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COVER STORY

22-10-1999

People's china at 50

Briefing

PEOPLE'S CHINA AT 50

As a celebration of state, the accent of the festivities that mark the half century of the People's Republic of China is on the achievements of the past 20 years - of the post-Mao Zedong era of reform which made China the fastest-growing economy of the world and a player of global consequence.

A GRAND parade at Tiananmen Square, and functions all over the country, will mark the celebration of a half century of China's existence as the People's Republic of China (PRC). The festivities, to which no foreign guests have been invited, will undoubte dly convey strong messages to the people of China and to the watching world. Some of these messages will confirm that the Communist Party of China (CPC) still plays the central and leading role in Chinese politics, that the third-generation team led by P resident Jiang Zemin is in control, and that China has successfully avoided going the Soviet way. Other messages will highlight the achievements of these 50 years not only in the indices of economic and state power but also in terms of living standards. In short, this anniversary will celebrate the fact that China, having 'stood up', as Mao Zedong so proudly announced on the founding of the PRC on October 1, 1949, now stands upright, sturdy and tall in the world of states.

As a celebration of state, the accent of the festivities will fall heavily on the achievements of the past 20 years, that is, of the post-Mao Zedong era of reform which made China the fastest-growing economy of the world and a player of global consequenc e. But no survey of the five decades of the PRC can ignore Mao Zedong, for he was both China's revolutionary and China's nationalist, par excellence. When victory in the civil war was won, and the new state was founded, Mao as leader of China's mi llions promised to bring to a close the long century of China's 'humiliation' by imperialist powers, including Japan. He promised to unite the nation and the state and set it on the path to wealth and power and to a standing of equality among the nations . No single imperialism had dispossessed China of its sovereignty; it never was fully a colony as India was. Only Japan thought of making the whole of China its colony. Its invasion and aggression against China in the 1930s provided the conditions for Ma o to entwine anti-Japanese nationalism and anti-imperialism into the compelling dynamic of the Chinese National Revolution. China's Revolution, therefore, did not confront the 19th century imperialist powers, especially Britain, which had opened its cent ury of humiliation with the Opium War of 1840. It confronted, instead, the new imperialists of the 20th century - first Japan and, after its defeat in 1945, the other new imperialist, the United States.

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To stand up - united, strong and equal with the powers - was a promise that history would have demanded of any government that may have come to power in Beijing. The CPC, on this anniversary, can claim to have fulfilled these promises in the main. Of the three territories that remained outside the jurisdiction of Beijing after 1949, Hong Kong was returned to China in a remarkably smooth transition under the innovative one-country, two-systems formula, and so will be Macao by the end of this year. It was often said that the Chinese leadership had privately decided on 2005 as the outside year for the peaceful reunification of Taiwan - to which that formula was first offered - with the mainland. But developments since the missile crisis in the Taiwan Stra it in 1995 and, more recently, a few months ago have set up serious roadblocks. If President Lee Teng-hui of Taiwan continues to describe cross-Strait relations as between two equal states, he risks making the one-plus-two formula, as well as the whole q uestion of reunification, dangerously redundant. The new situation will involve the U.S. more directly and could delay indefinitely a resolution of the Taiwan problem. This is one success that the CPC would have liked to have claimed at this anniversary. Instead, it represents a serious setback for the Chinese Government, and raises new tensions in the Asia-Pacific region.

THE other two promises made to the nation on the founding of the state have been more or less fulfilled. In its search for equality, as for wealth and power, China had set its sights on the richest and the most powerful country, namely the U.S. It was al so the U.S. that had denied the PRC's existence as an international entity, treating Taiwan as China, for 23 years. Appropriately, therefore, it was President Clinton who symbolically conferred, as it were, 'equality' on China during his first summit mee ting with President Jiang Zemin in 1997 in Washington. The Beijing summit the next year confirmed China's new status and considered establishing a 'strategic' partnership between the two countries. This suggests that China, already a permanent member of the United Nations Security Council, may envisage a diplomatic reach beyond its Asian region. However, it still has a long way to go before it can - if it ever will - acquire sinews of power to match those of the U.S.

Nevertheless, China's economic statistics testify to the giant strides it has taken in these five decades towards acquiring wealth and power with an average annual growth rate of 9.8 per cent over these decades. China weathered the recent Asian financial crisis without devaluing its currency, and its economy grew at a respectable 7.8 per cent during the period. In 1997 its gross domestic product (GNP) reached $1,055 billion, making it in terms of purchasing power parity (PPP) the third largest economy i n the world. Per capita income rose to $860, having doubled over the past decade; adult literacy rose to 87 per cent; and average life expectancy rose to 70 years. In the years from 1985 China attracted upwards of $140 billion in direct foreign investmen t and accumulated foreign exchange reserves of $120 billion and a trade surplus with the U.S. of about $40 billion. It also became the world's 11th largest trading state.

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These are impressive figures. But the goal before China is modest - to reach the income levels of middle-ranking countries such as France and Italy by the middle of the coming century. Actually the goal is far from modest, for it aims to provide all its 1.2 billion people with the comforts and living standards of those countries. China still has a long way to go before it can achieve this goal.

Nevertheless, at the end of the 20th century, China is no longer the ripe melon ready to be carved up by the imperialist powers that it was at the end of the 19th century. Instead, the present leaders could borrow from Zhou Enlai a description of China t oday. China, he said in 1975, was like a piece of tough meat, difficult to chew on or to swallow.

EVEN if the 50th anniversary is, in essence, a celebration of state and not of 'socialism', much of the credit for what the state is today must still go to Mao the nationalist. As a nationalist Mao led the millions of China. As a Marxist, however, he led a party that comprised, at that time, only a mere 5 per cent of the population. With this limited tool he undertook the awesome task of building socialism in the country from a peasant and backward base. Constantly aware of being in the minority, Mao ma de 'serve the people' (not just the proletariat), the raison d'etre of the party and the state and made the test of such service an incremental increase in the basic necessities of life for all the Chinese people. Building a strong state and servi ng the people were two separate and often conflicting items on the agenda. At best they were linked by the choice of means employed by the party in managing the large society and increasing its productivity.

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In the mid-1960s, fearful that the party was beginning to serve itself rather than the people, Mao called for the overthrow of the party leadership and organisation. The famous big character poster that urged 'bombard the headquarters' launched the disas trous Cultural Revolution (C.R.). In the desperate hyperbole of those heady days, the C.R. was presented as an attempt to touch people's souls, to bring about a sudden transformation of outlook and values in society, more in keeping with socialism. But M ao was in the minority even within the party. It was almost a foregone conclusion that Mao would fail, as he did, in this desperate gamble. His failure also heralded the end of the socialist effort in China, despite its present use as a signboard, to pro claim identity - that is, a socialist China building a socialist market economy, and so on.

Mao's portrait still looks out over Tiananmen Square and the 50th anniversary festivities. But his contribution to the building of the state will in all probability not be acknowledged. Yet Mao's contribution was not negligible, and needs to be recalle d for it laid the base from which Deng Xiaoping's reforms could take off. To list a few of his contributions: At the end of the Mao era, China was debt-free; oil resources (not revealed by Soviet prospecting) were discovered and exploited; the nuclear pr ogramme proceeded apace; land reform had been thorough and recovery had been made in agriculture.

Externally also China had made significant and strategic gains. Its 23-year-long period of isolation in the world ended with its acquiring a seat in the U.N. and its diplomatic recognition by the developed countries - on its own terms. This meant the de- recognition of Taiwan and the promise by other countries that relations with that island would henceforth be conducted only at sub-diplomatic levels. The crowning act in this drama of undoing the past was the 'private' visit of President Richard Nixon to China in 1972. That journey by the most powerful leader of the world to what was an 'enemy' country for 23 years, to be received by the man and a system he had threatened to destroy, and to a country which Washington did not recognise, was an exercise i n the most extreme form of realpolitik. It could only be accomplished by denying a friend of as many years, during which time Taiwan, with a population of only 11 million, was for the U.S. the only China. The Nixon visit opened the door to the technologi es and markets of the developed world for Mao's successors.

DENG XIAOPING, as Mao's successor, must, however, be given the credit for knowing how to walk through that open door where he wanted to take China. Deng's coming to power was an accident of history - he was not one of Mao's chosen successors. Mao identif ied him as the second most important target of the C.R. Deng survived that turmoil and witch-hunt, to be recalled to power and position in 1974 as Mao aged and cancer took its toll of Zhou Enlai. As soon as he had consolidated his power, he decided to pr onounce a formal assessment of and verdict on the C.R.

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No assessment of the C.R., however, was possible without a similar assessment of Mao and the party. Unable to throw out Mao with the C.R., as it were, his erstwhile targets found his merits to be primary and his errors to be secondary. Mao's undeniable c ontribution lay in waging a successful struggle and in bringing the CPC to power. His mistakes, such as the Great Leap Forward and the Cultural Revolution, had stemmed, it was found, from an inability to understand what building socialism meant. This had lost China 10 years and more of development. This verdict on the C.R. and Mao was to be the foil for Deng's genius in putting economics, not politics, in command of socialist development.

Physically Deng Xiaoping was a little man, small built and stocky, but he had the makings of a big leader, unlike Zhou Enlai who seemed destined to be the permanent No. 2 in the leadership hierarchy. The story of his return to power after the C.R. is u nsavoury, and understandably it is not often recounted in China. But China was fortunate to have him as leader. He brought order to the nation and to governance after the chaos of the C.R. Above all, in his person, he represented continuity - so importan t for a C.R. ravaged China - with the Revolution, with the party organisation, and with Mao, even though he switched the tracks on which the nation was going to travel. These were the sources of his right to power.

Yet, like Mao before him, he worried about leadership succession, on which would depend the future of China. He was unlucky with his chosen heirs until he brought Jiang Zemin from Shanghai to Beijing after Tiananmen (1989) and then devoted the next six y ears of his life to grooming Jiang to be the core of the third-generation leaders of party, state and army.

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Deng, like Mao, had the ability to think in the round. Having put economics in command, he undertook reform from above in all sectors of society, both to support the modernisation drive and to contain the inevitable fallout on the party and society as vested interests were disturbed. At the same time, he had to manage a complex relationship with the world, and in particular with the U.S. His biggest challenge was to introduce political democracy, taken to mean freedom of expression and association, th e rule of law and the separation of powers. Both internally and externally he was unable to fit political democracy into his reforms. Instead, as student demonstrations rocked China, the 'Democracy Wall', which had come up during the C.R., came down. His new Constitution also dispensed with the earlier Maoist inclusion of 'four big freedoms' to the people, including the right to strike work.

With Tiananmen and the collapse of the Soviet Union with its break-up on ethnic lines, and its adoption of a multi-party democratic system, China became the bad boy on the block. Isolated once again, as in 1950, by the developed world, it faced internati onal criticism and sanctions on many fronts - on human rights, on its one-child population policy, on prison labour, on censorship and so on, all of which added up to a condemnation of China's refusal to abandon socialism and change to a multi-party demo cracy.

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There was domestic criticism of his line too from both the Right and the Left, and not until 1992 was he able to assert his free-market, get-rich strategy and tempt the developed world with the prospect of a market of a billion consumers. That strategy, with some modifications and considerable skilful diplomacy, has resulted in the lifting of international sanctions and the muting of criticism by governments wanting to do business with China. Ten years after its international standing touched a low foll owing Tiananmen, and 20 years after the reforms began, China's economic development, supported by domestic stability and considerable military muscle, both conventional and nuclear, has enabled it to recover and improve its international standing, though not its pre-Tiananmen image.

This duality will continue to characterise the way the developed world will look at China in the years to come. On the one hand, the lure of the China market will strengthen those who advocate closer 'engagement' with China, who argue that this will in t ime bring about a greater democratisation of its system. On the other, in a strange reversal of roles, the ideologues of democracy - if one can call them that - are the new Cold War warriors who argue that China should be 'contained' by putting pressure on it to change its system through strong sanctions and diplomatic and trade isolation. As China becomes stronger, these voices will probably become louder. History has no precedent for the international community's adjustment to a new power without reso rting to war.

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EVEN as China reaches a critical take-off period in its domestic development, it is faced with a new and more complex external environment. The reform era began, by contrast, in the relatively simple and predictable bipolar world, which China charted wit h some skill until the collapse of the Soviet Union ushered in a unipolar world and with it, supposedly, the 'end of history'. Since then new complexities have been added - for instance, the nuclearisation of South Asia and the spread of international te rrorism.

Since that time China has been concerned not only with the problem of managing this complex world, but with the need for it and India, as ancient civilisations, to influence the shape, structure and norms of the coming world order. In the last half dec ade, China has indicated the kind of world order it would like to encourage, namely one in which a number of big powers can be identified. At present these comprise China, Russia, Japan, Germany, France and, potentially, India. In this multi-polar system of its preference, no one pole can aspire to equal the U.S., but collectively and in their own interests they would be able to act as curbs on it, both within and outside the United Nations.

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It has also revived the old India-China case for introducing a new set of behavioural norms - the Panch Sheel - to replace what it calls 'power politics'. In short, these would accept the territorial limits and the sovereignty of states; respect the righ t of governments to manage domestic problems without outside interference; help move disputes from the ground to the negotiating table; and encourage a mutuality of approach to common problems. This is its theoretical framework.

In its practice, China's grand strategy takes the U.S. as the 'other' both in terms of the world order it advocates and perhaps as the biggest obstacle to the emergence of China as a global great power. At the same time, it needs U.S. markets and U.S. technology. Its latent suspicions of the U.S. have become more overt as it aggregates the sum meaning for China of U.S. policies in the Asia-Pacific region of the past few years. Briefly these include what it sees as a qualitative change in Washington's more official relations with Taipei; the revival and strengthening of U.S. security relations with Japan and Australia; and America's proposed theatre missile defence system in Asia. Its overall objective is not to risk a military conflict with the U.S. but to use diplomacy to deflect from such a possibility and to continue to point out the advantages to both countries of a cooperative relationship.

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Partly as a result of the present skewed balance of power, partly because of U.S. policies and presence in the region, and partly because of its own limited military capability, China has begun to concentrate on Asia. The clearest expression of this inte rest is to be found in the speeches made by President Jiang Zemin on his recent state visit to Thailand. China's 'new security concept' calls for a series of bilateral and multilateral arrangements with its near and distant neighbours, which would increa se the density of interaction to the degree of making conflict a more and more distant possibility. China presents these as the building blocks of a comprehensive security system for the region, and by extension an alternative such system for the world. These arrangements, as should be obvious, have the added worth of reducing opportunities for the U.S. to take advantage of China's bilateral problems with its neighbours.

The 50th anniversary thus also marks the beginning of a period fraught with grave problems for China, both domestic and external which, in addition, intersect at many points. Some external problems have been mentioned above. China's many domestic probl ems include those that flow from a loosening of party controls, from a lack of higher purpose which has permitted religion to extend its hold and fringe groups like the Falungong to emerge; from the growing inequalities between the hinterland and the coa stal areas, the rural and the urban, the rich and the poor, the ethnic minorities and the Han, and so on, and from the consequences of its one-child family on the population profile of the early 21st century. These will test the management skills of the leadership as it takes China forward to achieving its mid-21st century goal for the Chinese state.

The architect of 'new China'

JOHN CHERIAN cover-story

MAO ZEDONG is no doubt one of the greatest of leaders who strode the world stage in the 20th century. The architect of the Communist Revolution in China, he presided over the country's destiny for 27 years. Maoist ideology may have been put on the backbu rner now, but the leaders of today's China acknowledge the role of Mao in building and consolidating the revolution. Many leading economists and Sinologists have forecast that China will become an economic superpower in the next three decades. It was Mao 's insistence on self-reliance during the first three decades after liberation that enabled China to withstand Western attempts to rein it in militarily and hamper its economic growth. Small wonder then that the Chinese people give Mao the credit for cre ating the "new China".

Mao was born in Hunan province on December 26, 1893. He was the eldest of four children - three sons and a daughter. His father, a dispossessed peasant, joined the army to escape poverty. His stint in the army made him relatively rich. From the beginning , Mao had the makings of a radical. He was against his father's profiteering ways.

Mao completed formal education at the age of 25. He passed out of an institution that trained teachers. While he was there, he participated actively in the country's nascent revolutionary movement. One of the early supporters of the Russian Revolution wa s Li Ta-chao, a librarian at Beijing University. He, along with some progressive-minded people, started a Society for the Study of Marxism in 1920, which was the forerunner of the Communist Party of China (CPC). Li employed Mao, who was one of its member s, as an assistant.

Mao was part of a group of young intellectuals in the CPC and began organising revolutionary activities in 1921. It was in the mid-1920s that Mao began to realise that tremendous revolutionary dynamism could be unleashed by mobilising China's vast, impov erished population. Although both Lenin and Stalin had recognised that peasants could play a revolutionary role in underdeveloped areas, Mao was the first to propose that the peasantry was potentially the backbone of the Chinese Revolution.

The Communist Party suffered a series of setbacks between 1921, when the party was founded, and 1927. Chiang Kai-shek's forces violently crushed the urban-based National Democratic Revolution and an attempt by industrial workers, who constituted a very s mall proportion of the population then, to ignite a revolution between 1925 and 1927. The failure of two revolutions sidelined the bourgeoisie and the proletariat. After 1927 the revolution shifted to the countryside, where Maoist ideology thrived, and i t triumphed ultimately.

After conducting some investigations on his own, Mao wrote in 1927 a report, the key elements of which was to constitute his lifelong conviction - that it was the rural areas that would be the key centres of revolution not only in China but all over the world. Mao predicted that the power of peasants would "bury imperialism and militarism". In a celebrated passage in the report, Mao emphasises that only "armed struggle" can bring about genuine change. "A revolution is not a dinner party, or writing an e ssay, or painting a picture, or doing embroidery; it cannot be so refined, so leisurely and gentle, so temperate, kind, courteous, restrained and magnanimous. A revolution is an insurrection, an act of violence by which one class overthrows another."

Mao's strategy and tactics were effective. Between 1928 and 1933, the Communist Party's membership in China swelled from 40,000 to 300,000. During the same period, the Communist army's strength grew to 100,000. Chu Teh, a former warlord, and his forces j oined hands with Mao. Chu Teh became the Commander of the Red Army and was Mao's comrade-in-arms during the 21 years of revolutionary warfare that followed.

Alarmed by the growth and popularity of the Communist Party, the Nationalist Government of Chiang Kai-shek, launched a fierce military offensive aimed at destroying Mao's military base in Kiangsi province, where Mao had proclaimed the creation of the Kia ngsi Soviet, a Communist republic. For three years, the Communists administered a territory of 15,000 square miles. The CPC was advised by the Comintern, an organisation of world Communist parties, against conceding any territory to the Kuomintang. This strategy, however, backfired, and in order to avoid a military rout the Communists, under Mao's leadership broke through the Kuomintang encirclement and embarked on the epic Long March. The March, one of the most heroic episodes in history, dramatically changed the course of 20th century history.

The March, which lasted from October 1934 to October 1935, saw Mao and his followers trek 6,000 miles (9,600 km) from Kiangsi to the northern Shensi province. A temporary headquarters was set up at Pao An before a permanent base was established at Yenan 14 months later. During the March, the Communist forces were reduced from 90,000 to around 20,000: they had not only to negotiate rivers, rough mountain terrain and arid areas, but also to engage the Nationalist (Kuomintang) army in battles. Among those who died were some of Mao's closest comrades. One of his brothers, Mao Tse-t'an, was killed in one of the battles with the pursuing Kuomintang and warlord armies. Two of Mao's children, who were left behind with sympathetic peasants in Kiangsi, were neve r traced.

Few would disagree with Edgar Snow's assessment of the Long March as "an Odyssey unequalled in modern times". The heroic deeds which the Communist guerillas under Mao accomplished are now part of revolutionary lore. They have inspired several revolutions , including the Cuban Revolution. The Long March was also instrumental in consolidating Mao's hold over the Chinese revolutionary movement. In January 1935, Mao was elected Chairman of the Politburo of the CPC. The other leaders of the party who held swa y for decades since the 1930 were also veterans of the Long March.

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The Yenan experience (1937-45) was invaluable for Mao and the CPC. During his sojourn in Yenan, Mao was at the height of his creativity. He addressed himself to the needs of the peasants and carried out land reforms and rent reduction programme. Peasants became fully involved in the political, economic and military organisations in the liberated areas. In order to sensitise the peasantry, Mao created a corps of poor peasants - this was in addition to the farm labour union - and encouraged them to partic ipate actively in the land reform movement. During this period Mao also formulated the "Three-Thirds System", which limited the participation of party cadre in local government to one-third, leaving two-thirds of the posts to progressive citizens and int ellectuals. The bulk of his writings, which later appeared as Thoughts of Mao, were written in Yenan. (Even while steering China towards progress in later years, Mao never forgot his Long March experiences or his days in Yenan. The periodic shake-ups he carried out in the government and in society in the 195 0s and 1960s owed a lot to these experiences.) In Yenan, he criticised comrades who could "repeat quotes from Marx, Engels, Lenin and Stalin from memory but understand very little or nothing of their own history."

The Communists under Mao made spectacular military gains from the mid-1930s to 1945. At the outset of the war with Japan, they gained immense prestige by routing the Japanese in the Shansi province, while the Nationalist troops had fallen into disarray. The Japanese invasion undermined the Kuomintang regime as it was evicted from the major cities. The Communists, on the other hand, gained enhanced access to the countryside as they had generated tremendous goodwill among the peasantry and were good at gu erilla warfare. The invading Japanese did not have sufficient manpower to enforce their writ in the countryside.

Much of the guerilla warfare against the Japanese were organised by the Communists. During this period the communist army gradually coalesced into a professional army. After the Japanese surrendered in 1945, it emerged as the strongest force in China. Bu t the Nationalists under Chiang Kai-shek refused to acknowledge this reality and started another civil war in the country which was just recovering from the ravages of Japanese occupation. (The Kuomintang war machine was financed by the United States of America. Chiang Kai-shek's main adviser was Gen. Ludwig von Falkenhausen, a German.) At the beginning of the civil war in 1945, the Communists only had half a million regular troops, which was one-fourth the size of the Nationalist army. By 1948, however , the Communist army's strength was the same as that of the Kuomintang's.

The U.S. tried to change the course of history by coming quickly to the aid of the Nationalists. When the Japanese were withdrawing from the cities, the U.S. dispatched 50,000 marines to key ports and communications centres, besides airlifting Nationalis t troops to Tientsin, Beijing, Shanghai and Nanking. The defeated Japanese Army also collaborated with the U.S. and the Kuomintang. The CPC, however, managed to retain control of most of northern China. The entry of Soviet troops into Manchuria was also a positive development from the CPC's point of view.

Mao's leadership role was crucial to the final outcome. His theory was that an inferior force could defeat a larger enemy only through a gradual process. When the civil war started, the Communists adopted a defensive posture, taking into account the over whelming numerical superiority of Chiang Kai-shek's forces. In a classic gambit, the Communists withdrew from several areas which were under their control, including their Yenan headquarters. Chiang Kai-shek interpreted the withdrawal of the Communists f rom their headquarters as a sign of military weakness and ordered his elite troops to pursue them deep into Manchuria. This, however, put an enormous strain on his supply lines. He did this against the advice of the U.S., his staunchest ally.

The second stage of the Communist plan was implemented in 1947. A limited counter-offensive was launched against the provinces of central China and against the railway network used extensively by Chiang Kai-shek to provide supplies to his troops. By the end of 1947, when Chiang Kai-shek's best troops were fighting in Manchuria and his communications capabilities were over-stretched, the more mobile Communist army captured key railway junctions in the Hopei province south of Beijing. The Nationalist Gove rnment in Nanking found it difficult to send reinforcements and supplies to its beleaguered troops in Manchuria and northern China.

By the middle of 1948, the Nationalists were in total disarray. Mao initiated the final push by launching a series of military campaigns through central and eastern China, which ultimately brought him and his men to the doorstep of the Nationalist capita l, Nanking. Chiang Kai-shek had fled to Taiwan. Despite the reservations expressed by some of his own comrades and allies such as Stalin, Mao ordered the capture of Nanking. The rest is history. On October 1, 1949, Mao stood high on the Gate of Heavenly Peace in Beijing to announce the establishment of the People's Republic of China. It was a day that was as significant as the end of the French Revolution in 1789 and the Russian October Revolution of 1917.

While riding into Beijing triumphantly, Mao composed a poem, which reflected his worldview. A line from it is: "The true way that governs the world of men is that of radical change."

China in a globalised world

PRABHAT PATNAIK cover-story

China's post-reform growth was made possible either because of the achievements of the pre-reform economic regime or because of the continuation of certain features of that regime.

CHINA's economic progress since 1949 is among the most significant phenomena of this century, a source of hope for the wretched of the earth that their lot too can improve dramatically within a short span of time. True, China has not been alone among th e underdeveloped countries in experiencing rapid economic progress, but its case is unique because of its size: its development makes a substantial difference to world poverty. A mythology, however, has grown up of late around China's development, which claims that it began with the introduction of "market reforms", that the earlier years were "wasted years" marked by bungling, bureaucratism, excesses, arbitrary experiments, and one terrible famine, all of which were associated with the effort to build socialism. China's pursuit of "pragmatic" neo-liberal economic policies not only has brought it prosperity but also constitutes a lesson for others who may still be suffering from a residual ideological inclination towards socialism.

This perception, which underlies such remarks as "China should be celebrating 25 years of reforms rather than 50 years of Communism", is in my view completely wrong: the contrast between a pre-reform period devoid of progress and a post-reform period mar ked by great achievements is factually incorrect; and the interpretation of the post-reform economic performance is fundamentally flawed.

China overcame poverty (as defined in Third World countries such as India) before it embarked on "market reforms". China put in place a universal public distribution system, which gave every citizen a certain minimum amount of essential commodities, befo re it embarked on "market reforms". China's stupendous achievements in terms of social indicators occurred before it embarked on "market reforms". And China, despite having an adverse land-man ratio (far more adverse than India's), managed to record sign ificant increases in food production (both absolute and per capita) through the construction of impressive water management systems under collective ownership, by mobilising locally available surplus labour, before it embarked on "market reforms". All th ese facts are well-known and have been attested to by a host of distinguished scholars (including Professor Shigeru Ishikawa of Japan). If for tactical reasons the current Chinese leadership underplays earlier economic progress, and if Western authors, e ither owing to neo-liberal ideological predilections or because of a penchant for bowing before the prevailing orthodoxy, underplay these remarkable achievements, then that is no reason why we too should close our eyes to them. In fact, in some ways, as we shall see later, the post-reform period represents a retrogression compared to the earlier years.

Even more important, however, is the fact that this perception, by attributing post-reform high growth to the so-called "virtues of the market", actually misinterprets this growth experience. China's remarkable post-reform growth (though I personally bel ieve it has been less remarkable than is usually made out) was made possible either because of the achievements of the pre-reform economic regime or because of the continuation of certain features of that regime.

THERE are at least four ways in which this happened. First, the achievement of near-universal literacy and the improvement in the educational and health status of the work-force, which were some of the legacies of the earlier years, were important factor s that contributed to the dynamism that China has experienced in the more recent period.

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Secondly, there can be little doubt that inequalities in China, both inter-regional and inter-personal ones, have increased greatly in the reform years, which has been a major problem associated with the reform process. Let us, however, eschew judgment f or the present. The point is that if these increases in inequalities were superimposed on an already highly skewed pattern of income and wealth distribution, then, notwithstanding such high growth rates that China is supposed to have been achieving, soci al tensions would have become difficult to manage. The surfacing of these tensions in turn would have made these growth rates impossible to sustain. Thus China was able to sustain its post-reform growth, for whatever it is worth, because it started with a relatively egalitarian base, and that was a contribution of the earlier regime.

Thirdly, to call China a neo-liberal "model" is a travesty. China's success during the reform years has sprung precisely from the fact that it has managed to combine in an altogether novel way the virtues of centralisation with those of decentralisation, or, putting it differently, the advantages of a command economy alongside the flexibility imparted by the functioning of markets. It has been, if you like, a command economy at one remove. In periods of runaway inflation, for instance, price controls ha ve been clamped down with ease rather than resorting to drastic deflation with high social costs (as would happen under capitalism), because a large part of the economy continues to be state-owned and hence amenable to control by the party. Likewise, for eign exchange management, a potential source of serious problems in any Third World capitalist economy, has been handled with somewhat greater ease because the old system of party directives to enterprises continues to be effective. In short, China has h ad the advantage of being able to supplement the usual instruments of state intervention available in a capitalist market economy with other instruments which it has retained from its pre-reform years. In this sense, drawing a sharp contrast between the pre- and post-reform periods is altogether misleading.

Finally, the high agricultural growth witnessed in the early reform years, which provided the bedrock for the reform experiment, was made possible because the regime of collective ownership and management of the irrigation systems was not abandoned. Here again China reaped the advantages of the old collective system in terms of the irrigation works it bequeathed, and continued to reap the benefits of collective ownership of such works, even while breaking up the communes and privatising agricultural ope rations.

The new regime, in other words, was erected on the shoulders of the old one, but not after wholly dismantling or destroying the latter. There was, and still is, a peculiar symbiosis between the new and the old, which characterises the Chinese economy. Th at is why lauding its neo-liberalism is as out of place as uncritically hailing it as a socialist "model".

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THE complex admixture of dirigisme and a market economy that characterises China is reminiscent of what other East Asian economies too had used to register remarkable growth rates. The difference lies in the fact that in China the dirigisme is that of a socialist economy while elsewhere it was dirigisme associated with capitalism. Notwithstanding this basic difference, the element of similarity must not be missed and this consists of the fact that the range of instruments available for intervention in t he market is much wider than under usual (metropolitan, especially Anglo-Saxon) capitalism. This admixture, particularly in the context of rapidly expanding world trade, can be a powerful promoter of growth.

Precisely as the experience of East Asia shows, however, this arrangement, this capacity to take advantage of the market and yet not be a market economy in the conventional sense of the term, can only be a transitional one. The very fact of high growth b rings about changes in the domestic social structure, in the class configuration of society, which undermines the continuance of this arrangement. Even more important, changes in world capitalism unleash new forces that make such an arrangement untenable and with this the continuation of the remarkable growth rates. East Asia has already reached a point of crisis from where a return to the earlier growth trajectory is almost impossible even if there is some recovery. China too, in my view, would find it difficult to continue with the regime it has been having and hence the growth experience that went with it. To say this is not to predict a slowing down of the Chinese economy but to suggest that China would have to adopt an altogether new course if it has to maintain its economic dynamism.

I mentioned earlier that despite market reforms China continued to have collective ownership of the irrigation works and that this contributed to the agricultural dynamism of the early reform years. Over the years, however, as agriculture has come under the sway of private ownership, the collectively owned irrigation works have tended to atrophy. A particular admixture of centralisation and decentralisation may be very fruitful in terms of growth, but it cannot be frozen for ever. Changes in class confi guration arising from this growth itself keep upsetting it, even though such upsetting has the objective consequence of choking off growth or making it more "expensive". The case of agriculture is only an illustration. More generally, as the private (or decentralised) sector of the Chinese economy becomes stronger and stronger, this very fact would restrict the ability to use party directives in special cases. The proposition that the "purity" of the Chinese Communist Party would act as a bulwark agains t China's proceeding towards full-fledged capitalism scarcely carries conviction. The Communist Party, after all, is not an entity that can for ever remain impervious to social pressures; if capitalists are on the ascendant, they would sooner or later en ter and influence the Communist Party itself. In such an eventuality, however, China would lose its current unique advantage and would not be able to maintain its dynamism.

There is a second and even more powerful reason for this and that has to do with the changes occurring in world capitalism. The ascendancy of finance and its globalisation constitute a crucial feature of the contemporary capitalist world. This has two ob vious effects. On the one hand it is responsible (among other factors) for the slowing down of the world economy, since Keynesian demand management, which worked so well in the post-War period, becomes difficult to undertake in a world of extreme financi al fluidity. On the other hand, globalised finance capital tries to break down the insulation which particular economies enjoy from its movements. It attempts to suck every country into the vortex of its movements.

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Now, the success of East Asia earlier and even of China arose from the fact that they managed to insulate themselves from the movements of finance even as they pushed out substantial exports of commodities. In the new situation, however, it becomes diffi cult to sustain both these features. The slowdown in the world economy adversely affects trade performance, which then creates the condition for globalised finance to insinuate itself into the economy. Once the economy has become open to financial flows, it becomes a plaything in the hands of international speculators, and its growth atrophies. This is what happened in East Asia. The question is: will China go the same way?

China managed to avoid the East Asian contagion because, as President Jiang Zemin himself pointed out, it did not have a convertible currency and had not undertaken any significant financial liberalisation. China had, in other words, managed to keep its economy insulated from international speculative financial flows. Nonetheless it had to pay a price. While the stability of its currency was maintained, the economy had to be deflated for this purpose. No doubt the economy can experience a resumption of growth (though not perhaps of the same order as before), provided there are enough controls in place to keep it insulated from the activities of domestic and international speculators. But this would require above all a countering of the political pressu re that these groups would bring to bear in various ways, including via the Bretton Woods institutions. The only way that such pressures can be countered is by mobilising the people. But if the working masses are depoliticised, then such countering becom es difficult. And if, in addition, the government wishes to win their favour by initiating growth through inflows of short-term finance, which makes the economy vulnerable to capital flight, then that would be a recipe not only for economic atrophy but f or imperialist hegemony over China. This is not just a political necessity. It is essential for China's continued economic advance.

We are, in short, entering a new phase of world capitalism. In this phase the possibility of the diffusion of activities from the metropolitan centres to certain sites in the Third World, which was responsible for the East Asian "miracle" and which also underlay the Chinese growth performance, is restricted. On the other hand there is enormous pressure for opening Third World economies for international financial flows, which would bring in their train economic atrophy, loss of economic sovereignty and loss of control over domestic natural resources and productive assets (especially of the public sector) to metropolitan capital (or what Karl Marx would have called "centralisation of capital" on a global scale).

The days of a socialist economy achieving high growth by using the capitalist world market are over. Adopting socialist ways (which must not be taken to mean getting back to the regime that prevailed earlier) may well be the means of achieving high growt h itself in the new situation.

Experimenting with market socialism

UTSA PATNAIK cover-story

At this stage, China perhaps needs to think afresh about the direction in which the anti-egalitarian market reforms have been taking its hard-won Revolution.

THE 20th century will surely be counted by China as one of the most momentous in the history of its ancient civilisation; and indeed China's rise from the status of a poor, humiliated semi-colonial nation to an independent, vibrant and confident nation p oised to emerge as the second largest economy in the world is of great moment for the course of world history. As China celebrates the 50th anniversary of the formation of the People's Republic after the victorious Revolution, one wonders anew at the eno rmous transformations that the great civilisation has undergone in the last century alone.

Successive images and events flash through the mind: the humiliation of the Triple Intervention by the Western imperialist powers, Beijing students in the May 19 Movement, the 21 demands made by the Japanese, the seizure of Manchuria, the peasant movemen t in Hunan, the Canton uprising, Chiang Kai-shek's annihilation campaigns against the Communists, the incredible Long March by a band of ill-clad and ill-equipped revolutionary soldiers with only handfuls of millet to sustain them physically but fired by the resolve to survive and wrest victory from retreat; the long guerilla war, land reforms in the liberated areas, and final victory over the Japanese and the Kuomintang, enabling the initiation of the historic second experiment in the world of an auton omous strategy of building socialism. The consternation in the advanced capitalist world at that time when China "went Communist" and the joy of the majority of the populations in the Third World at the victory can now only be imagined.

The Chinese have written their own history in bold strokes in this century; after the formation of the People's Republic of China (PRC), they have also demonstrated to the world that under socialism it is possible for a very poor nation to reach basic he alth care not only to the urban but also to the rural population, to provide education to all, to ensure not only food security but an improving standard of life to those who were the poorest in the old society. At this point some will talk of the "famin e" of 1959-61; we will discuss this at length in a moment. All analysts of Chinese development history in the last half century, even those hostile to socialism, are forced, however reluctantly, to accept that in terms of human development indicators - f ood security, advances in health and education, lowering of income poverty, in short, in promoting the welfare of the people - the record is outstanding, in fact better than that of developing capitalist countries with 10 times the per capita income of C hina. All socialist economies, including Cuba of course, have a very good track record in this respect; but the case of China acquires importance owing to the sheer enormity of the problems that were tackled and the huge size of the population that has b enefited.

There is a widespread misconception, however, that the gains are mainly to be traced to the period of market reforms from 1980 onwards and that there was little improvement in the period of Maoist egalitarian policies followed in the preceding three deca des - from 1949 to 1979. Nothing could be farther from the truth; in the earlier period, not only was the share of investment in income raised greatly (from about 15 per cent to 35 per cent of national income) and a diversified industrial base establishe d, but there was a sharp lowering of both the death rate for the general population and of infant mortality rate, accompanied by large gains in literacy, above all owing to the improvements in villages where the majority of the population lived and which tend to be the most neglected areas in other developing countries.

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The basis for this improvement was precisely the socialisation of property (through cooperative and later commune organisation), which enabled a collective welfare fund to be set up, as also egalitarian distribution policies, especially as regards foodgr ains and other necessities. Because the subsequent policies of Deng Xiaoping, which were implemented from 1980, were fundamentally different in content, calling for "combating egalitarianism" and "breaking the iron rice bowl" while doing away with collec tive operation of land, all the achievements of the earlier period have been deliberately sought to be downgraded since that time. In this effort, most Western academics with their hostility to socialism have participated eagerly; some who were all prais e for earlier policies switched their views with remarkable alacrity to correspond with the changed government and political line in China. While China has performed much better than India, it is widely believed that China had a more severe famine than I ndia ever had, during the "Great Leap" period in which millions are said to have died; the figure of 27 to 30 million famine deaths is frequently quoted. The main source of this figure in India is Amartya Sen's writings and speeches, which are more widel y known and reported than are the basic sources, the work of Western scholars, which he uses. The argument made by him is that the absence of press freedom in China explains the fact that the world did not have any inkling at the time that such a massive famine had taken place.

Similarly, Peter Nolan and others have argued that a massive famine took place during the collectivisation drive in the Soviet Union in the 1930s. In general, the thrust of the argument is that collectivisation produces famine and that the absence of a " free" press as in capitalist countries, prevents anyone outside these countries from knowing about it until much later - when liberal Western scholars painstakingly uncover the facts through their research. Since collective ownership and production form the very essence of socialist production relations, this appears to constitute a damning indictment of socialism. The picture is complicated by the fact that in China itself, some of those earlier termed "capitalist roaders", who were always opposed to e galitarian principles of distribution and who wanted to dismantle the rural communes (which were indeed dismantled from 1980 onwards), seized upon the alleged massive "famine" as one argument for an ex post justification for doing so, regardless o f the fact that they themselves, despite their active involvement in political life, were apparently quite ignorant at that time that such a massive famine which led to 27 million to 30 million deaths, had taken place in their own country.

It would be instructive to look at how exactly this estimate of "famine deaths" has been arrived at. In China in the period of 1959-61 there was indeed a large shortfall in agricultural output, as much as 15 per cent from the normal level in 1959 and 25 per cent from the normal in the next two years, and this decline did in fact coincide with the "Great Leap" when the transition from advanced cooperatives to the people's communes took place. At that time a number of reasons, including drought in parts o f the country, floods in others and attacks by pests, were put forward for the fall in output. No one, including members of the foreign diplomatic corps stationed there, or the ideological critics of collectivisation within the party, at that time sugges ted that there was massive famine. In India too the 1960s were difficult years and output shortfall owing to drought in 1965-67 was severe, although less so than in China, and it was combined with rapid inflation which eroded real wages and raised povert y levels to 60 per cent of the population, according to available World Bank estimates.

When we look at the estimates made by U.S. scholars of death rate and birth rate for China during the years 1959-61, we find that the death rate rose sharply in a single year, 1960, by as much as 10.8 per thousand compared to 1959. But because China in t he single preceding decade of building socialism had reduced its death rate at a much faster rate (from 29 to 12 comparing 1949 and 1958) than India had, this sharp rise to 25.4 in 1960 in China still meant that this "famine" death rate was virtually the same as the prevalent "normal" death rate in India which was 24.6 per thousand in 1960, only 0.8 lower. (All vital rates quoted here are from Carl Riskin's China's Political Economy: The Search for Development Since 1949). Further, in both the preceding and the succeeding year India's crude death rate was 8 to 10 per thousand higher than in China. Of course, each economy has to be judged in relation to its own internal performance; and no doubt the rise in the death rate during the worst years of output shortfall is a bad blot for China on its otherwise very impressive record of rapid decline and good food security.

Indeed the death rate would not have risen as much as it did despite the output shortfall, as Riskin argues, if the government had not bungled and continued to procure foodgrains from farmers. After 1961 the death rate again fell very steeply and reached 9.5 by 1966, a low level not achieved by India until three decades later in the mid-1990s. But is it correct to say that "famine deaths" in China totalled as much as 27 million to 30 million; and that absence of press freedom meant that China's then lea ders, despite being aware of such massive deaths, were so cynical and depraved that they could mislead the world successfully? In a recent article published in the Bengali-language journal Anushtup, Badruddin Umar has provided a powerful and expli cit critique of the widely accepted argument put forward by Western scholars and popularised by A. Sen on large famine deaths (and hence also a critique of others like P. Nolan). Umar argues that there is a contradiction in saying that the very state in China which had demonstrated its commitment to people's welfare through measures to reach basic health services and ensure food security to the poor, and which had achieved a much faster reduction in infant mortality and the death rate in the very first decade of independence than had India, could conceivably have wilfully suppressed information it had of such a large number of "famine deaths". We think there can be a more realistic estimate of mortality, and we also think of why no one, including the W esterners in China, even noticed that mortality was higher during these years.

Most people will accept that in order to qualify to "die" in a famine, and become a famine-death victim, it is necessary to be born in the first place. But over 16 million of the estimated 27 million "dead" in China's famine were not born at all! Most of those non-experts, journalists and others who accept and propagate the "massive famine deaths" in China argument do not themselves realise that people who were never born at all are being included to arrive at a grossly inflated estimate of "famine deat hs" in China.

The measurement techniques seem designed to mislead, to talk about the "death" of people who were never born. How is this absurd situation possible? It has come about because not only the rise in the death rate but also the accompanying sharp fall in the birth rate is being taken into account when estimating "famine deaths". The birth rate in China declined and fell to a low of 18 per thousand in 1961 compared to 29.2 in 1958. (After 1961 it rose at a faster rate than it had fallen, to reach a peak of o ver 43 by 1963). The rise in the death rate during 1959-61 compared to the bench-mark year 1958 implies that there was indeed a total excess mortality of about 10.5 million persons over the three-year period 1959-61 in China. This is the correct estimate of excess deaths, but this order of "famine deaths" is not quite spectacular enough for liberal scholars. (Had India lowered the death rate after 1962 at the same pace as China, over 6 million deaths per year could have been avoided here over a period o f three decades.) Therefore, the decline in the birth rate which was very steep during these three years, is taken into account and the babies which would have been born if the decline in birth rate had not taken place are added on by them to arrive at a nearly three times higher estimate, which is then called the "missing millions" and identified with "famine deaths".

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The fact that at least 16.5 million of the alleged famine victims were never born seems to be a minor point for those who want to talk about massive "famine deaths" totalling at least 27 million in China and thereby discredit collectivisation. To the lay mind with its robust common sense this cannot be anything but tendentious academic sophistry. That periods of food shortage do lead to decline in fertility is a fairly well-established proposition. Periods of mass mobilisation of males, for military ser vice, for example, also get reflected in a decline in the birth rate. There was no military conscription at this date in peacetime China, but there was massive mobilisation of both male and female workers for a stupendous construction effort during this period of early commune formation. The established peasant family living and work patterns were radically reorganised with the formation of the communes; large bands of men and women set out in teams and brigades for constructing water management systems , cleaning up the environment and eradicating disease-carrying organisms, afforesting hills, terracing and bunding and so on. They spent weeks at the work-sites, and there were communal kitchens and creches to look after children in these years. It is no t surprising if this disruption of normal family life in the interests of construction may have also contributed greatly to the observed decline in the birth rate as birth decisions were postponed. With the stabilisation of the new system, dismantling of communal kitchens and reversion to family life the birth rate again surged to unprecedented levels, peaking at 43.4 in 1963, as though the people were scrambling to make up for the earlier decline.

As regards the genuine excess mortality during China's difficult years, while shortages were very real and visible, famine was not easily visible, including to the Westerners resident at that time in China, because China by then was an egalitarian societ y, not a class society. The undoubtedly severe rural food shortage was not concentrated in a sharp drop in consumption by the members of a particular deprived class like poor peasants who then died in the sight of all, while others had more than enough t o eat, as typically happens with famine in class societies. Food shortage, while it was severe, was spread out over the rural consuming population much more evenly, and therefore, we can hypothesise, may have led to higher rates, but not immediately or o bviously visible higher rates of mortality in those segments which remain vulnerable even in an otherwise largely income-equalised society - such as parturient mothers, infants and the aged. Paradoxically, the very success of egalitarianism in distributi ng the burden may have contributed to the invisibility. It is a mistake to think that all real trends are visible to the individuals living through the events at the time.

Thus even though we ourselves in this country have lived through the period when the infant mortality rate has fallen greatly, it is a matter we are convinced of not from our direct experience of it but after the numbers have been counted and presented t o us. China's leaders were not guilty of wilful suppression of knowledge of the higher mortality; the knowledge itself was built up much later than the events, and the correct estimate as we have seen is about one-third of the highly sensationalised esti mates which are still being circulated.

On a visit to China in the early 1980s, during the time the inflated "famine deaths" were being talked about in the West, this author mentioned these estimates and asked some very senior Chinese economists about their own experience of this period. They were extremely surprised and said that while there were cases of more deficiency diseases than usual, they were not aware of widespread famine deaths. It should be noted that those who designed the above-mentioned unique measure of "famine deaths" by inc luding unborn babies, seem to be very reluctant to apply it to non-socialist countries. Their method, if impartially and honestly applied, would produce more than one episode in this century of large "famine deaths" - by their own definition - in the Wes t European countries, which saw not only a rise in civilian mortality but also a decline in the birth rate during the time of wartime shortages. Even the accurate definition in terms of rise in the death rate is never applied by them to talk about famine in countries which are no longer socialist. Thus, in Russia, comparing 1994 with 1990 with the data given in World Bank publications, we find that the death rate rose from 48.8 to 84.1 per thousand able-bodied persons (that is, excluding children and th e aged), the infant mortality rate rose, the birth rate also fell to a level below the death rate so that the population has been declining. Male life expectancy fell drastically as that country plunged into "shock therapy" to usher in a capitalist parad ise and succeeded only in halving its national income. No one can say that the press is under censorship in Russia today or that the estimated vital rates are not known. But not one of those eminent economists, experts and others who have deafened us wit h their estimates of "famine deaths" during the Soviet or Chinese collectivisation, have bothered to apply the same method to the current Russian data.

With the transition to market socialism in China too some of the welfare gains of the three decades of egalitarianism have slowly been reversed, as reflected in the rise in the infant mortality rate. There is a new emergence of large-scale unemployment a nd the proliferation of urban slums of migrants from the villages. As China celebrates the achievements of its half century of independence and building of socialism, its people perhaps need to reflect afresh on the direction in which the last two decade s of anti-egalitarian market reforms have been taking their hard-won Revolution. Much has been achieved; but the vision of an alternative society still remains to be realised.

A defensive strategy

GIRI DESHINGKAR cover-story

Perception about China in India are not always rooted in the reality; this situation calls for change.

IT has been an article of faith in India for almost 40 years out of the 50 years of existence of the People's Republic of China that it is an aggressive and expansionist country. In the immediate aftermath of the 1962 border war, such a perception was pe rhaps understandable. But it has persisted although the India-China border has essentially remained tranquil since that short war. This is because India's leaders projected an image of China, which was almost racist. "Whenever China has been powerful in history it has been expansionist," declared Jawaharlal Nehru, without consulting any history book. Much play was made about the literal translation of Zhongguo, the Chinese name for China, as the "Middle Country" as proof that China considered itself to be the centre of the world. Radio programmes such as "India and the Dragon" were aimed at creating a feeling of disgust about Chinese culture, food habits and so on.

Belief accumulates "evidence" to reinforce itself and rejects all contrary facts. So when China exploded its first nuclear device in 1964, there was panic in India; the perception was that those atom bombs were surely aimed at India. China's "no first us e" declaration was laughed at by the very people in India who today want other countries to trust India's "no first use" doctrine. India's think tanks treated the Sino-Soviet dispute as proof that China could not live in peace even with its ideological b rothers. Reports in India spoke of nuclear-tipped Chinese missiles deployed in Tibet, targeted at Indian cities; Defence Minister George Fernandes asserted this a year ago without checking out the facts with military intelligence. He also spoke of Chines e naval bases on the Cocos islands off Myanmar, again without the benefit of an opinion from naval intelligence.

Why did China withdraw to essentially India's claim line in the eastern sector after advancing to its own claim line in 1962? Why has China never conveyed even the hint of a nuclear threat against any country? Why has the India-China border remained larg ely peaceful for so many years? Why did Rajiv Gandhi's visit to China in December 1988 suddenly improve India-China relations? India and China have signed two agreements over the Line of Actual Control. The first operative sentence of the agreement of 19 96 says: "Neither side shall use its military capability against the other." Why did China bind its hands with such agreements? Such questions must be asked and answered in order to get beyond the prevalent one-line conclusions with which public opinion has been "educated" about China in India. Only then can India come up with an intelligent, sober China policy for the 21st century.

With this in mind, let us look at China's security and defence policies as they have evolved over the last 50 years. These have gone through two phases: the first, ideologically dominated one lasted approximately until the end of the 1970s. During this p hase, ideology defined who China's friends and enemies were, regardless of what the actual situation on the ground was. China's actual conduct of foreign relations was, however, laced with pragmatism. But the pragmatism came to an end with the onset of t he Cultural Revolution in 1966. Foreign policy until the early years of the 1970s was no longer determined by professionals in the diplomatic service but by the highly ideologically indoctrinated Red Guards.

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Ideology told the Chinese that another world war, a nuclear war, was inevitable, and that it would come sooner rather than later. China would therefore remain in a permanent state of mobilisation. Everyone in China became a soldier. Deep and extensive tu nnels were dug under all the big cities to withstand anticipated nuclear attacks by imperialist enemies such as the United States and "social imperialists" such as the Soviet Union. China's general defence posture in those days was one of giving the tit- for-tat response. This led to quite a few armed clashes on the Sino-Soviet border. Later China was to launch a "punitive" strike against Vietnam as well.

This astonishingly tough posture was based on a People's Liberation Army (PLA) which was high on manpower (at one point it had 6,000,000 soldiers) but very low on technology when it came to weapons and equipment. The basic military doctrine asked for a c ombination of millet and rifles, or a simple lifestyle and whatever weapons were available. The weapons were of old Soviet design. China's attempts to design new weapons were unsuccessful. What it lacked in weaponry was supposed to be made up with troop morale, that is, revolutionary fervour. Notwithstanding its deficiencies, the Chinese Army projected a formidable image of power, reinforced undoubtedly by a growing nuclear arsenal and a missile force. During this phase China's defence expenditure also remained high.

High-alert military preparedness, however, went with a totally defensive strategic doctrine. The motto was: "We will not attack unless we are attacked but we will certainly counter-attack if attacked" was the motto. This kept peace between China and othe r countries for the most part but the posture was also susceptible to over-reaction; retired Chinese officials admit today that China over-reacted to India's provocative "forward policy" in 1962. Their Indian counterparts agree that the policy was unnece ssarily adventurous.

Chinese leaders at last digested the evidence which cast serious doubts on what Marxist-Leninist ideology had been telling them and came to a new conclusion. By 1985 they were ready to declare that a nuclear world war was unlikely in the foreseeable futu re. So China should divert towards economic development its resources that were earlier earmarked for national defence. Since the new strategic doctrine did not envisage any large-scale invasion of China, the PLA's manpower could be gradually reduced: as of now it has been reduced to 2,500,000 and may see further reductions as the PLA's mobility improves. China's military industry has virtually stopped producing weapons of obsolete designs, among them long-range bombers, the MiG series of combat aircraf t, main battle tanks, army vehicles of different types, and some classes of submarines. Both troop reduction and a virtual end to arms procurement have enabled China to reduce the defence budget to a level that is lower than India's. (Journalistic opinio n of course dismisses the official budget figures as false but China-specialists say that the official figures are correct.) China's attempts to produce new designs for its weapons systems have not been successful so far. So, departing from past principl es and practice, China has begun to import advanced combat aircraft, submarines and anti-aircraft missiles from Russia and some military technology from Israel.

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Since the change of strategic doctrine, China has made special efforts to improve relations with its neighbours and these efforts have yielded results. The earlier antagonism between China and Vietnam has now given way to a cordial relationship; the bord er problem between them is close to being resolved. Russia, Kazakhstan and other Central Asian countries have already resolved their border problems with China. As a result, China has drastically reduced its troops strength on its northern border. The di spute between China and some of the islands in the South China Sea is alive on paper, but things are under control despite an occasional skirmish between the Philippines Navy and Chinese fishermen. China has become an active member of several multilatera l forums in the Asia-Pacific region.

CHINA'S relations with the U.S. had their ups and downs; at the moment they are at a new low. But there is no military tension between the two except insofar as the U.S. is prepared to involve itself in the event of China using force to integrate Taiwan with itself. The same problem plagues China-Japan relations, in addition, of course, to the historical distrust China has for Japan. Two earlier adversaries, Outer Mongolia and South Korea, are now on friendly terms with China.

The end of the Cold War has given China a feeling of security and facilitated several of these relationships, but China's foreign and defence policies had changed well before the end of the Cold War. Mikhail Gorbachev's Vladivostok initiative of July 28 1986 (the Soviet leader had unveiled an ambitious project for a dramatic recasting of Moscow's diplomacy towards the Asia-Pacific region, which included demilitarisation and an end to nuclear weapons development) may have induced Rajiv Gandhi to visit Ch ina and agree to a mutually acceptable solution to the border dispute (India had earlier refused to grant any legitimacy to the Chinese position) but by that time China's new policy of befriending earlier adversaries was already under way. Once relations started improving the pace picked up remarkably; the fact that China "readjusted" its policy towards Pakistan also helped the process along.

The perception in India that China is inherently an aggressive country and it will "show its teeth" when it becomes a super power is still deep-rooted, particularly in the armed forces and the bureaucracy. Without an enemy the military loses its mission and importance. The bureaucracy is institutionally unable to admit that the policies it made were wrong. The politicians have no such inhibitions but their views are dictated by the needs of domestic politics; they are often the victims of public opinion , which they had created in the first place.

Both independent India and China are 50 years old. China has learned the hard way quite a few lessons during this period. India has been slow in understanding China. Today, the fact is that there is no basic conflict of interest between the two countries ; there are only specific bilateral problems, as they exist between any two countries. It is important for India to watch China's security policies in order to see how a country can formulate a security doctrine, which is not imported or outmoded like th e "draft" Indian nuclear doctrine, but is a product of its own genius.

Foreign policy directions

JOHN CHERIAN cover-story

China is in the process of reorienting its foreign policy with the focus on promoting stability and prosperity in the Asian region and bringing about multipolarity in international relations.

CHINA'S foreign policy has evolved considerably over the past 50 years. In 1949, Mao Zedong unequivocally announced the "lean to one side" policy: "The Chinese people must lean either to the side of imperialism or to the side of socialism. There can be n o sitting on the fence; there is no third path."

The China-Soviet Union axis lasted until the late 1950s. There were many concrete manifestations of the friendship. One of these was the Soviet assistance to China in the nuclear field, which began in 1957. A year later the Soviet Union sent a heavy wate r type reactor to Beijing. This relationship was the cornerstone of Chinese foreign policy during the first decade after the Revolution.

In the early 1960s, the simmering ideological differences between Beijing and Moscow boiled over, and until the 1980s the two countries remained implacable ideological foes. However, the collapse of the Soviet Union and the emergence of a unipolar world once again made Beijing reorient its policies. Now Moscow and Beijing have re-established a "special" relationship but it is unlikely that the close ties of the 1950s will be replicated.

In the last two decades China's foreign policy has to a large extent been dictated by its security environment. China has about two dozen neighbours. Five of them - Russia, Japan, India, Pakistan and Indonesia - have a population of over 100 million each . China's foreign policy with regard to its non-Communist neighbours has been more or less consistent. Bilateral relations with these countries are guided by the five principles of peaceful co-existence: mutual respect for each other's territory and sove reignty; mutual non-aggression; non-interference in each other's domestic affairs; equality of relationship; and mutual benefit.

China played a crucial role in the Korean war in 1950 when it unhesitatingly sent a million "volunteers" to fight the American invasion. Chinese help to the Vietnamese in the 1940s and 1950s in their fight against the French and later in the 1960s and th e 1970s against the Americans was also of great importance.

CHINA'S key role in the 1955 Afro-Asian Conference in Bandung (Indonesia), where its theme of peaceful co-existence won it a leadership position among the countries of the Third World, was an important foreign policy milestone. The Chinese Government did its bit in the struggle to decolonise the Third World by providing liberation movements both moral and material support. In the 1960s and the 1970s, Beijing undertook ambitious infrastructure projects on a turn-key basis in the developing world. The rai lway line connecting Lusaka to Dar-es-Salam, which was completed in the 1970s, has contributed to the development of the region. Many underdeveloped countries benefited from such projects.

But after Deng Xiaoping consolidated his hold on power and ushered in the Four Modernisations - agriculture, industry, science and technology and national defence - Chinese foreign policy became more pragmatic. The focus was now on turning China into a l eading modern state by the year 2000. Since the 1980s Chinese officials have repeatedly emphasised the importance of economic development while underlining the danger posed by looming U.S. hegemony. The Chinese view is that in the 21st century, national power will derive primarily from economic, scientific and technological prowess.

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The fast pace of events instigated in the latter half of the 1980S by Soviet leader Mikhail Gorbachev's "new thinking" alarmed Beijing. China made no secret of its view that Gorbachev's reforms oriented towards perestroika (restructuring) and g lasnost (openness) would lead to the weakening of the Soviet Union and the socialist world. Secondly, the critical position Washington adopted after the Chinese authorities tackled the Tiananmen Square protests in 1989, led to a serious rethink in Be ijing. It became apparent to China that Washington was using the issue of "human rights" to interfere in its domestic affairs. Another alarming development related to indications of Japan's overt inclination to assume again the role of a military power.

The situation in the Korean peninsula was seen in Beijing as yet another matter of concern. The United States had made it clear by the mid-1990s that it intended to keep a forward force of 10,000 troops deployed in Japan and Korea for the next 20 years. Naturally China feels that these forces are aimed at it. Washington retains the right to position nuclear weapons in Okinawa in Japan, in case a military crisis erupts in the region. In May 1999, the Japanese Diet (parliament) passed legislation to enabl e the implementation of the U.S.' plans for joint U.S.-Japan operations in case another war breaks out in East Asia. The guidelines replace the joint strategy drawn up more than 20 years ago to fight the Soviet Union.

Beijing feels that it is being shortchanged by the U.S. and Japan on the Taiwan issue. President Bill Clinton, after visiting China in 1998, reiterated his support for China's position on the Taiwan question. But in July this year President Lee Teng-hui of Taiwan declared that Taiwan no longer considered itself part of China. China was infuriated and has announced its intention to "uphold national sovereignty, dignity and territorial integrity". The U.S., on the other hand, has pledged to defend Taiwan if it faces an external attack. From China's point of view, the U.S. position is aimed at preventing China from emerging as a great power.

The distrust between China and Japan runs deep and is fuelled by historical animosities. Beijing is suspicious of the intentions of Japan as also of some other states in its immediate neighbourhood that are cosying up to the U.S. and tacitly supporting P entagon's long-term plans to encircle China militarily. The Americans are doing their best to prevent China from emerging as the dominant power in the region and to hold on to their claim to be the sole arbiter in the Asia-Pacific region. China may be tr ying to follow the Japanese strategy of economic development, but it has carefully avoided the Japanese pattern of subservience to the U.S.

The recent crisis in Kosovo, during which the bombing of the Chinese embassy in Belgrade was bombed by U.S.-led forces, has further alienated Beijing from Washington. The continuing expansion of the North Atlantic Treaty Organisation (NATO) and the plans to set up a theatre missile defence (TMD) system are also viewed as manifestations of Washington's desire to dominate the world. The TMD umbrella is ostensibly meant to shield Japan, South Korea and Taiwan from a perceived missile attack. The system wou ld for all practical purposes make Taiwan a U.S. protectorate. China is justified in concluding that a new Cold War is in the making, with itself replacing the Soviet Union as the "enemy".

However, the Chinese leadership is optimistic about multipolarity in international relations becoming a reality in the not-so-distant future. Chinese security and strategic experts are of the opinion that Russia will recover and will soon pursue vigorous ly its national interests. They do not expect Japan to remain subservient to the U.S. for long and they feel that China will emerge as a world power.

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China is also aware of the U.S. backing to separatist ethnic and religious tendencies. Beijing has accused Washington of supporting a pan-Mongolian movement. Inner Mongolia is part of China. Statements have been issued from Mongolia urging "the peoples o f Inner Mongolia, Tibet and Xinjiang to fight for freedom and independence". In Xinjiang, the movement by Islamic fundamentalists to create an independent "Republic of East Turkistan" has the tacit support of the U.S. The U.S. encouragement to the separa tists in Tibet is well-documented.

The Shanghai Group of Five, consisting of China, Russia, Tajikistan, Kazakhstan and the Kyrgyz Republic, is coordinating action to combat the separatist and fundamentalist forces. Beijing attaches great importance to this regional grouping, citing it as an illustration of multipolarity. China, like India and Russia, takes the threat from Islamic fundamentalists seriously. Followers of Islam in China are concentrated mainly in the Xinjiang area (Muslims in the country number more than 17 million). China depends a great deal on Pakistan to use its influence on the Taliban leaders to prevent the supply of arms to Islamic rebels in Xinjiang.

WASHINGTON has accused Beijing of being one of the biggest arms exporters. Chinese officials, however, maintain that they are careful about entering into defence deals. The Chinese Government has denied that it has supplied missiles and advanced missile technology to countries such as Pakistan, Iran and Saudi Arabia. Beijing has accused Washington of being a greater proliferator of nuclear weapons, pointing out that the U.S. is the world's largest weapons exporter, with 44 per cent of the global sales. The Chinese Government is especially angry about the sale of high-tech U.S. weapons to Taiwan. The warm relations Beijing has with Moscow today has made China the second largest defence partner of Russia. India is the biggest buyer of Russian weapons.

Former Russian Prime Minister Yevgeny Primakov was a strong proponent of a Moscow-New Delhi-Beijing strategic axis to counter U.S. hegemony. But both New Delhi and Beijing, for their own reasons, were lukewarm to this proposal. But they do share some com mon perspectives. For instance, both India and China are alarmed at the growing trend in international politics of using "human rights" as a pretext to intervene in the internal affairs of sovereign countries. The Clinton administration has used this rat ionale to intervene in Kosovo.

Further, United Nations Secretary-General Kofi Annan's call for "more active intervention" by the U.N. when civilian populations are at risk has set alarm bells ringing. Chinese Foreign Minister Tang Jiaxuan has said that respect for national sovereignty and non-interference in the affairs of another country "are the basic principles governing international relations" and that any deviation from these would lead to a new form of gunboat diplomacy that would "wreak havoc" with global peace.

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China continues to have close ties with developing countries. It is involved in a number of joint ventures which, according to Chinese officials, are for "mutual benefit". The government allows "special enterprises" to take part in these ventures. China recently completed a major project in Sudan, which involved the developing of an oilfield and the laying of an oil pipeline. This project has made Sudan an oil-exporting country. Cash-strapped Sudan will repay China with crude oil. Sudan is one of severa l countries facing a U.S. economic embargo.

China has excellent relations with Cuba. It is one of the biggest trade partners of Cuba outside Latin America. Moreover, Beijing has been vociferous in its criticism of the inhuman U.S.economic blockade against Cuba. Both Cuban President Fidel Castro an d President Jiang Zemin have exchanged visits.

BEIJING'S focus is on promoting stability and prosperity in the region. Defence Minister General Chi Haotian said recently that the confidence-building measures (CBMs) signed by China since 1994 with Russia, Kyrgyzstan, Tajikistan, Kazakhstan and India h ave increased mutual trust and provided safeguards for border security. This in turn has promoted stability and prosperity.

China is on the verge of settling most of its border disputes. The long-standing disputes with Russia and the Commonwealth of Independent States have been more or less resolved. China and Vietnam have set the year 2000 as the deadline for resolving their border problems. The dispute with India is the only one that remains to be resolved. Chinese officials feel that a solution to this could take some time as the Line of Actual Control was never fully demarcated.

Jiang Zemin, in a recent speech in Bangkok, said that "the world is far from being tranquil. Hegemonism and power politics still exist and have even been developed in the international political, economic and security fields." He added that the "gunboat policy" and the economic neo-colonialism pursued by some powers had undermined the independence and development interests of many small and medium-sized countries and threatened world peace and international security.

Line and leadership

MANORANJAN MOHANTY cover-story

Mao Zedong's socialist vision would remain a reference point for assessing the Deng Xiaoping line of reforms.

AS China celebrates the 50th anniversary of the founding of the People's Republic, the people of China recall the Yi He Tuan movement, also known as the Boxer Uprising, whose centenary falls this year. It was an anti-imperialist armed struggle which star ted in Shandong province in 1899 and spread to Tianjin in early 1900 and to Beijing in May that year. The Qing dynasty dowager Ci Xi, after showing sympathy for the rebels, capitulated when the combined armed forces of Britain, Germany, Italy, Russia, th e United States and Japan landed to suppress the uprising in August. After this, yet another unequal treaty was imposed on China in 1901 giving more rights to the imperialist powers, including the right to set up their legation quarters in Beijing.

This uprising fuelled the sentiments of nationalism, leading to the 1911 Revolution that overthrew the Manchu monarchy and set up a republic. But only after the Bolshevik Revolution did the Chinese nationalist movement acquire a democratic content. The s tudents' protest in Beijing against the Treaty of Versailles giving German possessions to Japan spilled over into other cities. The May Fourth Movement of 1919 brought the masses into the political struggle against colonialism and social oppression. This struggle was led by the Communist Party of China (CPC), which was founded in 1921. After a tortuous process of political experiments, the CPC evolved its strategy of People's Democratic Revolution under the leadership of Mao Zedong and achieved victory on October 1, 1949.

The running theme of the 20th century history of China is gaining prestige for the nation and achieving welfare for the people and making them masters of their own destiny. Dr. Sun Yatsen, the leader of the 1911 Revolution, enshrined it in his Three Peop le's Principles - Nationalism, Democracy and People's Livelihood. Mao Zedong's theory of New Democratic Revolution built upon it and propounded the concept of a four-class united front of workers, peasants, petty bourgeoisie and the national bourgeoisie - constituting the people who formed 90 per cent of the population. This united front sought to carry out an anti-colonial and anti-feudal revolution. Deng Xiaoping reverted to this theme of nationalism with economic well-being in 1978 through his progra mme of reforms and an open-door policy. Mao's political line of the People's Democratic Revolution led to the founding of the People's Republic of China (PRC) and Deng's political line of building a socialist market economy has brought about significant economic successes in China and a steadily rising status for the country in the world. Deng followed the united front framework to mobilise social forces to the maximum extent in order to carry out economic modernisation.

Mao Zedong's line for building socialism was different from what Deng adopted. Mao advocated the application of the class struggle perspective while striving for economic development. He stressed that without the right political-ideological orientation e conomic growth may bring about capitalist development. The Cultural Revolution propounded this perspective, but in the course of the ideological campaigns during 1966-76, factional political battles became widespread, causing conditions of anarchy and la rge-scale persecution. Deng carried the party at the Third Plenum of December 1978 to repudiate the Cultural Revolution in toto and affirm the centrality of 'economic construction' in place of class struggle and emphasised the need for socio-polit ical stability as against the political campaigns of the Cultural Revolution.

Deng's and his successors' economic successes have put Mao's line on socialism in the museum of rejects. But two things cannot be denied. First, much of the economic successes of the reform period would not have been possible without the structure of col lective economy built during Mao's leadership. Secondly, as capitalist forces grow in China and the capitalist culture takes root and social inequality and regional disparity, corruption and crime acquire serious proportions, Mao's socialist vision remai ns a reference point to assess the Deng line of reforms. But without doubt, the living standards of every Chinese family have substantially improved during the past two decades.

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The line has been put in place by a political leadership to carry it out firmly. This year is the tenth year of Jiang Zemin's leadership, which was installed by Deng Xiaoping in June 1989 after the crushing of the youth demonstrations in Tiananmen Square . Interestingly enough, both Mao and Deng tried out three sets of their colleagues to carry out their respective lines. Mao had Liu Shaoqi as his deputy in what was a collective leadership until 1965. During the Cultural Revolution, Liu was disgraced and Lin Biao, the Defence Minister, became the second-in-command. After Lin Biao's failed coup and death in an air crash in 1971, Premier Zhou Enlai took command and he brought back Deng Xiaoping. Deng was challenged by Mao's wife Jiang Qing, who led the 'G ang of Four' and was arrested in October 1976 (Mao died in September that year). Mao's designated successor, the centrist Hua Guofeng, could not withstand the new wave initiated by Deng, who proclaimed the new line at the end of 1978.

Deng Xiaoping decided not to occupy top party or state posts except a crucial position as the Chairperson of the Military Affairs Commission, which he held until after the Tiananmen Square incident in 1989. His first nominee was Hu Yaobang, who was the C PC General Secretary from 1982 to 1987 until he was replaced by Premier Zhao Ziyang. Zhao Ziyang was dismissed in June 1989 for his mishandling - read sympathising with - the Tiananmen Square demonstrations.

Jiang Zemin, then the Secretary of the Shanghai Party Committee, slowly consolidated his position as the leader since 1989. Deng reaffirmed the reform line in early 1992 during his tours of the Special Economic Zones and invoked people to carry out the r eforms vigorously without fear of capitalist restoration; he pointed out that the Communist Party leadership was there to direct it. Jiang moved fast and christened the new ideas in the 14th Party Congress as the theory of "socialist market economy" and Deng Xiaoping's theory of "building socialism with Chinese characteristics". After the death of Deng (in February 1997), the 15th Congress, held in September 1997, proclaimed Deng's theory as the new "ideological banner" of the CPC. In the meantime, Jian g assumed the office of the Chairperson of the Military Affairs Commission after Deng's retirement and became President of the People's Republic.

Jiang at 73 has sidelined his critics and challengers such as Qiao Shi who was retired in 1997 on consideration of age. He has pulled along reasonably well with former Premier Li Peng, 71, now Chairperson of the National People's Congress Standing Commit tee (NPCSC). Jiang's trusted colleague from Shanghai is Premier Zhu Rongji, also 71, who has directed the economy through periods of crisis and periods of smooth growth. Another technocrat in his team in the Standing Committee of the Politburo is Li Ruih uan, 65, who was the leader in Tianjin earlier. Now he is the Chairperson of the Chinese People's Political Consultative Conference (CPPCC), the United Front organ. Li Lanquing, 67, a Vice-Premier, is in charge of international economic relations, and We i Jianxing, 68, the Secretary of the Party Discipline Commission spearheading the ruthless drive against corruption, is in charge of Security Affairs. But the man of the future is Hu Jintao, the youngest member of the team at 57, the Vice-President of th e PRC who has been elevated to the post of a Vice-Chairperson of the Military Affairs Commission in the just-concluded Plenum of the CPC Central Committee. A former Secretary of Guizhou and, more important, of the Tibet Party Committee and earlier the Yo uth League leader, Hu has been the President of the Party School for many years. Jiang Zemin may be grooming him to become his successor at the 16th Party Congress to he held in 2002.

The leadership question does not seem to pose much of a problem as a common commitment to the Deng Theory has created layers of leaders in China. The Deng Theory has an intrinsic flexibility to address the burning socio-political problems that China face s at the turn of the century. But the legacies of the people's revolution of the century have created enough strength to pursue their agenda of national prestige and mass well-being and contribute to similar processes going on in other parts of the world .

Manoranjan Mohanty is Professor of Political Science, University of Delhi, and Director, Institute of Chinese Studies.

Firmly on the socialist path

SITARAM YECHURY cover-story

China is making major strides of economic development while at the same time being conscious of the problems of growth of any tendencies alien to socialism. Some observations and impressions from a visit.

A FIVE-MEMBER Central Committee delegation of the Communist Party of India (Marxist) led by Polit Bureau member Sitaram Yechury visited China from March 31 to April 10, 1999, at the invitation of the International Department of the Central Committee of t he Communist Party of China (CPC). The other members of the delegation were Nirupam Sen, P.K. Gurudasan, N. Varadarajan and Ashok Dhawle.

The delegation, which was received warmly, held fruitful discussions with the CPC leadership reflecting the mutual desire to strengthen relations between the two countries, peoples and the parties. At the Great Hall of the People in Beijing the delegatio n was received by Wei Jianxing, one of seven members of the Standing Committee of the CPC Political Bureau who is in charge of party discipline. The delegation held discussions with Dai Bingguo, head of the International Department of the CPC Central Com mittee, Ma Wenpu, Vice-Minister of the International Department of the Central Committee, and many others. Three days of intensive discussions with the leadership of the CPC in Beijing covered a wide range of bilateral and international issues.

Thereafter, the delegation visited the provinces of Xian, the ancient capital of China, and Yunnan. In Yunnan, the delegation visited remote hilly areas and deep down south the tri-junction with Laos and Myanmar inhabited by China's minority nationalitie s. The week-long tour to interior China aimed to study the living conditions of the people and find out how the problems arising out of the speedy developmental process are being tackled at the grassroots level. The itinerary was worked out at our sugges tion that we visit interior China rather than the more developed, fashionable and prosperous east coast which has huge cities such as Shanghai and Guanzhou (Canton), which are easily comparable with Hong Kong.

What we saw and experienced in China's interior reflected a country and a people seized with a singular passion to bring about all-round development based on speedy economic growth. This singularity of purpose and determination was evident at all levels. Given that this is happening in a country with 1.3 billion people which has been experiencing a phenomenal annual economic growth during the last two decades, such a massive human and material effort is bound to produce results that will have global imp lications.

One highlight of the visit was the discussions the delegation had with Wei Jianxing. While detailing various aspects of the current situation in China, he highlighted China's desire to improve good-neighbourly relations with India. This, he said, was in China's interest as its main priority was to develop its own economy and thus strengthen socialism, which required peace and absence of tension with any country. Despite the recent setback to the decade-long process of improvement of relations that had b egun with Prime Minister Rajiv Gandhi's visit to China in December 1988, Wei Jianxing emphasised China's desire to overcome these problems and continue the process of improving relations. In response, we conveyed to the Chinese leadership that the Indian people, given their centuries-long association and interaction with the Chinese, are equally, if not more, desirous of improving these relations. In fact, mutual concern for good-neighbourly relations was a constant feature of all the discussions we had during the visit.

Considering that ours was the first political delegation visiting China after the BJP-led government assumed office in India and in the background of irresponsible acrimony unleashed by the BJP and its allies against China as a justification for Pokhran- II, the fact that there was such a universal desire among the Chinese leadership and the people to improve relations with India was heartening.

The Chinese leaders emphasised that while one arm of the present developmental process in China is that of economic reform and opening up to the outside world, the other arm is the firm adherence to the four cardinal principles (adherence to the socialis t road; Marxism-Leninism, Mao Zedong thought; people's democratic dictatorship; and the leadership of the Communist Party) and the strengthening of socialism with Chinese characteristics.

A series of public campaigns are being conducted by the CPC on these issues and a vast network of party schools continuously train and re-train party members on ideological matters. Our delegation visited the party school in Yunnan province. One importan t activity at this school is to carry on study and research in Marxism-Leninism and Deng Xiaoping theory. Apart from research scholars, party cadres sent by the lower-level committees come here for training. Over the last 20 years, the school has trained more than one lakh students. It conducts various courses in revolutionary theory and philosophy and also on party-building and party history. The faculty follows the method of criticism and self-criticism and studying theory by integrating the subjectiv e with the objective.

Explaining their assessment of the international situation, the CPC leaders told our delegation that peace and development will remain the main themes of the 21st century. They were optimistic that the 21st century will offer more opportunities than chal lenges for the struggle towards socialism. In their perception, the circumstances also will be more favourable than they are unfavourable, and hence the opportunities should be seized to counter the challenges.

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CERTAIN important features of the present international situation figured in the discussions. The first is the global tendency that propels the world towards multi-polarity. While on the one hand, such a development, after the bipolar Cold War period has ended, is a positive one, on the other, there are forces with a vision of a "new world order" which seek to convert this natural tendency towards multipolarity into one of unipolarity. Such an effort will have to be resisted in the interests of a democr atic world order.

The second feature concerns the true nature of economic globalisation. Its potential to wreak havoc is becoming clearer with the severe economic damage it caused in South East Asia, virtually overnight. Globalisation poses serious threats to the sovereig nty and economic security of Third World countries. On the other hand, globalisation also offers possibilities for expanding economic activity and, hence, achieving development. China is preparing to face this dual nature of globalisation.

During the discussions with various leaders it became clear that over the past couple of years China has overcome enormous difficulties and achieved new advances while maintaining political and social stability alongwith a relatively high economic growth . China has achieved significant diplomatic victories as well and is bracing itself to re-unite Macau during the 50th anniversary year of its socialist revolution.

Domestically, China had to overcome two very serious problems: the impact of the South East Asian financial crisis and severe floods, unprecedented in this century.

The impact of the financial crisis, we were informed, is still felt. Over the past few years China's foreign trade was growing at an annual rate of 16 per cent. Last year this figure fell to 0.4 per cent. Anticipating such problems, China had targeted a modest 8 per cent growth. Of this, 2 per cent was to come from foreign trade. The sharp drop in the foreign trade was therefore a severe setback. The unprecedented floods caused damage of more than 200 billion yuan (the Chinese currency, approximately ei ght to a dollar). Despite this, China achieved a growth rate of 7.8 per cent during the year. And real per capita income grew by 4.3 per cent in the rural areas and 5.8 per cent in the urban areas. How was this achieved?

China faced these two formidable challenges mainly by effecting a massive increase in state spending that stimulated internal domestic demand. This year, more than yuan 100 billion was spent by the exchequer on building infrastructural facilities. It was this timely and effective state intervention that helped China avoid going the way of the South East Asian countries, which would have caused tremendous chaos in a country of China's size.

While China's decision not to make its currency freely convertible helped it insulate itself from the financial crisis elsewhere, it has refused to devalue its currency despite this being the obvious choice to bolster exports and, thereby, improve the gr owth of foreign trade. The country, instead, took a series of measures to encourage exports through a variety of subsidies. One of the main reasons for not opting for the devaluation of the currency was that it would have affected Hong Kong which was alr eady suffering the consequences of the financial crisis. Further, any devaluation would adversely affect the overall confidence in the economy and its international standing. More important, it would increase China's foreign debt burden.

Incidentally, the few hours we spent in Hong Kong during our return journey confirmed the fact that mainland China had greatly helped Hong Kong to avoid buckling under the regional financial crisis. Apart from not devaluing the yuan, mainland China had s tepped up investments in Hong Kong, boosting demand and employment. This has silenced even the worst critics of Hong Kong's unification with China. The bulk of Hong Kong's population appears more grateful to the mainland than even before.

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It would be interesting to note that when we, in India, argue that in order to overcome the current industrial recession and at the same time generate employment it is necessary for the government to undertake large public expenditures, we are told by th e Indian "liberalisers" that this will push up the fiscal deficit and, hence, would be counter-productive. Then why is this not true for China? Because, it is not true for India either.

On the contrary, despite such huge public expenditure, both retail and consumer prices grew at a lower rate in China than in the previous year. The Chinese explained that the problem is not in building up domestic debt. The question is how such borrowed funds are utilised? If it is employed productively and not wastefully, then it need not give rise to inflation. They claimed that the ratio of deficit plus the total value of outstanding national bonds (domestic borrowing) to GDP is still below the inter nationally accepted alarm level and, hence, sustainable. This has been so because, unlike India, over the years China has pursued a prudent fiscal policy.

As regards foreign debt, a question with which we are often confronted in India, China has explained that in no single year has its outstanding foreign debt been more than its foreign exchange reserves. This, it was stated, is the key to ensuring that th e country does not get indebted excessively.

WE were most impressed to learn how China tackled the unprecedented floods. Apart from a direct economic loss of over yuan 200 billion, many mines and industrial enterprises had to be closed down. But, following a massive mobilisation programme under the leadership of the CPC and the People's Liberation Army, China succeeded in battling the floods and minimising losses. Despite such a major calamity, the harvest that followed was generally good. Amazingly, the grain output did not fall; it was estimated to have grown by around 4 per cent. In fact, very high priority has been accorded to agricultural development with an emphasis on urgent modernisation.

With regard to industry, a major problem China is facing is that of its public enterprises. Public enterprises continue to be the overwhelmingly predominant part of Chinese industry. And we were assured that this situation will be maintained. However, in the process of restructuring these enterprises, the problem faced is that of workers being laid off. Around five to six million workers are laid off every year. But at the same time, six to seven million new jobs are created every year. But due to popul ation growth and additions to the labour force every year, around five million workers remain to be re-employed. This situation is expected to be resolved in the next couple of years.

The laid-off worker is protected by the state; he or she receives a minimum amount of money required to sustain normal life. Further, in China, whenever a person is employed, the employer is obliged by law to take out an insurance policy against the empl oyees' future risk of unemployment. The employer pays the premium. If the employee loses the job, then he or she receives the insurance amount as compensation.

Another problem being faced by China is the regional economic imbalance between the prosperous east coast and the rest of the country. We were told that conscious efforts were being made to overcome this situation through greater financial allocations fo r major projects in these areas and to create a better climate for the introduction of private capital. The developed areas are to assist the backward areas through economic linkages, that is, by encouraging the establishment of auxiliary units in the ba ckward areas. Through this process, people deprived of developmental benefits should receive them at the earliest. What was in evidence, therefore, was an active policy of state planning to ensure balanced economic development, far from relying exclusive ly on "market forces".

Another problem that China is facing relates to the growing disparities in the income levels of its people. The Chinese dictum that in the process of getting rich some people will get rich faster is there for all to see. But through conscious state inter vention, China is seeking to provide benefits to those at the lower end.

Apart from such disparities, a major problem that continues to surface is the growth of illegal activities such as corruption. The CPC has adopted a vigorous policy of encouraging people to grow rich through honest means and simultaneously cracking down on illegal activities. A widespread campaign is on in this regard and some deterrent action has also been taken. The action taken against the former Mayor of Beijing, who was found to be corrupt, is one example.

In March 1999, the National People's Congress, the highest state authority, met to review the activities of the past year. The Chinese emphasise that Deng Xiaoping's theory means working from practical conditions. In the past, they had committed, accordi ng to them, the mistake of not acting on the basis of this theory. China is not yet a developed country; it is still backward. Hence their decision to develop productive forces through the socialist market economy and to demonstrate the superiority of so cialism through the growth of economic productivity. In the process of such a review, they realised the need to amend the Constitution in order to allow the development of other forms of property ownership such as private, collective or cooperative owner ship while retaining public ownership as the dominant one.

This, they said, was necessary to stimulate the initiative of private or other forms of ownership and to allow them to co-exist with public ownership. Responding to the obvious question whether this would permit the growth of a capitalist class, they ans wered that under the leadership of the CPC with its commitment to maintaining and strengthening socialism in China, they are confident that they can preserve China's socialist character and not allow such forms of property ownership to become dominant.

With differences in incomes and standards of living growing, the danger of such differentiation laying the basis for a possible process of class differentiation is a cause for worry. The Chinese leadership, however, is confident that while tackling the i ll-effects of the reform process, they will also preserve and strengthen the socialist character of the People's Republic of China.

In sum, our delegation's visit to China was an experience which helped us gather more information regarding how China is making stupendous strides of economic development while at the same time being conscious of the problems of growth of any tendencies alien to socialism. The CPC leadership repeatedly emphasised the fact that they are combating such trends and would preserve and strengthen the socialist character of China. The visit resulted in a better understanding of current developments in China an d the discussions reinforced the mutual desire to strengthen further the bonds of friendship between the two giant Asian neighbours.

Now for the verdict

As the marathon polling exercise ends, attention turns to the shape of governments to come.

THE Bharatiya Janata Party had obviously preserved the choicest specimens in its vocabulary of political invective for the home stretch of the marathon election season. Lal Krishna Advani rode into West Bengal deriding the dominant Left Front as mere "pa lanquin bearers" for the Congress(I). The veteran Marxist Chief Minister, Jyoti Basu, responded suitably by denouncing Advani as a "criminal" guilty of the demolition of a place of worship in Ayodhya. Prime Minister Atal Behari Vajpayee, in high dudgeon, demanded a personal apology for the insult inflicted on the Union Home Minister. Chief Minister Basu, at the time of writing, was in no mood to oblige.

Advani chose to portray renewed talk of the relevance of a "Third Front" as evidence of political confusion on the Left. The reality perhaps is that there is now an increasing likelihood that the BJP's leadership role within the National Democratic Allia nce (NDA) will be eroded by the numerical outcome of the Lok Sabha elections. This could unfetter some of the partners of the BJP-led front and allow them greater latitude to strike up political bargains in the future. The NDA being essentially an effort at numerical vote consolidation rather than an ideological fraternity, the BJP could well have to contend with fresh political headaches once the final arithmetic of the 13th Lok Sabha becomes clear.

EARLY projections of a triumphal romp for the BJP and its allies, it later transpired, were premised upon an assumption that the sense of national bonding and euphoria that the Kargil military operations engendered would be sustained through the election campaign, overriding contingent problems on the ground. This was not a very sound proposition for several reasons. The course of the election campaign - in particular the manifest sense of panic within the BJP's ranks over political events and trends in Uttar Pradesh - has proven that the "wave effect" that was so pronounced until 1984 is now decisively a thing of the past.

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All of the social sections that were united in uneasy alliance under the BJP banner in U.P. have strong political stakes in maximising their parliamentary representation. They were disinclined to cede their perceived right to political prominence to a Pr ime Minister basking in the glow of a military triumph. In the case of U.P., Vajpayee himself was seen not so much as a detached observer but an active element in the BJP's factional turmoil. In assuming that the Prime Minister's newly won moral authorit y would drown out the compulsion of appeasing every faction, the BJP strategists seem to have grievously erred. The response of U.P. Chief Minister Kalyan Singh, which just stops short of open rebellion, is a deeply embarrassing development, which threat ens to erode considerably the Vajpayee halo.

The bad news for the BJP is that the States where it is the dominant electoral presence in its own right are unlikely to give it the harvest of seats it garnered in 1998. Problems are at their most acute in U.P., although Madhya Pradesh and Rajasthan als o seem to be posing their own difficulties. Bitter infighting within the U.P. unit, and a relatively cohesive challenge from the Congress(I) in M.P. and Rajasthan, have ensured that the core area of the BJP's strength will be relatively less rewarding th is time around.

The erosion of the party's strength in these States could conceivably be remedied through fresh gains in Bihar and Maharashtra. But in both these States, the BJP is one among equals, and in the case of Bihar, its partner is only loosely affiliated to it in terms of ideological commitments. Andhra Pradesh and Karnataka could also bring it certain gains, of a relatively less decisive character in the latter State. In A.P., though, the BJP is quite clearly the junior partner in the NDA, having yielded most of the seats to the Telugu Desam Party (TDP).

The strategic alliances which have been a large part of the success of the BJP could, in the post-election scenario, engender a fresh set of difficulties. Except for Maharashtra, where its partner shares a strong element of ideological commitment with it , the other States present a uniform picture of contingent alliances, oriented towards the limited objective of maximising electoral gains. What this means for the core ideological programme of the BJP in the post-electoral scenario, when conceivably the NDA will be given the first call to form a government, remains to be seen. There is a strong possibility that even if the alliance that it leads exceeds its total tally of seats in the last Lok Sabha, the BJP's own influence within will be rather dimini shed.

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THE ally that is most likely to increase its clout within the NDA is the newly "united" Janata Dal bloc led by Ramakrishna Hegde and George Fernandes. Also performing strongly in the campaign is the Biju Janata Dal in Orissa, which has gained ground on a ccount of a virtual abandonment of the Congress(I) by the Janaki Ballabh Patnaik faction. Among the new partners, the Dravida Munnetra Kazhagam and the TDP would be pressing for positions of influence.

Considering that the Janata Dal(United) in Bihar alone is likely to have a minimum of five contenders for senior Cabinet positions, the post-electoral scenario for the NDA is likely to be rocky. It is perhaps on account of an uneasy awareness of the like ly consequences for the party's ideological commitments that there is already talk of an imminent change in the leadership of the BJP. The colourless tenure of Khushabhau Thakre as party president is unlikely to be prolonged very much further. Even if he is allowed to serve out his full tenure, he is likely to be put on notice immediately after the election results are in, of an imminent change of regime. The custodians of ideological purity in the Rashtriya Swayamsevak Sangh (RSS) have already indicate d that they would like somebody capable of a more purposive leadership style, such as Advani, at the helm of the party.

ONCE the results are in, there is also likely to be renewed attention to the role that election forecasts have played in this campaign. There was a virtual glut in the market for projections after the Election Commission's rather weak and legally infirm effort to restrain them failed. Many of these failed even to make a pretence of subtlety, plainly putting on view their partisan loyalties. To an extent, the multitude of conflicting or varying projections that have been made by rival agencies provide th e best negative advertisement of the accuracy of opinion and exit polls. But the matter is not one that can be wished away quite so easily, especially in a context of a reassertion of government control over the official electronic media.

To work out the various political possibilities that could emerge from the 13th Lok Sabha elections may at this stage be a pointless exercise. When the BJP assumed office in 1998, sections sympathetic to the party were known to predict confidently that i t was only one election removed from absolute power. A rather dubious record of governance in the first year of the Vajpayee government seemed to puncture this boast. Some semblance of credibility was restored to this expectation by the manifest inabilit y of the Opposition parties to work out a coherent strategy to neutralise the BJP. Kargil then gave it a renewed momentum. The campaign leading into General Elections 1999 will perhaps be remembered as the story of how this momentum was rapidly dissipate d.

A tale of woes at SAIL

Buffeted by market realities and overstretched on several fronts, the public sector steel behemoth faces an uphill climb back to viability.

THE steel-making giant once considered a jewel in the public sector crown, Steel Authority of India Limited (SAIL), today faces massive haemorrhaging. SAIL, which has the largest workforce among corporate entities in the country, had been a profitable en terprise until recently. However, it suffered a sudden downturn last year and posted losses of Rs. 1,574 crores. In the first quarter of this year, it toted up losses of Rs. 610 crores.

With reports of the government refusing to agree to a financial restructuring proposal and with no other remedy in sight until after the new government takes over, the prognosis is rather grim. If the losses continue, even the infusion of massive doses o f taxpayers' money is unlikely to revive the mammoth undertaking, and this could affect the livelihood of 1.75 lakh employees. Talk of referring the PSU to the Board for Industrial and Financial Reconstruction (BIFR) has set the alarm bells ringing. The irony is that the crisis has come about despite a 5.6 per cent growth in sales last year.

What has caused SAIL's decline and almost imminent fall? How far is the company itself to blame for the current situation and to what extent did factors beyond its control contribute to the process?

That the decline has occurred in the post-liberalisation era which has witnessed rapid capacity creation in the private sector is not entirely coincidental. When the government decided to decontrol steel and open up the sector for private capital in the early part of the decade, steel consumption had appeared to be growing at a promising rate and there was a rush of investments into the sector. The private sector is in the process of adding fresh capacity to the tune of nearly 11 million tonnes by the y ear 2000. Nearly all of this will be in flat products.

Not to be outdone, SAIL also planned a massive modernisation and expansion exercise at a cost of Rs.12,000 crores over the last three years, a process that envisaged adding 1.5 million tonnes to its capacity of flat products. SAIL is already the largest steel producer in the country with a capacity of 12.4 million tonnes of crude steel. It has a capacity of 10.192 million tonnes of saleable steel, 1.184 million tonnes of mild steel, 1.84 lakh tonnes of alloy steel and 1.86 lakh tonnes of hot-rolled carb on steel.

Was this creation of additional capacity in the public and private sector warranted? Demand projections made during the earlier part of the century were rather optimistic and the capacity addition was made based on these projections. However, these proje ctions have been proved wrong. According to a recent paper prepared by the Economic Research Unit of the Joint Plant Committee of the Government of India, domestic demand for finished steel, which is currently around 22.9 million tonnes, is estimated to reach no more than 27.73 million tonnes by 2001-2002. Of the latter, flat products will account for 15.95 million tonnes. According to the paper, even by optimistic estimates the demand will only be 29.6 million tonnes. Projections made by the Ministry o f Steel had envisaged a demand level of 31 million tonnes of finished steel for 2001-2002 and 47.04 million tonnes of finished steel for 2006-2007.

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How did the projections go awry? First, they were made on the basis of optimistic gross domestic product growth predictions, which have since been belied. Second, even the 5 per cent GDP growth that has occurred owes itself to an increase in the share of the services sector in national income. In fact, it has been found that the linkages between growth in the primary and secondary sectors and GDP have been weakening. Third, the industrial growth rate hovers around 7 per cent, a much lower level than est imated, resulting in an overall fall in steel consumption. This is mainly because the government, which was the prime provider of infrastructure, has retreated from the sector in the post-liberalisation phase expecting the private sector to step in to th e field. But the private sector has played coy. Fourth, such private investments as there have been in sectors like power, have relied on equipment sourced abroad, and domestic steel-makers have had no part of the pie.

In the case of flat products, which were earlier in short supply and for the manufacture of which substantial additional capacity has been added, the predominant consumer, the automobile industry, prefers to source them from abroad for reasons of quality or other considerations. Maruti Udyog Limited, the market leader in the passenger car sector, imports its requirement of flat steel from Japan. So do most other manufacturers, and this has created a near-crisis situation in the flat products segment. Fi fth, construction activity, which accounts for the largest segment of steel consumption (it consumes nearly a fifth of all steel produced in the country) has been sluggish in the last three years not only in India but in the entire South East Asian regio n. Gross domestic capital formation in the construction field has been much lower than was projected.

Thus, the situation today is that demand predictions have gone awry but ambitious capacity expansion has taken place. How did this happen? Ardhendu Dakshi, former general secretary of the Steel Workers' Federation (SWF), the largest union in the industry , told Frontline: "The World Bank not only encouraged the private sector to set up these huge capacities but even canvassed to find funding for them. The unplanned and irresponsible capacity additions in the private sector have been responsible fo r the state in which SAIL is in today."

The situation has been exacerbated by the growth in imports. Steel imports under the open general licence category were allowed and the duties were brought down from 85 per cent a few years ago to between 20 and 30 per cent now. In fact, hot-rolled (HR) coils used to be imported through advance licences for $225 a tonne until recently, when the government fixed a floor price of $302 a tonne. Steel producers from the Commonwealth of Independent States (CIS) and South Korea have exported flat products to India at prices no Indian producer can match, leave alone SAIL with its enormous wage bills, interest burden and overheads. While some private producers have matched import prices in a desperate attempt to cut down on inventories and losses, SAIL has bee n unable or unwilling to do so. The mechanism to fight the dumping of cheap steel into India is rather weak although Indian producers are often subjected to anti-dumping legislation and punitive measures by foreign steel companies.

While some SAIL plants are in sore need of modernisation, should it have gone in for large-scale modernisation and expansion using borrowed funds? Should it not then have simultaneously revamped its marketing set-up to face the competition? Should it not have pruned costs and made itself competitive even while it was making profits, rather than lock the stables after the horses had bolted?

SAIL has hitherto had a domestic orientation with a virtually captive buyer in the government under controlled market conditions. As a public sector unit and a lumbering giant at that, it not only lacked the agility displayed by its private sector counte rparts but lacked the marketing savvy so essential to succeed in a competitive environment, especially when demand projections have gone awry. Insiders say that revamping the marketing and other departments within the company is easier said than done in an environment where SAIL has been treated as a milch cow by successive parties in power and sundry politicians seeking all kinds of favours including employment opportunities for their near and dear, preference in the award of purchase contracts and so on.

Questions have also been raised as to whether the modernisation and expansion could not have been undertaken at much lower costs than have been incurred. SAIL insiders also say that its modernisation has been sporadic and uneven. Rs. 5,000 crores have be en spent on the Rourkela plant alone. While downstream facilities have been modernised with the installation of hot strip mill/continuous casting facilities, raw material handling has not been modernised. Lack of vision in designing a comprehensive moder nisation programme has resulted in investments which have not yielded commensurate improvements in productivity and quality, they say. While the modernisation measures in Durgapur are satisfactory, Rourkela and Bokaro have not yielded the expected result s, according to knowledgeable sources in SAIL. The modernisation programme was, incidentally, designed by SAIL although it did get consultants to advise it.

The recession combined with over-capacity led to a demand-supply mismatch. SAIL was bound to feel the impact of the mismatch most. The continuing withdrawal of the government from infrastructure development tasks has had a serious impact on SAIL because until recently the government had bought 80 per cent of its steel production.

Following the train accident at Khanna, Punjab, on November 26, 1998, the Railways suspended orders for rails made at SAIL's Bhilai plant which it believed did not meet the requirements. The orders were resumed only in the second quarter of this year aft er ultrasonic and gamma ray tests proved otherwise. SAIL not only lost business in the first quarter, but it also had to invest in new testing equipment. The Railways have been buying around 1.5 million tonnes of rails from SAIL annually.

A paper presented at a seminar on 'The Impact of the New Economic Policy on the Steel Industry in India' organised by the SWF records an all-round fall in the production of saleable steel in all the units of SAIL except the Durgapur unit.

For SAIL, price levels fell even as input costs rose. Increases in railway freight, and the costs of coal and power pushed up the expenditure bill by around Rs. 700 crores a year, prompting SAIL to undertake a massive cost-cutting exercise. However, McKi nsey & Co, the international firm which was consulted by SAIL to recommend measures to achieve a turnaround, reportedly found that SAIL had failed to negotiate effectively with its suppliers to obtain inputs at lower prices even as its output prices were falling. Purchase departments in large PSUs often have entrenched interests, and SAIL is perhaps no exception.

Defective distribution channels have been another problem for SAIL. Under controlled market conditions, steel was first shipped to stockyards in various parts of the country before being sent on to the buyers, which added to the transportation cost. Unde r the freight equalisation policy, SAIL absorbed the additional costs. This policy has since been partially amended but there has been resistance to its scrapping. A multi-tiered system of distribution has led to delays in delivery and higher costs. The Tata Iron and Steel Company (TISCO) has managed to scrap a system that relied on stockyards and cut costs, but SAIL, in typical bureaucratic fashion, has fought shy of revamping the distribution set-up.

There are also historical factors that have aggravated SAIL's woes. Located mainly in the central and eastern parts of the country near coal and iron ore mines, SAIL plants are far removed from the industrialised belt in western India. Private sector sup pliers located closer to this industrial belt have a distinct advantage over SAIL in terms of cost as well as delivery schedules.

While other steel plants have better access to imported coal at rates cheaper than those that prevail in the country, SAIL's options in this regard are rather limited. Notwithstanding improvements in energy-saving and other areas, SAIL can hardly hope to match the lower costs of its overseas competitors given its bloated size. SAIL has a workforce of 1,74,736 lakhs, of which 18,249 are in the executive cadre. Its wage bill is in the region of Rs.2,381 crores for 1998-99. Reports say that some managers w ho have had long tenures have converted their charges into personal fiefdoms and enjoy political patronage which have made them firmly-entrenched. The top management does not always enjoy the freedom to transfer senior executives. A financially attractiv e Voluntary Retirement Scheme (VRS) offer last year was availed of by 3,000 employees, but knowledgable SAIL sources say that the brighter employees were the ones who left.

AT the core of SAIL's current problems is the huge interest burden it has to bear on account of its over-ambitious modernisation programme initiated a few years ago based on demand projections which have since gone awry. The modernisation programme under taken at Durgapur, Rourkela and Bokaro cost the company Rs.12,000 crores, much of which was financed by loans from the Steel Development Fund. Currently, SAIL has a debt equity ratio of 3.03:1 with a total debt of Rs.21,000 crores. The interest burden ha s been mounting. From Rs.808 crores in 1995-96 it rose to Rs.2,017 crores in 1998-99 (including inventory carrying cost). Depreciation amounted to Rs.585 crores in 1995-96, but rose to Rs.795 crores in 1997-98 and to Rs.1,104 crores in 1998-99 thanks to newly capitalised investments in modernisation. SDF loans account for Rs.6,415 crores.

SAIL has submitted a financial restructuring plan to the government, seeking either a waiver of the SDF loan of Rs. 5,000 crores or its conversion into equity. Contributions to the SDF came from SAIL and TISCO in the form of a levy which was neither a ta x nor a cess and the fund was to provide soft loans to steel companies. However, Ispat Industries challenged the proposal even before the government could consider it and the Calcutta High Court restrained the Joint Plant Committee from entertaining SAI L's plea.

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The financial restructuring plan submitted to the government by SAIL also envisages writing down the asset value to the extent of capitalised interest accrued between 1993-94 and 1998-99 along with the writing off of loans and advances, including interes t accrued on it, given by the Government of India to the Indian Iron and Steel Company routed through SAIL. The interest waiver granted to IISCO in the past by SAIL on loans from its own sources, amounting to Rs.506 crores, is sought to be brought back t o SAIL's books of account. All these measures are intended to improve SAIL's debt-equity ratio.

SAIL reportedly hired McKinsey & Co to advise it on a restructuring package for a fee of Rs.8 crores even as its losses mounted. It is learnt that the crux of the McKinsey recommendations is that SAIL confine itself to its core competence, namely, steel- making, and hive off peripheral and ancillary activities. The Steel Executives Federation of India is aggrieved over the recommendations of McKinsey & Co, which they allege lacks the competence to undertake such an exercise.

Persistent efforts by Frontline to secure an appointment to meet with the Chairman and Managing Director (CMD) of SAIL, Arvind Pande, or any senior directors of the company, to elicit their views on various issues, including the McKinsey recommend ations, failed. And Frontline was informed that none other than the CMD was authorised to speak to the press.

According to a note faxed by SAIL officials to Frontline, the company has been scouting for partners to set up joint ventures for its captive power plants at Bokaro, Durgapur and Rourkela, its oxygen plant at Bhilai and its fertilizer plant at Rou rkela. It is on the look out for partners also for the backward integration of the Salem Steel Plant and for the revival of IISCO. These measures are believed to be in line with McKinsey's recommendations. SAIL intends to transfer some of its captive pow er units in its integrated steel plants producing totally 542 MW of electricity and 660 tonnes of steam per hour to a proposed subsidiary company and is seeking a strategic alliance partner to maintain that company for a period of 15 years. SAIL proposes to offer 49 per cent of the equity of this subsidiary, which will continue to supply power to its steel plants, to the alliance partner. SAIL has received expressions of interest from seven companies, of which the Bombay Electric Supply and Transport Un dertaking (BEST) and Enron are shortlisted. However, SAIL has to obtain government approval before it can execute its plans.

McKinsey is also learnt to have advised SAIL to divide its remaining four integrated steel plants into two strategic business units (SBUs), one for flat products, comprising the Bokaro and Rourkela plants and the other for long products, comprising the D urgapur and Bhilai plants.

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McKinsey has advised SAIL to revamp its Central Marketing Organisation (CMO) in order to save on operating costs, to improve quality and to prune the staff strength by 70,000 in the next five years. A note submitted by SAIL admits that it has targeted th e "right-sizing" of manpower to one lakh people in the next five years. The note claims that its marketing personnel have been empowered to resort to aggressive marketing techniques. It says that SAIL has recently succeeded in securing turnkey orders for mega-projects as well as orders for high-value items. Inventory- reduction, which was another recommendation of McKinsey, is also being attempted. With increase in direct despatches and the establishment of dealer networks, the CMO's stock yard system i s undergoing a change with unviable yards being closed, says the SAIL note.

SAIL also wants to close down its uneconomical units, shops and those facilities that have become redundant as a result of modernisation. The beleaguered company has proposed to reduce subsidies in social infrastructure and turn them into independent pro fit centres.

The 27th annual general body meeting of SAIL held on September 22 reiterated the resolve to prune costs through the implementation of the new proposals.

According to senior Steel Ministry sources, McKinsey has also advised that eventually the flat product SBU be sold to the private sector, followed by the long product SBU. Most of the business and financial restructuring proposals put forward by SAIL are clearly based on the McKinsey report, whose prescriptions leave no one in doubt as to their ultimate objective, namely, to privatise SAIL.

Sweeping charges

M.V. RAMANA world-affairs

The Cox report has clearly gone beyond available evidence in levelling nuclear espionage charges against China.

TOWARDS the end of the 1990 film Flashback, Dennis Hopper predicts that "once we get out of the eighties, the nineties are going to make the sixties look like the fifties." Unfortunately, that prediction has not come true. Instead, as the 1990s en d, some things do look like the 1950s all over again. In what appears to be the beginning of a new Cold War that certain interests within the United States would like to initiate, China is being assigned the role that had been earmarked for the Soviet Un ion earlier. Attempting to gain political mileage from the situation is Christopher Cox, a Republican Congressman from California and the Chairman of the House Select Committee on U.S. National Security and Military/Commercial Concerns with the People's Republic of China (PRC).

The committee was set up in 1998 after disclosures that two U.S. aerospace corporations were under criminal investigation for providing data relating to rockets to China. Its full report, classified Top Secret, was released on January 3, 1999; a declassi fied version, the so-called Cox report, was released on May 25. The report accuses China of stealing nuclear secrets from the U.S. and using "elements of the stolen information" to build warheads for its new Inter Continental Ballistic Missiles (ICBMs). Among the specific systems listed are the W-70 enhanced radiation warhead (popularly known as the neutron bomb), the W-88 thermonuclear warhead, and the Minuteman II, the Minuteman III and the Trident C-4 missiles.

The Cox report received wide media coverage, both in the U.S. and elsewhere, including India. Less attention was paid to the responses it generated. After having issued various statements attacking the Cox report, China released an official document on J uly 15 entitled "Facts speak louder than words and lies will collapse by themselves". The issues raised by the Chinese official responses, as well as numerous critiques of the Cox report within the U.S., suggest that the Cox report and some of the allega tions therein go beyond what was implied by available evidence.

Two questions need to be analysed. First, was China involved in nuclear espionage? Second, does information thus obtained give China a new, substantial capacity to design weapons that it was previously incapable of?

According to the Cox report, the answer to the first question is yes. The report states: "The People's Republic of China (PRC) has stolen design information on the United States' most advanced thermonuclear weapons."

There are many people who think that the Cox report goes beyond what the evidence would suggest. For example, John Spratt, a Democrat in the House of Representatives and one of the members of the Cox committee, called the charge a "sweeping" one. Spratt criticised the haste with which the report was produced and said that his objections to some sections of the report were not taken into account.

The sweeping nature of the charges is also clear from another example. The report claims: "The stolen information includes classified information on seven U.S. thermonuclear warheads, including every currently deployed thermonuclear warhead in the U.S. b allistic missile arsenal." Spratt maintained that "the select committee did not find evidence that China obtained design information on all our (that is, the U.S.) most advanced nuclear weapons."

It would not be surprising if China, like most nations with nuclear ambitions, does indulge in nuclear espionage. But to prove it is another matter. Certainly nobody in either country has stepped forward and admitted to spying. Even Wen Ho Lee, who was f ired from the Los Alamos laboratory for security violations, was not charged with any crime; he denied being involved in espionage (Frontline, June 18). Thus, it is difficult to conclude from public reports whether or not China stole classified in formation.

What is worth noting is how the U.S. obtained details about China's nuclear arsenal and plans. According to William Broad of The New York Times, details about Chinese weapons designs became clear only after "a Chinese nuclear expert who had been r ecruited to spy for the United States delivered an intriguing report to his American handlers". In other words, the U.S. got this information through its own espionage networks - what is diplomatically termed "intelligence". The U.S. has an annual intell igence budget that is estimated at $30 billion (the actual sum is classified), and for it to talk of Chinese espionage amounts to the pot calling the kettle black.

With regard to the second question, it is important to remember that China has worked on nuclear weapons for decades. China's first hydrogen bomb test came less than three years after its first atom bomb test. In comparison, the United Kingdom took over five years, the Soviet Union over six years, the U.S. over seven years and France nearly nine years to test a hydrogen bomb. While the Soviet Union helped with technologies to produce fissile material, the break between the two countries occurred in part owing to the Soviet Union's refusal to transfer nuclear weapons designs to China.

Some U.S. scientists who have visited Chinese weapons laboratories and talked to their counterparts also attest to the fact that the Chinese programmes are, for the most part, quite advanced. Harold Agnew, a past director of the Los Alamos nuclear weapon s laboratory, found that in some cases Chinese capabilities were better than that of the U.S. As an example he mentions an advanced X-ray camera called the pinex for which the Chinese design was superior to the American one. Such evidence for the advance d nature of China's nuclear programmes has led some American critics of the Cox report to point out that Beijing, even if it did spy, has made major breakthroughs on its own.

Further, there is a lot of information on different aspects of nuclear weapons technology - including the weapons that China is accused of spying on - available in the public domain; much of this can be found on the Internet. When a set of weapons scient ists with large financial resources and government support gain access to such information, even coarse details may suffice to suggest research possibilities for newer weapons designs. Making use of publicly available data as a guide to research cannot b e considered espionage.

Even if China resorted to espionage, it is unlikely to have acquired complete details about any weapons system. Any espionage is more likely to yield in partial design tips and, perhaps, computer codes. But, as Harold Agnew wrote in a letter to The Wa ll Street Journal, "No nation would ever stockpile any device based on another nation's computer codes." Thus, even if some classified data or computer codes from the U.S. had reached China, its scientists would still have had to do extensive researc h and conduct explosive tests in order to devise usable nuclear weapons based on them.

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The Cox report states: "With the stolen U.S. technology, the PRC has leaped, in a handful of years, from the 1950s-era strategic nuclear capabilities to the more modern thermonuclear designs." China may well be in the process of developing more modern th ermonuclear designs, but this would not imply that it stole those designs from the U.S. Indeed, there is substantial evidence that China is working on a new, more modern range of missiles. A few months ago, China conducted a test of the DF-31, a mobile I CBM. There are at least two reasons to expect it to work on such missiles and deploy them.

The first is that current Chinese ICBMs are large and cumbersome. Hence they may not survive a pre-emptive nuclear attack by, say, the U.S. Smaller mobile missiles that are more easily hidden require modern, miniaturised warheads, the kind that China is believed to have tested in the 1990s. The second reason stems from institutional pressures. Nuclear weapons laboratories derive their rationale for existence and financial support from developing new or modified weapons designs. Chinese weapons laborator ies, therefore, are likely to push for modernising the arsenal to further their own institutional goals. In this process, they may well use any information that may become available from spying. Nevertheless, with China signing the Comprehensive Test Ban Treaty (CTBT), it would be difficult, if not impossible, to verify adequately any new designs that weapons laboratories may develop from now on.

What is worth noting is that these modernisation programmes have had long gestation periods. This suggests that the Chinese government does not place a high priority on developing these missiles. Once again, there are reasons for this low priority, and f or the assumption that even if the weapons laboratories did develop more modern missiles, China would not deploy them in large numbers.

China adheres to a no-first-use policy, which means that it will use nuclear weapons only if attacked by nuclear weapons. Given such a policy and the relatively small size of its arsenal, estimated at around 400 warheads with only about 20 ICBMs capable of reaching the U.S., the Chinese strategy is to target cities rather than missile silos and other military sites. It matters little whether a large nuclear weapon explodes in the centre of Los Angeles or Moscow, or whether it explodes 2 km from the cent re of the city. In either case, hundreds of thousands of people will die.

Unlike China, U.S. and Russian strategies involve localised hardened targets like missile silos. This requires highly accurate missiles like the Trident with high-yield warheads. Such accuracy, however, comes at a price. The re-entry vehicle of a very ac curate missile has to be extremely narrow so as to reduce the impact of high winds that may buffet the missile as it re-enters the atmosphere. This necessitates one of two requirements. One is to keep the warhead away from the tip and add ballast in fron t of the warhead so as to prevent the re-entry vehicle from tumbling as it re-enters the atmosphere. This, however, leads to a loss of payload capacity.

The alternative is to develop a warhead that is small enough to fit close to the tip of the missile. One of the special features of the W-88 warhead that is employed on Trident missiles, for example, is that its primary fission explosive (that ignites th e secondary fusion explosion) is not spherical and can be placed near the tip of the missile.

Developing such a small warhead would, even given China's level of technological prowess in this field, require major advances, especially in manufacturing the supplementary parts that go with a warhead, the fuses, electronic components and so on. Accord ing to Richard Garwin, a physicist who has had extensive experience in nuclear weapons work, these technologies may be more of an impediment than the explosive parts themselves. (Frontline, July 16, 1999). In his judgment, therefore, "even if Chin a were confident that it had every detail of the W-88 and its Mk-5 re-entry vehicle, it would not reproduce the weapon."

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On the "enhanced radiation" weapon (the so-called neutron bomb) design that China is accused of stealing, Chinese officials claim that work on it started in the late 1970s and achieved success during the mid-1980s. Indeed, in 1988, The Washington Post had reported that China had tested a "neutron bomb" design. This indicates that China may not have had to rely on espionage as the Cox report suggests. Nevertheless, at a recent conference in Shanghai, a senior Chinese weapon scientist said that suc h bombs were not deployed because they were not suited to the country's military plans. Once again, institutional pressures from weapons scientists rather than any initiative from the armed forces may have been responsible for the 1988 test.

The signs of vested interests are evident all over the Cox report and the media hysteria over it. Two such interests are obvious. Clearly the Republican Party welcomes anything that can be used against President Clinton and his administration. And, with the collapse of the Soviet Union, the defence establishment has been left without a major enemy; China provides the best substitute.

Unlike the case of the Soviet Union during the Cold War, however, the U.S. has strong business interests in China. These are behind sections of the U.S. government and business community arguing for an "engagement" with China. U.S. policy towards China w ill ultimately depend on how the conflict between these two camps is resolved. As of now, the report has damaged relations between the two countries, but only to a small extent.

In the final analysis, the Cox report and the brouhaha surrounding it says more about the current climate in the U.S. than it does about China. It comes at a time when high levels of military expenditure and exorbitant, technically ineffective programmes such as Ballistic Missile Defence are sought to be rationalised by invoking threats of irrational "rogue nations". Alongside this is the bogey of a new peril from terrorism, based on a presumption that there are "others" who are unethical and fundamenta lly opposed to the U.S. Feeding indirectly on such images, the Cox report's allegations about espionage adds to the sense of the U.S. being under threat, internally and externally.

In such a milieu, one effect of the report is likely to be a curtailment of civil liberties and scientific freedom, especially when it comes to foreigners, within the U.S. And, if the supporters of the report and its message, including nuclear hawks of many stripes, have their way, these allegations would be used to decelerate the already slow pace of nuclear disarmament. If that happens, the world will continue to remain within the confines of the nuclear prison.

M.V. Ramana is a research associate at the Centre for Energy and Environment, Princeton University, United States.

Neither wave nor saffron?

BJP and the Evolution of Hindu Nationalism: From Periphery to Centre by Partha S. Ghosh; Manohar; pages 460, Rs. 800.

AFTER the French scholar Christopher Jaffrelot's classic The Hindu Nationalist Movement in India (1996) and the Danish scholar Thomas Blom Hansen's erudite and incisive work The Saffron Wave (1999), we have an Indian academic addressing him self in equal earnest to the two questions on which they had laboured. How did the Bharatiya Janata Party manage to travel from the periphery to the centre of Indian politics - from two seats and 7.68 per cent votes in the 1984 Lok Sabha elections to 86 seats and 11.5 per cent votes in the 1989 Lok Sabha elections? The answer is obvious and was provided repeatedly by one of its leaders L. K. Advani; namely, its Ayodhya movement, launched on the basis of the Palampur resolution of 1989 on the eve of the general elections. That, however, is a formal answer. The considerable transfer of votes would not have been possible but for an ideological affinity between the BJP and some leaders and workers in other parties, chiefly the Congress(I).

The second question is whether the so-called "saffron wave" is receding and, relatedly, whether the BJP is shedding its ideological baggage. The answer to the first part will be provided in the election results. Rashtriya Swayamsevak Sangh chief Rajendra Singh's revival of the triple mosque issue recently - Ayodhya, Mathura and Varanasi - shows that the RSS has not changed one bit. Nor has the BJP. Advani said emphatically in Bhubaneswar on September 19 that "there is no question of giving them (triple demands) up. Only deference is being shown to the sensitivities of the coalition partners.

Partha Ghosh has worked hard to collect data and ranges wide in his work to make it a useful source of reference on the last decade of India's politics generally, besides the communal situation. The book is marked by excessive reliance, generally, on sec ondary sources and a lack of rigour in analysis in many places. Ghosh rightly points out that "distortion of history in school texts is not a phenomenon peculiar to the BJP. In the 1950s and 1960s, when the Bharatiya Jana Sangh (BJS) was nowhere in sight of power even in strongholds such as M.P. and Rajasthan, let alone the Centre, there were complaints of distortions of history. Textbooks in circulation in the Hindi-speaking States as well as Gujarat and Maharashtra were heavily loaded in favour of Ind ia's Hindu past and against Muslim rule. When this question was raised in Parliament in 1966, a committee consisting of K. G. Saiyidain, J. P. Naik, Gopinath Aman and others was appointed to look into the matter. The committee reported that there was sub stantive evidence in the allegations that there was a Hindu bias in the textbooks of certain States and that historical events were "presented in such a manner as to arouse and perpetuate prejudice against certain religious groups. Besides, 'the books we re overweighed with Hindu mythology,' the literary texts were full of 'prayers to Hindu deities' and 'Hindu beliefs are presented in a manner as if they are universally held by all Indians.'" The footnote at the end of the paragraph (page 240) does not c ite the committee's report but a book which mentioned its findings. Opinions are quoted at length, and they are not always from ones known for expertise in the matter under discussion.

"Was Partition avoidable?" the author asks and cites the opinions of four writers of varying equipment without leaving the reader any the wiser as to his own views. Elsewhere, he expresses his views plainly enough.

These blemishes detract from the quality of the work but do not affect its essential worth. It is one of the most objective and impartial works by an Indian scholar of integrity and dedication who has brought together a mass of useful material enlivened by candid appraisals. At places they are wide off the mark. "Unlike majority (sic) Hindus, who wanted to wrest their rights through a political struggle with the British, the minority Muslims chose to do the same by aligning with the British. Even Sir Sy ed Ahmed Khan, the father of Muslim modernisation in India, subscribed to this line of argument." Apart from the inappropriate characterisation ("line of argument"), Sir Syed was the foremost advocate of this policy. It was opposed with compelling logic by Badruddin Tyabji, then Congress president, and also by a substantial body of the ulema. Maulana Abul Kalam Azad belonged to this school. The Sir Syed-Tyabji correspondence is very relevant to the situation of Indian Muslims today (For the text, see the writer's Badruddin Tyabji; Publications Division, 1969).

There is one formulation that raises an important issue: "Religion played an important role in the growth of Indian/Hindu nationalism and Muslim separatism." The amazing stroke (Indian/Hindu) apart, Hindu nationalism is surely no less "separatist" and a lapse from Indian nationalism than Muslim communalism is. One is reminded of Jawaharlal Nehru's remark on January 5, 1961 that "the communalism of a majority community is apt to be taken for nationalism." How right he was. Serbian "communalism" proved "s eparatist" and wrecked the Yugoslav federation constructed by Tito, a Croat. Not every Congressman shared Nehru's outlook. Morarji Desai had no hesitation in declaring at the National Democratic Convention in New Delhi on November 29, 1964: "The Hindu ma jority is clean-hearted and fair minded. I cannot say the same about the majority of Indian Muslims" (The Hindustan Times; November 30, 1964).

The two-nation theory was first propounded by V. D. Savarkar in his essay 'Hindutva' in 1923. In his presidential address to the Hindu Mahasabha in 1937 he amplified the theory: "There are two nations in the main, the Hindus and the Muslims in India." He rejected "the conception of Territorial Nationality not cemented by any Cultural, Racial or Historical affinities and consequently having no common will to incorporate themselves into a Nation". This doctrine of "cultural nationalism" was echoed by RSS chief M. S. Golwalkar in his Bunch of Thoughts (1966) and was ardently reiterated by the BJP in its election manifesto of 1998. A whole chapter is devoted to "Our National Identity: Cultural Nationalism". It asserts that "the cultural nationalism of India... is the core of Hindutva". The BJP astutely decided not to issue a separate manifesto in 1999 for fear of upsetting its gullible allies. Its 1998 manifesto is tacitly affirmed. It has not been abandoned, as Advani's speech on September 19, 199 9 makes clear.

The origin of Mohammed Ali Jinnah's two-nation theory bears recalling. In an article published in Time and Tide (London) on January 19, 1940, he said: "A Constitution must be evolved that recognises that there are in India two nations, who both mu st share the governance of their common motherland." This implied power-sharing in a united India, not its partition. The point was also made earlier in the article which rejected "unqualified Western democracy" and insisted that "all Gover nments, Central or Provincial, must be Governments that represent all actions of the people". On his part, "in evolving such a constitution" Jinnah was prepared to cooperate with the Congress "so that the present enmities may cease and India may take its place amongst the great countries of the world."

If only two months later, on March 23, 1940, he got the Muslim League to adopt the Pakistan resolution, it was, as is widely realised, as a bargaining chip. On December 20, 1986, the Liberation Tigers of Tamil Eelam spokesman in Chennai told The Sunda y Observer that it would accept a "viable alternative" to Eelam if it was made possible for "two nations to co-exist in our country".

Jinnah's intellectual equipment on this subject, like that of most lawyers, was limited. The concept of "consociational democracy" was articulated by Arend Lijphart in his book Democracy in Plural Societies (1982). In 1996 he noted that while "int er-group hostility and violence have increased" in India, it has adopted some elements of his concept. ("The Puzzle of Indian Democracy: A Consociational Interpretation"; American Political Science Review, June 1996).

But power-sharing was precisely what most in the Congress and all in the Hindu Mahasabha were opposed to. Hence, the ungenerous Motilal Nehru Report (1928). One of the finest political minds in the country and also a man of sterling integrity, Prem Bhasi n, formerly general secretary of the Praja Socialist Party (PSP), alluded to the latent reality in Janata, a journal founded by Jayaprakash Narayan (Annual Number 1998). He wrote: "The ease with which a large number of Congressmen and women - smal l, big and bigger still - have walked into the RSS-BJP boat and sailed with it is not a matter of surprise. For, there has always been a certain affinity between the two. A large and influential section in the Congress sincerely believed even during t he freedom struggle that the interests of Hindu Indians could not be sacrificed at the altar of a united Independent India." He named two stalwarts, Madan Mohan Malaviya and Lala Lajpat Rai, explicitly; Vallabhbhai Patel, haltingly. This group pre ferred partition to power-sharing in a united India. Lala Lajpat Rai had in the famous article in Tribune (December 14, 1924) proposed a partition of Punjab on communal lines (emphasis added, throughout).

None of this can excuse the havoc Jinnah wrought. When discussing the Indian Finance Bill (1925), he stated on the floor of the Legislative Assembly: "... I, Sir, stand here with a clear conscience and I say that I am a nationalist first, a nationalist s econd and a nationalist last... I once more appeal to this House, whether you are a Mussalman or a Hindu, for God's sake do not import the discussion of communal matters into this House, and degrade this Assembly, which we desire should become a real Nat ional Parliament. Set an example to the outside world and our people!" When, in 1940, he endorsed the poisonous two-nation theory and demanded Pakistan, he ought to have known that he was playing with fire.

Partha Ghosh has no hesitation in tracing the lineage of the BJP to the old Hindu communal constituency which came into being in the 19th century. Bitterness in the aftermath of Partition gave it an edge. It existed, however, for years earlier. This scho ol would also have flourished even in a united India, along with its Muslim counterpart. Secularists in both communities would have fought jointly against them. The pass was sold by secularists in both the Congress and the Muslim League. The BJP has prof ited by it in India, as has the Jamaat-e-Islami in Pakistan. (On the lineage vide B. R. Purohit; Hindu Revivalism and Indian Nationalism; Sagar, Sathi Prakashan; 1965). It is the minorities in both countries who bore the brunt of Partition.

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Partha Ghosh does a fine job, as only a scholar of strong secular commitment would, exposing thoroughly the bogey of "the pampered Muslim" with a wealth of data. Muslims constitute about 13 per cent of the Indian population but are grossly underrepresent ed in jobs, professions and education even fifty years after Independence.

"The National Sample Survey of 1988 provides the following figures: (1) A total of 52.3 per cent Muslims are below the poverty line (BPL); (2) the monthly income of Muslims is only Rs. 150; (3) 50.5 per cent Muslims are illiterate; (4) Muslims educate d up to high school are 4 per cent; (5) in government services their share is 4.4 per cent; (6) for starting any business enterprise 3.7 per cent Muslims got financial loan; (7) 5 per cent of Muslims got bank loans from the scheduled banks; (8) among Ind ian entrepreneurs who get industrial loans, only 2 per cent are Muslims. Male illiteracy among the Muslims is 42.4 per cent compared to 25.3 per cent among the Hindus. The corresponding figures of female illiteracy are 59.5 and 45.2, respectively. Less t han 1 per cent (0.8) Muslims are graduates while 4.5 per cent Hindus are."

In Central government employment, Muslims account for 4.4 per cent. Only 3 per cent of Indian Administrative Service officers are Muslims. Muslims are underrepresented in the police force. It will be long before anyone will think of reforms on the lines of those suggested in Chris Patten's recent Report on the Royal Ulster Constabulary (RUC). Catholics comprise 43 per cent of the population of Northern Ireland. The RUC is 92 per cent Protestant (International Herald Tribune; September 10, 1999).

Contrary to the BJP's propaganda, there is no monolithic Muslim vote-bank. The Muslim in Tamil Nadu, for instance, might perceive the situation differently from his counterpart in Bihar or West Bengal.

The author has not confined himself to the BJP's political agenda. He has also analysed its foreign policy and economic policy. He provides an interesting quote from Atal Behari Vajpayee's speech in May 1978 as Minister for External Affairs at Jawaharlal Nehru University. "The only way to prevent proliferation of nuclear weapons is to bring about complete cessation of the production of nuclear weapons and simultaneously cut off the manufacture of all weapon-grade fissionable material. There can be no do ubt about India's policy. We have set an example by abjuring the manufacture or acquisition of nuclear weapons. We have pledged ourselves to developing nuclear technology exclusively for peaceful purposes."

The chapter containing the conclusions is sparse in analysis. "The moot question is, now that the BJP has come to power, if it would mean the takeover of political power by Hindu zealots with the collapse of the inter-communal social fabric of India. BJP is a Hindu communal party but its communalism has limits. The same Advani who talks about Hindutva with so much aplomb castigates the Shiv Sena for its naked Hindu aggressiveness when the latter defeats his party at the Aurangabad municipal polls. As a political party with national ambitions BJP knows that mobilising religious sentiments from a position of responsibility is quite another."

The author does not deign to reflect on the RSS factor. The limits to the BJP's ventures are set by the RSS and no less by the outlook of its leaders who are the products of its upbringing. Advani has demonstrated that.

Of State and nationalism

India Against Itself: Assam and the Politics of Nationality by Sanjib Baruah; University of Pennsylvania Press, Philadelphia, 1999; pp xxiii + 257, $36.50.

COMBATIVE and polemical in its tone and substance, this passionately engaged but dense narrative challenges the received concepts of the State and Nationalism as articulated in Indian nationalist discourse - a structure and an idea invested with an immac ulate, eternally valid and near-mystical properties. The narrative does not claim to be, and indeed is not, a dry, impersonal and normatively detached academic exercise either. On the contrary, the author makes clear in the introductory chapter his commi tted engagement as an "interested and implicated observer". Baruah is indeed deeply involved personally and professionally in the memories and experiences of his narrative - as an "ethnic Assamese" (a term he says he is uncomfortable with even while usin g it) at a personal level, and as a political scientist teaching in the United States at the professional level.

The focus of the narrative is the Brahmaputra Valley, historically the core of Assam. However, the narrative also touches on the peripheral areas of this core which once formed a part of what one might call the "geographical Assam". These peripheral area s were politically, economically and culturally in varying degrees of proximity and distance from the core, the relations marked by amity or hostility or indifference and ignorance. Indeed, the present problems plaguing Assam cannot be understood except in the context of the historical process of the changes in the very physical contours of Assam. A crucial element of these changes which has a bearing on the present situation is the widely shared perception among the majority of ethnic Assamese that the y have only been passive spectators, if not the pre-destined victims of conspiracies hatched by foreigners and outsiders which they could barely comprehend, of these developments which have fundamentally affected their land and their history, their past and their future.

Chapters 2 to 5 dealing with the geographical and territorial background of the growth of Assamese nationalism delineate these changes and the underlying rationale of both the colonial regime and independent India. The process involved an artificially im posed enlargement of the territory of the Province of Assam by the colonial regime and, since Independence, an insensitively imposed process of progressive dismemberment of the State of Assam. Integral to this process was migration into Assam, the last l and frontier providing opportunities for those enterprising enough to seize them, and its inevitable impact on the demography of the region. These developments have posed grave challenges to the concept and, even more importantly and irrespective of its "empirical validity", the self-perception of the Assamese as a distinct and internally coherent people, a nationality within the broader framework of a pan-Indian civilisation and the Indian nation-state, a jati, and to use Baruah's expression, a "sub-nation". (The Assamese word jati, meaning a people and a nation, has a significance going far beyond the relatively restricted meaning the term has in other Indian languages.)

THESE chapters together chart the historical and ideological terrain which provided fertile ground for the anti-foreigner agitation in Assam. A notable feature of the narrative is that it brings together diverse themes from sources which one would not no rmally tap, as for instance, the interesting analysis of the songs of Bhupen Hazarika, to reinforce some of the arguments and to weave together the complex political and ideological landscape in Assam and the rest of northeastern India, where received no tions and ideas of nation, nationality and sub-nationalism continue to be in contestation.

What one misses, however, is an equally in-depth treatment of the economic issues of development and underdevelopment that have contributed to the tensions. Indeed, the argument about the failure of the centralised Indian state and, concomitantly, of the necessity of a federal arrangement to overcome the tensions between the nation-state and disaffected nationalities (or sub-nations) overemphasises the organisational features of the Indian dilemma and fails to look at the far more serious structural wea knesses arising out of unequal relations of production and distribution. The sharp and telling analysis of the superstructural contradictions and weaknesses does contrast with the relatively weak treatment of the corresponding contradictions in the sub-s tructural material base.

The rest of the narrative deals with the agitation itself, and the other ideas and forces that are causally related to the Assam agitation. The challenges posed by the insurgencies in the core territory of Assam by the United Liberation Front of Asom (to India) and by the Bodo agitation (to Assam and in its later stages, to India) and together to the neatly contrived concepts of sub-nationalisms of India's States and less well-defined regions and peoples existing in manageable and manipulable relations of violently articulated tension and understated complicity with the great nationalism of the Indian nation-state are yet to be resolved. Implicit in the analysis is the belief that even if these were to be eventually managed, the issues raised will not disappear and are likely to take fresh forms and manifest themselves in other areas.

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The above is a necessarily selective summary of the themes of the book. However, its real subject is the larger dilemma postulated in its very title - India Against Itself. This is a dilemma that is self-evidently as much an Assamese dilemma as an Indian one in that the various people of India, even those whose repudiation of Indian nationhood is apparently absolute, continue to negotiate, sometimes in violent confrontation and sometimes by making openly opportunistic deals - the two processes are not m utually exclusive - a working arrangement to live together in that necessarily flawed structure, the nation-state of India.

Is that admittedly flawed structure worth defending? Does it, can it, engage its citizens in any reasonable dialogue? Setting aside the Indian dilemma, is the very concept of a nation-state, what Baruah characterises as the "contingent and contested natu re of nations and nationalities", and the dismissively derided process of "nation-building" in societies that have emerged from centuries of colonial rule worth one's loyalty? Can a nation-state sustain itself without the ideological prop of aggressive a nd exclusivist nationalism? Is there a necessary dichotomy between "nations" or "peoples" on the one hand and the "nation-state" on the other as categories that have a right to self-determination, that holy Wilsonian cow which is lined up with remarkable selectivity only when existing post colonial states striving to consolidate themselves as nation-states are confronted with separatist movements?

Formulations on the "declining relevance" of the nation-state inform the argument of this narrative throughout. Linked to this is the sharp criticism of "nation-building" both as an envisaged objective and as an operational exercise. Given the fact that India and Assam is the theme of the narrative, it is perhaps natural that the criticism in this regard is made only in respect of these processes as they are at work in nation-states that have emerged from colonial rule. The obverse side of Baruah's ofte n valid criticisms of unilaterally imposed exercises in "nation-building" is the process of re-colonisation that is also at work in these entities, often with the complicit support of civil society structures and non-governmental organisations heavily fu nded by the West. This broader agenda which stares one in the face when one sees them at work in societies ravaged by war and starvation, appears never to have been questioned.

Not to put too fine a point on it, the single minded objective of the U.S., the one and only imperial power since the end of the Second World War, has been the effective debilitation of other nation-states - except of course of itself and those under its wings. Even in the latter case, a weakening is sought, although this is problematic, as is evident in the rivalries among the U.S., the European Union and Japan. The major part of the task was accomplished with the destruction of the Soviet Union and th e dismantling of the "existing socialist states" of Eastern Europe. Unlike earlier battles, this battle has not directly involved weapons of war and the physical occupation of defeated territories. Rather, apart from the systematic subversion and appropr iation of international instrumentalities like the United Nations and the World Trade Organisation (WTO) to serve the national objectives of the U.S., the most effective weapons have been ideological and technological ones - the beguiling promises and vi sions of consumerism and the so-called liberalisation and globalisation.

This is not to question the destructive, even self-destructive, potential of nationalism. An Indian scarcely needs to be reminded that the culmination of the national struggle was as much national independence as national slaughter. Indeed, the current a scendancy of Hindutva nationalism can be causally linked to the symbols and forces mobilised during the national struggle. However, to argue that the excesses of rampant nationalism of the Indian state in northeastern India could have somehow been mitiga ted if only the Indian polity had a working federal system, seems such an inadequate remedy to the horrors the narrative has delineated with such passion. Only the wilfully blind can fail to see the horrors and cruelties perpetrated by the very structure s and organisations and individuals, who, while themselves being victims of rampant nationalism of the Indian state, posit against it even more restrictive and exclusivist sub-nationalisms.

One last point about Baruah's treatment of what he calls "cultural politics of language". A key element of Assamese nationalist discourse is the position of the Assamese language in the province and the State of Assam at all points of its constitution an d reconstitution, and the contested relations between Assamese and Bengali before and since Independence. The standard view of the "fears" about the future of the Assamese in their one and only homeland is that those who have migrated (or more accurately their descendants) into Assam from former East Bengal (legal), former East Pakistan and present day Bangladesh (illegal) being Bengali-speaking would, over a period of time, outnumber the indigenous Assamese-speaking people, thus endangering the very ex istence of the people and their tongue.

Baruah cites the observation of C.S. Mullan, the superintendent of the 1931 Census in Assam, on migration into Assam of "land-hungry Bengali immigrants, mostly Muslims, from the districts of eastern Bengal and in particular from Mymensingh". The culminat ion of this process, envisaged in metaphors of war and invasion, would be that in another 30 years, it would not be improbable that "Sibsagar district would be the only part of Assam in which an Assamese will find himself at home". This reading has for l ong been a favourite text of Assamese nationalist discourse. It was also a constant in the polemics of the leaders of the anti-foreigner agitation. Baruah, however, notes that the critics of the agitation find Mullan's "fears" to have been misplaced. "Co ntrary to Mullan's mischievous prediction," Baruah quotes one such critic, "the entire East Bengal Muslim peasant community adopted the Asomiya language as their mother tongue."

It is surprising that the real nature of the "fear" of Assamese nationalists about the present and putative future identification of their home language is missed on both sides of this polemical divide. The fear is not that the descendants of erstwhile m igrants will, at some point in the future, claim to be Bengali speakers, and thus reduce Assamese speakers to a minority in Assam. Rather, the real fear is that this section of the population, most of whom have been probably using Assamese for at least t wo generations, will not merely continue to speak the language but indeed claim it as their own, stealing away, as it were, a crucial cultural patrimony which defines the Assamese people. This is the significance of the inscriptions on the graves of thos e killed in the Nellie massacres of the 1983 elections - the overwhelming majority of whom were of East Bengal origin - being in Assamese.

Incidentally, and as seen from the perspective of this reviewer from his present domicile, similar are the "fears" of the Afrikaners in South Africa about the future of Afrikaans under a democratic dispensation and without the kind of state and official patronage it enjoyed under apartheid. However, the real "fear" is not about the future of Afrikaans as such, but that the language, like so many other claimed symbols of Afrikanerdom cherished as the unique patrimony of the white Afrikaner, is being take n over, used or abused in vibrant and independently creative ways by other people who, despite their historic contribution to the growth and development of Afrikaans had been despised and made outcasts under apartheid. Closer home, one thinks of the cond escension with which a creative endeavour by Bengali Muslims used to be greeted not so long ago by those who too viewed Bengali language as their own unique and exclusive patrimony. How things have changed! For, if Bengali as a language and literature ha s any future at all in the long run, it will have to be in Bangladesh, where it is the national language, unlike in India, where it is only one of several.

Chronicle of the cultural interface

SUSAN RAM other

Interpreter of Maladies by Jhumpa Lahiri; Flamingo, 1999; pages 198; Rs.469.95 (paperback).

THE movement of peoples across borders and cultures that has, in the era of globalisation, broadened and accelerated beyond all previous experience, poses a special literary challenge. At one level, the cultural collisions, dislocation, loneliness and lo ss of identity thrown up by the process offer writers rich possibilities: locations, themes and characters abound, and the act of cultural juxtaposing promises interesting literary results. The scale of the canvas can, as Salman Rushdie has shown, elicit extraordinary results. But writers also face being swamped by such plenitude. The task becomes one of negotiating the material in such a way that intimacies emerge out of the vastness, the exotic is rendered familiar and the reader, irrespective of geog raphical location or cultural background, is jerked into new perceptions and understandings.

In her debut collection of short stories, Jhumpa Lahiri impressively unfolds the possibilities of the diaspora fiction genre, while also indicating some of the problems. Of Bengali origin, born in London and raised in the United States, she writes in the main within the bounds of her own experience; most of her stories explore uprooted Bengali experience in or around Boston, a beacon city for India's upwardly mobile by dint of its universities and career opportunities. Her instinct to explore her themes and characters within this well-defined, bipolar geography underlines the necessity, within this genre, for delimitation and control; it is when she strays beyond its parameters that problems surface.

LAHIRI'S Boston is a city of parks and tree-lined streets and quiet orderliness, a foil for Calcutta's clamour and vivacity. Here, her characters, Indian and American, lead unremarkable lives, grappling with everyday challenges, coping with inadequacy or failure, seeking to survive the visitation of tragedy. Their take on life is that of the educated middle class professional for whom income is assured; existential challenge lies in the essential unpredictability of human relationships and the whole bus iness of living.

For Mrs. Sen, the wife of a visiting Indian academic, homesickness for family, friends and the sheer exuberance of Calcutta is compounded by immobility in her new surroundings, her fear of driving through the fast, impassive Boston traffic locking her in to loneliness and accentuating the fragility of her links with life back home. Mr. Pirzada, a Bengali from the other side of the border, is initiated into the mysteries of Halloween by a small Bostonian girl of Indian Bengali origin. Through the prism of his presence, she in turn seeks to make sense of events taking place far from Boston and her history lessons in the American Revolution; the year is 1971, India is at war with Pakistan, and Mr. Pirzada must fear for his family caught in the maelstrom of a nation in the making. Sanjeev, an MIT-trained engineer making it very good indeed in corporate America, finds his life turned upside down and his basic assumptions challenged by Twinkle (Tanima), his lively and precocious new wife.

Working within the confines of this canvas, Lahiri exhibits the deftness of the gifted miniaturist, unlocking mysteries to throw light on sensitive areas of human experience. In the best of the stories, she pursues an identifiable literary strategy: some thing offbeat or unexpected or quirky is introduced, and this becomes the means by which problems are brought out into the open, confronted and resolved.

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In the fine opening story, "A Temporary Matter," a nightly electricity cut - a rare event in Boston or indeed any Western society - creates interludes of intimacy, shadowed by folk memories of India, in which Shoba and Shukumar can at last begin to deal with the grief bequeathed by their stillborn child. For Sanjeev and Twinkle, the newly married couple whose first weeks together are explored in the story "This Blessed House", a trail of Christian iconography and bric-a-brac secreted in their new home b y its previous occupants proves deeply unsettling, destabilising the husband's instinctive male assertiveness and setting the marriage on quite a different course.

In other stories, the perceptive abilities of a child cut to the heart of things. In the story "Sexy", Miranda, a young American woman, is shaken out of her obsession with Dev, a married Bengali investment banker, by seven-year-old Rohin, every bit as pr ecocious and forthright as the boy in the story of the emperor's new clothes. Elsewhere, Eliot, an American boy on the threshold of adolescence, is edged into India across the evenings spent at the home of Mrs. Sen, his Bengali babysitter. In this beauti fully observed story, one of the best in the collection, East meets West in the shared experience of loneliness and the poignancy of Mrs. Sen's situation is handled with utmost delicacy and control, unsullied by any hint of mawkishness.

In the best of her storytelling, Lahiri eschews showiness in favour of simplicity, delicacy and sustained understatement. This results in moments of acuity and insight. The immaculately attired Mr. Pirzada, escapee from subcontinental chaos and mayhem, m akes a small girl feel a stranger in her own home through the superb ease of his gestures. Eliot, observing his mother in the new universe of Mrs. Sen's flat, suddenly finds his own perceptions turned upside down: it was his mother, Eliot had thought, in her cuffed, beige shorts and her rope-soled shoes, who looked odd. Her cropped hair, a shade similar to her shorts, seemed too lank and sensible, and in that room where all things were so carefully covered, her shaved knees and thighs too exposed. She r efused a biscuit each time Mrs. Sen extended the plate in her direction and asked a long series of questions, the answers to which she recorded on a steno pad.

IT is when Lahiri moves outside her Boston setting to assay India as the backdrop for stories that her grip on her material falters. In the story that lends its title to the collection, the Bengali diaspora feeds back into India in the shape of Mr. and M rs. Das and family, visiting from the United States. Their interaction with the homeland is observed by Mr. Kapasi, a part-time guide who chauffeurs them on a day trip to the Sun Temple at Konarak. Through the story runs the theme of misinterpreted signa ls: Kapasi believes the (by Indian standards) scantily dressed Mina Das to be interested in him and the interpreting work he does at a doctor's clinic, while she assumes that Kapasi, by his very Indianness, will be able to interpret her failing marriage and falling out of love with life.

But the authenticity of their doomed encounter is undermined by stilted dialogue, elements of cliche and loaded symbolism exemplified by a gang of menacing monkeys.

Set loose from her Boston moorings, Lahiri allows herself to wander rather too freely. In the story "A Real Durwan", she attempts an Indian morality tale with surreal undertones. Magical realism surfaces unconvincingly in "The Treatment of Bibi Haldar", accompanied by overwriting and awkward sentences: "thus, her soliloquies mawkish, her sentiments maudlin, malaise dripped like a fever from her pores" (p. 161). Detached observation, a hallmark of Lahiri's writing elsewhere in this collection, becomes ed ged out in this story by elements of judgment and caricature.

Lahiri as a chronicler of cultural interface, rooted firmly in the Boston she knows and with her antennae tuned to the muted anguish of her middle class protagonists, emerges from this first collection as a writer of deftness, control and understatement. In the best of her stories, she binds reader to character so artfully that the reader longs for the narrative to continue beyond its typically low-key ending.

Lahiri, it seems, is a writer well-positioned to move from short story writing to a more sustained fiction. What is not yet clear is whether she is interested in making such a journey.

Renaissance man

The birth centenary of 'Kalki' R. Krishnamurthy occasions an appraisal of the contributions made in numerous fields by the Tamil novelist, freedom fighter and social crusader.

LOVERS of Tamil literature across the country celebrated the birth centenary of "Kalki" R. Krishnamurthy on September 9.

Krishnamurthy was freedom fighter, social crusader, novelist, short story writer, journalist, humorist, satirist, travel writer, script-writer, poet, critic and connoisseur of the arts - all rolled into one. A prolific writer, he wielded his pen with for ce and tenderness for three decades (1923-1954). He wrote on varied subjects during an eventful period in Indian history. His writings include over 120 short stories, 10 novelettes, five novels, three historical romances, editorial and political writings and hundreds of film and music reviews.

Although there is practically no subject he left untouched and no genre he did not experiment with, he is best known for his historical romances, which are acclaimed as classics and remain popular to this day, nearly five decades after his death.

His historical novels, Parthiban Kanavu (Parthiban's Dream), Sivakamiyin Sapatham (Sivakami's Vow) and Ponniyin Selvan (Ponni's Son) - which were first serialised in Kalki, the weekly he edited, and later published as books be tween 1943 and 1951 - attract 20,000 to 25,000 additional readers for the magazine, whenever it re-serialises these stories, according to K. Rajendran, son of Krishnamurthy and the present publisher of the weekly. (Ponniyin Selvan re-appears for a fourth time now.) It is amazing that whereas works of several contemporary writers fail to see even a second edition, each of these novels has been re-published eight times over the past 15 years (1984-1999).

KRISHNAMURTHY was born on September 9, 1899 at Puttaman-galam in the old Thanjavur district in an orthodox, large Brahmin family with limited means. Father Ramaswamy Aiyar was the village karnam (accountant), drawing a monthly salary of Rs.10. With the y ield from land, he managed to maintain the family. After primary education in the village, Krishnamurthy joined the National High School at Tiruchi, about 100 km away.

When Mahatma Gandhi launched his Non-Cooperation Movement in 1921, thousands of students gave up their studies to participate in the movement. Krishnamurthy was one among them. With the Secondary School Leaving Certificate (SSLC) examination just three m onths away, he left school and joined the Indian National Congress. Gandhi's speech at a public meeting in Tiruchi inspired him.

In 1922, he was awarded a one-year imprisonment for participating in the independence struggle. It was during this period that Krishnamurthy came into contact with two great persons, who were to play a major role all his life - veteran Congress leader C. Rajagopalachari (Rajaji) and T. Sadasivam, who was to become a life-long friend and partner in journalistic ventures.

Krishnamurthy's first attempt at writing fiction also came during that period. In 1923 he joined as a sub-editor in Navasakthi, a Tamil periodical edited by Tamil scholar and freedom fighter V. Kalyanasundaram, popularly known as "Thiru Vi. Ka". K rishnamurthy's first book was published in 1927.

Leaving Navasakthi in 1928, Krishnamurthy stayed with Rajaji at the Gandhi Ashram in Tiruchengode in Salem district and helped him edit Vimochanam, a Tamil journal devoted to propagating prohibition. In 1931, he was again imprisoned for six months.

Next year Krishnamurthy joined Ananda Vikatan, a humour weekly edited and published by S.S. Vasan, as its de facto editor. The magazine soon became a household name in middle class families. Krishnamurthy's witty, incisive comments on polit ics, literature, music and other forms of art were looked forward to with unceasing interest by readers. He wrote under the pen names of "Kalki", "Ra. Ki", "Tamil Theni", "Karnatakam" and so on. Vikatan published many of his short stories and nove ls (as serials).

In 1941 he left Ananda Vikatan and rejoined the freedom struggle and courted arrest. On his release after three months he and Sadasivam started Kalki. He was its editor until his death on December 5, 1954.

THE success that Krishnamurthy attained in the realm of historical fiction is phenomenal. Sixty years ago, at a time when the literacy level was low and when the English-educated Tamils looked down on writings in Tamil, Kalki's circulation touched 71,000 copies - the largest for any weekly in the county then - when it serialised his historical novels.

Noted historian Professor K.V. Rangaswamy Iyengar says that Kalki established his reputation as a novelist with Parthiban Kanavu. In his "introduction" to the novel, Rangaswamy Iyengar describes it as "a star of the first magnitude (that) had appe ared in the firmament of historical fiction." "It was the first attempt, to my knowledge, to utilise the ancient history of a famous South Indian dynasty and region as the background of an attractive story," says Rangaswamy Iyengar.

Describing Sivakamiyin Sapatham as a brilliant piece of writing, Rangaswamy Iyengar says that because of its stylistic qualities, the novel will have a permanent place in Tamil prose.

Although Kalki's historical romances captured the hearts of thousands of readers, recreating for them the glorious Tamil life during the periods of Pallavas and Imperial Cholas, critics were divided on their literary merits. One criticism was that Kalki' s novels dwelt rather overmuch on royalty and not enough on common people. The sudden twists and turns, which characterised serialised stories, made the stories unrealistic. There has, however, been a re-appraisal of Kalki, particularly among Marxist cri tics, in recent years. Semmalar, the monthly organ of the Tamil Nadu Progressive Writers Association, brought out a special number to commemorate Kalki's birth centenary.

Marxist critic Arunan says: "Kalki might not have gone into the inner layers of the social structure of those days, but he did give glimpses of the social life through his descriptions of the experiences and exploits of the royalty" (Semmalar, Sep tember, 1998). "At least, parts of people's history are touched," he says and adds: "Ponniyin Selvan, for instance, gives detailed accounts of the conflicts between Saivites and Vaishnavites and their impact on society."

Analysing the reasons for Kalki's continued relevance, Maran, another critic, says that Kalki, whose main concern was to arouse people's consciousness against colonial rule, sought to remind the people of their cultural heritage. Kalki's writings sought to instil pride in the greatness of Tamil language, literature, art, culture and valour. "Even after Independence, there is still a need to fall back on the cultural heritage. Kalki's works perhaps continue to serve that purpose" (Kanaiyazhi, Augu st, 1999).

Stating that Kalki was a social force, not an ordinary writer, writer D. Jayakanthan says, "In politics, literature, criticism of the arts and Tamil renaissance, no other person has served as much as he did."

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One of the criticisms against Kalki's short stories was that they were propagandist, but Kalki, for whom writing was part of political activity, a mobilisation exercise, was unconcerned about such criticism. If writing stories with a purpose was propagan dist, he said, he did not mind being dubbed propagandist. Inspired by the national movement, he sought to instil patriotism in his readers and his stories did succeed in doing so. "He knew the art of creating interest in and writing convincingly on any s ubject," observed Dr. M. Varadarajan, novelist and literary historian (History of Tamil Literature). "He understood the spirit and force of the spoken language and used it as a powerful medium for his writings."

Se. Ganesalingan, Sri Lankan Tamil writer, says that Kalki "democratised" literature and enabled even the common people to appreciate it. In simple Tamil he judiciously blended humour and satire with real incidents.

In writing historical fiction, Kalki was influenced by English novelists Sir Walter Scott and Lord Lytton and French novelists Victor Hugo and Alexandre Dumas, according to Sunda, Kalki's biographer.

Kalki's early interest in listening to harikathakalakshepam (musical religious discourse) and his acquaintance with the pamphlets of Sri Lankan Tamil Hindu propagandist and scholar, Arumuga Navalar, helped him acquire the skill of story-telling.

Kalki's crusade against drink, untouchability, superstition, oppression of women and many of the decadent practices in Brahmin families of those days is testimony to his progressive thinking. Thiru Vi. Ka., veteran labour leader, and Rajaji (who took cla sses in socialism for jail-mates) imparted in him socialist ideals, according to some critics. Soorya, a character in his novel Alai Osai (The sound of the waves) belongs to the Socialist group in the Congress. "Soorya is none other than the auth or," says Rajendran.

Kalki considered Alai Osai, which was serialised in Kalki in 1948-49 and published as a book in 1963, as his best. The novel won for him the Sahitya Akademi award posthumously in 1956; it has for its backdrop the freedom struggle and deals with social reforms and politics. His other social novels include Thyaga Bhoomi (The land of sacrifice) and Kalvanin Kadali (Bandit's sweetheart), both of which have been filmed. Thyaga Bhoomi, which has the salt satyagraha as its ba ckdrop, dealt with women's rights and untouchability. It was serialised in Ananda Vikatan; stills from the movie, which was being filmed at the same time, were used as illustration. After a successful run for six weeks, the film, directed by veter an K. Subrahmanyam, was banned by the colonial Government on the grounds that it indirectly aroused the people to fight for freedom.

S. Krishnaswamy, film historian and son of Subrahmanyam, told Frontline that the film had a theme that was "extraordinarily revolutionary" for the period it covered; it represented the high water-mark of the liberation of Indian womanhood. "The fi lm combined the spirit of Indian womanhood with the spirit of national freedom," said Krishnaswamy. According to Aranthai Narayanan, film critic, the film ranks on a par with the works of Satyajit Ray or Mrinal Sen in thematic as well as production value s. "Kalki's dialogues were sharp, particularly in the court scene; the heroine's offer to pay alimony to her husband who deserted her long back and wants to rejoin her, was revolutionary," says Aranthai Narayanan. Krishnaswamy has made a teleserial of th e story in Hindi with Bharat Bhushan in the key role.

Parthiban Kanavu, Kalvanin Kadali and Poiman Karadu were also filmed. Kalki wrote the script and some lyrics for Meera, an M.S. Subbulakshmi starrer.

Kalki's contribution to the cause of Tamil music is also noteworthy. He spearheaded a movement that wanted Carnatic musicians to include more Tamil songs in their concerts and composed a number of songs. His Tamil translation of Gandhi's autobiography, < I>My Experiments with Truth, was published as Satya Sothanai.

Kalki was in the midst of some controversies. One related to his response to an observation by a respectable writer that Subramanya Bharati was a "mahakavi"; although Kalki was a great admirer of the nationalist poet, he did not agree with this estimatio n. The other related to some contemporary writers' charge of plagiarism against Kalki. Kalki admitted that among his over 120 stories, the themes of some six or seven were adaptations.

The release of a postage stamp in honour of Kalki was among the highlights of the centenary celebrations. Sometime ago, the Tamil Nadu Government announced the nationalisation of Kalki's works; this will enable publishers to come out with reprints of his works. The celebrations have already inspired publication of a number of new books, which include Kalki: Selected Stories by Penguin Books and Kalki Kalanjiyam by Vanathi Pathippagam, which has published Kalki's books for decades. The Peng uin book is an English translation of 12 selected short stories of Kalki by his grand-daughter Gowri Ramnarayan.

For safeguards against bio-piracy

BIPLAB DASGUPTA the-nation

Governments of developing countries must recognise the urgency to protect their biological wealth and tackle the issue of a soft patent regime at the global review meeting of TRIPS at Seattle.

WEEK after week there are reports of the patenting of some Indian plant variety or the other by multinational agri-business companies. First, it was the patent on neem and its several uses, then came haldi (turmeric), followed by basmati, karel a (bitter gourd), kalajira (black cumin seeds, brinjal... Most of these have been an integral part of traditional systems of medicine in India, evolved over centuries mainly by small village communities. The medicinal and other useful properti es of most of these plants and their many varieties were widely known, although these were not properly documented in most cases. There was no bar on access to such traditional knowledge and no individual or company, far less a foreign one, thought of ob taining private rights on the use of these varieties.

The multinational companies (MNCs) began to scour poor countries in April 1994, when, following the signing of the Marrakesh Agreement, particularly the TRIPS (Trade-Related Aspects of Intellectual Property Rights) component, countries which were a party to the agreement were asked to protect (read individualise) their plant varieties by means of patent legislation. Time-bound proprietary rights began to be bestowed on individuals or companies instead of on the communities with a traditional knowledge b ase. Since patent implies the exclusion of others from IPRs, only the patent-holder is legally authorised to produce or to regulate production by selling, leasing or mortgaging such rights. Anyone producing those products without the permission of the pa tent-holder, obtained in exchange of a fee or royalty, would be violating the holder's legal rights.

Patent rights have been internationalised. This was one of the major features of the TRIPS agreement. Every member-country of the World Trade Organisation (WTO), which was established in January 1995 in order to monitor the implementation of the Marrakes h Agreement, had to recast its patent law in line with the global patent regime as ordained in the agreement, within a given time-frame. The poor countries were given a deadline of end-1999 to modify their laws, while pharmaceutical and agro-chemical ind ustries were given another five years. But that was no more than a formal concession devoid of substance. The time agreed upon was 2005, along with the 'transitory rules' regarding Exclusive Marketing Rights (EMRs). A precondition for WTO membership was agreeing to the EMRs of companies that had patented their products during the transitional period, the transitional period being the time between obtaining WTO membership (1994 in the case of India) and overhauling the patent legislation in line with the global format (2000 in the case of India in general and 2005 in the case of pharmaceuticals). Such transitional rights were not to be questioned by national patent laws.

The modus operandi of the MNCs has been to collect the plant varieties and their germplasms from poor countries in order to cross-breed them with other varieties, and claim that they had invented something novel, non-obvious and of practical use ( which are the requirements for acquiring patent rights), and then to patent them in their own countries or in any other country of their choice. Patenting a product in the United States or Burkino Faso or Burundi is as good as patenting it in Calcutta.

A typical example has been the patenting of basmati by Rictec, a Texas-based firm which, after collecting specimens from India and Pakistan and experimenting and cross-breeding them with other varieties, eventually patented them: first as Texmati, then a s Kashmati, and finally as Basamati. Rictec is claiming novelty because its Basamati, although identical in taste to the sought-after rice variety produced in India and Pakistan, has been produced by following a different method and in a different terrai n. And as such, with the passage of the EMR legislation early this year, the company is, legally and effectively, the owner of basamati. This ownership right has been instantly recognised by WTO members. They now have even the right to exclude indigenous basmati from the Indian market unless it is patented as a product distinct from the variety patented by the Texas-based company or as one that is identical but has been produced through a different process. Under the TRIPS agreement, the onus of providi ng this is now on the Indian or Pakistani basmati producer.

ONE way of combating the menace of bio-piracy is by challenging the patent claims by MNCs in the courts of the rich countries. On the turmeric patent, the Council for Scientific and Industrial Research (CSIR) won a battle. But such legal battles are expe nsive and time-consuming, and not easy to fight in each and every case. The main difficulty, even assuming that the judicial system is neutral, is that courts in the developed countries rely mainly on documentary evidence. Such documents are hard to come by in India. Unlike in the case of China or the Arab countries, India is not known to have had a systematic method of documentation. Without documents a patent application cannot be challenged in a foreign court on the ground of "prior art".

Another method is to counter TRIPS with the United Nations Convention on Biodiversity (CBD), which was signed by 170 countries in 1993, as against 150 signatories for TRIPS. The CBD recognises the collective rights of the village communities, and not tho se of individuals or companies. It further decrees that a rich country's demand for patent rights should not be at the cost of the overriding need for the conservation of plant diversity. It was possible for India to insist that both TRIPS and the CBD, o ne insisting on conformity and the other on diversity, cannot be right at the same time. Unfortunately, such arguments have not been fruitfully deployed by the Indian government in international negotiations to counter patentability, and as a result, ind ividualisation of plant varieties.

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This emphasis on the collective right of village communities can be taken a step further by arguing that the government, as the guardian of numerous village communities, should be permitted to exercise proprietary rights on their behalf. Such a step is l egally feasible and defensible, and would have the additional advantage of protecting plant varieties. Once the sovereign right of a government over the biological wealth of a country is recognised, one can go even further and prepare an inventory of Ind ian flora, particularly the 8,000 medicinal plants targeted by the MNCs, and get those patented before the companies gain access to them. This is the commonsense approach to saving biological resources from lurking predators, rather than engaging in cost ly and risky legal battles in foreign courts.

PERHAPS there are better ways of preventing this poaching that has been going on for five years. But no government in power in India appears to have been concerned enough about the urgency of protecting the biological wealth. Something needs to be done n ow, and fast. The rich countries, poor in biological resources, are keen to gain a time-bound monopoly on India's biological wealth.

Article 27(3)(b) of TRIPS provides an option for patenting, that is, by way of sui generis or a combination of patent and sui generis. Sui generis is different from patenting but serves the same purpose of 'protecting' plant varietie s. Generous though it appears at first glance, it is analogous to a patent in its essential features. The intent is the same as patenting, that is, privatising rights over plant varieties, but where the recording of rights would be simpler and less forma l. Sui generis that India has in mind is UPOV (International Plant Breeders' Rights Convention), a soft patent regime that has its origins in an international convention in 1961 and was supported by 37 countries. UPOV has three versions: the origi nal 1961 version and two more that were formulated in 1978 and 1991. Of these, only the 1991 version remains.

A major criticism of UPOV is that it is more concerned about protecting the interests of the plant breeder than the farmer. In its 1991 version the rights of village communities have been ignored, as also the right of re-use and exchange of seeds, while the breeder has been given the right to seize the harvest of the farmer should he fail to pay royalty for the use of seeds.

Further, given its insistence on stability and uniformity, an ordinary farmer would not be able to get the seeds developed by him registered, while the seed market would be dominated by MNCs engaged in agri-business, such as Monsanto (see separate story) . The MNCs, it is feared, may use genetic information obtained from farmlands without paying any fee to the farmer to develop seeds and register them under UPOV, and then sell them at a high price back to farmers and those who had supplied the genetic in formation. This has revealed another serious dichotomy. The rich countries insist on the recognition of plants and their germplasms that are located mainly in the poor countries as the common heritage of mankind, access to which should be open and free. But at the same time they have no qualms about selling at a high price plant varieties and products they produce (and patent) from those countries.

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Biodiversity legislation likely to be passed in India in a year gives MNCs easy access to biological resources for a fee to be paid to the community in the name of 'benefit-sharing'. The idea of benefit-sharing makes no sense in an unequal world with the MNCs on the one side and the communities, not having the faintest idea of the economic price of their resources, on the other. It is more than likely that by paying a negligible amount MNCs would seize the right of 'bio-prospecting', and arrogate to the mselves the rights of these communities. Non-governmental organisation activists such as Vandana Shiva fear that in the long run, this benefit-sharing would force India to pay out a great deal more in the form of royalties to buy those plant varieties no w patented elsewhere than what the country would obtain from such paltry 'compensations'. Although this legislation is purported to conform to the CBD, it does not explicitly recognise indigenous knowledge, nor does it recognise village communities. It o nly talks about 'persons' with whom benefits would have to be shared by the companies. This legislation is likely to come in conflict with the existing laws relating to traditional management practices in areas inhabited by the Scheduled Tribes and with the Constitution (73rd Amendment) relating to local bodies.

Article 27(3)(b) of TRIPS, incorporating the provision for sui generis, will be one of the major items on the agenda at the global review of TRIPS at Seattle in November 1999. If the governments of the poor countries are united in their resolve, t hey can induce the rich countries to accept a wide definition of sui generis that recognises indigenous knowledge and community rights and moves away for the soft patent format of UPOV. If they fail, it is more than likely that even this mild prov ision of sui generis would be taken away and all the plant varieties would be required to be patented.

On the issue of patentability, India seems to have missed a major opportunity on May 11, 1998, the day a nuclear device was exploded at Pokhran. Until that day, the European Parliament had no legislation on patenting of life forms. Although since the Mar rakesh Agreement, European governments were under pressure from biotechnology and genetic engineering firms to move towards a patent regime, the Green and Left parties and a large section of the Social Democrats in various countries took the view that li fe was not patentable. During the first reading in the European Parliament of the draft bill on patent on biotechnology, an amendment was moved by these political forces against bio-piracy. This bill required the applicant for patent rights to disclose f ully the source of its genetic material, and also to declare that such material had been taken out of its country of origin. Had this amendment been passed, it would have been possible for India to bring forward a corresponding legislation that would hav e effectively prevented the poaching of biological resources. More important, Europe would have become a powerful ally of India on this issue and it would have been possible to bring pressure on the U.S. and Japan in Seattle to incorporate such provision s in their respective laws.

WHEN this writer, along with Indira Jaisingh, Senior Advocate in the Supreme Court, went to Brussels at the invitation of some NGOs, and met several members of the European Parliament, their impression was that a strong intervention from the poor countri es, led preferably jointly by India and Pakistan, could tilt the balance in favour of this amendment on bio-piracy, as the difference between the two sides was not big; it was a matter of just 30 votes. The author arranged to send urgent fax messages to the Ministers concerned, with the help of the Indian Ambassador, urging immediate and strong intervention as time was running out. When he returned to India on May 9, the Ministers concerned confirmed that they had received the messages and were in agree ment with the author, but during the intervening 10 crucial days nothing concrete had taken place. Action taken by the Ministries was too late to have any effect on the deliberations at the European Parliament on May 11, the day the biotechnology bill, w ithout any safeguards against bio-piracy, was adopted. Rather than make common cause with Pakistan on basmati, the government's preoccupation at that time was with Pokhran-II.

For an alternative patents regime

PHILIPPE CULLET the-nation

There is a strong case for the revision of the TRIPS agreement concerning the protection of plant varieties, drawing lessons from India with regard to the development of a sui generis system.

THE agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), one of the treaties administered by the World Trade Organisation (WTO), has been a subject of controversy in India. Membership of the WTO and the ratification of TRIPS have s ignificant implications for developing countries. Public awareness about the implications of TRIPS with regard to bio-piracy heightened following the patenting in some countries of neem and its various properties and the application for a patent on some medicinal properties of haldi (turmeric) in the United States, which was turned down after a review.

The WTO ministerial conference slated for November 1999 in Seattle, whose member-states are to decide on the launch of a new round of trade negotiations, will raise the stakes once again. More significant is the fact that India has to prepare for the imp lementation of TRIPS and initiate a broad debate on the issue since any legislation to protect a plant variety should, theoretically, be adopted before the year-end. The issue of protection of plant varieties has received a fair degree of attention. And a fresh look at the provisions concerning plant varieties and the responses being proposed in India is in order.

TRIPS provides for the availability of patents for inventions, whether they are products or processes, in all fields of technology. Member-states can restrict patentability to some cases. For instance, they can exclude plants and animals from patentabili ty. But TRIPS mandates the introduction of a form of legal protection on plant varieties. Member-countries have the liberty to "provide for the protection of plant varieties either by patents or by an effective sui generis system or by any combina tion thereof" (Article 27.3.b). This constitutes one of the few areas where countries are given some margin of appreciation in devising a protection system.

There has traditionally been no legal protection for plant varieties in India or at the international level. Seeds were, for instance, exchanged among farmers and countries on the basis of the principle that the means of enhancement of food security shou ld not fall into the domain of commercial interests. This free sharing of knowledge has in no way hampered the development of new plant varieties or agricultural research. Indeed, the hybrid varieties of the Green Revolution, celebrated as the ultimate s olution to the challenges of improving food availability per capita, were developed entirely on the basis of free access to and free sharing of knowledge pertaining to biological resources.

In Europe and in North America, the principle of free access to information has been progressively restricted following pressure from the private sector for the establishment of a system of private property rights. This has been concomitant with the decl ine of agriculture as a subsistence activity and the overall commercialisation of the primary sector. In India, socio-economic conditions differ dramatically from those obtaining in the countries that are part of the Organisation for Economic Cooperation and Development (OECD). The primary sector still constitutes more than a quarter of the gross domestic product (GDP) and employs about two-thirds of the working population. Further, agriculture is still mainly a subsistence activity. The current Patents Act reflects both the traditional practices of free exchange and the socio-economic conditions of the country. It provides, for instance, that methods of agriculture or horticulture cannot be patented. Further, in the case of substances intended for use as food, it restricts patentability to the process and provides for a shorter duration of the rights.

The TRIPS agreement broadly reflects the current legal situation in the OECD countries. It thus imposes a significant burden of adaptation on countries such as India. In a few cases, it allows member-states the liberty to determine the form of protection (as in the case of plant variety) they want to adopt. In fields such as pharmaceuticals, patent protection is compulsory. If the new regime seems inappropriate to the local situation in India, the only remedy is to lobby for a change in the agreement or for India's withdrawal from the WTO.

Here the focus is on the current proposals at the governmental and non-governmental levels concerning the development of a sui generis system. All these proposals fall short of constituting appropriate alternatives for India. Efforts should be dir ected at the development of such an alternative. While fighting patents and working towards a reform of the WTO agreements can be pursued in the long term, it is of utmost importance to use the scope provided in the treaties.

THE government has for the past several years been in the process of drafting a Plant Variety Protection and Farmers' Rights Act, which is to constitute a direct response to the TRIPS agreement. The draft mainly focusses on the definition of formal plant breeders' rights and follows closely on the model of the International Convention for the Protection of New Varieties of Plants (UPOV Convention). The UPOV Convention specifically seeks to develop plant breeders' rights. Patents and plant breeders' righ ts are conceptually similar. Both seek to give the private sector incentives to enter the seed business. Plant breeders' rights are, however, less firm than patents and provide some exceptions to breeders' rights in favour of farmers.

The draft Act provides, as in the case of the UPOV Convention, that protection will be available only for varieties that conform to the criteria of novelty, distinctness, uniformity and stability. Further, the draft explicitly states that, in order to be protected, the 'new variety' must be clearly distinct by at least one essential characteristic from wild relatives and traditional cultivars. In this sense, it is geared to providing incentives to the private sector to engage in the seed business.

Although the title suggests that the Act also provides for farmers' rights, it focusses on plant breeders' rights, which are inherently incapable of recognising farmers as breeders. Farmers are seen as cultivators and managers of agro-biodiversity, whose varieties cannot be protected under the Act. At the most, farmers are granted the rights to save, use, exchange, share and sell the produce of a protected variety. These do not constitute novel rights but rather drastically restrict existing rights.

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NON-GOVERNMENTAL activists have been active in the field of plant variety protection. Their efforts have focussed on both practical activities and policy development. Significant attention has been devoted to the setting up of biodiversity registers for benefit-sharing and in order to develop alternative legislative frameworks.

Biodiversity registers have been proposed partly to fight patent applications. The process has been promoted on a large scale by the Centre for Ecological Sciences in Bangalore but has also been undertaken independently, as in Pattuvam village in Kannur district of Kerala.

The idea is to document existing plant and animal species and knowledge relating to these resources. This can then be used to show that a given patent application uses information which is already part of the common body of knowledge in use in a given co mmunity or in the country in general. This is enough to defeat a patent application since the patents system is premised on rewarding 'inventions'.

Biodiversity registers are of great importance in fighting unwarranted patents. However, they do not contribute to the development of an alternative to the patents system as they are conceived exclusively as a defensive strategy against patents. They ser ve to show that the knowledge already exists and thus cannot be patented, but do not provide any other form of protection for this existing knowledge.

As a corollary to the setting up of biodiversity registers, the concept of benefit-sharing has been put forward. Its proponents include, for instance, the M.S. Swaminathan Research Foundation in Chennai. Benefit-sharing is directly linked to the idea tha t the knowledge of farmers and local communities is not susceptible to fulfilling patenting criteria or even that it should not be included in the patent system. It thus seeks simply to provide a form of monetary compensation for the use of local people' s knowledge. The concept of benefit-sharing has been enshrined in the proposed Biological Diversity Act, which provides that the national biodiversity fund shall be utilised, for instance, for "channelling benefits to the conservers of biological resourc es, creators and holders of knowledge". There is no hint that the creators and holders of knowledge may be the owners of these resources and should thus have the right to determine whether they want to sell and at what price.

Overall, benefit-sharing constitutes a useful strategy to mitigate some of the undesirable impacts of patents on biological resources for current holders of biodiversity-related knowledge. Without benefit-sharing, such knowledge may be 'taken' from its c urrent holders without any form of acknowledgement or compensation. However, benefit-sharing does not contribute to the definition of an alternative regime to patents. Indeed, while it seeks to limit the impact of the introduction of patents in the field of biological resources, it does not seek to provide any rights to current holders of knowledge. In this sense, it assumes that local people do not have intellectual property rights (IPRs) over their knowledge and that a monetary reward constitutes a su fficient compensation. Further, benefit-sharing is not necessarily a practical or desirable solution since there are many instances where the source of the materials used is very difficult to trace to a particular community, region or even country. This is because most people around the world depend to a large extent on plants which are originally from other areas for some of their staple food. Since centuries may have passed since the first transfers took place, it is hardly feasible to trace the varie ty to its original source even if this was deemed to be desirable.

The dangers of benefit-sharing are also illustrated by what is seen by some as a model benefit-sharing transaction. In the case of Aarogyappacha, the Tropical Botanical Garden and Research Institute near Thiruvananthapuram decided unilaterally that the m anufacturer of the drug award the Kani tribe, who shared their knowledge of the anti-fatigue properties of the plant, 50 per cent of the licence fee and royalty. If the percentage awarded to the Kanis is high, this transaction involves the transfer of th e IPRs of the Kanis to the institute. While the monetary compensation is welcome, the rights should stay with the first holders of the knowledge.

It has also been suggested that India should develop legislation which would extend the circle of potential holders of patents and make patents available to local communities. Proposals by the Research Foundation for Science, Technology and Natural Resou rces Policy, New Delhi, and by K. Abdul Latheef of Kozhikode have been circulated. Community intellectual property rights are premised on the idea that the current patents system only recognises the northern industrial model of innovation. The idea is th erefore to foster intellectual property laws which recognise the more informal, communal system of innovation through which farmers and indigenous communities produce, select, improve and breed a diversity of crop and livestock varieties.

These proposals are significant insofar as they seek to give local holders of knowledge actual property rights. However, they do not constitute appropriate models for the development of an alternative to the patents system. This is due to the very nature of patents as monopoly rights, which cannot reward several actors. By granting local communities the right to seek patents, they are put on a par with any private company which is in this business. This implies that even if farmers manage to patent some of their innovations, they are bound to lose out in the long run since private companies will always be able to innovate faster than them.

All the proposals reviewed focus on fighting patents. However, the TRIPS agreement does allow for an alternative form of protection for plant varieties.

Exclusion of patents in agriculture has traditionally been premised on elements of public morality, the need to foster innovations at all levels from the smallest farmer to multinational companies and the need to restrict the commercialisation of sectors dealing with the most basic needs of humankind, such as food and healthcare. While these characteristics are valid even today, TRIPS now requires the introduction of a form of plant variety protection.

The introduction of patents in agriculture should be avoided in the current socio-economic context characterised by the existence of a variety of actors involved in agricultural management and agricultural innovations. Patents are by definition incapable of apportioning benefits in a manner that fits this reality since the grant of a patent implies that the patentee derives all the benefits associated with the invention. Patents also have the undesirable side-effect of implying that all knowledge which is not patented is in the public domain and thus freely available. Any knowledge which cannot be protected by patents because it is not 'state-of-the-art' is thus deprived of legal protection. This is very unfortunate because it gives the impression that the work of the managers of biodiversity is devoid of value while the work carried out in laboratories is the only one which adds value to the final product. Finally, patent rights are not known to foster the conservation or sustainable use of biologica l diversity.

Current proposals clearly do not constitute a full alternative to patents. The plant variety legislation is closely modelled on the UPOV Convention and recognises plant breeders' rights which are, like patents, monopoly rights meant to foster the involve ment of the private sector in the seed industry. Some of the other proposals are extremely interesting in the context of a patent regime but do not contribute to the development of an alternative. Clearly, India should develop an alternative system, not one modelled after UPOV. The UPOV system was developed by European countries at a time when subsistence agriculture had already mostly disappeared and when an overwhelming percentage of the population did not work in the primary sector anymore. These con ditions do not obtain in India.

An alternative regime should have some of these characteristics: First, it should provide for the establishment of property rights for all actors involved in agricultural management and seed improvement. To this end, it should aim at protecting not only the interests of corporate biotechnology firms and seed companies, as is the case with patents and plant breeders' rights but also the interests of farmers, who are among the major seed producers in India. One solution would be to provide a two-pronged r ecognition of commercial breeders' rights and farmers' rights, a proposal made at the international level a decade ago but which is still being discussed. Concerning farmers, the aim should be to protect farmers' current techniques or varieties and to al low them to derive benefits from any improvements they will carry out.

Secondly, the system should provide for non-monopoly rights. This directly derives from the fact that various actors contribute to agricultural innovation and that each of them should be entitled to property rights over their inventions, whether they are state-of-the-art or not. This would, for instance, imply that while commercial breeders can have the right to market their varieties, farmer-breeders can at the same time have the right to use their own varieties, exchange them and sell them. In this fr amework, different property rights systems exist side by side. A non-monopoly system implies that no single entity derives all the benefits associated with a given invention and that various inventors can have concurrent rights.

Thirdly, an alternative regime should recognise the fact that not all inventors seek to commercialise their knowledge. Indeed, one of the major shortcomings of the patent system is the assumption that the only incentive for innovation is the possibility of commercialising an invention and receiving monetary returns from it. Some farmers may try to take advantage of the possibility of commercialising their knowledge, while others may not. This fact should therefore be recognised in the proposed framework .

Fourthly, the TRIPS agreement requires that the alternative system should be 'effective'. This should not be understood as implying only the existence of legal enforcement procedures but should be understood in a broader context. While the WTO has assume d disproportionate importance in international relations partly because of the existence of a stringent dispute settlement system, plant variety protection is not regulated exclusively in TRIPS. Therefore, it is imperative that an alternative system be c onstrued in the broader framework of India's international obligations which include, for instance, the Convention on Biodiversity (CBD). Of particular relevance is Article 1 of the CBD which states that the aims of the Convention are the conservation an d sustainable use of biodiversity. The alternative system should thus contribute to the sustainable management of plant varieties.

Overall, the TRIPS agreement gives member-states the liberty to adopt plant variety protection regimes which are not based on patents. Given the current socio-economic conditions in India, this possibility should be fully utilised to strengthen the posit ion of all innovators in the field of agricultural management. The current draft legislation, which is directly based on the UPOV Convention, should be abandoned because it provides for monopoly rights which will only benefit the private sector industry. A novel version should be drafted with a view to granting meaningful property rights to all relevant actors and foster the sustainable management of biological resources.

Dr. Philippe Cullet is research programme director at the International Environmental Law Research Centre in Geneva. This article draws largely from a longer paper prepared by the author that is published in the Journal of World Intellectual Property (Volume 2, Page 617, 1999).

Openness, deficits and lack of development

JAYATI GHOSH columns

A report from UNCTAD highlights the role that greater trade openness may have played in worsening growth prospects in much of the developing world.

AT last, it's official. Although many economists and analysts in developing countries have been emphasising it for some time now, most multilateral economic agencies have tended to steer clear of noting the uncomfortable consequences that greater interna tional economic integration has already implied for most developing countries. The latest Trade and Development Report (TDR) just released in Geneva by UNCTAD (the United Nations Commission for Trade and Development), however, finally does look closely a t this issue.

In doing so, it has come to accept that both financial and trade liberalisation can have undesirable consequences not just for the balance of payments but also for domestic economic growth. The current received wisdom in the mainstream literature, especi ally from the World Bank, is rather different, and can be briefly summed up in the mantra "trade liberalisation good; financial liberalisation bad". But this is a simplistic view. More perceptive observers have noted that trade liberalisation can play a role in building up to crises like those in East Asia, or in causing recessions or declines in domestic manufacturing industry in several other developing countries, or even in limiting the possibilities of major shifts in the international divisi on of labour.

Thus, the TDR '99 admits that "developing countries have striven hard, and often at considerable cost, to integrate more closely into the world economy. But in the face of deep-seated imbalances in economic power and systemic biases in the international trading and financial systems, their expectations of the gains from such integration in terms of faster growth, greater employment opportunities and reduced levels of poverty have been disappointed... the downside risks have proved far greater than was g enerally expected... the twentieth century is closing on a note of crisis and a growing sense of unease about the policy advice that was proffered in the past decade" (page V).

On the basis of a slightly longer look at the experience of growth and external imbalance in developing countries, the TDR points out that growth in developing countries as a group in the 1990s has been at an annual average of around 4.3 per cent. This d oes represent a recovery from the levels of the 1980s, but it is still well below the average of 5.7 per cent per annum of the 1970s. Moreover, this partial recovery in economic growth has been accompanied by a significant worsening of external deficits. Indeed, if China (whose performance was exceptional for a variety of specific reasons) is excluded, then it turns out that the average developing country trade deficit for the 1990s is higher than that for the 1970s by almost 3 percentage points of GDP , while the average growth rate is lower by 2 per cent per annum.

Of course, low oil prices in the 1990s (compared to high oil prices in the 1970s) have played some role in this average since a number of developing countries rely on oil exports. But the same pattern is evident, to almost the same degree, even for non-o il exporting developing countries, indicating that the basic problem lies elsewhere.

The pattern is also the same across regions. In Latin America, growth has been lower while trade deficits as a share of GDP have been the same. In sub-Saharan Africa, growth has fallen but trade deficits have risen. Countries in Asia have on average run greater external deficits in the 1990s without achieving faster growth.

The general tendency among the majority of developing countries over the 1990s, therefore, is of widening external deficits combined with stagnant or falling growth rates. This is precisely the opposite of what had been promised by the proponents of libe ralisation at the start of the decade.

Two forces were supposed to create a virtuous cycle of growth and (eventually) lower deficits for developing countries: the Uruguay Round of the General Agreement on Tariffs and Trade (GATT), which was supposed to bring about a dramatic increase in marke t access for developing country exports; and the greater freedom accorded to international capital flows in the wake of financial liberalisation, which would allow developing countries to finance deficits easily and increase their domestic growth rates.

Obviously, neither of these forces has acted quite in the manner predicted by their votaries. What explains the more depressing reality? To its credit, the TDR eschews the simplistic explanations which have been all too readily advanced in the recent pas t, which tend to blame everything on "over-hasty financial liberalisation" or domestic problems like "crony capitalism".

Instead, it seeks to find some common features which apply to all or most developing countries, and which also reflect the general conditions of the world economy. It thus isolates two important factors behind the adverse combination of payments deficits and lower growth: terms of trade losses and rapid trade liberalisation.

Both of these stem directly from the attempts of developing countries - pushed by public international institutions like the International Monetary Fund (IMF) as well as private ones like the World Economic Forum - to integrate more closely with the worl d economy in terms of both trade and finance, to make their economies more "open" and to rely more heavily on exporting activity as an engine of growth.

Thus, the terms of trade losses reflect the growing numbers of developing country exporters crowding into already saturated markets, pushing down prices further, and reducing the income gains from additional exports. Interestingly, the process of relativ e price decline occurred for both primary and non-primary goods exported by developing countries.

The decline in commodity prices (both oil and others) is well-known by now, reflecting both slow growth of aggregate demand in industrial countries as well as substitution away from the use of such commodities because of technological change. But standar d adjustment policies continue to promote reliance on these traditional exports for most developing countries, further worsening the problem.

But even for manufactured exports by developing countries, relative prices fell. In fact, since the beginning of the 1980s, the terms of trade of developing countries relying mainly on manufactured exports have fallen by as much as 1 per cent per annum o n average. This reflects the increased concentration of developing country interest on certain labour-intensive or natural-resource based manufactured products, including low-technology inputs to the electronics industry.

The TDR points to the concern that such manufactures may be acquiring the characteristics of primary commodities in world markets. The fear that several analysts had expressed earlier, that all countries cannot play the same game of aggressive export pro motion in labour-intensive manufactures without affecting international prices, now appears to have been justified.

The problem has been aggravated by inadequate market access for developing country exports in developed markets. This has turned out to be one of the major false hopes raised by the Uruguay Round and the formation of the World Trade Organisation (WTO). T he TDR is emphatic that increased market access for developing country exports should form the basis of negotiation in GATT, since it may turn out to be more important than capital inflows for development prospects.

While developed country markets have not become more open for developing exporters, the markets of developing countries have been significantly liberalised. Many developing countries opted for "big bang" forms of trade liberalisation which drastically ch anged the structure of domestic demand in favour of imports, but even the more gradual liberalisers have seen imports make big inroads into their markets and erode the viability of domestic manufacturers.

In the past, it used to be felt that trade liberalisation combined with currency devaluation would ensure that trade deficits would not get too large. Indeed, the inability to finance such deficits typically ensured that trade would eventually be brought into balance, even at the cost of domestic contraction. But the possibility of using private capital markets to finance such deficits, even if only for short periods, has meant that deficits now continue for slightly longer periods. More significantly, because trade liberalisation has often been accompanied by financial liberalisation, it has broken the link between the current account and exchange rate movements, which now get determined by the behaviour of capital flows at the margin. So the new sce nario is one of exchange rate instability and currency "misalignment" driven by capital flows that further cause trade balances to deteriorate.

Often the imbalances can be sustained for some time because of continued capital inflow. But the story of the 1990s has been one of increasingly rapid reversal of such capital movements, leading to boom and bust cycles. The Asian crisis and the ongoing d ifficulties in Russia, Brazil and elsewhere, are evidence of this. In the process, there is also significant damage to domestic industry, in many cases leading to effective de-industrialisation because nascent manufacturers simply disappear in the face o f severe and cheap external competition.

This is portrayed by some determined advocates of indiscriminate liberalisation as being bad for workers but good for consumers in the country. But it can only be good for consumers if domestic economic expansion is somehow sustained sufficiently to ensu re that there is more purchasing power in the hands of consumers. The pattern of terms of trade movements along with effects on domestic economic activity and employment suggests that this has not been the case for most developing countries.

So the greater openness of developing countries in the 1990s has been associated not only with higher volatility and larger payments deficits, but even with inferior economic growth performance.

Clearly, it is time for those in developing countries to revise the now-hackneyed policy prescriptions which see liberalisation as the universal panacea, and take a more sophisticated and realistic view of the economic challenges ahead. To push for any r eal change in economic reality, ideas must change first.

A depreciating dollar

Will America stagnate if Asia recovers?

AN unusual question haunts the world's financial analysts. Can the United States sustain its robust growth if the rest of the world is buoyant as well?

This question arises in a context in which many economies which were experiencing stagnation or contraction appear poised to return to a situation of growth. The Japanese government's repeated efforts to pump-prime the system with deficit-financed govern ment expenditures finally appear to be yielding results. Real GDP grew by a pleasantly surprising 2 per cent in the first quarter of 1999, after five consecutive quarters of decline. There is evidence of expansion in Europe as well, after the period of c ontraction induced by the fiscal austerity adopted as a run-up to the euro. Finally, not only has the recession bottomed out across East Asia, but there is evidence of robust growth in South Korea during the first two quarters of this calendar year. Sinc e the United States and the United Kingdom have already been experiencing strong expansion, the world seems poised to return to a bygone era of "synchronised growth" in all major economies or regions.

But, as even the International Monetary Fund (IMF) makes clear in its recently released World Economic Outlook, that prospect is still uncertain. This is because developments during the decade of globalisation seem to have rendered synchronised gr owth (or recession) across the world's economies an unlikely occurrence.

The world economy in the 1990s has been characterised by two much-noted features. First, slow growth in Japan and across much of the world. According to World Economic Outlook, the average rate of world economic growth during the 1990s was only 3 per cent, which is below the 3.5 per cent average of the 1980s and 4.5 per cent in the 1970s. The second feature has been remarkable instability. Not only have there been two phases of sharp slowdown in economic growth (in 1991-93 and 1998-99) over the d ecade, but it has been characterised by periodic crises in Mexico, countries of East Asia, Russia and Brazil.

Yet the 1990s represented one of the best decades for the U.S.. Not only was the U.S. recession of 1990-91 unusually mild, but the country went on to record almost continuous and, more recently, particularly robust growth. If this process is sustained th rough early next year, as some expect it to, then this would be the longest episode of continuous growth on record for the country.

Till recently, this unusually splendid growth record of the U.S. was attributed to specific features of its economy or economic policy. The U.S., it was initially argued, had more flexible labour markets than Europe, as did the U.K. which was also perfor ming better. This helped companies downsize and restructure, and kept wages down, enhancing U.S. competitiveness and growth.

More recently, better growth has been ascribed to U.S. policy. To quote from World Economic Outlook: "The recent impressive performance of the U.S. economy is, in large part, testimony to laudable policies. These include the turnaround in the fisc al balance from deficit to surplus (a structural improvement equivalent to roughly 3.5 per cent of GDP since 1993); the agile management of monetary conditions by the Federal Reserve in achieving and maintaining low inflation, in helping to maintain stab le growth and also in helping to calm global financial turbulence; and structural policies that have continued to foster the flexible working of markets."

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WHAT is left unexplored in that summary assessment is the role that 'external factors' played in reviving growth in the U.S.. Exports were clearly not a contributory factor. Export volumes grew at just 1.5 per cent in 1998 while import volumes grew by 10 .5 per cent. As a result, the value of the current account deficit on the U.S. balance of payments has risen almost continuously from $43 billion in the first quarter of 1998 to almost double that value in the second quarter of 1999. Despite this worseni ng current account deficit, the dollar remained strong and even gained in strength. This, as has been widely reported, was only because of large financial flows into the U.S. from abroad. Not only did money flow into U.S. equity, but outstanding amounts of international debt securities originating in the U.S. rose sharply from $552.8 billion at the end of 1997 to $946 billion at the end of the first quarter of 1999.

The willingness of foreign investors to hold dollar-denominated assets is thus the key to the rise of the dollar. And so also to robust growth in the U.S. Given the large direct and indirect (through pension funds, for example) investments of personal sa vings in equity in the U.S., the stock market boom enhanced the wealth of American citizens, reducing incentives to save. The net result has been a collapse of private savings in the U.S. Personal savings as a percentage of disposable personal income in the U.S. fell from 1.2 per cent in 1997 to 0.5 per cent in 1998, turned negative in the first quarter of 1999 and touched a remarkably high negative level of 1.3 per cent in the second quarter ending June 1999. The other side of the fall in savings was a rise in private consumption expenditure, which was crucial to sustaining growth in the U.S. economy.

Thus, growth in the U.S. was dependent on a consumption boom fuelled by the willingness of foreign investors to bet on the dollar, irrespective of the state of the U.S. balance of payments. That willingness stemmed from a range of sources, many of which were related to the dollar's still-unchallenged role as the world's reserve currency. Higher interest rates in the U.S. at a time when the Japanese economy was performing poorly is indeed one such factor. This triggered the infamous "yen-carry trades" in which investors borrowed yen funds, converted them into dollars and invested them in higher yielding dollar-denominated assets. When the occasion arose to unravel these trades, they gained not merely because of the differential in interest rates between Japan and the U.S. but also because of the depreciation of the yen in the interim period.

The other element contributing to investment in U.S. assets was the "flight to safety" from a stagnant Japan and an East Asia struck by crisis. In fact, till mid-1998 those flows virtually insulated the U.S. economy from the effects of that crisis. Final ly, inflows into the U.S. fed upon themselves. To start with, investments in American financial assets helped sustain what was a completely unexpected boom in stock markets. High returns in the stock market obviously makes investment in American stocks a n attractive proposition, drawing in more funds from the international economy.

In the circumstances, growth has been robust in 1997 and 1998 and remained at acceptable levels even in the first half of 1999. Overall, for much of the recent past, the U.S. economy has been characterised by a strong currency, a conservative budgetary s tance, a buoyant stock market, a creditable rate of growth and low inflation. In the world of macroeconomic indicators, something must give to ensure this otherwise peculiarly favourable scenario from the American point of view. And that has been the def icit in the trade in goods and services. That deficit rose almost continuously and nearly doubled, from $33.3 billion in the first quarter of 1998 to $65 billion in the second quarter of 1999. This magnitude of increase in the trade deficit accounts for almost 85 per cent of the increase in the current account deficit in the U.S. balance of payments during this period.

What is worrying financial analysts is that as the recovery begins outside the U.S., this situation may change. The most telling sign of this has been the weakening of the dollar in recent times. Towards the middle of September the dollar touched a three -and-a-half year low of yen 103.3 to the dollar. Not only was the value of the U.S. currency that day at a new low, but underlying its day-to-day fluctuations was an acceleration of the depreciation of the currency from a value as high as yen 122 to the dollar just two months earlier. Even if we consider monthly average figures of the value of the yen vis-a-vis the dollar, the trend of a sharp appreciation of the dollar vis-a-vis the yen between August 1998 and January 1999, which was stal led thereafter, has revived from May this year. The weakness of the dollar has also resulted in a reversal of the "unexpected" appreciation in its value vis-a-vis the euro since its creation in January.

The current weakening of the dollar indicates that America's ability to borrow itself into growth when the rest of the world languishes seems to be under challenge. Observers are clear that the dollar sank sharply in mid-September because investors were no longer ready to bet on an overheated U.S. economy. The signs of reversal of capital flows into the U.S. have appeared despite the fact that the Federal Reserve Board has raised interest rates twice in recent months. The consequent widening of interest rate differentials between the U.S. and elsewhere is obviously proving inadequate to attract the foreign investor.

A number of factors could explain this tendency. The fall in the dollar occurred in the wake of the news of a record current account deficit in the second quarter and of a surge in retail sales of 1.2 per cent in August, which took its value to a level c lose to 11 per cent higher than in the corresponding month of the previous year. Clearly, private consumption was still buoyant and was still widening the gap between America's imports and exports. But now international investors have begun to pull out i n the wake of these developments. All of a sudden what has been true all along - that U.S. fundamentals are indeed weak and that the economy is vulnerable - seems to matter to the investor.

This loss of confidence is related to a number of other developments. The incipient recovery in Japan and the rest of Asia is reversing the flight to safety into U.S. bonds and reducing the "autonomous" demand for dollar-denominated assets. Operators wan ting to unwind positions financed through yen carry trades could be increasing their demand for the Japanese currency, resulting in a strengthening of the yen. Above all, the possibility that as Japan recovers and the U.S. current account deficit widens, the yen would appreciate vis-a-vis the dollar, and more than neutralise any gains from investments in higher yielding U.S. bonds, would make investors turn dollar-shy and yen-friendly. And the more they turn away from the dollar and towards the y en, the more would their expectations of an appreciation of the yen be realised. All this is now happening with greater intensity because the biggest investors in U.S. Treasuries are Japanese investors, who are reportedly selling out in the U.S. and taki ng their money back to where it came from.

While this decision may be reasonable from the point of view of the individual Japanese investor, it is creating much discomfort among governments. A depreciating dollar is obviously bad news for the U.S. Underlying that depreciation must be a loss of co nfidence in U.S. equity, which could trigger an abrupt fall in U.S. equity prices. As the public information notification issued by the IMF after its executive board concluded the Article IV consultation with the U.S. noted: IMF directors believed that i n the U.S. "the strength of demand, including corporate investment as well as household consumption, had been underpinned by the high level of stock prices - a level that was difficult to explain". This would mean that a sharp market decline could wipe o ut illusory wealth, lead to an abrupt adjustment in the household savings rate from its current historic low, and massively squeeze consumption demand. The era of high growth and large current account deficits appears to be near its end.

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But the lessons from this episode go further. In the era of financial globalisation, it appears, synchronised growth in different parts of the world is impossible. The boom in America appears to depend on slow growth and crises elsewhere. And a recovery elsewhere appears to threaten America's economic health. Interestingly, World Economic Outlook does recognise this new conjuncture in the world economy. To quote the Outlook:

"Economic and financial linkages and policy transmission mechanisms across countries have become more complex in the 1990s, warranting a further reassessment of key relationships. Historically, the developing countries' economic cycle was mostly positive ly correlated with that of the industrial countries due to the impulses transmitted through trade and commodity prices. In the early 1990s, however, when the industrial countries went through successive episodes of cyclical weakness, growth actually acce lerated in many emerging market economies, fuelled by the rapid growth of trade among them (especially in Asia) as well as by substantial capital inflows.

"More recently, in the wake of the Asian crisis, all industrial countries with significant trade links with Asia would have been expected to experience adverse effects on growth. In fact, however, while Japan and, to a lesser extent, Europe were negative ly affected, the United States' economic expansion appears to have gained further momentum. A flight to dollar-denominated assets helped to sustain the U.S. expansion by boosting domestic demand through lower interest rates and the dampening effect on pr ices of an appreciating dollar, notwithstanding the negative impact on U.S. exports.

"In both examples, the integration of financial markets appears to have contributed to a tendency for global financial resources to move to whichever countries and regions are relatively dynamic at the time. In principle, such reallocations of financial resources are beneficial for the recipient countries and also for global growth and efficiency. However, as experience shows, large net capital flows into strongly expanding economies may exacerbate risks of overheating and asset market bubbles, while ra pid reversals of such flows can severely strain weak financial systems and lead to destabilising currency movements."

Behind this elaborate reasoning is one striking judgment. In a globalised world dominated by financial as opposed to real flows, growth at one pole has come to depend on stagnation or contraction at the other. Whatever other virtue the IMF may find in ma rket-driven globalisation, it has been forced to admit that its downside is that autonomous tendencies in the current conjuncture militate against the synchronised growth needed for a global consensus.

Arrogant nuclearism

L. RAMDAS science-and-technology

What India needs is an urgent Strategic Defence Review to determine its security needs. Instead of this it now has a dangerous doctrine for nuclear weaponisation.

However, in the last seven years, whilst much larger number of terrorists have infiltrated into the Kashmir Valley, inflicting tens of thousands of casualties on civilians, servicemen and police personnel, there is no suggestion that the Indian Army s hould follow the precedent of 1965. Here comes the nuclear factor. Since both India and Pakistan perceive each other as having nuclear weapons capability, the covert war waged by Pakistan has not escalated to a high intensity inter-state war because of t he implied risk of a possible nuclear exchange. While Pakistan's nuclear capability has enabled it to launch a covert war against India, the perception of mutual deterrence has ensured that the situation does not escalate further. This has resulted in a no inter-state war situation between India and Pakistan for almost twenty-five years.

- K. Subrahmanyam in World Affairs Journal, October-December 1997.

YES, this is the same K. Subrahmanyam, the Convener of the National Security Advisory Board (NSAB), who in a 1997 article titled "Covert Operations pose new challenges for Indian Security" said that there was already a minimum nuclear deterrent working. The only change in the political and security firmament since then has been that a new coalition government, led by the Bharatiya Janata Party, came to office in March 1998 and went on full speed ahead to conduct the nuclear tests at Pokhran in May 1998. For its splendid contribution, the BJP-led government was rewarded with the limited war in Kargil, which accounted for the loss of nearly 500 precious lives. We must thank the "Good Shepherd" for his early warning. In our hi-tech post-nuclear profile th is was the reality of our command, control and communications readiness. We came very close to losing Ladakh and the northern parts of Kashmir. Without trying to sound too alarmist, there was a real possibility of this conflict escalating into an all-out war, including a nuclear exchange with all its disastrous consequences.

Just as the country was recovering from this traumatic experience came yet another bombshell from the caretaker government - the announcement of the draft Indian Nuclear Doctrine on August 17, 1999. Many observers have stated that the NSAB's draft had be en with the government for nearly two months

(John Cherian in Frontline, September 10, 1999 and Achin Vanaik in The Hindu, September 4, 1999) but the government thought it fit to release it a fortnight before the first round of the general elections on September 5. Predictably, the Op position parties were furious, and rightly so. A matter of such importance should not have been made public by a caretaker government. Having carefully stowed it away for two months, it could have waited until the next government took office after the el ections. There is little doubt that the announcement was intended to influence voter opinion in the Government's favour. If ever there was a pre-emptive strike, this was it. There was no question of 'no first use' in this launch. Should a non-BJP governm ent come to office, it may well have a different approach altogether.

Of late we are seeing a lot of this kind of unilateralism. Take the telecom dispensation, which resulted in a loss of over Rs. 50,000 crores to the exchequer, or the hurry with which certain appointments of senior civil servants and Governors were made q uite arbitrarily. Or for that matter the utter disregard shown to the presidential advice on convening a Rajya Sabha session on the Kargil issue, which also demonstrated this arrogant and defiant attitude. The same government dismissed a Chief of the Nav al Staff on the specious grounds of defiance when he was only trying to call its attention to the regulations that governed the Navy.

This government has specialised in putting the cart before the horse. It did so with the nuclear tests of May last year and now with the Nuclear Doctrine. At the time of the announcement of the latter, NSAB Convener Subrahmanyam mentioned three things, a ll of which not only are worthy of mention but warrant some discussion. First: "The NSAB was working very hard at undertaking a Strategic Defence Review (SDR) and its report would be finalised in the next few months." Second: "No estimates on costs to ma intain a minimum credible nuclear deterrent have been worked out." Third, in response to a question from a mediaperson whether the nuclear button would be in a briefcase with the Prime Minister, he replied: "We are far more advanced than those with the b lack box with the button." This remark exudes technical superiority.

The first thing that the NSAB should have undertaken was the SDR. Had this been done before Pokhran-II, probably there may have been no need for the nuclear tests at all. Likewise, there would have been no need to evolve an elaborate nuclear doctrine to follow up the mistake of Pokhran-II. Finally, to support both these decisions, we have to do an SDR. The announcement has certainly not triggered any great enthusiasm as expected. No one even talks about the bomb or the doctrine. In an article in The Times of India dated September 6, Subrahmanyam laments "that the nuclear doctrine has not generated any worthwhile popular debate so far, but only criticism and endorsements from a very limited number of commentators. They reflect by and large the di vide between those who consider a nuclear deterrent necessary for Indian security and those who oppose it. The real debate has to be among different parties, all of which had over the years sustained the nuclear weapon and missile programmes." If Subrahm anyam himself felt in 1997 that the "Existential Deterrence" was working, how can he fault these political parties for not being fired by this great release? If anything, they have been angered by the release of this doctrine just prior to the elections. Presumably, by 'popular' Subrahmanyam means political parties and not the people. People are more concerned with basic necessities such as water, food, health care, schools, sanitation and jobs. If we see the print and electronic media, the complaint th at comes through loud and clear is that people's issues are not being discussed at all. Regrettably for the caretaker government, the release of the nuclear doctrine has, if anything, misfired.

What should the SDR address? It should:

* Identify national and strategic interests, clarify the bottom line for border management.

* Assess the overall strategic environment in the short-, medium- and long-term perspectives.

* Evaluate threats to "human security" and "national security" in the short-, medium- and long-term.

* Evolve plans and strategies to combat these threats. These should include a broad assessment of the priorities for both human security and other needs and the allocation of resources.

* Given the present capabilities, determine additional weapons/equipment that need to be inducted.

* Carry out scenario studies to identify force level and weapon requirements.

* Assess whether nuclear weapons are needed or whether the present level of nuclear capability will suffice (see note on Subrahmanyam's statement made in 1997).

* Conduct a cost-benefit analysis, keeping in mind both "human and national security" needs.

* Evolve suitable foreign and defence policies to match the above requirements.

* Examine the existing structure of the Ministry of Defence and suggest a more responsive architecture.

* If the nuclear answer is for the weapon, announce the doctrine, which should be brief and concise. Leave the strategic and tactical details to be evolved by appropriate agencies. The current doctrine is a three-in-one package. It contains doctrine, str ategy and even some tactics.

As this strategic review had not been carried out before jumping into the deep end with Pokhran-II, there is an elaborate justification to achieve maximum credibility with the launching of a grandiose nuclear doctrine. This is based on a 'triad' of air, land-based and sea-launched weapons. The doctrine goes on to say in paragraph 2.4: "The fundamental purpose of Indian nuclear weapons is to deter the use and the threat of use of nuclear weapons by any state or entity against India and its forces. Ind ia will not be the first to initiate a nuclear strike, but will respond with punitive retaliation should deterrence fail." This must be read in conjunction with paragraph 2.5, which states: "India will not resort to the use or threat of use of nuc lear weapons against states which do not possess nuclear weapons or are not aligned with nuclear weapon powers." We have suddenly become so powerful that we are going to take on not only the nuclear weapon powers but also virtually half this world! T his smacks of irrational and xenophobic thinking. Surely this is not the kind of credible minimum nuclear deterrent that was originally advocated. This is bound to create the demand for a very large and varied nuclear arsenal that would give us such a ca pability. The trouble is that the people are made to believe that we have it already - "but it is only in the head".

In view of the heavy commitment already made through the two mega decisions, one to go overt as a nuclear weapon state and the other to publicise our nuclear doctrine, which in short is our nuclear wish list, one can foresee the SDR ending up with 'Situa ting the Appreciation' instead of 'Appreciating the Situation'. Many of us have the habit of taking decisions guided more by instinct, desire or some preconditioned thinking rather than by mature and careful analysis of the pros and cons of the situation . Here we have a classic example of the former approach, adopted by the BJP-led government. The NSAB on its part is busy doing gymnastics to justify these decisions, which were made by leaving the SDR to the very end. Needless to say, this end product wi ll be tailored to be a perfect fit to make it look as "The Complete Plan".

When one reads paragraph 2.1 in conjunction with paragraph 4.1 of the doctrine, two things become clear.

* First, deterrence can fail, which is what most of us have been saying all along.

* Second, the level and weight of punitive retaliation must be such that it inflicts "destruction and punishment" that the aggressor will find unacceptable if nuclear weapons are used against India and its forces.

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This concept amounts to a tacit acceptance of the failure of the "deterrent theory". The approach of no first use and punitive retaliatory strike gives one the justification to have a much larger arsenal of nuclear weapons. The number of weapons could go up even further to cater for "adequate retaliatory capabilities after enduring repetitive attrition attempts" (see paragraph 4.3). These, when viewed in the context of taking on the U.S. and half the world - the sky is the limit. This is a doctrine for maximum credible deterrence.

A few words on "Unacceptable Damage". It is perhaps best illustrated by quoting Gen. Thomas S. Power, Commander-in-Chief of the U.S. Strategic Air Command (SAC), who stated in February 1960: "The closest to one man who would know what the minimum dete rrent is would be (Soviet leader Nikita) Khrushchev, and frankly I don't think he knows from one week to another. He might be able to absorb more punishment next week than he wants to absorb today. Therefore Deterrent is not a concrete or finite amount" (Atomic Audit, edited by Stephen I. Schwartz and brought out by the Brookings Institute, page 22). Nor for that matter is how much is acceptable or unacceptable damage. If this be so, we can easily expect more and more demands to raise your inventory and therefore stockpile weapons to achieve these conjured-up desires of making the adversary think the way you do. This nuclear doctrine has shaped the course of an inescapable arms race and is therefore unacceptable. We have not come to t he cost factor yet, which will say much more.

With a concept of multiple adversaries, we will certainly face a very serious problem identifying the source of the attack, especially if it comes from a submarine. Are we to understand that we will retaliate by attacking all nations which possess missil e-carrying submarines? There seems to be no clarity as to how we propose to deal with ballistic-missile-carrying submarines of the nuclear weapon states. Is it our intention to have a large nuclear attack submarine fleet, to 'tag and tail' all ballistic- missile-carrying submarines operating in the Indian Ocean? Hopefully we are not visualising a replication of the "the hunt for Red/ Blue/ Green/ Pink October". We must get our sights trained properly and not get carried away by "it is only in the head" t heory. It is extremely dangerous, silly and clearly beyond our reach financially for a long time to come. The U.S. Navy has recently commissioned the "Seawolf" class attack submarine to 'tag and tail' the Russian "Typhoons" and "Deltas". The cost of one Seawolf is $9 billion, or Rs.38,000 crores, equal almost to the entire defence budget of India for one year. Do we really want to join this league? We were well served by "Existential Deterrence" as stated by Subrahmanyam in 1997. Instead of this the BJP has gifted the nation the P3I system (Perennial Penury for the People of India).

The command, control, communication, information and intelligence (C4 I2) systems are going to be "robust". Presumably that means that the Command Post will be in a hardened site with back-up alternative locations elsewhere. The chain of command after th e Prime Minister will also be designated. In the U.S. this is very clearly indicated. It is enacted by Congress and is a public document. Strange was the reaction of National Security Adviser Brajesh Mishra when he was asked to specify the chain of comma nd after the Prime Minister: "They have to be kept a secret and could not be revealed for security reasons" (The Times of India, August 18, 1999). For lending credibility to paragraph 4.3 (sub para 2) of the doctrine, "for the continuity of nuclear command and control, read in conjunction para 2.6 (e)," regarding the 'will' to employ nuclear forces, it is necessary to identify the chain of command, including all the successors as for the U.S. practice. The U.S. lists a total of 17 people a fter the President who shall exercise this command (Atomic Audit, Note 42, page 220). Secrecy in this regard is therefore a misplaced concept.

The 'robustness' also envisages excellent communications systems, which must survive a first strike by an adversary. The state of the national communications system today is pitiable. This is borne out by the fact that the Prime Minister remained unaware of the news of Pakistan's nuclear tests at Chagai even after the rest of the world had learned about it through the electronic media. The Prime Minister's embarrassment was writ all over his face as he came to learn about the event on the floor of Parli ament. There ended the great strategic gulf which lasted for precisely 14 days. We do not have radio communications even to guide drivers of fast trains on the Indian Railways, in order to avert accidents. Many incidents which could have been avoided had such a facility been available, have not yet led to technology upgradation. We see many accidents on the roads; disasters are frequent - floods, quakes, gas leaks, the capsizing of boats, and much more. Each time the platitudes are repeated and inquirie s conducted, more as a yardarm clearing exercise. The reason is simple - because the elites in India have ceased to have a soul. All that the political leaderships is busy doing at the moment is to hurl cheap and vulgar epithets at one another; they do n ot care at all for the people's needs.

Rear-Admiral Raja Menon, in an article in The Times of India on August 26, states: "There is a serious dysfunction between minimum deterrence and a tri-service arsenal. The two cannot go together, and is akin to yoking a horse and a camel together ." Clearly, this is our problem. The entire doctrine, based on no first use and the acceptance of a significant first strike and punitive retaliation, is dependent on survivability capacity for retaliation.

Aircraft-delivered nuclear weapons and land-based missile systems suffer from high vulnerability and therefore poor survivability in the context of a no-first-use doctrine. The least vulnerable platform - both for detection and for destruction - is the m issile-carrying submarine. General K. Sundarji, former Chief of the Army Staff, had proposed an arsenal of 40 atom bombs and a couple of submarines as being enough to meet India's requirements. Even missiles on surface ships have a much greater survivabi lity factor than land-based systems. This form of vectoring need not be ruled out.

Let us examine the cost factor which has conveniently been overlooked by the NSAB.

The book Atomic Audit has many interesting features which are worth noting. Although it has carried out an audit of the U.S. nuclear programme, the parameters and concepts used apply equally to the Indian programme. The outgo has been listed and a nalysed under several headings. Only the proportion of costs under each heading is shown, as these are likely to remain the same for the Indian programme, notwithstanding the numbers of nuclear weapons involved. The breakdown is as follows:

* Building the bomb - 7 per cent * Deploying the bomb - 55.7 per cent

* Targeting and controlling the bomb - 14. 3 per cent

* Defending against the bomb - 16.1 per cent * Dismantling the bomb - 0.5 per cent * Nuclear waste management - 6.3 per cent

* Victims of U.S. nuclear weapons - 0.04 per cent

* Nuclear secrecy - 0.05 per cent * Congressional oversight - 0.02 per cent

C.Rammanohar Reddy, with his modest assumptions of the nuclear arsenal, worked out a figure Rs.50,000 crores over a 10-year period. In view of the rather ambitious plan outlined in the nuclear doctrine we can easily double that figure, in which case we s hall end up with a demand for a sum of Rs.100,000 crores to be spent over the next 10 years exclusively for the nuclear deterrent. In other words, Rs.10,000 crores a year. This amounts to an addition of 25 per cent per annum to the already burgeoning def ence expenditure. With Rs.1 crore we can have 10 primary schools, each for about 50 children, or 10 primary health centres, or water supply for at least 100 villages with five borewells per village - there are several other options. A sum of Rs.10,000 cr ores would help provide primary education to all children in the country.

The Kargil experience has thrown up strange and irrational deductions and consequently avoidable demands. The situation requires a management of both diplomacy and defence. We need to look at these kinds of options as well.

* Defence spending has been inadequate.

* We need to raise another corps to defend Kargil.

* The Air Force needs more aircraft.

* The Navy needs more ships and submarines and aircraft carriers.

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Had the government and the Army been alert and listened to the commanders at the scene of action, Pakistani forces would never have reached where they did and the entire activity would have been nipped in the bud. These hasty and ill-advised demands woul d never have arisen. We need to do the SDR fast and come up with a composite and integrated plan. We will otherwise end up making the same mistake of trying to please everybody and at some cost. We certainly need to be far more pragmatic and realistic th an that. What about opportunity costs?

The allocation of resources to ensure deterrence and the associated infrastructure have a penalty in terms of opportunity costs, efficiency versus effectiveness, capital costs, resource consumption and so on. Even in the U.S., the huge expenditure incurr ed in the nuclear weapons programme has staggered many Americans. General Lee Butler says: "Atomic Audit lays bare the staggering price exacted upon the most technologically proficient of the Cold War antagonists. More important, it begins to expo se the policy, planning, and other operational flaws that undercut both the logic and implementation of deterrence as perceived by its American practitioners." Maybe there is a lesson here for the Indian nuclear hierarchy. If a correct appraisal is made of the requirements for human security needs in the SDR, we shall arrive at the correct balance to be maintained between that and other national security requirements.

A POTENTIALLY rich country like India, with nearly one billion people - 38 per cent of them are below the poverty line as per the government's own statistics, but other estimates put the number of poor people at 750 million - is poised to enter an era of arrogant nuclearism so well articulated by the Indian Nuclear Doctrine. The architects of this document in the NSAB have not even addressed the cost factor to study the economic impact of such far-reaching recommendations. Instead of starting with an SD R to determine what was required by way of both human and national security needs, we are now left with the Hobson's choice of evolving and supporting a nuclear weaponisation programme and its doctrine. Hopefully our countrymen will put some saner leader ship in place to manage our strategic environment better. Even now it is not too late to disengage from this useless, costly and totally unnecessary 'evil'. Let us try and craft a whole new strategic initiative and evolve an India-China-Pakistan peace an d security agreement for the next century. This 'Triad' would be far more effective and much cheaper in the long run. We need to usher in the new millennium with a new vision and mission if we are not to go down in history as the failed gen eration.

Admiral L. Ramdas (retd) is a former Chief of the Naval Staff.

A defensive strategy

GIRI DESHINGKAR cover-story

Perception about China in India are not always rooted in the reality; this situation calls for change.

IT has been an article of faith in India for almost 40 years out of the 50 years of existence of the People's Republic of China that it is an aggressive and expansionist country. In the immediate aftermath of the 1962 border war, such a perception was pe rhaps understandable. But it has persisted although the India-China border has essentially remained tranquil since that short war. This is because India's leaders projected an image of China, which was almost racist. "Whenever China has been powerful in history it has been expansionist," declared Jawaharlal Nehru, without consulting any history book. Much play was made about the literal translation of Zhongguo, the Chinese name for China, as the "Middle Country" as proof that China considered itself to be the centre of the world. Radio programmes such as "India and the Dragon" were aimed at creating a feeling of disgust about Chinese culture, food habits and so on.

Belief accumulates "evidence" to reinforce itself and rejects all contrary facts. So when China exploded its first nuclear device in 1964, there was panic in India; the perception was that those atom bombs were surely aimed at India. China's "no first us e" declaration was laughed at by the very people in India who today want other countries to trust India's "no first use" doctrine. India's think tanks treated the Sino-Soviet dispute as proof that China could not live in peace even with its ideological b rothers. Reports in India spoke of nuclear-tipped Chinese missiles deployed in Tibet, targeted at Indian cities; Defence Minister George Fernandes asserted this a year ago without checking out the facts with military intelligence. He also spoke of Chines e naval bases on the Cocos islands off Myanmar, again without the benefit of an opinion from naval intelligence.

Why did China withdraw to essentially India's claim line in the eastern sector after advancing to its own claim line in 1962? Why has China never conveyed even the hint of a nuclear threat against any country? Why has the India-China border remained larg ely peaceful for so many years? Why did Rajiv Gandhi's visit to China in December 1988 suddenly improve India-China relations? India and China have signed two agreements over the Line of Actual Control. The first operative sentence of the agreement of 19 96 says: "Neither side shall use its military capability against the other." Why did China bind its hands with such agreements? Such questions must be asked and answered in order to get beyond the prevalent one-line conclusions with which public opinion has been "educated" about China in India. Only then can India come up with an intelligent, sober China policy for the 21st century.

With this in mind, let us look at China's security and defence policies as they have evolved over the last 50 years. These have gone through two phases: the first, ideologically dominated one lasted approximately until the end of the 1970s. During this p hase, ideology defined who China's friends and enemies were, regardless of what the actual situation on the ground was. China's actual conduct of foreign relations was, however, laced with pragmatism. But the pragmatism came to an end with the onset of t he Cultural Revolution in 1966. Foreign policy until the early years of the 1970s was no longer determined by professionals in the diplomatic service but by the highly ideologically indoctrinated Red Guards.

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Ideology told the Chinese that another world war, a nuclear war, was inevitable, and that it would come sooner rather than later. China would therefore remain in a permanent state of mobilisation. Everyone in China became a soldier. Deep and extensive tu nnels were dug under all the big cities to withstand anticipated nuclear attacks by imperialist enemies such as the United States and "social imperialists" such as the Soviet Union. China's general defence posture in those days was one of giving the tit- for-tat response. This led to quite a few armed clashes on the Sino-Soviet border. Later China was to launch a "punitive" strike against Vietnam as well.

This astonishingly tough posture was based on a People's Liberation Army (PLA) which was high on manpower (at one point it had 6,000,000 soldiers) but very low on technology when it came to weapons and equipment. The basic military doctrine asked for a c ombination of millet and rifles, or a simple lifestyle and whatever weapons were available. The weapons were of old Soviet design. China's attempts to design new weapons were unsuccessful. What it lacked in weaponry was supposed to be made up with troop morale, that is, revolutionary fervour. Notwithstanding its deficiencies, the Chinese Army projected a formidable image of power, reinforced undoubtedly by a growing nuclear arsenal and a missile force. During this phase China's defence expenditure also remained high.

High-alert military preparedness, however, went with a totally defensive strategic doctrine. The motto was: "We will not attack unless we are attacked but we will certainly counter-attack if attacked" was the motto. This kept peace between China and othe r countries for the most part but the posture was also susceptible to over-reaction; retired Chinese officials admit today that China over-reacted to India's provocative "forward policy" in 1962. Their Indian counterparts agree that the policy was unnece ssarily adventurous.

Chinese leaders at last digested the evidence which cast serious doubts on what Marxist-Leninist ideology had been telling them and came to a new conclusion. By 1985 they were ready to declare that a nuclear world war was unlikely in the foreseeable futu re. So China should divert towards economic development its resources that were earlier earmarked for national defence. Since the new strategic doctrine did not envisage any large-scale invasion of China, the PLA's manpower could be gradually reduced: as of now it has been reduced to 2,500,000 and may see further reductions as the PLA's mobility improves. China's military industry has virtually stopped producing weapons of obsolete designs, among them long-range bombers, the MiG series of combat aircraf t, main battle tanks, army vehicles of different types, and some classes of submarines. Both troop reduction and a virtual end to arms procurement have enabled China to reduce the defence budget to a level that is lower than India's. (Journalistic opinio n of course dismisses the official budget figures as false but China-specialists say that the official figures are correct.) China's attempts to produce new designs for its weapons systems have not been successful so far. So, departing from past principl es and practice, China has begun to import advanced combat aircraft, submarines and anti-aircraft missiles from Russia and some military technology from Israel.

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Since the change of strategic doctrine, China has made special efforts to improve relations with its neighbours and these efforts have yielded results. The earlier antagonism between China and Vietnam has now given way to a cordial relationship; the bord er problem between them is close to being resolved. Russia, Kazakhstan and other Central Asian countries have already resolved their border problems with China. As a result, China has drastically reduced its troops strength on its northern border. The di spute between China and some of the islands in the South China Sea is alive on paper, but things are under control despite an occasional skirmish between the Philippines Navy and Chinese fishermen. China has become an active member of several multilatera l forums in the Asia-Pacific region.

CHINA'S relations with the U.S. had their ups and downs; at the moment they are at a new low. But there is no military tension between the two except insofar as the U.S. is prepared to involve itself in the event of China using force to integrate Taiwan with itself. The same problem plagues China-Japan relations, in addition, of course, to the historical distrust China has for Japan. Two earlier adversaries, Outer Mongolia and South Korea, are now on friendly terms with China.

The end of the Cold War has given China a feeling of security and facilitated several of these relationships, but China's foreign and defence policies had changed well before the end of the Cold War. Mikhail Gorbachev's Vladivostok initiative of July 28 1986 (the Soviet leader had unveiled an ambitious project for a dramatic recasting of Moscow's diplomacy towards the Asia-Pacific region, which included demilitarisation and an end to nuclear weapons development) may have induced Rajiv Gandhi to visit Ch ina and agree to a mutually acceptable solution to the border dispute (India had earlier refused to grant any legitimacy to the Chinese position) but by that time China's new policy of befriending earlier adversaries was already under way. Once relations started improving the pace picked up remarkably; the fact that China "readjusted" its policy towards Pakistan also helped the process along.

The perception in India that China is inherently an aggressive country and it will "show its teeth" when it becomes a super power is still deep-rooted, particularly in the armed forces and the bureaucracy. Without an enemy the military loses its mission and importance. The bureaucracy is institutionally unable to admit that the policies it made were wrong. The politicians have no such inhibitions but their views are dictated by the needs of domestic politics; they are often the victims of public opinion , which they had created in the first place.

Both independent India and China are 50 years old. China has learned the hard way quite a few lessons during this period. India has been slow in understanding China. Today, the fact is that there is no basic conflict of interest between the two countries ; there are only specific bilateral problems, as they exist between any two countries. It is important for India to watch China's security policies in order to see how a country can formulate a security doctrine, which is not imported or outmoded like th e "draft" Indian nuclear doctrine, but is a product of its own genius.

Foreign policy directions

JOHN CHERIAN cover-story

China is in the process of reorienting its foreign policy with the focus on promoting stability and prosperity in the Asian region and bringing about multipolarity in international relations.

CHINA'S foreign policy has evolved considerably over the past 50 years. In 1949, Mao Zedong unequivocally announced the "lean to one side" policy: "The Chinese people must lean either to the side of imperialism or to the side of socialism. There can be n o sitting on the fence; there is no third path."

The China-Soviet Union axis lasted until the late 1950s. There were many concrete manifestations of the friendship. One of these was the Soviet assistance to China in the nuclear field, which began in 1957. A year later the Soviet Union sent a heavy wate r type reactor to Beijing. This relationship was the cornerstone of Chinese foreign policy during the first decade after the Revolution.

In the early 1960s, the simmering ideological differences between Beijing and Moscow boiled over, and until the 1980s the two countries remained implacable ideological foes. However, the collapse of the Soviet Union and the emergence of a unipolar world once again made Beijing reorient its policies. Now Moscow and Beijing have re-established a "special" relationship but it is unlikely that the close ties of the 1950s will be replicated.

In the last two decades China's foreign policy has to a large extent been dictated by its security environment. China has about two dozen neighbours. Five of them - Russia, Japan, India, Pakistan and Indonesia - have a population of over 100 million each . China's foreign policy with regard to its non-Communist neighbours has been more or less consistent. Bilateral relations with these countries are guided by the five principles of peaceful co-existence: mutual respect for each other's territory and sove reignty; mutual non-aggression; non-interference in each other's domestic affairs; equality of relationship; and mutual benefit.

China played a crucial role in the Korean war in 1950 when it unhesitatingly sent a million "volunteers" to fight the American invasion. Chinese help to the Vietnamese in the 1940s and 1950s in their fight against the French and later in the 1960s and th e 1970s against the Americans was also of great importance.

CHINA'S key role in the 1955 Afro-Asian Conference in Bandung (Indonesia), where its theme of peaceful co-existence won it a leadership position among the countries of the Third World, was an important foreign policy milestone. The Chinese Government did its bit in the struggle to decolonise the Third World by providing liberation movements both moral and material support. In the 1960s and the 1970s, Beijing undertook ambitious infrastructure projects on a turn-key basis in the developing world. The rai lway line connecting Lusaka to Dar-es-Salam, which was completed in the 1970s, has contributed to the development of the region. Many underdeveloped countries benefited from such projects.

But after Deng Xiaoping consolidated his hold on power and ushered in the Four Modernisations - agriculture, industry, science and technology and national defence - Chinese foreign policy became more pragmatic. The focus was now on turning China into a l eading modern state by the year 2000. Since the 1980s Chinese officials have repeatedly emphasised the importance of economic development while underlining the danger posed by looming U.S. hegemony. The Chinese view is that in the 21st century, national power will derive primarily from economic, scientific and technological prowess.

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The fast pace of events instigated in the latter half of the 1980S by Soviet leader Mikhail Gorbachev's "new thinking" alarmed Beijing. China made no secret of its view that Gorbachev's reforms oriented towards perestroika (restructuring) and g lasnost (openness) would lead to the weakening of the Soviet Union and the socialist world. Secondly, the critical position Washington adopted after the Chinese authorities tackled the Tiananmen Square protests in 1989, led to a serious rethink in Be ijing. It became apparent to China that Washington was using the issue of "human rights" to interfere in its domestic affairs. Another alarming development related to indications of Japan's overt inclination to assume again the role of a military power.

The situation in the Korean peninsula was seen in Beijing as yet another matter of concern. The United States had made it clear by the mid-1990s that it intended to keep a forward force of 10,000 troops deployed in Japan and Korea for the next 20 years. Naturally China feels that these forces are aimed at it. Washington retains the right to position nuclear weapons in Okinawa in Japan, in case a military crisis erupts in the region. In May 1999, the Japanese Diet (parliament) passed legislation to enabl e the implementation of the U.S.' plans for joint U.S.-Japan operations in case another war breaks out in East Asia. The guidelines replace the joint strategy drawn up more than 20 years ago to fight the Soviet Union.

Beijing feels that it is being shortchanged by the U.S. and Japan on the Taiwan issue. President Bill Clinton, after visiting China in 1998, reiterated his support for China's position on the Taiwan question. But in July this year President Lee Teng-hui of Taiwan declared that Taiwan no longer considered itself part of China. China was infuriated and has announced its intention to "uphold national sovereignty, dignity and territorial integrity". The U.S., on the other hand, has pledged to defend Taiwan if it faces an external attack. From China's point of view, the U.S. position is aimed at preventing China from emerging as a great power.

The distrust between China and Japan runs deep and is fuelled by historical animosities. Beijing is suspicious of the intentions of Japan as also of some other states in its immediate neighbourhood that are cosying up to the U.S. and tacitly supporting P entagon's long-term plans to encircle China militarily. The Americans are doing their best to prevent China from emerging as the dominant power in the region and to hold on to their claim to be the sole arbiter in the Asia-Pacific region. China may be tr ying to follow the Japanese strategy of economic development, but it has carefully avoided the Japanese pattern of subservience to the U.S.

The recent crisis in Kosovo, during which the bombing of the Chinese embassy in Belgrade was bombed by U.S.-led forces, has further alienated Beijing from Washington. The continuing expansion of the North Atlantic Treaty Organisation (NATO) and the plans to set up a theatre missile defence (TMD) system are also viewed as manifestations of Washington's desire to dominate the world. The TMD umbrella is ostensibly meant to shield Japan, South Korea and Taiwan from a perceived missile attack. The system wou ld for all practical purposes make Taiwan a U.S. protectorate. China is justified in concluding that a new Cold War is in the making, with itself replacing the Soviet Union as the "enemy".

However, the Chinese leadership is optimistic about multipolarity in international relations becoming a reality in the not-so-distant future. Chinese security and strategic experts are of the opinion that Russia will recover and will soon pursue vigorous ly its national interests. They do not expect Japan to remain subservient to the U.S. for long and they feel that China will emerge as a world power.

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China is also aware of the U.S. backing to separatist ethnic and religious tendencies. Beijing has accused Washington of supporting a pan-Mongolian movement. Inner Mongolia is part of China. Statements have been issued from Mongolia urging "the peoples o f Inner Mongolia, Tibet and Xinjiang to fight for freedom and independence". In Xinjiang, the movement by Islamic fundamentalists to create an independent "Republic of East Turkistan" has the tacit support of the U.S. The U.S. encouragement to the separa tists in Tibet is well-documented.

The Shanghai Group of Five, consisting of China, Russia, Tajikistan, Kazakhstan and the Kyrgyz Republic, is coordinating action to combat the separatist and fundamentalist forces. Beijing attaches great importance to this regional grouping, citing it as an illustration of multipolarity. China, like India and Russia, takes the threat from Islamic fundamentalists seriously. Followers of Islam in China are concentrated mainly in the Xinjiang area (Muslims in the country number more than 17 million). China depends a great deal on Pakistan to use its influence on the Taliban leaders to prevent the supply of arms to Islamic rebels in Xinjiang.

WASHINGTON has accused Beijing of being one of the biggest arms exporters. Chinese officials, however, maintain that they are careful about entering into defence deals. The Chinese Government has denied that it has supplied missiles and advanced missile technology to countries such as Pakistan, Iran and Saudi Arabia. Beijing has accused Washington of being a greater proliferator of nuclear weapons, pointing out that the U.S. is the world's largest weapons exporter, with 44 per cent of the global sales. The Chinese Government is especially angry about the sale of high-tech U.S. weapons to Taiwan. The warm relations Beijing has with Moscow today has made China the second largest defence partner of Russia. India is the biggest buyer of Russian weapons.

Former Russian Prime Minister Yevgeny Primakov was a strong proponent of a Moscow-New Delhi-Beijing strategic axis to counter U.S. hegemony. But both New Delhi and Beijing, for their own reasons, were lukewarm to this proposal. But they do share some com mon perspectives. For instance, both India and China are alarmed at the growing trend in international politics of using "human rights" as a pretext to intervene in the internal affairs of sovereign countries. The Clinton administration has used this rat ionale to intervene in Kosovo.

Further, United Nations Secretary-General Kofi Annan's call for "more active intervention" by the U.N. when civilian populations are at risk has set alarm bells ringing. Chinese Foreign Minister Tang Jiaxuan has said that respect for national sovereignty and non-interference in the affairs of another country "are the basic principles governing international relations" and that any deviation from these would lead to a new form of gunboat diplomacy that would "wreak havoc" with global peace.

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China continues to have close ties with developing countries. It is involved in a number of joint ventures which, according to Chinese officials, are for "mutual benefit". The government allows "special enterprises" to take part in these ventures. China recently completed a major project in Sudan, which involved the developing of an oilfield and the laying of an oil pipeline. This project has made Sudan an oil-exporting country. Cash-strapped Sudan will repay China with crude oil. Sudan is one of severa l countries facing a U.S. economic embargo.

China has excellent relations with Cuba. It is one of the biggest trade partners of Cuba outside Latin America. Moreover, Beijing has been vociferous in its criticism of the inhuman U.S.economic blockade against Cuba. Both Cuban President Fidel Castro an d President Jiang Zemin have exchanged visits.

BEIJING'S focus is on promoting stability and prosperity in the region. Defence Minister General Chi Haotian said recently that the confidence-building measures (CBMs) signed by China since 1994 with Russia, Kyrgyzstan, Tajikistan, Kazakhstan and India h ave increased mutual trust and provided safeguards for border security. This in turn has promoted stability and prosperity.

China is on the verge of settling most of its border disputes. The long-standing disputes with Russia and the Commonwealth of Independent States have been more or less resolved. China and Vietnam have set the year 2000 as the deadline for resolving their border problems. The dispute with India is the only one that remains to be resolved. Chinese officials feel that a solution to this could take some time as the Line of Actual Control was never fully demarcated.

Jiang Zemin, in a recent speech in Bangkok, said that "the world is far from being tranquil. Hegemonism and power politics still exist and have even been developed in the international political, economic and security fields." He added that the "gunboat policy" and the economic neo-colonialism pursued by some powers had undermined the independence and development interests of many small and medium-sized countries and threatened world peace and international security.

Line and leadership

MANORANJAN MOHANTY cover-story

Mao Zedong's socialist vision would remain a reference point for assessing the Deng Xiaoping line of reforms.

AS China celebrates the 50th anniversary of the founding of the People's Republic, the people of China recall the Yi He Tuan movement, also known as the Boxer Uprising, whose centenary falls this year. It was an anti-imperialist armed struggle which star ted in Shandong province in 1899 and spread to Tianjin in early 1900 and to Beijing in May that year. The Qing dynasty dowager Ci Xi, after showing sympathy for the rebels, capitulated when the combined armed forces of Britain, Germany, Italy, Russia, th e United States and Japan landed to suppress the uprising in August. After this, yet another unequal treaty was imposed on China in 1901 giving more rights to the imperialist powers, including the right to set up their legation quarters in Beijing.

This uprising fuelled the sentiments of nationalism, leading to the 1911 Revolution that overthrew the Manchu monarchy and set up a republic. But only after the Bolshevik Revolution did the Chinese nationalist movement acquire a democratic content. The s tudents' protest in Beijing against the Treaty of Versailles giving German possessions to Japan spilled over into other cities. The May Fourth Movement of 1919 brought the masses into the political struggle against colonialism and social oppression. This struggle was led by the Communist Party of China (CPC), which was founded in 1921. After a tortuous process of political experiments, the CPC evolved its strategy of People's Democratic Revolution under the leadership of Mao Zedong and achieved victory on October 1, 1949.

The running theme of the 20th century history of China is gaining prestige for the nation and achieving welfare for the people and making them masters of their own destiny. Dr. Sun Yatsen, the leader of the 1911 Revolution, enshrined it in his Three Peop le's Principles - Nationalism, Democracy and People's Livelihood. Mao Zedong's theory of New Democratic Revolution built upon it and propounded the concept of a four-class united front of workers, peasants, petty bourgeoisie and the national bourgeoisie - constituting the people who formed 90 per cent of the population. This united front sought to carry out an anti-colonial and anti-feudal revolution. Deng Xiaoping reverted to this theme of nationalism with economic well-being in 1978 through his progra mme of reforms and an open-door policy. Mao's political line of the People's Democratic Revolution led to the founding of the People's Republic of China (PRC) and Deng's political line of building a socialist market economy has brought about significant economic successes in China and a steadily rising status for the country in the world. Deng followed the united front framework to mobilise social forces to the maximum extent in order to carry out economic modernisation.

Mao Zedong's line for building socialism was different from what Deng adopted. Mao advocated the application of the class struggle perspective while striving for economic development. He stressed that without the right political-ideological orientation e conomic growth may bring about capitalist development. The Cultural Revolution propounded this perspective, but in the course of the ideological campaigns during 1966-76, factional political battles became widespread, causing conditions of anarchy and la rge-scale persecution. Deng carried the party at the Third Plenum of December 1978 to repudiate the Cultural Revolution in toto and affirm the centrality of 'economic construction' in place of class struggle and emphasised the need for socio-polit ical stability as against the political campaigns of the Cultural Revolution.

Deng's and his successors' economic successes have put Mao's line on socialism in the museum of rejects. But two things cannot be denied. First, much of the economic successes of the reform period would not have been possible without the structure of col lective economy built during Mao's leadership. Secondly, as capitalist forces grow in China and the capitalist culture takes root and social inequality and regional disparity, corruption and crime acquire serious proportions, Mao's socialist vision remai ns a reference point to assess the Deng line of reforms. But without doubt, the living standards of every Chinese family have substantially improved during the past two decades.

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The line has been put in place by a political leadership to carry it out firmly. This year is the tenth year of Jiang Zemin's leadership, which was installed by Deng Xiaoping in June 1989 after the crushing of the youth demonstrations in Tiananmen Square . Interestingly enough, both Mao and Deng tried out three sets of their colleagues to carry out their respective lines. Mao had Liu Shaoqi as his deputy in what was a collective leadership until 1965. During the Cultural Revolution, Liu was disgraced and Lin Biao, the Defence Minister, became the second-in-command. After Lin Biao's failed coup and death in an air crash in 1971, Premier Zhou Enlai took command and he brought back Deng Xiaoping. Deng was challenged by Mao's wife Jiang Qing, who led the 'G ang of Four' and was arrested in October 1976 (Mao died in September that year). Mao's designated successor, the centrist Hua Guofeng, could not withstand the new wave initiated by Deng, who proclaimed the new line at the end of 1978.

Deng Xiaoping decided not to occupy top party or state posts except a crucial position as the Chairperson of the Military Affairs Commission, which he held until after the Tiananmen Square incident in 1989. His first nominee was Hu Yaobang, who was the C PC General Secretary from 1982 to 1987 until he was replaced by Premier Zhao Ziyang. Zhao Ziyang was dismissed in June 1989 for his mishandling - read sympathising with - the Tiananmen Square demonstrations.

Jiang Zemin, then the Secretary of the Shanghai Party Committee, slowly consolidated his position as the leader since 1989. Deng reaffirmed the reform line in early 1992 during his tours of the Special Economic Zones and invoked people to carry out the r eforms vigorously without fear of capitalist restoration; he pointed out that the Communist Party leadership was there to direct it. Jiang moved fast and christened the new ideas in the 14th Party Congress as the theory of "socialist market economy" and Deng Xiaoping's theory of "building socialism with Chinese characteristics". After the death of Deng (in February 1997), the 15th Congress, held in September 1997, proclaimed Deng's theory as the new "ideological banner" of the CPC. In the meantime, Jian g assumed the office of the Chairperson of the Military Affairs Commission after Deng's retirement and became President of the People's Republic.

Jiang at 73 has sidelined his critics and challengers such as Qiao Shi who was retired in 1997 on consideration of age. He has pulled along reasonably well with former Premier Li Peng, 71, now Chairperson of the National People's Congress Standing Commit tee (NPCSC). Jiang's trusted colleague from Shanghai is Premier Zhu Rongji, also 71, who has directed the economy through periods of crisis and periods of smooth growth. Another technocrat in his team in the Standing Committee of the Politburo is Li Ruih uan, 65, who was the leader in Tianjin earlier. Now he is the Chairperson of the Chinese People's Political Consultative Conference (CPPCC), the United Front organ. Li Lanquing, 67, a Vice-Premier, is in charge of international economic relations, and We i Jianxing, 68, the Secretary of the Party Discipline Commission spearheading the ruthless drive against corruption, is in charge of Security Affairs. But the man of the future is Hu Jintao, the youngest member of the team at 57, the Vice-President of th e PRC who has been elevated to the post of a Vice-Chairperson of the Military Affairs Commission in the just-concluded Plenum of the CPC Central Committee. A former Secretary of Guizhou and, more important, of the Tibet Party Committee and earlier the Yo uth League leader, Hu has been the President of the Party School for many years. Jiang Zemin may be grooming him to become his successor at the 16th Party Congress to he held in 2002.

The leadership question does not seem to pose much of a problem as a common commitment to the Deng Theory has created layers of leaders in China. The Deng Theory has an intrinsic flexibility to address the burning socio-political problems that China face s at the turn of the century. But the legacies of the people's revolution of the century have created enough strength to pursue their agenda of national prestige and mass well-being and contribute to similar processes going on in other parts of the world .

Manoranjan Mohanty is Professor of Political Science, University of Delhi, and Director, Institute of Chinese Studies.

Firmly on the socialist path

SITARAM YECHURY cover-story

China is making major strides of economic development while at the same time being conscious of the problems of growth of any tendencies alien to socialism. Some observations and impressions from a visit.

A FIVE-MEMBER Central Committee delegation of the Communist Party of India (Marxist) led by Polit Bureau member Sitaram Yechury visited China from March 31 to April 10, 1999, at the invitation of the International Department of the Central Committee of t he Communist Party of China (CPC). The other members of the delegation were Nirupam Sen, P.K. Gurudasan, N. Varadarajan and Ashok Dhawle.

The delegation, which was received warmly, held fruitful discussions with the CPC leadership reflecting the mutual desire to strengthen relations between the two countries, peoples and the parties. At the Great Hall of the People in Beijing the delegatio n was received by Wei Jianxing, one of seven members of the Standing Committee of the CPC Political Bureau who is in charge of party discipline. The delegation held discussions with Dai Bingguo, head of the International Department of the CPC Central Com mittee, Ma Wenpu, Vice-Minister of the International Department of the Central Committee, and many others. Three days of intensive discussions with the leadership of the CPC in Beijing covered a wide range of bilateral and international issues.

Thereafter, the delegation visited the provinces of Xian, the ancient capital of China, and Yunnan. In Yunnan, the delegation visited remote hilly areas and deep down south the tri-junction with Laos and Myanmar inhabited by China's minority nationalitie s. The week-long tour to interior China aimed to study the living conditions of the people and find out how the problems arising out of the speedy developmental process are being tackled at the grassroots level. The itinerary was worked out at our sugges tion that we visit interior China rather than the more developed, fashionable and prosperous east coast which has huge cities such as Shanghai and Guanzhou (Canton), which are easily comparable with Hong Kong.

What we saw and experienced in China's interior reflected a country and a people seized with a singular passion to bring about all-round development based on speedy economic growth. This singularity of purpose and determination was evident at all levels. Given that this is happening in a country with 1.3 billion people which has been experiencing a phenomenal annual economic growth during the last two decades, such a massive human and material effort is bound to produce results that will have global imp lications.

One highlight of the visit was the discussions the delegation had with Wei Jianxing. While detailing various aspects of the current situation in China, he highlighted China's desire to improve good-neighbourly relations with India. This, he said, was in China's interest as its main priority was to develop its own economy and thus strengthen socialism, which required peace and absence of tension with any country. Despite the recent setback to the decade-long process of improvement of relations that had b egun with Prime Minister Rajiv Gandhi's visit to China in December 1988, Wei Jianxing emphasised China's desire to overcome these problems and continue the process of improving relations. In response, we conveyed to the Chinese leadership that the Indian people, given their centuries-long association and interaction with the Chinese, are equally, if not more, desirous of improving these relations. In fact, mutual concern for good-neighbourly relations was a constant feature of all the discussions we had during the visit.

Considering that ours was the first political delegation visiting China after the BJP-led government assumed office in India and in the background of irresponsible acrimony unleashed by the BJP and its allies against China as a justification for Pokhran- II, the fact that there was such a universal desire among the Chinese leadership and the people to improve relations with India was heartening.

The Chinese leaders emphasised that while one arm of the present developmental process in China is that of economic reform and opening up to the outside world, the other arm is the firm adherence to the four cardinal principles (adherence to the socialis t road; Marxism-Leninism, Mao Zedong thought; people's democratic dictatorship; and the leadership of the Communist Party) and the strengthening of socialism with Chinese characteristics.

A series of public campaigns are being conducted by the CPC on these issues and a vast network of party schools continuously train and re-train party members on ideological matters. Our delegation visited the party school in Yunnan province. One importan t activity at this school is to carry on study and research in Marxism-Leninism and Deng Xiaoping theory. Apart from research scholars, party cadres sent by the lower-level committees come here for training. Over the last 20 years, the school has trained more than one lakh students. It conducts various courses in revolutionary theory and philosophy and also on party-building and party history. The faculty follows the method of criticism and self-criticism and studying theory by integrating the subjectiv e with the objective.

Explaining their assessment of the international situation, the CPC leaders told our delegation that peace and development will remain the main themes of the 21st century. They were optimistic that the 21st century will offer more opportunities than chal lenges for the struggle towards socialism. In their perception, the circumstances also will be more favourable than they are unfavourable, and hence the opportunities should be seized to counter the challenges.

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CERTAIN important features of the present international situation figured in the discussions. The first is the global tendency that propels the world towards multi-polarity. While on the one hand, such a development, after the bipolar Cold War period has ended, is a positive one, on the other, there are forces with a vision of a "new world order" which seek to convert this natural tendency towards multipolarity into one of unipolarity. Such an effort will have to be resisted in the interests of a democr atic world order.

The second feature concerns the true nature of economic globalisation. Its potential to wreak havoc is becoming clearer with the severe economic damage it caused in South East Asia, virtually overnight. Globalisation poses serious threats to the sovereig nty and economic security of Third World countries. On the other hand, globalisation also offers possibilities for expanding economic activity and, hence, achieving development. China is preparing to face this dual nature of globalisation.

During the discussions with various leaders it became clear that over the past couple of years China has overcome enormous difficulties and achieved new advances while maintaining political and social stability alongwith a relatively high economic growth . China has achieved significant diplomatic victories as well and is bracing itself to re-unite Macau during the 50th anniversary year of its socialist revolution.

Domestically, China had to overcome two very serious problems: the impact of the South East Asian financial crisis and severe floods, unprecedented in this century.

The impact of the financial crisis, we were informed, is still felt. Over the past few years China's foreign trade was growing at an annual rate of 16 per cent. Last year this figure fell to 0.4 per cent. Anticipating such problems, China had targeted a modest 8 per cent growth. Of this, 2 per cent was to come from foreign trade. The sharp drop in the foreign trade was therefore a severe setback. The unprecedented floods caused damage of more than 200 billion yuan (the Chinese currency, approximately ei ght to a dollar). Despite this, China achieved a growth rate of 7.8 per cent during the year. And real per capita income grew by 4.3 per cent in the rural areas and 5.8 per cent in the urban areas. How was this achieved?

China faced these two formidable challenges mainly by effecting a massive increase in state spending that stimulated internal domestic demand. This year, more than yuan 100 billion was spent by the exchequer on building infrastructural facilities. It was this timely and effective state intervention that helped China avoid going the way of the South East Asian countries, which would have caused tremendous chaos in a country of China's size.

While China's decision not to make its currency freely convertible helped it insulate itself from the financial crisis elsewhere, it has refused to devalue its currency despite this being the obvious choice to bolster exports and, thereby, improve the gr owth of foreign trade. The country, instead, took a series of measures to encourage exports through a variety of subsidies. One of the main reasons for not opting for the devaluation of the currency was that it would have affected Hong Kong which was alr eady suffering the consequences of the financial crisis. Further, any devaluation would adversely affect the overall confidence in the economy and its international standing. More important, it would increase China's foreign debt burden.

Incidentally, the few hours we spent in Hong Kong during our return journey confirmed the fact that mainland China had greatly helped Hong Kong to avoid buckling under the regional financial crisis. Apart from not devaluing the yuan, mainland China had s tepped up investments in Hong Kong, boosting demand and employment. This has silenced even the worst critics of Hong Kong's unification with China. The bulk of Hong Kong's population appears more grateful to the mainland than even before.

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It would be interesting to note that when we, in India, argue that in order to overcome the current industrial recession and at the same time generate employment it is necessary for the government to undertake large public expenditures, we are told by th e Indian "liberalisers" that this will push up the fiscal deficit and, hence, would be counter-productive. Then why is this not true for China? Because, it is not true for India either.

On the contrary, despite such huge public expenditure, both retail and consumer prices grew at a lower rate in China than in the previous year. The Chinese explained that the problem is not in building up domestic debt. The question is how such borrowed funds are utilised? If it is employed productively and not wastefully, then it need not give rise to inflation. They claimed that the ratio of deficit plus the total value of outstanding national bonds (domestic borrowing) to GDP is still below the inter nationally accepted alarm level and, hence, sustainable. This has been so because, unlike India, over the years China has pursued a prudent fiscal policy.

As regards foreign debt, a question with which we are often confronted in India, China has explained that in no single year has its outstanding foreign debt been more than its foreign exchange reserves. This, it was stated, is the key to ensuring that th e country does not get indebted excessively.

WE were most impressed to learn how China tackled the unprecedented floods. Apart from a direct economic loss of over yuan 200 billion, many mines and industrial enterprises had to be closed down. But, following a massive mobilisation programme under the leadership of the CPC and the People's Liberation Army, China succeeded in battling the floods and minimising losses. Despite such a major calamity, the harvest that followed was generally good. Amazingly, the grain output did not fall; it was estimated to have grown by around 4 per cent. In fact, very high priority has been accorded to agricultural development with an emphasis on urgent modernisation.

With regard to industry, a major problem China is facing is that of its public enterprises. Public enterprises continue to be the overwhelmingly predominant part of Chinese industry. And we were assured that this situation will be maintained. However, in the process of restructuring these enterprises, the problem faced is that of workers being laid off. Around five to six million workers are laid off every year. But at the same time, six to seven million new jobs are created every year. But due to popul ation growth and additions to the labour force every year, around five million workers remain to be re-employed. This situation is expected to be resolved in the next couple of years.

The laid-off worker is protected by the state; he or she receives a minimum amount of money required to sustain normal life. Further, in China, whenever a person is employed, the employer is obliged by law to take out an insurance policy against the empl oyees' future risk of unemployment. The employer pays the premium. If the employee loses the job, then he or she receives the insurance amount as compensation.

Another problem being faced by China is the regional economic imbalance between the prosperous east coast and the rest of the country. We were told that conscious efforts were being made to overcome this situation through greater financial allocations fo r major projects in these areas and to create a better climate for the introduction of private capital. The developed areas are to assist the backward areas through economic linkages, that is, by encouraging the establishment of auxiliary units in the ba ckward areas. Through this process, people deprived of developmental benefits should receive them at the earliest. What was in evidence, therefore, was an active policy of state planning to ensure balanced economic development, far from relying exclusive ly on "market forces".

Another problem that China is facing relates to the growing disparities in the income levels of its people. The Chinese dictum that in the process of getting rich some people will get rich faster is there for all to see. But through conscious state inter vention, China is seeking to provide benefits to those at the lower end.

Apart from such disparities, a major problem that continues to surface is the growth of illegal activities such as corruption. The CPC has adopted a vigorous policy of encouraging people to grow rich through honest means and simultaneously cracking down on illegal activities. A widespread campaign is on in this regard and some deterrent action has also been taken. The action taken against the former Mayor of Beijing, who was found to be corrupt, is one example.

In March 1999, the National People's Congress, the highest state authority, met to review the activities of the past year. The Chinese emphasise that Deng Xiaoping's theory means working from practical conditions. In the past, they had committed, accordi ng to them, the mistake of not acting on the basis of this theory. China is not yet a developed country; it is still backward. Hence their decision to develop productive forces through the socialist market economy and to demonstrate the superiority of so cialism through the growth of economic productivity. In the process of such a review, they realised the need to amend the Constitution in order to allow the development of other forms of property ownership such as private, collective or cooperative owner ship while retaining public ownership as the dominant one.

This, they said, was necessary to stimulate the initiative of private or other forms of ownership and to allow them to co-exist with public ownership. Responding to the obvious question whether this would permit the growth of a capitalist class, they ans wered that under the leadership of the CPC with its commitment to maintaining and strengthening socialism in China, they are confident that they can preserve China's socialist character and not allow such forms of property ownership to become dominant.

With differences in incomes and standards of living growing, the danger of such differentiation laying the basis for a possible process of class differentiation is a cause for worry. The Chinese leadership, however, is confident that while tackling the i ll-effects of the reform process, they will also preserve and strengthen the socialist character of the People's Republic of China.

In sum, our delegation's visit to China was an experience which helped us gather more information regarding how China is making stupendous strides of economic development while at the same time being conscious of the problems of growth of any tendencies alien to socialism. The CPC leadership repeatedly emphasised the fact that they are combating such trends and would preserve and strengthen the socialist character of China. The visit resulted in a better understanding of current developments in China an d the discussions reinforced the mutual desire to strengthen further the bonds of friendship between the two giant Asian neighbours.

Renaissance man

The birth centenary of 'Kalki' R. Krishnamurthy occasions an appraisal of the contributions made in numerous fields by the Tamil novelist, freedom fighter and social crusader.

LOVERS of Tamil literature across the country celebrated the birth centenary of "Kalki" R. Krishnamurthy on September 9.

Krishnamurthy was freedom fighter, social crusader, novelist, short story writer, journalist, humorist, satirist, travel writer, script-writer, poet, critic and connoisseur of the arts - all rolled into one. A prolific writer, he wielded his pen with for ce and tenderness for three decades (1923-1954). He wrote on varied subjects during an eventful period in Indian history. His writings include over 120 short stories, 10 novelettes, five novels, three historical romances, editorial and political writings and hundreds of film and music reviews.

Although there is practically no subject he left untouched and no genre he did not experiment with, he is best known for his historical romances, which are acclaimed as classics and remain popular to this day, nearly five decades after his death.

His historical novels, Parthiban Kanavu (Parthiban's Dream), Sivakamiyin Sapatham (Sivakami's Vow) and Ponniyin Selvan (Ponni's Son) - which were first serialised in Kalki, the weekly he edited, and later published as books be tween 1943 and 1951 - attract 20,000 to 25,000 additional readers for the magazine, whenever it re-serialises these stories, according to K. Rajendran, son of Krishnamurthy and the present publisher of the weekly. (Ponniyin Selvan re-appears for a fourth time now.) It is amazing that whereas works of several contemporary writers fail to see even a second edition, each of these novels has been re-published eight times over the past 15 years (1984-1999).

KRISHNAMURTHY was born on September 9, 1899 at Puttaman-galam in the old Thanjavur district in an orthodox, large Brahmin family with limited means. Father Ramaswamy Aiyar was the village karnam (accountant), drawing a monthly salary of Rs.10. With the y ield from land, he managed to maintain the family. After primary education in the village, Krishnamurthy joined the National High School at Tiruchi, about 100 km away.

When Mahatma Gandhi launched his Non-Cooperation Movement in 1921, thousands of students gave up their studies to participate in the movement. Krishnamurthy was one among them. With the Secondary School Leaving Certificate (SSLC) examination just three m onths away, he left school and joined the Indian National Congress. Gandhi's speech at a public meeting in Tiruchi inspired him.

In 1922, he was awarded a one-year imprisonment for participating in the independence struggle. It was during this period that Krishnamurthy came into contact with two great persons, who were to play a major role all his life - veteran Congress leader C. Rajagopalachari (Rajaji) and T. Sadasivam, who was to become a life-long friend and partner in journalistic ventures.

Krishnamurthy's first attempt at writing fiction also came during that period. In 1923 he joined as a sub-editor in Navasakthi, a Tamil periodical edited by Tamil scholar and freedom fighter V. Kalyanasundaram, popularly known as "Thiru Vi. Ka". K rishnamurthy's first book was published in 1927.

Leaving Navasakthi in 1928, Krishnamurthy stayed with Rajaji at the Gandhi Ashram in Tiruchengode in Salem district and helped him edit Vimochanam, a Tamil journal devoted to propagating prohibition. In 1931, he was again imprisoned for six months.

Next year Krishnamurthy joined Ananda Vikatan, a humour weekly edited and published by S.S. Vasan, as its de facto editor. The magazine soon became a household name in middle class families. Krishnamurthy's witty, incisive comments on polit ics, literature, music and other forms of art were looked forward to with unceasing interest by readers. He wrote under the pen names of "Kalki", "Ra. Ki", "Tamil Theni", "Karnatakam" and so on. Vikatan published many of his short stories and nove ls (as serials).

In 1941 he left Ananda Vikatan and rejoined the freedom struggle and courted arrest. On his release after three months he and Sadasivam started Kalki. He was its editor until his death on December 5, 1954.

THE success that Krishnamurthy attained in the realm of historical fiction is phenomenal. Sixty years ago, at a time when the literacy level was low and when the English-educated Tamils looked down on writings in Tamil, Kalki's circulation touched 71,000 copies - the largest for any weekly in the county then - when it serialised his historical novels.

Noted historian Professor K.V. Rangaswamy Iyengar says that Kalki established his reputation as a novelist with Parthiban Kanavu. In his "introduction" to the novel, Rangaswamy Iyengar describes it as "a star of the first magnitude (that) had appe ared in the firmament of historical fiction." "It was the first attempt, to my knowledge, to utilise the ancient history of a famous South Indian dynasty and region as the background of an attractive story," says Rangaswamy Iyengar.

Describing Sivakamiyin Sapatham as a brilliant piece of writing, Rangaswamy Iyengar says that because of its stylistic qualities, the novel will have a permanent place in Tamil prose.

Although Kalki's historical romances captured the hearts of thousands of readers, recreating for them the glorious Tamil life during the periods of Pallavas and Imperial Cholas, critics were divided on their literary merits. One criticism was that Kalki' s novels dwelt rather overmuch on royalty and not enough on common people. The sudden twists and turns, which characterised serialised stories, made the stories unrealistic. There has, however, been a re-appraisal of Kalki, particularly among Marxist cri tics, in recent years. Semmalar, the monthly organ of the Tamil Nadu Progressive Writers Association, brought out a special number to commemorate Kalki's birth centenary.

Marxist critic Arunan says: "Kalki might not have gone into the inner layers of the social structure of those days, but he did give glimpses of the social life through his descriptions of the experiences and exploits of the royalty" (Semmalar, Sep tember, 1998). "At least, parts of people's history are touched," he says and adds: "Ponniyin Selvan, for instance, gives detailed accounts of the conflicts between Saivites and Vaishnavites and their impact on society."

Analysing the reasons for Kalki's continued relevance, Maran, another critic, says that Kalki, whose main concern was to arouse people's consciousness against colonial rule, sought to remind the people of their cultural heritage. Kalki's writings sought to instil pride in the greatness of Tamil language, literature, art, culture and valour. "Even after Independence, there is still a need to fall back on the cultural heritage. Kalki's works perhaps continue to serve that purpose" (Kanaiyazhi, Augu st, 1999).

Stating that Kalki was a social force, not an ordinary writer, writer D. Jayakanthan says, "In politics, literature, criticism of the arts and Tamil renaissance, no other person has served as much as he did."

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One of the criticisms against Kalki's short stories was that they were propagandist, but Kalki, for whom writing was part of political activity, a mobilisation exercise, was unconcerned about such criticism. If writing stories with a purpose was propagan dist, he said, he did not mind being dubbed propagandist. Inspired by the national movement, he sought to instil patriotism in his readers and his stories did succeed in doing so. "He knew the art of creating interest in and writing convincingly on any s ubject," observed Dr. M. Varadarajan, novelist and literary historian (History of Tamil Literature). "He understood the spirit and force of the spoken language and used it as a powerful medium for his writings."

Se. Ganesalingan, Sri Lankan Tamil writer, says that Kalki "democratised" literature and enabled even the common people to appreciate it. In simple Tamil he judiciously blended humour and satire with real incidents.

In writing historical fiction, Kalki was influenced by English novelists Sir Walter Scott and Lord Lytton and French novelists Victor Hugo and Alexandre Dumas, according to Sunda, Kalki's biographer.

Kalki's early interest in listening to harikathakalakshepam (musical religious discourse) and his acquaintance with the pamphlets of Sri Lankan Tamil Hindu propagandist and scholar, Arumuga Navalar, helped him acquire the skill of story-telling.

Kalki's crusade against drink, untouchability, superstition, oppression of women and many of the decadent practices in Brahmin families of those days is testimony to his progressive thinking. Thiru Vi. Ka., veteran labour leader, and Rajaji (who took cla sses in socialism for jail-mates) imparted in him socialist ideals, according to some critics. Soorya, a character in his novel Alai Osai (The sound of the waves) belongs to the Socialist group in the Congress. "Soorya is none other than the auth or," says Rajendran.

Kalki considered Alai Osai, which was serialised in Kalki in 1948-49 and published as a book in 1963, as his best. The novel won for him the Sahitya Akademi award posthumously in 1956; it has for its backdrop the freedom struggle and deals with social reforms and politics. His other social novels include Thyaga Bhoomi (The land of sacrifice) and Kalvanin Kadali (Bandit's sweetheart), both of which have been filmed. Thyaga Bhoomi, which has the salt satyagraha as its ba ckdrop, dealt with women's rights and untouchability. It was serialised in Ananda Vikatan; stills from the movie, which was being filmed at the same time, were used as illustration. After a successful run for six weeks, the film, directed by veter an K. Subrahmanyam, was banned by the colonial Government on the grounds that it indirectly aroused the people to fight for freedom.

S. Krishnaswamy, film historian and son of Subrahmanyam, told Frontline that the film had a theme that was "extraordinarily revolutionary" for the period it covered; it represented the high water-mark of the liberation of Indian womanhood. "The fi lm combined the spirit of Indian womanhood with the spirit of national freedom," said Krishnaswamy. According to Aranthai Narayanan, film critic, the film ranks on a par with the works of Satyajit Ray or Mrinal Sen in thematic as well as production value s. "Kalki's dialogues were sharp, particularly in the court scene; the heroine's offer to pay alimony to her husband who deserted her long back and wants to rejoin her, was revolutionary," says Aranthai Narayanan. Krishnaswamy has made a teleserial of th e story in Hindi with Bharat Bhushan in the key role.

Parthiban Kanavu, Kalvanin Kadali and Poiman Karadu were also filmed. Kalki wrote the script and some lyrics for Meera, an M.S. Subbulakshmi starrer.

Kalki's contribution to the cause of Tamil music is also noteworthy. He spearheaded a movement that wanted Carnatic musicians to include more Tamil songs in their concerts and composed a number of songs. His Tamil translation of Gandhi's autobiography, < I>My Experiments with Truth, was published as Satya Sothanai.

Kalki was in the midst of some controversies. One related to his response to an observation by a respectable writer that Subramanya Bharati was a "mahakavi"; although Kalki was a great admirer of the nationalist poet, he did not agree with this estimatio n. The other related to some contemporary writers' charge of plagiarism against Kalki. Kalki admitted that among his over 120 stories, the themes of some six or seven were adaptations.

The release of a postage stamp in honour of Kalki was among the highlights of the centenary celebrations. Sometime ago, the Tamil Nadu Government announced the nationalisation of Kalki's works; this will enable publishers to come out with reprints of his works. The celebrations have already inspired publication of a number of new books, which include Kalki: Selected Stories by Penguin Books and Kalki Kalanjiyam by Vanathi Pathippagam, which has published Kalki's books for decades. The Peng uin book is an English translation of 12 selected short stories of Kalki by his grand-daughter Gowri Ramnarayan.

A depreciating dollar

Will America stagnate if Asia recovers?

AN unusual question haunts the world's financial analysts. Can the United States sustain its robust growth if the rest of the world is buoyant as well?

This question arises in a context in which many economies which were experiencing stagnation or contraction appear poised to return to a situation of growth. The Japanese government's repeated efforts to pump-prime the system with deficit-financed govern ment expenditures finally appear to be yielding results. Real GDP grew by a pleasantly surprising 2 per cent in the first quarter of 1999, after five consecutive quarters of decline. There is evidence of expansion in Europe as well, after the period of c ontraction induced by the fiscal austerity adopted as a run-up to the euro. Finally, not only has the recession bottomed out across East Asia, but there is evidence of robust growth in South Korea during the first two quarters of this calendar year. Sinc e the United States and the United Kingdom have already been experiencing strong expansion, the world seems poised to return to a bygone era of "synchronised growth" in all major economies or regions.

But, as even the International Monetary Fund (IMF) makes clear in its recently released World Economic Outlook, that prospect is still uncertain. This is because developments during the decade of globalisation seem to have rendered synchronised gr owth (or recession) across the world's economies an unlikely occurrence.

The world economy in the 1990s has been characterised by two much-noted features. First, slow growth in Japan and across much of the world. According to World Economic Outlook, the average rate of world economic growth during the 1990s was only 3 per cent, which is below the 3.5 per cent average of the 1980s and 4.5 per cent in the 1970s. The second feature has been remarkable instability. Not only have there been two phases of sharp slowdown in economic growth (in 1991-93 and 1998-99) over the d ecade, but it has been characterised by periodic crises in Mexico, countries of East Asia, Russia and Brazil.

Yet the 1990s represented one of the best decades for the U.S.. Not only was the U.S. recession of 1990-91 unusually mild, but the country went on to record almost continuous and, more recently, particularly robust growth. If this process is sustained th rough early next year, as some expect it to, then this would be the longest episode of continuous growth on record for the country.

Till recently, this unusually splendid growth record of the U.S. was attributed to specific features of its economy or economic policy. The U.S., it was initially argued, had more flexible labour markets than Europe, as did the U.K. which was also perfor ming better. This helped companies downsize and restructure, and kept wages down, enhancing U.S. competitiveness and growth.

More recently, better growth has been ascribed to U.S. policy. To quote from World Economic Outlook: "The recent impressive performance of the U.S. economy is, in large part, testimony to laudable policies. These include the turnaround in the fisc al balance from deficit to surplus (a structural improvement equivalent to roughly 3.5 per cent of GDP since 1993); the agile management of monetary conditions by the Federal Reserve in achieving and maintaining low inflation, in helping to maintain stab le growth and also in helping to calm global financial turbulence; and structural policies that have continued to foster the flexible working of markets."

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WHAT is left unexplored in that summary assessment is the role that 'external factors' played in reviving growth in the U.S.. Exports were clearly not a contributory factor. Export volumes grew at just 1.5 per cent in 1998 while import volumes grew by 10 .5 per cent. As a result, the value of the current account deficit on the U.S. balance of payments has risen almost continuously from $43 billion in the first quarter of 1998 to almost double that value in the second quarter of 1999. Despite this worseni ng current account deficit, the dollar remained strong and even gained in strength. This, as has been widely reported, was only because of large financial flows into the U.S. from abroad. Not only did money flow into U.S. equity, but outstanding amounts of international debt securities originating in the U.S. rose sharply from $552.8 billion at the end of 1997 to $946 billion at the end of the first quarter of 1999.

The willingness of foreign investors to hold dollar-denominated assets is thus the key to the rise of the dollar. And so also to robust growth in the U.S. Given the large direct and indirect (through pension funds, for example) investments of personal sa vings in equity in the U.S., the stock market boom enhanced the wealth of American citizens, reducing incentives to save. The net result has been a collapse of private savings in the U.S. Personal savings as a percentage of disposable personal income in the U.S. fell from 1.2 per cent in 1997 to 0.5 per cent in 1998, turned negative in the first quarter of 1999 and touched a remarkably high negative level of 1.3 per cent in the second quarter ending June 1999. The other side of the fall in savings was a rise in private consumption expenditure, which was crucial to sustaining growth in the U.S. economy.

Thus, growth in the U.S. was dependent on a consumption boom fuelled by the willingness of foreign investors to bet on the dollar, irrespective of the state of the U.S. balance of payments. That willingness stemmed from a range of sources, many of which were related to the dollar's still-unchallenged role as the world's reserve currency. Higher interest rates in the U.S. at a time when the Japanese economy was performing poorly is indeed one such factor. This triggered the infamous "yen-carry trades" in which investors borrowed yen funds, converted them into dollars and invested them in higher yielding dollar-denominated assets. When the occasion arose to unravel these trades, they gained not merely because of the differential in interest rates between Japan and the U.S. but also because of the depreciation of the yen in the interim period.

The other element contributing to investment in U.S. assets was the "flight to safety" from a stagnant Japan and an East Asia struck by crisis. In fact, till mid-1998 those flows virtually insulated the U.S. economy from the effects of that crisis. Final ly, inflows into the U.S. fed upon themselves. To start with, investments in American financial assets helped sustain what was a completely unexpected boom in stock markets. High returns in the stock market obviously makes investment in American stocks a n attractive proposition, drawing in more funds from the international economy.

In the circumstances, growth has been robust in 1997 and 1998 and remained at acceptable levels even in the first half of 1999. Overall, for much of the recent past, the U.S. economy has been characterised by a strong currency, a conservative budgetary s tance, a buoyant stock market, a creditable rate of growth and low inflation. In the world of macroeconomic indicators, something must give to ensure this otherwise peculiarly favourable scenario from the American point of view. And that has been the def icit in the trade in goods and services. That deficit rose almost continuously and nearly doubled, from $33.3 billion in the first quarter of 1998 to $65 billion in the second quarter of 1999. This magnitude of increase in the trade deficit accounts for almost 85 per cent of the increase in the current account deficit in the U.S. balance of payments during this period.

What is worrying financial analysts is that as the recovery begins outside the U.S., this situation may change. The most telling sign of this has been the weakening of the dollar in recent times. Towards the middle of September the dollar touched a three -and-a-half year low of yen 103.3 to the dollar. Not only was the value of the U.S. currency that day at a new low, but underlying its day-to-day fluctuations was an acceleration of the depreciation of the currency from a value as high as yen 122 to the dollar just two months earlier. Even if we consider monthly average figures of the value of the yen vis-a-vis the dollar, the trend of a sharp appreciation of the dollar vis-a-vis the yen between August 1998 and January 1999, which was stal led thereafter, has revived from May this year. The weakness of the dollar has also resulted in a reversal of the "unexpected" appreciation in its value vis-a-vis the euro since its creation in January.

The current weakening of the dollar indicates that America's ability to borrow itself into growth when the rest of the world languishes seems to be under challenge. Observers are clear that the dollar sank sharply in mid-September because investors were no longer ready to bet on an overheated U.S. economy. The signs of reversal of capital flows into the U.S. have appeared despite the fact that the Federal Reserve Board has raised interest rates twice in recent months. The consequent widening of interest rate differentials between the U.S. and elsewhere is obviously proving inadequate to attract the foreign investor.

A number of factors could explain this tendency. The fall in the dollar occurred in the wake of the news of a record current account deficit in the second quarter and of a surge in retail sales of 1.2 per cent in August, which took its value to a level c lose to 11 per cent higher than in the corresponding month of the previous year. Clearly, private consumption was still buoyant and was still widening the gap between America's imports and exports. But now international investors have begun to pull out i n the wake of these developments. All of a sudden what has been true all along - that U.S. fundamentals are indeed weak and that the economy is vulnerable - seems to matter to the investor.

This loss of confidence is related to a number of other developments. The incipient recovery in Japan and the rest of Asia is reversing the flight to safety into U.S. bonds and reducing the "autonomous" demand for dollar-denominated assets. Operators wan ting to unwind positions financed through yen carry trades could be increasing their demand for the Japanese currency, resulting in a strengthening of the yen. Above all, the possibility that as Japan recovers and the U.S. current account deficit widens, the yen would appreciate vis-a-vis the dollar, and more than neutralise any gains from investments in higher yielding U.S. bonds, would make investors turn dollar-shy and yen-friendly. And the more they turn away from the dollar and towards the y en, the more would their expectations of an appreciation of the yen be realised. All this is now happening with greater intensity because the biggest investors in U.S. Treasuries are Japanese investors, who are reportedly selling out in the U.S. and taki ng their money back to where it came from.

While this decision may be reasonable from the point of view of the individual Japanese investor, it is creating much discomfort among governments. A depreciating dollar is obviously bad news for the U.S. Underlying that depreciation must be a loss of co nfidence in U.S. equity, which could trigger an abrupt fall in U.S. equity prices. As the public information notification issued by the IMF after its executive board concluded the Article IV consultation with the U.S. noted: IMF directors believed that i n the U.S. "the strength of demand, including corporate investment as well as household consumption, had been underpinned by the high level of stock prices - a level that was difficult to explain". This would mean that a sharp market decline could wipe o ut illusory wealth, lead to an abrupt adjustment in the household savings rate from its current historic low, and massively squeeze consumption demand. The era of high growth and large current account deficits appears to be near its end.

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But the lessons from this episode go further. In the era of financial globalisation, it appears, synchronised growth in different parts of the world is impossible. The boom in America appears to depend on slow growth and crises elsewhere. And a recovery elsewhere appears to threaten America's economic health. Interestingly, World Economic Outlook does recognise this new conjuncture in the world economy. To quote the Outlook:

"Economic and financial linkages and policy transmission mechanisms across countries have become more complex in the 1990s, warranting a further reassessment of key relationships. Historically, the developing countries' economic cycle was mostly positive ly correlated with that of the industrial countries due to the impulses transmitted through trade and commodity prices. In the early 1990s, however, when the industrial countries went through successive episodes of cyclical weakness, growth actually acce lerated in many emerging market economies, fuelled by the rapid growth of trade among them (especially in Asia) as well as by substantial capital inflows.

"More recently, in the wake of the Asian crisis, all industrial countries with significant trade links with Asia would have been expected to experience adverse effects on growth. In fact, however, while Japan and, to a lesser extent, Europe were negative ly affected, the United States' economic expansion appears to have gained further momentum. A flight to dollar-denominated assets helped to sustain the U.S. expansion by boosting domestic demand through lower interest rates and the dampening effect on pr ices of an appreciating dollar, notwithstanding the negative impact on U.S. exports.

"In both examples, the integration of financial markets appears to have contributed to a tendency for global financial resources to move to whichever countries and regions are relatively dynamic at the time. In principle, such reallocations of financial resources are beneficial for the recipient countries and also for global growth and efficiency. However, as experience shows, large net capital flows into strongly expanding economies may exacerbate risks of overheating and asset market bubbles, while ra pid reversals of such flows can severely strain weak financial systems and lead to destabilising currency movements."

Behind this elaborate reasoning is one striking judgment. In a globalised world dominated by financial as opposed to real flows, growth at one pole has come to depend on stagnation or contraction at the other. Whatever other virtue the IMF may find in ma rket-driven globalisation, it has been forced to admit that its downside is that autonomous tendencies in the current conjuncture militate against the synchronised growth needed for a global consensus.

LETTERS

other
A martyrdom

I would like to bring to the attention of readers the story of the martyrdom of Major Sameer Katwal.

Katwal was killed on the morning of August 28 while attacking a camp of the newly formed Dima Halong Dowga (DHD) militant group in the North Kachar Hills district of Assam. He was not waylaid and killed while travelling in a vehicle, as reported by newsp apers.

Sameer, born on July 25, 1974, was the son of K.P.S. Katwal, an officer of the Indian Forest Service posted in Tamil Nadu. He had his school education in Tiruchi and Chennai, got trained at the National Defence Academy and the Indian Military Academy, an d was commissioned into the 21st Battalion of the Kumaon Regiment on June 10, 1995. In the words of his Commanding Officer, Colonel J.J. Bajwa, Sameer was a very competent soldier with enthusiastic devotion to duty.

The night before he died, Sameer had led a group of 40 soldiers on foot for about 20 km across difficult terrain, to a DHD hideout. All the soldiers, including Sameer, had the protection of bullet-proof vests and steel helmets. The approach was so skilfu l that the militants, numbering about 15, did not notice the soldiers even whey were within 50 metres. The colonel had given clear instructions against any adventurism. Therefore several volleys were fired upon the camp before the final charge was made. Sameer was in the forefront. A fleeing militant turned around and emptied his AK-47 rifle, and one fatal bullet found its mark: it ripped through the right collar bone and neck of Sameer.

A.J.T. Johnsingh Dehra Dun Narmada Valley

A few weeks after the February 18 Supreme Court order permitting an increase in the height of the Sardar Sarovar dam, I observed 1,000 people of Nandurbar district meeting and asking the Collector where the land that the Maharashtra government had mentio ned in its Supreme Court affidavit as being available was. They waited for three days (they slept outside the Collector's office) only to be told that there was no such land.

I came to Dhule and saw the resettlement site - the jail. This monsoon, whenever there was submergence people were taken to jail. When the waters receded, they returned to the valley.

In the United States, they are building more and more jails. Although they have stopped building big dams, they still jail the poor, the migrant workers, the black people, and all who come in the way of their own forms of destructive development. In Amer ica jails make a profit and are getting privatised. If that is development, then we shall also have to build more jails as we build more dams.

P. Aravinda Camp: Dhule BJP's unease

The Bharatiya Janata Party-led National Democratic Alliance (NDA) started with a bang, banking on the Kargil victory and the image of Prime Minister A.B. Vajpayee. But the euphoria vanished slowly. The staggered election schedule gave the Congress(I) an opportunity and the time to launch an aggressive campaign. Moreover, the anti-incumbency factor, infighting in States such as Uttar Pradesh, misunderstandings among alliance partners in States such as Karnataka, and local issues started causing problems for the BJP. So mid-way through the election the BJP lost the decisive edge ("Growing unease", October 8).

Still the NDA has hope. After V.P. Singh, Vajpayee has emerged as a national leader who can take on the "dynasty" and who is acceptable to the different regions of the country.

A. Jacob Sahayam Vellore Nuclear doctrine

This refers to "Questions about capabilities" by T. Jayaraman (September 29). It is tragic that a country like India has presented its nuclear policy in shameful haste, reducing the status of such a serious and strategically important document to that of a comedy full of ambiguities and errors. The most disheartening aspect is the way in which the vision, ideals and hopes that inspired the freedom of India are abandoned by the 'honest' and 'liberal' leaders. What they have done is against the spirit of the Constitution, which directs the state to strive for peace and security.

A country whose basic defence needs are met through imports, a country which does not possess even a modern artillery unit made by itself, a country which does not possess an indigenous fighter jet, claims to build a nuclear force based on the "triad of aircraft, mobile land-based missiles, and sea-based assets". Judging by the pace of the R&D efforts in the country it does not seem that India will have these assets in the near future? This very fact makes the nuclear doctrine a 'comedy of errors'.

There is a word emphasised in the doctrine - "credible". Is this so-called credibility going to be managed by sheep-grazers? The Kargil shock is too recent for us to be able to believe in such "credibility". Moreover in this country (as well as in the re st of the subcontinent), where policy is guided not by wisdom and vision but by hidden agendas and the desire for power, what is the guarantee that there will be safe and secure control of the nuclear devices? It seems that even the policy of 'no first u se' has also been abandoned: note that the deterrence capability will be such that it will inflict unacceptable damage on "any potential aggressor".

It seems that the Government prepared the doctrine without doing any homework. It is nothing more than an addendum to the NDA's election manifesto.

Lokesh Pathak Deoria, Uttar Pradesh Attack on minorities

The brutal killing of a Roman Catholic priest, Fr. Arul Doss, by armed assailants at Jamabani village in Mayurbhanj district of Orissa and the burning of a church on September 2 have once again shocked the peace-loving people of India.

Padiabeda village in the same district witnessed the gruesome murder of Sheikh Rehman, a Muslim trader, on August 26. The killing of Muslims and Christians in Orissa on the eve of the general elections is designed deliberately to intimidate the minoritie s and create divisions in society. This is in keeping with the hateful thesis of "one nation, one culture, one people and one language" propagated by Hindu fundamentalists. They neither advance the cause of the great Hindu religion nor help advance the s ecular ideal of the nation. Their sole aim is to gain political power and patronage. This conspiracy of hate, terror and division has posed a threat to the secular and pluralistic fabric of the nation.

We wish to highlight certain facts and raise some questions.

All the three killings witnessed in Mayurbhanj district took place close to Hindu festivals. Graham Stewart Staines and his two sons were burnt alive on the night before Saraswati Puja. Sheikh Rehman was killed on Raksha Bandhan day and Fr. Arul Doss was murdered on the night before Janmashtami. Is this a coincidence or the result of deliberate planning by communal forces?

Two gruesome murders took place in the same region within the span of one week after the Wadhwa Commission report on the Graham Staines incident was made public. Is this again a coincidence or has the clean chit given by the Wadhwa report to the communal organisations that are known to be involved in the Graham Staines incident emboldened them to go on a killing spree against the minorities?

When the Government's intelligence agencies could find out where Congress(I) president Sonia Gandhi was going to contest the elections, they are unable to trace Dara Singh, the main accused in these crimes, and his associates. Is this a coincidence or a case of deliberate neglect of the security concerns of the minorities in India?

Ever since the BJP-led coalition government assumed power, the minorities, particularly Christians, have been victims of communally motivated mob attacks. Is this a coincidence or a manifestation of the overt and covert support given by the government to the Hindu communal organisations?

Hatred against the minorities, secular-minded groups and the weaker sections of society in general has been spreading like cancer throughout India owing to the unchecked activities of the Sangh Parivar. The carefully nurtured secular fabric of the nation is under threat.

We appeal to all people of goodwill to join our campaign to save our country from disintegration by deciding to oppose actively the anti-secular ideology of the Sangh Parivar; dissociate from anyone who sympathises with the RSS and its sister organisatio ns; inform your neighbours about the gravity of this situation; write letters to the President, the Prime Minister, the Home Minister, the Governor and the Chief Minister of Orissa expressing distress and anguish over the recent incidents; organise signa ture campaigns and mobilise support for our just demands such as immediate steps to apprehend Dara Singh and his associates who were involved in the killings, restore public confidence, ensure that there is no recurrence of such violence, and ban all com munal organisations in the country.

Students of Vidyajyoti Jesuit College of Theology New Delhi

Kargil

In "An aborted deal?" (September 10), the author, while projecting the deficiencies of the decisions taken by the BJP government to deal with the Kargil crisis, should have also mentioned the achievements made. India has made a silent achievement without compromising its self-respect and honour.

Shailendra Singh Wadhwa Commission

It is shocking that the Wadhwa Commission gave a clean chit to organisations such as the RSS and the Bajrang Dal ("An exercise in illogic," September 10). What is most amazing is the Commission's failure to take note of the various First Information Repo rts that point to Dara Singh's association with the Bajrang Dal. It is deplorable that the Commission overlooked the reports of the Divisional Commissioner, the Deputy Inspector-General of Police (DIG, Crime) and the DIG attached to the National Human Ri ghts Commission. On May 31, counsel for the Commission submitted that there was prima facie evidence to show the link between Dara Singh and the Sangh Parivar.

The murder of Graham Staines and his two children was not the result of any personal enmity between the Australian missionary and Dara Singh. It was a planned, well-organised attack. Such a heinous crime could not have been committed without the backing of organisations that are influential in the area. It is well known that the murder was committed at a time when attacks against Christians and their institutions were on the increase in different parts of the country. The murder cannot be viewed as an i solated incident. The ideological motives behind it and the social context in which it took place have to be taken into account in any attempt to arrive at the truth.

Sanjai Kumar Hazaribagh, Bihar

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Oct 9,2020