Foreign Trade Policy for 2012-13: 7-Point Strategy To Boost Exports

Commerce and Industry Minister Anand Sharma has unveiled the Foreign Trade Policy for 2012-13 on June 5. He announced a seven-point strategy to boost exports which include extension of interest subsidy scheme by one year until March 31, 2013. The policy is based on a seven-point strategy which includes thrust to employment intensive industry, encourage domestic manufacturing for inputs to export industry and reduce the dependence on imports, promote technological upgradation of exports, persist with a strong market diversification strategy, encourage exports from the northeastern region, incentives for manufacturing of green goods and reduce transaction costs.

The policy continued with most of the export tax sops and increased the ambit of some others to help exporters rack up $360 billion in exports in the current fiscal. It is indeed a difficult task to present a policy which aims for rapid growth in exports in the face of weak global demand and the unabated persistence of the global economic crisis which erupted four years ago.

Market Diversification

The seven-pillars to boost exports, Sharma said, would also include efforts to increase exports from the north-east region and provide incentive for manufacturing of green goods.

In addition, there would "endeavor to reduce transaction cost through procedural simplification and reduction of human interface. Efforts would be made to promote technological upgradation of exports to retain a competitive edge in global markets and encourage domestic manufacturing for inputs to export industry, thus reducing dependence on imports. The zero-duty Export Promotion Credit Guarantee (EPCG) scheme would be extended by an year to March 31, 2013.

On market diversification, market-linked focus product scheme has been extended until the end of the current fiscal 2012-13 for exports to the United States and European Union (EU), in respect of apparel sector.

Special Economic Zones

As regards the Special Economic Zones (SEZs), he said, "we will come out with new guidelines to make the operation of the SEZ policy more buoyant." In addition, the minister said the government would revamp the 100 per cent Export Oriented Unit (EOU) scheme in the next few months.

The benefits under the scheme, he said, would also be available to those units which had taken benefits under the Technology Upgradation Fund Scheme (TUFS).

The EPCG scheme will also be available for those who had surrendered their benefits under the Status Holder Incentive Scrip (SHIS) scheme.

The government will come out with new guidelines to revive export hubs, SEZs which have lost their sheen after the imposition of the minimum alternate tax and a proposal to take away tax incentives. The government accepted the key demand of industry to extend the two per cent interest subsidy until March 2013.

India’s Exports

India’s exports grew by 21 per cent in 2011-12 to touch $303 billion. The country’s exports inched up 3.23 percent to $24.5 billion in April from a year earlier after falling in March, a far cry from the more than 20 percent growth recorded in recent years. India has been hit by falling demand from its traditional export markets in the United States and Europe.

The export figures compounded an already gloomy economic picture — Gross Domestic Product (GDP) data showed the economy grew at its slowest pace in nine years in the first three months of 2012.

Salient Features

* Foreign Trade Policy document made more user friendly

* Incentives for exports from north-eastern states

* The government to come out with new guidelines to promote SEZs

* The government aiming 20 per cent export growth in 2012-13

* Two per cent interest subsidy scheme extended until March 2013

* Seven new markets added to Focus Market Scheme

* Single revolving bank guarantee for different export deals

* Focus on market diversification to continue

* Steps announced to reduce transaction cost of exports

* Market linked focus product scheme extended until March 2013 for apparel export to the United States and EU

* Ahmedabad, Kolhapur, and Shaharanpur new Towns of Export Excellence

* Zero per cent duty EPCG scheme for technology upgradation extended until March 2013

* Shipments from Delhi, Mumbai through post, courier or e-commerce to get export benefits

Economic Survey 2011-12: Inflation Pegged at 6.5 Per Cent, Maintained GDP Growth at 6.9 Per Cent

Finance Minister Pranab Mukherjee presented the Economy Survey 2011-12– a report card of the Indian economic scenario for current fiscal– in the Lok Sabha (lower house of the Parliament) on March 15.
Inflation Rate
The Survey pegged inflation at 6.5-7 percent by end of March and projected a further moderation in the next fiscal. Inflation in the current fiscal has largely been driven by high food prices. It had slipped to a low of 6.6 percent in January, but rebounded to almost 7 percent in February. The survey, however, said that fiscal consolidation was the only way to keep inflation down.
The survey said that monetary measures by the Reserve Bank of India (RBI) and its impact on curbing inflation needed to be studied further to improve efficiency of such actions in the future. Incidentally, the RBI in its mid-quarter review of the monetary policy left key rates unchanged, citing upside risks to inflation.
Growth Rate
The Economic Survey has maintained Gross Domestic Product (GDP) growth at 6.9 per cent. The growth in the financial year 2012-13 growth is expected to come in at 7.6 per cent and the financial year 2013-14 growth is pegged at 8.6 per cent.
Indian along with Indonesia showed strong growth despite a global economic slowdown in the final quarter of 2011, according to the International Monetary Fund (IMF).
IMF in its latest provisional report has said the GDP growth of G20 – a grouping of leading economies of the world – slowed to 0.7 per cent in the October-December quarter, compared with 0.9 per cent in the third quarter.
In the United States, GDP growth increased to 0.7 per cent in the fourth quarter, compared with 0.5 per cent in third quarter.
The IMF stated that in India and Indonesia growth increased strongly, but slowed in China to 2 per cent, compared with 2. 3 per cent in the third quarter.
In Japan, economic growth decreased to (-)0.2 per cent, following the strong rebound (+1. 7 per cent) in third quarter.
The Survey states that GDP fell by (-)0.3 per cent in both the European Union and the euro area in the fourth quarter of 2011, the first fall since the second quarter of 2009.
Fiscal Deficit
The Survey states that the fiscal outcome in 2011-12 is likely to be affected by the macroeconomic setting which indicates sharp slowdown in industry and rising costs affecting profits. In the first nine months of the current fiscal, gross tax revenue has grown by 12.2 per cent as against the budget estimate target of 17.3 per cent, it said.
On the other hand, as against a target of 4.9 per cent for the whole year, growth in total expenditure in the first nine months of 2011-12 was 13.9 per cent, which comprised 15.4 per cent growth in non-Plan expenditure and 10.8 per cent growth in Plan expenditure, the survey added.
Per Capita Income
According to the Survey, the per capita income of India stood at $ 1,527 in 2011. The Survey says that this is perhaps the most visible challenge. Nevertheless, India has a diverse set of factors, domestic as well as external that could drive growth well into the future.
The Survey further says that between 1980 and 2010, India achieved a growth of 6.2 per cent, while the world as a whole registered a growth rate of 3.3 per cent. As a result, India’s share in global GDP more than doubled from 2.5 per cent in 1980 to 5.5 per cent in 2010.
Consequently, India’s rank in per capita GDP showed an improvement from 117 in 1990 to 101 in 2000 and further to 94 in 2009. China, however, improved its rank from 127 to 74 during the same period.
Highlights
* India's economic growth estimated at 6.9 per cent in the current fiscal; growth momentum to pick up in next two fiscals to 7.6 per cent 2012-13 and 8.6 per cent in 2013-14.
* RBI expected to lower policy interest rates, as inflationary pressures expected to ease in coming months; A low interest rate regime to encourage investment activity and push forward economic growth.
* Steps required for deepening of domestic financial markets, especially corporate bond market and attracting longer-term inflows from abroad; Efforts at attracting dedicated infrastructure funds have begun.
* The growth rate of investment in the economy is estimated to have declined significantly; borrowing costs up due to a sharp increase in interest rates.
* High borrowing costs and increase in other costs affecting profitability and internal accruals.
* Slowdown in Indian economy largely due to global factors, as also because of domestic factors like tightening of monetary policy, high inflation and slower investment and industrial activities.
* Inflation high, but showing clear signs of slowdown by the year-end; Whole-sale food inflation down to 1.6 per cent in January 2012 from 20.2 per cent in February 2010.
* India remains one of the fastest growing economies of the world; Country's sovereign credit rating rose by a substantial 2.98 per cent 2007-12
* Farm sector growth pegged at 2.5 percent for 2011-12.
* Services sector to grow at 9.4 percent.
* Services sector share in GDP to go up to 59 percent in the fiscal ending March 31.
* Industrial growth pegged at 4-5 percent, expected to improve as economic recovery resumes.
* Inflation on Wholesale Price Index (WPI) was high but showed clear slow down by the year-end. This is likely to spur investment activities leading to positive impact on growth.
* WPI food inflation dropped from 20.2 percent in February 2010 to 1.6 percent in January 2012.
* Calibrated steps initiated to rein-in inflation on top priority.
* India remains among the fastest growing economies of the world.
* Fiscal consolidation on track - savings and capital formation expected to rise.
* Exports grew by 40.5 percent in the first half of this fiscal and imports grew by 30.4 percent.
* Foreign trade performance to remain a key driver of growth.
* Forex reserves enhanced - covering nearly the entire external debt stock.
* Central spending on social services goes up to 18.5 percent this fiscal from 13.4 percent in 2006-07.

World Economic Situation and Prospects 2012

The United Nations has warned that the world is on the brink of another recession, projecting that global economic growth will slow down further in 2012 and even emerging powerhouses like India and China, which led the recovery last time, will get bogged down.
The UN “World Economic Situation and Prospects 2012” report has cut the global growth forecast for next year to 2.6 per cent from 4 per cent in 2010.
It has called 2012 a "make-or-break" year for the global economy, which will face a "muddle-through" scenario and continue to grow at a slow pace.
"Following two years of anaemic and uneven recovery from the global financial crisis, the world economy is teetering on the brink of another major downturn," the UN report said, warning that "the risks for a double-dip recession have heightened".
The report said the failure of policymakers, especially those in Europe and the United States, to address the jobs crisis, prevent sovereign debt distress and escalation of financial sector fragility poses the most acute risk for the global economy in 2012-13.
GDP Growth
Growth in developing countries like India and China, which had stoked the engine of the world economy so far, will also slow down to 5.6 per cent in 2012 from 7.5 per cent in 2010
"Developing countries are expected to be further affected by the economic woes in developed countries through trade and financial channels," the report said. Gross Domestic Product (GDP) growth in China and India is expected to "remain robust, but to decelerate," it said.
India's economy is expected to expand by between 7.7 per cent and 7.9 per cent in 2012-13, down from 9.0 per cent in 2010. In China, growth slowed from 10.4 per cent in 2010 to 9.3 per cent in 2011 and is projected to slow further to below 9 per cent in 2012-13.
Notably, the United Nations has revised its 2012 prediction downward for every major country. It projected 1.3 per cent growth for the US (down 0.7 per cent from its last forecast), 1.5 per cent for Japan (down 1.3 per cent), 0.5 per cent for the 27-nation European Union (down 0.8 per cent) and 8.7 per cent for China (down 0.2 per cent).
Persistent Weaknesses
The report stated that a serious, renewed global downturn is looming because of persistent weaknesses in major developed economies on account of problems left unresolved in the aftermath of the recession of 2008-2009. It said that most developed country governments have indiscriminately switched from fiscal stimulus to premature austerity measures. This has further weakened global aggregate demand, already nurtured by persistent high unemployment.
Financial and Commodity Markets
Additionally, the economic woes in Europe and the US are exacerbating volatility in international financial and commodity markets and slowing growth in developing countries. All of these weaknesses are present and reinforce each other, but a further worsening of one of them could set off a vicious circle leading to severe financial turmoil and a renewed global recession for 2012-13.
The report outlines several policy directions that could avoid a double-dip recession, including the optimal design of fiscal policies to stimulate more direct job creation and investment in infrastructure, energy efficiency and sustainable energy supply, stronger financial safety nets, better coordination between fiscal and monetary policies, as well as providing sufficient support to developing countries for addressing the fallout from the crisis.

Annual UN Climate Change: India Feels Heat

Two-week international climate conference with participants from more than 190 nations plus the European Union (EU) has already begun in Durban, South Africa on November 28. The conference is seeking ways to curb ever-rising emissions of climate-changing pollution, which scientists said last week have reached record levels of concentration in the atmosphere.
Addressing the conference, South African President Jacob Zuma said that global warming already is causing suffering and conflict in Africa, from drought in Sudan and Somalia to flooding in South African, urging delegates at an international climate conference to look beyond national interests for solutions. He added that for most people in the developing countries and Africa, climate change is a matter of life and death.
Talks Failed
Talks at the climate change conference have predictably bogged down over funding and over the insistence of the first world countries that emerging economies like India and China also commit to legally binding and higher reduction of carbon emission.
Nations like Japan, Canada, Russia and New Zealand have decided to back out of the Kyoto Protocol, the only legally binding treaty that requires 37 developed countries to reduce amount of CO2 they released. The European Union has made it clear that it would agree to more carbon reduction only if emerging economies like China and India also undertake some form of binding cuts to bring down their gases that trap heat and make the climate warm.
Government delegates from 194 countries have gathered in Durban to agree to the next steps to combat climate change. The talks have been bogged down by disagreements on the kind of actions that need to be taken by developed and developing nations.
Another area of disagreement is on the design of a Green Climate Fund, which will provide $100 billion a year from 2020 to developing countries to combat climate change. The report of the UN committee on how to set into motion such a fund is now being debated at the talks. The South American nations of Colombia, Venezuela, Nicaragua (representing the ALBA nations) as well as Saudi Arabia and the U.S have objected to its contents.
There is, however, an overall urgency for the Fund to be adopted at Durban so that money begins to flow. Tomasz Chruszczow, the Polish envoy whose country is currently presiding over the EU, told reporters that the report was a “good compromise.” “In its current form it would attract significant funding,” he said. “We believe it would be counterproductive to undertake technical decisions on the instrument.”
The Africa Group also supported India, which “is doing its fair share in the context of its own challenges,” said Nafo, the spokesperson of the Africa Group to The Tribune. The diplomat from Mali further noted that China was taking the lead in investing in renewable energies that do not pollute the environment.
As large developing economies release more CO2 in the atmosphere because of rapid economic growth in the past decades, it has also led to divisions within the bloc of G77 + China. Both have argued that their overriding priority remains poverty eradication.
Emission Reduction Obligations
Even before the annual UN climate change negotiations are formally kicked off in Durban, India was warding off pressure to commit to legally binding CO2 emission cuts. Developed countries are threatening to abandon the 1997 Kyoto Protocol, which imposes emission reduction obligations on 37 industrialized countries, if all major emitters don’t do more to curb their greenhouse gases.
The Indian delegation here has reiterated its stand that it was indeed absurd to expect India and other developing nations to undertake reductions on the lines of developed nations. The developing countries, says the Indian delegation, have the overriding priority of eradicating poverty and sustain development. Indian negotiators added that they have already taken on voluntary commitments to reduce emission by 20 per cent by 2020.
The Indian delegation cited the Stockholm Environment Institute’s Report, released in 2011, which said that pledges to reduce carbon emissions from developing countries are more than the targets set by the developed countries. The study, commissioned by Oxfam, estimates that over 60 per cent of emission cuts by 2020 are likely to be made by the developing countries. The emission reductions of China, India, South Africa and Brazil - the BASIC countries - could actually be more than the combined efforts of the seven most developed countries or zones, namely the US, the European Union, Japan, Canada, Australia, New Zealand and Russia.
Already there are concerns that talks over the next two weeks will fail. The 2010 talks in Cancun skirted around the issue with Japan and Canada asserting their opposition to the 1997 Kyoto treaty. The US had also backed out of the agreement in 2001, claiming that it was unfair. Developing countries, including India, want these talks to result in developed countries renewing their pledges, since the first phase of the treaty expires at the end of 2012.
But the European Union, Japan, Canada and Russia are not willing to be part of a treaty that neither includes the US nor emerging economies like China and India. But with mounting Republican opposition, the Obama administration cannot act decisively until the 2012 presidential elections.
Some countries have also hinted that another treaty could take as much as 10 years to work out. In Durban, the US has already made it clear that it would not agree to any legal instrument that did not put obligations on all major emitters.
The efforts to continue the North-South differentiation under the Kyoto Protocol is led by India, China, Brazil and South Africa (BASIC) countries. “The Kyoto Protocol is the cornerstone of the climate regime,” a Chinese spokesperson told delegates. “We call upon the developed countries to rise up to their historical responsibility and take the lead up by undertaking ambitious and robust commitments consistent with science.”
China is now the largest producer of carbon emissions followed by the US. Indian delegates maintained that the BASIC statement by China at the start of the conference testified to the group’s solidarity. The bloc of developing countries, however, is more fragmented due to the immediate danger faced by small island nations, which are most vulnerable to rising sea levels. The International Energy Agency report, released this month, said the world had five years before the consequences of climate change will become irreversible. The goal is to stop the Earth’s temperature from increasing more than 2 degree Celsius from pre-industrial levels. Despite the deadlock over the Kyoto Protocol, delegates from 194 countries will attempt to find solutions on issues like adaptation, finance and technology sharing.
On a positive note, however, the Indian delegation was pleased that it garnered some support for its three-point agenda - equitable access to sustainable development, unilateral trade measures (in response to the European Union aviation tax), and intellectual property rights - two of which were left out of previous Cancun agreements. India’s lead negotiator Jayant Mauskar said: “We are not talking about the Himalayas, Mumbai or the Ganges. These three issues are important for all developing countries.”
Saving Financial Costs
The UN's top climate scientist says global warming will lead to human dangers and soaring financial costs and that containing carbon emissions will have a host of benefits.
Addressing the conference, Rajendra Pachauri, head of the Intergovernmental Panel on Climate Change (IPCC), said that heat waves experienced once every few decades will happen every other year by mid-century.
Coastal areas and islands are threatened with inundation by global warming, rain-reliant agriculture in Africa will shrink by half and many species will disappear.
Pachauri said: "Many impacts can be avoided, reduced or delayed by reducing emissions. The costs of action would be offset by improved health, greater energy security and more secure food supplies.”
Weather Data Released
On the sidelines of the UN-sponsored climate change talks, the World Meteorological Organization (WMO) stated that the global average temperature in 2011 was down from the record high in 2010 because of it being a La Nina year, but it was still higher than previous La Nina years.
The latest weather data highlight the conundrum of the negotiations as governments spar on whether developed or emerging countries should bear the brunt of emission reductions. Few attendees expect a breakthrough on the talks, which come amid growing warnings about the likelihood and severity of global warming.The UN weather group stated 2011, still with one month left, was the 10th warmest year on record. While the temperature was down from 2010, the WMO said it was higher than previous La Nina years. La Nina typically has a cooling influence on temperatures.

Iran Continues Nuke Program: Threat to World Peace

Iran appears to have worked on designing an atomic bomb and may still be conducting secret research, the UN nuclear watchdog said in a report likely to raise tensions in the Middle East.
Citing what it called "credible" information from member states and elsewhere, the agency listed a series of activities applicable to developing nuclear weapons, such as high explosives testing and development of an atomic bomb trigger.
The report immediately exposed splits among the big powers about how best to handle the row over Iran's nuclear aims: the United States signaled tougher sanctions on Teheran but Russia said the report could hurt chances for diplomacy.
It was preceded by Israeli media speculation that the Jewish state may strike against its arch foe's nuclear sites. But Defence Minister Ehud Barak has recently said that no decision had been made on embarking on a military operation.
Iran, which denies it wants nuclear weapons, condemned the findings of the Vienna-based International Atomic Energy Agency (IAEA) as "unbalanced" and "politically motivated."
IAEA Chief Yukiya Amano is "playing a very dangerous game," Ali Asghar Soltanieh, Iran's ambassador, said.
Teheran's history of hiding sensitive nuclear activity from the IAEA, continued restrictions on IAEA access and its refusal to suspend enrichment, which can yield fuel for atom bombs, have drawn four rounds of U.N. sanctions and separate punitive steps by the United States and European Union.
The report detailed evidence apparently showing concerted, covert efforts to acquire the capability to make atomic bombs. Some of the cited research and development work by Iran have both civilian and military applications, but "others are specific to nuclear weapons," said the report.
Western powers have pressured the major oil producer, which says its nuclear program is aimed at increasing electricity generation, over its record of hiding sensitive nuclear activity and lack of full cooperation with UN inspectors.
The United States will look to put more pressure on Iran if it fails to answer questions raised by the IAEA report, a senior US official said in Washington. "That could include additional sanctions by the United States. It could also include steps that we take together with other nations," the official told reporters.
Russia criticized the report, saying it would dim hopes for dialogue with Teheran on its nuclear ambitions and suggesting it was meant to scuttle chances for a diplomatic solution.
The Russian Foreign Ministry said: "We have serious doubts about the justification for steps to reveal contents of the report to a broad public, primarily because it is precisely now that certain chances for the renewal of dialogue between the 'sextet' of international mediators and Teheran have begun to appear."
Russia and the United States are among the six big powers, also including China, the United Kingdom, France and Germany, which have been involved in stalled attempts to find a diplomatic solution to the nuclear dispute with Iran.
Sanction on Iran’s Energy Sector
The US Government has announced that it will slap sanctions directly on Iran's energy sector and warned the financial firms in the world against dealing with the Islamist state.
"Recent days have brought new evidence that Iran's leaders continue to defy their international obligations and violate international norms," US State Secretary of State Hillary Clinton said at the State Department, referring to the recent alleged plot to assassinate the Saudi ambassador in the United States, and report by the UN nuclear watchdog on Iran's nuclear program.
Iran and its powerful ally Russia have slammed new Western sanctions imposed on Teheran over its suspect nuclear program, saying they were illegal and futile.
The Iranian Foreign Ministry stated that the unilateral measures against Iran's financial, petrochemical and energy sectors announced Monday by the United States, Britain and Canada amounted merely to propaganda and psychological They were "reprehensible" and would prove ineffective, it said.
Russia -- which with China had blocked any possibility of the Western steps going before the UN Security Council for approval -- took a sterner view, saying in a Foreign Ministry statement the sanctions were "unacceptable and against international law."
The declarations set the stage for a hardening of diplomacy over Iran and its nuclear program. The issue has already generated speculation that Israel is mulling air strikes against Iranian nuclear sites.
The country is already subject to four sets of UN sanctions designed to force it to give up uranium enrichment, along with additional, unilateral sanctions by the United States and the European Union (EU).
The latest sanctions put more pressure on Iran's financial sector, with the United States and Britain invoking anti-terrorist laws to target Iran's central bank and other financial institutions.
Rejection of UN Report
Iranian President Mahmoud Ahmadinejad has dismissed a report from the United Nations' nuclear agency that highlighted concerns Teheran had worked on designing an atomic bomb, saying it was based on "invalid" information from Washington.
"You should know that this nation will not pull back even a needle's width from the path it is on," he said in a speech carried live on state television.
However, a Foreign Ministry spokesman said Iran remains ready to engage in negotiations with world powers concerned about its nuclear program, but only if the other parties show it due respect.
The EU may approve fresh sanctions against Iran within weeks, after a UN agency said Teheran had worked to design nuclear bombs, EU diplomats said.
Iran denies trying to build atom bombs and its Supreme leader Ayatollah Ali Khamenei said any US or Israeli attack on its nuclear sites would be met with 'iron fists'.
The United States and Israel have refused to rule out any option to prevent Iran from acquiring a nuclear arsenal.
Diplomats in Brussels said preliminary discussions among EU capitals on new measures had begun and plans may be ready for EU foreign ministers in Brussels to approve on December 1.
Iran already faces a wide range of the UN sanctions, as well as some imposed unilaterally by the United States and the EU.
New EU sanctions would be a significant part of Western efforts to ratchet up pressure on Teheran after the UN nuclear watchdog's report this week that laid bare a trove of intelligence suggesting Iran is seeking nuclear weapons.
Teheran’s Confidence
Iran’s confidence emanates from the fact that its nuclear facilities are supported by Russia and China. Or is it that Ahmadinejad is sitting on a nuclear weapon facility already? Well, this is unlikely because nuclear weapons and the delivery system cannot be made overnight and in such secrecy.
The point is that Ahmadinejad’s brave anti-US postures must, in the natural course, make those who dream of an end to the US hegemony and those who detest George Bush, the war-monger, look up to him. And in that context express disgust over the Manmohan Singh regime’s decision to kow-tow the United States and its allies.
A generation that grew up detesting the United States and participated in umpteen demonstrations and other kinds of agitation against the successive regimes in the US — the Vietnam War some 40 years ago and against the Invasion of Iraq now — must feel happy that they are not alone.
Other View
Economic sanctions would hurt the West more than Iran. The premise of this argument is that any sanctions imposed on Teheran would result in a dramatic rise in oil prices, hurting the economies of Western countries and undermining public support for the sanctions.
WhileIran holds the world’s second-largest reserves of oil and gas and is the fourth-largest oil producer, it is in fact a net importer of refined oil products, including gasoline. And internal consumption of oil products in Iran is growing by 5.2 percent a year, far faster than its ability to increase refining capacity. This means that the levels of imports necessary to make the Iranian economy function will only increase over time.
Russia and China would never go along with sanctions. While persuading Russia and China to support sanctions might take some time and effort, these countries are unlikely to prove reliable allies for the Iranian regime.
Russia has little strategic interest in supporting the Iranian cause. While it may see Iran as a useful tool for balancing U.S. power in the Middle East, it has far more to fear from Iran’s nuclear program in the long term than does the United States or Europe. Iran’s support of Islamic fundamentalist terrorism across the Middle East and Central Asia is a direct challenge to Russian interests in territories that were part of the old Soviet empire and are still considered by Moscow to be within its sphere of influence.
Iran might respond to sanctions by irrationally lashing out at Israel and other U.S. allies. One of the most dangerous assumptions about Iran is that it is acting irrationally or is led by people who do not calculate the potential costs and benefits of their actions.

Arab League Suspends Syria

The Arab League has suspended Syria until President Bashar al-Assad implements an Arab deal to end violence against protesters, and called for sanctions and transition talks with the opposition. The League has long been seen by tens of millions of people throughout West Asia and North Africa as toothless and a puppet of the despots, dictators, and absolute monarchs who comprise the majority of its governments. This time 18 of the 22 members voted for the proposal at an emergency meeting in Cairo, with three — Syria, Yemen, and Lebanon — voting against and Iraq abstaining. The immediate cause of the vote is the failure by Damascus to abide by its own November 2 assent to an earlier League plan to end the violence, which the United Nations estimates has caused more than 3,500 deaths since the protests began in March.
A statement, read by Qatari Prime Minister Hamad bin Jassem Al-Thani, said the Arab League decided “to suspend Syrian delegations’ activities in Arab League meetings” if it continued to stall the Arab plan and to implement “economic and political sanctions against the Syrian Government.” It also called for the withdrawal of Arab ambassadors from Damascus, but left the decision to each Arab state.
The statement warned that Arab League Secretary General Nabil al-Arabi would contact international organizations concerned with human rights, “including the United Nations,” if the bloodshed continued. It called for a meeting in Cairo with Syrian opposition groups in three days to “agree a unified vision for the coming transitional period in Syria.”
A week of deadly violence in city of Homs had overshadowed the meeting, in which Arab ministers appeared divided on what measure to take but eventually voted by majority on the final statement.
Assad’s regime agreed on November 2 to an Arab road map, which called for the release of detainees, the withdrawal of the army from urban areas and free movement for observers and the media, as well as negotiations with the opposition.
Instead, human rights groups say the regime has intensified its crackdown on dissent, especially in flashpoint Homs, killing at least 125 people in the city since signing onto the League’s deal.
Saudi Arabia, which is extremely hostile to Iranian influence in Syria and to democracy in the region, advocates encouraging Sunni Islamist forces, and this would also marginalize moderate Syrian Sunnis. This suits North Atlantic Treaty Organization (NATO) members very well. Those Western powers whose leaders, facing severe domestic problems and needing some high-profile foreign adventurism, suborned the United Nations Security Council into voting for the violent and destructive intervention against Muammar Gaddhafi know that Russia and China will rightly veto any such resolution on Syria; but now the West can look uninvolved and can expect little criticism for its silence over continuing state brutality in Bahrain and Yemen.
Growing Death Toll
The UN human rights office said that more than 3,500 people have been killed in the Syrian regime's brutal crackdown on dissent, deploring the slaughter that went on despite a peace plan. The brutal crackdown on the dissent in Syria has so far claimed the lives of more than 3,500 Syrians.
More than 60 people are reported to have been killed by military and security forces since Syria signed the peace plan sponsored by the league of Arab states, including at least 19 on Eid al-Adha.
The Arab roadmap calls for an end to violence, the release of those detained, the withdrawal of the army from urban areas and free movement for observers and the media, as well as talks between the regime and opposition.
EU Extends Sanctions
European Union (EU) governments agreed have to extend sanctions against Syria to 18 more individuals associated with its violent crackdown on dissent, but signaled that Western military action against the government was unlikely for now.
EU foreign ministers, meeting in Brussels, also sought to increase economic pressure on President Bashar al-Assad by approving plans to stop Syria accessing funds from EU’s European Investment Bank (EIB).
The EU has already placed sanctions on 56 Syrians and 19 organizations in its effort to get Assad to halt his bloody crackdown on the eight-month uprising, and has banned the import into the EU of Syrian crude oil.
EU leaders warned last month that Syria could face new sanctions if there was no halt to the violence, in which the United Nations says more than 3,500 protesters have died. British Foreign Secretary William Hague said there was a good case for further extending EU measures, which from 15 November will affect 74 individuals and 19 firms and entities.
Syria’s Reaction
Syrian Foreign Minister Walid Muallem said that the government in Damascus will not budge despite its suspension from the Arab League, which he warned was a “dangerous step.” Muallem’s comments come after the Arab League announced a fresh meeting on Syria and as global pressure, including a threat of new sanctions, intensified on President Bashar al-Assad’s regime over its lethal crackdown on protests. “The decision of the Arab League to suspend Syria... represents a dangerous step,” Muallem added.
The foreign minister said: “Today there is a crisis in Syria which pays the price of its strong positions. Syria will not budge and will emerge stronger... And plots against Syria will fail,” said the minister. Muallem said Syria’s government was not concerned about the likelihood of foreign military intervention in the country, due to the opposition of China and Russia. He added: “Syria is not Libya. The Libyan scenario will not be repeated; what is happening in Syria is different from what happened in Libya and the Syrian people should not worry.”

17th SAARC Summit

Founded in 1985, the South Asian Association for Regional Cooperation (SAARC) is an organization of eight South Asian nations, namely: Bangladesh, Bhutan, India, the Maldives, Nepal, Pakistan, Sri Lanka and Afghanistan. The bilateral meetings tend to overshadow SAARC, much to the annoyance of the region’s smaller countries like the Maldives, the summit is largely India’s show. The Ministry of External Affairs’ spin doctors would like to project SAARC as a success beyond expectations. Some may even have the gumption of comparing it with ASEAN (Association of South East Asian Nations) grouping and the European Union (EU), claiming that what SAARC has achieved in its 26th year of its existence has been done at a faster pace in many sectors than what the other two economic biggies have been able to achieve.
The truth is that SAARC has so far been moderate in its accomplishments. But significantly it is now finally ready to take off and become a major economic grouping. Or, to put it even more dramatically, SAARC is an idea whose time has finally arrived. That is indicated by the fact that there are now nine countries that have been given ‘Observer” status at the current summit in Maldives outnumbering the number of member countries. These are the United States, Australia, China, the EU, Iran, Japan, South Korea, Mauritius, and Myanmar. That is a good sign as many of these countries had written off SAARC regarding it as a lost cause.
The fact is that India’s neighborhood is in a better shape than it has been for many years. Nepal appears back on track, restive Bangladesh has got its economy going, Sri Lanka has finally ended years of civil war and Pakistan, despite internal strife, wants to bring its economy back in shape. In all the eight SAARC countries, democracy has emerged though in Afghanistan, Nepal and Bhutan it may still be nascent.
Heads of states and delegates to the 17th SAARC met at the two-day summit in Addu City (the Maldives) on 10-11 November.
Focal Theme
The focal theme of the Maldives Summit was: "Building Bridges – both in terms of physical connectivity and figurative political dialogue." This eloquently summarizes the imperative of greater regional integration, and is an objective to which India is fully committed. One such initiative taken in 2010 was the launch of the South Asia Forum that has brought together eminent South Asians from different walks of life about the future cooperation in South Asia.
Chairman of 17th SAARC Summit was Maldivian President Mohamed Nasheed.
Joint Declaration
At the end of the summit, leaders adopted Addu Declaration, which reaffirms their commitment to peace, confidence building, liberty, human dignity, democracy, mutual respect, good governance and human rights. The declaration reviews their commitment to alleviate poverty and reduce income inequalities within the societies and reaffirms their resolve to improve quality of life and well-being of their people through people-centered sustainable development.
In the declaration, SAARC member states show their concerns about the continuing threat of terrorism in all its forms and manifestations, transnational organized crimes, especially illegal trafficking in narcotic drugs and psychotropic substances, trafficking in persons and small arms and increased incidents of maritime piracy in the region; and reiterating their resolve to fight all such menaces.
The declaration states that the countries are aware the environmental degradation and particular vulnerabilities of the region to the threat of climate change and recognize the need to further strengthen the institutional mechanisms of SAARC to bolster and enhance regional cooperation.
Foreign ministers from SAARC member countries have signed the agreements on Rapid Response to Natural Disasters, Multilateral Arrangement on Recognition of Confirmity Assessment, Implementation of Regional Standards and Seed Bank.
The Maldives Summit agreed to conclude the Regional Railways Agreement and convene the Expert Group Meeting on Motor Vehicles Agreement before the next Council of Ministers.
Highlights of Addu Declaration
Intensify efforts to fully and effectively implement the South Asian Free Trade Areas (SAFTA) agreement and work on reduction in Sensitive Lists as well as early resolution of non-tariff barriers and expediting the process of harmonizing standards and customs procedures.
* Direct SAARC Finance Ministers to chart a proposal that would allow for greater flow of financial capital and intra-regional long-term investment.
* Conclude the Regional Railways Agreement and convene the Expert Group Meeting on the Motor Vehicles Agreement before the next Session.
* Ensure completion of the preparatory work on the Indian Ocean Cargo and Passenger Ferry Service, including the Feasibility Study, by the end of 2011.
* Direct the conclusion of the Inter-governmental Framework Agreement for Energy Cooperation and the Study on the Regional Power Exchange Concept as also the work related to SAARC Market for Electricity.
Security and Other Issues
The leaders of the Maldives Summit agreed to establish a South Asian Postal Union.
On security issues, Nasheed said the SAARC leaders have reached an agreement on the Rapid Response to Natural Disasters and agreed to initiate work on combating maritime piracy in the region.
SAARC countries have agreed that they will spend an appropriate proportion of their national income on renewable energy technologies, subject to approval of national arrangements. They have agreed to convene an expert group meeting to discuss a regional mechanism to empowerment of women and promote gender equality in the region.
The SAARC leaders decided to promote communication between SAARC countries. SAARC secretary general has been instructed to ensure the final preparations for the Indian Ocean Cargo and Passenger Ferry Service are completed this year.
They agreed to direct the finance ministers to chart a proposal to allow more financial flows and investments.
India’s Point
Indian Prime Minister Manmohan Singh pledged to promote fair trade in the region. He spoke positively of the progress made in SAARC terming it as "impressive" and pointed out that many sectors including trade, transport, health and education have benefited from it.
He said: "Our summit is taking place at a time when the West is having an economic crisis. In the meantime developing countries like ours will be squeezed for capital and markets and we should look for innovative solutions within South Asian region."
The 18th SAARC Summit will be held in Nepal.

BASIC Environment Ministers’ Conference

Environment ministers of India, China, Brazil and South Africa (BASIC) group of developing countries met in Durban (South Africa) on 1 November. They sought to bridge their differences and strike a common position ahead of this month’s climate change conference in Durban. The conference has drawn attention amid reports of differences within the influential block of emerging countries.
BASIC environment ministers called on the West to ensure the extension of the Kyoto Protocol as well as step up financial and technological assistance to developing countries.
Joint Statement
In their joint statement, they said “the bloc should achieve a comprehensive, fair and balanced outcome” and “clearly establish the second commitment period under the Kyoto Protocol,” which the statement described as “the cornerstone of the climate regime” and “the essential priority” for the summit’s success.
South Africa has been seen as coming under particular pressure to strike a balance between the BASIC group’s position and the West under its additional responsibility as host of the summit and acting president of the Conference of Parties.
Quantified Emissions Reduction Objectives
However, South Africa’s lead climate negotiator, Alf Wills, sought to draw a line over reports that his country was moving away from the essential BASIC position that developing countries, unlike developed Annex-1 countries, would not accept legally binding emission reduction commitments.
Wills said: “There has always been this misunderstanding that South Africa is advocating that developing countries take on these quantified emissions reduction objectives. That is untrue. We have always held the position that we will meet our legal obligation to take mitigation actions consistent with our respective common but differentiated responsibilities and our respective capabilities.”
He added: “South Africa shared the view of the BASIC group that “the current Kyoto Protocol system, which elaborates those specific legal obligations that developed countries have in a multilateral rules-based system…provides the benchmark and cornerstone for any future climate change regime or system.”
Pressure From West
Although South Africa did not appear to voice any disagreement with the BASIC position during meetings, officials expressed the concern that once negotiations started in earnest in Durban, the country might face particular pressure as the host nation to dilute its stance. There is a fear that there will be attempts by the West to divide the BASIC group.
BASIC nations – and China in particular – have come under increasing pressure from the West to agree to a road map on undertaking legally binding emission reduction targets. The European Union (EU) has said it preferred “a single global and comprehensive legally binding instrument,” although it was open, in the interim, to a second commitment period under the Kyoto Protocol on the condition that large emitters agree on a road map.
BASIC environment ministers also identified financing as “one of the pressing priorities” at the Durban conference, calling on developed countries to fulfill their commitment of providing US$ 30 billion as fast-start funding.
As far as India is concerned, Minister of Environment and Forests Jayanthi Natarajan said that New Delhi was “completely committed to the stand of BASIC countries.”
Debt Crisis and Recession
The West had to come through with funding regardless of the current financial turmoil sweeping across Europe. It is painfully conscious of its problems.
BASIC environment ministers also urged developed countries to honor a commitment to provide $100 billion per year by 2020, officials accepted that was increasingly unlikely following the debt crisis and the recession, and emerging countries would perhaps have to settle for “millions and not billions.”
Xie Zhenhua, China’s top climate official, did not rule out the possibility of bridging differences with the West despite EU insistence on developing countries taking on greater commitments.
In a multilateral mechanism, a solution is something that everyone can accept even if no one is satisfied. For this, each individual must make a compromise, but the basis of the compromise is to stick to commitments and conventions agreed to in Copenhagen and Cancun.

Current Predicament in Israeli-Palestinian Conflict

At this moment, US President Barack Obama, Palestinian Authority President Mahmoud Abbas, Israeli Prime Minister Benjamin Netanyahu and at least 120 heads of State or Government, might have already arrived in New York to attend this year's UN General Assembly. At this year's UN General Assembly, we can UN member countries to debate and discuss issues pertaining to nuclear safety, famine in Africa, Libya and other major issues. But the highlight of the debate and discussion for this year's UN General Assembly definitely focused on Palestinian Authority's application to join the United Nations as a member country.
The determination of Palestinian Authority President Mahmoud Abbas in wanting to file in an application for Palestine to become an UN member country is very firm. After giving his address at the UN General Assembly on 23 September, Mohamoud Abbas submitted Palestine's application documents to join the United Nations as a member country to the UN Secretary General Ban Ki-moon. After this, the "showdown" at the UN General Assembly between the Israeli regime and the Palestinian authority will officially be on at the UN platform.
Movement Against Palestinian Authority
At this stage, apart from the Israeli regime which has continued to intimidate the Palestinians, the United States, the European Union and the so-called Quartet West (the United States, European Union, Russia and the United Nations) are still making last-minute effort to discourage and to advise the Palestinian Authority on giving up its application to the UN as a member country. The consequence after the Palestinian authority filed an application in wanting to become an UN member is indeed unpredictable. Palestinian Authority President Mahmoud Abbas has also warned his fellow Palestinians that in the coming days, Palestinians will face even more (unpredictable) problems.
Abbas indeed knows very well that the consequence for the Palestinian Authority to file in an application to become an UN member can be very serious. However, regardless of what will happen to the Palestinians in the coming days, he has decided to fight for the independence of Palestine through seeking the help of the UN member countries now. Such a strong determination taken by the Palestinian Authority in wanting to become an independence country has reflected the political reality that in addition to the despair of the Palestinians after engaging more than 20 years of peace negotiation with the Israeli regime, their despair has also exposed the hypocrisy of the United States in its handling of Israeli-Palestinian affairs all along.
Although the United States has expressed its support for the "two state solution" framework to allow peaceful coexistence between Palestinians and Israelis, but it appears that all the peace proposals coming from the United States in wanting to resolve the pending Israeli-Palestinian conflicts are but empty talks. These empty talks coming from the United States can only let the Palestinians getting "excited" for a short while only. This is because in order for the United States to support and implement the Israel-Palestine "two-state solution framework", the Israeli government and the Palestinian Authority must first resolve the vast and varied issues between them. These issues have included calling the Israeli regime to stop building more Jewish settlements in the Palestinian occupied land and for the common border between Israel and Palestine to retract back to the 1967 period. In addition, the Israeli authority must also allow the Palestinians to use East Jerusalem as its capital; to allow the tens and thousands of Palestinian refugees scattered in Jordon and other countries to return to their homeland, and so on. However, so far, the Israeli authority has even refused to issue an official command to stop the Israelis from building more Jewish settlements on the Palestinian land. As such there is no hope for the Palestinian Authority to expect the Israeli regime to take action on other issues that can move toward the two-state solution plan for Israel and Palestine.
Pressure on Israeli Authority
As a strong ally of Israel, the US Government has, besides repeatedly proclaimed that it will support the independence of Palestine, and besides issuing regrets to deplore the uncalled for action taken by the Israeli regime on the Palestinian land, the US Government has not taken any actual or pragmatic action to support the Palestinians. The US Government is afraid to offend the influential Jewish community in the United States.
The US Government dares not exert pressure on the Israeli authority and force the Israeli regime to make concessions toward the Palestinian Authority so that the Israeli-Palestinian peace talk can be resumed again. In this regard, the United States cannot escape the responsibility for causing the present predicament between the Israeli and the Palestinian Authority that has in turn led the Palestinians having to use the United Nations as its next political platform to resolve their pending problems.

Europe, US To Tell Palestinians Not To File Application as UN Member

Palestinian Authority has announced its application in wanting to become a member country of the United Nations. This announcement made the Israeli authority extremely furious. Israel has come out with a stern warning and said action taken by the Palestinian authority will end with a "tragic result." In addition, Israel has even given Palestine the hint that not only the Israeli authority will not allow Palestine to become an independent country; it will even annex some of its lands. As it stands, the United States and the European Union (EU) are getting very nerves over this recent development by the Palestinian authority in wanting to become an UN member.
Israeli-Palestinian Negotiating Table
On one hand, they warned the Palestinian regime that such action taken by the Palestinian authority will result in the United States and the EU cutting off their aid and assistance to the Palestinians; on the other, they also quickly dispatched special envoy to meet up with Palestinian and Israeli leaders respectively. They hope that at the eleventh hour, they can convince the Palestinian authority to give up its action in wanting to file a membership application to the United Nations but will instead choose to return to the Israeli-Palestinian negotiating table to settle their disputed border.
However, we must understand that it has been a dream for the Palestinians to become an independent country for a long time now. For more than 20 years in the past, the Palestinian authority has already engaged in numerous rounds of peace talks with the Israeli regime to settle the territorial dispute. Palestinians also hope that they can become an independent state under some kind of peaceful negotiation atmosphere. But until today, there is still no progress in the peace talk between the Palestinian authority and the Israeli authority. Palestinians are in a "desperate" stage now. They have no other choice but to apply to the United Nations and ask the UN member countries to recognize it as an independent nation. It is difficult for Europe and the United States to tell the Palestinians not to file an application as an UN member.
Pragmatic Solution
As the situation stands now, although the United States and European nations are rather anxious about the application of UN membership by the Palestinian authority, the only measure they can do at this moment is try to persuade the Palestinian authority not to apply as an UN member; however, until today, the West especially the United States still cannot find a pragmatic solution which is acceptable by the Palestinian authority to resume peace negotiation talk with Israel. The last Israeli-Palestinian talk was held more than a year ago. But at that peace talk, due to the fact that the Israeli authority has insisted on the continual construction of the Jewish settlements in the Palestinian territories, the peace talks has broken down eventually.
Palestinian-Israeli Border Conflict
However, the Palestinian authority's demand now is different. The Palestinian authority has, besides insisting that the Israeli side must stop constructing permanent settlements in the Palestinian land, it also demands that the revived peace negotiation talk on the Palestinian-Israeli border must be based on the Palestine territory before the Six Day War held on 1967. In addition, the Palestinian authority also said that the peace negotiation talk with the Israeli regime must be based on the principle that East Jerusalem would become the future capital of Palestine. But all these conditions set by the Palestinian authority are also the terms firmly opposed by the Israeli side. As such, the special envoys sent by the United States and European nations to the respective Israeli and Palestinian side can only say all the good things they can say in the hope that eventually the Israeli authority and the Palestinian authority can resume peace talk between them. Yet in reality, they can only do the "talking" they cannot persuade either side to give in a little bit of concessions to the other side in order to cut a negotiation deal. So, the lobbying miss ions of the US and European envoy to Israel and Palestine are doomed to fail.
US Support to Israel
In fact, on the pending Palestinian demand in wanting to file in an application for UN membership, US President Obama has also faced with a sense of helplessness. On one hand, President Obama does not want to offend the powerful and influential Jewish community in the United States, and on the other, President Obama also does not want to further alienate the Arab countries if the United States chooses to support Israel. However, after weighing the types of interests he can obtain from both sides, in the end, President Obama still chose to support the Israeli authority and will prevent the application of the UN membership by the Palestinian authority.
Palestinian President Mahmoud Abbas, the authority that represents the Palestinians, is determined to submit an application for Palestine to become an UN member to the UN Secretary General Ban Ki-moon on 23 September. However, according to the spokesperson of the Palestinian authority, if a "trusted choice" favorable to the Palestinian authority can emerge prior to 23 September; the Palestinian authority will still take it into consideration. However, due to the shortage of lead time, there is no indication to show that the Israeli regime will soften its position on its peace negotiation term with the Palestinian authority. It is thus unavoidable for a new round of fight between the Israel authority and the Palestinian authority to emerge in the United Nations in the coming days.

India’s Industrial Production Dips

The Reserve Bank of India (RBI) is in an unenviable position ahead of its monetary policy review meeting scheduled on 16 September. It has to take a call on interest rates -- whether to raise them further in the face of continuing inflationary pressures or pause temporarily based on the latest disappointing factory output data. To its credit, the central bank has been much more realistic in turning the spotlight on the Indian economy's blind-spots than North Block. In its successive policy reviews, the RBI has not simply focused on inflation's stubborn persistence, but even warned of business mood dips impacting investment and consumption growth declining as interest rate-sensitive sectors face increasingly reluctant buyers.
GDP Growth
In fact, while New Delhi has tended to exhibit a misplaced optimism about growth prospects with its eyes shut, the RBI was ahead in scaling down its Gross Domestic Product (GDP) growth forecast for 2011-12 by a full percentage point to below eight per cent.
India’s GDP increased 7.8 per cent in the three months ended March 31 from a year earlier, the weakest pace in five quarters, government data show. Still, the expansion is the quickest after China among major economies, bolstered by higher incomes in the nation of 1.2 billion people. All in all, the portents for the Indian economy are far from encouraging.
Overall IIP
The latest industrial growth figures for July suggest that the slowdown that many experts and most policymakers thought would be temporary and narrow is, indeed, broad-based. The overall Index of Industrial Production (IIP) registered a year-on-year expansion of only 3.3 per cent, the lowest in 21 months. Manufacturing and mining grew by 2.3 per cent and 2.8 per cent respectively, while the 13.1 per cent increase in electricity was mainly a result of the good monsoon, which has helped boost generation from hydel stations. More disturbing has been the 15.2 per cent dip in production of capital goods, a proxy for investment activity. Even if one discounts for the unreliability of data for this sector -- leading to extreme growth volatility -- the fact that investment sentiment has been vitiated by recent political developments and concerns over ambiguous laws and tangled procedures among foreign investors cannot be missed. If industrial growth is slowing, there is the possibility of weakening demand on account of high interest rates further dampening it.
Growth in Mining Output
The growth in mining production was 2.8 per cent in the month, down from 8.7 per cent in the same month last year. Production of intermediate goods fell by 1.1 per cent during the month under review against a growth of 8.5 per cent in July 2010.
Consumer durables grew by 8.6 per cent in July as compared to a growth of 14.8 per cent in the corresponding month of last year. However, electricity production improved witnessing a growth of 13.1 per cent in July this year as against a growth of 3.7 per cent in July 2010.
Non-durable consumer goods (FMCG) production also grew by4.1 per cent in July, compared to a decline of 0.9 per cent in the same month last year.
Rate of Inflation
Persistent increases in its key policy rates over the past 20 months may have somewhat dented non-food 'core' inflation resulting from excessive demand. But the problem is that while demand in the manufacturing segment may have dipped, general inflation has not. Agricultural production has been tardy for quite a long time now. The services sector has been a saving grace but it cannot prop up growth beyond a point.
The international business environment continues to be bad and in fact deteriorating and with the RBI raising lending rates and tightening liquidity so as to check rampant inflation, the negative impact on economic activity and growth was not inconceivable. For once the Finance Ministry may be right when its Chief Economic Adviser Prof Kaushik Basu, says inflation will stay high until December. So the RBI, in a way a victim of its own success, will now have to battle high inflation and the prospect of falling output driven by weakening demand.
For policymakers it would be tempting to pass off the slowdown as partly the outcome of global woes just as earlier they claimed that inflation was also stoked by global commodity prices. But unlike the United States and the European Union, India did recover from 2008 with a smart pick-up in 2009. The current slide actually began in the past six months or so. And that has been the result of very successful monetary and very slothful public policies.

Whither Middle East Peace Process?

US President Barack Obama, during his maiden visit to the Middle East in May 2009, delivered an important speech in the Egyptian capital -- Cairo. In that address, Obama said that Israel would have to suspend the construction of its legal settlements on the Palestinian lands on the West Bank for the restart of Arab-Israel peace talks. Almost instantly, Israeli Prime Minister Benjamin Netanyahu had rejected the proposal of the US President. The Israeli prime minister said that the building of the settlements was suspended for one year that means up to September 2009 during the tenure of President George W. Bush and after expiry of the timeframe Israel will again start the construction. President Osama had to withstand that insult silently. It had become clear that the Fatah party government of Palestine would not sit for peace talks unless Israel stopped building settlements.
Arab-Israel Conflicts
Since then, Israel has established a good number of new illegal settlement areas on the West Bank and the captured East Jerusalem and built several thousands of structures on the Palestinian lands. Rather arrogant and aggressive Netanyahu and his government blamed the Palestinians for the capture of lands. The argument of the Israeli government was the Palestinians are divided, among them the HAMAS is determined to eliminate the existence of Israel, so no peace talks are possible with them. As the United States and European Union (EU) have recognized HAMAS as terrorist so the plea of Israel is acceptable to them. In the internal politics Obama has earned the wrath of the US capitalist over his national health bill. And his popularity was nosedived.
In addition, Obama did not get enough opportunity to think over the Middle East as he lost majority in the Congress in the midterm polls. Moreover, he will have to seek votes in November 2012 to become the US President for the second term. Obama knows it very well that it will not be possible for him to win the election by annoying the 'most powerful' Israeli lobbies in the US. And as a result, he prefers keeping mum on the issue of Arab-Israel conflicts.
Unexpected Address
President Obama on 19 May gave a completely unexpected statement at the US Department of State. He had definitely an intention of revising to some extent the present anti-US policy in the Middle East. At the beginning of the so-called 'Arab autumn' process the US seemed to be against the trend. But as the development began going out of the control of the US policy Washington welcomed the revolution in Tunisia and Egypt one after another. But in other places the United States is still lagging behind the pace of developments. Washington was in a dilemma for a long time regarding the mass upsurge in Yemen and Syria. Huge criticisms were raised in the US over mysterious indifference of the Obama administration to sending of Saudi Arabian troops to quell rebellion in Bahrain.
In his State Department address, Obama made attempts to minimize those criticisms. He said: 'The US welcomes those changes that expand the scopes for self determination and opportunities- there should not be any doubt about it. For many decades we have been admitting the no change in situation of this region or the Middle East, but now we have gotten the chance of following the path through which the world could advance in the right direction.'
Obama in that address further said that the basis of the Arab-Israeli crisis would be a 'secured Israel' and on the basis of an independent Palestinian state, and the borders of the two states will be along the demarcation line that was before the 1967 war. But Obama said that some changes along the common borders here and there were possible on the basis of mutual understanding.
On 2 May, the US commandoes swooped on a residence at Abbottabad in Pakistan and killed Usama Bin Ladin. Since then popularity of Obama has jumped high repeatedly. The US President might have thought that he would implement his 2009 Cairo address riding on this popularity. Besides, he might have realized that Israel has been using the peace talks with the Palestinian as a technique of killing time and the crisis will no be solved this way. Now he is thinking over the 2002 Saudi proposal. In that Saudi proposal it was stipulated that the borders of Palestine and Israel will be fixed along the demarcation line of 1967 and all Arab states will recognize Israel simultaneously.
Bad Tempered Dialogue
The US foreign policy is not determined in Washington. This is determined in Israel and the Israelis secure this control by dint of the strength of the Israeli lobbies in the United States. Israeli Prime Minister Netanyahu was scheduled meet the US President in Washington on the following day of the speech of Obama. Prior to his departure for Washington, Netanyahu announced that the 1967 borderline was not acceptable to Israel. He said that the ground realities have under gone many changes (because of illegal Israeli settlements) since 1967 and those changes cannot be ruled out. In other words, he said that the Jews (those came from Europe) had the right to build settlements in the areas where they have settlements during the Bible era that means in entire Palestine.
The Jewish people in the United States could hardly be one-thirtieth of the total population. But in pursuance of Zionist conspiracy, they have taken control of the US politics, economy, and media. Of them, the American-Israeli Public Affairs Committee (AIPAC) is the most powerful group. It being said that no bill in the US Congress could be passed without approval from the AIPAC. Obama might have thought that he will be able to create influence by addressing the AIPAC conference. The AIPAC conference silently heard the speech of Obama. But when the US President referred to the 1967 borderline they raised voice in unison to condemn him. To pacify the anger, President Obama was compelled to announce that the United States will oppose the Arab proposal in the UN General Assembly in September 2011 for giving recognition to the Palestinian state.
Netanyahu also addressed the AIPAC conference. In his address, the Israeli Prime Minister said that the 1967 borderline was not acceptable to his country for security reasons. He had again referred to the Jewish settlements in the Bibal area. And it is needless to mention that the address of Netanyahu was welcome amid repeated clapping from the audience. Netanyahu has again demanded that as a condition for establishing peace Israel must have to be recognized as a Jewish state. His proposal means forfeiting the birth right of the Palestinians, expelled from Israel, in returning to their homeland, which the United Nations accepted for many times. The proposal will give Israel the liberty of expelling nearly 2 million Palestinian from that country. The Palestinian will accept the proposal.
On 24 May, Netanyahu was more cordially greeted in the joint session of the two houses of the US Congress than the AIPAC conference. During his address to the House, both the Republican and Democrat members of the Congress gave him standing ovation 18 times. By this time, Obama and Netanyahu held face to face meeting in the White House. According to available information, their discussions were exciting and bad tempered.
Split in Western Alliance
However, Obama was given rousing receptions during his visit to Irish Republic and the United Kingdom. He earned the rare distinction of addressing the joint session of the British Parliament in Westminster Hall. Before him no US President was fortunate to address the joint session of the British Parliament. In his address, Obama traditionally raised the Palestinian issue and said: 'We (US and Europe) are united for cause a secured Israel and an Independent Palestinian state.
But Obama knows it better that the Europe is now not united with the United States on the Palestinian issue. Virtually Europe is getting more intolerant with each passing. So long the Arab-Israel issue has been under the exclusive jurisdiction of the United States. It was true that a quartet was formed on the issue comprising the United Nations, EU, Russia, and the United States. But that quartet was absolutely ineffective. Former US President George W. Bush appointed his cohort in misdeeds -- Tony Blair -- as the representative of that quartet. It seemed from the statements of Tony Blair that protecting interest of Israel was his prime concern. He is going to Jerusalem off and on and Israelis are receiving him very cordially. It being heard that Tony Blair has been benefiting for her relations with Israel.
Now the EU could have realized that the US foreign policy is determined in Tel Aviv, not Washington. And as a result, no just solution of the crisis is possible by the United States. Some of the EU countries believe the Europe now will have to take responsibility from the United States the initiatives of solving the Arab-Israel crisis. Some of the EU countries, including France, have hinted that they are ready to recognize the independence of Palestine if it is unilaterally declared by the Palestinians.
The Europe has some special advantages also. The Israeli lobbies are very active in Europe particularly in France and Germany. But they are yet to become so stronger like the AIPAC in the United States. In addition, the progress of Israeli economy still largely depends on Europe. Israel is enjoying the duty free access to Europe in exporting goods like other EU members. That means Israeli Prime Minister will find no courage to show his red eyes to the Europe the way he has been demonstrating his audacity to hackle the US President. Under the above circumstances, the people, who support an independent Palestinian state inside Israel, will be encouraged.
Recent Development
Meanwhile, a significant change has taken place in the situation of the Middle East. Israel has been successful in laying a siege to Gaza for long four years with active support from the Hosni Mubarak government of Egypt. That the Egyptian Government acting on behalf of the Israeli Administration has closed down the Rafa Crossing on the southern frontier. But a post-revolution Egypt is not ready to act as a guard of Egypt. Egypt opened the Rafa Crossing on 28 May. Most countries in the Middle East are now witnessing mass upsurge. The friends of Israel in Europe believe Israel will be more friendless if 'Arab Autumn' gets perfection. Under the above circumstances, it will be better for Israel to reach a settlement without killing time.
The Arab League, at a meeting in Doha on 22 May, has decided that despite objection from the US they will move a resolution in the UN General Assembly in September for giving recognition to an independent Palestinian state with the border of 1967. That resolution will create very complex situation for the United States. Under pressure from Israel, the United States will try to oppose the resolution. However, most countries in the world are likely to give recognition to the Palestinian state. The public opposition of so many countries will surely hamper the international dignity of the United States.
Only one option has been left for Washington to adopt. The option is supporting the Arab League resolution. If the United States fails, Washington should abstain from voting against the proposal and handover initiatives of resolving the Middle East crisis to the EU.

British Prime Minister's Pakistan Visit

Pakistan and the United Kingdom on 5 April formally launched 'enhanced strategic dialogue' aimed at strengthening ties in security, trade, health and education sectors. Prime Minister Syed Yousuf Raza Gilani and his British counterpart David Cameron, while addressing a press conference after a day-long interaction that also covered the UK-Pakistan National Security Dialogue and a meeting with the heads of parliamentary parties, vowed to enhance bilateral investments and encourage their private sectors to help increase bilateral trade from 1.2 to 2.5 billion pounds by 2015.

Prime Minister Cameron termed the Pakistan-UK ties 'unbreakable' and said the two sides focused on trade, security and education sectors. He said he had also increased Pakistan's market access to Europe.

Security Issue

On the security sector, Cameron said that the two sides agreed on police services and intelligence cooperation, besides discussing the importance of Pakistan-Afghanistan relationship. He said that both the countries shared the need of having a peaceful, stable and democratic Afghanistan. 'Pakistan suffered greatly in tackling terrorism and extremism,' he said, adding that there was a huge fight being waged by the Pakistani Government against terrorists and the United Kingdom had a share in combating terrorism.

Education Sector

On education, Cameron said that the United Kingdom had launched a new package to help Pakistan in imparting education to four million children, training to 90,000 teachers and provision of six million text books.

Responding to a question on spending a huge amount on Pakistan's education, Cameron said his coalition government had increased the overseas budget by 7.7 per cent of the gross national income as it was in the interest of the United Kingdom to support the poorest in the poor countries in education, maternal health and in fighting poverty.

Terming illiteracy a root-cause of terrorism, Gilani said that the focus was on education in Federally Administered Tribal Areas (FATA) and remote areas. He said that more than 30,000 Pakistani students were in Britain for education and called for extending more scholarships. Asked about the visa issues, the British Prime Minister said that the processing had been shifted out of Pakistan 'to make it more efficient.'

Extradition Treaty

When asked about return of former President Pervez Musharraf to Pakistan, David Cameron said that the two countries did not have any extradition treaty and also a 'proper application' was needed to be made to proceed in that regard.

Regarding Pakistan's role on extremism and terrorism, Prime Minister Gilani said Pakistan had rendered unprecedented sacrifices and lost more soldiers and civilians than the combined losses of North Atlantic Treaty Organization (NATO).

Trade Relations

Pakistani President Zardari sought closer ties in other areas, pledging to boost bilateral trade from £1.9 billion a year to £2.5 billion a year by 2015, and announcing up to £650 million over four years for education.

The aid money will help four million children go to school through providing training for 90,000 teachers and six million new textbooks. Cameron promised to continue to advocate for Pakistan to gain enhanced trade access to the European Union, including through GSP.

Strategic Dialogue

The Pakistan-UK strategic dialogue was a significant step and was vital for both sides, for this region and for the world as a whole. The need for the two sides to gear up to achieve the objectives that the two countries have set for both countries in the declaration of enhanced strategic dialogue.

The national security dialogue, comprising political, military and intelligence tracks will lead to creating a better understanding in bringing about clarity on issues of global, regional peace and security.

Peace and Stability in Afghanistan

About the Afghan issue, the president said peace and stability in Afghanistan was necessary for regional peace and emphasized on the Afghan-led peace process in the country rather than foreign led. The president said an appreciation of the dynamics of human relations by the international community was no less important than machines and weapons.

Future ProspectsTo start a new era in the relations between Pakistan and the United Kingdom, the governments and people from both the sides should clear up the misunderstandings of the past, work through the tensions of the present and look together to the opportunities of the future.

UN Resolution Against Libya

With the authorization of the United Nations Security Council (UNSC), the allied forces spearheaded by the United States, France and the United Kingdom launched their large-scale military actions against the military of Muanmmar Gaddafi's regime starting from 19 March.

Ever since the outburst of the massive demonstrations against the authoritarian rule of Gaddafi in Libya, Gaddafi has been taking actions against the dissidents with high-handed crackdown, which include attacking unarmed demonstrators using fighter jets. In the ensuing military actions against the areas controlled by the revolutionist forces, his military have shown no mercy to innocent civilians as well.

Disdainful and Bloody Massacres
Although Libya is a sovereign country, the disdainful and bloody massacres committed by Gaddafi's forces have violated the fundamental values and beliefs commonly recognized by the modern society. The UNSC passed a resolution on 17 March, which approves setting up a no-fly zone in Libya and authorizes the international community to take any necessary measure to protect the Libyan civilians and their residential areas from the threat of armed attacks. We believe that Russia and China, which always insists on the principle of non-interference, had abstained instead of vetoing the resolution this time out of the consideration that the main objective of the UNSC resolution is to protect the common people in Libya. It was also because of this reason that Singapore had made the stance to support the UNSC resolution.

The allied forces have resorted to cruise missiles and combat jets to destroy the air defense system of Gaddafi's military based on the reason that the latter has violated the ceasefire resolution of the UNSC by continuing its attacks against places controlled by the revolutionary forces such as Benghazi. The action is to stop Gaddafi's military from killing or hurting Libyan civilians in their attacks. If we examine from this perspective, the military actions of the allied forces can be considered a justifiable move.

However, it is easy to start the attacks but it is hard to bring it to an end. The UNSC resolution only agrees on setting up a no-fly zone, protecting civilians and imposing harsher sanctions on Libya such as arms embargo and asset freeze. The resolution does not authorize the allied forces to deploy their ground forces to occupy Libya. Under such circumstances, should Gaddafi's military disregard the UNSC resolution and continue their actions in wiping out the revolutionary forces, it seems that the allied forces would have no other more effective measures besides launching 'surgery-style combat' against ground targets in Libya.

If the allied forces accidentally hurt some Libyan civilians who happen to be Gaddafi's supporters, it will not only go against the spirit of the UNSC resolution; instead, such accident will will also be an issue that Gaddafi can utilize to rally pan-Arabic nationalist sentiment in the Arabic world to counter the West.

In fact, Gaddafi has begun to do so. The Arab League was the organization that proposed to set up a no-fly zone in the airspace of Libya initially. Now the secretary-general of the organization Amr Moussa has openly criticized the military actions of the allied forces. He said that 'what happen now in Libya has violated the objectives of setting up a no-fly zone. We need protection of the civilians, not bombings on more civilians.'

Disagreement Within EU
There is also disagreement within the European Union (EU). German Foreign Minister Guido Westerwelle defended his country's abstention in the vote on the UNSC resolution by citing the criticism of the Arab League on the military actions against Libya. He said that Germany is right to adopt a reserved stance on this issue.

It is hard for the allied forces to continue their military actions if they do not have the support from the Arab League. In addition, US President Barack Obama has earlier stated that launching military actions was not his first choice; while the US Defense Secretary Robert Gates also said yesterday that the United States will recede in the coming few days (he stressed repeatedly earlier that the United States would not deploy any ground forces to Libya) and will pass over the command authority to the United Kingdom and France. Judging from these signs, the United States does not want to see aggravation of the situation and has no intention to make Libya a 'second Iraq' or 'second Afghanistan' that will get the US military into a big trouble.

Future Step
Considering various factors such as the lack of adequate authorization from the UNSC, the objection of the Arab League, the absence of consensus among the EU and the reluctance of the United States to lead for long term, it seems that the allied forces' military actions against Libya are just a temporary measure. It is rather unlikely that it will develop into a long war.

The military actions over the past few days should have weakened Gaddafi's military strength to some extent. The next step should be diplomatic actions. They should attempt to persuade Gaddafi to resolve domestic conflicts in a peaceful manner as much as possible. But will there be any effect? We can only observe the subsequent development. After all this is an internal issue of Libya, eventually the Libyan people have to resolve it themselves.

Brazil, Turkey Emerge New Diplomatic Powers

By persuading Iran to ship 1,200 kilograms of low enriched uranium out of the country and receive in return high enriched uranium for use in a reactor in Iran, Turkey and Brazil made a meaningful diplomatic achievement by outwitting the efforts of Western powers which are more akin to intimidation and have an undertone of a war threat.

Nuclear Issue
Reaching a solution through negotiation to overcome the deadlock of the issue of Iran's nuclear program is for the interest of regional and global security.

We should praise Brazil and Turkey, two non-permanent members of the United Nations Security Council (UNSC) for their diplomatic wisdom that they managed to convince Iran to negotiate on the nuclear issue and agree to move away the uranium.

Unfortunately this issue has not won respect or compliment from the Western media, which consider it as too late since the US and Israel have had their strategy in place to attack Iran in the process of imposing more stringent sanctions on Iran.

The President of Brazil, Luiz Inacio Lula da Silva, who will step down this year after holding the post for two terms has successfully led his country towards the status of a big power via this proactive diplomatic approach.

In fact, prior to this, when there was a serious tension between Venezuela, Ecuador and Colombia in 2008, Lula intervened as a neutral mediator crossing the boundaries of political ideology in Latin American countries.

Palestine-Israel Issue
In the endeavor to win a permanent seat in the United Nations Security Council (UNSC), Lula is also aware that his country should be seen as playing the role of problem solver rather than a symbolic role to show its strengths in terms of economic growth and military power.

He has also made the effort to help resolve the conflict between Israel and Palestine through high-profile diplomatic mission in March this year as a neutral party.

In addition, Lula already gained a status on a par with Middle East Quartet and he proposed a friendly soccer match between the Brazilian national team and the Palestinian-Israeli mixed team. The Quartet is formed by the United States, Russia, the European Union (EU) and UN and involved in mediating the peace process between Palestine and Israel.

Although Turkey is not a developing country growing like Brazil, it is also emerging as a respectful power in Middle East.

Ankara also became the mediator in the negotiation process of Israel-Syria conflict to resolve the old settlements issue between the two countries. Turkey also played a role in easing the tension between Hamas and Fatah. Turkey is in a better position than Egypt to play a diplomatic role in resolving the Palestine-Israel issue.

It seems Brazil and Turkey are portraying themselves as the new actors in international relations particularly in diplomatic efforts.

Resolving Deadlock
Amazingly, within a short period, Brazil and Turkey have successfully resolved the deadlock, which the West, UN and the International Atomic Energy Agency (IAEA) had been working on for a long time. More surprisingly, Iran which had been recalcitrant and insistent to enrich the uranium within the country had changed its position because of the persuasion of Brazil and Turkey.