Monday, December 22, 2008

London reaps benefits from Pakistan’s flight of capital

Billions of dollars flying out of Pakistan, due to growing fears of terrorism and worsening economic situation, came to be a boon for London’s slumped property market. A number of projects, worth millions of dollars, proposed to be set up in Pakistan by its expatriate community were kept on long hold as they adopted a `wait and see’ policy and the money is diverted to acquisition of property in the UK.

According to property dealers here in London, Pakistani politicians and military officers have been investing in areas around the prestigious Park Lane and Mayfair in central part of the city, which are historically the most sought after areas for the rich and famous Pakistanis. Shortage of land in these areas has opened up adjoining residential districts, which are now being preferred to by many Pakistanis for investments and development. They feel that investments in the UK are safe bet than putting their money in Pakistan.

Mr. Rehman Malik, Advisor to the Prime Minister on Interior Affairs, stated in Gilgit on November 10 that the government has taken measures to prevent illegal transfer of funds abroad. Head of the country’s largest foreign exchange company, `Khanani and Kalia Interntional’, was arrested on charges of illegal transfer of billions of US dollars abroad. More than 10 billion dollars were reported to have been transferred by this company till October.

Pakistani official data shows that its foreign exchange reserves have fallen from $ 16.5 billion in October 2007 to 6.75 billion in November this year. While many Pakistanis living in the UK have commented that there is nothing wrong with investing where returns are safe and guaranteed, they agree that large amounts of cash are slipping out of Pakistan in transactions which are of questionable nature. Most of these deals have the involvement of politicians as well as senior military officers, who employ `reliable and dependable’ friends for such transactions and therefore raise suspicions as to the acquisition and depositing of this wealth.

Many of the observers felt that in the absence of a corporate structure in Pakistan handling international money transfers, the benefits are often reaped by underground operators. The State Bank of Pakistan is the licensing authority for money changers but it seems to have very little control over such illegal transfers. For instance, the State Bank issued orders in the month of May, 2008 to stop Exchange companies from sending cash abroad in foreign currencies like Dollars, Sterling, Euro and UAE Dirham in an effort to stabilize the local currency, Rupee, but the recent arrests of some of the `money changers’ show that the official measures had no effect and illegal transfers continued to be made.

Pakistani watchers claimed that when politicians and senior military officers themselves were involved, it is difficult for the Central Bank to do anything to stop this flight of capital.

Politicians and senior army generals siphoning off huge funds and buying property abroad is not a secret. British papers carried reports of President Zardari and slain former Prime Minister Benazir Bhutto owning palatial buildings in London, equipped with best polo courts. Many of the cases against him in Switzerland were dropped only recently. Another former Prime Minister Nawaz Sharif is also accused of mercurial rise through questionable means.

According to the report in Asia Week, quoting London-based Observer newspaper, the Sharif family acquired properties in London through two companies, Nescoll and Nielson Enterprises, registered in the British Virgin Islands and linked to a bank account in Lahore in the name of a fictitious person: Sulman Zia. The four flats in Avendale House in Park Lane are said to be worth at least £ 750,000, which worth millions of pounds.

Dr. Shahid Qureshi, a respected Pakistani journalist based in London, wrote in his recent article that Pakistanis’ wealth in foreign banks is estimated over $ 200 billion. Only 45 Pakistanis have deposited $ 23 billions in foreign banks. He quoted an analyst saying, “Zardari’s financial advisor Mr. Tareen, Shahid Javeed Burki, Shaukat Aziz, Salman Shah, Mian Mohamad Somor are the pimps of the international financial mafia”. The article mentioned that late Benzair Bhutto’s assets were worth more than $ 2 billion, according to Saifurahman and according to NAB the figures are around $1.2bn [£ 830m].

Qureshi stated that the military officers are no angels and are equally plundering the country at the cost of common people. “The personal wealth of Musharaf’s key generals is estimated at £3.5m a head. And Musharraf himself, who has a combined salary of £700 a month for his jobs as president and army chief, has acquired a real-estate portfolio worth £5m”, according to The Guardian’s report, “The plot to bring back Benazir” published on 21st July 2007.

Pakistan’s military today runs a huge commercial empire, writes noted columnist Ayesha Siddiqi in her recent book, “Pakistan’s Military Inc”. According to her, “This is a peculiar kind of military capital that is used for the personal benefit of the military fraternity, especially the officer cadre, but is neither recorded nor part of the defence budget… Since this military capital is hidden from the public, it is also referred to as the military’s internal economy…. Although it is not possible to give a definitive value of the military’s internal economy, because of thelack of transparency, the estimated worth runs into billions of dollars.”

The establishment of the Askari Commercial Bank (AWT) in 1992 was a major development designed by the Army to legalize such questionable funds and safely siphon them off to foreign accounts. Nawaz Sharif’s finance minister, Sirtaj Aziz, said that the bank was General Mirza Aslam Beg’s idea, says Ayesha Siddiqi. “An important question is that why the army thought of entering in the banking sector.” Experts like Peter Lock are of the notion that it is natural for militaries to enter the banking sector, especially for money laundering. According to the book, Pakistan’s Military Inc, “the timing of the establishment of the bank was certainly critical: the early 1990s was a time when rumors were afloat of a lot of drug and corruption-related money in the financial markets. The ballooning of the black market had, in fact, started under Zia and continued through the 1990s.”

In his book `Whiteout’, Alexander Cockburn , a columnist for the New York Times, accused a senior General of Zia army, General Fazle Haq, who was also the governor of the NWFP, of being part of the drugs trafficking racket. Another story appeared in Pakistani paper, `The Nation’ on 16 April1997 about the arrest of a PAF officer in New York on charges of heroin smuggling. It indicated that the officer and his accomplices had used a PAF transport aircraft. “What is certain is that the Askari Bank signified the army’s financial autonomy, as in other countries such as Thailand where a powerful military operates a bank as well,” according to Ayesha Siddiqi.

Hassan Abbas, a former police official who served in the National Accountability Bureau (NAB) during the early Musharraf regime, claims in his book Pakistan’s `Drift into Extremism’ that the NAB’s hands were tied in investigating the alleged corruption of senior military officers, such as Generals Aslam Beg, Hamid gul, Zahid Ali Akbar, Talat Masood, Saeed Qadir and Farrukh Khan, and Air Marshals Anwar Shamim and Abbas Khattak.

According to `Pakistan’s Military Inc’, “One of the key examples in Pakistan is private ventures like the Varan Transport Company. Owned by the daughter of the former head of the intelligence agency, ISI, Lt. Gen. (retd) Hamid Gul, the company is clear example of how a military-oreinted patronage system benefits its clients. Varan was given preferential access to bus routes between the twin cities of Islamabd and Rawalpindi, and the company’s management and drivers behaved with impunity.”

The economic effects of the latest `capital flight’ are already being strongly felt in Pakistan as inflation has increased and the Central Bank has been forced to increase the interest rates from 10 to 12 percent.

Some leading Pakistani businessmen in the UK felt that the environment in their country is les than conducive for doing business at present. According to them, law and order, growing terrorist menace, political uncertainties, corruption and economic downturns are just a few factors. The overall situation is of paranoia and fear and in such a situation, Pakistan is the last thing any investor would be interested in.

Meanwhile, both ethnic Pakistani and British construction companies in the UK are reaping all the benefits. The most attractive offers for average British Pakistanis are the housing schemes in major cities of the UK. Satellite TV channels, owned by ethnic Pakistanis, have been putting out attractive advertisements luring these investors with slogans like `higher margins for investments in London than in Lahore or Islamabad’.

Pakistani rich and elite have pushed the prices high in the prime localities like London Hyde Park, Bayswater and Sussex Garden, where it ranges from about 500,000 to many millions of Pounds a piece.

It is a tragedy that billions of dollars are finding their way out while remittances from expatriate community dried up leaving the foreign exchange reserves with State Bank of Pakistan reduced to only $ 5.4 billion at the beginning of November, 2008, according to economists.

Thursday, October 23, 2008

China Threatens neighbors in South China Sea

With the Olympics behind now, China has begun flexing its muscles to brow beat its neighbors to fall in line or face the music. Serious concerns have been expressed, especially by Vietnam, over the recent intense activities of the Chinese Navy in and around the disputed Paracel and Spratly islands in the South China Sea.

Chinese naval vessels have adopted threatening postures to mount pressure against Vietnamese oil exploration activities in and around the disputed islands for alleged violation of Chinese territorial waters. The Vietnamese Government, however, held that oil exploration was undertaken within their continental shelf and the EEZ. Exxon Mobil, which entered into a joint exploration agreement with PetroVietnam, had been forced to terminate their activity around Spratly islands following Chinese threats.

A Norwegian ship, hired by Vietnam, for oil exploration was intercepted by the Chinese naval ships and threatened to fire unless it leaves the disputed area in the South China sea region.

Vietnamese authorities, however, contended that the exploration is being carried out within their EEZ and China had no reason to launch such threats. They have launched strenuous diplomatic efforts to convince the Chinese of their claims. The matter was also discussed during the recent visit of Deputy Secretary of State John Negroponte, and the latter assured the Vietnamese authorities of the US support.

Taking advantage of the 7th Asia-Europe Summit (ASEM) on October 24-25 in Beijing, Vietnamese Prime Minister Nguyen Tan Dung, arrived in the Chinese capital a day before the summit to discuss the issue with the Chinese leaders.

The Vietnamese have complained that the Chinese fishing, oil exploration and Coast Guard vessels continue to intrude into Vietnamese territorial waters. Even in Tonkin Gulf area, where Vietnam and China had reached an agreement in the year 2000 on the territorial waters, the situation became tense a couple of months ago when Chinese vessels intruded into Vietnamese waters for oil exploration. The Chinese vessels left the area only after they were challenged by the Vietnamese Navy. In order to step up its military presence in the South China Sea, China is also contemplating to deploy JIN Class 094 nuclear submarine and Shang Class submarine this month.

China-sponsored websites have also been carrying extremely objectionable anti-Vietnamese articles, including a reported defence strategy to attack Vietnam and occupy it through military means.

China's threatening military postures may be an early indication of reversal of its foreign policy toward its neighbours. After its mis-guided adventure on Vietnam in 1972 and other minor conflicts with rest of the neighbors in South East Asia, Jiang Zemin's regime realised the need for a better image for quick economic development and launched a policy of `Good Neibourly relations' in 1989-90. China's approval of the Code of Conduct in the South China Sea in November 2002 at the 8th ASEAN Summit in Cambodia and its Joint Declaration at the Bali ASEAN Summit in October 2003 helped in creating a positive atmosphere on the issue of disputed islands and improving its relations with neighbors.

Having reached its zenith in economic growth with a massive $ 2 Trillion foreign exchange reserve cushion and all other economic powers slipped to a recession, hardliners in the Chinese Communist Party may now be pushing for a hardline for a military solution to regional disputes including that of Taiwan.

Wednesday, October 22, 2008

Guardian Journalist detained in Islamabad

A reputed journalist of the Guardian newspaper, Adrian Levy, who arrived in Islamabad on valid visa on Sunday was detained and refused entry. He was scheduled to interview the President of Pakistan for the British paper. The reasons for the detention was that Levy’s name figured on the Pakistani government’s `Black List’ and Pak High Commission in London issued the visa without checking his antecedents. Imran Gardezi, Minister for Press Affairs, who was responsible for arranging interview with the President and also recommended visa, was called for his explanation. He had also recommended that Levy should be facilitated in visiting FATA and interviews with military commanders there.

Levy is a strong critic of Pakistan's deceptive policies on terrorism and nuclear proliferation. Adrian Levy, along with Cathy Scott-Clark, authored the book, "Deception: Pakistan, the United States and the Global Nuclear Weapons Conspiracy." In a February 3, 2008 article, he cautioned to stop giving the Pakistani president Musharraf the benefit of the doubt, saying he doesn't deserve it.

Thursday, July 24, 2008


TV Channels are literally mushrooming in South Asia. This is a phenomenon that is something unbelievable and as some of my friends say it can rightly claim the tag of Ripley’s believe it or not. Anyone with some few hundred thousand dollars in pocket is turning to be a TV entrepreneur. For any one in search of political or economic nirvana, a TV channel has become the sure shot to fame. Real estate players, businessmen of all hues and politicians aspiring for the big league and even political parties are entering the fray. Getting a license from the authorities and tying up the uplink facility are not always easy as the security agencies too have a say. And there is every possibility of political executive and licensing authority going by the advice of people without caps. In other words TV entry is a high risk business. But that is not acting as a deterrent as my research shows.

Surprisingly, News channel is the preferred one for most prospective players. I could not fathom why more and more News Channels are hitting the TV screen. However deep may be the promoter pockets, given the limited advertisement pie, it is not easy to sustain a 24x7 news channel. Even the respected BBC World has limited eyeball contact and it is not necessarily because BBC fare is in English. Any how, most new news channels in the region are also in English. Narrowcasting is being talked about as the in-thing but I doubt whether the route offers the manna. While looking at these developments, which are as much fascinating as absorbing to an outsider, I came across an interesting case study, which is the subject matter for this article.

Some time in early 2006, a Bangladeshi businessman ( a member of Khaleda Zia’s BNP party and a minister in the BNP-Jamaat coalition government) with wide contacts and his son with business interests in Dhaka and Hong Kong floated a TV channel with up-linking from the Media Mecca, Dubai. It met with usual hiccups. And in about seven months, it folded up on orders from ‘higher-ups’. The father was sent to jail (he may be released soon, according to reports) and the son is running around knocking at all doors. Now there is the talk of the channel bouncing back with a new management in the front office and the old management in the back office. You may say what is so great in the whole story? What is so unique in its travails? Any start-up without adequate preparation often meets such fate anywhere and in any sector, more so in the media business. I don’t disagree. I only wish to say you will not reject out of hand my contention.

If you care to go through the fine print in the way I did as a financial and market analyst with an eye for political environment, you will also begin to wonder at the complex web of tangled wires that is appearing to be a staple diet of developing countries. What intrigued me in the instant case is the involvement of a second country and the way its agencies planned and propped up the venture at great risk. I have heard stories about CIA running clandestine radio services in the good old Cold war days. I also heard of the involvement of MI in such enterprises but this was the first time I came across face- to- face with a daring TV enterprise of a faceless agency in a friendly country for some gains which remain obscure. At least to me, because I live in and deal with a world which is divided into white and black with no grey areas.

From the documents I have been privileged to access and study, it is clear to me that the channel was planned with an eye on Bangladesh elections in 2007. Work on CSB (Chrono Satellite Broadcast) News started way back in 2006 and after putting in lot of spade work the channel hit the screens on March 24, 2007. But the government in Dhaka issued orders for its closure with effect from September 6, 2007. Because the authorities felt the channel was trying to give a fillip to the student unrest in the Dhaka and Rajshahi University campuses. Government viewed the student protest as a ‘failed coup attempt’ by influential teachers, businessmen and two media houses.

“The (government) report says I am responsible for deliberately exaggerating the issue (student protests) so that violence spreads across the country”, Fayyaz Qader Chowdhury, who promoted the channel CBS (Chrono Satellite Broadcast) News, along with his father, wrote in a communication to his Dubai contact on August 26, 2007.

Giving a graphic account of the behind the scene intrigues, the communication went on to say, “The report stated that planning (for student protests) was done in conjunction with a member of the Indian High Commission. They have not only made me a scape goat but they have also made me an Indian agent”. Apparently, Fayyaz doesn’t like to be close to India nor is he a follower of Awami League, the party of the founder of Bangladesh. Because, at one place in the long communication, he writes all businessmen and MD of ETV who were facing music at that time were ‘all Awami Leaguers’.

The advice this lament had brought forth from the Dubai contact is the stuff not normally one comes across in routine business deals. “You will have to task your people to buy over people to create your lobby in government at local level”, the September 2, 2007 datelined message reads. The tagline of this communication was equally interesting: Make ingress in uniformed people at all levels… in the intelligence section…..may be by bribe or any way”.

At another time troubled by the tales of woe from Fayyaz, the Dubai friend promised all possible help to get his father Salauddin Qader released from Rangpur jail where he was detained from February 2007, and offered a homily. “At the same time I suggest you should be friendly channel for the time being and project image of present government in a positive way”:

Salauddin’s troubles appear to have started after the Caretaker Government came to office with the backing of the army and with the avowed object of creating an environment for a free and fair election in the country. The advent of the caretaker saw the imposition of emergency and a ‘no nonsense’ drive against the corrupt elements in and outside the corridors of power to the great relief of people, as my friends from Dhaka keep telling me.

From what I had heard, Salauddin and his business partner Fazlur Rehman became marked men for their ability to swing through the corridors of government when Prime Minister Khaleda Zia’s BNP led coalition was in office. Islamic parties were a part of the coalition. Salauddin’s interests have footprints in Dubai and, Islamabad and his son’s in Hong Kong. Rehman is a member of ‘business syndicates’ which manipulate prices of commodities. His very nature of business pits him against a government determined to keep the price line and help bail out the poor and middle classes out of price haemorrhage. So the two partners faced music of one kind or the other very unkindly.

Salauddin’s troubles are also to an extent because of his Islamabad connections, which are no longer highly prized. From what is on record, it appears Salauddin’s son used his influence with his ‘contacts’ even to deny an invitation to Bangladesh Army chief from Pakistan. “My father has asked me to give a specific message – please do not allow the Army Chief Moeen to visit your side. The message must be given loud and clear to the chief”. It is not clear to what extent the message influenced Islamabad but the fact of the matter is B’Desh army chief has not visited Pakistan so far though he had visited Delhi and Kolkata recently.

Whether the authorities in Dhaka had an inkling of Salauddin - Fayyaz contacts is a moot point. It is possible they were alerted by money transfers to their accounts for starting the channel. There are at least three known tranches in dollar denomination. They had friends in high places at home in civil and military establishments but the changed circumstances made them unsolicited, according to a version in circulation. That was bad luck as they were told in so many words to behave well if they want to go on air again.

“It looks like the government is not liking our connection with you”, Fayyaz wrote to Dubai friend on September 22, 2007. And disclosed: “They (government) have given us the indication that they will only be willing to allow the channel again if Salauddin and family move out of management control” After some time, on April 16, 2008, to be precise, the powers that matter bluntly stated that they ‘suspected your side had funded the channel’. How did the suspicion come? It came because ‘your elders are contacting them regarding the channel’.

The very structure of the company created to run the channel was also a give away. The MOU that had stitched the deal in June 2006, puts the Dubai end under the aegis of an off-shore shell company (started with UK pounds 1900), gives a 50 per cent share to Phoenix floated by Dubai friend, and offers 33.33 per cent equity to Quintina Holdings, a Hong Kong based enterprise of Fayyaz. It fixes authorised capital at 50 million Arab Emirate Dirhams and paid up capital at 29 million Arab Emirate Dirhams.

The correspondence that preceded the MOU shows that the partners and their patrons were in a hurry to launch the channel in time for the Bangladesh elections slated at that time for end 2006 or early 2007.

“I have tremendous pressure from my elders to be on air as per the given date”, the Dubai man wrote to his partners in Dhaka whom he visited once and hosted their return visit. January 17, 2007 was the date set to start the channel on ‘adhoc basis’. The application for license spoke of plans to offer TV, broadcast, cable, MMDS, DTH and other related services “Production of content in Bangladesh is your baby’, he told his partners and assured them ‘professional and deft handling’ will be his fort.

After the polls were put off and the country came under emergency regulations, the launch was deferred to February 17. It went on the air on March 26 and was pulled off the air before the year was out.

Like all business ventures, this enterprise too had a rough patch over fine print on the JV agreement. Discord often led to intemperate expressions and direct digs at each other in mails that had become more frequent. About some clauses, out went the complaint from Dhaka (May 22, 2006) that these were not only ‘unfair’ but they were also ‘invalid’ and ‘inconsistent’ with the agreement reached in Islamabad. A visit to Islamabad and a revision of the draft agreement were a natural corollary. From then on the ‘original’ deed has become ‘Islamabad agreement’ in all references. ‘We are preparing’, said one such mail, ‘an alternative shareholder agreement that is consistent with the Islamabad agreement in order to keep things moving’.

Like any business person, the Dhaka group behind the CBS News also found a way out soon. That was to bring the Bangladesh envoy to Pakistan, Yasmeen Murshed as the partner and handover the reigns of the company to her. She and Salauddin know each other well and even had business dealings. She is also close to Fazlur Rehman as her son is his business colleague. The modus operandi: make Fazlur give all his shares to Yasmeen. She is also agreeable to the idea. With her involvement, they hoped to have the decks cleared as their sources winked at their plan even when it was on the drawing board. “The license will be given to the company as soon as she (Yasmeen) takes over our share”, Fayyaz conveyed (April 16, 2008) to Dubai, who got back to him on May 22, with the message “Our elders have agreed with whatever deal you have planned for re-opening the channel”.

It was indeed a master business stroke. A management company will be set up by Fayyaz and Yasmeen’s son as a 50:50 venture to look after the every day administrative affairs of CSB News. It will collect upfront a fee for these services. While Yasmeen’s son will work from CSB office, Fayyaz will sit in the management company’s office and thus he will still have indirect influence and control ‘for the time being’. Fayyaz also secured his interests another way. His Quintina Holdings holds the international distribution rights of CBS.

What about a proverbial slip between the cup and the lip normal to any high risk venture in a volatile world? Fayyaz set at rest any such possibility in a long letter to his Dubai partner cum venture capitalist of sorts, which he began addressing him as Dear Brother.

“We are secured in the following ways”, he said and listed as many as eight steps that are his insurance cover. Top of the table will be an undated share transfer document signed by Yasmeen. “When we sign over share transfer forms to Yasmeen, she signs over share transfer forms to us at the same time. Whenever we want we can submit the share transfer forms signed by her to take back the shares”, he stated by way of clarification ‘you asked for’.

To set at rest probably any lingering doubts, the letter adds at Point Eight: “A final agreement with YM is that because she is not actually owning the company (since she is already signing away her share transfers to us), she is not investing any funds to run the company. Funds will be arranged by us and will be invested through her. Further more, she will be paid yearly sum of $ 50,000 for her services of being our face and maintaining a basic management on our behalf”.

He stated further thus: “All the above are conditional upon a legal agreement – that we take final decisions on all operational matters since YM’s people have no experience in this field”.

Then came the caveat unexpected. And that is that the arrangement with ambassador Yasmeen is not for public consumption. “YM’s internal arrangement with us is absolutely confidential” and made out a case against ‘your elders’ putting in a good word for the channel with the authorities in Dhaka. Such intervention would backfire, it cautioned, pointing out “authorities will think that YM has made a deal with your elders while she is ambassador in Islamabad. She may even lose her job”.

As I completed my case study two questions remained unanswered: who are these ‘your elders’ and what interest Pakistan has in a TV channel in Bangladesh. I did not identify the name of the Dubai partner. This is rather deliberate as I feel it is not germane to my case study. Also there are references to ISI in the correspondence I gained access to during my study of the TV channel market in south Asia. But then, I have not made any direct reference to either ISI or any similar agency in Bangladesh itself since these belong to a different domain and not to my area of work.

As a business analyst here my focus was limited to types of interests at play and to how the nascent medium of TV has a flipside.

Tuesday, July 22, 2008

India to jump start to shed its nuclear `pariah’ status

Curtains are going to fall tonight in India on the two-year old controversy whether to go through the various stages to operationalize the Indo-US nuclear accord. The number game in the Indian parliament, which has been taking surprising twists in the past few days, seems to be finally giving an edge to the ruling coalition led by the Congress Party.

While the confidence motion in the Indian parliament was precipitated by the government’s insistence to go ahead with the IAEA and NSG approvals, most of the parties have different designs and equations. The decision of the leftists to withdraw support to the government was not on account of the `devil in the details’ of the agreement, but on the larger issue of a strategic alliance with the United States, which was their primary principled objection. If the government wins the confidence vote, the Communist Party of India (Marxist)is likely to see a great shake up.

BJP, the right wing party, and the so called Third Front parties have formed opportunistic alliances as the next parliamentary elections are round the corner. None of these non-leftist parties have any ideological objections against the nuclear deal or the strategic relationship with the US.

Now the government seems to be set to win the confidence vote to go ahead with the stages of IAEA and NSG approvals. Indian Foreign Secretary briefed a combined session of IAEA and NSG members in Vienna last week, with US officials were at hand to ensure that the IAEA safeguards agreement sails through the Board of Governors.

But the process does not seem to be a safe sail for India. Several countries, including Australia, Japan, South Africa, Sweden, Norway etc., are still apprehensive of giving a special status to India. Pakistan, India’s archrival, is trying to block a consensus by insisting on voting on India-specific safeguards agreement in the IAEA. Even if the agreement goes through the Board of Governors, NSG is another major hurdle for India. The US is expected to go the extra mile to pressure the unwilling members to vote for it, but the next stage of getting the Congressional approval is really a near impossible task in view of the Presidential elections and schedule of the Congress. The Bush administration may try to facilitate it if all the initial stages are completed on time.

This is a significant development as the US has finally discarded its South Asia policy of maintaining strategic balance between India and Pakistan. India’s growing global status in economic and technological spheres seem to have won the day.

Friday, July 18, 2008

Drug Trafficking through Xinjinag province

I recently saw from Chinese press that entry points from the Golden Crescent countries (Afghanistan, Iran and Pakistan) to Chinese Xinjiang Uighur Autonomous Region (XUAR) have now become prime trade routes for international drug dealers. Forty such suspected drug traffickers were arrested in the month of June. Most of them were from Pakistan, Afghanistan, Tajikistan and Kazakhstan. Chinese news agencies Xinhua and Zhongguo Xinwen She reported that Urumqi customs officials cracked a transnational drug trafficking case in which two Pakistanis were arrested. Chinese border defence forces have taken a serious view of it and demanded Pakistani customs to prevent drug smuggling from its side.

China orders relocation of Myanmar's villagers

Chinese oil company, PetroChina, has ordered to relocate the residents of the Myanmar’s village, Agu Maw, and other nearby islands. Nearly 100 engineers of the Chinese oil company are presently engaged in oil/natural gas exploration work in Agu-Maw village, 25 miles North from Sittwe in Arakan State, Myanmar, bordering Bangladesh. Heavy drilling machines and other equipment has been brought from China, and the village has been completely cordoned off by ‘Na-Sa-Ka’, the border security force. The Chinese company has so far identified 15 places with gas/oil reserves in Agu Maw. Earlier, four small islands near Agu-Maw village were fenced off by the Myanmar authorities following discovery of gas deposit by Chinese company.

My sources also said that Myanmar military authorities have banned since mid-June all mining activities by Chinese nationals in Laiza and Namsan-Yang areas, 50 miles southeast of Myitkyina, Kachin state. The ban followed charges of illegal gold mining by Chinese nationals. Chinese gold miners are now forcing local authorities through bribes to issue pre-dated permission letters.

Tuesday, July 15, 2008

China strengthens its naval presence in Coco Islands for Indian Ocean surveillance

Chinese naval delegation led by Col. Chi Ziong Feng, accompanied by their Myanmarese counterparts headed by Brig. Gen. Win Shein, visited the Coco Islands in the Indian Ocean on June 25, 2008. Brig. Gen. Shein is the Commander of Ayeyarwaddy naval headquarters which control the Island. China has built naval facilities there to monitor shipping movements in the Indian ocean. Beijing is concerned about the security of sea lanes of communications as a major part of its oil and gas supplies transit through the Indian Ocean.
The two delegations decided to (a) increase the strength of Naval troops on the Coco islands (b) construct two more helipads and storage facilities for arms and ammunition and (c) upgrade the communication equipment on the island.
Construction of more helipads indicates Chinese intentions of increasing airborne surveillance of the sea lanes.