Thursday, August 28, 2008

Western investments in Russia, China and other countries without the rule of law

As has become clear over the last year or so, the West needs to systematically rethink its attitude to investing in countries without the rule of law.

Russia's actions and attitudes in relation to the BP-TNK joint venture have made it clear that the BP investment in Russia was a complete mistake.

Similarly, it will become clear in time that Western investments in China have been a mistake.

Any country that does not have the rule of law is bound to be one that, in crunch times (however defined by the ruling elite in the country in question), is going to resort to actions that are entirely illegal.

That raises of course the question of what exactly IS "legal". In the absence of a global agreement on this question, it is clear that investors must decide which definitions of the word they find most congenial - and there can be hardly any doubt that it is the European/ North American definition (for all the minor differences between them) that will find favour.

Why then do individuals and companies want to invest in countries without the rule of law? Because their own markets are more or less fully exploited, and pastures that are far away always appear greener than those that are at hand.

Emerging markets are still markets from which it is difficult to emerge in an emergency. Sphere: Related Content

So the West is indulging in empty words again - this time to Russia

I see that some parts of the West have united in a chorus to discourage Russia from considering retaking Moldova, Ukraine and the Crimea:

Whether this will be any more useful or effective than the Vatican telling off the Indian government for its actions and inaction in Orissa remains to be seen. So the result regarding Russia will depend on whether the West actually stations army/ navy/ air force contingents in positions to protect places such as Moldova and Crimea.

At present, there is no sign of this happening.

Failing that, as I have already argued for some years, it is fairly clear that Russia will indeed retake these and other areas right across what was the former USSR - and possibly beyond. Sphere: Related Content

Vatican interference in India's internal affairs

I see that the Vatican has dared to publicly criticise the Indian national and state governments for their handling of the troubles in Orissa.

Quite apart from the Vatican's own mixed record in this sort of area, what India does or fails to do in terms of its own internal affairs is none of the Vatican's business.

Indians who are Roman Catholics have of course a right to express their views to the nation - as they have been doing.

But it is one of the challenges for Indians who are Roman Catholics to avoid whingeing to the Vatican when they cannot, for good reasons or bad, express their point of view persuasively to their fellow Indians.

Fortunately, Indian Protestants and the (centuries older) Eastern Orthodox have no tradition of a state (such as the Vatican) interfering in the internal affairs of India.

Nor do Muslims, Buddhists and other religious communities.

That is why the Indian government should tell off the Vatican, and nevertheless do what is right - that is, restore law and order, bring the guilty to book, and compensate as well as in every other way support those who are affected. Sphere: Related Content

Wednesday, August 27, 2008

Indian Express now produces a nonsensical editorial on the Orissa massacres

A friend draws my attention to the following as a "balanced" piece:

I'm afraid I disagree. The IE editorial says, inter alia: "Pravin Togadia, whose political emasculation by Narendra Modi in Gujarat makes him keen on finding other hotspots, has attacked Navin Patnaik is good proof of the administration’s impartial handling of the VHP versus Christian missionaries conflicts." Just because Togadia has "attacked" Patnaik, that proves that the administration is "impartial"???

If the Indian Express means "as incompetent in the case of preventing the murder of the Swami, as of preventing the murder of Tribals and Dalits; equally incompetent in bringing the guilty to justice in both cases", then the IE is right.

However, the IE is fundamentally wrong in portraying this as a conflict between Christian missionaries and VHP. It is basically a conflict between all the poor of the area (Dalits and Tribals) who are mere pawns in the game between larger forces because the state and national governments have failed in their duty to provide education, infrastructure and an environment conducive to economic progress. Instead, the state and national governments have focused primarily on lining their own pockets (all political parties). It is, for example, highly dubious whether the huge Posco deal will produce any real benefits for the poor of Orissa.

The result is this mess, in which people on all sides rush to make whatever capital they can - expressing their frustration against whatever targets they can find. The real culprits are the politicians in Orissa and Delhi. Sphere: Related Content

"I cannot sleep tonight because of Orissa; can you, Sir?"

Though the situation in Orissa is quite complex, there is no excuse for either the state or the central governments failing to protect innocent citizens of whatever caste or creed. Similarly, there is no excuse for failing to bring the culprits to justice, whether in the case of the murder of the Swami, or in the case of the murder of tribals and other economically disadvantaged individuals and families.

Meanwhile, I have received a copy of the following message to Shri Navin Patnaik, Chief Minister of Orissa, and am putting it on my blog with the kind permission of Shri Kostka.

Many will be interested to see whether he receives any response from Shri Patnaik.


Dear Sir,

I am an Indian professional who, after having spent about half my life overseas, has recently returned to work towards the development and progress of India.

When I left India the last time in 1999 it was with the haunting images of Graham Staines and his two innocent sons burnt alive as they slept in a jeep in rural Orissa.

My first Christmas back in India, last year, was against the backdrop of innocent SC and ST Christians having their churches and homes torched, pursued and persecuted, forcing many to spend cold weeks in the jungles.

If that was not bad enough, this past week, following the heinous murder of the Swami and his colleagues reportedly by Maoists/Naxalites, even worse terror has been unleashed on the hapless Christians in your state.

Surely, having learned from last December's experience, you would know better to dispatch police and para-military forces immediately to the sensitive areas.

Instead we are reading reports of your officials standing "helplessly" as Hindutva mobs rape, beat up, burn (alive), hack to pieces and just simply kill Christians as well as destroy their personal and institutional properties.

I certainly cannot sleep while this goes on; can you, sir?

Aghast, ashamed, anxious and awaiting your urgent response to turn around the situation,

Ivan Kostka
Chief Visionary Officer

PS: I am praying and fasting for you and the state of Orissa. Sphere: Related Content

Tuesday, August 26, 2008

Companies continue to dump social responsibility while crying ever louder about it

Defined benefit pensions fall further
Aug 25 2008 22:30
About half of larger employers expect to try to get rid of their remaining liability within a decade, according to a biennial survey of 134 private sector schemes

From the beginning, the usual "pension" was a "defined benefit" (i.e. "x" proportion of your final salary, or some such formula).

Some years ago, companies started changing this to "defined contribution" (i.e. you contribute "x", and we can't tell what that might be worth, if anything, by the time you retire).

All this while raising the range and volume of propoganda about Corporate Social Responsibility and joining organisations such as Global Compact. No wonder: talking, and joining compacts, and providing representatives to speak at conferences on the subject is much cheaper than actually looking after your retired employees. Sphere: Related Content

Does Rio Tinto know something the public does not know about China - or is Rio Tinto simply trying to "talk up" the market?

I see the following news item:

Rio Tinto predicts post-games boom
Aug 25 2008 23:57
A surge in demand from China could cause a bounce in commodities prices as restrictions on industrial activity around Beijing are eased after the Olympics

In any case, it will be most interesting to see if Rio Tinto is right. Sphere: Related Content

Monday, August 25, 2008

Lakshmanananda Saraswati, the Start of the Naxalite-Hindu Parishad Mahayudha, and a Proposal for a Government of National Unity

There have been skirmishes between various Hindu and Marxist groups in India for several years.

Minor Marxist functionaries have been killed by the VHP and its allies, and minor VHP or VHP-ally functionaries have been killed by the Marxists of various stripes.

This weekend Marxists/ Maoists/ Naxalites killed a senior Orissa VHP leader, Lakshmanananda Saraswati, and four other VHP folk. As far as I can recollect, he is the most senior VHP-type leader that has been killed by the Maoists.

The killing of such a senior VHP figure bodes ill for India. It may be tantamount to a declaration of war by the Maoists on the VHP.

Most members of the Congress, the BJP (the political wing of the VHP) and the administrative machinery of India have occupied themselves mainly with lining their own pockets.

The business community is mostly in hock to the politicians, and provides token help to the poor while indulging in ever-more grandiose displays of wealth and opulence.

The secular NGOs, Churches and liberal intellectuals are the only ones who at least make some gestures towards helping the vast majority of the country who are poor.

Now that Nepal has succumbed to Maoist rule, while inflation has risen to intolerable levels for the average Indian, it seems that Maoists have been emboldened to think that their moment has arrived in India. They may have decided that the main obstacle to taking over power in India is the VHP and its allies.

I therefore fear more attacks on VHP personalities as well as on the general political and administrative machinery in India.

There is no military solution to the Naxalite/Maoist problem in India. The only solution is for all right-thinking people to get together, form a government of national unity and invite the Naxalites to join unconditionally.

What should such a Government of National Unity do?

First, it should apologise to the poor for having focused on looting the country (our brown sahibs have looted the country much more effectively in the last 60 years than the British did in some 350 years)

Second, the new Government should set up a Truth and Reconciliation Commission under internationally-known personalities (including from South Africa) to identify the most corrupt people in the country - and to work on agreed actions (including restitution) which would result in their rehabilitation as "normal" citizens ("deshbhakt" instead of "deshbhrashtthh").

Third, none of our 5-year plans (except the First) focused on improving the lot of the rural poor India. A new programme of extensive deregulation combined with genuine national development needs to be conceived and implemented concentrating on improving the lot of the average Indian - who still lives on the equivalent of US$2 a day while having dangled before the eyes the mega-mirages of Bollywood and the monstrous realities of Indiagate.

If we take the murder of Lakshmanananda Saraswati as a wake-up call to the nation, we could still have a solution that can work for the whole country. It is the only solution that I can foresee to the rise of Maoism in India.

My forecast is that we have two years in which to address the issue, or the challenge will be beyond us. Sphere: Related Content

Monday, August 18, 2008

Resignation of President Musharraf of Pakistan

An opportunity has been presented to Pakistan by the resignation of President Musharraf.

The question is whether the country's political leadership will seize the opportunity to build a national consensus to lead the country away from Islamism, tribalism, lingualism, terrorism, corruption and the distinction between "true Pakistanis" and "immigrants from India" (i.e. at the time of partition from India, over 60 years ago!).

Given the history of the country, I am doubtful.

But my prayers and best wishes are with the country - and I hope that all Indians will pray and offer their best wishes to a country whose instability and lack of progress does good neither to the citizens of Pakistan nor to the citizens of India. Sphere: Related Content

Indian theories of Karma as one explanation for the persistence of corruption and the failure of the rule of law in India

In Indian thought, karma is considered to be of three kinds : (1) prarabdha - i.e. karma which has already started bearing fruit; (2) sanchita - i.e. accumulated karma, which will bear fruit in the future, and (3) kriyaamaana karma - i.e. that which will be performed by us and which will bear its own fruit in future.

When a person becomes "spiritually liberated" (or attains moksha or nirvana) in this life, the person ceases to generate any further karma as, at the moment of enlightenment, all sancita karma is destroyed - though the person continues to work out her/ his prarabdha until death.

However, according to some commentators a jivanmukta is liberated from all the three kinds of karma at the moment of liberation.

Whichever explanation is followed, it is not entirely surprising that spiritual leadership and moral leadership do not always go together.

That divorce of spiritual and moral is essential to understanding why corrupt spiritual leaders cozy up to corrupt political leaders rather than challenge them - and why the rule of law fails in our country.

That gap between spiritual and moral also explains why movements such as VHP and BJP (which ought to offer some hope) have so far largely failed to do so, focusing only on manipulating religious feelings to bring to leadership people who are largely spiritually and morally bankrupt. Some VHP and BJP leaders are of course better than others. And this is also the case in other political parties. But that is the broad-brush picture of politics and spirituality in our country.

It is also the broad-brush picture of business and morality in our country - though the most international of our businesses have, since liberalisation, begun to understand that our traditional cronyist ways of doing business will not enable us to succeed in the global arena.
That is why, as Indian businesses begin to have international success, they tend to become less and less traditional, caste-oriented and corrupt.

I do not mean that continued liberalisation by itself will make India as corruption-free as northern Europe. I do mean that liberalisation has helped and will continue to help make at least Indian business less corrupt, as it is more and more exposed to international trends.

However, a re-connection of morality and spirituality( such as happened in Europe with the Reformation) is essential if corruption is to be reduced in India.

And that is only possible with the rejection of Advaita and such related philosophies and practices. Sphere: Related Content

How far will oil prices (and other commodity prices ) fall?

The markets are now very disconnected from realities and are based on "sentiment" or "herd instinct".

I predict therefore that the oil price will fall to around $50 before recovering (at some point in the future) to $70-80. I don't anticipate prices arising to over $100 again for some considerable time.

There will be similar drastic falls in commodity prices before a parallel recovery.

How long will it take for the global economy to recover? It will not start recovering earlier than say 3-4 months after any actions by the new US President (and her/his team) - assuming that such actions are effective.

Before any recovery can happen, it is necessary for the global economy to clean out "excess liquidity" (i.e. absorb the money that has been printed without regard to the total national value of goods and services, most notably in China and the US, but also by most other countries, since the bust).

In other words, I don't see a recovery before Summer 2009 at the earliest. Recovery should, in fact, take much longer - but the global economy has stopped responding to any "should" and has become entirely irrational.

Much more fundamental changes (and of the right kind!) are necessary for the world to see sensible and stable economic growth, but whether the changes that will come are of the right or wrong sort remains to be seen. Sphere: Related Content

Thursday, August 14, 2008

More on Bulgarian corruption now aided and abetted by the EU

Here is further information from my correspondent:

"It’s interesting that there are EU funds available for smaller businesses. But the universal experience has been that there is not only a vast amount of effort involved (in getting hold of the funds) - the process is effectively filtered by the current government, (so that) it’s almost impossible to get the required approvals without involving a Minister or Deputy Minister in the process financially.

Consequently these smaller business no longer bother to participate and generally believe that these funds will never find their way into the “real” economy and will be largely stolen in one form or other by the associates of the current government. Business seems to be doing business in areas which don’t involve the approval of the State we have two parallel system one fully dysfunctional, corrupted from within, and the other (real estate etc) proceeding apace. The latter however cannot create deep economic benefit or long lasting benefit - the country needs production and it’s hard to see (that that is going to develop).

Yes, it really is depressing. I just cannot see resolution of this. If the EU renews the funding flow to Bulgaria this would be almost criminal. The EU needs to flex what muscle it has. I thought that Accession would have been good for Bulgaria - I now believe that it might be in the very long term but in a reasonable timeframe it would have been better for the EU to have withheld membership for 2 years. This would have seen the real implementation of the Laws passed. The Bulgarians just enacted and “normalized” various regulations as a ruse - they never had any intention whosoever of auctioning these law. How could they? They would have to act against their own interests - and as we can see they are NOT willing to take action against the obvious criminal elements in Bulgarian Society and as a result Bulgaria is sinking deeper into the mire of immoral business practices." Sphere: Related Content

Wednesday, August 13, 2008

How Norms-Based is the EU?: The Case of Bulgaria

In view of how consistently the EU claims to be norms-based, the following private email from a friend makes sobering reading:

I was thinking of you this morning. The reason was my rumination on the state of the Balkans - and your steadfastness about morality in business. So obviously the rumination was good.

Seems to me that business here has become a lot more difficult since Bulgaria joined the EU. There was much “structural change” and much “legislative reform” but this was all a mask. There has been no real reform - no change - excepting for the negative. Corruption has become worse not better – it has become more systemic and now the Ministers are even more brazen in their requests for an interest in all deals of significance. Seems that nothing now gets done in Bulgaria without an interest to a politician. It’s pretty dismal image and I can see no end to this.

I still however stand by my principles and just can’t bring myself to participate in such practices. I feel that local business and probably much foreign business has formed the view that to do business in this environment you just have to be corrupt. XXX is much the same - could lead this country - has the drive and determination but, after having spent much effort, can’t participate in the necessary corrupt practices to get into the Parliament as XXX says she has morals - morals from the old times. She is precisely the sort of person that this country needs - I say this without hesitation. Unfortunately I see no others of merit - they are all compromised - all corrupt.

An interesting interlude was had the other day. I was doing 83 kmph in a 60 kmph zone - just did not see the sign. The police officers did not speak English. They asked for money - about USD50. Naturally I refused to pay - they said we would have to go to the court - I was actually pretty abusive - they turned up with a piece of paper with amount of money written on it. I told them to do what the law said and indicated that if they asked for money again I would go straight to the prosecutor’s office and lodge a formal complaint. Along with a few expletives they would know but would never have heard from a motorist before. After some argument I was a little too much for them and they said go go.

This is the Balkans. I can’t see a resolution - the EU has not the political will to rein in a member state in any meaningful way. The Government is managed by old commies and the police and the state secret service and they really do still pull the strings - there is a huge amount of money laundering from all sorts of illegal activity - prostitution, drugs, illegal import/export, armaments. I also suspect that Bulgaria has become a funnel for the laundering of money from Kosovo and Serbia and a channel into the EU for drugs. I have no idea how this will improve. It really is a most dismal picture here. "

My response to him was that as long as people such as he are prepared to take such matters to the court of public opinion, there is always a hope that things will in fact change for the better.

We would need to start getting worried only if people and institutions stop being vocal about such issues. Sphere: Related Content