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Bloodbath in Egypt

The House of Saud picks a side.

There is chaos in Egypt.  The Muslim Brotherhood and their leader Mohammed Morsi were ousted from power by the Egyptian military in a soft coup last month.  The Brotherhood hasn’t taken kindly to being deposed from power.  This week has seen violence of an unprecedented scale in recent history in Egypt.  Over 750 civilians have been killed since Wednesday.  Without the active intervention of the U.S. and regional powers, that number will rapidly increase and the possibility that Egypt will descend into a long, protracted civil war isn’t far-fetched.

What we’re seeing is a battle between the Old Guard and resurgent Islamist groups in Egypt.  The military-security apparatus’s decades-long dominance is being challenged and neither the Islamists nor the Old Guard are ready to back down.  The victims of the ensuing confrontation are, unfortunately, the ordinary Egyptians.

In the midst of turmoil, Saudi Arabia appears to have picked a horse:

King Abdullah of Saudi Arabia has called on Arabs to stand together against “attempts to destabilise” Egypt.

“The Kingdom of Saudi Arabia, its people and government stood and stands by today with its brothers in Egypt against terrorism,” he said in a statement read on state TV on Friday, backing Egypt’s military leadership.

“I call on the honest men of Egypt and the Arab and Muslim nations … to stand as one man and with one heart in the face of attempts to destabilise a country that is at the forefront of Arab and Muslim history,” he added.

Saudi Arabia “has stood and stands with its Egyptian brothers against terrorism, deviance and sedition, and against those who try to interfere in Egypt’s internal affairs… and its legitimate rights in deterring those tampering with and misleading” its people, he said. [al-Jazeera]

The House of Saud’s endorsement of the Egyptian military may appear odd given Saudi Arabia and the Brotherhood’s commitment to conservative strains of Islam.  However, it is important to distinguish between Wahhabism as a religious and philosophical movement that the Saudis promote (for example in Afghanistan or Pakistan) and the political movements that draw inspiration from Wahhabism.

The Saudis are happy to promote Wahhabism, but have always been very cautious about political Wahhabism.  It should not surprise us then that they are very uneasy with the Brotherhood because they see the movement as a threat to monarchy in the Gulf.  Other Gulf monarchies also endorse the distinction.  The UAE, for example, arrested 30 Egyptians and Emiratis in June on suspicion of ties with the Muslim Brotherhood.

This also explains why Saudi Arabia, the UAE and Qatar have ensured that the Muslim Brotherhood hasn’t gained the kind of foothold in the Gulf that it has in Egypt and the Islamic maghreb.  The absence of the Brotherhood’s mass participation in the politics of the Gulf is not by accident, it is by design.  None of the Gulf monarchies are eager to see the Brotherhood operate in their neighborhood.

Further, where Egypt is concerned, the Saudis have always been among the military-security establishment’s most important supporters.  Gen. Nasser and Mubarak drew strength from Saudi Arabia’s backing.  In fact, it should be surprising that Saudi Arabia’s endorsement of the military-security establishment wasn’t made apparent sooner.

In India’s neighborhood, similar parallels can be drawn with regard to Pakistan, though for different reasons.  The Saudis are likely to always back the Pakistani army over political parties such as the JUI (that draw inspiration from the Muslim Brotherhood).  This is unlikely to change as long as the Saudis see nuclear Pakistan as a bulwark against Iran.  Of course, the Saudis will continue to support the proselytizing of puritanical Wahhabism by religious jamaats in Pakistan, but not to the extent that they begin to pose a challenge to the Pakistani army’s primacy in dictating policy in that country.

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The Khaleej and India

How will the instability in the Gulf impact India’s economy?

Political instability in the Middle East will likely have an impact on India.  We have already seen how the uprisings in Egypt and Libya have affected the lives of the over 18,000 Indians living in that part of the world.  The potential impact of the deteriorating situation in Bahrain will be far greater, where about 300,000 Indian expatriates live.  GCC countries today are home to about 4.3 million Indians.  This, of course, does not include the many undocumented (mostly blue collar) Indian workers in the region.  In some cases (as in Dubai, which experienced an influx of workers in the last decade), the number of undocumented workers as a percentage of the total population of expatriate Indians will be considerable.

But beyond the potential effects to the lives of Indian citizens, political disturbances in the region will also have an impact on India’s economy.  Today, remittances account for about 4% of India’s GDP (considerable, but not as high as other countries in the subcontinent).  Remittances to India as a percentage of GDP have also (somewhat interestingly) increased over time, and with the liberalization of India’s economy (from 1.1% in 1985, 2.8% in 2000 to about 4% in 2008).  As of 2008, the Gulf was the largest source of remittances to India at about 40%:

(Source of data: Reserve Bank of India)

Two important points need to be made here: first, while we already know that India leads other nations in terms of total dollar remittances ($46 billion, 2008), it does not include remittances made via hawala transactions.  Since the September 11 attacks, the U.S. has worked with Gulf countries to strengthen their finance and banking regulations to ensure control over hawala transactions (which, by their very nature, have been helpful to terrorists to finance attacks against the U.S. and India).  However, according to some estimates, hawala remittances to India from the Gulf are still pegged at about 30-40% of legal remittances.  That would effectively put total remittances from the Gulf to India at at least $60 billion.

Second, when one considers remittances as a percentage of net state domestic product (NSDP), some states will likely be far more vulnerable to political uncertainties in the Gulf than others.  According to a study published by the Centre for Development Studies, remittances to Kerala as a percentage of the state’s economy was at 30%.  Further, per data published in the same report, it can be inferred that remittances from the Gulf alone can be pegged at about 28% of the Kerala’s economy.

While the most immediate impact of the repatriation of Indian citizens from a worsening situation in Bahrain could result in a momentary spike in remittances, as some suggest was the case during the first Gulf War, it will undoubtedly have a medium- to long-term impact on the economies of states in India that depend heavily on them.

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Atomic outsourcing

More on the China-Pakistan nuclear deal.

The inimitable K. Subrahmanyam is on target in this Indian Express piece on the motives and implications of the China-Pakistan nuclear deal which envisages China building two 650-MW reactors in Punjab province:

The real issue is the following. According to US nuclear scientists Thomas Reed and Danny Stillman who wrote The Nuclear Express, Deng Xiaoping took a decision to proliferate to selected Marxist and Islamic countries in the early ‘80s including Pakistan, North Korea and Iran…[I]t stands to reason that the Chinese proliferation to Pakistan and proliferation by both countries to Iran were deliberate state-led acts. All subsequent Pakistani proliferation attempts to Iran and Libya were state-sanctioned, and Khan was acting with full approval of successive governments and army chiefs in Pakistan.

China managed to insert a clause aimed at India into the Comprehensive Test Ban Treaty draft, totally in violation of the Vienna Convention on Treaties, that the treaty would enter into force only when India which was totally opposed to the treaty, signed and ratified it. This was a challenge to India’s sovereignty.

The real issue they overlook is the Pakistani nuclear arsenal’s destabilizing effect on West Asia and the strategic gain for China from that phenomenon. On June 7 this year, The Washington Post disclosed that a former CIA officer who managed intelligence reports on Saudi Arabia has sent an uncleared manuscript to Congressional offices claiming that China supplied nuclear missiles to the kingdom early in the George W. Bush administration.

Shia Iran finds itself confronted on two sides by Sunni nuclear-armed powers. Iran has an experience of weapons of mass destruction (chemical weapon) by its Sunni leadership (Saddam Hussein). They face millennium-old Sunni hostility, al-Qaeda and its associates patronized by the Pakistan army regularly target Shias even while praying in mosques. Western analysts are right to worry about an arms race in West Asia. But the origins lie not in Iranian proliferation, but in Chinese-Pakistani proliferation. Iran is only trying to protect itself. The arms race is already on. [Indian Express]

A couple of points to further accentuate these arguments. First, the real issue here is how nuclear non-proliferation regimes have been singularly incapable of both holding China accountable to its non-proliferation commitments and dealing with nuclear proliferation perpetrated by a larger power like China.  While the West fumes and frets over a nuclear Iran or Myanmar’s so-called “nuclear brigade,” the 800-pound giant panda in the room is a China that has been entirely unapologetic about its intent to proliferate.

But then, this has been the defining characteristic of global non-proliferation regimes — they are discriminatory by design.  Recent news reports bring up China’s NSG commitments because of the impending NSG meet in New Zealand.  But there are several non-proliferation treaties that China has violated since 1990 in its decision to supply Islamabad and Pyongyang with nuclear know-how.

Second, China has, from the outset, sought to ensure India’s containment in the subcontinent.  It has pursued this by utilizing Pakistan as a tool — equipping Pakistan with nuclear weapons is just one aspect of this.  Given China’s intentions, India taking up its concerns vis-a-vis Pakistan to Beijing assumes that China can be turned around and that it can play the role of an honest broker in the subcontinent.  However, there is no precedent in the last 60 years to support this well intentioned, but misplaced leap of faith.  China can’t be an “honest-broker” when it is part of the problem.

Finally, as The Filter Coffee has previously pointed out, the impact of China’s actions will be felt most in West  Asia. Pakistan’s deterrence vis-a-vis India has, arguably, been in place since about 2000-2001.  Yet, Pakistan continues to produce nuclear weapons at a frantic pace.  The answer to this apparent disconnect lies in Pakistan’s nuclear commitments to Saudi Arabia.  Iran’s misplaced bravado and miscalculations have largely led to its nuclear isolation; however, the Sunni world is disquieted by Tehran aspirations and has sought refuge under a nuclear umbrella, provided by China, by way of Pakistan.

China’s reckless actions, which have already destabilized the subcontinent, now further complicate matters in an already volatile West Asia.   In addition, its defiance of non-proliferation efforts further accentuates systemic flaws in the global non-proliferation order.  These issues are of consequence to India and the rest of the world.  Myopic editorials on the matter hurt efforts in confronting the reckless behavior of a serial proliferator.

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Sauce for goose

The China-Pakistan nuclear deal: where have all the ayatollahs gone?

The Guardian carried a rather sensationalist piece by Chris McGreal on how Israel had, at one point, offered to sell nuclear weapons to South Africa.  Some in the United States are fuming at the idea that a U.S. “proxy” considered selling nuclear weapons to an “autocratic, unstable state” (South Africa was under apartheid at the time) — somehow, apparently, this undermines the U.S.’s “moral authority.”  It is another matter entirely that this report had little factual basis.

In fact, the outrage that is non-story has generated has largely obscured the very credible, and potentially significant story coming out of Beijing:

Chinese companies will build at least two 650-megawatt reactors at Chashma in Punjab, the Financial Times said.A statement posted on the website of the China National Nuclear Corporation on March 1 said the financing for two new reactors at Chashma was agreed by the two sides in February.

“Our Chinese brothers have once again lived up to our expectations,” the Financial Times quoted an unidentified Pakistani official as saying of the deal, which would help Pakistan cope with a crippling energy crisis. “They have agreed to continue cooperating with us in the nuclear energy field.” [Dawn]

Some sources indicate that the U.S. is unlikely to broach this issue with the Chinese.  In some ways, the Obama administration may feel that this alleviates its own moral burden, faced with increasing pressure from Pakistan for a civilian nuclear deal.  Of course, the administration would be missing the point — Pakistan’s desire for civilian nuclear energy is subordinate to its desire for parity with India in the eyes of the U.S. In that regard, Pakistan’s quest for a nuclear deal with the U.S. has nothing to do with its need for nuclear energy.

The implications of  specific aspects of the China-Pakistan deal will need to be further examined when more information is made available.  If their previous track records are any indication, these reactors will not be subject to IAEA safeguards or inspections.   Other questions exist — will China seek to “grandfather” the new reactors with those it built in Pakistan prior to joining the NSG?  If not, how could China possibly  ensure that an exception is made for Pakistan at the NSG in the event that the reactors are kept out of IAEA’s purview?

Purely from the perspective of strategic balance in South Asia, this deal may not alter much.  However, a couple of issues need to be considered in light of this deal. First, the impact of this deal is of greater consequence to the Middle East than it is to South Asia — particularly to Saudi Arabia and Iran.  Saudi Arabia’s “nuclear-capacity-by-proxy” strategy has paid rich dividends via Pakistan’s frantic acceleration of weapons production on its behalf.  Two 650 MW reactors will give this cozy arrangement fresh impetus, if any was needed.  By extension, this puts considerable strain on Iran’s own nuclear program.

Second, what does the deal say about non-proliferation ayatollahs in the Obama administration? Clearly, altered dynamics after the economic crisis, and China’s importance in negotiating through the nuclear issue with Iran leaves the U.S. with minimal leverage over China.  China, for its part, is using the opportunity to violate the spirit of those existing non-proliferation regimes on a technicality.  Of course, it has been doing this for ages, rather clandestinely.  Now, it does so brazenly.

There may be little that India can do to prevent the deal from going through.  In this context, the 2010 UN NPT RevCon directive to India (and Israel) to sign the NPT is absurd and deserving of contemptuous dismissal. A world order where global nuclear non-proliferation regimes attempt to shackle, curtail and impose significant costs on those willing to abide by established norms, but lack the capacity to punish those who willfully violate them in letter and spirit is unacceptable.   The necessity for India to be at the forefront of defining a new world order where verifiable, non-discriminatory nuclear disarmament is the objective, is felt more acutely now than ever.

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