Shed a tear for Shanno...

Shed a tear for Shanno’s smothered innocence. It is my fault, of course. I didn’t learn the alphabet. The teacher is right to punish me. But why this weakness? Why is the ground blurring? I must be strong. The sun is so hot today…
Shed a tear for Shanno’s pain. I stood in a contorted position, like a criminal in a self-righteous policeman’s cell. But maybe that’s the way of the world I’m going to grow in.
Shed a tear for Shanno’s perplexity, her confusion. Wasn’t this school the temple of learning, the route to a better life? This suffering, then, must be a trail to that route.
Shed a tear for Shanno’s aspirations. I too will, one day, through education and learning, cross over to the other side, the side of light, joy and fulfilment. The side they call ‘emerging India’. I too will lead my country, buy a car — and play all day. I will be Prime Minister.
Shed a tear for Shanno’s ignorance. She died without knowing she could protest.

Blog post on Cutting the Edge

Why Savita will vote but I can’t

I am an Indian but bureaucratic procedures will not allow me to vote from my real constituency. She is a Bangladeshi but will elect a representative who will likely govern us. She is neither ‘Savita’ nor Indian but her paper-perfect Indian identity entitles her — and the 20 million illegal migrants in India — to vote.
You may have seen her, spoken to her, even hired her. They are all over the place in select ghettos across Delhi, Kolkata and Guwahati — their first destination when they jump the border. The influx of illegal immigrants from Bangladesh is a reality — their numbers are large and growing; their networks are strong, allowing them to turn invisible; their enterprise is organised as each migrant provides a base for the next.
Their getting an Indian citizenship through a maze of corruption and manipulation, is not merely a supra-political paper issue. In real and tangible terms, they hurt Indian labour by offering lower wages and replacing them. Quite like what the Indian outsourcing industry does to workers of the developed world. With one difference: they are illegal.
In different ways and through the stories of different Savitas or Sameers, all of us know this. As do the officials who, through a mesh of bribes, are their catalysts. The local leaders as well as the local mafias — to which they provide competition — know this. The state governments (the Nano-Singur episode is one recent example) are also well informed.
And the Centre, at the highest level, too. “He has no business to work here unless he has a work permit,” home minister P Chidambaram told a TV channel in a January 11 interview. “He is a Bangladeshi. I think we issue very large number of visas to Bangladeshis every month. There is no reason to issue so many visas. And there is very ineffective monitoring system (to check) whether the guy has gone back to Bangladesh or remained here.”
In the earlier NDA administration, George Fernades, speaking as defence minister in September 2003 had said: “My discussions with the Eastern Army Commander this week revealed that there are about 20 million Bangladeshi migrants in India, which are altering the demographic character of the north-eastern states.”
Whichever government takes charge after elections and whoever becomes home minister, defence minister and foreign minister, will have one more tool to fight this menace at the diplomatic and policy level: Kamal Sadiq’s fascinating first insights into the subject.
In Paper Citizens: How Illegal Immigrants Acquire Citizenship in Developing Countries, Sadiq convincingly and compellingly argues that it is not just developed countries like the US, Canada, UK, Germany or France that face an influx of illegal immigrants. Developing countries like India (from Bangladesh), Pakistan (from Afghanistan) and Malaysia (from Philippines) too are major destinations for illegal immigrants.

Blog post on Cutting the Edge

Summit over, here are India’s G-20 gains

Gautam Chikermane, Hindustan Times
New Delhi, April 05, 2009

The royal receptions and grand speeches are fond memories now. With PM Manm-ohan Singh back home from the glitzy G20 meeting in London, it’s time for a reality check.

In the final analysis, the six pledges that the heads of G20 leaders signed on April 2, will mostly, not completely, work in India's favour. However, there’s a catch: these pledges are non-binding and hence some of them may just bring false hope.

The pledge to not repeat the “historic mistakes of protectionism” is likely to have the greatest short-term impact. The members have also pledged "to refrain from raising new barriers to investment or to trade in goods and services.” So, India could look forward to markets in, and funding from, developed countries, which had taken a hit following the downturn, to open their doors again.

Story in Hindustan Times

Obama, PM off to a good start

Gautam Chikermane , Hindustan Times
London, April 02, 2009

"The US sees India as a global power." This is what US President Barack Obama told Prime Minister Manmohan Singh as they stepped into a bilateral meeting on the sidelines of the G20 Summit.
"Our relationship with India is very important,” Obama told the TV crews. “India is a country, like the US, that’s full of energy.”
Turning to Singh, he said, “Mr Prime Minister, the rise of India is attributed to your wisdom. You unleashed the economic power of India as finance minister and now have been guiding the country for five years. Turning to Singh, he said, “Mr Prime Minister, the rise of India is attributed to your wisdom. You unleashed the economic power of India as finance minister and now have been guiding the country for five years. By the time this meeting gets over, I can call you a friend. I am grateful for the time I’ve had in London with you and I look forward to visiting India.”

Story in Hindustan Times

A new world order is born: Brown

Gautam Chikermane, Hindustan Times
London, April 02, 2009

Globalisation is not dead – yet. Leaders of the Group of 20 countries on Thursday agreed to a $1.1 trillion (Rs 55 lakh crore) deal to combat the worst economic downturn since the Great Depression.
The G-20 leaders agreed that this sum will be made available to the world economy through the International Monetary Fund (IMF) and other institutions. This will include $250 billion of the special IMF “currency” called Special Drawing Rights.
“This money will be available for lending to all IMF members,” British Prime Minister and summit host Gordon Brown said at a press conference after the summit.

Story in Hindustan Times

G20 leaders hope to revive global economy

Gautam Chikermane, Hindustan Times
London, April 02, 2009

Even as thousands protest the G20 (Group of 20) summit in London “for robbing the poor to benefit the rich”, on Thursday, the global community expects the 20 nations to come up with a plan to arrest and reverse the global downturn.
"G20 is not going to agree on every point,” said US President Barack Obama in a press conference with UK Prime Minister Gordon Brown on Wednesday. The G20 countries have an "obligation to lead", he said, and in the days ahead, they "will move forward with a sense of purpose".

Story in Hindustan Times

G20 D-Day tomorrow: a Summit that could have been

The London air outside is cold but refreshingly so. The road outside Crowne Plaza at St James near Buckingham Gate is empty but for a sudden buzzing cavalcade that seems to be carting G20 leaders who are busy with four things — meeting the US President Barack Obama, meeting UK Prime Minister Gordon Brown, meeting the Queen and possibly meeting one another.
And from what we see as bystanders and vicarious observers, the London Summit of G20 is headed towards being one that could have been. The intellectual and nationalist positions that were expected to soften as the April 2 deadline approached have got harder.
In a twittering analysis this is what I see:
The US-UK combine that’s been fishing for greater stimulus packages from the rest of the 17 (plus EU) countries’ heads have put their aggressive stance behind them, rather reluctantly but still, and are talking cooperation. That’s good.
But Japan has put its hat in the stimulus debate with its Prime Minister Taro Aso suggesting Germany and France don’t know what they’re talking about.
The French President Nicolas Sarkozy has dropped a position bombshell. “If things don’t advance in London, there will be an empty chair,” the Guardian reported him saying. “I’ll get up and leave.” To him, and most of Continental Europe, if the London Summit did not create new rules for capitalism it would be worthless, Sarkozy reportedly said at a cabinet meeting.
From the South in this North-South dialogue, Brazil’s President Luiz Inacio “Lula” da Silva, who last week blamed “white and blue eyed” people for the crisis, will meet Sarkozy, now his G20 rebel leader in arms, tomorrow. Together, they hope to raise support for increasing regulation and a harebrained idea of a global regulator.
In all this, India stands like its spiritual past: calm, composed, collected. It has also been able to win a small victory in this great battle: an entry into Financial Stability Forum, bringing protectionism to the forefront of G20 discussions and be seen as one of the important world’s saviours of the world over the next 24 months where along with China, it will be the only other significant economy to show growth.

Blog post on Cutting the Edge

1 day to G20: 157 expectations, 20 heads, 1 day

In the high profile tracking of recommendations from governments and multilateral agencies, I overlooked some others. Here are four that I wasn’t able to bring to you as they were released but are nevertheless important. This quad of recommendations are important not because of what they contain, but because it heightens, very elegantly, the expectations people across continents, ideologies and interests have.
The first count of recommendations took me to 101. On second count they rose to 119. Adding this list, we stand at 157.
The G-20 London Summit 2009: Recommendations For Global Policy Coordination. This March 29 report by The Brookings Institution lays out nine recommendations.
1. Stimulate, Reform, Coordinate: A Macroeconomic Agenda for the G-20 by Eswar Prasad
2. Tame Protectionism and Revitalise Trade by Paul Blustein
3. Speed the Flow of Money to Poor Countries by Homi Kharas
4. Mobilise the G-20 to Respond to the Global Economic Crisis by Colin Bradford and Johannes Linn
5. Empower the Regional Development Banks by Mauricio Cárdenas
6. Aid Africa by Ernest Aryeetey and John Page
7. Good Governance: Learn from the Missing Countries by Daniel Kaufmann
8. Focus on What Asia Wants by Lex Rieffel
9. Understanding and Addressing Political Instability by Raj Desai
New ideas for the London Summit: Recommendations for the G20 Leaders. Released on March 28, you need to know the context where this report is coming from. Chatham House, an eight-decade old “source of independent analysis, informed debate and influential ideas on how to build a prosperous and secure world for all.” The other contributor, The Atlantic Council, “promotes constructive US leadership and engagement in international affairs.” Its recommendations going beyond general declarations at the London Summit and apart from the six broad actions, there are detailed recommendations in this report.

Blog post on Cutting the Edge

G20 should help reverse slowdown: Manmohan

Gautam Chikermane, Hindustan Times
On Board PM’s Special Aircraft, April 01, 2009

Two hours before he departs for London to participate in a global summit of G20 nations on April 2, Prime Minister Manmohan Singh has his priorities clear but words them in diplomatic and stretchable words: “It is important and necessary for the Summit to take credible decisions which will help to halt and reverse the current slowdown and to instill a sense of confidence in the global economy.”
What is less ambiguous is his agenda for the meeting with US President Barack Obama. “This will be our first meeting and will be an opportunity for us to review our bilateral relations, as well as hold discussions on important regional and global issues such as terrorism, the situation in Afghanistan, energy security and climate change,” Singh said.

Story in Hindustan Times

2 days to G20: India still keeps its cards close to its chest

Not that other countries have a position paper ready to dish out, but most of them have their stances clear. Between November 15 when the Washington Declaration was signed and today with the London Summit just 48 hours away, the positions — and the divides — are fairly clear.
The US and the UK stand together on two issues: keeping stimulus high and avoiding over-regulation. It’s a relief that they’ve reversed their insistence on coercing other countries to follow their 2 per cent spending tip, which their very obedient and loyal mouthpiece, the International Monetary Fund, yelped with full gusto.
Continental Europe, led by Germany and France, while rejecting all calls to spend, seek stronger regulation, nationalisation and more control over financial entities.
China, worried about its dollar investments that add up to $1 trillion at last count, is seeking an alternative global currency — an interesting proposal, possibly useful too.
Other emerging countries like Argentina, South Africa and Russia, but not excluding Australia that technically doesn’t fall in the “emerging” club, are largely silent, with the sole exception of the crude (and comic?) comments of Brazilian President Luiz Inacio “Lula” da Silva, who said ““This crisis was fostered and boosted by irrational behaviour of some people that are white, blue-eyed.”
India has not yet opened its cards. “We were very involved in the preparatory process, that’s why you have this impression,” Foreign Secretary Shivshankar Menon told reporters at a press briefing.
Unofficially, India’s overarching stance is to fight protectionism. ““We are against protectionism,” Menon said. “We would like to see a very strong statement coming out of G20 against protectionism.”
Earlier, I had spoken to the heads of some of India’s leading industry opinion makers and protectionism was indeed the theme of greatest concern, particularly US President Barack Obama’s comments on outsourcing, buy American and so on.

Blog post on Cutting the Edge

3 days to G20: the US-UK-IMF “Spend!” proposal is destined to die

I hate to say ‘I told you so’, but I told you so — I really did.
Coming to a global congregation of the world’s largest economies and hoping 18 members to blindly follow what the US dictates and the UK furthers was nothing short of a foolish expectation. High on intent, reason and morals but low on humility, persuasion and mutual respect, the audacious spend-your-way-out-of-the-crisis proposal, born in the USA, grown in the UK and parroted by IMF, was destined to die.
True, the G20 economies add up to 85 per cent of the world’s GDP. But what perhaps escapes US President Barack Obama and his chorus comprising UK Prime Minister Gordon Brown and the IMF is a simple fact: smaller they may be when measured by output, but all, repeat all, other 18 countries still carry their economic uniqueness and sovereign dignity — the credit crisis has not been able to scratch that.
Here’s what some of the leaders said, according to the Sunday Times story:
“I will not let anyone tell me that we must spend more money,” said German Chancellor Angela Merkel.
“In these conditions I and the rest of my colleagues from the eurozone believe there is no room for new fiscal stimulus plans,” said Spanish Finance Minister Pedro Solbes.
French President Nicolas Sarkozy added his two bits about reforming capitalism being more important than cutting taxes.
Talks of such a package have begun in India, but I see neither much fiscal room nor administrative force (until the next government comes into power) for it to fructify.

Blog post on Cutting the Edge

12 days to G20: IMF’s spend-your-way-out-of-the-crisis recommendations are best ignored

In its predictable conclusion-first-analysis-later approach when it comes to ensuring that the interests of its key stakeholder, the US, are protected, the International Monetary Fund has cobbled together a recommendation that resonates, reiterates and reeks of the US line: spend, spend, spend.
I had pointed out yesterday how the US is pressuring the world in general, and G20 that meets in London on April 2 in particular, to mimic its policies, ostensibly to get an even response globally to a situation that’s global. This, I said, won’t work because each country is structurally different.
My warning as a result: “Some of the tensions in G20 — between emerging economies and the emerged, between US-UK and Continental Europe led by France, between US and China and among fringe groups — are because of differences like these between countries. And while domestic political pressure on leaders of all G20 countries is the same (get the economy back on track, now), expecting all economies to behave the same way under the broadsword of the same solutions through a magnified geopolitical pressure on the same leaders is going to prove counterproductive.”
We saw the first murmurs of this discontent, muffled as it was, today as EU leaders resisted calls for new spending.

Blog post on Cutting the Edge

4 days to G20: children have some advice for leaders

Finally, the single most important reason why G20 must solve the ongoing credit crisis: children.
BBC has an excellent story on how the crisis is affecting children in three schools in Glasgow, Islamabad and Mbabane.
“In future we think there will be fewer scholarships,” say students of Waterford Kamhlaba United World College in Mbabane, Swaziland.
“We have given up hobbies such as dance classes and sports as we simply can’t afford them anymore,” say students of St Ninian’s High School in Glasgow, UK.
“We would show the G20 leaders beggars in search of food in garbage disposals, filthy canals and along pedestrian tracks,” say students of Islamabad Convent School in Islamabad, Pakistan.
Mallika, 16, a student of Springdales School in New Delhi says: “The people who have had to bear the brunt are those who do not have steady jobs or income. Many of those below the poverty line are not receiving even a minimum wage. These are the people I would introduce to the G20 leaders because they reflect the true effects of the economic crisis. People who can barely afford a meal for their families on a daily basis.”

Blog post on Cutting the Edge

5 days to G20: the debate gets dirty

The undercurrents at G20 just got public and the London Summit just got racist. Standing next to UK Prime Minister Gordon Brown, the Brazilian President Luiz Inacio “Lula” da Silva brought the black-brown-white frustrations on the global finance table.
“This crisis was caused by no black man or woman or by no indigenous person or by no poor person,” Lula said after talks with the prime minister in Brasilia to discuss next week’s G20 summit in London, Guardian reported.
“This crisis was fostered and boosted by irrational behaviour of some people that are white, blue-eyed. Before the crisis they looked like they knew everything about economics, and they have demonstrated they know nothing about economics.”
Lula’s irritation with bankers is understandable and justified. What’s not acceptable is for the leader of the world’s 10th largest economy, someone who seeks to drive the global finance agenda through greater vote share in institutions like the IMF to turn the London Summit into something so small, so trite, so disgusting.
Lula said he did not know a single black banker. Well, I know several who are brown — and all of them are their by the sheer power of merit (you can condemn the direction of that merit, the use it’s been put to and so on). Using probability theory, I am confident that there will be several black. Some of them may even be part of the bonus-maximising herd that ignored risk and brought global finance and through it the real economies of many economies, including Lula’s Brazil, to its knees.
Whatever else Lula maybe, I would fear to put something as sensitive and as powerful as global finance into his hands. I’m glad he’s not driving the agenda and a black man is.

Blog post on Cutting the Edge

6 days to G20: a new paper tells Obama what to do

A March 20, 2009 paper from Yale has tips for Obama to negotiate this crisis. Written by Michael S. Solender, a senior research scholar and visiting lecturer at Yale Law School, How the Obama Administration Should Regulate the Financial Sector puts forth five key attributes that US regulators should have. These are:
1. The right people, which could be those with industry experience — this is something Indian regulators desperately need. In India, the only financial regulator with industry experience is C.B. Bhave, chairman, Securities and Exchange Board of India; the others are bureaucrats.
2. Enough access to the companies and their employees. “No matter how capable or experienced the personnel employed by the regulatory agency, a regulator is unlikely to be able to obtain information and avert problems and crises without sustained and meaningful access to the regulated companies and their personnel.”
3. Enough information that regulators should maximise. “This will require achieving the proper balance between robust enforcement of the law and creating the proper incentives for those they regulate.”
4. Creation of an internal brain trust “to accumulate information acquired from individual companies and industries and make comparisons between companies and across industries, looking for trends and warning signs.”
5. Creation of a rapid action team empowered to act quickly in a financial emergency. “The team should draw upon different skill sets — attorneys, economists, examiners, and policymakers — and from personnel from the different financial regulatory agencies.”
I like what I read.

Blog post on Cutting the Edge

7 days to G20: Obama writes an agenda strengthening op-ed

Surprising for a superpower that still believes it leads a unipolar world, US President Barack Obama’s March 24, 2009 op-ed published in 31 newspapers was free of arrogance. Whether that’s a recognition of the emergence of a multi-polar world a quarter of a century down the road or whether that’s a true spirit of cooperation that Obama hopes to usher in following the country’s Bush-led isolation, we will know some day.
His prime focus, as he has spoken about earlier, remains the same: “Our efforts must begin with swift action to stimulate growth.” That to him means fiscal stimulus, which not all G20 members would be able to afford. Obama urged the G20 to “embrace” open trade and investment and resist protectionism.
Protectionism is something that Prime Minister Manmohan Singh too had laid out strongly, and India was probably the first to flag the issue, during the Washington meet on November 15, 2008. Subsequently, it became part of the Washington Declaration — under Point No 13 and as part of G20’s commitment to an open global economy, the G20 leaders put out this rather brave statement, which subsequently, as we all know, was thrown in bin on the way out.
“We underscore the critical importance of rejecting protectionism and not turning inward in times of financial uncertainty. In this regard, within the next 12 months, we will refrain from raising new barriers to investment or to trade in goods and services, imposing new export restrictions, or implementing World Trade Organization (WTO) inconsistent measures to stimulate exports. Further, we shall strive to reach agreement this year on modalities that leads to a successful conclusion to the WTO’s Doha Development Agenda with an ambitious and balanced outcome. We instruct our Trade Ministers to achieve this objective and stand ready to assist directly, as necessary. We also agree that our countries have the largest stake in the global trading system and therefore each must make the positive contributions necessary to achieve such an outcome.”

Blog post on Cutting the Edge

8 days to G20: it’s raining recommendations — 101 and counting

Speaking only of official recommendations — that is, suggestions made by governments or regulators of G20 and not think tanks or economists — I have with me a master list that has crossed a century. Taking the 126 page The Turner Review, published by UK’s Financial Services Authority on March 18, 2009, which adds 32 of its own (listed at the bottom of this post), the total number of sovereign suggestions stands at 101 — and counting. Here’s the timeline.
First came the November 15, 2008 Washington Declaration that listed out six broad policy responses, five common principles of reform and request to the G20 finance ministers to formulate six additional recommendations. The rather overstated “action plan to implement principles for reform” had 47 — repeat forty-seven — recommendations.
Then came the communiqué that the finance ministers put together on March 14, 2009. “We agreed further action to restore global growth and support lending, and reforms to strengthen the global financial system,” the communiqué stated. All told, eight new “further actions” were suggested across two themes — restoring global growth and strengthening the financial system.
The March 19, 2009 leak of Macroeconomic Stability and Financial Regulation: Key Issues for the G20 — the final report of the first of the three working groups set up before the G20 meet — to breakingviews.com followed next. This contains 24 recommendations, which while put together the various issues that leaders of G20 will be confronting in the April 2, 2009 meeting, have accountability missing.
And now, The Turner Review — a product of FSA chairman Lord Turner who was asked by the UK’s Chancellor of the Exchequer to review the events that led to the financial crisis and to recommend reforms — which has been critiqued by some economists who call it “flawed”.

Blog post on Cutting the Edge

9 days to G20: China likely to get influence support from Down Under…and other stories

Today, Australian Prime Minister Kevin Rudd pressed for a greater role of China in International Monetary Fund (IMF) as a prelude to the G20 meeting on April 2. With this, the first step in reforming this multilateral institution has been taken. That step is to give a greater voice to borrower countries that are poorer than the wealthy nations that lend to the bank.
On its part, China is ready to take the reins. According to a Reuters report filed today, the country’s vice foreign minister He Yafei “told reporters that Beijing would press for reform of international financial institutions with a view to giving a bigger voice for developing countries.”
A November 2006 paper by Brock Blomberg of Claremont McKenna College and J. Lawrence Broz of University of California, San Diego, explores this conflict. Titled, The Political Economy of IMF Voting Power, this short paper is insightful as much as it is mathematical.
“The IMF’s membership is now divided into two blocs: rich country “creditors” that provide the lion’s share of IMF resources, and poor country “borrowers” that draw upon the Fund for financial assistance and are subject to its policy conditionality,” the paper says. “This division creates tensions around governance issues and voting power because rich country creditors have different interests regarding the terms and conditions of IMF lending, and are sceptical about ceding greater control to developing country borrowers. To oversimplify, developing countries favour quota increases and less conditionality since they are more dependent on the IMF for payments financing and more vulnerable to financial crises. Industrial countries resist quota increases and favour increased conditionality and surveillance since they have access to private credit markets to finance deficits and do not rely on the IMF for support (as it was the case in the 1960s and 1970s).”

Blog post on Cutting the Edge

10 days to G20: a reading list that hopes to change the world

If you’ve been visiting my blog over the past week, when it turned daily, you would broadly know the issues confronting the heads of the 20 most powerful nations on earth today — how to get their economies going. That is, how to get banks to lend, industry to invest and households to buy, well, houses. So complex has the debate around resolving this global financial crisis (the first for this generation), so vested the interests (of countries, of bankers, of companies) and so wide and deep the consequences (from the US and Europe through Asia to Africa), that it has moved from global boardrooms to our bedrooms.
Nobody knows for sure how to resolve this crisis. Not economists, not policymakers, not politicians — and certainly not the bankers. But all are trying. Here’s what they are saying. More will follow over the next week.
1. The Washington Declaration. The story of the London Summit began with the Washington meet in November 2008. This November 15 statement from the heads of the G20 nations explored the causes of the financial crisis and listed out the “actions taken” and “to be taken”. They put together the common principles for reform of financial markets that included regulation, international regulatory cooperation, strengthening of international standards and their consistent implementation. They listed out five common principles for reform — strengthening transparency and accountability, enhancing sound regulation, promoting integrity in financial markets, reinforcing international cooperation and reforming international financial institutions.

Blog post on Cutting the Edge

11 days to G20: 24 recommendations but no breakthrough

For those looking at a sneak preview of what’s to come in the London Summit of G20 on April 2, breakingviews.com has a leak.
“The G20 blueprint programme, a copy of which has been obtained by breakingviews.com, is largely a statement of principles,” said Hugo Dixon, the website’s editor in chief and chairman. “The scheme will have to be blessed when the leaders meet in April. Detailed numbers and regulatory mechanisms will then need to be worked out in the coming months.”
I waded through the “scheme” and tried to figure out just what’s in store. My conclusion: more of what we already know, much of what we already expect, lots of holy-sounding noises but nothing revolutionary, and maybe, just maybe, the first step in the creation of a new global financial order. Here’s a quick analysis of what the report’s 24 recommendations mean.
“Recommendation 1: As a supplement to their core mandate, the mandates of all national financial regulators, central banks, and oversight authorities, and of all international financial bodies and standard setters, should take account of financial system stability.”
My view: Of course! Stability, after all, is the new keyword, the overarching word of global finance today.

Blog post on Cutting the Edge