Thursday, April 28, 2016

Saudi Vision 2030, also known as Utopia

Mohammed bin Salma, the thirty year old deputy crown prince of Saudi Arabia, has just announced his country’s transition to Utopia. He calls it, Saudi Vision 2030. The concept essentially envisages a day when the Saudis will learn living without oil, or rather the money earned from oil. To achieve this a sovereign wealth fund is on the anvil. When created it will have assets worth US$ 2 trillion (according to IMF estimates, India’s GDP for the year 2015-16 was US$ 2.4 trillion). Bin Salman, second in line to the throne, also hinted at social reforms in an ultra-conservative country. He touched upon sensitive matters like women’s rights. He wants the country to start living off oil, 2020 onward. This means reducing subsidies and introducing taxes. All This will happen in just about three and a three quarters of a year from now. 
Such news makes extremely good global PR. You can read the coverage by Bloomberg, The Wall Street Journal, Reuters, The Economist, etc. But the PR apart, is the Kingdom ready for the bold steps the prince proposes? Indian Affair thinks it is not. Here is why –

The foundation
The entire euphoria the prince is trying to generate is based on an assumption that 5% of Aramco (the state oil company and apparently the largest corporation in the world) will fund the Saudi Utopia. However the problem is that no one knows what the actual worth of Aramco really is. There are no records in public domain and given the oil prices plummeting to US$ 40 a barrel, the crude under Aramco’s control might be worth much less now. Another problem is the location of oil. Most of the oil in Saudi Arabia sits on its eastern coast. That is also the region with a restive Shia  population (who are systematically persecuted by the Sunni majority). The most serious of the problems is transparency. In his prerecorded telecast the prince did not give details of how the wealth fund will be created or how the citizens will be impacted by subsidy cuts. The economic situation of the country is not pretty. Various reports suggest a huge budget deficit in the range of 13% - 15% for the year 2015. The country is expected to run high budget deficit in the next four years. The foundation of the dream is indeed shaky.

The society
Saudi Arabia is the most populous of all the GCC countries. With a large population comes the responsibility of feeding it. The Saudi citizens get unimaginable subsidies like a tax free income (both personal and corporate), heavily subsidized food (the price of a three liter milk can, at SAR 10, has not changed since at least 2010), cheap petrol and no taxes like VAT, GST or sales/service tax. These subsidies however benefit even the resident expats. On top of these are subsidies for overseas education, a lavish unemployment allowance (estimated 30 – 40% youth unemployment), soft loans to purchase residential land, a free hand in importing cheap labour from Asia, protection from foreign competition by forced partnerships with local firms (HSBC is called SAAB in Saudi Arabia), etc.

I shalt take back the subsidies from thee
Photo courtesy - Bloomberg
Like all authoritarian regimes (the Communists, the theocracies and monarchies), Saudi Arabia too has bought legitimacy by bribing its citizens with freebies. Take these freebies away from them and the subjects will rise and challenge the authority. The recent hike in water and petrol prices met with strong Twitter protests (the only uncensored protest platform). Such was the outburst that the minister for water and electricity was sacked, for his “poor handling of price increase". One can only imagine how the citizens will react if the government introduces taxes, while at the same time asks the unemployed to forego the allowance and actually work.

The women in Saudi Arabia are a suppressed lot, mandatory covering up in the abayya, no driving, male consent for surgery and overseas travel, arbitrary divorce, no jobs and so on. While the prince has some bright ideas to emancipate women, slowly; certain sections of the society might not be ready for such reforms, that they might find “radical”.

Saudi Arabia was far more liberal in the 70s than it in the twenty first century. But things changed after the siege of Mecca in November 1979, the same year the Islamic Revolution in Iran overthrew the Pahlavi dynasty. Post the siege the monarchy was forced by the Wahhabis to impose an austere or rather a radicalized version of Islam on its people. Public beheadings are common and laws are not codified. Social changes proposed by the prince might face stiff resistance from the powerful Wahhabis and the citizens alike. Weaning off a population addicted to freebies and alienating the clergy can be an explosive mix in a conservative country like Saudi Arabia.

The Utopia
The target of 2020 to start living without oil money is not ambitious by foolhardy. The general population has long resented the lavish lifestyle of the royal family. The stories of the king and his entourage spending millions on shopping in Marbella have earned enough bad press. The people feel that the royal family is having a good time at the cost of its own citizens. Now when the prince finally promises them Utopia, he wants to make their lives more miserable by cutting down subsidies and imposing taxes. A double whammy.

There are far too many risks in implementing the plan 2030. The risk of the citizens turning against the monarchy, the expats not willing to come to the country because the social reforms are too slow for their comfort and cost of living too high post the economic reforms and finally the clergy denouncing the establishment of walking away from the religion.

The environment
The reforms apart, the monarchy will have to survive in the dynamic environment the world is functioning. It has to survive the drastic steps that are being taken around the world to minimize oil dependency. Commercial nuclear fusion energy is in sight in a few decades, countries are planning to ban oil run cars, bio fuels are tested for both cars and aircraft and solar is coming up in a big way. India plans to add 20,000 MW of grid connected solar power by 2020.

Given the global aversion of oil dependence and a reducing crude price, the US$ 2 trillion wealth fund looks a bit too far away. What looks scarily close is the Corniche in Jeddah, swarmed by the Saudis seeking elections to the presidential office. 

Sunday, April 24, 2016

Kashmir and The Economist's gossip column

Welcome to Kashmir
Image courtesy - IBTimes
There is never a dull time to write about Kashmir. The place is always on the edge. Sometimes due to an infiltration bid from Pakistan or there are mass protests by the locals. While the Indian army does a good job at containing the infiltration attempts, nothing much has changed when it comes to locals protesting. Friday afternoons, after the prayer, are a preferred time for protests. Masked men would raise anti-India slogans and wave Pakistani flags. They would have an immediate audience of people returning from the prayers (Friday prayers are kind of mandatory in Islam and mosques witness a high attendance compared to other days). Till some time ago the protesters would wave Pakistani flags to show their support towards Kashmir’s accession to Pakistan, i.e. secession from India. Things have taken an alarming trend ever since the Islamic State came into being. The protesters now wave IS flags, probably showing support to the brutal terror outfit.

The story of Kashmir is complicated and there are no immediate answers to the problem, especially when Pakistan is illegally occupying almost a third of the territory. This blogpost is not an attempt to find solution to the Kashmir problem or to assign blame for the mess the place is in today. This is in response to a recent article that appeared in The Economist. Titled “Kashmir in stasis – Rough sleeping”, the article is an attempt to highlight the recent bout of violence that resulted in five people losing their lives.

The article, full of rhetoric and very little substance seems to be an attempt at “covering India” in each of its issues. The Economist wants to increase its subscription base in India and hence gives extra coverage to stories from the country. No harm in that. With dwindling subscriptions in mature markets in the West, India is the obvious market. China being a tough nut due to its extremely strict media censorship.

Back to the article. The article begins with, “MUSLIMS know the parable as the story of the People of the Cave: some men fall asleep and find, on waking, that centuries have passed and the world is transformed. The people of the Kashmir valley in the lush uplands of the Indian state of Jammu and Kashmir have their own version”.

Well, it’s not just the Muslims of the valley who know this parable, the Hindus of the valley, who were systematically murdered of forced to flee their homes in hundreds of thousands are equally aware of that.

“Ever since 1947, when they found themselves east of an active frontline between the two new states of India and Pakistan, valley folk have watched the world evolve”.

The Kashmiri people did not find themselves between two new states. The state of Kashmir acceded to India (just like the 550 princely states did after 1947), after Pakistan attacked the territory by infiltrating tribal people and army men without insignia.

“And still the valley’s 7m people, who speak their own unique language, are nearly all Muslim and generally disdain India and Pakistan alike, remain hapless pawns in a vicious game between those rivals”.

Kashmiris speak a unique language just like millions of other Indians speak theirs. There are 22 scheduled languages in India. The population of Kashmir is 96.4% (census 2011) Muslim, largely because the Hindus were kicked out of their homes or murdered by the Kashmiri people in 1990. As far as the “disdain” is concerned, The Economist should recall that 65% eligible Kashmiris turnedout to cast their votes in the 2014 state elections. Not sure where the statistics for “disdain” were dug out from.

“Some facts are clear. Anger at the Indian army’s heavy presence is explosive”.

Of course people will not like to live in a virtual army barrack all their lives. But then what exactly are these people doing to come out of this? Waving Pakistan flags or IS flags will definitely not help the army in reducing their presence. The recent events in Paris & Brussels are case in point where a handful of terrorists unleashed mayhem in an otherwise peaceful city.

“Security forces are quick to shoot, and keen to divert attention from their misconduct”.

This is what is known as a “motherhood statement”. Where are the facts? Where is the source? On the contrary here is a video evidence, which suggests that the security forces actually put their own lives in danger and get beatenup by the locals instead of randomly firing at protestors.

“Few in Kashmir doubt which version is closer to the truth. They have too often heard of sexual abuse by soldiers, and of police framing scapegoats”.

Again The Economist reports like a gossip column quoting hearsay instead of credible sources. People can read The Sun if they want gossip, why bother competing with it?

“Incidents like this often lead to escalating protests and shootings, and end in inquiries with no result”.

Another motherhood statement without any source.

“Some 40,000 people, by official count, have died in the valley since 1990, when a bloody insurgency covertly sponsored by Pakistan provoked a brutal Indian crackdown”.

After carefully establishing that the army in the valley is cruel and brutal and the peaceful, stuck-in-between Kashmiris are the victims, the article come up with a figure of 40,000 dead, subtly implying that these were people killed by the army. This is called “misleading” the readers. The 40,000 includes civilians killed by terrorists & terrorists killed by security forces. Also The Economist should give some editorial space to the fact that the “quick to shoot” security forces came to the valley only after the locals took to insurgency.

“In recent years Pakistan has throttled the flow of arms”.

This is the most ludicrous statement made by The Economist in the entire article. Well if Pakistan has “throttled” the flow of arms, then where exactly do the terrorists get the arms before they try to sneak in across the Line Of Control? There is no evidence of the terrorists having a 3D printer where they can print their assault rifles.

“Dependent on income from tourism, the wider public has scant appetite for jihadist heroics against India’s massive might”.

This is true but then the wider public has never really made these feelings public. There are more rallies and shutdowns in support of theterrorist separatists than against them.

“It’s been 26 years since militancy peaked, but there is more anger and alienation among the youth now than then,” says Mirwaiz Umar Farooq, a separatist leader”.

What else does one expects to hear from a “separatist leader”?

“We want to keep resistance peaceful, but it’s very hard when India bans every outlet for protest or debate, and in fact doesn’t even acknowledge that there is a problem.” 

Of course India will not recognize the problem, i.e. the problem of Kashmir seceding from India (azadi as they call it), because there is no legal basis for that.

The separatists want to move away from India only because they think Muslims cannot live with a Hindu majority India. They sincerely believe in the two nation theory proposed by Jinnah, which led to partition of India. What Mirwaiz doesn’t acknowledge is that the theory has been proved wrong, many times over, in the country Jinnah created. Pakistan has been a hotbed of ethnic and religious unrest ever since it was created.

The Islamic state of Pakistan has a simmering insurgency in Balochistan, where the Pakistani army randomly picks up men, women and children and dumps their mutilated bodies along highways. Read here, here and here. The North Western region of Pakistan has long been a secure hideout for Al-Qaeda and Taliban. The Provinces of Punjab and Sindh witness regular terror attacks carried out by the Pakitani Taliban. Ahmadiand Shia Muslims are brutally massacred on the streets and their places of worship blown up. So much for the two nation theory.

To sum up, the story The Economist is trying to tell is one that of rhetoric and extremely poor research, even gossip masquerading as hearsay in some cases. We understand that you want to improve your subscription base in India (which has more English speaking people than the population of United Kingdom), but to merely fill the “India section” you should not resort to reducing yourself to a Tabloid.