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Saturday, 20 June 2009
Beijing, USA, Iran, Thailand, Moldova.....in perspective
By M K Bhadrakumar
China has broken silence on the developing situation in Iran. This comes against the backdrop of a discernible shift in Washington's posturing toward political developments in Iran.
The government-owned China Daily featured its main editorial comment on Thursday titled "For Peace in Iran". It comes amid reports in the Western media that the former president Akbar Hashemi Rafsanjani is rallying the Qom clergy to put pressure on the Guardians Council - and, in turn, on Supreme Leader Ali Khamenei - to annul last Friday's presidential election that gave Mahmud Ahmadinejad another four-year term.
Beijing fears a confrontation looming and counsels Obama to keep the pledge in his Cairo speech not to repeat such errors in the US's Middle East policy as the overthrow of the elected government of Mohammed Mosaddeq in Iran in 1953. Beijing also warns about letting the genie of popular unrest get out of the bottle in a highly volatile region that is waiting to explode. Tehran on Friday saw its sixth day of massive protests by supporters of Mir Hossein Mousavi, whom they say was cheated out of victory.
A parallel with Thailand
Meanwhile, China's special envoy on Middle East, Wu Sike, is setting out on an extensive fortnight-long regional tour on Saturday (which, significantly, will be rounded off with consultations in Moscow) to fathom the political temperature in capitals as varied as Cairo and Tel Aviv, Amman and Damascus, and Beirut and Ramallah.
Beijing also made a political statement when a substantive bilateral was scheduled between President Hu Jintao and Ahmadinejad on Tuesday on the sidelines of the summit meeting of the Shanghai Cooperation Organization (SCO) in Yekaterinburg, Russia.
Conceivably, Hu would have discussed the Iran situation with his Russian counterpart Dmitry Medvedev during his official visit to Moscow that followed the SCO summit. Earlier, Moscow welcomed Ahmadinejad's re-election. Both China and Russia abhor "color" revolutions, especially something as intriguing as Twitter, which Moscow came across a few months ago in Moldova and raises hackles about the US's interventionist global strategy.
China anticipated the backlash against Ahmadinejad's victory. On Monday, The Global Times newspaper quoted the former Chinese ambassador to Iran, Hua Liming, that the Iranian situation would get back to normalcy only if a negotiated agreement was reached among the "major centers of political power ... But, if not, the recent turmoil in Thailand will possibly be repeated". It is quite revealing that the veteran Chinese diplomat drew a parallel with Thailand.
However, Hua underscored that Ahmadinejad does enjoy popularity and has "lots of support in this nationalist country because he has the courage to state his own opinion and dares to carry out his policies". The consensus opinion of Chinese academic community is also that Ahmadinejad's re-election will "test" Obama.
Thus, Thursday's China Daily editorial is broadly in the nature of an appeal to the Obama administration not to spoil its new Middle East policy, which is shaping well, through impetuous actions. Significantly, the editorial upheld the authenticity of Ahmadinejad's election victory: "Win and loss are two sides of an election coin. Some candidates are less inclined to accept defeat."
The daily pointed out that a pre-election public opinion poll conducted by the Washington Post newspaper showed Ahmadinejad having a 2-1 lead over his nearest rival and some opinion polls in Iran also indicated more or less the same, whereas, actually, "he won the election on a lower margin. Thus, the opposition's allegations against Ahmadinejad come as a trifle surprising".
The editorial warns: "Attempts to push the so-called color revolution toward chaos will prove very dangerous. A destabilized Iran is in nobody's interest if we want to maintain peace and stability in the Middle East, and the world beyond." It pointedly recalled that the US's "Cold War intervention in Iran" made US-Iran relationship a troubled one, "with US presidents trying to stick their nose into Iran's internal business".
Theocracy versus republicanism
Beijing understands Iran's revolutionary politics very well. China was one of the few countries that warmly hosted Ruhollah Khomeini as president (in 1981 and 1989). In contrast, India, which professes "civilizational" ties with Iran, was much too confused about Iran's revolutionary legacy to be able to correctly estimate Khamenei's political instincts favoring republicanism. Most of the Indian elites aren't even aware that Khamenei studied as a youth in Moscow's Patrice Lumumba University.
Be that as it may, the Hu-Ahmadinejad meeting in Yekaterinburg on Tuesday once again shows Beijing has a very clear idea about the ebb and flow of Iran's politics. Hu demonstrably accorded to Ahmadinejad the full honor as Beijing's valued interlocutor.
Chinese media have closely followed the trajectory of the US reaction to the situation in Iran, especially the "Twitter revolution", which puts Beijing on guard about US intentions. Indications are that the US establishment has begun meddling in Iranian politics. Rafsanjani's camp always keeps lines open to the West. All-in-all, a degree of synchronization is visible involving the US's "Twitter revolution" route, Rafsanjani's parleys with the conservative clergy in Qom and Mousavi's uncharacteristically defiant stance.
Obama faces multiple challenges. On the one hand, as Helene Cooper of The New York Times reported on Thursday, the continuing street protests in Tehran are emboldening a corpus of (pro-Israel) conservatives in Washington to demand that Obama should take a "more visible stance in support of the protesters". But then, a regime change would inevitably delay the expected US-Iran direct engagement and upset Obama's tight calendar to ensure the negotiations gained traction by year's end, while Iran's centrifuges in its nuclear establishments keep spinning.
Also, a fragmented power structure in Tehran will prove ineffectual in helping the US stabilize Afghanistan. However, top administration officials like Vice President Joseph Biden and Secretary of State Hillary Clinton would like the US to "strike a stronger tone" on Iran's turmoil. Cooper reported they are piling pressure on Obama that he might run the risk of "coming across the wrong side of history at a potentially transformative moment in Iran".
A Thermidorian reaction
No doubt, the turmoil has an intellectual side to it. Obama being a rare politician gifted with intellectuality and a keen sense of history would know that what is at stake is a well-orchestrated attempt by the hardcore conservative clerical establishment to roll back the four-year-old painful, zig-zag process toward republicanism in Iran.
Mousavi is the affable front man for the mullahs, who fear that another four years of Ahmadinejad would hurt their vested interests. Ahmadinejad has already begun marginalizing the clergy from the sinecures of power and the honey pots of the Iranian economy, especially the oil industry.
The struggle between the worldly mullahs (in alliance with the bazaar) and the republicans is as old as the 1979 Iranian revolution, where the fedayeen of the proscribed Tudeh party (communist cadres) were the original foot soldiers of the revolution, but the clerics usurped the leadership. The highly contrived political passions let loose by the 444-day hostage crisis with the US helped the wily Shi'ite clerics to stage the Thermidorian reaction and isolate the progressive revolutionary leadership. Ironically, the US once again figures as a key protagonist in Iran's dialectics - not as a hostage, though.
Imam Khomeini was wary of the Iranian mullahs and he created the Iranian Revolutionary Guards Corps as an independent force to ensure the mullahs didn't hijack the revolution. Equally, his preference was that the government should be headed by non-clerics. In the early years of the revolution, the conspiracies hatched by the triumvirate of Beheshti-Rafsanjani-Rajai who engineered the ouster of the secularist leftist president Bani Sadr (who was Khomeini's protege), had the agenda to establish a one-party theocratic state. These are vignettes of Iran's revolutionary history that might have eluded the intellectual grasp of George W Bush, but Obama must be au fait with the deviousness of Rafsanjani's politics.
If Rafsanjani's putsch succeeds, Iran would at best bear resemblance to a decadent outpost of the "pro-West" Persian Gulf. Would a dubious regime be durable? More important, is it what Obama wishes to see as the destiny of the Iranian people? The Arab street is also watching. Iran is an exception in the Muslim world where people have been empowered. Iran's multitudes of poor, who form Ahmadinejad's support base, detest the corrupt, venal clerical establishment. They don't even hide their visceral hatred of the Rafsanjani family.
Alas, the political class in Washington is clueless about the Byzantine world of Iranian clergy. Egged on by the Israeli lobby, it is obsessed with "regime change". The temptation will be to engineer a "color revolution". But the consequence will be far worse than what obtains in Ukraine. Iran is a regional power and the debris will fall all over. The US today has neither the clout nor the stamina to stem the lava flow of a volcanic eruption triggered by a color revolution that may spill over Iran's borders.
Ambassador M K Bhadrakumar was a career diplomat in the Indian Foreign Service. His assignments included the Soviet Union, South Korea, Sri Lanka, Germany, Afghanistan, Pakistan, Uzbekistan, Kuwait and Turkey
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Friday, 19 June 2009
Boss-class hypocrisy
Managers who have long defended their huge pay have a cheek asking staff to work for nothing
- guardian.co.uk, Thursday 18 June 2009 23.00 BST
There's a cheery cliche popular with top entertainers and sports stars: "I love this job so much that I'd still do it if they didn't pay me." But people only say this if they know there's no risk of it happening. Those British employees now being asked to come in and work for nothing would never have thought to make the offer.
The novelty of the economic crisis has been a series of schemes encouraging staff to take unpaid leave, salary reduction or to work for a month without money as an alternative to being laid off. In the most high-profile example, British Airways has won substantial pay cuts from its pilots while encouraging other staff to work gratis for part of the year.
In some cases – principally, the highest-paid radio and TV presenters – the victims of thrift simply have to accept that their losses will be widely viewed as a necessary market correction. In the same way, the only rapid way for MPs to begin to restore public confidence would be to vote through a self-flagellating pay cut.
But the obvious objection to this popular gateau analogy is that the plates were not equally filled before the redistribution began. As BA staff have pointed out, a hairshirt month for the airline's senior management still leaves them with as much annual cash as the lowest names on the payroll would earn in a decade. At different ends of the corporate pyramid, there is a vivid difference between putting on hold plans for a second holiday house and being unable to pay the mortgage on your only home.
Even without the understandable fear that those who insist on keeping their contracted wad may later be punished with redundancy, there is something fundamentally queasy about presenting as equality a scheme in which the impact varies so widely.
The biggest obstacle to these pain-sharing schemes is the instinctive psychological and moral resistance that most people have to the idea of working for nothing. From Dr Johnson's frequently-quoted advice that only blockheads write for anything but money to the Roman Catholic catechism's warning that one of the highest sins of all is to "defraud labourers of their wages", respectable economies have been built on the concept of turning brain or muscle power into spending power.
One of the great shames of the past decade – most prevalent in the media sector – has been the practice of using young people on unpaid or barely-paid "work experience", sometimes extending for months or even years as tolerated slave labour in a post-union world. So we should flinch at the idea that such sneaky cheapskating may now become an accepted corporate tactic.
Inconveniently for the managers now promoting the benefits of allowing the bank account some downtime, the captains of industry are lengthily and noisily on record with the idea that there is a direct relationship between income and incentive.
For decades, these bosses have argued against higher taxation on the grounds that a reduction in take-home rewards would result in the drivers of society idling at their desks because there was no longer any point in making money. Yet now they have harnessed precisely the argument previously used against them – that work can have a larger purpose than personal gain – to propose what amounts to a recession tax on their employees. People who refused to earn less for the good of society now preach the beauty of taking a cut for the company.
At the risk of encouraging my employers and enraging my agent, I probably would be prepared, having had some very good and lucky years, to do much the same work next year for less than the fees paid this. But I would agree to this from the visceral, Dickensian fear of all employees that the workhouse looms as the alternative, and would nurse the angry suspicion that the superiors benefitting from our sacrifices were not suffering as much themselves. When the upturn comes, will they raise the payments or smirkingly continue with a cheaper workforce? (The BA pilots have at least been given shares as the price of their privation.)
Horrible as high unemployment is, an economy that suffers it is at least being honest about the gap between supply and demand and the failures of its systems. A state that reclassifes salary as charity is simply disguising its failures. Except for the super-rich who can do it as a populist gimmick, there is nothing to be said for working for nothing.
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Thursday, 18 June 2009
Iraq is handing over control of its fields to foreign companies
Iraqi Oil Minister accused of mother of all sell-outs
In less than two weeks, on 29 and 30 June, the Iraqi Oil Minister, Hussain Shahristani, will award service contracts to the world's largest oil companies to develop six of Iraq's largest oil-producing fields over 20 to 25 years.
Senior figures within the Iraqi oil industry have denounced the deal. Fayad al-Nema, the director of the South Oil Company, which comes under the Oil Ministry and produces most of Iraq's crude, said on the weekend: "The service contracts will put the Iraqi economy in chains and shackle its independence for the next 20 years. They squander Iraq's revenues." Mr Nema is reported to have since been fired because of his opposition to the contracts, which he says is shared by many other officials in Iraq's state-owned oil industry.
The government maintains that it is not compromising the ownership of Iraq's oil reserves – the third largest in the world at 115 billion barrels – on which the country is wholly dependent to fund its recovery from 30 years of war, sanctions and occupation.
But the fall in the oil price over the past year has left the government facing a financial crisis; 80 per cent of its revenues go to pay for salaries, food rations and recurrent costs. Little is left for reconstruction and the government is finding it hard to pay even for much-needed items such as an electrical plant from GE and Siemens.
The development of Iraq's oil reserves is of great importance to the world's energy supply in the 21st century. They may be even larger than Saudi Arabia's, as there was little exploration while Iraq was ruled by Saddam Hussein. International oil companies are desperate to get their foot in the door.
"Everyone wants to be in Iraq," says Ruba Husari, an expert on Iraqi oil. "Together with Iran, this is the only oil province in the world that has great potential. It is a great opportunity for oil companies because nobody knows the size of Iraq's reserves. Iraq itself needs to know what is under its soil."
But Iraqis are wary of the involvement of foreign oil companies in raising production in super giant fields like Kirkuk and Bai Hassan in the north and Rumaila, Zubair and West Qurna in the south. They suspect the 2003 US invasion was ultimately aimed at securing Western control of their oil wealth. The nationalisation of the Iraqi oil industry by Saddam Hussein in 1972 remains popular and the rebellion against the service contracts has been gathering pace all this week.
Parliament is demanding that bidding be delayed. MPs summoned Mr Shahristani, a nuclear scientist imprisoned and tortured under Saddam Hussein, to answer questions about the service contracts and the fall in Iraq's oil production and exports. Jabir Khalifa Kabir, the secretary of parliament's oil and gas committee, says the contracts will "chain the government with complex contractual terms" and will abort South Oil Company's own plans to raise production. The government says the bidding must go ahead.
The contracts are not particularly favourable to the international oil companies. They are rather the outcome of the companies' extreme eagerness to get into Iraq and the government's attempt to obtain expertise and investment without ceding control. The companies will be paid a fee linked to first restoring and then increasing oil output. They will, however, have greater control when there is a second round of bidding for oilfields which have been discovered but not yet developed. Separate again is the question of exploration for as yet undiscovered oil reserves.
Critics of the deal in parliament say that Iraq has already invested $8bn (£4.9bn) in developing its super giant fields. But Mr Shahristani needs $50bn over the next five or six years to raise current production levels from 2.5 million barrels a day of crude and knows the money and expertise can only come from outside Iraq.
The government in Baghdad may be near broke but Iraqis ask whose fault that is. The Oil Ministry, like much of the government, is dysfunctional when it comes to carrying out long-term projects. Mr Shahristani is blamed for poor management skills, though he eloquently defends himself by saying that when he took over the ministry in 2006, he had to cope with attacks by guerrillas who once were blowing up a pipeline every day.
This explains Mr Shahristani's problems in northern Iraq, where the Sunni Arab insurgency of 2003-08 was strong, but not in the far south, where the Shia community is dominant and there was no uprising.
Jabbar al-Luaibi, the former head of the South Oil Company, who battled to maintain oil production in these years, gave a devastating interview detailing the failings of the Oil Ministry to provide the most basic equipment needed to monitor the oil reservoirs.
"It's like driving your car without any indicators on the dashboard," he said, adding that if mismanagement continued in the same way as in the past "who knows, we might have to start importing crude oil".
The Iraqi government made two other mistakes for which it is now paying. It optimistically believed the price of oil would stay high at $140 a barrel. Instead of investing extra revenues by paying for outside expertise and equipment to raise production in the oilfields, it spent the money on raising the pay of government employees and increasing their number.
This increased Prime Minister Nouri al-Maliki's popularity in the provincial elections in January but left the government short of cash when oil prices collapsed. Prices have risen since then, but not nearly enough to solve the government's problems.
In June 2008 the Iraqi oil industry seemed poised to receive foreign help by signing two-year technical support contracts with oil companies. Control would have remained with Iraq. However, at the last minute, the contracts were cancelled despite being supported by Mr Shahristani and the council of ministers. The reason why this happened explains much about why the state machine is unable to carry out long-term policies. Jobs are allocated to members of political parties regardless of their experience or abilities. After 2003 the Oil Ministry had been the fief of the Fadhila, a Shia Islamic party strong in Basra, and, though it left the government, it never wholly accepted Mr Shahristani as minister.
Showing a certain cheek, Fadhila members – having sabotaged the plan to acquire foreign expertise when money was available to buy it last year – now criticise the government for being forced to accept worse terms because it cannot invest itself.
Many Iraqis will be angered to see their historic oilfields being partially run by foreign companies. But the government believes it has no choice.
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Wednesday, 17 June 2009
Charting Western Omniscience In Post-Elections Iran
By Ali Jawad
16 June, 2009
Countercurrents.org
One of the dominant themes that has consistently defined the workings of the modern world - even after the undoing of the (visible) chains of colonialism - has been the axial role of Western 'omniscience'. Through the Renaissance, the West not only attained enlightenment for itself, but rather established its firm standing as the paramount and par excellence enlightened polar in an otherwise dark and ignorant world. Indeed as a result, the relationship between the West (with all its internal heterogeneity) and a loosely defined "Other" has been one of domination and varying degrees of hegemony.
After all, acclaimed Western minds were quick to declare that history itself had grinded to a halt and arrived at its terminus with the departure of the Soviet Union from the world stage – the direct, albeit verbally tacit, premise that the destiny of humanity lay at the doorstep of the West, with the rest of the world reduced to animated spectators (at best), did not even deserve raising.
Come the Iranian elections and the unexpected landslide victory in favour of Ahmedinejad, and once again rushing to enlighten the world are the normatively 'All-Knowing' Western capitals and media pundits. Swarming the airwaves, one and all cried out 'fraud', 'stolen elections' and a 'nation's will silenced'.
Before a few words on the apparent sincere Western concern for the national will of the Iranian people, it would be instructive to expose this chronic omniscience at work in an episode in very recent history: the British sailors' crisis.
As soon as news of the capture of the British sailors reached media stations, we were barraged with informed analyses of "incontrovertible facts" that supported the British government, which then conveniently segued (as is usual) into the inherent bellicosity of Iran 'under the mullahs'. Just to convey this mindset, here's a brief taste of media headlines at the time of the incident: "UK has proof in Iran dispute", "Britain presents evidence Iranians seized sailors in Iraqi waters", "Sarkozy condemns Iran over British sailors", "Bush Administration accuses Iran of Hostage Diplomacy", "Iran advances global terrorism" et al.
After the release of the sailors, what was pitched as unquestionable 'evidence' against Iran unsurprisingly turned out to be an altogether well orchestrated series of half-truths and outright deceptions. In a report by British House of Commons Foreign Affairs Committee, it was stated (with some honesty, after dishonesty had duly had its share) that the British government was "fortunate that it was not in Iran's interests to contest the accuracy of the map".[1] Even more revealingly, the British Foreign & Commonwealth Office (FCO) stated that the government had embarked on a "world-wide diplomatic lobbying campaign" in order to further their case against Iran.[2]
It is perhaps even more instructive to place these later self-verified conclusions made by the British government against the early statements made by Iranian officials during the height of the crisis. In a live television interview made on British television Channel Four, former National Security Council chief, Dr. Ali Larijani, (correctly) evaluated the situation as follows:
"[But] you are aware of the fact that as soon as this incident happened, a harsh diplomatic atmosphere was created and indeed political tools came into being and effect. The meaning was [that] our sovereignty was violated, our territorial waters was violated and we turned to be indebted to these violations as well.
"[And] unfortunately some EU members also started taking positions […] prior to knowledge of whether they were in our territorial waters or not; apparently they were amongst the people who could see the unseen."[3]
Moving on to present, this timeless Western monopoly over, and recurring resort to, its matchless omniscience once again typifies the tone of media reporting of post-elections tensions. Writing for the New York Times, op-ed columnist Roger Cohen - after enlightening the readers on the real distribution of voters in his unquestionably infinite wisdom – relies on a deep-rooted mode of political narration. He opts to speak for the "other", albeit with a sprinkling of quotes, as if an entire nation was imbibed in his person. Indeed, seldom has presumptuous omniscience hidden its brazen trails.
"I've argued for engagement with Iran and I still believe in it, although, in the name of the millions defrauded, President Obama's outreach must now await a decent interval.
"I've also argued that, although repressive, the Islamic Republic offers significant margins of freedom by regional standards. I erred in underestimating the brutality and cynicism of a regime that understands the uses of ruthlessness."[4]
To put his words differently: 'we thought we knew it (Iran), but now we have come to know it better, and we should thus adopt an alternate course'. One can trace this overpowering mindset in centuries of Western exploitation and dominance.
It is altogether natural to see media reporting awash with an all-too-obvious 'power-knowledge' rhetoric in covering the post-elections atmosphere in the Islamic Republic. It is likewise perfectly instinctive for Western capitals to underline their erstwhile concern for the 'national will' of the Iranian people, and urge on the 'mullahs' to respect the choice of the people, as if this were an unchanging and enduring pattern of enlightened Western ideals vis-à-vis the Iranian nation.
One can bet their bottom dollar (even in such troubled times) that Western concern for the national will of the Iranian people will conveniently vaporise when the nation's demands – which enjoy a consensus amongst both pro-Ahmedinejad and pro-Mousavi camps – for their natural right to nuclear enrichment for peaceful ends are aired.
"Radical democratic populism" - to borrow from the terminology of former National Security Advisor, Zbigniew Brzezinski - is a useful tool only when a beneficiary vantage point is its corollary. The selective coverage, and hence definition, of the voice of the 'Iranian nation' best evinces this traditional attitude. At the time of writing this article, hundreds of thousands demonstrators have converged on Tehran in a show of support to President Ahmedinejad. Western media sources apparently seem to have missed the ocean of people, who are I would assume too civil to merit coverage.
The highly sensationalized and at times outright deceptive media coverage in the wake of the Iranian elections thus typifies an age-old attitude that enjoys a most distinguished and, it has to be said, hereunto untouchable rank.
Lost in between the endless supply of bold-faced lies such as repeated reports citing the house arrest of president candidate Mir-Hossein Mousavi, was the Supreme Leader's recourse to the legislative process after having received the aggrieved candidate's letter citing inconsistencies in the electoral process. Lest I spoil the frenzied party, a very democratic outcome – it should be noted – that is strikingly absent in nearby US and Western harboured vassals; including the one from which US president Obama chose to address the 'Muslim' world.
History bears testimony that in the case of Iran, Western powers have suffered from an endemic "failure to properly gauge" and acknowledge the nature of its revolution, its "very organic religious" social structures, and its political system.[5] The events over the last few days further demonstrate that little has in fact changed in spite of much touted declarations of "new beginnings".
I am reminded here of the deep eloquence in the words of that trouble-plagued, nineteenth-century essayist:
"Allow me to offer my congratulations on the truly admirable skill you have shown in keeping clear of the mark. Not to have hit once in so many trials, argues the most splendid talents for missing."
And thus should the West be congratulated.
Notes:
1. See: Foreign Policy Aspects of the Detention of Naval Personnel by the Islamic Republic of Iran, pg. 3 http://www.publications.parliament.uk/pa/
cm200607/cmselect/cmfaff/880/880.pdf
2. See: Foreign Policy Aspects of the Detention of Naval Personnel by the Islamic Republic of Iran, pg. 23 http://www.publications.parliament.uk/pa/
cm200607/cmselect/cmfaff/880/880.pdf
3. See: Channel Four Interview of Ali Larijani,
http://www.youtube.com/watch?v=qnq8nHmwsZs
4. See: Iran's Day of Anguish, The New York Times,
http://www.nytimes.com/2009/06/15
/opinion/15iht-edcohen.html?_r=1
5. See: Wishful thinking from Iran, Guardian Comment,
http://www.guardian.co.uk/commentisfree/
2009/jun/13/iranian-election
Ali Jawad is a political activist and a member of the AhlulBayt Islamic Mission (AIM); http://www.aimislam.com/ .
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Tuesday, 16 June 2009
Glaxo in generic drug alliance
Glaxo in generic drug alliance
By Gill Plimmer in LondonPublished: June 15 2009 22:05 | Last updated: June 15 2009 22:05
The move marks intensifying interest by pharmaceutical companies in expanding into generics as their medicines go off patent. With sales growth in the US and Europe flagging, drugs companies are competing to expand in emerging markets where selling large volumes at lower prices is more important.
The GSK deal, effective immediately, gives the company access to Dr Reddy's portfolio and future pipeline of more than 100 branded pharmaceuticals in areas such as cardiovascular, diabetes, oncology, gastroenterology and pain management.
Navid Malik, analyst at Matrix Corp, said the deal was likely to signal a wave of further deals. "This gives Glaxo instant gratification," he said. "It generates sales immediately and allows GSK to expand in emerging markets with a ready made mix of products."
Seven emerging nations – Brazil, Russia, India, China, Korea, Mexico and Turkey – could account for 70 per cent of pharma sales growth by 2020, according to a study by UBS. Rising incomes and ageing populations in poorer countries also mean more people are suffering from rich country diseases such as cancer.
Last month, GSK struck a similar $389m deal to acquire a 16 per cent stake in South Africa's Aspen Pharmacare.
Last week it also agreed to create a joint venture flu vaccine business in China. It will combine forces with Shenzhen Neptunus, which is quoted in Hong Kong, taking an initial 40 per cent stake for £21m ($34m) with the prospect of increasing to majority control within two years.
Pfizer, the world's largest pharmaceuticals company, has also stepped up its presence in generics, agreeing licensing deals with India's Auro-bindo and Claris Lifesciences.
The latest GSK agreement does not involve any cash payment or equity stake. Revenues will be reported by Glaxo and shared with Dr Reddy's under terms that the companies are not disclosing. In some undisclosed markets, Dr Reddy's and GSK will co-market drugs.
Abbas Hussain, president of emerging markets at GlaxoSmithKline, said: "This is another significant step forward in our strategy to grow and diversify GSK's business in emerging markets. Growth in both population and economic prosperity is leading to increased demand for branded pharmaceuticals."
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Sunday, 14 June 2009
When You Want It That Much More
All the poor Bihari kids in the Super 30 got into IIT this year. What's the secret?
DOLA MITRA
| Rigour Rules Select the Best *** A couple of years ago, there were several attempts on the life of Anand Kumar—including bombs being hurled at him on the streets of Bihar as well as an incident in which he was nearly stabbed in the chest by a masked man. These incidents, according to Anand, "were attempts by competitive commercial coaching companies, in connivance with local criminals, to finish me off". Today, he never steps out of his house without three armed bodyguards. A ferocious Labrador stands guard outside the house. And he carries a loaded and licensed pistol to bed whenever he feels threatened. "I don't want to take chances with my life. Many people depend on me and I have unfinished business to take care of." ***
He's the son of a Grade-IV government employee, who got a job during the electrification drive in their village but subsequently was laid off. Vishwaraj was sent to Patna to live with his grandparents because there was no money to educate him. Ambitious, intelligent and hardworking, he excelled in school—and then applied to the Super 30. *** This 'unfinished business', of course, is the task Anand has taken on himself—ensuring that not a single underprivileged boy or girl in Bihar (with exceptional intelligence) is deprived of an opportunity to get ahead because of their lower social and economic condition. Coming from a poor family which depended at one time on door-to-door sales of homemade 'papads' as its only source of income, Anand is aware that to be born with an extraordinary intelligence quotient alone does not guarantee success in life.He remembers all too clearly that he had to fight hard just to get to use the superior mathematical ability he realised he possessed early on in life. "The Super 30 was born with this idea in mind," explains Anand, who had started the Ramanujam School of Mathematics in the mid-90s. At that time, he worked with Patna Additional Director General of Police Abhyanand, who later started a breakaway Super 30, which is also very successful (this year 48 of the latter's 54 students made the IIT grade). However, Anand declined to comment on their parting of ways. The 'institute' itself is located on the fringes of Patna, beyond the bumpy Bihar roads, past stretches of a treeless landscape with pavement huts and congested slums. A rusty gate opens up to reveal a dusty area that looks more like a cow shed with a roof of corrugated metal sheets than like a classroom. This, as the sign over the fenced gate points out, is the Ramanujam School of Mathematics. The students, who come here to attend classes from Patna and also from faraway villages, make the journey every day by bus, on bicycles or even on foot. Those who stay in the hostels are provided free food and lodging. The rows of long, narrow wooden benches with attached desks are largely empty now. This time, early June, is the transitional period between the end of the last batch of Super 30 and the beginning of the next. But though classes have ended and the wait now is only to know which IIT they'll be placed in, several of the outgoing batch have turned up to pick up pointers from "Sir". "We want to take as much as possible from him before we leave," admits Nagendra honestly.The 18-year-old 'Super 30' boy is the son of a sweeper, and he remembers his childhood as being plagued by poverty. "There was never enough to eat for my parents, my three siblings and me. I want to rid my family first of poverty, then my state and eventually the country," he says. Nagendra had to fight great odds just to get admission in the free government school in his village. "I borrowed other people's books to study but except for a couple of times, I always came first in the class." ***
The son of a sweeper, Nagendra studied in the free government village school and was always 'first' in class. He hated the sight of seeing his father cleaning sewers and vowed he wouldn't do that. Borrowed Rs 60 to buy the Super 30 application form. *** Though the students of Super 30 put some credit for their amazing success to their "hard work", they are all in awe of the "unique teaching techniques" of "Anand Sir". Satish Kumar talks about the "interesting tales" Anand tells in class to illustrate complex mathematical and scientific theories, making them easy to grasp. "He held us spellbound with a thrilling story of a daring robbery only to demonstrate to us that differential calculus was similar to the way the detective went about gathering clues. "Super 30 students as well as teachers claim that the practice of administering sample tests every single day for one year is also a foolproof way of preparing students for the competitive exams, ensuring that they have pretty much worked with and figured out every conceivable permutation and combination. Praveen Kumar, one of the two teachers other than Anand Kumar at the school, puts things in perspective: "If you've solved every imaginable problem in the book at least once, there is nothing that's going to stop you from cracking the IIT code. Because of the sheer power of practice, the competitive questions never come as a bolt out of the blue for our students." ***
Ever since Rahul's father—who worked in a local press that shut down a decade ago—lost his job, there's been no steady income for the family. Enrolled in a free government school, Rahul had his eyes peeled for better opportunities. Then came Super 30. *** Anand himself believes it's the focus factor that is behind the success. "During this one-year period, the boys are not allowed to do anything but study, study and study. They live in the hostel with no television, no computer. No sports. No movies. Nothing." "We don't even want to," 18-year-old Rahul clarifies. "When you are trapped in a situation where you know you have the intelligence to conquer the world but you are crushed in by your circumstances, you'll do anything to break free."This is perhaps the true secret behind the success of Super 30. It's a formula that cannot be stolen or emulated. It's an overwhelming yearning, induced by circumstances, to break free—which every member of the Super 30 team comes with. The very basis of the selection is that the candidate has to be from an underprivileged background. Anand's brother Pranab Kumar conducts the verification of claims. Each year 6,000 young boys buy the application form for Rs 60 and submit it in the hope of making it to the Super 30. Candidates then take three separate admission tests to determine IQ, administered in ascending order of difficulty.Of the 500 short-listed initially, 30 eventually make it to the core group. These are the poorest with the most powerful minds. |
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Saturday, 13 June 2009
A Sociologist Critically Examines Paul Krugman's Economics
By Kim Scipes
12 June, 2009
Zmag
The Return of Depression Economics and the Crisis of 2008
By Paul Krugman (New York and London: W.W. Norton & Co., 2009)
Paul Krugman is arguably the most-read economist in the world today. A Princeton University Professor of Economics and International Affairs, a Nobel Prize laureate in Economics, and a twice-weekly New York Times columnist, his reach extends far beyond academia, into government and public discourse. He obviously has very high-level contacts in government—Ben Bernanke, the Chairman of the US Federal Reserve is a former colleague, and the person who hired Krugman from MIT. Krugman's writing is accessible—at least his public writings—and he is even witty at times. And, he is not afraid to go after the right-wingers when necessary. In short, he brings an understanding of economics to a public that is largely considered economically ignorant, and makes "the dismal science" not.
As a long-time global labor activist turned sociology professor at a regional campus of Purdue University in Indiana, I turned to Krugman's new book, along with other resources, for help in preparing for a course on "The Sociology of the Current Financial Crisis" that I am teaching this summer. What I read in Krugman's book shocked me—and in more ways than might be immediately expected. Let me give an overview of Krugman's book, and then I'll comment.
Krugman seeks to share his understanding of the current financial crisis, and he takes things up to October 2008, making this an extremely up-to-date book. (An earlier version of this book examined the 1997-98 "Asian Financial Crisis," and he now extends his analysis to see what was learned from it that is guiding the responses to the current crisis.) His methodology is to report and discuss financial crises particularly since the Great Depression of the 1930s, but even some before that, in order to help pull out commonalities and differences. Importantly, his scope is global as well: he discusses financial crises in Latin America in the 1980s, with a particular examination of Mexico and Argentina; Japan in the 1990s and on to 2003; the "Asian financial crisis" of 1997; and Argentina (again) in 2002. He examines these crises to try to learn what happened, and to see what the economic profession has learned from them.
From looking at these particular cases, he also looks at policy responses to these crises. He certainly is critical. However, he writes as a Keynesian, which obviously colors his perspective. [Quickly, Keynesians focus on creating demand to get an economy out of economic slowdowns, and take the position that macroeconomic intervention through cutting interest rates or increasing budget deficits, as needed, "could keep a free market economy more or less stable at more or less full employment" (p. 102).] Interestingly, he also writes from a particular Keynesian position, not common to all Keynesians—surprisingly, and I comment further below, he all-but-ignores the real economy of production and consumption.
Krugman points out the economics profession—of which he is a full-fledged member—has basically claimed that they know enough to prevent any future repeats of the Great Depression. Yes, there are still recessions, but the response is simple: cut interest rates to restimulate the economy and, if necessary, cut taxes and raise spending. This approach has been used in the United States in 1975, 1982, and 1991.
However, in talking about the financial crisis that began in Asia in 1997, he observes "the policies those countries followed in response were almost exactly the reverse of what the United States has done in face of a slump" (102). Many of the affected Asian countries raised their interest rates and cut their budgets drastically. How to explain that? He notes that the Asian countries' economic policies had been "largely dictated" by the US Treasury and the International Monetary Fund (103).
Here he turns to the issue of international currency speculation, arguing that the policies designed for East Asia were intended to thwart speculators—thus, he sees the crisis as a financial crisis only. Krugman points out that speculators seek situations where they can prey on weakened—or apparently weakened—currencies, benefiting from and sometimes even stimulating currency crises. Therefore, to keep the speculators at bay, the solutions proposed were designed to maintain market confidence at all costs, even though much of the problems that emerged were from the private sector and not the public sector. Hence, interest rate hikes and drastic budget cuts were proposed so as to discourage currency speculation. Obviously, this takes us into the realm of social psychology:
... because crises can be self-fulfilling, sound economic policy is not sufficient to gain market confidence—one must cater to the perceptions, the prejudices, the whims of the market. Or, rather, one must cater to what one hopes will be the perceptions of the market.
... international economic policy ended up having very little to do with economics. It became an exercise in amateur psychology, in which the IMF and the Treasury Department tried to persuade countries to do things they hoped would be perceived by the market as favorable (114).
And then, to his credit, Krugman asked if the IMF actually made things worse. He concluded it had done two things wrong—the IMF was wrong to demand fiscal austerity, and it was wrong to demand structural reform as a precondition to getting new money—and avoided one problem (demanding that these countries defend their currency values at all costs) by creating another (demanding that they raise their interest rates so as to try to persuade investors to keep their money in the country).
Nonetheless, Krugman continues onward to argue there simply were no good choices in this situation, concluding "And so it really was nobody's fault that things turned out so badly" (118); i.e., "stuff happens." I wonder if the millions of workers who lost their livelihoods, the children who were forced out of school because their families could no longer pay education expenses, and everyone else whose life was disrupted would agree with Krugman on that. (And actually, Malaysia rejected IMF prescriptions and emerged much less damaged than the countries that accepted them.)
Krugman stays on the tracks of the speculators, seeking "bad guys" cause obviously it could not be the economic system itself. He specifically focuses on George Soros and his efforts. He notes that Soros had created a financial crisis for Britain in 1990. He critiques Mahathir Mohamad, then prime minister of Malaysia, for blaming speculators and especially Soros for Malaysia's financial crisis in 1997-98. But then Krugman talks about efforts by speculators—rumored to include Soros—to create a currency crisis in Hong Kong, but were turned back only by deft action by governmental officials. Hummm ... maybe Mahathir wasn't as crazy as he first seemed....
Krugman continues this approach. He talks about Long Term Capital Management (LCTM), a hedge fund whose collapse in 1998 threatened to cause a full-scale global financial panic. And, helpfully, he explains to the reader the real idea of a hedge fund: instead of helping to make sure that market fluctuations do not affect one's wealth, as is often suggested, Krugman points out that "What hedge funds do, by contrast, is precisely to try to make the most of market fluctuations" (120).
In other words, hedge funds try to profit off of small variations in valuation between different (usually) international markets, shifting money back and forth across the globe with computer keystrokes. And because they can often operate with large amounts of money, they can make immense profits off of small changes—or they can loose immense amounts of money if they guess wrong. LCTM guessed wrong—and a global financial system calamity was barely averted.
Here, though, Krugman says something very interesting. After the New York Federal Reserve intervened to get a group of investors to buy out the management of LTCM, and surmount the crisis, Krugman points out that, "even now, Fed officials are not quite sure how they pulled this rescue off" (138).
Speaking of the Fed, he shifts to discussing Alan Greenspan's stewardship of the US Federal Reserve. Krugman is quite critical of Greenspan, and points out that on Greenspan's watch, two economic bubbles were allowed to emerge—in stocks related to the dot-com world in the late 1990s and the housing crisis of the mid-2000s—and Greenspan basically did nothing about them.
Along with the two bubbles, however, Greenspan did nothing while a "shadow banking system" emerged, which basically functioned as a banking system only without the regulation with which the established banking system had to contend (albeit with little interest to regulate by the George W. Bushies). By June 2008, the combined balance sheets of the five major investment banks reached over $4 trillion, while the total assets of the entire banking system was only $10 trillion. It was the failure of this shadow banking system that Krugman claims caused the current financial crisis, which began in the summer of 2007. He calls this "The Mother of All Currency Crises" (176):
... in the short run the world is lurching from crisis to crisis, all of them critically involving the problem of generating sufficient demand. Japan from the early 1990s onward, Mexico in 1995, Mexico, Thailand, Malaysia, Indonesia, and Korea in 1997, Argentina in 2002, and just about everyone in 2008—one country after another has experienced a recession that at least temporarily undoes years of economic progress, and finds that the conventional policy responses don't seem to have any affect (emphasis added) (184).
Krugman doesn't present any "solutions" to the crisis. All he can come up with is the need "to approach the current crisis in the spirit that we'll do whatever it takes to turn things around; if what has been done so far isn't enough, do more and do something different, until credit starts to flow and the real economy starts to recover" (188).
This shocks me. Here is one of the most highly respected and well-trained economists in the world telling us to do "whatever it takes to turn things around." I'm sorry: a high school student could give this kind of advice. You don't need a Ph.D., etc., to come up with this.
And this comes after almost 190 pages of historical examples, and clear discussions of what happened and/or should have happened. And this is the best he can come up with...?
However, in his defense, he does suggest "vigorous monetary expansion" earlier in the book to end recessions, the tool which was used to end recessions of 1981-82, 1990-91, and 2001, as he notes (68). But Krugman does not differentiate between short-term financial stimulation—such as vigorous monetary expansion—and the long-term economic stimulation provided by plentiful, well-paying jobs that provide means for people to support themselves and their families. His concern only extends to the short-term response. And this illuminates a key weakness of the Keynesian approach: as long as sufficient demand can be generated—no matter how—then apparently any recession can be overcome. Krugman doesn't have to be concerned about jobs, because his particular type of Keynesian does not require this consideration, and thus, he doesn't.
Beyond this, there are two things in the book that caused my jaw to drop, at least metaphorically. First, Krugman shows that finance officials have seen the problems we're facing in the US and the world again and again—most certainly in 1997-98 as the "Asian financial crisis" spread around the world, almost taking down Russia, Brazil and the United States—and they have no understanding of the causes of these crises and, hence, no realistic solution.
He refers to this several times throughout the book: the problem is "deleveraging," "involving plunging prices and imploding balance sheets" (135). In other words, great amounts of money are invested—by "regular" investors such as investment banks as well as speculators—in the hopes of making great profits, and when things go bad—for whatever reason—this "herd" flees like a bat out of hell, destroying economic value and leaving economic and social devastation that affects millions of people in their wake. And it's on to the next "opportunity."
Yet Krugman cannot explain why investors pulled out of Asia the way they did in 1997. He focuses on Thailand, suggesting it was because an over-supply of credit (i.e., in this case, foreign investment): "Soaring investment, together with a surge of spending by newly affluent consumers, led to a surge of imports, while the booming economy pulled up wages, making Thai exports less competitive..." (81). So, supposedly export growth slowed down, creating a huge trade deficit. And the problem was "crony capitalism."
Krugman's got a problem here. He asserts—giving no evidence for the claim—that Thai wages were being pulled up by the expanding economy. Yes, generally speaking, research has shown that workers make more money in multinational corporation's subsidiaries and/or subcontractors than they do in corporations run by Thai capitalists (i.e., "national" capital) or than they did in their former lives as peasants. However, once the jump has been made into the MNC-related factories, there is nothing to push up wages. Unlike Filipino workers in the 1980s, Thai workers never created a labor movement strong enough to force MNC-related factories to keep raising wages. And without that, and especially in the face of competition from countries like the Indonesia, Malaysia and the Philippines, it is all but certain Thai wages did not increase, and certainly nowhere near with the importance Krugman suggests.
The larger problem of Krugman's analysis here is that he leaves out the development strategy pushed by the International Monetary Fund (IMF) and the World Bank (WB): export-oriented industrialization. In other words, recognizing the low levels of consumption in these countries, along with the cheap cost of labor, the IMF/WB encouraged each of the "developing countries" in Asia to focus their economy toward providing imports for the developed countries, such as the US. And when each industrializing country in the region did this, ultimately there became an overproduction of goods, which forced prices downward, and investors were not prepared for the reduction of growth. And as overproduction forced prices down, governments devalued their currencies to try to maintain their respective economy's competitive positions. And the result was about $105 billion dollars of investment withdrawn from East Asia in little more than a year. This economic problem then shifted to Russia, to Brazil and, finally, to the US.
As I wrote in an article in Canadian Dimension in mid-1999, "It became a crisis because investors around the world were making heavy bets that the economies in East Asia would continue to expand as they had been since the mid-1980s, and they were unprepared—intellectually or emotionally—to have the Asian 'economic miracle' collapse. After all, by the mid-1990s, Asia (including Japan) had been producing one-third of the manufacturing value in the world." In short, I showed it was an economic crisis—based on overproduction—and a financial crisis rather than just a financial crisis as Krugman alleges.
Along with this, however, is something even more shocking than his not understanding the cause of the "Asian financial crisis": I don't know about Krugman's academic writings, but in this book, he shows almost zero interest in or knowledge of what he calls "the real economy" in the United States, the economy of production and consumption, and the lives of working people. His total focus on this, in any concentrated form, is on pages 179-180.
Now maybe this is not uncommon among economists, but this utterly astounds me. In this book, he gives no idea of the changes that are going on in the real economy. However the global economy is getting more and more competitive, jobs are being destroyed by businesses through technological displacement and by off-shoring of production to respond to this increased global competition; companies are restructuring; corporate bankruptcies are throwing even more and more workers on the scrap heap, etc., which, in turn, reduces these displaced workers' ability to support their families, to consume products, to live. (For details of this, see my recent "Neo-liberal Economic Policies in the United States: The Impact of Globalization on a 'Northern' Country" at http://www.zmag.org/znet/viewArticle/21584.)
And while things are getting worse in the United States, the financial crisis has already wrecked untold misery on people in the "developing countries." In a global economic system dependent on selling to the "developed countries," the economic contraction in this country is an unmitigated disaster for hundreds of millions around the world.
In short, what Krugman doesn't understand—and more importantly, what the people who share Krugman's viewpoint and the people they advise don't understand—is that there is a difference between the economic system and the well-being of working people in this country and around the globe. Not understanding that difference is the reason, I believe, that we're gotten the particular response of the Obama Administration, pushing trillions of dollars to the banks, and much, much less to support the rest of us. The refusal of the government to bail out the State of California, to give an extreme case, only illustrates this difference much more clearly.
Krugman, who so smugly dismisses alternatives to capitalism in his first chapter, spends the rest of his book giving us considerable reasons for requiring an alternative. Capitalism has caused great misery around the globe over the past several centuries, and a small number of us (relative to the world's population) have done well over the past 100 years (give or take). Now, as this financial crisis continues, the benefits are becoming even more restricted.
Not only is a better world possible, it is required.
Kim Scipes, Ph.D., is an Assistant Professor of Sociology at Purdue University North Central in Westville, IN. He has been episodically writing on changes in the global economy and how they have affected Americans over the past 25 years, and is the author of KMU: Building Genuine Trade Unionism in the Philippines, 1980-1994 (Quezon City, Metro Manila: New Day Publishers, 1996). His web site is at http://faculty.pnc.edu/kscipes, and he can be reached directly at kscipes@pnc.edu.
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