Understanding Risk - Risk explained to a sixteen year old

By Girish Menon

Risk is the consequence one has to suffer when the outcome of an event is not what you expected or have invested in.

For e.g. as a GCSE student you have invested in getting the grades required by the sixth form college that you wish to go to.

The GCSE exam therefore is the event.

From an individual's point of view this event has only two possible outcome viz. you get the grades or you don't.

Your investment is time, money and effort in order to get the desired outcome.

The risk is what you will have lost when despite all your investment you did not get the desired grades and hence you are not able to do what you had wanted to do.

From a mathematical point of view since there are only two possible outcomes one could say that the probability of either outcome is 0.5.

Your investment with spending time studying, taking tuitions, buying books.... are to lower the probability to failure to as low a figure as possible.

Can you lower the probability of failure to 0? Yes, by invoking the ceteris paribus assumption. If all 'other factors' that affect a student's ability to take an exam are constant, then a student who has studied all the topics and solved past papers will not fail.

Else, some or all the 'other factors' may conspire to bring about a result that the student may not desire. It is impossible to list all the 'other factors' and hence one is unable to control them. Hence, the exam performance of even a hitherto good student remains uncertain.

If the above example, with only two possible outcomes, shows the uncertainty and unpredictability  in the exam results of a diligent student then one shudders to think about other events where all the outcomes possible cannot be identified.

Let's move to study the English Premier League. Here, each team plays 38 matches and each match can have only three outcomes. When one considers picking a winner  of the league one could look at the teams, the manager etc. But, 'other factors' such as injury to key players, the referee...... may scupper the best laid plans.

When one looks at investing in the shares of a company one may study its books of accounts. Assuming that these books are accurate, this information may be inadequate because it is information from the past and the firm which made a huge killing last season may now be facing turbulent conditions of which you an outside investor maybe unaware of. The 'other factors' that may impinge on a firm's performance will include the behaviour of the staff inside the firm, behaviour of other firms, the government's policies and even global events.

Yet, as a risk underwriter one has to take into account all of these factors, quantify each factor based on its importance and likelihood of happening and then estimate the risk of failure. The key thing to remember is that the quantitative value that you have given each factor is at best only a rough estimate and could be wrong. Which is why every risk underwriter follows Keynes' dictum, 'When the facts change, I change my mind'. George Soros, the celebrated investor, has been rumoured to say no to an investment decision that he may have approved only a few hours ago.

Even if Keynes and Soros may have changed their minds on receipt of new information I am willing to bet that their investment record will show many wrong decisions.

So if the risk in investment decisions itself cannot be accurately predicted imagine the dilemma a politician makes when he decides to take his nation to war.

Hence the best way sportsmen, businessmen and politicians overcome the uncertainty of decision making is by posturing. Pretending that you are the best and everything is within your control. They hope that this will scare away the challengers and doubters and victory becomes a self fulfilling prophecy. Alas! It unfortunately does not work every time either. 

(The author is a lecturer in economics.)

The problem with the Anna Hazare plan

By C P Surendran in The Times of India

A most comical anti-corruption opera is being staged all over the country under the leadership of Anna Hazare, who in his moral tyranny is actually beginning to look like Mahatma Gandhi. This itself is a bit of laugh: when a man wants to be someone else eventually transmigration of the soul and nose happens. It only remains for Anna to hold the Dandi March.




But the real reason why this anti-corruption campaign is looking like an over-stretched Johnny Lever joke is that the people largely constituting the movement have happily externalized corruption as if it's an event happening outside themselves.



The fact is that the petite bourgeoisie-auto rickshaw drivers, and constables, if Haryana Police Sangathan support for Jan Lok Pal's bill is any indication, and low paid government officials and assorted elements-have no idea that they are very much part of the corruption. They believe it is a disease outside them, primarily endemic to the government and its institutions, when they are active players in the drama.



The others who are a part of the movement, including the youngsters, who this lookist country swears by, are there for an opportunity to hold candles and chant Sarojini Naidu kind of poems which normally begin: O, deliverer… The youth will hold a candle and even burn a finger from the dripping wax, but when it comes to admission, if an IIT director or an engineering college dean will accept cash for seats, they will gladly part with it.



For one with passing interest in the Lokpal politics, the only major difference in the bills drafted by the government and Anna apart from bringing the PM into the bill's ambit, seems to be that the government wants to set up a separate investigative agency while Anna and his team want an existing investigating agency like the CBI to report to the Lokpal committee. That would eventually mean the Lokpal evolving into a parallel power vortex, and might make Parliament redundant.



In other words, those whom you elected will not be of as much consequence as those self-appointed or government nominated Lokpal committee members. That is a fraught process, and actually might create more unaccountability and corruption.



That is one part of the joke. The other, equally entertaining part has been the Congress-led UPA government's complete and visible bankruptcy of ideas to tackle an agitation outside party structures. Much the same happened before the Emergency when Jayaparakash Naryan led a movement that cut across party lines against the Indira Gandhi led Congress government, which panicked and declared an Emergency.



Anna's movement is mostly apolitical. And the support it has drawn, for all its faults, is an indication how political parties and other democratic institutions have failed to represent people, or inspire faith. Across the world, memberships of political parties are decreasing. Alternate people's groupings with environmental and ethical themes are gaining strength. In Europe and America where democracies are institutionally stronger and fairer than in India, this could be explained as an evolution.



But, in India where fairness woven into the system is at best fraying, when a movement is directed primarily against its institutions and the political party in power as well as the ones in Opposition are fumbling in their response, a movement like this can have dire consequences. Clearly, the parties have failed to represent the people, which is why a moral tyrant like Anna is holding the government to ransom. When institutions fail, individuals take up their role. .And if Anna wins, the nature of Indian politics will change.



It'd be fun to see who were the advisors who landed a wimp like Prime Minister Manmohan Singh into the Lok Pal soup. A party that can't argue its case against a retired army truck driver whose only strength really is a kind of stolid integrity and a talent for skipping meals doesn't deserve to be in power. Power goes to people who love it. Anna Hazare loves nothing more than power.

David Cameron has to maintain that the unrest has no cause except criminality – or he and his friends might be held responsible

These riots reflect a society run on greed and looting

• 
• • Seumas Milne
  • guardian.co.uk, Wednesday 10 August 2011 22.39 BST
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David Cameron talks to acting borough commander superintendent Jo Oakley during a visit to Croydon to view the destruction from the riots. Photograph: Wpa Pool/Getty Images
It is essential for those in power in Britain that the riots now sweeping the country can have no cause beyond feral wickedness. This is nothing but "criminality, pure and simple", David Cameron declared after cutting short his holiday in Tuscany. The London mayor and fellow former Bullingdon Club member Boris Johnson, heckled by hostile Londoners in Clapham Junction, warned that rioters must stop hearing "economic and sociological justifications" (though who was offering them he never explained) for what they were doing. When his predecessor Ken Livingstone linked the riots to the impact of public spending cuts, it was almost as if he'd torched a building himself. The Daily Mail thundered that blaming cuts was "immoral and cynical", echoed by a string of armchair riot control enthusiasts. There was nothing to explain, they've insisted, and the only response should be plastic bullets, water cannon and troops on the streets. We'll hear a lot more of that when parliament meets – and it's not hard to see why. If these riots have no social or political causes, then clearly no one in authority can be held responsible. What's more, with many people terrified by the mayhem and angry at the failure of the police to halt its spread, it offers the government a chance to get back on the front foot and regain its seriously damaged credibility as a force for social order. But it's also a nonsensical position. If this week's eruption is an expression of pure criminality and has nothing to do with police harassment or youth unemployment or rampant inequality or deepening economic crisis, why is it happening now and not a decade ago? The criminal classes, as the Victorians branded those at the margins of society, are always with us, after all. And if it has no connection with Britain's savage social divide and ghettoes of deprivation, why did it kick off in Haringey and not Henley? To accuse those who make those obvious links of being apologists or "making excuses" for attacks on firefighters or robbing small shopkeepers is equally fatuous. To refuse to recognise the causes of the unrest is to make it more likely to recur – and ministers themselves certainly won't be making that mistake behind closed doors if they care about their own political futures. It was the same when riots erupted in London and Liverpool 30 years ago, also triggered by confrontation between the police and black community, when another Conservative government was driving through cuts during a recession. The people of Brixton and Toxteth were denounced as criminals and thugs, but within weeks Michael Heseltine was writing a private memo to the cabinet, beginning with "it took a riot", and setting out the urgent necessity to take action over urban deprivation. This time, the multi-ethnic unrest has spread far further and faster. It's been less politicised and there's been far more looting, to the point where in many areas grabbing "free stuff" has been the main action. But there's no mystery as to where the upheaval came from. It was triggered by the police killing a young black man in a country where black people are 26 times more likely to be stopped and searched by police than their white counterparts. The riot that exploded in Tottenham in response at the weekend took place in an area with the highest unemployment in London, whose youth clubs have been closed to meet a 75% cut in its youth services budget. It then erupted across what is now by some measures the most unequal city in the developed world, where the wealth of the richest 10% has risen to 273 times that of the poorest, drawing in young people who have had their educational maintenance allowance axed just as official youth unemployment has reached a record high and university places are being cut back under the weight of a tripling of tuition fees. Now the unrest has gone nationwide. But it's not as if rioting was unexpected when the government embarked on its reckless programme to shrink the state. Last autumn the Police Superintendents' Association warned of the dangers of slashing police numbers at a time when they were likely to be needed to deal with "social tensions" or "widespread disorder". Less than a fortnight ago, Tottenham youths told the Guardian they expected a riot. Politicians and media talking heads counter that none of that has anything to do with sociopathic teenagers smashing shop windows to walk off with plasma TVs and trainers. But where exactly did the rioters get the idea that there is no higher value than acquiring individual wealth, or that branded goods are the route to identity and self-respect? While bankers have publicly looted the country's wealth and got away with it, it's not hard to see why those who are locked out of the gravy train might think they were entitled to help themselves to a mobile phone. Some of the rioters make the connection explicitly. "The politicians say that we loot and rob, they are the original gangsters," one told a reporter. Another explained to the BBC: "We're showing the rich people we can do what we want." Most have no stake in a society which has shut them out or an economic model which has now run into the sand. It's already become clear that divided Britain is in no state to absorb the austerity now being administered because three decades of neoliberal capitalism have already shattered so many social bonds of work and community. What we're now seeing across the cities of England is the reflection of a society run on greed – and a poisonous failure of politics and social solidarity. There is now a danger that rioting might feed into ethnic conflict. Meanwhile, the latest phase of the economic crisis lurching back and forth between the United States and Europe risks tipping austerity Britain into slump or prolonged stagnation. We're starting to see the devastating costs of refusing to change course.

• © 2011 Guardian News and Media Limited or its affiliated companies. All rights reserved.

UK's secret policy on torture revealed

Document shows intelligence officers instructed to weigh importance of information sought against pain inflicted

• Ian Cobain
• guardian.co.uk, Thursday 4 August 2011 12.42 BST
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A number of men said they were questioned by MI5 and MI6 officers after being tortured at Guantánamo Bay. Photograph: Mark Wilson/Getty Images
A top-secret document revealing how MI6 and MI5 officers were allowed to extract information from prisoners being illegally tortured overseas has been seen by the Guardian. The interrogation policy – details of which are believed to be too sensitive to be publicly released at the government inquiry into the UK's role in torture and rendition – instructed senior intelligence officers to weigh the importance of the information being sought against the amount of pain they expected a prisoner to suffer. It was operated by the British government for almost a decade. A copy of the secret policy showed senior intelligence officers and ministers feared the British public could be at greater risk of a terrorist attack if Islamists became aware of its existence. One section states: "If the possibility exists that information will be or has been obtained through the mistreatment of detainees, the negative consequences may include any potential adverse effects on national security if the fact of the agency seeking or accepting information in those circumstances were to be publicly revealed. "For instance, it is possible that in some circumstances such a revelation could result in further radicalisation, leading to an increase in the threat from terrorism." The policy adds that such a disclosure "could result in damage to the reputation of the agencies", and that this could undermine their effectiveness. The fact that the interrogation policy document and other similar papers may not be made public during the inquiry into British complicity in torture and rendition has led to human rights groups and lawyers refusing to give evidence or attend any meetings with the inquiry team because it does not have "credibility or transparency". The decision by 10 groups – including Liberty, Reprieve and Amnesty International – follows the publication of the inquiry's protocols, which show the final decision on whether material uncovered by the inquiry, led by Sir Peter Gibson, can be made public will rest with the cabinet secretary. The inquiry will begin after a police investigation into torture allegations has been completed. Some have criticised the appointment of Gibson, a retired judge, to head the inquiry because he previously served as the intelligence services commissioner, overseeing government ministers' use of a controversial power that permits them to "disapply" UK criminal and civil law in order to offer a degree of protection to British intelligence officers committing crimes overseas. The government denies there is a conflict of interest. The protocols also stated that former detainees and their lawyers will not be able to question intelligence officials and that all evidence from current or former members of the security and intelligence agencies, below the level of head, will be heard in private. The document seen by the Guardian shows how the secret interrogation policy operated until it was rewritten on the orders of the coalition government last July. It also: • Acknowledged that MI5 and MI6 officers could be in breach of both UK and international law by asking for information from prisoners held by overseas agencies known to use torture. • Explained the need to obtain political cover for any potentially criminal act by consulting ministers beforehand. The secret interrogation policy was first passed to MI5 and MI6 officers in Afghanistan in January 2002 to enable them to continue questioning prisoners whom they knew were being mistreated by members of the US military. It was amended slightly later that year before being rewritten and expanded in 2004 after it became apparent that a significant number of British Muslims, radicalised by the invasion of Iraq, were planning attacks against the UK. The policy was amended again in July 2006 during an investigation of a suspected plot to bring down airliners over the Atlantic. Entitled "Agency policy on liaison with overseas security and intelligence services in relation to detainees who may be subject to mistreatment", it was given to intelligence officers handing over questions to be put to detainees. Separate policy documents were issued for related matters, including intelligence officers conducting face-to-face interrogations. The document set out the international and domestic law on torture, and explained that MI5 and MI6 do not "participate in, encourage or condone" either torture or inhuman or degrading treatment. Intelligence officers were instructed not to carry out any action "which it is known" would result in torture. However, they could proceed when they foresaw "a real possibility their actions will result in an individual's mistreatment" as long as they first sought assurances from the overseas agency. Even when such assurances were judged to be worthless, officers could be given permission to proceed despite the real possibility that they would committing a crime and that a prisoner or prisoners would be tortured. "When, not withstanding any caveats or prior assurances, there is still considered to be a real possibility of mistreatment and therefore there is considered to be a risk that the agencies' actions could be judged to be unlawful, the actions may not be taken without authority at a senior level. In some cases, ministers may need to be consulted," the document said. In deciding whether to give permission, senior MI5 and MI6 management "will balance the risk of mistreatment and the risk that the officer's actions could be judged to be unlawful against the need for the proposed action". At this point, "the operational imperative for the proposed action, such as if the action involves passing or obtaining life-saving intelligence" would be weighed against "the level of mistreatment anticipated and how likely those consequences are". Ministers may be consulted over "particularly difficult cases", with the process of consulting being "designed to ensure that appropriate visibility and consideration of the risk of unlawful actions takes place". All such operations must remain completely secret or they could put UK interests and British lives at risk. Disclosure of the contents of the document appears to help explain the high degree of sensitivity shown by ministers and former ministers after the Guardian became aware of its existence two years ago. Tony Blair evaded a series of questions over the role he played in authorising changes to the instructions in 2004, while the former home secretary David Blunkett maintained it was potentially libellous even to ask him questions about the matter. As foreign secretary, David Miliband told MPs the secret policy could never be made public as "nothing we publish must give succour to our enemies". Blair, Blunkett and the former foreign secretary Jack Straw also declined to say whether or not they were aware that the instructions had led to a number of people being tortured. The head of MI5, Jonathan Evans, said that, in the post 9/11 world, his officers would be derelict in their duty if they did not work with intelligence agencies in countries with poor human rights records, while his opposite number at MI6, Sir John Sawers, spoke of the "real, constant, operational dilemmas" involved in such relationships. Others, however, are questioning whether – in the words of Ken Macdonald, a former director of public prosecutions, "Tony Blair's government was guilty of developing something close to a criminal policy". The Intelligence and Security Committee, the group of parliamentarians appointed by the prime minister to assist with the oversight of the UK's intelligence agencies, is known to have examined the document while sitting in secret, but it is unclear what – if any – suggestions or complaints it made. Paul Murphy, the Labour MP and former minister who chaired the committee in 2006, declined to answer questions about the matter. A number of men, mostly British Muslims, have complained that they were questioned by MI5 and MI6 officers after being tortured by overseas intelligence officials in Pakistan, Bangladesh, Afghanistan and Guantánamo Bay. Some are known to have been detained at the suggestion of British intelligence officers. Others say they were tortured in places such as Egypt, Dubai, Morocco and Syria, while being interrogated on the basis of information that could only have been supplied by the UK. A number were subsequently convicted of serious terrorism offences or subjected to control orders. Others returned to the UK and, after treatment, resumed their lives. One is a businessman in Yorkshire, another a software designer living in Berkshire, and a third is a doctor practising on the south coast of England. Some have brought civil proceedings against the British government, and a number have received compensation in out-of-court settlements, but others remain too scared to take legal action. Scotland Yard has examined the possibility that one officer from MI5 and a second from MI6 committed criminal offences while extracting information from detainees overseas, and detectives are now conducting what is described as a "wider investigation into other potential criminal conduct". A new set of instructions was drafted after last year's election, published on the orders of David Cameron, on the grounds that the coalition was "determined to resolve the problems of the past" and wished to give "greater clarity about what is and what is not acceptable in the future". Human rights groups pointed to what they said were serious loopholes that could permit MI5 and MI6 officers to remain involved in the torture of prisoners overseas. Last week, the high court heard a challenge to the legality of the new instructions, brought by the Equality and Human Rights Commission. Judgment is expected later in the year.

• guardian.co.uk © Guardian News and Media Limited 2011

India Against Corruption - The Second Freedom Struggle

Beware of the Government Lokpal Bill


My dear friend,

I reviewed the Government.s Lokpal bill in great detail. I am deeply concerned and not to mention alarmed with what I learned from it. Government has completely ignored the wishes of the common man and made a mockery of our hard fought struggle for strong anti-corruption laws. I have summarized the most troubling aspects of the government version here and suggested possible steps that everyone of you can take to help in this movement.

We had been demanding that an institution called Lokpal should be set up for central government and a Lokayukta should be set up for each state government through the same Bill. Lokpal would receive and investigate corruption complaints against central government employees and politicians. Lokayukta would do that job in respective states. However, the Cabinet has rejected our demand. Only a few senior-most officers in central government have been brought within the jurisdiction of Lokpal. All officials and politicians in state governments have been left out.

What does that mean?

• It means that rampant corruption in Panchayat works would continue as it is. Through the use of RTI Act, many people across the country have revealed how payments are routinely made for ghost works. Check dams exist only on paper. List of beneficiaries of various government schemes contain bogus names. Wages of poorest people are denied and siphoned off under NREGA. Social audits in several states have exposed corruption running into thousands of crores in NREGA. Medicines are routinely diverted to black market from government hospitals. Teachers do not turn up in government schools. They pay a part of their salaries to Basic Shiksha Adhikari to mark their attendance. 80% of Rs 30,000 crores of ration subsidy is siphoned off. People living below poverty line are turned away by ration shopkeepers because their rations are diverted to black market. Much of this money reaches the party coffers or the senior-most politicians. All this will continue even after the enactment of government.s Lokpal Bill because all of this is outside its jurisdiction.
• In cities, roads would continue to break after a few months of being constructed. Flyovers would continue to collapse. Streetlights will still not light up. Parks would continue to remain dilapidated. The builders would continue to fleece ordinary consumers. You would still need to pay bribes to get your passport or income tax refund. Building plan will not be passed without a bribe. Government.s Lokpal Bill does not cover any of this.
• Adarsh Housing scam is not covered under Government.s Lokpal. Reddy brothers will continue to loot our mines and minerals. Commonwealth Games, Fodder scam, Taj Corridor Scam, Yamuna Expressway scam, Jharkhand Mukti Morcha scam, Cash for vote scam . none of these scams are covered under Government.s Lokpal Bill.
• Members of Parliament and MLAs would continue to take bribes to ask questions or vote in Parliament and legislative assemblies because Lokpal would not have the powers to investigate them.
• Prime Minister, Chief Ministers, MPs, MLAs, municipal councilors, sarpanches, judges, all state government employees, all Group B, Group C and group D employees of the central government . all are out of the jurisdiction of Government.s Lokpal Bill.
• Interestingly, if any citizen makes a complaint of corruption against any official to Lokpal and if it lacks adequate evidence, then as per government.s bill, the citizen would face two years of minimum imprisonment. And the government would provide a free advocate to the corrupt official to file a case against the citizen. But if the citizen is able to prove that the official has indeed indulged in corruption, there is just six months of minimum imprisonment. Therefore, rather than the corrupt and corruption, the government bill is targeted against those who dare raise their voice against corruption. In short, it discourages people from reporting acts of corruption!
• 13 people, who had dared to raise their voice against corruption, were murdered in the last one year. We had demanded that Lokpal should have the powers and duty to provide protection to such people. Government Bill does not have any such provision.
• Government has retained its control over CBI. So, CBI would continue to avoid taking action against a future Raja until Supreme Court admonished them. Accounts of Quattrochis would continue to be defrozen in secrecy against national interests. CBI would continue to be used to arm twist Mayawatis, Laloo Yadavs, Jayalalithas and Mulayam Singhs into submission. Corruption money would continue to be siphoned off to Swiss accounts.
• Government.s Lokpal Bill is also unconstitutional. Prime Minister does not enjoy any immunity from investigations under the constitution. Exclusion of Prime Minister from Lokpal Bill is unconstitutional.
• Selection and removal of Lokpal members will be completely in the control of the government. Out of 9 member selection committee, five will be from ruling establishment, thus effectively giving powers in the hands of the government to appoint the most corrupt, pliable and politically loyal people as Lokpal members.
• High Courts and Supreme Court would continue to take more than 20 years to dispose appeals in corruption cases because our plea to set up special benches to hear such appeals has also been turned down.

Government says that there are 1.25 crore government employees in the country. Government refuses to bring them under Lokpal Bill because it would need large number of anti-corruption staff to keep a check on them. Isn.t that an absurd excuse? India is a huge country. Obviously, it has large number of employees. Can the government leave them unchecked and allow them to loot the people and the country? Under law, corruption is a crime . as heinous as murder or rape. If tomorrow, the incidence of murders or rapes increases as much as we have corruption now, would the government turn around and say that this country has 120 crore population and since they would need large number of policemen to check crime, they would not do it?
The country seems to be in the clutches of highly corrupt people. It has been reported that in the Cabinet Meeting, the Prime Minister, including some of his other Cabinet colleagues, kept pleading that PM be included within the Lokpal Bill. However, the corrupt within the Cabinet had the last say. The Prime Minister was rendered helpless, though one wonders the reasons for his helplessness.

What are our options? Some people feel that Anna is unreasonable. They say that an indefinite fast is a brahmastra and should be used as a last resort. Haven.t we already reached the end of the road?
Friends, I must confess that the road ahead is extremely challenging. Government is on a path to try and crush the movement at any cost. We need the active participation of every single Indian in order to fight back. If the Government.s bill becomes law we are literally gifting our country to the corrupt people to further plunder our resources.

Like I have said before its now or never.

Let every citizen in this country take one week.s off from his normal work from 16th August, the day Anna starts his indefinite fast, and take to the streets . in front of his house or at the crossings or in parks . with a tricolor in his hands shouting slogans against corruption. Let students take off from their schools and colleges. Let everyone take to streets. If this happens, we will achieve our goal within a week. Government can crush one Anna but it cannot crush 120 crore Annas. Government can impose section 144 on one jantar mantar. But it cannot impose a curfew on the whole country.

Can we count on you support to participate in one final attempt to save our country from the corrupt?

Arvind Kejriwal

Why do political leaders stride into the same trap, even having witnessed the fate of those who went before them?

Steve Richards: History repeats itself in Libya

Tuesday, 2 August 2011 in The Independent

 

Some of the best thrillers depend on the audience knowing in advance that a deadly outcome is unavoidable. We sit, watch and wait, gripped with fear as the inevitable end looms. And often the characters suspect they are making the wrong moves but cannot stop themselves from doing so.

The same pattern applies in politics. Governments tend to make the same colossal mistakes as their predecessors. Leading figures recognise the errors when they were committed the first time around but then proceed to make a similar set of misjudgements. It's as if they are trapped by dark forces beyond their control.

This is what has happened with David Cameron's response to the crisis in Libya. He watched the first time around, recognised the mistakes and repeated them. The invasion of Iraq was on a much bigger scale and conducted without the support of the UN. Nonetheless, there are precise parallels with Libya. George Bush and Tony Blair invaded Iraq without having a clear outcome in mind. Their official war aims as far as they were specified did not include the removal of Saddam, although that was the outcome they hoped for.

Both leaders assumed that Iraqis would welcome them as liberators and that democracy would follow. As with the earlier war in Afghanistan, Blair declared that financial costs would be relatively low. In the build-up to Iraq, most newspapers hailed Blair for his political courage, even though he was siding with the most powerful military force in the world against an ageing tyrant. We know what followed.

More importantly, David Cameron knew what followed. Friends of Cameron insist he had deep doubts about the war in Iraq at the time, although he voted for it. Later, as Leader of the Opposition, he made one of his best speeches, during which he argued that a lesson of Iraq was that countries could not be bombed into democracy. With Cameron it is not always easy to judge whether he meant what he said or was seeking crudely to widen his party's appeal by belatedly marking distance for Iraq. Still, that was what Cameron argued, in an extensively briefed speech. I recall talking to him at length about it at the time. We must presume he recognised complexity and nuance as the calamity of Iraq unfolded.

Yet earlier this year Cameron rushed to the Commons to make an emergency statement. He supported a no-fly zone over Libya and had taken the lead in securing it. The aim was to protect the Libyans but he hoped the outcome would be the removal of Gaddafi, although this was not an objective. The cost would be a few million pounds. In large parts of the media Cameron was hailed for his leadership and courage.

A few months later and we are in another familiar phase of the pattern. The dictator is still there. The alternative might well be as unsavoury. Questions are being asked about why military action is taken in Libya, but not in Syria.

Here the Defence Select Committee estimates the costs of the campaign have exceeded early predictions and have already risen to beyond £200m. There is no end to the conflict in sight, so that figure will continue to rise. The same committee calculates that the cost of Afghanistan to the UK Government has been at least £18bn and it is probably a lot more than that.

Cameron and George Osborne argue that spending went out of control in the early years of this century. They may have a case, but in terms of the specifics they supported all the areas where expenditure rose. One of them was the cost of fighting major wars. Here we go again.

Why do political leaders stride into the same trap, having resolved not to do so when witnessing the fate of those that went before them? Cameron is not the first to do so. On the domestic front in the 1970s there was a similar eerie pattern. Ted Heath got into fatal difficulties as he attempted to impose a pay policy. His opponent, Harold Wilson, was scathing until he won an election. Shortly afterwards, he also imposed one. Jim Callaghan was also sceptical but succumbed in the same way and was brought down by it. In the end, all three Prime Ministers followed the same deadly route having resolved not to do so. They could see no alternative. They were too scared of breaking with corporatist orthodoxy. Having been brought up politically in the 1930s, they feared the social and economic consequence of high unemployment.

On Libya Cameron could see no alternative. He feared a slaughter. He is the heir to Blair and as he contemplated what to do about Libya, he reflected on his hero and what he would have done. Cameron was brought up politically at a time when Britain deployed military force without asking too many awkward questions. Now he is trapped, just as the leaders in the 1970s were in relation to their economic policies.

I make no prescription as to what outsiders can do to tame selected tyrants but we know from recent conflicts what does not work. Or do we? We are about to do so. Orthodoxies change and leaders learn, but after knowing the risks involved, they still make the same miscalculations as those who preceded them.

So you thought Britain wasn't corrupt?

Mary Dejevsky:

Two of the most deep-rooted maladies of British society are freebies among friends and jobs for the boys

Friday, 22 July 2011 The Independent

Anyone who had expected to drowse through the Home Secretary's Commons statement on the Metropolitan Police might have awoken with a start when she began with "allegations about police corruption". It was the flat, almost casual, way in which Theresa May appeared to accept at least the possibility, that surprised and the use of the actual words "police corruption". She went on to announce a review of "instances of undue influence, inappropriate contractual arrangements and other abuses of power in police relationships..."

The reason this bald catalogue shocks is that Britain has long projected an image of itself as a paragon of good governance and the rule of law, to the point where experts on such matters earn a good living advising other countries how to emulate our standards. It also happens to be an image that the vast majority of its citizens share. We regard ourselves as mercifully free of the sort of corruption that blights the lives of, say, Nigerians, Egyptians or Russians, and a cut above most southern Europeans.

That may be how we see ourselves, but it is not quite how others see us. Transparency International, an independent organisation which monitors this sort of thing, places the UK 20th in its latest (2010) corruption perception index. Overall, this may not look so bad – 178 countries are listed. Look closer, though, and you will see that the UK comes well below all the Nordic countries, below Luxembourg, Ireland and Germany, and just below the small Gulf state of Qatar. It is only marginally ahead of the United States, France and Spain. Is this where Britain should be – in 20th place, and falling?

Corruption, of course, takes many forms. In some countries, bribery is so prevalent as to be tantamount to a tax. Indeed, a theory has recently been advanced that this is how it should be regarded and that it is perhaps not so reprehensible after all. In others, an unofficial tariff – ranging from a box of chocolates to a luxury holiday – dictates access to the best educational establishments, the best hospitals, the best flats. In yet other countries which would not generally be regarded as particularly corrupt, contributions to political parties constitute a perennially murky area in which even otherwise distinguished politicians have come to grief, such as the former German chancellor Helmut Kohl. You might argue that the US system of lobbying is a form of legalised corruption.

Generally, these are not ills that afflict the UK. If you live here, you can probably be fairly confident that you will not have to offer teachers a backhander for admitting your child or ensuring a decent grade. (Although I have heard tell of quite lavish gifts offered.) You will not have to pay a doctor for decent NHS treatment or a fast track up the transplant waiting list. (Although, again, there is apocrypha that hints at exceptions, and it was once intimated to me that a consideration might keep my husband classified as a UK resident when we were living abroad, so that he would still qualify for expensive drugs on the NHS.)

And you probably won't find a speed cop or parking warden suggesting that a small transaction "between us" would "fix it" before he writes out the ticket, or a frontline immigration officer nodding through someone with some crisp banknotes, but no visa, in his passport. Or election officers stuffing ballot-boxes after the polls have closed.

But you will find ways in which Britain falls very far short of Scandinavian-level probity; areas where complacency has meant a blind eye is turned to abuses, and grey zones where transactions take place that are not actually illegal, but which would – and should – embarrass one or both parties if they became public.
Several such instances emerged earlier this week when the Commons Home Affairs Committee questioned the Commissioner of the Metropolitan Police, Sir Paul Stephenson, and the Assistant Commissioner, John Yates – both of whom had just resigned – as well as the head of public affairs, Dick Fedorcio. The most blatant was Sir Paul's acceptance of hospitality from Champney's health farm.

The commissioner may have been recovering from very serious illness (as he was), he may have declared the gift in the register as required (which he said he did on his return to work), and the owner of Champney's may have been a family friend (though it is unclear how close). But the value of this gift – around half the average Briton's annual pre-tax salary – and Sir Paul's apparent inability to understand that accepting it sat uneasily with his position as the country's most senior police officer on a salary of more than £250,000, suggests a blind spot. It left the impression that there was one law, and one set of subsidised living standards, for the well connected, and another for everyone else.

Something similar applied when it came to the hiring of Neil Wallis, former deputy editor of the News of the World, as a media consultant. Despite some close questioning – notably from two sparky new female Tory MPs, Nicola Blackwood and Louise Mensch – there was precious little clarity about how Wallis actually got the job. Between the lines, however, it could be deduced that there was no open advertisement, no standard recruitment procedure, no formal interview and no public disclosure of the appointment. This was a public-sector, tax-payer funded position, yet contacts and networks appear to have been all.

What we have here are two of the most deep-rooted maladies of British society: freebies among friends and jobs for the boys. And there will be many who shrug and say that this is just how the country works. Yet these ingrained ways of doing things are part of the reason why the UK comes below Finland, Australia and Canada in TI's corruption perception index. They are also a reason, along with our segregated schools, why social mobility in Britain is so relatively poor. Advantage compounds advantage.

At root, much of the disparities come down to information and the way so much is still kept from "prying" eyes. The UK-based American journalist Heather Brooke, who has made opening up what she calls Britain's "information cartel" something of a personal crusade and whose work led to the publication of MPs' expenses, notes that records available to US journalists as a matter of course are "off-limits" here, where access to information "depends on one's wealth, power or privilege". She is right – yet the responses, when she argues this, are not all approving. Some accept that it was ever thus; others accuse her of poking her nose into places it does not belong.

Nor has the Freedom of Information Act so far brought the transformation it should have done. Quite basic information still has to be applied for. This government's efforts to open up details of department and local council spending are laudable, but there has hardly been a rush to comply. Until our patronage system is tackled, British boasts of incorruptibility will remain boasts – discredited by our 20th place on the global corruption index and our continuing fall, as those below us move to clean up their act.
m.dejevsky@independent.co.uk

How the phone-hacking scandal unmasked the British power elite

The close ties between politicians and the media mean that if Murdoch's empire falls, the political establishment will suffer

At 2.30 on Tuesday 19 July, the story that has spread itself over the news for weeks will reach one of its most spectacular moments. An elderly American–Australian billionaire and his 38-year-old son will be transported to the Houses of Parliament, along with a 43-year-old woman from Warrington, long used to the company of the rich and powerful, but freshly departed from her high-powered job and just released from a central-London police station. There, they will face a committee of MPs, from a wide array of backgrounds – among them, a trade unionist's son from Kidderminster; a privately educated chick-lit novelist who has recently married the manager of Metallica and the Red Hot Chili Peppers; and a woman who was once the finance director for the company that makes Mars bars.
Exactly what will happen when Rupert Murdoch, James Murdoch and Rebekah Brooks face the culture, media and sport select committee is anyone's guess. Tom Watson – the Kidderminster-raised Labour MP whose dogged pursuit of News International forms one of the key threads of how the hacking scandal has played out – warned the Guardian against getting too excited. "There is not going to be a killer blow on Tuesday," he said. "Expectations are way too high."
That may be true, but even if the trio hide behind half-answers and obfuscation, there will plenty on which to feast. Body language will be picked apart; pauses will acquire huge significance; the merest slip-up might open up very damaging lines of inquiry. And besides, the event will be defined by one massive piece of symbolism. In the 43 years he has been operating in the UK, Rupert Murdoch has never formally faced British MPs. Why would he, when the most powerful among them would gladly grant him regular audiences, opening the back door of Downing Street so they could check that everything in his world was as perfect as it could possibly be?
Yesterday, in the wake of yet more arrests and resignations, I listened to another media appearance by Steve Hewlett, the Guardian columnist and presenter of Radio 4's Media show – who, in the midst of droves of talking heads coming close to losing theirs, has sounded a dependable note of calm and real insight. As far as I know, he has not talked about the "British Spring". But when he popped up towards the end of the Today programme, he seemed to agree that something absolutely remarkable was afoot.
"It's almost as if the whole establishment – the political-media elite – is in a state of wobble," he said. "Any association with Murdoch and his papers, which quite naturally everybody has had in some form . . . is now so toxic that any mention of it is . . ."
A pause.
"I mean, look: it's carnage. It's almost as if the light has suddenly come on, and everybody has said: 'Good lord – were we doing that?'"
This is an example of what he means. On Saturday 2 July, Rupert Murdoch's daughter Elisabeth and her millionaire PR husband Matthew Freud hosted a party at their 22-bedroom mansion in the Cotswolds. Michael Gove, the education secretary, was there. So was David Cameron's consigliere Steve Hilton, and the culture minister Ed Vaizey. The Labour figures in attendance included Peter Mandelson, the ex-work and pensions secretary James Purnell, the shadow foreign secretary Douglas Alexander - and his shadow cabinet colleague Tessa Jowell, who reportedly arrived with her supposedly estranged husband David Mills. They were joined by David Miliband – who, let us not forget, was supported in his quest for the Labour leadership by the entire Murdoch stable of newspapers.
Robert Peston was glimpsed in deep conversation with Will Lewis, News International's general manager. The BBC's director general Mark Thompson turned up, along with Alan Yentob, Jon Snow from Channel 4 News, Bear Grylls, Mariella Frostrup, Lily Allen and Patrick Kielty. And what a time they had: thanks to Nick Jones, the owner of the members-only Soho House club and husband of Desert Island Discs' Kirsty Young, two marquees had been turned into pop-up versions of his London reaturants, Cecconi's and Pizza East, and drinking and dancing went on until 4am.
Also among the guests was James Murdoch, who spent much of the night talking intently to Rebekah Brooks – whose behaviour that night was said to be somewhat uncharacteristic. "Usually, Rebekah flits around having a word with everyone," one witness told the Daily Mail. "She loves being the centre of attention. But that night, she spent nearly all her time with News International people."
The following Monday, when plenty of the revellers must still have been feeling groggy, the Guardian ran the story by Nick Davies and Amelia Hill about Milly Dowler's phone being hacked. And so began the explosion of revelations that has – for the time being, at least – blown this cosy, cloistered world apart.

A long love affair

Self-evidently, powerful people tend to cluster together. Those who control the media are a particularly strong magnet for the rich and influential, and there is a long history of people from all sides of politics sharing their company. Take note: that great socialist godhead Aneurin Bevan was a friend of Lord Beaverbrook, as was Bevan's protege Michael Foot, who was so enamoured of the proprietor of the two Express titles and the London Evening Standard that he once said this: "I loved him, not merely as a friend, but as a second father."
But the endless scramble to Rupert Murdoch's table, and the powerful milieu that sprouted around him and his children, has been something new. When he decisively began to exercise his grip on British politics in the 1980s, Murdoch was an intimate of Margaret Thatcher, who cleared the way for his move into British television, though to claim that she was under his spell was deeply misplaced. As with so many things, the rot decisively started under New Labour, thanks to obvious enough reasoning: News International had so tortured John Major and Neil Kinnock, that rather than be monstered by people who evidently decided who to target and then pursued them to the point of destruction, it was surely better to get them decisively on side, via whatever means were necessary. So, in July 1995, Tony Blair and his retinue famously made their whistlestop trip to a News Corp conference in Hayman Island, off the coast of Australia.
The Murdoch factor undoubtedly informed swaths of New Labour politics: not least, an ingrained reluctance to embrace the more economically interventionist aspects of the European Union, and a reckless belief that Britain should always support American foreign policy, no matter how dangerous the consequences (never forget: all of Murdoch's newspapers loudly backed the invasion of Iraq). Moreover, even before Blair entered Downing Street, he and his allies' closeness to News Corp seems to have led to very precise manoeuvres on Labour's media policy.
In 1996, for example, the Major government's broadcasting bill was making its way through parliament. There was particular controversy surrounding the question of whether the legislation should force Murdoch to manufacture digital TV boxes that could be used for services provided by other companies – so that, if you chose to buy BSkyB kit but wanted to watch television delivered by another provider, that was possible. The alternative was effective monopoly, as plenty of Labour MPs well knew. But when it came to the vote at committee stage, two Labour members mysteriously went missing, meaning that the vote was tied 11-11, Murdoch got his way – and we began our passage into that brave new TV world where BSkyB has a UK market share of 80%.
If you read Volume One of Alastair Campbell's diaries, you find one possible explanation, not just for this, but other New Labour capitulations to News Corp – such as the 2003 "Murdoch clause" that relaxed the rules on the acquisition of TV companies by newspaper owners, and thus opened the way to a Murdoch buyout of Channel 5 (which didn't happen – though it's this change that allowed in that unseemly sub-Murdoch Richard Desmond). It's there in an account of a meeting between Campbell, Blair and Mandelson, and Les Hinton and one Jane Reed, then News International's director of corporate affairs. "They were clearly worried that party pressure would lead us to adopt positions on the broadcasting bill, and legislation if we got in, that would hit their business interests," Campbell recalls.
Later in the same paragraph, he seems to suggest that in return for Labour's quiescence on these issues, they expected full and consistent support from Murdoch's newspapers: "I emphasised that they had to understand that there would be a big price to pay in the party if we restricted and curbed the natural desires of people to do something about Murdoch, and ultimately the Sun and News of the World really went for us."
When I interviewed Campbell last year, he was at pains to deny that the Blair government had ever offered News International any kind of quid pro quo on anything. Still, I asked him about the broadcasting bill, and suggested that behind his account of meeting Hinton and Reed and that mention of "curbing" the collective Labour desire to somehow move on Murdoch, there had been a whole tangle of intrigue. He nodded. "Mmmm. Mmmm," he said. "I'd forgotten about that."
Power couple: Elisabeth Murdoch and Matthew Freud. Photograph: Richard Young/Rex Features Twelve years later, in the summer of 2008, David Cameron was transported in a private plane – laid on by Freud – to the Greek island of Santorini, from where he was ferried to Rupert Murdoch's 184ft yacht the Rosehearty, for an important meeting. The following year, the Tories began to harden a new antipathy to the BBC, floating the freezing of the licence fee and urging the corporation to do "more with less": messages that were in accord with the chippy anti-BBC lecture James Murdoch gave at that year's Edinburgh TV festival. Just over a month later came achingly predictable news: that the Sun was swinging its support behind the Conservatives, and dumping Labour.
By then, the spell cast by the Murdoch empire on politicians of all parties was endlessly reported as if it was the natural order of things. The next year, when the Sun announced its support for the Tories with the headline "Labour's lost it", even the BBC reported the switch as if it were an enshrined part of the British political process, rarely questioning why its reporters were paying so much attention to the whims of one man, or what it said about the fall of our politics that his manoeuvrings were considered so important.
Meanwhile, the so-called Chipping Norton set – the Camerons, Elisabeth Murdoch and Matthew Freud, Brooks and her husband Charlie, Steve Hilton and his wife Rachel Whetstone, Google's head of communications and public policy – was developing into a hardened clique. News International had long since seduced not just politicians, but police officers. In Sunday's deluge of news about Met commissioner Sir Paul Stephenson, one story was strangely overlooked: that according to the New York Times, his links with News International were sufficiently close for him to have "met for meals 18 times with company executives and editors". All told, British politics was blurring into a mulch largely built around policies the Murdochs could endorse, and their company was apparently so gone on its own power that some of its staff obviously thought they were way beyond the law.

The unpopular press

Which brings us to some of the most important questions of all. Even before the hacking scandal decisively broke, how does anyone suppose all of this was this playing with the public? How did ordinary voters feel, watching every broadcast outlet telling them that Murdoch had swapped from Labour to Tory, and implying that the next election was thereby all but decided, as if their own votes counted for precious little? As they heard about Blair's trip to Australia, or Murdoch and Cameron's tete-a-tete in Greece, what did they think? This is not to suggest that millions of people were anywhere near as hostile to the Murdoch empire as hard-bitten lefties, nor that the politics of his newspapers did not chime with those of millions and millions of people: but rather to point out that if politicians have long gnashed their teeth about "disconnection" and the decline of public trust, the fact that they have increasingly formed a distant, pampered elite – with the Murdochs at its centre – must surely provide some of the explanation.
Right now, as the arrests and resignations pile up, you wonder how dangerous all this is for the amazingly small collection of people who have such a colossal influence on British public life. Comparisons between the fall of News International and the crisis that beset the banks are currently 10-a-penny, but there is one point of comparison that has not yet been mentioned. Just as the entire banking system was almost brought down by the insidious contagion of bad debt, might an entire establishment be horribly damaged by its equally widespread and just as toxic links to News Corp? Each time Andy Coulson crash-lands in the headlines, David Cameron flinches. When Stephenson resigned thanks to the Met's links with the former NoW staffer Neil Wallis, he made explicit reference to Coulson, and thus defined a whole swath of the next day's headlines, as well as jangling Downing Street nerves even further. Now Assistant Commissioner John Yates has gone – and Boris Johnson remains under fire for the London mayoralty's failure to act on the seemingly unhealthy connections between Wapping and Scotland Yard.
On and on it goes. In every report that followed Brooks's resignation and arrest there were potent images of her in the company of Blair, Cameron and others. Ed Miliband may have largely kept his distance from the Murdochs, but there are plenty of senior Labour figures who have been only too happy to pay court, repeatedly. And one other thing worth knowing before the select committee hearing: according to the Independent on Sunday, its chairman, John Whittingdale, has dined with Brooks, met Elisabeth Murdoch on several occasions, and is a good enough friend of Hinton to have been invited to his wedding in 2009 (he didn't go). As you push through the establishment and encounter endless links to News Corp, you start to wonder where it will all end. Questions even started to be asked about whether the prime minister should consider his position. When Stephenson resigned, a friend texted me: "Who's next: the Queen?"
As this whole saga develops, some people's hopes are being raised into the stratosphere. Undoubtedly, it has been great to see a Labour leader so confidently end his party's demeaning relationship with Murdoch, and widen the argument into a discussion about wider irresponsibility at the top and the dangers of large concentrations of power. Yes, we now have the best hope in generations of convincing laws on media ownership. There is a good chance that if Murdoch's shadow recedes, politicians will extend the national debate into at least some of the areas that have been shut off for far too long.
But beware one thing in particular. After the fall of the banks and the scandal of MPs' expenses, the events of the last two weeks are less likely to result in a gleaming new dawn than a deepening of a deadened public scepticism about Britain's elites, and our politicians in particular. We've heard a lot about Watergate lately: it's worth bearing in mind as the full extent of the Nixon administration's transgressions became clear, the main result was not a massed drive to get politics working again, but a drastic hardening of the public cynicism that had initially taken root thanks to the Vietnam war. In 1964, three-quarters of Americans believed the government in Washington could be trusted to do the right thing; in 1974, it was just over a third. Eventually, politics was revived not thanks to the Democrats, but Ronald Reagan and the populist New Right.
In other words, you could be forgiven for looking beyond the hacking scandal and asking a sobering question: rather than marking the point at which Westminster starts to make some kind of recovery and politicians are entrusted to clean things up, might it actually push us into a deadening stand-off between most of those at the top, and a public who now simply trust no one at all?
The Sunday before last, Elisabeth Murdoch was allegedly heard claiming that her brother James and Brooks had "fucked the company". Here's my fear: that as the revelations extend into the distance, they may have done the self-same thing to our politics and public life.

• guardian.co.uk © Guardian News and Media Limited 2011

How to prepare a Public sector firm for Privatisation - the Air India story

Air India, India’s national carrier-turned-cadaver, is waiting for its last rites. When last heard of, the airline had turned in a loss of Rs 7,000 crore in 2010-11, and was investing in an oversized hat to hit the government for yet another bailout masquerading as a turnaround package.




Only, the amounts this time are too staggering for Pranab Mukherjee to agree to without a fight. According to a report in The Times of India, the airline will need equity support of Rs 43,255 crore just to stay afloat over the next 10 years. Mukherjee is hoping to raise that kind of money by selling public sector equity this year. If he agrees to bail out Air India, it’s as good as kissing goodbye to this moolah.



With liabilities of over Rs 47,000 crore, the airline is on the verge of defaulting on its loans. Mukherjee will thus have to chip in with some money willy-nilly – even if he is not asked for the full sum that SBI Caps has suggested as part of its revival plan for the airline. The newspaper says Air India will require Rs 8,372 crore this year itself – Rs 6,600 crore to pay its bills for 2011-12 and Rs 1,772 crore to keep up with loan payments.




But for all this, the airline still won’t be able to make a profit till 2017-18. Air India, it seems, has been fixed – and fixed for good – by former Civil Aviation Minister Praful Patel, who has often been accused by the unions of batting for Air India’s rivals till the ministry was prised away from his grip last January.



When Patel took over as Minister of State for Civil Aviation in 2004, the domestic carrier (then Indian Airlines) was market leader with a 42% share, but slipping. Today, it is No 5 – behind Jet, Kingfisher, IndiGo and SpiceJet – fighting extinction.



Here’s how Praful Patel did it – ruin Air India that is – and there’s nothing his successor Vayalar Ravi can do to rescue it.



First, load it with debt so high that it can never raise its head again. It is now clear the Air India’s financial problems began in 2004 when Praful Patel chaired a meeting of the board in which the airline suddenly inflated its order for new aircraft from 28 to 68 without a revenue plan or even a route-map for deploying the aircraft, says an India Today report.



An airline with revenues of Rs 7,000 crore was being asked to take on a debt of Rs 50,000 crore. Today, it’s losses themselves are Rs 7,000 crore. And the bailout it is seeking is as big as the cost of those 68 aircraft. The government might as well have gifted those birds to Air India.



Second, Patel presented a merger of Air India with Indian Airlines as the panacea for all ills. It is surprising how often ministers suggest mergers when public sector companies head for ruin. When telecom company MTNL was sliding, then Communications Minister Dayanidhi Maran was suggesting a merger with Bharat Sanchar Nigam Ltd. That didn’t happen, but both MTNL and BSNL are in the sick bay anyway. Praful Patel used the losses of Air India and Indian Airlines to push for their merger, claiming there would be cost savings from synergies. Worldwide, mergers usually destroy value. The Air India-IA merger has been the biggest man-made disaster in aviation history – thanks to their varying cultures and employee costs.



Says Gustav Baldauf, former COO of Air India who fell foul of Patel’s successor and had to quit: “The management never resolved the pending human resource (HR) issues related to the merger. I had warned the Chairman-cum-Managing Director and the Aviation Ministry of the consequences of introducing a single code without resolving issues first. But they never listened,” he told Mid-Day.


Third, Patel seemed to be batting for Air India’s rivals. He handed over lucrative routes to private players. Though Air India had no birthright to every lucrative route, Patel’s overnight manoeuvres in this regard suggested that he had a clear conflict of interest by being both Aviation Minister and board member in Air India.




A Tehelka report quotes Capt Mohan Ranganathan, an aviation expert, as saying that the airline handed over “flying rights on lucrative sectors in the Gulf to foreign airlines, including Etihad Airways, Qatar Airways, Air Asia, Singapore Airlines and several others…” One glaring instance of a sudden handover could not have come without Patel’s nod. Tehelka says that in October 2009, the airline sent “letters…to its stations in Kozhikode, Doha and Bahrain stating that it was withdrawing operations on the route” – a route in which the airline was making money hand over fist. Very soon, Jet and Etihad stepped in to fill the gaps, and so did Emirates.



Fourth, Praful Patel’s own airline preferences made it clear who he favoured. According to replies received under the Right to Information Act by one Jagjit Singh, Patel used mostly private airlines. Between June 1, 2009 and July 2, 2010, 26 of the 41 flights he took between Delhi and Mumbai were with Kingfisher. “It is intriguing that the minister who stresses the need for revival of the national carrier himself chooses to ignore it,” said Singh. And this happened just when the Finance Ministry was asking all government employees to use Air India for their official travel to help revive the carrier.




Patel’s haughty reply when asked about this preference of private airlines: “I am the Union Civil Aviation Minister and not the minister in charge for Air India. As a minister, it is not binding upon me to fly only one particular airline. I fly according to my convenience.” But when he ordered so many places for Air India, was he acting as Minister or superboss of the airline?



Fifth, Patel used his clout with Air India often for personal ends. Another RTI query showed that Patel’s kin used the Air India Managing Director’s office to regularly upgrade from economy to business class. Business class is a cost Patel’s family, which is rolling in wealth, can easily afford. So what does this say about Patel’s attitude to the airline?



But is the new Civil Aviation Minister going to reverse the rot set off by Patel?



According to a Financial Express report, the new turnaround plan does not look any more viable than the deadweight Patel cast on Air India by getting it to buy planes it could not afford. The newspaper quotes a Deloitte review of the SBI Caps revival plan which says it’s simply not viable.



Reason: Air India again wants to buy too many aircraft, just like Patel did. “Aviation consultancy Simat Helliesen & Eichner, which carried out a detailed route planning and capacity exercise, has suggested 87 narrow-body aircraft for Air India by 2015, but the carrier has proposed 143, according to Deloitte’s report dated February 11, 2011,” says the newspaper.



Deloitte’s comment: “The only justification that one can have for going in for such capacity expansion can, therefore, be the adoption of a strategy of buying market share through deploying high capacity into the market (with corresponding lower yields and consequent financial implications).”



This means Air India is planning to sink further into losses for years to come.



Over to you, Mr Ravi. Do you want to go down the same path Praful Patel pushed Air India?



The government’s best bet now is to cut its losses. Air India should be privatised or closed down.