rise of Islamic movements in Bangladesh. Some counter that this phenomenon is exaggerated. Whatever the truth of the matter, they exist. Nothing would give them a more powerful shot in the arm than the unilateral decision by India to block the flow of water. A new Farakka, a new obstacle, a new cause. Bangladesh depends on agriculture, and therefore water. Is this not the perfect issue for any political force that depends on animosity to India?
In 2002, the small Left Wing parties organised a series of long marches throughout the country against the export of gas to India. They galvanised civil society into action. These two groups had no overt political power but the issue was so emotive that a government with a two-thirds majority in parliament told the donors and energy companies to back off. Its survival was in question.
This time there is a difference. The gas fields lie within the territory of Bangladesh. The dam will be built outside the borders and divert or block water before it enters Bangladesh. In other words, there is very little leverage. The power lies on the other side of the border. The protests may therefore not be effective.
Nevertheless, the issue will not go away and will act as a lightning rod for political posturing. Both India and Bangladesh need to work on improving relations. The benefits of a sound cooperative approach are plain to all and worth countless billions. The place to start is to have genuine dialogue, show sensitivity, to reveal plans, so as to remove suspicion. Both sides will need to use more imagination than they have shown so far if they want to come out of this unscathed.

Tuesday, May 10, 2005

Breathing space!

The results so far indicate that the AL incumbent will win the mayoral election in Chittagong. The political classes in Bangladesh have been keeping their eye on this one. Even foreign institutions such as the International REpublican Institute (IRI) were there, having a look. Thousands of people were milling around into the early hours of the morning, ostensibly to ensure that counting would be done properly. To some, it must been reminiscent of Kiev..............
Counting had stopped unexpectedly at 9.30. After pressure , it resumed an hour later. The papers are full of stories of irregularities, but they do not at this juncture look to have been significant.
This restart of counting (and acceptance of the inevitable) was indeed a wise move from the government. They must have known that any signs of widespread rigging would have been pounced upon by an opposition itching to launch a movement.
They can now try and take the winds out of the sails of the "political reform movement". If they want to play a masterstroke, the government can now set up an all-party forum to examine the issue of electoral reform, calling in civil society and interested donors. They can do this from a position of strength, showing the public that elections can be more or less free and fair, and drag this on for six months.
By agreeing to a debate, the opposition will lose its momentum. If they do not agree and take to the street, then the government can show that the opposition is actually only keen on trouble and insincere.
What this country least needs is another year of instability on the basis of electoral procedures. Ak-dofa (one-point) movements are merely diversions away from our fundamental problems.
Unity on an "agenda for change" makes more sense as far as a hard-pressed population is concerned.
If Bangladesh is really at that mythical "take-off stage", then we need to understand exactly how we are going to take advantage of that and propel this country to the next level.
Changing the guard through nicely run elections is not enough. We have had three reasonably conducted elections and haven't much to show for it.
There is a window of opportunity for the rest of the year to achieve consensus what the real agenda should be.
This window would have closed had there been trouble in Chittagong. It will now close early next year as we enter the cycle of electoral politics.

Monday, May 09, 2005

What is free is not always fair

If we do not ask people what they think, why should we expect them to take a stake in our policies? After fourteen years of democratic rule, the political leaders are as far away from the people as they could be. Try though they may to “meet the people”; they are kept apart from their “constituents” by a phalanx of sycophants. They hardly ever hear the truth. If they do, it is indirectly via local party activists who relay the frustration of the electorate. Sixty million voters have little or no stake in this democratic system. Combined with a faltering, under-performing economy and precarious security situation, and one understands that the legitimacy of the democratic experiment is in question.

Infrastructure Politics:
How do people vote? Do they “think local” and “act local” too? And why should n’t they? They now mistrust all politicians. The electorate may be functionally illiterate but they are nevertheless tactically astute and also judge their local candidate by how much they can deliver. The voter wants to see tangible signs of “development”. That means a bridge, culvert, school, clinic, canal, road or electricity. They correctly judge that most existing candidates come from dubious backgrounds. They can see that the election is being bought as candidates spend Tk. 10 million for rural seats and Tk. 50 million for urban ones. Cigarettes (biris) and Tk.100 bills are literally given away. On top there are feasts to attract poor voters. Election rules are flouted. Manifestos are ignored. Ideology is dead. It seems to boil down to a question of which candidate can provide the most infrastructure.
Once these criteria are satisfied, other considerations come into play. For example, the background of the candidate is important. How much time has he spent in the area over the last few years? If he is an absentee politician, that counts against him since he is more likely to forget to secure funds for that road or bridge than one who is based in the constituency.
Voters still vote for the big two parties since they are likely to be in government. Independents rarely do well. ”New party” success at the polls is almost unheard of.
Now, we are asked every five years to stand in line and then vote for a local candidate. We get all very excited on election night to see who are our political masters will be and then get on with our normal lives. Our local candidate gets elected, and that is the end of that. Promises are forgotten, people are betrayed and the new MP gets comfortable in Dhaka, “doing politics”. We have had our one-day of power. We have sent our ‘representative’ to Parliament. Job done.
We need to see a return to legitimacy. That means citizens need to see a benefit from democracy. In terms of jobs, economic upliftment and social change. They judge the system by its output, not its input.

What’s free isn’t always fair
We used to marvel at our ‘unique’ caretaker system. Whereby the incumbent government steps aside for 90 days to allow a ‘neutral’ administration to handle the elections. Now even this is embroiled in controversy. It is a pity that this was not immediately conceded, an inquiry launched, the appropriate changes enacted and made into a non-issue. Instead, it is the latest lightning rod. Whole rafts of proposals are about to come out. The opposition party machines are ready to enlighten us, and then take to the streets.
However good the ideas, I find it hard to believe that the quality of politician will suddenly improve. Only because so many of the proponents for political reform are alumni from the old “school of corrupt politics”. They are not fresh faces. Their track record does not inspire. The barometer for change will be how many old ‘leaders’ step aside or are forced to retire. Dhaka City has had its cleanliness drive. We need to see one or two political parties cleaned up too. The impetus can only come from enlightened leadership, bold enough to try a new approach.
Until then, it appears to the layman, that a “free and fair electoral process” gives us a false choice between two almost identical groups. Political reform may eventually lead to a new generation entering politics, but that will take time. Time that this nation does not have.
So, can we make a little request? As you engage in the battle over the electoral mechanism, bear this in mind. Do not spend all your political capital telling us how you would like to get to power. Save some to tell us what you are going to do when you get into power.

Printed Daily Star, May 9th 2005