CANADA AND INDIA NEED TO TAKE ON LEADING ROLE TO GUIDE THE G-20 TOWARDS A BETTER ECONOMIC FUTURE!!

G-20 Leaders gathering in London on 02 April represent 85% of the world's economy. At this meeting:

· The G-20 nations want to reach agreement on more co-ordinated action to revive the world economy, both through more interest rate cuts and more spending by governments to bring economies out of recession;
· Most of the G-20 countries will push for an action plan to prevent a future crisis by strengthening the international regulation of banks and other financial institutions;
· The Group also hopes to agree on a blueprint for future reform, including changes to the international organisations charged with regulating the world economy, such as the International Monetary Fund (IMF), to give a greater clout to poorer countries.

USA is on board with interest rate cuts and more spending by governments, but it is not articulating its views very clearly on reform of international financial architecture. And, on regulation of financial institutions, the US, if anything, is reluctant to appear to be strong proponent of stricter regulatory measures. US’s view on this issue has been at best muffled and confusing.

A report from the G20 working group on regulation has been reportedly leaked to the financial website breakingviews.com. Key recommendations include the strengthening of capital requirements, greater transparency, and more International Monetary Fund (IMF) oversight of systemic risks. It is said that the recommendations closely follow proposed reform of the UK's regulation.

This is where the problem is: A country which has itself made a mess of its economic management is trying to propose changes. The country is question is America’s lackey – Britain. Britain’s banks are in pathetic condition, the top ones needed the government to dole them out of trouble. Britain’s housing mortgage almost mimicked the disastrous American model.

Despite all this the wily schmuck British are trying to pre-empt other countries by drafting some document and throwing it out there. The Brits, whose international stature these days depends on the crumbs thrown their way by their patrons in Washington, generally try to propose something that pleases their American masters.

In case of the current economic mess the countries that have the legitimate credentials to offer changes regarding economic world order, regulation of financial systems are essentially two – Canada and India. The reasons are almost obvious to anybody who is non-partisan, unprejudiced and has some idea of international financial system.

Among the G-7 countries Canada’s banking system is the least affected by current economic turmoil. The financial regulatory framework in Canada seems to have acquitted itself fairly well. The Bank of Canada is presiding over the overall Canadian financial institutions in a reasonably competent manner – its Governor Mike Carney taking necessary steps to provide CPR to the Canadian economy. He also seems to be clued to the stimulus measures being rolled out by the Harper government.

Among developing economies, India has the best credentials, from various standpoints, to offer a suitable blueprint on regulatory framework as well as new economic world order. First, India has the 5th highest GDP (based on PPP) in the world (after US, China, Japan & Germany). India’s central bank has been implementing and managing necessary regulatory framework for the financial institutions in India in a very successful and effective manner for years.

When Asia Pacific countries reeled under currency meltdown in the 90’s, India remained unscathed simply because India’s central bank already had in place effective tools and regulatory structure to prevent any such disaster. India’s economy is predicated on one of the most sensible models – an economy which is around 60% based on internal consumption and rest on export. The Indian economic honchos have displayed a far greater sense of foresight and understanding than their peers in US, Germany, Britain, Japan and other G-20 countries.

USA has no moral or ethical standing to pontificate about new economic world order (including IMF, World Bank) and/or regulatory framework for financial institutions. The current economic global crisis has been engendered by diabolical mutilation of ethical dealings unleashed by the shameless greedy SOB’s of American financial institutions.

These shameless rogues of the US financial system seem incorrigible – they have the audacity to thumb their noses to present administration. The American public and the President et al were dealt with a resounding slap when the AIG executives pocketed bonuses in the excess of $200 Million – and horror of horrors, this amount coming out of government alms! Who knows what stratagems the other US banks and financial institutions are planning to bilk away huge bonus packets for themselves?

Of the other G-7 nations, Germany also seems to be floundering. Therefore, it is also not in the best position to lead any initiative for the required change. China doesn’t make a good candidate for being a leader of change because China’s regulatory framework is not backed by the checks and balances that a democratic country like India has. Brazil is still learning the ropes, and so are the other developing countries of the G-20 club.

In recent G-20 conclaves USA has been urging focus mainly on stimulus, and kind of downplaying need for expeditious action on changes in economic world order and regulation. It is a sad commentary of American intellectual level. A country which boasts of a string of Nobel Laureates in Economics is right now struggling to stay afloat and get back on track!

American budget deficits are turning cavernous by the week; Treasury Secretary Geithner is under pressure. He received implicit support though from his President in March but it will not be easy for him to grapple and subdue the gargantuan economic mess that engulfs the US. Moreover, the highly partisan skulduggery at the Capitol Hill tends to significantly weaken any policy initiative emanating from the White House.

So, in summary the G-20 meeting in April will be best served if Canada and India are given more leeway and opportunity to shape the economic framework of the future. If the US is allowed by the G-18 to ride roughshod over the sensible policy directions, and if their lackeys – the bootlicking schmuck Brits – get a freehand in drafting the policy directions, then God bless the world!

It is time the 18 countries of the G-20 club told the US and its poodle (Britain) to move over to the sidelines and let the more knowledgeable practitioners to fashion the economic future of the world. However, the US and Britain may offer meaningful suggestions, if they can. But if they resorted to dog-in-the-manger policy it will do no good to the current crisis, and it is the US which stands to lose maximum if the world economy goes in a deeper hole rather than come out it. President Obama and Gordon Brown would do well to lend their ears more rather than their tongues!

MR. OBAMA, PLEASE HANDLE INDIA (AND KASHMIR ISSUE) WITH CAUTION!

This is a open letter to President-elect Barack Obama on the above subject.

Dear Mr. Obama,

Hearty congratulations to you on your election to the presidency of United States of America!

Many, including me, heard your comments on your first press conference with great interest. The media is also reporting about your team formation process and the 'deliberate haste' that you are proposing to exercise. So far so good.

However, there are some media reports that suggest that you are considering to bring in former President Clinton to act as a mediator for resolving Kashmir issue. You are reported to have said during your luncheon meeting with Clinton in New York recently, “We should probably try to facilitate a better understanding between India and Pakistan and try to resolve the Kashmir crisis so that Pakistan can stay focused not on India, but on the situation with those militants (on Pak-Afghan border).”

The news is also rife that Gen David H Petraeus, who took over as commander of the US Central Command on October 31 and visited Pakistan and Afghanistan soon after that, has reportedly nominated Ahmed Rashid and Shuja Nawaz, author of the recently published book on Pakistani Army called "Crossed Swords", as members of a brains trust to advise him on a new strategy towards Afghanistan and Pakistan.

Ahmed Rashid (along with Barnett Rubin) in an article in Foreign Affairs called for a “grand bargain” in which the Pakistani state trades a course correction on its western front with a more sustained international effort at resolving the Kashmir dispute with India. Former Pak president Pervez Musharraf justified abandoning the Taliban regime in September 2001 as a legitimate price Pakistan had to pay in order to keep up its support for militants in Kashmir.

But the outgoing US administration rightly found it difficult to accept such a trade-off, especially, after the brutal murder of Wall Street Journal reporter Daniel Pearl which highlighted the fact that there are no walls that separate the terrorists operating in different parts of Pakistan.

Mr. President-elect, the foregoing, which I tried to keep as brief as I could, is meant to provide a background so that I could make a sincere request to you: In your administration's eagerness to deal with anti-American forces in Afghanistan/Pakistan please do not push anything on India regarding Kashmir.

Mr. Obama, American interests will be best served if your administration can get Pakistani military to forswear involvement in politics for all time to come. Once that step is taken in earnest, the policy of building alliances with or tolerating terrorists in Afghanistan, Kashmir and Pakistan itself would naturally come to an end.

Instead of achieving the above, if your advisers get launched on the so-called “grand bargain” trajectory, it will be like trying to address the surface rather than trying to hit the root cause. And, in the process the strong partnership which got built between US-India during the last four years can potentially get undone.

Mr. President-elect, India has unhappy memories of some of your foreign policy advisers — Anthony Lake, Strobe Talbott, Robert Einhorn and Richard Holbrooke. Please tell your State Dept folks to DELINK Kashmir from any US strategy on Afghanistan. It doesn't require much brain to understand that support to any terrorist elements, be it in Kashmir or in any part of the world by any govt (in this case Pakistan) is totally unacceptable.

What I am trying to say, if your policy advisers tell you that to incentivize Pakistan (read Pak military & ISI) to help US in winning against Taleban, US has to mediate and 'solve' Kashmir issue (in some way that would please Pak), there is nothing more foolish, illogical, unethical, unprincipled than this.

If YOU didn't subscribe to anything Bill Ayers purportedly said about radicalism, how can you let your judgement be clouded by any "grand bargain" strategy which predicates itself on pleasing one set of radical elements (i.e. the militants in Kashmir) to almost beg support from a govt (Pakistan) to serve US interests.

If you don't handle the Kashmir issue from moral, logical grounds you may end up screwing up an excellent alliance that got built up between US and India - an alliance which has far more strategic spin-offs for US than one could imagine.

My suggestion to you would be that before embarking on any US-Pak-Afghan policy that potentially impacts India, please have a chat with your running mate, Joe Biden. He will have a lot to contribute in finding a strategy that on one hand will get US its desired outcome, but at the same time it will not seek to bulldoze India in some uncomfortable situation which will have immense potential negative knock-on effect.

You may also like to consult Karl Inderfurth, one of your foreign policy advisers.

I hope you will handle India (and Kashmir issue) in a 'deliberate' and sensible manner. Please remember it takes a long time to build a mutually advantageous alliance; and it takes a far shorter time to weaken and/or destroy that alliance!

With warm regards.