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22 May 2013 | Vol. 4, № 17.
From the Editor’s Desk
Dear FDI supporters, Welcome to the Strategic Weekly
Analysis. This week’s issue starts with
coverage of the Second Asia-Pacific Water
Summit in Thailand, and the Thai
government’s unveiling of its new multi-
million dollar water management project.
Next, we examine how new Pakistani
President Nawaz Sharif will address issues
such as US drone strikes and negotiation
in Afghanistan in light of increasing
domestic pressure.
We then move to China where the first
Chinese “Blue Book” on the state of India
has expressed concern over a government
in crisis.
With the Iranian Presidential Elections
approaching on 14 June, we analyse the
interdynamics of the dominant players:
Khamenei, Ahmadinejad, Velayati,
Mashaei and Rafsanjani.
In the subcontinent, we investigate
whether India’s new Mig-29K has the
potential to become another difficult
security development in Sino-Indian
relations; and the implications of the
defeat of India’s main opposition party in
the recent Karnataka elections.
In Africa, we examine the impact of the
recent removal of fuel and food subsidies
in Zambia on the mining and resources
sector, and its obligation to appease
increased social expectations.
Finally, I analyse the consequences of the
Chinese Premier’s recent visit to India,
and whether it is, as many suspect, a case
of all courses normal, or whether we can
expect to see a shift of attitude in
relations between the two countries.
I trust that you will enjoy this edition of
the Strategic Weekly Analysis.
Major General John Hartley AO (Retd) Institute Director and CEO Future Directions International
*****
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Page 2 of 15
Second Asia-Pacific Water Summit Overshadowed by
Mega-Project Controversy
Concerns about the multi-billion dollar water management project initiated by the Thai
Government hung over the Second Asia-Pacific Water Summit recently held in Chiang Mai.
Background
The Second Asia-Pacific Water Summit, which opened early last week, was titled, “Water
Security and Water-related Disaster Challenges: Leadership and Commitment”. It has been
overshadowed, however, by ongoing speculation about, and opposition to, the
Government’s commitment to a multi-million dollar water management project designed for
flood-mitigation and water infrastructure development.
Comment
The Thai Government has used the Water Summit as an opportunity to showcase the four
contenders bidding to participate in the country’s 350 billion baht water, flood management
and infrastructure megaprojects. With the government planning to announce the winning
bid on 4 June, those opposed to the project have called for a review of the scheme and a re-
evaluation of specific infrastructure development.
While the Summit’s key themes focused on leadership and commitment, Thailand’s
Democratic Party has supported calls from civil society and environment groups for a review
of the megaprojects. This follows the National Anti-Corruption Commission’s (NACC)
identification of several irregularities in some of the nine projects. Doubts have also been
raised about the cost of the scheme and the small number of contractors bidding for
projects. The four contenders for the nine projects are Korea Water Resources Cooperation,
ITD-Power China Joint Venture, Summit SIT and Loxley.
The lack of discussion with civil society and environment groups, as well as claims that
feasibility studies for the projects have been omitted, has led to concerns surrounding the
leadership shown by Thailand’s Water and Flood Management Commission (WFMC).
Ongoing bidding for the projects despite the omission of many legal requirements and
reports of corruption and power plays within the WFMC, continue to drive public
condemnation. The Thai Government seeks regional leadership in flood management and
water security; the current measures in developing the WFMC’s megaprojects suggest an
aspiration to do so as quickly as possible, with little regard for project protocol or legal
requirements.
Guided by the principle that the cost of recovery from natural disasters is far greater than
the cost of building mitigating infrastructure, the scheme is designed to cover 70 per cent of
the area affected by Thailand’s 2011 floods, which reportedly cost US$45 million in
damages. As well as a forum to unveil the proposed designs for the WFMC’s megaprojects,
the Thai Government, according to Technical Advisor of the panel Apichart Anukularmphai,
is using the Summit to propose the creation of a US$10 million fund to facilitate research on
water-resource management in the region. Thailand is endeavouring to become a regional
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centre for information sharing and collaborative water solutions; however, it remains to be
seen how this aspiration will be affected by the lack of inclusion of civil society and
corruption allegations circling the government initiated mega-projects.
Sinéad Lehane Research Analyst Global Food and Water Security Research Programme
*****
Sharif’s Win May Bring Better Pakistan-US Relations
Nawaz Sharif’s landslide victory in Pakistan’s general elections may bring better Pakistan-
US relations, but how he tackles issues such as US drone strikes and the negotiation
process in Afghanistan, remains to be seen.
Background
Pakistan has achieved its first ever democratic transition, with Nawaz Sharif claiming victory
in the general elections held on 11 May 2013. Sharif will be hoping it is third time lucky, after
his two previous efforts as Prime Minister were cut short by a constitutional crisis and a
coup d’état by the military. The popular politician will have little time to celebrate, however,
as the country faces mounting domestic challenges. But further afield, commentators are
hopeful that Sharif’s win will bring change to Pakistan’s foreign policy, especially its fraught
relationship with the United States.
Comment
Sharif’s triumph in the recent elections, which saw a 60 per cent turnout despite widespread
violence inflicted by the Pakistani Taliban, has renewed hopes that Islamabad may alter its
foreign policy. In particular, analysts are hopeful that Pakistan-US relations may finally
improve after ties hit a nadir in 2011, following the operation that killed Osama bin Laden.
Pakistani cooperation is critical to any settlement in Afghanistan and the US is heavily reliant
on its ports and transport links for a smooth withdrawal in 2014.
Following his impressive victory, Sharif, who heads the Pakistan Muslim League-N, vowed to
pursue better relations with the US. In an interview with the Wall Street Journal he said, ‘I’d
like to take this relationship further. We need to strengthen the relationship’. Sharif pointed
out that Pakistan’s relationship with the US was quite good while he was in power, before a
military coup, by led by Pervez Musharraf, ousted him in 1999. Washington enjoyed a
rapport with Musharraf but the relationship soon soured when it became clear that
Pakistan’s powerful military was “double dealing” by supporting the Taliban in secret.
The 63 year old Sharif got on well with the US administration and reportedly enjoys close
ties with John Kerry, the new Secretary of State. Kerry is himself well-known in Pakistan; he
is viewed by many as a sympathetic attaché and has vowed to continue the billions of dollars
http://www.futuredirections.org.au/publications/indian-ocean/29-indian-ocean-swa/1038-pakistan-s-new-government-a-harbinger-of-hope.html
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in aid currently going to Pakistan. But better Pakistan-US relations are no certainty and a
number of important question remain.
The first, and most pressing question, is what Sharif plans to do about the US drone
campaign. The air strikes, launched by CIA drones targeting extremists on the Pakistan-
Afghan border, are deeply unpopular among Pakistanis; anti-American sentiment remains
high despite a drop in drone attacks recently. Sharif himself has declared that the strikes are
‘challenging our sovereignty’ and he vowed to end them once in power. But he stopped
short of promising to shoot down the drones as Imran Khan did. ‘Why shoot them down,
when the drone flights can be stopped by other means?’ Sharif said on the eve of the polls,
signalling a desire to end the drone campaign via negotiations rather than force.
But this will be easier said than done. Pakistan officials often publicly condemn the strikes,
to garner popular support, while tacitly supporting them. Moreover, as the US begins to
withdraw the bulk of its troops from Afghanistan, decreasing its military footprint, its
strategic dependence on drone strikes is likely to increase. With Pakistan proving unwilling,
or unable, to go after such targets, the US is unlikely to stop its campaign altogether. Should
Sharif force the issue, possibly by threatening to cut off vital supply routes in 2014,
Washington may cut aid to Pakistan, as it has done before, and relations may deteriorate.
For all his cosy links with Kerry, Sharif faces the same unenviable dilemma as his predecessor
Zardari.
Second, it remains to be seen what role Pakistan will play in ending the conflict in
Afghanistan. Sharif has promised to facilitate the US withdrawal in 2014, which includes
shipping vast amounts of military equipment through the port city of Karachi. But beyond
this, Islamabad has often played an obstructionist role, angering US officials. Pakistan’s army
frequently meddles in the negotiation process, in the hope of securing a pro-Pakistan
government in Kabul, which would limit India’s sphere of influence.
But analysts are hopeful that Sharif may bring much-needed change. Unlike Zardari, who
was trusted by neither the Pakistan army nor the Taliban, Sharif has the potential to become
a mediator in peace talks. He is respected by the Taliban and also by Pakistan’s military,
despite the coup that ousted him in 1999, and has recently said that Pakistan should no
longer meddle in the affairs of its smaller neighbour. Furthermore, Sharif has indicated that
he wants better relations with India, a long-term ally of Afghanistan, which would improve
the situation on the ground, especially when foreign forces leave in 2014.
Though domestic issues will head Sharif’s political agenda for now, how he eventually
tackles these two questions will largely determine the future of Pakistan-US relations.
Observers in Pakistan and the US will be hoping Sharif’s victory marks a much-needed
turning point.
Andrew Manners Research Analyst Indian Ocean Research Programme amanners@futuredirections.org.au
http://www.futuredirections.org.au/publications/indian-ocean/29-indian-ocean-swa/969-taliban-office-established-in-qatar-as-negotiations-inch-forward.htmlhttp://www.futuredirections.org.au/publications/indian-ocean/29-indian-ocean-swa/969-taliban-office-established-in-qatar-as-negotiations-inch-forward.htmlmailto:amanners@futuredirections.org.au
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*****
Chinese “Blue Book” Optimistic On Indian Future
The first Chinese “blue book” on the state of India has expressed concern over a
government in ‘serious crisis’, but also believes India will emerge stronger after conquering
its current obstacles.
Background
Chinese think tanks release “blue books” every year on numerous issues; the books have
tacit backing by the Chinese government, even if they do not fully represent its views. The
“blue book” on India runs to over 300 pages and was compiled by Yunnan University, which
hosts one of China’s biggest South Asia programmes.
Comment
According to a brief summary of the report, posted on the website of the Social Sciences
Academic Press of China, it argues ‘that since the implementation of a comprehensive
economic reform in 1991, India's economic development has made remarkable
achievements’.1 It points
to substantial economic
growth, which shows the
‘comprehensive
economic strength’
behind India’s ‘incredible’
rise. It also argues that
‘contradictions under the
high-growth aura are
covered up’, citing issues
such as ‘poverty, uneven
development, irrational
industrial structure, the
fiscal deficit (which
remains high) and many
other problems’. It
estimates that by 2030, the Indian population will exceed that of China and forecasts that
India isfacing serious developmental challenges. Despite this, it concludes that ‘many
difficulties can make a country prosperous.’
The report asserts that Indian foreign policy has focused on improving relations in South
Asia. This involves pushing for peace with Pakistan and developing strategic relations with
Afghanistan, Bangladesh, Sri Lanka and Nepal; all countries with which China has deepened
1 Lyu, Z., ‘Annual Report on India’s National Conditions (2011-2012)’, Social Sciences Academic Press:
Beijing, 2012.
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Page 6 of 15
its economic and political ties in recent times. It also views the US “pivot” to Asia and its
strengthening of regional alliances, as influencing an acceleration in India’s “Look East”
policy, which has meant warming defence cooperation between India and the US, Japan,
Vietnam and Australia. This is viewed by many Chinese analysts as a nascent strategy to
contain Chinese power, but the report stops short of suggesting that India will become part
of a US-led front against China. The report has been carefully crafted to avoid expressing
displeasure over border issues, such as Arunachal Pradesh, and the presence of the Dalai
Lama in India, achieving this by avoiding detailed analysis of these problems.
Rising Indian military strength is also discussed and this is perceived as being partially
directed at China. The report argues that India’s defence policy has shifted from a singular
focus on Pakistan, to a dual focus on both Pakistan and China, which includes the possibility
of a limited two-front war. It notes that India has expanded both the military forces on its
border with China and its naval power towards the East. The prime causes of concern result
from large increases in the numbers of Indian troops at the borders with new weapons and
equipment, as well as India’s expanding blue water navy. It highlights the Indian Navy’s
Eastern Naval Command and its bases in the Andaman and Nicobar Islands, as examples of
India’s eastern maritime focus. Despite this readjustment, the report argues that India
continues to view Pakistan as the ‘real threat’. More generally, it notes that India’s economic
growth has funded an increased defence budget, which has allowed it to become the
greatest importer of international arms, according to current SIPRI data.
Concerning India’s internal issues, the report argues that New Delhi is currently facing its
worst governmental crisis, despite ‘remarkable achievements’ since the 1991 reforms. This is
due to internal issues, such as the Naxalite-Maoist insurgency and frequent corruption
scandals. It discusses the state of the Bharatiya Janata Party and other political parties in
India, as well as the widespread discontent and agitations against its government. It notes
that the congress-led United Progressive Alliance is facing its most serious crisis since taking
power in 2009, as divisions within the UPA and public anger at the economic situation have
damaged Prime Minister Manmohan Singh’s government, according to a parliamentary
standing committee on finance. State-owned banks are writing off these bad debts, some of
which are alleged to have been granted under political and corporate influence, while
actions initiated by the finance ministry have failed to arrest the trend. Such corruption
scandals are particularly corrosive on public trust and are highlighted as a significant
problem by the Chinese report.
Despite the problems and concerns listed above, China is optimistic about India’s progress.
The official Chinese view appears to be one that values a peaceful, ‘anti-hysterical’ attitude
towards India’s rise. In turn, this bodes well for an increasingly fruitful bilateral relationship.
Daniel Barnes Research Assistant Indian Ocean Research Programme
*****
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Page 7 of 15
Iran’s New Election Faced with Old Problems
The decision by the Supreme Guardian Council to bar Rahim Mashaei and Hashemi
Rafsanjani from standing in the upcoming 14 June elections is likely to engender public
dissatisgfaction and boost the Green Movement. How this will impact on Saeed Jalili’s
campaign against Supreme Leader Khamenei’s close advisor Ali Akbar Velayati remains to
be seen.
Background
On 21 May, the 686 Iranian presidential nominations have been cut down to just eight
approved candidates. As a shock to many analysts, Mashaei and Rafsanjani have been
dismissed by the Supreme Guardian Council. The two have made many powerful enemies
due to their policies and allegiances, meaning that current Secretary of the Supreme
National Security Council, Saeed Jalili, is likely to become the next Iranian president.
Comment
Despite Mashaei and Rafsanjani being quite opposed to Khamenei, it has come as quite a
surprise that they did not survive the vetting process. Despite being an opaque system, the
Iranian clerical regime relies
to a great extent on the
perception of being
transparent and legitimate.
The elimination of these two
major figures before the
election is likely to legitimise
the complaints of the Iranian
Green Movement.
Khamenei therefore needs to
balance two competing
needs. The first is to ensure
that his man, who in this case
is expected to be Jalili, will become the next Iranian president. The second is to ensure that a
repeat of the 2009 election in which there were large-scale protests and violence does not
reoccur. The latter will be achieved politically through controlling the debate, which includes
internet and newspaper censorship, and militarily through the coercive efforts of the Iranian
Revolutionary Guard Corps, the protectors of the Islamic Revolution.
Senior Commander of the IRGC, Colonel Rasool Sanaeirad issued a statement on 19 May,
warning his forces to be on high alert, stating that a ‘possible riot in Tehran could spread.’2
His statement and the heightened internet censorship are likely to have a significant effect
on the Green Movement by restricting its ability to communicate and organise protests and
then to crush any that do sprout.
2 Karimi, N., (2013), ‘Iran’s Guard Warns Against post-Election Turmoil’, Associated Press.
.
http://news.yahoo.com/irans-guard-warns-against-post-election-turmoil-082436418.html
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Dr Jalili is a clear choice as a successor to Ahmadinejad. Beyond his relationship with
Khamenei, Jalili has been in several foreign policy positions in recent years and has been the
face of Iran’s nuclear programme since 2007. During this position, he has been effective at
bridging the divide between the United States, Western powers and Iran in achieving several
rounds of talks this year, despite the very limited progress made at them. His position could
be useful to Khamenei, who has been under increasing public pressure due to the wide-
spread effects of Western sanctions, which have increased the cost of many daily goods and
medicines.
The other contender for the presidential position is Ali Akbar Velayati. The former Minister
of Foreign Affairs, Velayati has stayed close to the clerical regime since the 1979 Revolution.
Additionally, he has been Khamenei’s top international affairs advisor, giving him a high
degree of legitimacy as a potential future Iranian president. Velayati has been out of the
limelight for several years, however, and as a result, has significantly less public appeal than
Jalili.
The Supreme Guardian Council’s decision to bar Mashaei and Rafsanjani is likely to cause
public consternation. Rafsanjani, in particular, has considerable public support and barring
him at this early stage of the presidential campaign is likely to damage the perceived
legitimacy that Khamenei values.
Khamenei’s gamble rests on the fact that neither Ahmadinejad through Mashaei, nor
Rafsanjani, will rock the boat during the campaign and endanger the regime. It will be
interesting to watch how these two factions compete against regime-backed Jalili, and how
outside factions will have a role in the elections.
Gustavo Mendiolaza Research Analyst Indian Ocean Research Programme gmendiolaza@futuredirections.org.au
*****
No Homes for India’s New Mig-29Ks
India’s latest acquisition, the advanced aircraft carrier-capable Mig-29K, could be another
difficult security development in Sino-Indian relations. With the supplier Russia in the
middle, it remains to be seen how Beijing will respond to this potential threat.
Background
The Indian Naval Air Arm has this month received 16 carrier version Mig-29Ks and their first
Long Range Maritime Reconnaissance & Anti-Submarine Warfare (LRMRASW) Boeing P-8I
Poseidon. These purchases come at a time when India has been waiting for the refitted
Russian aircraft carrier INS Vikramaditya. Additionally, India’s recent acquisitions have also
coincided with China’s purchases of high-end Russian aircraft, finally concluding a deal on
the Su-35 to end nearly a decade of talks.
mailto:gmendiolaza@futuredirections.org.au
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Page 9 of 15
Comment
The India, the Mig-29K is an important form of power projection, when coupled with a
competent naval strike force. It would have a considerable deterrent effect on its regional
rivals and, to a certain extent, be an imposition upon China. The Mig-29K comes as part of
the US$2.3 billion Gorshkov deal that includes the refit of the INS Vikramaditya, six Karmov-
31 naval helicopters, 45 Mig-29Ks and extensive pilot training.
The deal is expected to be part of an emerging Indian naval strategy. India plans to be able
to project two carrier groups simultaneously, with another carrier in reserve; a similar
concept to British and French strategic naval doctrine. The 44,570 tonne carrier being
bought from Russia will complement two indigenous designs expected to be commissioned
by 2018 and 2025, with displacements of 40,000 tonnes and 65,000 tonnes respectively.
India’s Naval Air Arm received its first LRMRASW P-8I from the United States this month. The
P-8I will complement India’s naval strategy by being able conduct surveillance, anti-
submarine and electronic
intelligence operations. Its
operational range of
2,200km can be extended
through midair refuelling,
utilising the Ilyushin II-78
aerial tanker, giving India’s
naval air arm both
defensive and offensive
capabilities. India is
expected to receive seven
more P-8Is.
The publicity India has
gathered about its aerospace acquisitions has come at a convenient time, with China
recently announcing that it has made a deal to purchase the Su-35 from Russia. Talks about
this purchase have been in progress since the 1990’s, to little avail until recently, mainly
based on Russian worries about technology theft. This has occurred with various other
aircraft that Russia has exported to China, including the Su-27 and Su-33, which China copied
into the J-11 and J-15 respectively. The Su-35 is powered by a Saturn-117S engine, which is
suspected to be a decisive reason behind Beijing’s desire for the aircraft. The engine in
question is highly sophisticated and, given China’s nascent indigenous military technology
industry, critical to a future Chinese fifth-generation fighter.
China’s acquisition of the Su-35 and India’s growing power projection capabilities, present
confronting realities. In April this year, India withdrew from trilateral naval exercises with
the US and Japan off Guam, in response to concerns of how its involvement may be
perceived by Beijing. New Delhi’s reluctance to participate echoes that of Australia during
the Rudd era, when the Australian government withdrew from the Quadrilateral Security
Dialogue, signalling closer relations with China and fear of a provocation. India will still hold
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Page 10 of 15
naval exercises with the US this year in the regular Malabar exercises, but these are
expected to be a “bare bones” arrangement held in the Arabian Sea.
It is apparent that New Delhi is concerned about how its purchases may be perceived in
Beijing. Consequently, India’s naval air capability expansion is likely to raise eyebrows due to
the offensive nature of those capabilities.3 New Delhi’s overarching concern about China’s
military activities may be seen to be a key driver behind its acquisitions, with air and naval
capabilities taking priority for their ability to project power. Though India may acquire the
Mig-29K, it has little practicality until the Vikramaditya has been delivered by Russia and
integrated into the Indian Navy. This is expected at the end of 2013. This process will take
time and, until then, India’s block of Mig-29Ks will have to wait on a mock-up of a flight deck
in Goa.
Gustavo Mendiolaza Research Analyst Indian Ocean Research Programme gmendiolaza@futuredirections.org.au
*****
India: Karnataka Elections Reflect Federal Challenges for Modi
The defeat of India’s main opposition party in the southern state of Karnataka is a
rejection not only of the party’s poor governance record, but of the nationalistic Hindu
ideology that some members adopt. One such member is a potential candidate for Prime
Minister.
Background
India’s main federal opposition party, the Bharatiya Janata Party (BJP), has been voted out of
power in the southern state of Karnataka. The loss of Karnataka is a substantial setback for
the BJP, whose support base is generally found in the north of the country. Gujarat Chief
Minister, Narendra Modi, a likely BJP candidate for Prime Minister in the 2014 federal
elections, campaigned on behalf of the party in Karnataka.
Comment
The BJP came to power in Karnataka in 2008, with over 40 per cent of the vote. This month,
a strong swing against the party meant they received only 21 per cent of the vote – and are
now only the third largest party in the state. Corruption and poor governance have been
widely recognised as a key cause of the poor showing. The BJP has also been accused of
turning Karnataka into a Hindutva laboratory, referring to the nationalistic Hindu ideology.
Hindutva is not the ideology of the BJP, but is endorsed by some members.
3 Kainikara, S., (2012), Essays on Air Power, Air Power Development Centre: Canberra, pp. 33-6.
mailto:gmendiolaza@futuredirections.org.au
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Page 11 of 15
Gujarat’s popular Narendra Modi is a proponent of Hindutva. He was brought into Karnataka
to campaign on behalf of the ruling BJP party, based on his success in presiding over the
rapid development of Gujarat. Modi was elected for a third term last year, after making his
state a major investment destination and advancing industrialisation and power distribution,
while also controlling pollution. While the BJP has not yet named its preferred candidate for
Prime Minister ahead of next year’s federal election, Modi is a front-runner for the job. The
loss in Karnataka is a blow to the BJP, and particularly to Modi. In Gujarat, the opposition
party, the Indian National Congress, has pointed out that wherever Modi campaigned in
Karnataka, the BJP lost seats.
One conclusion is that these circumstances highlight the fact that while Modi is popular in
Gujarat, he remains a divisive figure elsewhere.
Another conclusion is that the Hindutva policies, which have been popular in Gujarat, are
viewed with scepticism elsewhere in India. In Gujarat, Modi has combined this ideology with
high rates of economic growth, averaging greater than 10 per cent each year over eight
years. Growth rates have been comparable in other states of a similar size, however. The
Hindutva ideology has certainly not been popular in Karnataka, which is known for its
secularism. The state already boasted strong economic growth before the BJP was elected.
A number of incidents, involving violent right-wing Hindu gangs, have occurred in Karnataka
and have raised concerns about the Hindutva ideology. On one occasion, such a group
brought a girl to the local police station – accused of befriending a Muslim boy. Police
warned her and her father about her behaviour. She committed suicide the following
morning. Other incidents of violence against Muslims have been reported. On another
occasion, following attacks on churches, false charges were filed against Christians, accusing
them of coerced conversions. The BJP has been accused of implicitly supporting and
protecting Hindutva gangs.
Modi has himself been criticised over the 2002 anti-Muslim violence in Gujarat, which
resulted in the death of over 800 Muslims and 100 Hindus. His administration stands
accused of, at best, failing to stop the violence, or, at worst, actively encouraging it.
It is likely that several factors were behind the BJP’s loss in Karnataka. The vast majority of
voters have turned against the party they elected in 2008. This includes Muslims, Christians,
and Hindus. There is no doubt that corruption, poor governance, instability within the
government – and Hindutva ideology have all contributed towards the result. The rejection
of Hindutva is notable, while Modi has found support in Gujarat, where the Hindutva
ideology has been combined with economic growth, outside of the state there is much
scepticism. This will be a factor on the minds of BJP leaders as they choose their Prime
Ministerial candidate.
James Davies Research Assistant Indian Ocean Research Programme
*****
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Page 12 of 15
The Removal of Fuel and Food Subsidies: What It Means For
Resource Companies
Zambia’s decision to remove fuel and maize subsidies could put added pressure on the
mining sector to appease social expectations.
Background
Zambia’s president, Michael Sata, has removed subsidies on maize meal and fuel, a decision
which has angered civil society, particularly the young. Protests have since been held and,
although these have not turned violent, they signal a growing social discontent in the
country. On 16 May, a group of civil society organisations gave the government seven days
to reverse their decision to remove subsidies, threatening to stage mass protests if the
demand is not met. As the government is unlikely to back down from their decision, large
protests should be anticipated, beginning on 23 May, particularly in Lusaka. Although the
protests may not have a direct impact on the mining industry, it is important to note that the
removal of these subsidies, combined with civil society’s growing dissatisfaction, could
arguably place added pressure on the mining sector to increase wages and create more
employment opportunities.
Comment
The rising level of social discontent is a concern in Zambia, which is considered to be a
relatively stable country that witnesses only sporadic incidents of social unrest. There is,
however, a rising youth population and unemployment, particularly amongst this group,
remains high. An estimated 60 per cent of the population is considered to be below the
poverty line. The high level of poverty is fuelled by the high rate of unemployment among
the young. The removal of fuel and maize subsidies is likely to stoke tensions and could
prove to be a catalyst to bring other social and economic issues to the fore.
The resources sector will need to monitor the current dissatisfaction closely. This sector,
particularly in developing or emerging economies, often faces the task of satisfying the
needs of civil society by providing education, employment and improvement to the local
area, for example through the development of infrastructure. Although the current
discontent stems from government decisions, those in the resources sector could arguably
find themselves having to face demands for increased wages and the creation of more
employment opportunities for the young, as the cost of living increases. Failure to respond
to such demands is likely to result in targeted protests and unrest.
Simmering social tensions and discontent with the government, may also be a deterrent for
future foreign investments. With the country’s ongoing stabilisation and peaceful 2011
elections, there appeared to be an opportunity for viable and stable investment in the
mining industry, particularly copper – one which has been taken up by some Australian
companies, such as Blackthorn Resources. With the recent political developments, however,
it is probable that investors will now monitor and consider the country’s long-term political
risk more closely prior to making investments. At a time when interest, and therefore
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Page 13 of 15
competition, in Africa is increasing, Zambia needs to control demonstrations and rising social
tensions to attract foreign investors and ease concerns of long-term political instability.
Kim Moss Research Analyst Minerals and Energy Research Programme kmoss@futuredirections.org.au
*****
A New Approach or More of the Same? China’s Premier Visits
India
The visit may result in a new relationship that will see China and India assume closer ties
that reflect more than economic issues.
Background
Premier Li Keqiang’s four-day visit to India is the first time a Chinese leader has gone to New
Delhi before visiting another country. The visit follows recent border tensions and a visit to
Beijing by India’s Foreign Minister. A visit to China is planned for later this year by Prime
Minister Singh.
Comment
Analysts view Li’s visit in one of two ways: a sign that China recognises India as a major
player in the region or that Beijing seeks to establish assertiveness while India’s government
is distracted by internal issues, leading to next year’s national election.
The first school of thought suggests that it is in China’s interests that both countries benefit
from a closer relationship that establishes their territorial integrity and prepares the way for
further economic development and the social and political transformation that will
undoubtedly confront both countries. This is a long term vision that also recognises the
challenges that China faces with an ageing population, environmental concerns and
increased demands for food, water and energy.
An indication of this type of reasoning is the burgeoning economic interaction between both
countries. Annual bilateral trade is now over $70 billion with a target of $150 billion by 2015.
India, of course, seeks to redress the imbalance which now significantly favours China.
The second school of thought views the relationship as clouded with uncertainty at best.
The recent border incursion, where some 40 Chinese soldiers camped 19 kilometres inside
India’s perceived territory, is part of this assumption. Why did this occur? Was this part of
China’s “pressure diplomacy”? Was it designed to place India in a defensive and reactive
mode? Certainly there is no shortage of strategic thinkers and journalists in India who view
China as a major threat.
mailto:kmoss@futuredirections.org.au
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This visit, and Singh’s proposed visit to China, occurs during a period of considerable regional
political change. The appointment of a new Chinese National People’s Congress in March,
India’s national elections next year, the recent defeat of China’s close ally, former Pakistani
President Zadari, and the withdrawal of most of the international force from Afghanistan are
all part of this uncertain future.
Nor is there any doubt that Li’s visit is different from those of senior Chinese leaders in the
past. Both he and President Xi Jinping became politicians after the 1962 war between India
and China and do not carry the negative baggage that resulted from this conflict. Li has also
been to India before, having led a youth delegation in 1986.
Even if Li’s intentions are to establish not only closer relations, but an attempt to have the
two most populous countries influence the changing of a world order, it will take some time
for India to accept this direction. Li will visit Pakistan next and further discussion will
undoubtedly follow as to the intentions of the visit to India and its perceived outcome.
Major General John Hartley AO (Retd) Institute Director and CEO Future Directions International
*****
What’s Next?
22-23 May: Chinese Prime Minister Li Keqiang will visit Pakistan where he will meet
with President Asif Ali Zardari. It will be Li’s first visit to Pakistan after assuming
office, and it comes shortly after general elections in Pakistan.
23 May: Iran’s Guardian Council will complete the vetting of potential presidential
candidates and will announce the final list.
24-27 May: Indian Foreign Minister Salman Khurshid will travel to Saudi Arabia to
discuss regional issues and Saudi labour policies.
The Summit of the African Union continues in Addis Ababa until 27 May, with the
theme “Pan Africanism and African Renaissance.”
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Page 15 of 15
Any opinions or views expressed in this paper are those of the individual author, unless stated to be those of Future Directions International. Published by Future Directions International Pty Ltd. 80 Birdwood Parade, Dalkeith, WA 6009 Tel: +61 8 9389 9831 Fax: +61 8 9389 8803 E-mail: tdavy@futuredirections.org.au Web: www.futuredirections.org.au
mailto:tdavy@futuredirections.org.au
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