India Business

The Overweight Maharaja Needs A Diet

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At 35,000 feet on board a 747, I have an amusing choice.  For $25 I can buy a bottle of Napa Valley Cabernet from the inflight shopping catalog, or buy 10% of the airline I’m flying.

Okay not quite.  But a functional and sustainable civil aviation system is critical for any nation’s economic security, and both the United States and India have aviation industries in severe financial distress.  In the past 20 years there have been over 100 bankruptcies by US airliners, with losses of over $30 billion and recent layoffs in the tens of thousands.  India’s airliners are under a similar specter.  Air India, once regarded as one of the best airlines in the world, is continuing a 30 year run of sad decline as annual losses grow alongside management scandals and customer dissatisfaction.  Most of India’s private sector counterparts are doing no better.

Both India’s and America’s airline industries have a lot to learn from each other, mostly on what doesn’t work, but that’s a good place to begin.  One, American legacy carriers attempting to attract passengers by offering the lowest fares while monetizing dining, entertainment, baggage, and other service lines has been a failing strategy.  Airlines not marketing themselves as no frills carriers should be setting the highest industry standards for service and not resorting to penny pinching as a means of safeguarding financial health.  Two, ground time of aircraft in the U.S. and India is unacceptably prolonged and capital intensive assets must be utilized far more productively.  Three, develop financing strategies for execution of fleet renewal that allows for deferment of deliveries or leasing out of aircraft in the event of a downturn.  Many labor disputes in India and America have arisen as a result of pay cuts stemming from cash flow issues related to fleet renewal costs.  Four, developing a long-haul network and abandoning revenue diluting hubs in London, Paris, and Frankfurt, used for America-to-Asia air-traffic.

Regulatory reforms however are no less urgent.  Recognizing the importance to national security of civil aviation infrastructure, rationalizing the taxes on aviation fuel is a must, particularly for India which has some of the highest jet fuel taxes in the world.  Two, raising limits on FDI and allow foreign players to help recapitalize airlines.  Three, investment in modernizing national air traffic control systems to help lower fuel and labor costs.

Lastly, no more commissions which meet amid big fanfare but pass reports onto regulators who sit on the files.  The problems of both India’s and America’s airline industries are no big secret, and there are no shortages of talented management and turnaround plans.  Regulators ought to listen more, and explore what other nations facing similar crises have tried.  The Maharaja badly needs a diet.

India-US Relations Blog

Obama’s opposition to Outsourcing: How are Indian-Americans & U.S. businesses viewing this?

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There is a taste of threat in the air for some and may not be for the rest. President Obama’s opposition to outsourcing has raked enough controversy and a certain note of uncertainty seems to lurk about. He has voiced it time and again that his policy aimed at making the lives of middle-class Americans more secure; thereby ensuring that jobs were not sent overseas. His views have given rise to several perceptions among Indian-Americans.

First and foremost, a lot of individuals believe that due to President Obama’s opposition to outsourcing, several IT professionals lost their jobs in 2009. He had promised at almost eradicating the unemployment problem in the U.S., thereby providing a tax rebate to all those American firms who sought for labor and employment within the country. That was a time when people were grappling with the loss of jobs and the future seemed bleak and Obama felt the need to reinstate the U.S. as the financial superpower. However the intent of the government to recover $ 700 billion went kaput and now the end game with the elections draws close. The entire notion of this opposition to outsourcing appears ‘discriminatory’ to some.

However there are several others who think otherwise. Wipro has reiterated its presence in the U.S. having partnered and collaborated with other businesses. It holds a different view of the outsourcing controversy. Infosys believes in the same. Some have of course dismissed the outsourcing chaos as something that is mere ‘political rhetoric’ and political hogwash. Well, one has reasons to believe so and this is it. While the unemployment rate in the U.S. is at a high, the political leaders also need to ponder about the repercussions in terms of profit that American conglomerates would face if they had no outlet to outsourcing. It is about time for them to think and create and draft ideas that work towards the better of all.

Indian-Americans and U.S. Politics Blog

Indian-American Youth: A Present Focus on the Future

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Guest post by Ravi Jha and Kush Desai

The 21st century is so far playing out to be a rather eventful time in human history, especially in the progression of our Modern Era. While society enjoys the fruits of past generations’ labors – from the stability of the former Marshall Plan-aid receiving Europe to the entrepreneurial zeal of the baby-boomers – society is also lamenting the former pitfalls of their parents’ generations, like the baleful re-emergence of the formerly American-outfitted Taliban and the crash of a regulation-free Wall Street. But amidst terrorist attacks, Middle-Eastern conflicts, diplomatic showdowns, crippling economic meltdowns, and ‘interesting’ political candidacies, any meaningful discussion about contemporary youth appears to have been marginalized. Policy-makers are especially apathetic to Indian-American students and youngsters; after all, why worry about a demographic often epitomized as the impeccable paragon of overachieving students?

But in modern America, issues exist which will not only affect today but also continue to drag down tomorrow, the foremost among them being education, political discontentment, and social discord. Thus the writers of this blog, a college undergrad and a high school junior, hope to reinvigorate serious debate revolving on issues related to youth affairs with a particular focus in on Indian-American youngsters.

But why?

Consider South Korea. In the aftermath of the devastating Korean War, South Korea was devastated; there was no economy to speak of, and social and governmental institutions outside of an American-fitted army were non-existent. It was a Stakhanovite work ethic and an almost absurdly stressed education system that transformed the nation into the modern high-tech hub that politicians, businessmen, and economists gawk at. In essence, continual public awareness and attention to the state of Korean youth, particularly on anything concerning education, quintessentially transformed South Korea within a span of a few decades.

The quintessential importance of the youth flows out of the classroom and workplace and into political, social, and economic realms as well. Frustrated youngsters in countries like Egypt, Tunisia, Libya, and Morocco were able to induce entire national uprisings to create what we now call the Arab Spring. Household Cold War autocrats like Hosni Mubarak and Muammar Qaddafi were swept out of office, despite hiding behind violent police and military forces. The main point: while Korea’s paragon of education allowed its children to develop their nation, politically frustrated youth in the Middle East were forced to coerce their governments radically, demonstrative of the need for a politically contented youth. Public policy for social change, on the other hand, is no worse.

Public education and awareness programs that target racism at elementary schools across the United States have been omnipresent ever since the successes of the Civil Rights Movement. In this case, public attention and action over children has translated into a more socially cohesive society. Institutions like the Ku Klux Klan no longer scare African-American children to sleep; an African-American has been able to capture the support of an entire nation in a landmark presidential election. Indeed, many negative aspects of American culture and society were bettered not just by de jure legislation, but by teaching about the past in order to pass on the lessons of yesterday.

In all of these cases, renewed focuses on youth were able to transform entire societies economically, politically, and socially, positively, might we add. Indian-American youth, a demographic quickly filling the shoes of American (and global) business, government, and scientific leaders, will undoubtedly play an important role in the coming decades of global integration. What we feel, know, do not know, and face is imperative to the very future; it is time that youth affairs from education to social cohesion get a center role in the arena of public policy debate. We hope to jump-start this message of a renewed youth focus by routinely informing about and taking sides on issues and events relevant to us.

India-US Relations Blog

Bill Clinton Should Come Clean on Donors

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The relationship between the U.S. and the Sheikh states of the Gulf Cooperation Council (GCC) has been close ever since the 1960s, when Washington took over from London as the principal guarantor of the reign of these monarchs. Hence it is no surprise that the U.S. policy in the Mideast has almost invariably been a compound of two interests, which intersect more often than they compete: that of Israel and the other (those of the GCC countries). The State of Israel is core to U.S. strategic interests, and is the Knowledge Superpower of the region, accounting for more than 95% of its hi-technology creations. Were Israel to have normal relations with the Sheikh states, the latter would benefit via the infusion of technology and intellectual resources that the Jewish state would bring to the table. This columnist has never hidden his view – even while in Tehran or Damascus that the Jewish people are as an entirety the most gifted in the world. Although small in number, they have gifted the world numerous technologies and improvements that have made life longer and better for billions.

To go beyond the region to India, were the world’s most populous democracy to spend as much on Israeli agricultural technology (especially dry land farming) as it does on defense equipment; 300 million citizens of India would not need to go to bed hungry each night. However, while defense is attractive to policymakers, agriculture is not. Unhappily for the region, the U.S. has hardly used its influence to nudge the GCC towards more normal ties with Israel. Were this to happen, the benefits from the interaction would soon be so obvious that it would silence the domestic opposition to closer relations with the Jewish state. Instead of seeking to leverage upwards their own skills, the GCC states are focused on propitiating domestic constituencies that are increasingly becoming out of touch with the wishes of youth in their countries. The spread of the internet has combined with better knowledge of the English language to create in young Arabs a desire to compete in the global marketplace on equal terms, and not simply through the sale of a single – and finite – natural resource. However, the school curricula within the GCC remain archaic and unsuited to a modernized economy. Hence there is a growing disconnect between the young and those making decisions for them, a gap that is generating a sense of insecurity in ruling groups across the region.

Instead of improving the educational infrastructure, enhancing language skills, and seeking to diversify away from petro-products, the GCC states are satiating their insecurity by seeking the overthrow of those they see (often correctly) as foes of their continued power. These are the non-monarchist rulers of nearby states. Muammar Gaddafi was one ruler such, as was Saddam Hussein, while Bashar Assad is another. Two out of the three were eliminated, and the attention is now getting concentrated on removing the third.

Neither Iraq nor Syria is any safer for the GCC potentates than they were under the previous management. The processes of democracy have made Iraq the second major Shia-dominated state within the region after Iran. Theology has brought the two together, trumping geopolitical considerations, which mandate that Baghdad ought to leverage its possession of Shia holy sites to take over the international leadership of the Shias from Tehran. Instead, Baghdad has become a contented Avis, which gloried in being second-best to Hertz. Given the challenge that Shia Islam is now facing from the Sunni-controlled GCC (at least two of whose members, Saudi Arabia and Qatar, are not merely Sunni but Wahabbi), it is no surprise that Iraq has resisted the U.S. calls to team up against Iran. As has been mentioned by this analyst in other articles, the members of the NATO seem to have joined with the Wahabbi-Sunni monarchies in the Middle East to battle against the Shia. The U.S., for example, has been vocal about giving a disproportionate share in Iraq’s oil wealth to Sunni Arabs, even while being silent over the far more egregious discrimination meted out to the Shia in Saudi Arabia. Although more than 70% of Saudi oil is in the Shia belt, members of the sect gets less than 2% of the subsidies that go to Sunnis and Wahabbis.

Again, while there has been a rising drumbeat of State Department condemnation of Syria, the response to the repression of the Shia population in Bahrain has been so muted as to be effectively non-existent. As for Iran, although most of the population despises the mullahcracy, the people as a whole are being demonized as a threat to the international order.

Not only in the USINPAC blogs but in other blogs (such as Gatewayhouse.in or the-diplomat.com), this analyst has been critical of the uncritical welcome given to the so-called “Arab Spring”: from the start, forecasting early on that it would end in a “Wahabbi Winter”, which it has. Taking a leaf from the Jihadists in Kashmir, who use the argot of human values and universal right to camouflage their actual intent to set up a Talibanized system of governance, the Wahabbi elements who were assisted by the NATO to overthrow Muammar Gaddafi have now come into the open, imposing their own version of Sharia Law and killing, torturing, and detaining their theological, social and other foes, all this to near-complete silence from Western media or chancelleries. The Libyan example ought to have served as a wake-up call to the U.S., warning policymakers in Washington away from helping the GCC Sheikhs to fulfill their personal goal of removing regional rivals from office and life. Instead, the State Department headed by Hillary Clinton has joined with the rulers of Qatar and Saudi Arabia in calling for the head of Bashar Assad. Muammar Gaddafi, who had surrendered his WMD and his intelligence secrets to the U.S. and to European countries, ought not to have been subjected to the military assault that took place for more than six months, before he was killed like a rodent near a drain. Such an ending suited the interests of the GCC rulers, but not at all NATO, which has today shown to the world that the surrender of WMD is no guarantee for safety. It is a small wonder that Syria, Iran, and North Korea are very unlikely to go the Gaddafi way. And in Egypt, after more than three decades upholding U.S. and Israeli security interests, Hosni Mubarak was abandoned to a Wahabbi mob that hates him for precisely this reason. If the military is now seeking to prosecute American citizens, it is because they know that doing by so is a surefire way of getting the appreciation of the Wahabbis, no matter how sweetly the latter croon to the U.S. and EU policymakers and journalists. Had Mubarak been given the sanctuary that Yemen’s former president has got for the moment, it would have been proof that NATO stands besides its friends rather than feeds them to the wolves once their use gets over.

Although this may not be welcome news to the lynch mob now gathering force inside the State Department, Bashar Assad is far more preferable than the motley crew of Wahabbists that are being backed with weapons and cash by the Sheikhs. The Wahabbi fanatics will cheerfully accept assistance from any quarter. However, once they succeed in ensconcing themselves, they will resist pressure the way the Taliban did after then U.S. Assistant Secretary of State Robin Raphel and then Unocal consultant Zalmay Khalilzad helped it to power during the 1990s.
Today, the warlords roaming across Libya are obedient to no one barring themselves. The GCC Sheikhs have created a monster that will soon turn on them, the way the Taliban did on the U.S. after it came to office in 1996. Adopting a policy towards the region identical to the (flawed and self-defeating) wish list of the GCC sheikhs is a prescription for disaster. And this is where Bill Clinton comes in. The buzz amongst Wahabbis in Qatar, Saudi Arabia, and Kuwait is that they have made munificent donations to the foundations and programs headed or mentored by the former U.S. President, and that it is this money that is proving to be decisive in shaping U.S. policy towards the region, and making it travel in lockstep with the GCC monarchs. Certainly such a smear must be untrue. To prove that it is so, Bill Clinton needs to make transparent the funds and other moneys that his foundations and other institutions have got from sources in the Mideast, whether directly or through fronts based in other countries. Those who claim that the U.S. policy can be purchased, the way they can in some other parts of the world, need to be shown up as being purveyors of falsehood. Come clean, President Clinton. The world knows that Hillary and you are a team. Help her by showing that the charge that you are excessively reliant on funds from Kuwait, Saudi Arabia, and Qatar are wrong.

India-US Relations Blog

U.S.-Iran Imbroglio: India’s Neutral Stance

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India’s stance seems to be that of being sandwiched between a rock and a hard place. While ASSOCHAM (Associated Chambers of Commerce and Industry) states that Iran continues to be a vital business ally as India’s demand for commercial energy including hydrocarbon is increasing. Further the Iran-India trade is expected to hit $30 billion by 2015. Tracing the events heating up over the last couple of months: Iran, Israel, and the U.S., India’s diplomatic position seems be precarious like that of a cat treading on a hot tin roof. Previously, India’s decision to go ahead and continue importing oil from Iran caused a whir in Washington. Nicholas Burns – former Under Secretary of State for Political Affairs wrote in ‘The Diplomat’ stating, “This is bitterly disappointing news for those of us who have championed a close relationship with India. And, it represents a real setback in the attempt by the last three American Presidents to establish a close and strategic partnership with successive Indian governments.” He added, “The Indian government’s ill-advised statement last week that it will continue to purchase oil from Iran is a major setback for the U.S. attempt to isolate the Iranian government over the nuclear issue.” He spoke about India’s reliance on Iran for 12% of the oil imports.

India could be viewed as being on its way to alienation and quagmire with this latest decision with Iran; it’s literally being coerced into choosing between Iran and the U.S. Its diplomatic stance on the current scenario seems to be confusing to most minds. Iran seems recalcitrant and resilient about its intent to go nuclear and the world vehemently feels otherwise. Keeping in mind, what India shares with the U.S. at this juncture, a ‘strategic’ partnership, India cannot let go off its dependence on the import while the U.S. has been anti-Iran due to its theocratic administration.

India’s diplomacy has always been on the mild and sensitized diplomatic route based on progress and peace. It is worth noting that despite its ties with Israel on tourism, agriculture, and technology, it has still been vocal about the Palestinian cause and need for sovereignty. After the thawing of the Cold War phase, India diplomatic relations with the U.S. turned towards progress and headed to the 123 Agreement signing of the US-India civil nuclear cooperation deal in 2005. As a result, India progresses as a paradigm nation of non-ritzy diplomacy keeping its focus on maintaining a common ground for one and all.