Purulia Exposé: India's best kept secret

Times Now | Apr 28, 2011,

In the wee hours of December 18 1995 a mysterious weapon consignment was dropped from the sky over Joupur Jhalda area under Purulia district of West Bengal. The consignment was discovered the next morning. Until now nobody knew what really happened. Today Kim Davy the seventh man and the leader of the operation reveals everything to TIMES NOW.

My first question to you Niels Christian Nielsen, alias Kim Davy, Why are you choosing to speak out now?

Davy: I am under the danger of being extradited to India as a terrorist, I don't feel I am a terrorist; I have not done anything to harm anyone. On the contrary I have done things to protect people from Communist terror, state sponsored terror and I kept my silence in all those years, 15 years. But now political forces in India are coming out to reach me again as they did 15 years ago and I feel its time to set the record straight.

I will call you Kim Davy because you are known as Kim Davy across the country. Tell me who were these arms meant for and for what purpose, who commissioned this armsdrop?

Davy: The arms were meant for self-protection. It is my complete conviction that if I was tried in a court of law about the legality of dropping arms to protect people against state sponsored Communist terror, I would clear my name because it was legal defence against decades of murder, torture, rape by the CPI(M) in West Bengal. I have seen friends being butchered in front of my eyes for so many years and all I did was to work for the betterment of the rural people of West Bengal. For 15 years, I worked to better the circumstances of the poorest of the poor in West Bengal, but the atrocities committed by the Communist simply became too much when too many friends were tortured to death so we had to defend ourselves against these attacks and that was the whole background of the Purulia arms drop.

Well I don't know if everyone is going to buy that argument but tell me who sent you? My question to you was who commissioned this arms drop and were there any Indians involved?

Davy: Of course there were Indians involved. There were political forces at the centre. There have been for years MPs who had seen the atrocities committed against the people of Purulia district and 24 MPs had signed the petition to the President to intervene to try to protect these people, nothing happened. And finally central government saw and approved the plans to arm the defence of these innocent people.

Name the people, can you name the people?

Davy: I can tell you as much as RAW was informed by external forces and approved of the arms drop months in advance of the arms drop.

Which external forces?

Davy: The communication was between the British intelligence MI5 and RAW. There was a British ex-intelligence officer on board the plane. The Indian authorities knew the flight plan, the people on board, the cargo, the drop zone -- everything was known well in advance and approved well in advance.

You are saying that the Indian government knew and authorised these arms drop over Indian territory by you?

Davy: I am saying that there were political forces in the centre in Delhi who saw it as an opportune way to further their political agenda. You must remember that we are talking ancient history here, but in 1988 centre introduced Presidential rule in Tripura after engaging in supplying arms to different rebel groups there. The same strategy was announced publicly in the beginning of the 90's that there was a decision to introduce Presidential rule in West Bengal and therefore it was seen as a furthering of this agenda that arms were procured to protect local people.

What was your role? You were working with the British and American intelligence officials, were there American intelligence officials also involved or only British?

Davy: To my knowledge there were no Americans involved.

So these were British MI5 which was involved in this and you are saying they told the India's external intelligence agency RAW about it?

Davy: No I am not telling that. This is a well published fact -- go to their webpage and you will see the exact date when MI5 conferred this whole matter to RAW. It is a matter of public knowledge that this coordination was taking place.

This is the reason you are saying that you were able to slip in that night, in 1995? You flew into Indian territory, you are saying you were allowed to fly in, the movement was facilitated and you are saying the Indian government was told about it?

Davy: Well look at the zest of this. It is a matter of public record that RAW was informed on three defined dates by MI5 about the arms drop, the people on board the plane, the drop zone everything was informed. This is a matter of public record. I don't know who in their right mind would fly a plane from the arch enemy of Pakistan into Indian airspace with a load of clandestine weapons without having it cleared by with the Indian authorities. It is unthinkable to do that.

So tell me what happened after that? If you managed to come in, tell me about that flight, where you took it from, how you got the clearances, what assurances you had if you are saying you had some assurances from the Indian side? Who were those assurances coming from?

Davy: That was a lot of questions, can we take them one at a time

Sure, where were the assurances coming from?

Davy: You were saying how did the flight happen, how did I get away afterwards, what did you ask?

No tell me about the first part on how the flight happened, who gave you the assurances that you would be allowed to come in?

Davy: Well, I was in direct contact with an MP who told me that he was in further contact with the Prime Minister's office and on the 16th of December I was called in Karachi by these people who told me that I had to finish the job within 48 hours otherwise the window that they had opened for me would be closed down again. So it was very clear that the communication was on time and clearly it was also defined. It was proven in the court case that the radar station concerned, the Military radar that could have detected this was turned off, was switched off and the order for this came from RAW. So don't take my word for it is what I am saying

Can you name the Member of Parliament. Please?

Davy: We will do that live

Why should we not believe that this is a tall claim?

Davy: Well, I can only repeat that, please verify the facts that I am putting forward for you. Please verify that these contacts between MI5 and RAW did take place, please verify the fact that the radar was turned off, please verify all these external facts and you will see that what I am saying is the only logical explanation of what happened that time

Neils, you just said that you had been called in by some people in Karachi and set about finishing this job in 48 hours. Who are these people? When you mention these people, who are these people?

Davy: Well I can only say to you that immediately after the arms drop went wrong and crew and Peter Bleach was caught, there was an investigation going into a Bihari political connection into the arms drop. And that line of investigation was curiously enough, closed down very shortly afterwards and throughout these 15 years that has passed since, three Parliamentary Commissions in India have been commissioned. Nobody has ever seen the result of those. Though it is a matter of public record outside India that there was this communication between MI5 and RAW it has never been discussed in the Indian public, so everytime that the real story has tried to sneak its way forward in this, it has been clamped down and stopped. For obvious reasons because in the Central government in India it is only to turn a couple of pages and one will know who was behind and why, it is a matter of knowledge, it is not a matter of guesswork.


What about you leaving? In what circumstances did you leave the country? There have been different reports about that, can you elaborate a little bit on that please?

Davy: Well, first I was helped out of the airport in Mumbai and after that I was smuggled out of India to Nepal on the backseat of an MP's car. I can give you the full details and the latest dates when we talk again but it was very clear that those forces that had approved the arms drop did not want me to be interrogated by the CBI or anybody because the story that I can tell, would not have been convenient. Obviously today there must be political forces in India who see it as an opportune time for me to tell the full story and that's why I think the extradition is now on the table.

Neils...in this period when you were, before you disappeared, you vanished from Mumbai airport from what we know, in this period when you were held, were you in touch with the people , like you mentioned the Member of Parliament, were you in touch with those people in this period?

Davy: Before leaving the country you mean?

Yes

Davy: Yes, I was in their care

Where

Davy: First in Delhi, Mumbai, Delhi and then over the border, land border to Nepal

And you were taken in an MP's car into Nepal through the land route

Davy- Right

And there were officials with you?

Davy: I don't know what officials they were. But there was a car in front, a car behind with AK-47 holding guard, the whole way. I obviously did not ask people's name and what there duty was but it was obvious to me that I was being whisked out of the country by people who had the power and the ability to do it


What is your link with the Anandmarg?

Davy- Well, you see for 15 years I worked with development work in Africa, in Central America and especially in India. I worked with the Catholic Church, I worked with Anandmarg. I worked with Greenpeace, with different organizations through these 15 years. The project in Purulia was reference project for all NGO's around the world that I worked with. Everybody referred to the development project of Purulia as the light and the way to do things. To develop grassroots up with local resources with local people. So this project caught the imagination of not only me, but thousands around the world and when we continuously got these reports of people, even an Australian women who was almost killed by the Communist goondas, her name was Patricia. When we saw our volunteers ending up like you see in these pictures here, butchered by the Communists. This made an enormous impression, you must remember that I as a young 19 year old came to Kolkata for the first time, coming from one of the most affluent corners of the world and I saw the suffering in Kolkata and it moved my heart to do something. I had to work tirelessly for 15 years.

Three Points of View: The United States, Pakistan and India

By Peter Zeihan

In recent weeks, STRATFOR has explored how the U.S. government has been seeing its interests in the Middle East and South Asia shift. When it comes down to it, the United States is interested in stability at the highest level — a sort of cold equilibrium among the region’s major players that prevents any one of them, or a coalition of them — from overpowering the others and projecting power outward.

One of al Qaeda’s goals when it attacked the United States in 2001 was bringing about exactly what the United States most wants to avoid. The group hoped to provoke Washington into blundering into the region, enraging populations living under what al Qaeda saw as Western puppet regimes to the extent that they would rise up and unite into a single, continent-spanning Islamic power. The United States so blundered, but the people did not so rise. A transcontinental Islamic caliphate simply was never realistic, no matter how bad the U.S. provocation.

Subsequent military campaigns have since gutted al Qaeda’s ability to plot extraregional attacks. Al Qaeda’s franchises remain dangerous, but the core group is not particularly threatening beyond its hideouts in the Afghan-Pakistani border region.

As for the region, nine years of war have left it much disrupted. When the United States launched its military at the region, there were three balances of power that kept the place stable (or at least self-contained) from the American point of view. All these balances are now faltering. We have already addressed the Iran-Iraq balance of power, which was completely destroyed following the American invasion in 2003. We will address the Israeli-Arab balance of power in the future. This week, we shall dive into the region’s third balance, one that closely borders what will soon be the single largest contingent of U.S. military forces overseas: the Indo-Pakistani balance of power.
Pakistan and the Evolution of U.S. Strategy in Afghanistan

U.S. strategy in Afghanistan has changed dramatically since 2001. The war began in the early morning hours — Pakistan time — after the Sept. 11 attacks. Then-U.S. Secretary of State Colin Powell called up then-Pakistani President Gen. Pervez Musharraf to inform him that he would be assisting the United States against al Qaeda, and if necessary, the Taliban. The key word there is “inform.” The White House had already spoken with — and obtained buy-in from — the leaders of Russia, the United Kingdom, France, China, Israel and, most notably, India. Musharraf was not given a choice in the matter. It was made clear that if he refused assistance, the Americans would consider Pakistan part of the problem rather than part of the solution — all with the blessings of the international community.

Islamabad was terrified — and with good reason; comply or refuse, the demise of Pakistan was an all-too-real potential outcome. The geography of Pakistan is extremely hostile. It is a desert country. What rain the country benefits from falls in the northern Indo-Pakistani border region, where the Himalayas wring moisture out of the monsoons. Those rains form the five rivers of the Greater Indus Valley, and irrigation works from those rivers turn dry areas green.

Accordingly, Pakistan is geographically and geopolitically doomed to perpetual struggle with poverty, instability and authoritarianism. This is because irrigated agriculture is far more expensive and labor-intensive than rain-fed agriculture. Irrigation drains the Indus’ tributaries such that the river is not navigable above Hyderabad, near the coast — drastically raising transport costs and inhibiting economic development. Reasonably well-watered mountains in the northwest guarantee an ethnically distinct population in those regions (the Pashtun), a resilient people prone to resisting the political power of the Punjabis in the Indus Basin. This, combined with the overpowering Indian military, results in a country with remarkably few options for generating capital even as it has remarkably high capital demands.

Islamabad’s one means of acquiring breathing room has involved co-opting the Pashtun population living in the mountainous northwestern periphery of the country. Governments before Musharraf had used Islamism to forge a common identity for these people, which not only included them as part of the Pakistani state (and so reduced their likelihood of rebellion) but also employed many of them as tools of foreign and military policy. Indeed, managing relationships with these disparate and peripheral ethnic populations allowed Pakistan to stabilize its own peripheral territory and to become the dominant outside power in Afghanistan as the Taliban (trained and equipped by Pakistan) took power after the Soviet withdrawal.

Thus, the Americans were ordering the Pakistanis on Sept. 12, 2001, to throw out the one strategy that allowed Pakistan to function. Pakistan complied not just out of fears of the Americans, but also out of fears of a potentially devastating U.S.-Indian alignment against Pakistan over the issue of Islamist terrorism in the wake of the Kashmiri militant attacks on the Indian parliament that almost led India and Pakistan to war in mid-2002. The Musharraf government hence complied, but only as much as it dared, given its own delicate position.

From the Pakistani point of view, things went downhill from there. Musharraf faced mounting opposition to his relationship with the Americans from the Pakistani public at large, from the army and intelligence staff who had forged relations with the militants and, of course, from the militants themselves. Pakistan’s halfhearted assistance to the Americans meant militants of all stripes — Afghan, Pakistani, Arab and others — were able to seek succor on the Pakistani side of the border, and then launch attacks against U.S. forces on the Afghan side of the border. The result was even more intense American political pressure on Pakistan to police its own militants and foreign militants seeking shelter there. Meanwhile, what assistance Pakistan did provide to the Americans led to the rise of a new batch of homegrown militants — the Pakistani Taliban — who sought to wreck the U.S.-Pakistani relationship by bringing down the government in Islamabad.
The Indian Perspective

The period between the Soviet collapse and the rise of the Taliban — the 1990s — saw India at a historical ebb in the power balance with Pakistan. The American reaction to the Sept. 11, 2001, attacks changed all that. The U.S. military had eliminated Pakistan’s proxy government in Afghanistan, and ongoing American pressure was buckling the support structures that allowed Pakistan to function. So long as matters continued on this trajectory, New Delhi saw itself on track for a historically unprecedented dominance of the subcontinent.

But the American commitment to Afghanistan is not without its limits, and American pressure was not sustainable. At its heart, Afghanistan is a landlocked knot of arid mountains without the sort of sheltered, arable geography that is likely to give rise to a stable — much less economically viable — state. Any military reality that the Americans imposed would last only so long as U.S. forces remained in the country.

The alternative now being pursued is the current effort at Vietnamization of the conflict as a means of facilitating a full U.S. withdrawal. In order to keep the country from returning to the sort of anarchy that gave rise to al Qaeda, the United States needed a local power to oversee matters in Afghanistan. The only viable alternative — though the Americans had been berating it for years — was Pakistan.

If U.S. and Pakistan interests could be aligned, matters could fall into place rather quickly — and so they did once Islamabad realized the breadth and dangerous implications of its domestic insurgency. The five-year, $7.5 billion U.S. aid package to Pakistan approved in 2009 not only helped secure the arrangement, it likely reflects it. An unprecedented counterinsurgency and counterterrorism campaign conducted by the Pakistani military continues in the country’s tribal belt. While it has not focused on all the individuals and entities Washington might like, it has created real pressure on the Pakistani side of the border that has facilitated efforts on the Afghan side. For example, Islamabad has found a dramatic increase in American unmanned aerial vehicle strikes tolerable because at least some of those strikes are hitting Pakistani Taliban targets, as opposed to Afghan Taliban targets. The message is that certain rules cannot be broken without consequences.

Ultimately, with long experience bleeding the Soviets in Afghanistan, the United States was inherently wary of becoming involved in Afghanistan. In recent years, it has become all too clear how distant the prospect of a stable Afghanistan is. A tribal-ethnic balance of power overseen by Pakistan is another matter entirely, however. The great irony is that such a success could make the region look remarkably like it did on Sept. 10, 2001.

This would represent a reversal of India’s recent fortunes. In 10 years, India has gone from a historic low in the power balance with Pakistan to a historic high, watching U.S. support for Pakistan shift to pressure on Islamabad to do the kinds of things (if not the precise actions) India had long clamored for.

But now, U.S. and Pakistani interests not only appear aligned again, the two countries appear to be laying groundwork for the incorporation of elements of the Taliban into the Afghan state. The Indians are concerned that with American underwriting, the Pakistanis not only may be about to re-emerge as a major check on Indian ambitions, but in a form eerily familiar to the sort of state-militant partnership that so effectively limited Indian power in the past. They are right. The Indians also are concerned that Pakistani promises to the Americans about what sort of behavior militants in Afghanistan will be allowed to engage in will not sufficiently limit the militants’ activities — and in any event will do little to nothing to address the Kashmiri militant issue. Here, too, the Indians are probably right. The Americans want to leave — and if the price of departure is leaving behind an emboldened Pakistan supporting a militant structure that can target India, the Americans seem fine with making India pay that price.

Read more: Three Points of View: The United States, Pakistan and India | STRATFOR

China and the End of the Deng Dynasty

By Matthew Gertken and Jennifer Richmond

Beijing has become noticeably more anxious than usual in recent months, launching one of the more high-profile security campaigns to suppress political dissent since the aftermath of the Tiananmen Square crackdown in 1989. Journalists, bloggers, artists, Christians and others have been arrested or have disappeared in a crackdown prompted by fears that foreign forces and domestic dissidents have hatched any number of “Jasmine” gatherings inspired by recent events in the Middle East. More remarkable than the small, foreign-coordinated protests, however, has been the state’s aggressive and erratic reaction to them.

Meanwhile, the Chinese economy has maintained a furious pace of credit-fueled growth despite authorities’ repeated claims of working to slow growth down to prevent excessive inflation and systemic financial risks. The government’s cautious approach to fighting inflation has emboldened local governments and state companies, which benefit from rapid growth. Yet the risk to socio-political stability posed by inflation, expected to peak in springtime, has provoked a gradually tougher stance. The government thus faces twin perils of economic overheating on one side and overcorrection on the other, either of which could trigger an outburst of social unrest — and both of which have led to increasingly erratic policymaking.

These security and economic challenges are taking place at a time when the transition from the so-called fourth generation of leaders to the fifth generation in 2012 is under way. The transition has heightened disagreements over economic policy and insecurities over social stability, further complicating attempts to coordinate effective policy. Yet something deeper is driving the Communist Party of China’s (CPC’s) anxiety and heavy-handed security measures: the need to transform the country’s entire economic model, which carries hazards that the Party fears will jeopardize its very legitimacy.

Deng’s Model

Former paramount leader Deng Xiaoping is well known for launching China’s emergence from Mao’s Cultural Revolution and inaugurating the rise of a modern, internationally oriented economic giant. Deng’s model rested on three pillars.

The first was economic pragmatism, allowing for capitalist-style incentives domestically and channels for international trade. Deng paved the way for a growth boom that would provide employment and put an end to the preceding decade of civil strife. The CPC’s legitimacy thus famously became linked to the country’s economic success rather than to ideological zeal and class warfare.

The second pillar was a foreign policy of cooperation. The lack of emphasis on political ideology opened space for international maneuver, with economic cooperation the basis for new relationships. This gave enormous impetus to the Sino-American detente Nixon and Mao initiated. In Deng’s words, China would maintain a low profile and avoid taking the lead. China would remain unobtrusive to befriend and do business with almost any country — as long as it recognized Beijing as the one and only China.

The third pillar was the primacy of the CPC’s system. Reform of the political system along the lines of Western countries could be envisioned, but in practice would be deferred. That the reform process in no way would be allowed to undermine Party supremacy was sealed after the mass protests at Tiananmen, which the military crushed after a dangerous intra-Party struggle. The People’s Liberation Army (PLA) and the People’s Armed Police would serve as Deng’s “Great Wall of steel” protecting the Party from insurrection.

For three decades, Deng’s model remained mostly intact. Though important modifications and shifts occurred, the general framework stands because Chinese-style capitalism and partnership with the United States have served the country well. Deng also secured his policy by establishing a succession plan: He was instrumental in setting up his immediate successor, Jiang Zemin, and Jiang’s successor, current President Hu Jintao.

Hu’s policies have not differed widely in practice from Deng’s. China’s response to the global economic crisis in 2008 revealed that Hu sought recourse to the same export- and investment-driven growth as his predecessors. Hu’s plans of boosting household consumption have failed, the economy is more off-balance than ever, and the interior remains badly in need of development. But along the general lines of Deng’s policy, the country has continued to grow and stay out of major conflict with the United States and others, and the Party has maintained indisputable control.

Emergent Challenges

Unprecedented challenges to Deng’s model have emerged in recent years. These are not challenges involving individuals; rather, they come from changes in the Chinese and international systems.

First, more clearly than ever, China’s economic model is in need of restructuring. Economic crisis and its aftermath in the developed world have caused a shortfall in foreign demand, and rising costs of labor and raw materials are eroding China’s comparative advantage even as its export sector and industries have built up extraordinary overcapacity.

Theoretically, the answer has been to boost household consumption and rebalance growth — the Hu administration’s policy — but this plan carries extreme hazards if aggressively pursued. If consumption cannot be generated quickly enough to pick up the slack — and it cannot within the decade period that China’s leaders envision — then growth will slow sharply and unemployment will rise. These would be serious threats to the CPC, the legitimacy of which rests on providing growth. Hence, the attempt at economic transition has hardly begun.

Not coincidentally, movements have arisen that seek to restore the Party’s legitimacy to a basis not of economics but of political power. Hu’s faction, rooted in the Chinese Communist Youth League (CCYL), has a doctrine of wealth redistribution and Party orientation. It is set to expand its control when the sixth generation of leaders arrives. This trend also exists on the other side of the factional divide. Bo Xilai, the popular Party chief in Chongqing, is a “princeling.” Princelings are the children of Communist revolutionaries, who often receive prized positions in state leadership, large state-owned enterprises and the military. This group is expected to gain the advantage in the core leadership after the 2012 transition. Bo made himself popular by striking down organized-crime leaders who had grown rich and powerful from new money and by bribing officials. Bo’s campaign of nostalgia for the Mao era, including singing revolutionary songs and launching a “Red microblog” on the Internet, has proved hugely popular. It also has added an unusual degree of public support to his bid for a spot on the Politburo Standing Committee in 2012. Both sides appeal to the inherent value of the Party, rather than its role as economic steward, for justification.

The second challenge to Deng’s legacy has arisen from the military’s growing self-confidence and confrontational attitude toward foreign rivals, a stance popular with an increasingly nationalist domestic audience. The foreign policy of inoffensiveness for the sake of commerce thus has been challenged from within. Vastly more dependent on foreign natural resources, and yet insecure over prices and vulnerability of supply lines, China has turned to the PLA to take a greater role in protecting its global interests, especially in the maritime realm. As a result, the PLA has become more forceful in driving its policies.

In recent years, China has pushed harder on territorial claims and more staunchly defended partners like North Korea, Iran, Pakistan and Myanmar. This trend, especially observable throughout 2010, has alarmed China’s neighbors and the United States. The PLA is not the only institution that seems increasingly bold. Chinese government officials and state companies have also caused worry among foreigners. But the military acting this way sends a particularly strong signal abroad.

And third, Deng’s avoidance of political reform may be becoming harder to maintain. The stark disparities in wealth and public services between social classes and regions have fueled dissatisfaction. Arbitrary power, selective enforcement of the law, official and corporate corruption, and other ills have gnawed at public content, giving rise to more and more frequent incidents and outbursts. The social fabric has been torn, and leaders fear that it could ignite with widespread unrest. Simultaneously, rising education, incomes and new forms of social organization like non-governmental organizations and the Internet have given rise to greater demands and new means of coordination among dissidents or opposition movements.

In this atmosphere, Premier Wen Jiabao has become outspoken, calling for the Party to pursue political reforms in keeping with economic reforms. Wen’s comments contain just enough ambiguity to suggest that he is promoting substantial change and diverging from the Party, though in fact he may intend them only to pacify people by preserving hope for changes in the unspecified future. Regardless, it is becoming harder for the Party to maintain economic development without addressing political grievances. Political changes seem necessary not only for the sake of pursuing oft-declared plans to unleash household consumption and domestic innovation and services, but also to ease social discontent. The Party realizes that reform is inevitable, but questions how to do it while retaining control. The possibility that the Party could split on the question of political reform, as happened in the 1980s, thus has re-emerged.

These new challenges to the Deng approach reveal a rising uncertainty in China about whether his solutions are adequate to secure the country’s future. Essentially, the rise of Maoist nostalgia, the princelings’ glorification of their Communist bloodline and the CCYL’s promotion of ideology and wealth redistribution imply a growing fear that the economic transition may fail, and that the Party therefore may need a more deeply layered security presence to control society at all levels and a more ideological basis for the legitimacy of its rule. Meanwhile, a more assertive military implies growing fears that a foreign policy of meekness and amiability is insufficient to protect China’s access to foreign trade from those who feel threatened by China’s rising power, such as Japan, India or the United States. Finally, a more strident premier in favor of political reform suggests fear that growing demands for political change will lead to upheaval unless they are addressed and alleviated.

Containing the Risks

These emerging trends have not become predominant yet. At this moment, Beijing is struggling to contain these challenges to the status quo within the same cycle of tightening and loosening control that has characterized the past three decades. Though the cycle is still recognizable, the fluctuations are widening — and the policy reactions are becoming more sudden and extreme.

The country is continuing to pursue the same path of economic development, even sacrificing more ambitious rebalancing to re-emphasize, in the 2011-15 Five-Year Plan, what are basically the traditional methods of growth. These include massive credit expansion fueling large-scale infrastructure expansion and technology upgrades for the export-oriented manufacturing sector, all provided for by transferring wealth from depositors to state-owned corporations and local governments. Modifications to the status quo have been slight, and radical transformation of the overall growth model has not yet borne fruit.

In 2011, China’s leaders also have signaled a swing away from last year’s foreign policy assertiveness. Hu and Obama met in Washington in January and declared a thaw in relations. Recently, Hu announced a “new security concept” for the region. He said that cooperation and peaceful negotiation remain official Chinese policy, and that China respects the “presence and interests” of outsiders in the region, a new and significant comment in light of the U.S. re-engagement with the region. The United States has approved China’s backpedaling, saying the Chinese navy has been less assertive this year than the last, and Washington has since toned down its own threats. China’s retreat is not permanent, and none of its neighbors have forgotten its more threatening side. But China has signaled an attempt to diminish tensions, as it has done in the past, to avoid provoking real trouble abroad (while focusing on troubles at home) for the time being.

Finally, the security crackdown under way since February — part of a longer trend of security tightening since at least 2008, but with remarkable new elements — shows that the state remains committed to Deng’s general deferral of political reform, choosing strict social control instead.

The Deng model thus has not yet been dismantled. But the new currents of military assertiveness, ideological zeal and demand for political reform have revealed not only differences in vision among the elite, but a rising concern among them for their positions ahead of the leadership transition. Sackings and promotions already are accelerating. Unorthodox trends suggest that leaders and institutions are hedging political bets to protect themselves, their interests and their cliques in case the economic transition goes wrong or foreigners take advantage of China’s vulnerabilities, or ideological division and social revolt threaten the Party. And this betrays deep uncertainties.

The Gravity of 2012

As the jockeying for power ahead of the 2012 transition has already begun in earnest, signs of vacillating and conflicting policy directives suggest that the regime is in a constant state of policy adjustment to try to avoid an extreme shift in one direction or another. Tensions are rising between leaders as they try to secure their positions without upsetting the balance and jeopardizing a smooth transfer of power. The government’s arrests of dissidents underline its fear of these growing tensions, as well as its sharp reactions to threats that could disrupt the transition or cause broader instability. Everything is in flux, and the cracks in the system are widening.

One major question is how long the Party will be able to maintain the current high level of vigilance without triggering a backlash. The government effectively has silenced critics deemed possible of fomenting a larger movement. The masses have yet to rally in significant numbers in a coordinated way that could threaten the state. But the regime has responded disproportionately to the organizational capabilities that the small Jasmine protests demonstrated, and has extended this magnified response to a number of otherwise-familiar spontaneous protests and incidents of unrest.

As security becomes more oppressive in the lead up to the transition — with any easing of control unlikely before then or even in the following year as the new government seeks to consolidate power — the heavy hand of the state runs the risk of provoking exactly the type of incident it hopes to prevent. Excessive brutality, or a high-profile mistake or incident that acts as a catalyst, could spark spontaneous domestic protests with the potential to spread.

Contrasting Deng’s situation with Hu’s is illuminating. When Deng sought to step down, his primary challenges were how to loosen economic control, how to create a foreign policy conducive to trade, and how to forestall democratic challenges to the regime. He also had to leverage his prestige in the military and Party to establish a reliable succession plan from Jiang to Hu that would set the country on a prosperous path.

As Hu seeks to step down, his challenges are to prevent economic overheating, counter any humiliating turn in foreign affairs such as greater U.S. pressure, and forestall unrest from economic left-behinds, migrants or other aggrieved groups. Hu cannot allow the Party (or his legacy) to be damaged by mass protests or economic collapse on his watch. Yet, like Jiang, he has to control the process without having Deng’s prestige among the military ranks and without a succession plan clad in Deng’s armor.

More challenging still, he has to do so without a solid succession plan. Hu is the last Chinese leader Deng directly appointed. It is not clear whether China’s next generation of leaders will augment Deng’s theory, or discard it. But it is clear that China is taking on a challenge much greater than a change in president or administration. It is an existential crisis, and the regime has few choices: continue delaying change even if it means a bigger catastrophe in the future; undertake wrenching economic and political reforms that might risk regime survival; or retrench and sacrifice the economy to maintain CPC rule and domestic security. China has already waded deep into a total economic transformation unlike anything since 1978, and at the greatest risk to the Party’s legitimacy since 1989. The emerging trends suggest a likely break from Deng’s position toward heavier state intervention in the economy, more contentious relationships with neighbors, and a Party that rules primarily through ideology and social control.

Read more: China and the End of the Deng Dynasty | STRATFOR

Kate Middleton and Princess Diana – worlds apart

LONDON (AFP) – From the moment Prince William put his mother's sapphire and diamond ring on Kate Middleton's finger, comparisons between his wife-to-be and the late princess Diana became inevitable.

More than a decade after Diana's death, the "People's Princess" remains adored and the new royal bride will be measured against the young, shy blonde who captivated the world at her wedding to Prince Charles in 1981.

The royals are understandably wary of comparisons between the two women, and William himself insisted soon after the engagement that "no one is trying to fill my mother's shoes".

Diana's marriage was a famously unhappy union which broke down amid infidelity on both sides, ending in a bitter divorce and then tragedy, when the princess died in a Paris car crash in 1997.

It is not a tale to comfort a nervous bride, but fortunately, commentators see more differences than similarities between the two women.

Despite her lack of aristocratic blood, Kate will be far better prepared than Diana ever was for royal life when she walks down the aisle of Westminster Abbey on April 29.

"Kate's been very carefully groomed, it's been a long process over a period of time and she's got people around her who understand the modern media.

"She knows exactly what she's getting," said Max Clifford, a top British PR man who has represented many celebrities.

Kate and William have been together for eight years, whereas Diana was courted for just six months. In fact, Kate has been waiting so long for her boyfriend to pop the question that the press dubbed her "Waity Katy".

But Clifford says the length of time puts their relationship on a strong footing, saying "William seems to be totally in love with her and vice versa".

The young couple have had a very modern courtship.

They lived together while at St Andrews University in Scotland, where they met, and in recent months Kate has stayed with William on the island of Anglesey in Wales, where he works as a helicopter search and rescue pilot.

At the age of 29, Kate also has considerable life experience compared to Diana, who was only 20 on her wedding day, 12 years younger than Charles. Just five months separate Kate and William, who is 28.

Diana had left school before finishing her studies and her work experience was limited to a stint at a nursery.

By contrast, Kate graduated with a degree in art history from a top university, although her jobs as an accessories buyer for a clothing brand and then for her family's party goods firm have been criticised as lightweight.

Kate also had a happier and more stable childhood than Diana, whose parents divorced when she was young. Kate is close to her mother Carole and sister Pippa, her maid of honour, and says her family is a major source of support.

Up to now, William's bride has also had a better relationship with the press, which hounded the late princess right up to the moment of her death.

Despite a rocky start following Kate's move to London after graduation, when photographers mobbed her every time she left the house, warning letters from lawyers and the palace have caused the media to back off.

Kate "is an intelligent girl. She has a good head on her shoulders and is so much older than Diana was and she knows William," said royal historian Hugo Vickers.

The royal family "must be delighted. She's cautious. She's very measured -- confidence is not quite the right word, but she is assured," he added.

Diana was beautiful, charismatic and almost universally loved, but she was also unstable and the explosive fallout of her split with Charles cast a pall over the royal family that is only now starting to lift.

She also overshadowed the other royals, staying firmly in the limelight even after the divorce through her charitable causes.

"Diana became far more popular worldwide than the royal family, and in this country -- she was the one everyone wanted to see, wanted to hear, wanted to be around," said Clifford.

The royals "would have learned from that", he said.

Kate has shown no sign of Diana's love of publicity, although only time will tell how far her careful plans survive the pressure of being a fully paid-up member of the royal family.

Cowering before a Sunflower Seed: Why China is not a great power

here are many measures of a nation's power. Almost all are deeply flawed. The U.S. Commerce Department team that originally devised the concept of gross domestic product warned it should not be used as a measure of a nation's true economic health because it was too limited and left too many factors out. Defense spending only partially captures a nation's military capabilities because other factors -- like the political will to use force -- are so crucial to the equation. Resources are good to have but can be a curse if a nation grows too complacent about other aspects of their development because of them. Great populations are a potential source of fantastic power if the people are educated and well-employed and share the goals of the government but as we regularly see, that is often not the case.

But one unfailingly good indicator of a nation's real strength is the nature of the enemies or adversaries it fears. Truly great powers do not fear small threats or, if they come to, they diminish themselves and lift up the small. The United States has illustrated this phenomenon well as it reorganized its entire national security apparatus to respond to the threat of hundreds or perhaps a few thousands of largely disorganized terrorists of limited capabilities, extreme views, and little geopolitical traction.

But however egregious America's over-reaction to the terrorist threat was and however grotesquely it led to the perversion of our values and the undermining of our international standing, it seems positively rational and even ennobling compared to the degree to which China cowers in the presence of old men, artists, religious sects, and even words. In this, China joins the ranks of other seemingly "great" powers from Nazi Germany to Soviet Russia that signaled their fundamental weakness even as they bulked up their armies and posed and postured on the world stage. Great states and great men do not fear the little guy so much that they demonize him, outlaw the expression of his views, or throw him in prison.

Yet that is just what is happening again in China as the whiff of jasmine from the Middle East wafts through its society. The Chinese were so afraid of words like "demonstration" and "protest" and even "jasmine" that they monitored and censored them on the web. They turned out police at the first signs of unrest. And they have rounded up dissidents.

Among those arrested now is avant-garde artist Ai Weiwei. Apparently the government of the world's most populous country, the world's second biggest economy, the country that spends more on defense than all others but one, is afraid of a man who perhaps best known for an installation at the Tate Gallery in London consisting of a million hand-painted porcelain sunflower seeds. He is a prolific artist and communicator and has become a thorn in the side of the Chinese regime even after he was one of the designers behind the famous "bird's nest" stadium that became a symbol of the country during the Beijing Olympics. But he is also just one man, just an artist. Just as jailed Nobel laureate Liu Xiabao is just one man.

Outgoing U.S. Ambassador to China and likely Republican presidential contender Jon Huntsman saluted both men in an address in Beijing on Wednesday stating that they, "challenge the Chinese government to serve the public in all cases and at all times." That is the kind of challenge any government should relish. It is why governments exist. And for the leaders in Bejing to shrink and wince and draw back in the presence of these individuals and their ideas sends a clear message.

Beijing is afraid. They clearly recognize something that most observers in the world downplay. While Japan may be threatened by the fault lines on which the island is build, China is built on a volcano. Social unrest seethes just beneath the surface with hundreds of millions of unemployed, underemployed and otherwise disenfranchised people -- many very well educated and attuned to the opportunities they would have elsewhere in the world -- posing a constant threat to the current government, once revolutionary, now just another ancien regime clinging to power.

They are afraid of Ai because they know they are smaller than his ideas, smaller than all those sunflower seeds, all appearing small, all full of huge potential, straining at their shells and waiting for nature to take its course. China is big and home to a great culture. But through its fears and who it fears it reveals itself to still be a long way from being anything like a great power.

Russia's Crime Of The Century

How crooked officials pulled off a massive scam, spent millions on Dubai real estate, and killed my partner when he tried to expose them.

BY JAMISON FIRESTONE | APRIL 20, 2011

If there remains any pretense that justice and rule of law exist in Moscow today, that notion should now be counted as pure fantasy. The case of Sergei Magnitsky -- a senior partner at my law firm who was imprisoned, tortured, and murdered after his efforts to shed light on a massive governmental fraud by Interior Ministry officials stealing subsidiaries of my client's company, the Hermitage Fund, and the $230 million of taxes they had paid -- has illuminated the cruelty and criminality of Russian legal enforcement. And new evidence released last week on YouTube as part of the broad campaign seeking justice for Sergei, goes even further -- exposing the blatant theft, impunity, and ill-gotten gains of senior Russian tax officials who were complicit in the fraud and subsequent murder of my colleague.

The very bureaucrats -- government tax officials on modest salaries in Moscow Tax Office 28 -- exposed by Sergei three years ago of perpetrating the massive fraud stashed millions of dollars in overseas bank accounts, created offshore companies, and purchased luxury villas in Dubai, Montenegro, and Moscow. Worse still, the Kremlin and Russian President Dmitry Medvedev, in particular, have refused -- out of embarrassment, inability, culpability, or incompetence -- to review and prosecute what is now overwhelming evidence of this clear crime.

When I opened my law firm, Firestone Duncan, in Moscow in 1993, I was aware of the dangers of doing business in Russia. The stories about "mafia" groups of tracksuited thugs extorting businesses were well known to me. What I never expected was that the Russian mafia would merge with the government; its members are now the same officials who are supposed to be protecting the public.

The story begins in July 2007, when Russian Interior Ministry officers Artem Kuznetsov and Pavel Karpov raided my law offices in Moscow and seized without a warrant two vanloads of documents and corporate seals (imprints that go along with the signature on any signed document in Russia) from companies belonging to my firm's clients, including the Hermitage Fund, which had once been Russia's largest foreign investor. At the time, one of my junior lawyers protested that their search was illegal. He was taken into a conference room by the officers and beaten so severely that he was hospitalized for three weeks.

A few months later, we learned that the materials seized by the police had been handed over to a criminal group that used them to fraudulently re-register the companies under the name of a frontman, the convicted murderer, Viktor Markelov. Markelov had been recently released from pretrial detention on an unrelated kidnapping and extortion charge involving the same officers, Kuznetsov and Karpov. The seized documents were also used to create $1 billion of fake backdated contracts. Markelov and two other ex-convicts were made directors of the re-registered companies and, through their lawyers, pleaded guilty in several regional courts to $1 billion in these fake liabilities. We learned this from a bailiff in the St. Petersburg court who called our office looking for hundreds of millions of dollars of assets to satisfy those claims.

At this point, Sergei got involved. He started investigating the scheme and, after a few weeks, pieced the story together through court records, registration files, and bank statements. He prepared a number of very detailed criminal complaints against the police officers and perpetrators involved in the massive fraud. These complaints were filed with the most senior Russian law enforcement authorities on Dec. 3, 2007. The police did nothing.

Three weeks later, on Christmas Eve 2007, the stolen firms under Markelov's name applied for a refund of $230 million in taxes that the Hermitage Fund companies had paid one year earlier. It was the largest tax refund in Russian history -- and it was granted in one day by Olga Stepanova, head of Moscow's Tax Office 28, and her colleague in Moscow Tax Office 25, Elena Khimina. The money was then wired to a small Russian bank, Universal Savings Bank, owned by another convicted criminal, Dmitry Kluyev. The money then left Russia through the Austria-based Raiffeisen bank and was later funneled through Citibank and JPMorgan Chase.

We were shocked by the theft of the Hermitage companies and the fake court judgments, but when we discovered the $230 million refund, we knew something was spectacularly wrong. It wasn't just a crime against Hermitage -- it was also a massive crime against the Russian state. Something had to be done. Sergei, in particular, was adamant that criminal complaints be filed with every single law enforcement agency in Russia. His logic: Even if there were a few bad apples in the system, surely once the Russian leadership realized that hundreds of millions of dollars had been stolen from state coffers, then the "big guns" would be rolled out to arrest the corrupt officials and criminals involved. Sergei volunteered to give a sworn testimony to the Russian State Investigative Committee about the collaboration of Russian police and tax officials with organized criminals in stealing millions from taxpayers.

Sergei testified against officers Kuznetsov and Karpov on Oct. 7, 2008. The next month, on Nov. 24, he was arrested by three subordinates of Kuznetsov under a case opened by Karpov. He was thrown behind bars at the Interior Ministry's detention center on Petrovka Street in Moscow, where they tortured him to force him to withdraw his testimony and sign a false confession saying he was the one who stole the $230 million.

The case against Sergei was assigned to Maj. Oleg Silchenko of the Interior Ministry. Silchenko transferred Sergei between detention centers in secrecy; refused to allow Sergei contact with his wife, mother, and children; denied all his legal requests; and put emotional and psychological pressure on him to retract his testimony against officers Kuznetsov and Karpov. Sergei, however, continued while in detention to insist on his testimony while in detention -- evidence that exposed the partnership between government officials and organized crime. But Silchenko did not investigate Sergei's evidence. Silchenko was working together with Kuznetsov -- who had been assigned to this investigation by senior Russian Interior Ministry brass -- to cover up the theft of the $230 million

The more Sergei insisted on his testimony in sworn statements and in court, the more pressure Silchenko applied to him. He was put in a cell with eight inmates and only four beds so the detainees had to sleep in shifts. In December 2008, he was put in a cell with no heat and no windowpanes -- he nearly froze to death. Later, he was moved to another cell with no toilet, just a hole in the floor where the sewage overflowed.

After six months of this treatment, Sergei -- who went into detention a healthy 36-year-old man -- had lost 40 pounds. He developed pancreatitis and gallstones and needed medical attention. In July 2009, Sergei was moved to Butyrka, a maximum-security facility that had no medical facilities. At Butyrka, Silchenko repeatedly denied medical care to Sergei, hoping that it would break him. Sergei remained defiant and continued to write complaints about his innocence and the pressure applied to him. But nearly one year after his arrest, on the night of Nov. 16, 2009, he became gravely ill. He was transferred to the intensive-care wing of Matrosskaya Tishina detention center, but instead of receiving medical attention, he was put in a straitjacket, chained to a bed, and left by himself in an isolation cell for one hour and 18 minutes while doctors waited right outside the door until they were certain he was dead.

On the eve of the one-year anniversary of Sergei's death, the Interior Ministry called a news conference to announce the findings of Silchenko's investigation. The entire highly sophisticated $230 million tax fraud conspiracy was pinned on two minor criminal participants, Markelov and one other frontman who turned themselves in and "confessed" to the crime, and who in turn named three dead men as their accomplices. The two confessors were tried in secret hearings and were given the minimum sentence of five years. They were not asked about the stolen money or their connections with officers Kuznetsov and Karpov.

In the news conference, the Interior Ministry announced that Sergei had masterminded the fraud. He was accused of organizing the very conspiracy to which he had alerted the government. The government's sole evidence of Sergei's guilt was the hearsay of the two convicts who "confessed" to their role in the crime and who Sergei had asked authorities to arrest in early December of 2007 before any money was stolen.

Furthermore, Interior Ministry officials stated that according to their findings, the tax officials were innocent and were themselves victims of the crime. They had simply been tricked into refunding the money. They went on to say that the bank that received the stolen funds was owned by another dead person. To cap it all they announced that the stolen government money could not be found -- a truck transporting the records had apparently crashed and exploded. Karpov, Kuznetsov, and Silchenko were credited with "solving" the case of the stolen $230 million. The Russian government promoted and decorated them with the honor of "Russia's Best Investigators." And the criminals were now safe to enjoy the proceeds of their crime. Enjoy them they did.

But Sergei's friends -- outraged by the Russian state's continued efforts to vilify the whistle-blower while protecting the corrupt -- continued to pursue an independent investigation in hopes of bringing to justice those responsible for the tax fraud and Sergei's untimely death. Through the work of nearly 100 sources inside and outside Russia, we now have a much clearer picture of the economics behind this crime. Three weeks after approving the fraudulent refund, the entire top management of Moscow Tax Office 28 began buying multimillion dollar properties at the Kempinski Palm Jumeirah -- a luxury hotel and housing complex on an artificial palm-shaped island off the coast of Dubai. The Kempinski properties were paid for by three tax officials using the same bank account at Credit Suisse. The head of Moscow Tax Office 28 also bought a $20 million avant-garde house in Moscow's most exclusive neighborhood, Rublevskoe Shosse, designed by Moscow's most famous architect, Alexei Kozyr, and a $700,000 beach house in the seaside town of Bar in Montenegro.

The scale of the crime and the coverup is truly astounding. It directly involves the Russian deputy interior minister, the deputy general prosecutor, the head of the economic counterespionage unit of the secret police, the heads of Moscow Tax Offices 25 and 28, and a dozen judges, as well as hundreds of functionaries throughout the system. But the Kremlin has shown little willingness to prosecute this case. Instead, Medvedev has tried to deflect attention away from it and portray Sergei's case as an important investigation of Russian prison conditions after a possible death in detention due to "negligence."

As this farce plays out, Medevedev continues to make reassuring statements that he is serious about fighting corruption, that the rule of law is sound, and that international investors have nothing to fear in Russia. It is clear that the Kremlin is prepared to let things lie. But around the world, governments, activists, and independent civilians are speaking up. In 2010, Sergei was posthumously awarded Transparency International's Integrity Award. In Russia, too, there is overwhelming public support to launch an official independent investigation into his case. Russia's leading human rights activist, Lyudmila Alexeyeva, head of the Moscow Helsinki Group, filed a criminal complaint in March of 2010 against officers Silchenko, Kuznetsov, and Karpov, as well as their subordinates, for Sergei's torture and murder. Valery Borschev, head of the Moscow Public Oversight Commission, a Moscow NGO that focuses on prisoners' rights, said that Sergei was kept in torturous conditions and killed to cover up the crime he exposed.

Western governments have begun taking steps to contain this corruption inside Russia. The European Parliament recently passed a resolution calling on EU member states to impose visa sanctions and asset freezes on the Russian officials responsible for the tax fraud, Sergei's death, and the coverup. And on April 15, U.S. Rep. James McGovern reintroduced the Justice for Sergei Magnitsky Act to the House of Representatives to effectively do the same.

It is imperative for both Russia and the United States that this bill be passed. There will be no progress in Sergei's case -- or for Russian justice as a whole -- unless the West forcefully sanctions the corruption and cronyism gripping Russia today. Measures such as the EU resolution and the Justice for Sergei Magnitsky Act would put effective "soft" pressure on Russian officials to clean their own house. This would not weaken U.S.-Russia relations but redefine and strengthen them.

The U.S. government has a duty to its people to keep Russian lawlessness from reaching its shores -- or those of friendly nations, such as the United Arab Emirates. Russia and the United States are bound by numerous treaties, the success of which presupposes a level of honesty and integrity of the officials and legal systems of both countries. Sergei's case -- more precisely, Medvedev's unwillingness, or perhaps inability, to bring the perpetrators of this massive government conspiracy to justice -- demonstrates the fallacy of the supposition. It is dangerous to U.S. interests to be forced to rely on and to grant comity to information, decisions, and requests made by foreign officials who are abusing the implicit trust that these treaties rely upon.

This case has the potential to be Russia's Watergate: The evidence unearthed by Sergei would expose the graft and cronyism that is corroding Russia's core. Acting upon it would not only cleanse the system of a score of corrupt officials but would set a new standard of expected behavior and send a message to Russians that the president would support them if they fight corruption. But left ignored, Medvedev's war on corruption and any pretense of rule of law in Russia are but a sham.

-Jamison Firestone is the managing partner of Firestone Duncan, a U.S. law firm headquartered in Moscow.

India third most powerful nation: US report

Washington: India is listed as the third most powerful country in the world after the US and China and the fourth most powerful bloc after the US, China and the European Union in a new official US report.

The new global power lineup for 2010 also predicted that New Delhi's clout in the world will further rise by 2025, according to "Global Governance 2025" jointly issued by the National Intelligence Council (NIC) of the US and the European Union's Institute for Security Studies (EUISS).

Using the insights of a host of experts from Brazil, Russia, India and China, among others, and fictionalised scenarios, the report illustrates what could happen over the next 25 years in terms of global governance.

In 2010, the US tops the list of powerful countries/regions, accounting for nearly 22 percent of the global power.

The US is followed by China with European Union at 16 percent and India at eight percent. India is followed by Japan, Russia and Brazil with less than five percent each.

Official United States report has listed India as the third most powerful nation in the world after the U.S. and China and the fourth most powerful bloc after the United States.

“The new global power line-up for 2010 also predicted that New Delhi's clout in the world will further rise by 2025,” as per ‘Global Governance 2025,' jointly issued by the National Intelligence Council (NIC) of the U.S. and the European Union's Institute for Security Studies (EUISS).

The report — quoting the views of a host of experts from Brazil, Russia, India and China and depicting fictionalised scenarios — points to what could happen over the next 25 years in terms of global governance.

While India ranked third in the case of population and fourth in terms of defence capabilities, it was at the 34th position in technology and 33rd in energy security. Only US, China and Russia are ranked higher than India in defence capability. In economic strength, India ranked seventh.

Out of the five criteria, maximum weightage was given to defence capabilities at 30%. Economic strength, technology and effective population had weightage of 20% each. Energy security had the remaining 10%.Only US, China and Russia are ranked higher than India in defence capability, while in effective population China and United States were ahead. In economic strength, US, Japan, China, Germany, United Kingdom and France score more than India.

But an "International Futures model" measuring GDP, defense, spending, population and technology for individual states projects the relative political and economic clout of many countries will shift by 2025. The power of the US, EU, Japan and Russia would decline while that of China, India and Brazil would increase, even though there would be no change in the power list.

By 2025, the United States' share of global power would decline from 22 per cent to 18 per cent, while China would rise up from 12 per cent to 16 per cent to displace EU (down to 14 per cent), making U.S and China as close 1-2. India will remain in third or fourth positions (depending on whether EU bloc is counted in or not) with its share of global power going up to ten per cent.

The 82-page report is the product of research and analysis by the NIC and EUISS following a series of international dialogues co-organized by the Atlantic Council, TPN, and other partner organizations in Beijing, Tokyo, Dubai, New Delhi, Pretoria, Sao Paulo & Brasilia, Moscow, and Paris with unnamed officials and strategic experts.

The report shows growing concern among Indian officials and analysts about China as they worry about an ''absence of an internal equilibrium in Asia to ensure stability.'' India, they concede, is not well positioned to help develop regional institutions for Asia given China's preponderant role in the region.

As a result, the report says, India is primarily interested in transforming global governance institutions. ''The Indians thought existing international organizations are 'grossly inadequate' to deal with mounting challenges...Many hoped the United States would continue to be very much part of the Asian region as a political, economic, and military power,'' the report observes.

It also cites some Indian experts fearing that a system developed by the West, which includes democracy and rule of law, would suffer as the East (read China) becomes more powerful. ''It would be a pity if the West does not hang together to influence the future,'' an Indian interlocutor is quoted as saying.

Source: IANS

Understanding Pakistan’s military-jihadi complex

- BY Nitin Pai

Until we are clear what is source of the problems Pakistan poses to the world, we are unlikely to get anywhere near solving it. The source, I would submit, is an multi-faceted entity that I call the military-jihadi complex---a dynamic network of military, militant, radical Islamist and political-economic structures that pursues a set of domestic and foreign policies to ensure its own survival and relative dominance.

It has captured the 'commanding heights' of the Pakistani state and subordinated the Pakistani people to its ends. It exploits Pakistan's geopolitical position to promote its own interests, passing them off---often quite successfully---as Pakistan's national interests, thereby becoming the primary beneficiary of international assistance that ought to have accrued to the peoples of Pakistan. Having total control over a nuclear arsenal has emboldened it to pursue ideological-territorial ambitions in Kashmir and Afghanistan. Nuclear weapons do not secure Pakistan, as much as they shield the military-jihadi complex from paying the true costs of its policies. Indeed, the strategic costs of its many misadventures and failures have been passed on to the Pakistani people, in the form of a failed state, a ruined economy and a deeply radicalised population.

Let's look under the hood. What does the military-jihadi complex comprise of? Obviously, it includes the Pakistani armed forces, their intelligence agencies, their commercial enterprises (that Ayesha Siddiqa refers to as 'MilBus') and cliques of retired military officers and their associated political-economic interests. These might be said to constitute the first node.

The second node consists of radical Islamist organisations and their large networks of militant groups, such as the Jamaat-ud-Dawa/Lashkar-e-Taiba and the Lashkar-e-Jhangvi. Given that these groups rely on Islamism to recruit and motivate their cadres, they are also connected with international Islamist causes and networks such as al-Qaeda. Organised crime syndicates are another aspect of this node.

The third node is formed by political and bureaucratic actors who might be members of various political parties and occupy positions in the government, but represent the interests of the military-jihadi complex. The fourth node includes civil society groups, think tanks, NGOs and sections of the media.

The complex is held together by forces of attraction, repulsion, patronage and coercion. Ideological affinities keep the complex together: Islam and Pakistani nationalism (defined in anti-India, anti-American and anti-Israel terms) are the main forces of attraction. Sectarian, institutional and personal rivalries drive the forces of repulsion.

The presence of both attraction and repulsion allows the army's top leadership to keep the military-jihadi complex under its control. This arrangement received shocks after 9/11, after General Musharraf turned against some groups, and again in June 2007, when he ordered the army to storm Islamabad's Lal Masjid. To the extent that the relationship with the United States permits, General Ashfaq Kayani is trying to repair the damage.

Power in the military-jihadi complex derives from the ability to supply or deny money, infrastructure, material, expertise, operational support, intelligence, propaganda and political cover. This again allows the army leadership to exercise control over the other parts of the complex. But because there is no rigid hierarchy across the complex, 'subordinate' units have some amount of autonomous bargaining power, not least through their ability to create political or diplomatic trouble for their superiors.

The David Headley story---more of which will come to light next month when the matter goes to court in the United States---tells you how all this works. He was once involved in drug trafficking, and used the contacts from the narcotics smuggling world to enter into the jihadi circles. He joined one group and toyed with the idea of joining another, more ambitious group. He observed Pakistani military officers training terrorists. At all times, he had an ISI handler who he was expected to report to.

So long as the military-jihadi complex exists, it is impossible for Pakistan to live in peace with itself and with other countries. A radical Islamist agenda with an increasingly global scope, enmity with India over Kashmir and the use of terrorism as the principal instrument of policy form the complex's core agenda. From Rajiv Gandhi's overtures to Benazir Bhutto, to Atal Bihari Vajpayee's bus ride to Lahore, to Manmohan Singh's dogmatic pursuit of dialogue, India's attempts to engage have substantively failed. The military-jihadi complex has not stopped cross-border terrorism, merely changed its form. Over the last decade, the United States put enormous diplomatic, military and financial resources to bear on the Pakistani army to dismantle militant groups, only to meet with astoundingly little success.

The fact is that the military-jihadi complex is an implacable strategic adversary that is resolved to destroy India. In the short term, it must be contained. In the medium-term it must be dismantled. Ultimately, it must be eliminated.

Nitin Pai is founder & fellow for geopolitics at the Takshashila Institution and editor of Pragati - The Indian National Interest Review, a publication on strategic affairs, public policy and governance.

Cyber spying: China vs US

As America and China grow more economically and financially intertwined, the two nations have also stepped up spying on each other. Today, most of that is done electronically, with computers rather than listening devices in chandeliers or human moles in tuxedos.

And at the moment, many experts believe China may have gained the upper hand.

Though it is difficult to ascertain the true extent of America's own capabilities and activities in this arena, a series of secret diplomatic cables as well as interviews with experts suggest that when it comes to cyber-espionage, China has leaped ahead of the United States.

According to US investigators, China has stolen terabytes of sensitive data -- from usernames and passwords for State Department computers to designs for multi-billion dollar weapons systems. And Chinese hackers show no signs of letting up.

"The attacks coming out of China are not only continuing, they are accelerating," says Alan Paller, director of research at information-security training group SANS Institute in Washington, DC.

Secret US State Department cables, obtained by WikiLeaks and made available to Reuters by a third party, trace systems breaches -- colorfully code-named "Byzantine Hades" by US investigators -- to the Chinese military. An April 2009 cable even pinpoints the attacks to a specific unit of China's People's Liberation Army.

Privately, US officials have long suspected that the Chinese government and in particular the military was behind the cyber-attacks. What was never disclosed publicly, until now, was evidence.

U.S. efforts to halt Byzantine Hades hacks are ongoing, according to four sources familiar with investigations. In the April 2009 cable, officials in the State Department's Cyber Threat Analysis Division noted that several Chinese-registered Web sites were "involved in Byzantine Hades intrusion activity in 2006."

The sites were registered in the city of Chengdu, the capital of Sichuan Province in central China, according to the cable. A person named Chen Xingpeng set up the sites using the "precise" postal code in Chengdu used by the People's Liberation Army Chengdu Province First Technical Reconnaissance Bureau (TRB), an electronic espionage unit of the Chinese military.

"Much of the intrusion activity traced to Chengdu is similar in tactics, techniques and procedures to (Byzantine Hades) activity attributed to other" electronic spying units of the People's Liberation Army, the cable says.

Reconnaissance bureaus are part of the People's Liberation Army's Third Department, which oversees China's electronic eavesdropping, according to an October 2009 report by the US-China Economic and Security Commission, a panel created by Congress to monitor potential national security issues related to US- China relations.

Staffed with linguists and technicians, the Third Department monitors communications systems in China and abroad. At least six Technical Reconnaissance Bureaus, including the Chengdu unit, "are likely focused on defense or exploitation of foreign networks," the commission report states.

The precise relationship with the Chinese Army of suspected hacker Chen Xingpeng could not be immediately determined by Reuters. A spokesman for the Chinese embassy in Washington did not respond to multiple requests for comment. The US State Department declined to comment.

But the leaked cables and other US government reports underscore how Chinese and other state-sponsored and private hackers have overwhelmed US government computer networks.

In the last five years, cyber-intrusions reported to the US Computer Emergency Response Team, a unit of the Department of Homeland Security, have increased more than 650 per cent, from 5,503 incidents in fiscal 2006 to 41,776 four years later, according to a March 16 report by the Government Accountability Office.

The business of spying
The official figures don't account for intrusions into commercial computer networks, which are part of an expanding cyber-espionage campaign attributed to China, according to current and former US national security officials and computer-security experts.

In the last two years, dozens of US companies in the technology, oil and gas and financial sectors have disclosed that their computer systems have been infiltrated.

In January 2010, Internet search giant Google announced it was the target of a sophisticated cyber-attack using malicious code dubbed "Aurora," which compromised the Gmail accounts of human rights activists and succeeded in accessing Google source code repositories.

The company, and subsequent public reports, blamed the attack on the Chinese government.

The Google attack "was certainly an escalation of Chinese network operations against the US," says Joel Brenner, former counterintelligence chief for the Office of the Director of National Intelligence. "Thousands" of US companies were targeted in the Aurora attacks, Brenner says -- far more than the estimated 34 companies publicly identified as targets so far -- a scale which Brenner says demonstrates China's "heavy-handed use of state espionage against economic targets."

Many firms whose business revolves around intellectual property -- tech firms, defense group companies, even Formula One teams -- complain that their systems are now under constant attack to extract proprietary information. Several have told Reuters they believe the attacks come from China.

Some security officials say firms doing business directly with Chinese state-linked companies -- or which enter fields in which they compete directly -- find themselves suffering a wall of hacking attempts almost immediately.

The full scope of commercial computer intrusions is unknown. A study released by computer-security firm McAfee and government consulting company SAIC on March 28 shows that more than half of some 1,000 companies in the United States, Britain and other countries decided not to investigate a computer-security breach because of the cost. One in 10 companies will only report a security breach when legally obliged to do so, according to the study.

"Simply put, corporations cannot afford negative publicity (about computer security breaches)," says Tom Kellermann, vice president of security awareness at Core Security Technologies and a contributor to the study.

Gone phishing
What is known is the extent to which Chinese hackers use "spear-phishing" as their preferred tactic to get inside otherwise forbidden networks. Compromised email accounts are the easiest way to launch spear-phish because the hackers can send the messages to entire contact lists.

The tactic is so prevalent, and so successful, that "we have given up on the idea we can keep our networks pristine," says Stewart Baker, a former senior cyber-security official at the US Department of Homeland Security and National Security Agency. It's safer, government and private experts say, to assume the worst -- that any network is vulnerable.

Two former national security officials involved in cyber-investigations told Reuters that Chinese intelligence and military units, and affiliated private hacker groups, actively engage in "target development" for spear-phish attacks by combing the Internet for details about US government and commercial employees' job descriptions, networks of associates, and even the way they sign their emails -- such as US military personnel's use of "V/R," which stands for "Very Respectfully" or "Virtual Regards."

The spear-phish are "the dominant attack vector. They work. They're getting better. It's just hard to stop," says Gregory J. Rattray, a partner at cyber-security consulting firm Delta Risk and a former director for cyber-security on the National Security Council.

Spear-phish are used in most Byzantine Hades intrusions, according to a review of State Department cables by Reuters. But Byzantine Hades is itself categorized into at least three specific parts known as "Byzantine Anchor," "Byzantine Candor," and "Byzantine Foothold." A source close to the matter says the sub-codenames refer to intrusions which use common tactics and malicious code to extract data.

A State Department cable made public by WikiLeaks last December highlights the severity of the spear-phish problem. "Since 2002, (US government) organisations have been targeted with social-engineering online attacks" which succeeded in "gaining access to hundreds of (US government) and cleared defense contractor systems," the cable said. The emails were aimed at the US Army, the Departments of Defense, State and Energy, other government entities and commercial companies.

Once inside the computer networks, the hackers install keystroke-logging software and "command-and-control" programs which allow them to direct the malicious code to seek out sensitive information. The cable says that at least some of the attacks in 2008 originated from a Shanghai-based hacker group linked to the People's Liberation Army's Third Department, which oversees intelligence-gathering from electronic communications.

Between April and October 2008, hackers successfully stole "50 megabytes of email messages and attached documents, as well as a complete list of usernames and passwords from an unspecified (U.S. government) agency," the cable says.

Investigators say Byzantine Hades intrusions are part of a particularly virulent form of cyber-espionage known as an "advanced persistent threat." The malicious code embedded in attachments to spear-phish emails is often "polymorphic" -- it changes form every time it runs -- and burrows deep into computer networks to avoid discovery. Hackers also conduct "quality-assurance" tests in advance of launching attacks to minimise the number of anti-virus programs which can detect it, experts say.

As a result, cyber-security analysts say advanced persistent threats are often only identified after they penetrate computer networks and begin to send stolen data to the computer responsible for managing the attack. "You have to look for the 'phone home,'" says Roger Nebel, managing director for cyber-security at Defense Group Inc, a consulting firm in Washington, DC.

It was evidence of malicious code phoning home to a control server -- a computer that supervises the actions of code inside other computers -- that provided confirmation to US cyber-sleuths that Chinese hackers were behind Byzantine Hades attacks, according to the April 2009 State Department cable.

As a case study, the cable cites a 10-month investigation by a group of computer experts at the University of Toronto which focused in part on cyber-intrusions aimed at Tibetan groups, including the office of the exiled Dalai Lama in Dharamsala, India.

Referencing the Canadian research, the cable notes that infected computers in the Dalai Lama's office communicated with control servers previously used to attack Tibetan targets during the 2008 Olympics in Beijing. Two Web sites linked to the attack also communicated with the control server.

Targets detailed
The same sites had also been involved in Byzantine Hades attacks on U.S. government computers in 2006, according to "sensitive reports" cited in the cable -- likely a euphemistic reference to secret intelligence reporting.

The computer-snooping code that the intrusion unleashed was known as the Gh0stNet Remote Access Tool (RAT). It "can capture keystrokes, take screen shots, install and change files, as well as record sound with a connected microphone and video with a connected webcam," according to the cable.

Gh0st RAT succeeded in invading at least one State Department computer. It "has been identified in incidents -- believed to be the work of (Byzantine Hades) actors -- affecting a locally employed staff member at the U.S. Embassy in Tokyo, Japan," according to the cable.

Evidence that data was being sucked out of a target network by malicious code also appears to have led cyber-security investigators to a specific hacker, affiliated with the Chinese government, who was conducting cyber-espionage in the United States. A March, 2009 cable identifies him as Yinan Peng. The cable says that Peng was believed to be the leader of a band of Chinese hackers who call themselves "Javaphile."

Peng did not respond to three emails seeking comment.

The details of alleged Chinese military-backed intrusions of US government computers are discussed in a half dozen State Department cables recounting intense global concern about China's aggressive use of cyber-espionage.

In a private meeting of US, German, French, British and Dutch officials held at Ramstein Air Base in September 2008, German officials said such computer attacks targeted every corner of the German market, including "the military, the economy, science and technology, commercial interests, and research and development," and increase "before major negotiations involving German and Chinese interests," according to a cable from that year.

French officials said at the meeting that they "believed Chinese actors had gained access to the computers of several high-level French officials, activating microphones and Web cameras for the purpose of eavesdropping," the cable said.

Testing the waters
The leaked State Department cables have surfaced as Reuters has learned that the US is engaged in quiet, proxy-led talks with China over cyber issues.

Chronic computer breaches have become a major source of tension in US relations with China, which intensified after the major Google hack was disclosed in January 2010, according to US officials involved in the talks. Even before the Google hack, Chinese officials had recognized the problem as well.

In mid-2009, representatives of the China Institutes for Contemporary International Relations, a nominally-independent research group affiliated with China's Ministry of State Security, contacted James A. Lewis, a former US diplomat now with the Center for Strategic and International Studies.

Lewis said that in his first meeting with his Chinese counterparts, a representative of the China Institutes asked: "Why does the Western press always blame China (for cyber-attacks)?" Lewis says he replied: "Because it's true."

There was no response to request for comment on the talks from the Chinese embassy in Washington.

Preliminary meetings at CSIS have blossomed into three formal meetings in Washington and Beijing over the last 14 months. According to two participants, the talks continue to be marked by "a lot of suspicion." Attendees have focused on establishing a common understanding of cyber-related military, law enforcement and trade issues. Cyber-espionage isn't being discussed directly, according to one participant, because "the Chinese go rigid" when the subject is raised.

One reason: for China, digital espionage is wrapped into larger concerns about how to keep China's economy, the world's second largest, growing. "They've identified innovation as crucial to future economic growth -- but they're not sure they can do it," says Lewis. "The easiest way to innovate is to plagiarise" by stealing US intellectual property, he adds.

There have been a few breakthroughs. US and Chinese government officials from law enforcement, intelligence, military and diplomatic agencies have attended in the wings of each discussion. "The goal has been to get both sides on the same page," says Lewis. "We're building the groundwork for official discussions."

A former senior national security official who has also attended the talks says, "Our reports go straight to the top policymakers" in the Obama administration.

Chinese participants have sought to allay US concerns about a Chinese cyber-attack on the US financial system. With China owning more than $1.1 trillion in US government debt, Lewis says China's representatives acknowledged destabilisation of US markets would, in effect, be an attack on China's economy, itself.

Despite the talks, suspected Chinese cyber-espionage has hardly tapered off. Documents reviewed by Reuters show that CSIS itself recently was the target of a spear-phish containing malicious code with a suspected link to China.

On March 1, an email sent from an address on an unofficial US Armed Forces family welfare network called AFGIMail was sent to Andrew Schwartz, chief spokesman for CSIS. Attached to the message was an Excel spreadsheet labeled "Titan Global Invitation List."

An analysis conducted for Reuters by a cyber-security expert who asked not to be identified shows the email may have been sent from a compromised AFGIMail email server. The Excel spreadsheet, if opened, installs malicious code which searches for documents on the victim's computer.

The code then communicates to a Web-site hosting company in Orange County, California that has additional sites in China.