For a government that has been (rightly) pilloried for policy paralysis, the celebration of 20 years of establishment of diplomatic relations with Israel is a rare occasion for the UPAII to claim a degree of coherence in policymaking.
First up, and perhaps most encouragingly, there has been no squeamishness in "celebrating" the occasion. The Foreign Minister is in Tel Aviv for the occasion, a slew of deals are being signed during his visit, an FTA is under negotiation. In short, the whole nine yeards. The optics are clear for everyone to see (and draw conclusions from).
Second, it follows through on a "Look West" policy initiative that has relations with Iran, Saudi Arabia and Israel as its cornerstones.
For Israel, the occasion comes at a time when its social-strategic compact with the rest of the Middle East is undergoing a fundamental shift. Its traditional ally, Turkey, has increasingly taken a position sharply antagonistic, primarily on account of the ruling AKP's aspiration to reinvent Turkey as the primary "tilt" power in the larger muslim and Arab world. The various "springs" in the larger Arab world on the other hand - from Egypt to Bahrain to Syria, bring nervous portends for Israel. Shorn of the rhetoric, Israel had assiduously built a co-existance compact with the Arab street over the decades. The new dispensations taking over from the older autocracies , or those struggling to do the same do not necessarily share with Israel the same covert affinity of fear (of Iran). Nor indeed do the Islamists looking to cut deals in the same manner as Hosni Mubarak or the House of the Saud have been in the past.
At the same time, India has embarked on an ambitious new agenda with the Arab world, primarily woven around economics.
India has historically had a unique position in the Arab world. Not many remember that till the late '60s, the Indian rupee was legal tender in much of the current GCC area. India's support for the Palestinian cause was well in line with the Arab street for a long time. And even the surge in Indo-Israeli relationship has not taken the rhetoric away completely - note that SM Krishna's next after Tel Aviv is going to be Palestine!
While Israel tries to navigate around the emerging Arab world and newer alliances, India can play a unique role in helping the it engage with it afresh. India's in a unique place - its important and credible to Israel in terms of hard dollars, and it is important and credible to the larger Arab world (and Iran, in a delicious twist of potential opportunity!) in terms of hard dollars. There are only two other countries that have the same leverage - US and China. US is not trusted by the Arab street, while the Chinese tango with Israel will always be hamstrung by the large looming reality of US influence within Israel.
This is an opportunity that India cannot miss. By most accounts, it is doing a fair job of it...
Tuesday, January 10, 2012
Monday, January 9, 2012
Bill Gross and interest rates - and he is wrong!
Bill Gross stands corrected: Markets expected to muddle in unchartered territories in 2012
Last year Bill Gross spelt out his bearish outlook on US treasuries for various reasons and he was under-invested treasuries because they offer no upside.
US 10-year Treasury yield (inverse to Treasury prices) closed below 2% to 1.87% for the first time in history. The 10 yr note prices are up nearly 17%.
(Ironically, in the days after S&P downgraded U.S. creditworthiness, investors flocked to U.S. Treasury bonds, and any further downgrades will continue to result in investors seeking the security of U.S. Treasury bonds. The European sovereign debt crisis, the elephant in the room, although nearly not as bad as the nadir a few months ago, is still a significant problem.)
Bill Gross’s latest (Jan 2012) monthly investment outlook indicates his bullish view on U.S treasury bonds as against his bearish views on US treasuries a year back. PIMCO fund’s underperformance (as compared to peer group) is a reflection of it’s under invested positions in US treasuries.
Durations and average maturities should be at their maximum possible limits” states the letter. So now treasuries have value? With the 10-year note yielding under 2%, and the 5-year below 90bp? Of course the answer PIMCO offers is that longer durations should be in TIPS to protect against inflation. But TIPS yield is now negative, so with a 2% inflation rate, one is roughly at the same yield as with the 10-year note.
Conclusions/learning:
1. Globally markets and economies are treading unchartered waters amidst black swan events like the subprime crisis, sovereign credit crisis & Euro zone crisis.
2. Markets continue to surprise the even the best regarded market analyst/strategist.
Last year Bill Gross spelt out his bearish outlook on US treasuries for various reasons and he was under-invested treasuries because they offer no upside.
US 10-year Treasury yield (inverse to Treasury prices) closed below 2% to 1.87% for the first time in history. The 10 yr note prices are up nearly 17%.
(Ironically, in the days after S&P downgraded U.S. creditworthiness, investors flocked to U.S. Treasury bonds, and any further downgrades will continue to result in investors seeking the security of U.S. Treasury bonds. The European sovereign debt crisis, the elephant in the room, although nearly not as bad as the nadir a few months ago, is still a significant problem.)
Bill Gross’s latest (Jan 2012) monthly investment outlook indicates his bullish view on U.S treasury bonds as against his bearish views on US treasuries a year back. PIMCO fund’s underperformance (as compared to peer group) is a reflection of it’s under invested positions in US treasuries.
Durations and average maturities should be at their maximum possible limits” states the letter. So now treasuries have value? With the 10-year note yielding under 2%, and the 5-year below 90bp? Of course the answer PIMCO offers is that longer durations should be in TIPS to protect against inflation. But TIPS yield is now negative, so with a 2% inflation rate, one is roughly at the same yield as with the 10-year note.
Conclusions/learning:
1. Globally markets and economies are treading unchartered waters amidst black swan events like the subprime crisis, sovereign credit crisis & Euro zone crisis.
2. Markets continue to surprise the even the best regarded market analyst/strategist.
Friday, January 6, 2012
Army Chief’s date of birth – much ado masking the real issues
The press, both print and electronic has been abuzz with the date of birth issue over the last couple of weeks. Politicians, never to be expected to let go of opportunities to get into the limelight, have jumped in. On the issue specifically, it is really much ado about little. Disputes over date of birth are par for the course in government services, and happen by the dozens every year at many levels. “Political interference” too is hardly new or unique to this situation – from Nehru’s handling of Gen Thimayya to Indira Gandhi’s supercession of Lt Gens Sinha and Bhagat to Mulayam Singh Yadav’s open interference on blatant caste terms for certain Army commanders – its a reality which hardly needed a caper over the incumbent Chief’s date of birth to unravel. In the present case, all it requires is a bit of common sense on both sides (the good General and the MoD) for the issue to be resolved amicably.
The larger question however is different. Which is of the state of higher management of defence in the country. Nearly 15 years after Kargil, ad hocism mark most decision-making on policy. The K Subramanyam committee recommendations have achieved the status of most “committee” reports in India, ie, be food for termites in a departmental almirah.
Starting from a lack of institution building at the apex level (when was the last meeting of the NSAB?) to continuing interservice quarrels over equipment (latest being the fracas between IAF and IA over ownership of tactical attack choppers), India’s higher level defence management doesnt seem to have changed much since the ’70s!
An integrated service headquarters with MoD is nowhere in the horizon, CDS has not gone beyond intra-service bickerings, and each service arm continues to buy equipment rather than plan for meeting objectives. Importantly, barring some notable exceptions, India continues to try being a military power primarily on imported equipment, the first for any country in recent or distant memory.
In the Indian concepts of “timelessness”, dates are forgotten only too easily. One has only to look at the Kargil lessons to realise this. In that context, the Chief’s date of birth is but a matter of minor detail!
The larger question however is different. Which is of the state of higher management of defence in the country. Nearly 15 years after Kargil, ad hocism mark most decision-making on policy. The K Subramanyam committee recommendations have achieved the status of most “committee” reports in India, ie, be food for termites in a departmental almirah.
Starting from a lack of institution building at the apex level (when was the last meeting of the NSAB?) to continuing interservice quarrels over equipment (latest being the fracas between IAF and IA over ownership of tactical attack choppers), India’s higher level defence management doesnt seem to have changed much since the ’70s!
An integrated service headquarters with MoD is nowhere in the horizon, CDS has not gone beyond intra-service bickerings, and each service arm continues to buy equipment rather than plan for meeting objectives. Importantly, barring some notable exceptions, India continues to try being a military power primarily on imported equipment, the first for any country in recent or distant memory.
In the Indian concepts of “timelessness”, dates are forgotten only too easily. One has only to look at the Kargil lessons to realise this. In that context, the Chief’s date of birth is but a matter of minor detail!
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