July 2007, Vol. 2, No. 7

Feature: Rethinking Western Strategies Toward Pakistan: An Action Agenda for the U.S. and Europe

Rethinking Western Strategies Toward PakistanCarnegie’s newly released report on Pakistan, authored by Visiting Scholar Frederic Grare, shows that Pakistani political and security priorities reflect the specific institutional interests of the military and therefore cannot be fundamentally changed unless the army gradually cedes its political role to representative civilian leaders and limits itself to defending borders. In other words, the U.S. and other international actors vital to Pakistan’s future must stop taking the metaphorical bribe of partial Pakistani cooperation in fighting Al Qaeda terrorists in return for propping up an unrepresentative, military government. Read more.

In this Issue:
  1. Feature: New Carnegie Report on Pakistan: Rethinking Western Strategies Toward Pakistan: An Action Agenda for the United States and Europe

  2. Carnegie Analysis/Events: Grare on the Musharraf era; event on development issues in the Doha Round; Tellis on China’s anti-satellite test

  3. Views from South Asia:
    Foreign Policy and Domestic Politics
    : Presidential elections; Kashmir; U.S.-India relations; India-U.S.-Japan-Australia quadrilateral; India-China relations; India-East Asia relations; Myanmar strategy; defense sector reforms
    Economics and Energy: Doha round; implications of rupee appreciation; monetary policy; stock market; corporate governance; financial hubs; rural banking; skilled labor shortage; power sector reforms; ethanol in India’s energy mix

    Pakistan: The Lal Masjid crisis; an opening for democracy; what the future might hold for Pakistan; prospects for free and fair elections; possible solutions to the current crisis; Pakistan’s military economy; Kashmir

    BANGLADESH: Political party reform; BNP’s terrorist links; India-Bangladesh relations; integrated energy strategy

    NEPAL: Turbulent political climate; lessons from Cambodia; November 2007 elections

    SRI LANKA: Parliamentary Select Committee on Electoral Reforms; future of SLFP; LTTE’s ties with Al Qaeda; India’s role in Sri Lanka

  4. In-Depth Analysis: Potsdam trade negotiations; India’s services sector; agricultural growth; capital account convertibility

  5. Additional Resources: IPCS Strategic Review; India-Ethiopia relations; India-Japan energy dialogue; India’s maritime strategy; India-Bangladesh relations; India’s position at the Conference on Disarmament; Pranab Mukherjee’s trip to Indonesia and Singapore; India’s ‘look east’ policy; India-Vietnam relations; Pakistan’s Ministry of Foreign Affairs media briefings


Editor's Note
The situation in Pakistan showed no sign of improving, as a new crisis hit the Musharraf regime. A confrontation with clerics and students at the Lal Masjid, the Red Mosque, in Islamabad escalated the instability in Pakistan’s urban centers. Fears about heightened radicalism and conservatism in Pakistan have only fueled doubts about the longevity of the Musharraf regime even as Musharraf’s opponents are hoping that the spate of crises will lead to the establishment of a civilian democratic governement in the coming months. It remains unclear whether, and under what circumstances, the military will withdraw from the political scene. Visiting Scholar Frederic Grare’s new report on Pakistan (see feature) addresses many of these core issues.

India’s push to develop better relations with its neighbors in East and Southeast Asia was evident from the agreements signed with Vietnam, Indonesia, and Singapore. Its decision to go ahead with the quadrilateral strategic initiative with the U.S., Australia, and Japan is a clear sign of its eagerness to play a bigger role on the regional and global stage, and counter the growing Chinese influence in its neighborhood.

Bangladesh continued to show positive signs of political reform, with the major political parties announcing their agendas for internal reform.

Sri Lanka continued to search for ways to enhance cooperation among the major parties, while Nepal’s political climate remained turbulent.

Anirudh Suri
Editor, South Asian Perspectives

Feature: New Carnegie Report
GrareRethinking Western Strategies Toward Pakistan: An Action Agenda for the U.S. and Europe
Carnegie's newly released report on Pakistan, authored by Visiting Scholar Frederic Grare, calls for a new strategy designed to encourage Pakistanis, particularly the military, to reestablish the preeminence of civilian government according to the Pakistani constitution. The key to this strategy is not to allow Pakistan to trade off democratization for the country's cooperation on terrorism, Afghanistan, and to a lesser extent, Kashmir. Pakistani progress on these objectives would bring increased international rewards, while its abandonment of a single one of them would expose the Pakistani leadership to the withdrawal of foreign assistance.Conditionality of cooperation assistance applied by a large number of countries, not simply by theU.S., should be applied to Pakistan's leadership, in particular the military leadership, and should not affect the general population. Read full text.

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Carnegie Analysis/Events
MusharrafMusharraf in the Twilight
In a analysis, Carnegie's Frederic Grare addresses what he calls the approaching "end of the Musharraf era in Pakistan." Although traditional thinking considers this a potential disaster, Grare argues that the current crisis in Pakistan actually shows the relative weakness of extremists and the dubious quality of Pakistan's cooperation in the war on terror and against the Taliban.

GrareRethinking Western Strategies Toward Pakistan: An Action Agenda for the U.S. and Europe
On July 10, Visiting Scholar Frederic Grare discussed the findings of his new and timely report, Rethinking Western Strategies Toward Pakistan: An Action Agenda for the United States and Europe. Stephen Cohen from the Brookings Institution and Mark Schneider from the International Crisis Group served as discussants, while Carnegie's George Perkovich moderated the event.

NathDelivering on Development in the Doha Round
On June 28, 2007 the Carnegie Endowment hosted Indian Minister of Commerce & Industry Kamal Nath for a discussion on the development issues at the core of the Doha Round and the latest events in the negotiations. Minister Nath presented India's perspective on the agricultural, non-agricultural (NAMA) and services negotiations. Carnegie's Sandra Polaski moderated the discussion.

China's Antisatellite Weapon TestChina's Antisatellite Weapon Test
In a provocative new policy brief, Punching the U.S. Military's “Soft Ribs”: China's Antisatellite Weapon Test in Strategic Perspective, Ashley J. Tellis challenges the conventional wisdom that China's antisatellite test (ASAT) was a protest against U.S. space policy, arguing instead that it was part of a loftier strategy to combat U.S. military superiority and one that China will not trade away in any arms-control regime. An event was held on June 22 to discuss its findings.

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Views from South Asia

INDIA - Foreign Policy and Domestic Politics
Presidential Elections
Shekhar Gupta
questions the Congress’ decision to choose Pratibha Patil as their Presidential candidate, predicting that “her tenure as president will be the most controversy-ridden in the history of Rashtrapati Bhavan” (Indian Express, June 30, 2007).


Praveen Swami
, highlights the continuing upswing in infiltration into Jammu & Kashmir and analyzes the possible impact on the demilitarization debate in Kashmir (Outlook India, July 2, 2007, free registration required).

U.S.-India RelationssU.S.-India Relations
G. Balachandran
analyzes the various sticking points in the U.S.-India civil nuclear deal negotiations, and outlines possible ways out of the deadlock over core issues (IDSA Strategic Comments, July 3, 2007)

C. Raja Mohan believes that the outrage over the USS Nimitz’s port visit to India “highlights our chattering class’s self-serving obfuscation on nuclear issues” (Indian Express, July 2, 2007).

A recent speech by Secretary of State Condoleeza Rice, claiming that the Non-Aligned Movement (NAM) was irrelevant now, invited a strong response from India’s External Affairs Ministry stressing that India remains committed to the ideals of NAM (Outlook India, June 29, 2007, free registration required).

India-U.S.-Japan-Australia Quadrilateral

Amit Kumar
analyzes the geopolitical compulsions of the newly shaped quadrilateral grouping between the U.S., India, Australia, and Japan, and argues that it “is likely to be projected not as a formal strategic coalition, but as a way to persuade a constructive engagement among the key players of Asia-Pacific and the Indian Ocean region” (ORF Analysis, July 2, 2007).

India-China RelationsIndia-China Relations
D.S. Rajan
analyzes the Chinese responses to India’s successful testing of the Agni-III missile (SAAG Paper No. 2280, July 2, 2007).

B. Raman welcomes the renewed Indian commitment to build infrastructure near the border areas as a way of strengthening its intelligence and military-related capabilities and conveying to China its determination to defend Arunachal Pradesh (SAAG Paper No. 2273, June 22, 2007).

Jabin Jacob argues that India could “be taking a more nuanced position on Taiwan—keeping its focus on economics while simultaneously keeping tabs on both the island's politics and the PRC's positions” (IPCS Article No. 2322, June 27, 2007).

India-East Asia Relations
Vibhanshu Shekhar points out that “the visit of India's Minister for External Affairs, Pranab Mukherjee, to Indonesia and Singapore from 17 to 22 June has helped in consolidating India's strategic engagement with ASEAN, identifying new areas for cooperation and developing modalities to further expedite India's integration with the region” (IPCS  Article No. 2325, June 29, 2007).

Subhash Kapila identifies the strategic challenges to the U.S. in East Asia and outlines possible American responses to this challenge (SAAG Paper No. 2276, June 27, 2007).

Myanmar Strategy

B. Raman
contends that Aung San Suu Kyi might be more successful in affecting change in Myanmar by leading an international movement against the Junta and influencing the debate on the future of Myanmar, rather than allowing the military junta to silence her voice (SAAG Paper No. 2274, June 26, 2007).

Defense Sector Reforms

Deba R. Mohanty analyzes the possibility of further reforms both at the policy and the structural-institutional levels in India’s defense production sector, concluding that it is a Herculean task (ORF Analysis, June 22, 2007).

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INDIA - Economics

IndiaDoha Round
An editorial contends that “the failure of the Potsdam meeting of the trade ministers of the G-4 (the US, the European Union, Brazil and India) last week has been widely seen as heralding an impasse in the Doha round of the World Trade Organization” (Economic and Political Weekly, June 30, 2007).

Implications of Rupee Appreciation
T.K. Arun addresses anxieties about a strong rupee and argues that “a stronger rupee right now would help the economy consume and invest more and to enhance Indian ownership of assets in India and abroad” (Economic Times, June 21, 2007).

An editorial in the Business Standard raises questions about a possible reversion to export subsidies by the Indian government in light of the rising rupee (Business Standard, July 05, 2007).

Monetary Policy

Jahangir Aziz and Kalpana Kochhar identify key lessons for India from China's monetary policy (Business Standard, July 5, 2007).

Stock Market

An editorial in the Business Standard posits that “changed expectations with regard to interest rates as well as continued good news at specific counters would explain the current rally on the stock market” (Business Standard, July 4, 2007).

Corporate Governance
T.T. Ram Mohan points out that the “corporate world has much to learn from the public sector in several areas—competitive elections, division of power, succession planning and compensation” (Economic Times, June 14, 2007)

Creating New Financial Hubs

Nirvikar Singh makes the case for “multiple financial hubs to serve the domestic economy better” with the aim of complementing the “creation of an International Financial Center, support integrated financial sector reform, and gain political traction for implementation of reforms” (Financial Express, July 5, 2007).

Rural Banking

Swaminathan Aiyar speculates whether a new architecture of rural banking is slowly emerging in India (Economic Times, June 20, 2007).

Skilled Labor Shortage
Y.R.K. Reddy
analyzes the risks of shortage of trained and skilled labor in India and cautions that India’s growth momentum might be kindered unless “supply chain of skills is governed better at the national policy level” (Financial Express, June 23, 2007).

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INDIA - Energy

Power Sector Reforms
N.K. Singh
outlines the various challenges that hamper power reform initiatives in India, and recommends the formation of a “Special National Group on Power which represents a broader political spectrum” that is “needed to build and carry forward any consensus on these daunting challenges” (Financial Express, June 17, 2007).

Ethanol in India’s Energy Mix

Priyadarshini Singh
argues that “a well structured and decentralised bio-fuels policy that takes into account local climatic, demographic and agricultural factors can kill the proverbial two birds, namely rural unemployment and energy dependence, with one arrow”(IDSA Strategic Comments, June 7, 2007).

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The Lal Masjid CrisisThe Lal Masjid Crisis
Tasneem Noorani
examines the causes and implications of the Lal Masjid defiance in Pakistan’s capital, Islamabad (Dawn, June 29, 2007).

B. Raman argues that China forced President Musharraf to act decisively, and that “the crackdown against Lal Masjid [came] soon after the livid Chinese ran the riot act to Musharraf” (Outlook India, July 4, 2007, free registration required).

An Opening for Democracy?

Rasul Bakhsh Rais
points out that “the ongoing movement in Pakistan presents the U.S. with a fresh opportunity to support democratic transition” (Daily Times, June 19, 2007). In a similar vein, Subhash Kapila examines the situation in Pakistan and argues that the U.S. is allowing strategic compulsions to prevail over the political imperatives of re-establishing democracy in Pakistan (SAAG Paper No. 2272, June 21, 2007).

What the Future Might Hold for Pakistan
An IPCS Panel report looks at the way ahead for Pakistan (IPCS Article No. 2328, July 2, 2007), while another seminar report explores potential future scenarios and drivers for the India-Pakistan relationship (IPCS Article No. 2322, July 10, 2007).

Trying to predict how the current democratic struggle in Pakistan would end, I.A. Rehman believes that it is imperative for political parties to take over this mass movement, and urges them to engage “in a sustained and comprehensive dialogue with the people to ascertain their views on what they are prepared to yield to the state and what the state must guarantee them as part of its contract with them” (Dawn, June 28, 2007).

However, Masud Mufti reiterates the widespread disillusionment with the existing political parties and urges the lawyers to harness their “force into the permanent mould of a new political party with a different character, credentials and properties” in order to consolidate and expand the democratic gains made in recent months (Dawn, June 26, 2007).

An editorial points out that President Musharraf, amid possible changes in U.S. policy towards his regime, has begun “diversifying” his reliance on the U.S. by reviving old links in the Gulf” with countries such as the UAE and Saudi Arabia (Daily Times, June 13, 2007).

Anwar Syed
examines the various possible scenarios for Musharraf’s political future (Dawn, June 24, 2007), while Syed Sharfuddin outlines an exit strategy for the military (Dawn, June 12, 2007).

MusharrafProspects for Free and Fair Elections
An editorial in Dawn, looking at questionable voters’ lists, warns against “an engineered exercise conducted on the lines of the 2002 polls” (Dawn, June 28, 2007).

Hasan Askari Rizvi
argues that “the exclusion of some government adversaries from the electoral process and the manipulation of the elections to the advantage of the ruling party would not salvage the Musharraf government;” rather, it would simply “hasten its collapse” (Daily Times, June 24, 2007).

Amid speculation that President Musharraf might be considering an early election to stave off the current crisis, an editorial in the Daily Times contends that “either way the country is heading towards a crisis that may become more dangerous as the economy begins to buckle under the effect of a sustained anti-Musharraf movement” (Daily Times, June 23, 2007).

Possible Solutions
To defuse this crisis and shape a new Pakistani polity, Najam Sethi recommends “a transitional power-sharing partnership between the military and political parties on the basis of an agreed moderate and liberal reform agenda, a sort of truth and national reconciliation process that heals political wounds and charts the road to a new Pakistan” (Daily Times, June 18, 2007).

Hasan Askari Rizvi believes the solution lies in the government committing itself to “holding parliamentary and provincial elections first, and to allowing the two exiled former prime ministers to return and lead their respective political parties” (Daily Times, June 17, 2007).

Pakistan’s Military Economy

Ayesha Siddiqa
, author of a highly controversial book, Military Inc: Inside Pakistan's Military Economy, attributes the sustenance of the military’s control over Pakistani politics to “parts of the political leadership, the civilian corporate sector, media barons, landed feudal elements and many others who'd like to see the military comfortably ensconced in the state's power politics” (Outlook India, June 25, 2007, free registration required).

Mirwaiz Umar Farooq
, chairman of the All Parties Hurriyat Conference, Kashmir, outlines his new thinking on Kashmir, outlining essential measures to resolve the Kashmir problem and move forward (Dawn, June 25, 2007).

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Bangladesh Political Party Reform
Muhammad Nurul Huda
finds it ironical that “it required a military-backed and allegedly non-representative government to awaken the mainstream political parties and make them realize the imperatives of reforms including party reforms” (Daily Star, June 30, 2007). In a separate article, he warns against giving in too early to the demand for the lifting of the ban on indoor political activities despite the U.S. ambassador's remark that delay in this regard could “adversely affect the legitimacy and legacy of the present caretaker government” (Daily Star, June 23, 2007).

Kazi S.M. Khasrul Alam Quddusi contends that “Awami League president and former premier Sheikh Hasina has come up with some novel proposals for reforms, which should turn out to be a reformer's delight in view of the heightened fervour and pressure for political reforms in Bangladesh” (Daily Star, June 27, 2007).

BNP’s Terrorist Links

While noting the caretaker government’s cognizance of the links between the BNP and terrorist outfits a Daily Star editorial, urges the government to “consider appointing a high level committee to inquire in depth about the links and funding of the terrorists and the extent of their influence in our society” (Daily Star, June 23, 2007).

India-Bangladesh Relations
An editorial commends the positive vibes during the foreign secretary-level talks between India and Bangladesh, and finds the various agreements to be fairly significant steps forward (Daily Star, June 28, 2007).

Energy Strategy

Ahmed Badruzzaman, Sarwat Chowdhury, Golam Kabir, M Khalequzzaman and Selim Hannan urge the government to rethink its coal-based energy strategy, and argue that “the coal policy cannot be decided in isolation, and with the interests of foreign companies in mind.” Instead, they assert that “it has to be a part of an integrated, long-term, and comprehensive national energy strategy” formulated with the help of various Bangladeshi energy experts (Daily Star, June 23, 2007).

An editorial believes that “the approval given to Bangladesh by the International Atomic Energy Agency (IAEA) to set up nuclear reactors for power generation is an opportunity that the country should seize in order to cope with the ever-growing demand for electricity (Daily Star, June 28, 2007).

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Nepal Saubhagya Shah draws attention to the turbulent political climate in Nepal and questions why “the sense of victory and epochal accomplishment has been overshadowed by anger and accusation, suspicion and cynicism,” noting that “interestingly, nowhere is this sense of foreboding shriller than among the main actors who coalesced to defeat the old regime and institute the New Nepal” (, June 16, 2007).

Nishchal N. Pandey examines the transitionary mis-steps that occurred in Cambodia and stresses that Nepal should learn from these painful lessons (, June 17, 2007).

Saurabh Prasad addresses the major hurdles that lie on the road to the November 2007 elections in Nepal, stressing the importance of delicately handling each, as “disagreement on major issues could lead to the reemergence of Maoist violence plunging the country into deep trouble” (IPCS Article No. 2324, June 29, 2007).

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Sri Lanka A recent editorial lauds the achievements of the Parliamentary Select Committee on Electoral Reforms but also stresses the importance of increased cooperation of "all political parties to treat this work as a national task...which will have a path breaking effect on the country’s progress" (Daily Mirror, June 8, 2007).

Ayesha Zuhair
 argues for redirected attention and points out that "the current system of governance has not worked and [that] to create a system of governance that will facilitate the self-actualization needs of all individuals, there is a need to go back to the ideas put forward on December 5, 2002" (Daily Mirror, June 13, 2007).

After examining twists and turns in the party's history, M.S. Shah Jahan asks the question that is on the minds of many, "What is the Future of the SLFP?" (Daily Times, June 25, 2007).

Ajit Kumar Singh
points out that though “the LTTE is yet to be outlawed in Australia which is also one of its largest sources of funding,” it has been brought under the scanner “due to its recently established linkages with the al-Qaeda” (Outlook India, June 7, 2007, free registration required).

B. Raman stresses the importance of India's dual role in Sri Lanka in a recent article (Daily Mirror, June 4, 2007).

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In-Depth Analysis
WTO: Why Potsdam Failed, Economic and Political Weekly, June 30, 2007

Contribution of Services to Output Growth and Productivity in Indian Manufacturing: Pre- and Post-Reforms, Economic and Political Weekly, June 30, 2007

Deceleration in Agricultural Growth: Technology Fatigue or Policy Fatigue? Economic and Political Weekly, June 23, 2007

Capital Account Convertibility: A Neglected Consideration, Economic and Political Weekly, June 23, 2007

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Additional Resources
IPCS Strategic Review: South Asia in June 2007

Visit of External Affairs Minister, Pranab Mukherjee to Ethiopia, July 3-6, 2007

Opening Statement by Montek Singh Ahluwalia, Deputy Chairman, Planning Commission at the India-Japan High Level Energy Dialogue, July 2, 2007

• “International Relations And Maritime Affairs – Strategic Imperatives,” The Admiral Chatterjee Memorial Lecture by the Hon’ble External Affairs Minister Pranab Mukherjee, June 30, 2007

Speech by Shivshankar Menon, Indian Foreign Secretary at the Bangladesh Enterprise Institute, June 27, 2007

Remarks by Ambassador Jayant Prasad, Permanent Representative of India to the Conference on Disarmament at the Plenary Meeting, June 19, 2007

Statement by Ambassador Jayant Prasad, Permanent Representative of India to the Conference on Disarmament, June 18, 2007

Visit of External Affairs Minister, Pranab Mukherjee to Indonesia and Singapore, June 17-20, 2007

Address by the External Affairs Minister Pranab Mukherjee on "India's Growing Engagement with East Asia" in Indonesia, June 18, 2007

Speech by External Affairs Minister Pranab Mukherjee at Seminar on 'Look East' Policy in Shillong, India, June 16, 2007 (PDF)

Agreements signed during the State Visit of the Prime Minister of Vietnam to India, June 7, 2007

Pakistan: Ministry of Foreign Affairs - Media Briefings
    Transcript of the media briefing, July 9, 2007
    Transcript of the media briefing, July 7, 2007
    Transcript of the media briefing, June 25, 2007
    Transcript of the media briefing, June 18, 2007
    Transcript of the media briefing, June 11, 2007
    Transcript of the media briefing, June 4, 2007

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  Editorial Staff

Anirudh Suri, junior fellow, South Asia Program, Carnegie Endowment

Gretchen Smith, program assistant, South Asia Program, Carnegie Endowment

Carnegie Endowment for International Peace
1779 Massachusetts Avenue, NW
Washington, DC 20005
Ph: 202-939-2306

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