POLITICAL STRIFE IN BANGLADESH

The Begums of Bangladesh continue to be at loggerheads with each other one year after the controversial 2014 election, refusing to cede concessions to the other even in the interest of peace and security of their country.

The Begums of Bangladesh have nothing in common with each other except their family name, Rahman. As current leaders of the two main political dynasties, both Prime Minister Sheikh Hasina and Khaleda Zia have taken turns at office for most of the country’s existence, keeping the other on a tight rein and occasionally even throwing the country into turmoil in pursuit of their personal agendas. To understand the reasons of the current strife, a little background would be helpful.

Current Prime Minister Sheikh Hasina is the daughter of the founder of Awami League (AL), Sheikh Mujibur Rahman. She has headed the AL since 1981, and her party has been in power since 2009. Two-time Prime Minister and current opposition leader, Khaleda Zia, has led the Bangladesh Nationalist Party (BNP) since 1983, and she is the widow of General Zia-ur-Rahman. Both women have had several stints in power over the years, fraught with instability due to their bitter rivalry. In 2007, the military jailed them on charges of corruption and made some concerted efforts to open up the political arena to other players but did not succeed in weakening their hold.

Both parties have very different political agendas for consumption of the public. The AL seeks a platform on the basis of Bengali language and culture; the BNP relies on unifying its vote bank on nationalist Bangladeshi sentiment with alliance of the religious parties, chiefly, Jamaat-e-Islami (JeI). Media reports often cite the leaders’ autocratic style of governance and pursuit of politics of revenge as they trade turns in office, fanning civil unrest to destabilize the other’s government, jailing opposition leaders by lodging false cases against them, and rendering institutions like judiciary and security weak and ineffective with nepotism. Owing greatly to their misguided policies, Bangladesh currently stands at a ranking of 145/177 countries in Transparency International’s Corruption Perceptions Index of 2014.

Both, Sheikh Hasina and Khaleda Zia attribute the current political crisis to each other’s stubbornness and lack of political foresight. The initial stirrings of the present conflict likely happened in 2009 when the AL sought to make an amendment in the Constitution to undo the care-taker system introduced in 1996. Under this system, a neutral, impartial interim government oversees elections to ensure their credibility. Given their history, and distrust of each other to hold free and fair elections, the caretaker system has provided a workable solution. As the amendment passed in 2011, the BNP launched massive country-wide protests which resulted in loss to life and property in staggering numbers, but the AL government refused to change its stance. Additionally,  the ruling AL began war crime trials of the leaders of religious parties aligned with BNP in 2010, which the New York-based Human Rights Watch termed legally-flawed, and the BNP insisted were politically-motivated persecution of its allies. 

Concerned by the growing instability, foreign diplomats, including UN officials, and some national level leaders tried mediation efforts between the two, albeit unsuccessfully. Both the US and the EU refused to send their election observers to the controversial election, and the BNP announced a boycott. Compared to almost 80% voter turnout at the 2009 election, only 40% vote was cast in the January’14 election (Bangladesh Election Commission) owing to the boycott and election-day violence, with only 147/300 seats to be contested. The ruling AL won 105 of those147 seats, while filling 127/153 seats uncontested; winning a staggering total of 232/300 seats in all (Harvard International Review). Not only was the election deemed ‘illegal’ by the BNP, most of whose leadership was in jail or under house arrest at the time, but the international community also showed strong reservations about the whole process.

The US State Department issued a statement on January 6, stating that “…the United States is disappointed by the recent Parliamentary elections in Bangladesh. With more than half of the seats uncontested and most of the remainder offering only token opposition, the results of the just-concluded elections do not appear to credibly express the will of the Bangladeshi people…” , and encouraged “...immediate dialogue to find a way to hold as soon as possible elections that are free, fair, peaceful and credible, reflecting the will of the Bangladeshi people.”

The European Parliament also adopted a Resolution on January 14, 2014 to record its concern:  “2013 has reportedly been the most violent year in post-independence Bangladesh’s history, and the pre-election and election phases in particular have been marked by widespread violence, with blockades, strikes and voter intimidation orchestrated mainly by the opposition and with over 300 people killed since the beginning of 2013, including at least 18 on election day, with Bangladesh’s fragile economy being paralysed as a result.”

The year that followed was filled with similar periods of political turbulence, and the first anniversary of the 2014 election brought renewed calls for a nation-wide transit strike and anti-government rallies by the BNP, reiterating demands for ‘snap polls’ under a caretaker government. The AL’s ban on public demonstrations did not deter BNP from successfully enforcing shutdowns on working days, incurring huge losses to the economy. The AL is uncomfortable with BNP’s massive street power and funding that is allegedly attributed to its close alliance with the JeI. Wary of the perceived attached radical element, Sheikh Hasina has made the severing of ties with JeI and other religious parties a pre-requisite for talks with Khaleda Zia, a demand the BNP has refused. Neither side appears to want to show any flexibility towards the other.

The international community has repeatedly called on all parties to work together to diffuse the tension. On January 16, Ravina Shamdasani, a spokesperson for the UN High Commissioner for Human Rights (OHCHR), urged restraint:  “We urge all political parties to show restraint and to bring an immediate end to the violence. We also call on the authorities to ensure the prompt, impartial and effective investigation of all killings committed – irrespective of whether they were committed by State or non-State actors.” The European parliament delegation also paid a four-day visit to Bangladesh last month, led by Cristian Dan Preda, vice-chairperson of the European Parliament’s subcommittee on Human Rights, was quoted saying: “We’re here because we’re very concerned about human rights situation”.

Although the plight of the common man through this turmoil should be enough to guide the actions of their leaders, perhaps a look at financial considerations would help the Begums get their priorities in order. An unstable country is not an attractive option for foreign investment, not to mention how one unstable country has the potential to destabilize the whole region – especially one already as volatile as South Asia.

In conclusion, this political strife in Bangladesh requires a concerted effort on the part of both leaders to show an earnest desire for reconciliation and bringing peace and security in the country. Rising above personal vendettas would be a crucial first step towards any improvement, before compromise and strategic depth can become the main strengths of their political strategy. A comprehensive political dialogue aimed at resolving all issues of discontent, including the caretaker system, war crimes tribunals and fresh elections is of utmost urgency. Only then can any future government focus on building and strengthening independent state institutions to improve long-term prospects of transparent and democratic governance in Bangladesh.

 SouthAsia Magazine, March 2015

Challenges for the Gulf Cooperation Council

Some Arab leaders of the Gulf Cooperation Council (GCC) may not find the idea of handing power to a central authority very appealing but having a strong unified presence on the world stage is a strong incentive for GCC to move ahead with Saudi Arabia’s proposal for a confederation.

The Gulf Cooperation Council (GCC), formally known as the Cooperation Council for the Arab States of the Gulf (CCASG), is an intergovernmental union of six Arab states, including Kuwait, Qatar, Saudi Arabia, the United Arab Emirates (UAE), Oman and Bahrain. These states are also members of the Arab League, and the first four hold membership of Organization of the Petroleum Exporting Countries (OPEC). GCC was created in 1981 in Riyadh, Saudi Arabia with the objective to enhance cooperation and connection among the oil-rich Gulf States, and to bolster regional defense in the face of internal and external challenges.

In 2012, the proposal for formation of a closer union came from Saudi Arabia at the GCC summit in Riyadh, in response to the Arab uprisings and what was seen as Iran’s growing threat – an attempt to redefine and renew its commitment to the region. At the summit, Saudi King Abdullah cautioned about “…challenges that require vigilance and a united stance” (AFP). At the time, the original six merely agreed to discuss and evaluate the proposal for a later consideration because the idea of a confederation is a difficult concept to grasp for the Arab monarchs, as evident by political analyst Johann Weick’s quote from an Arab source, that he mentions in his analytical piece titled, “GCC States Remain Split over EU-Style Union”: “EU, one law, one strong and unchecked power capable to legislate, to execute and to enforce its will on your country, even if your government says no?”

However, faced with greater uncertainty and shifting alliances, the need for presenting a united front in the form of a confederation has became an urgent consideration. The idea of a ‘united stance’ makes economic sense too. Despite its susceptibility to rising conflicts, the Gulf has some of the fastest growing economies in the world due to vast oil and natural gas reserves. The regional funds in the GCC countries own and manage assets worth billions of dollars. A proposal for a joint currency named ‘Khaleeji’ (literally, ‘from the Gulf’) has also been proposed, but not without resistance from Oman and UAE who object to the designated Central Bank’s location in Riyadh. If materialized, Khaleeji would be the second largest international monetary union in the world.

GCC has fared well for over three decades because of the members’ somewhat similar political, religious and cultural identity. Yet internal issues continue to bring forth new challenges. Even as the GCC seems poised to add Jordan and Morocco into its fold, Qatar has always pursued its own foreign policy, many times in conflict with the wishes of the rest of GCC members. Its support for the Muslim Brotherhood in Egypt, a group other members view with suspicion,  has caused serious concern among members, and in reaction to this clear violation of GCC policy of non-interference, Saudi Arabia, the UAE and Bahrain withdrew their ambassadors from Qatar early this year (CNN, March 2014).

This situation underlines the need for member states to consider carefully who they accept into the GCC. Extending the GCC membership to Jordan and Morocco to form a confederation would help strengthen economic, political and security cooperation among the Gulf States. Both countries enjoy good global standing, and their addition to GCC would bring more authority and credibility internationally, while offering strategic and political depth to the alliance. Morocco has never previously shown interest in becoming part of the GCC, but Jordan had already applied for GCC membership twice, in the 1980s and 1996, and was rejected both times. Understandably, the Saudi Monarch, King Abdullah’s invitation has been received with much enthusiasm. Jordan’s economy is largely dependent on external aid and GCC membership promises generous rewards in aid and investment. In return, Jordan would be a valuable member to GCC offering security support through its military, police and intelligence services.

The GCC proposal of a Joint Military Command with Jordan and Morocco aims to effectively manage not only the region’s internal issues of violence and insecurity but also to discourage external intervention. Military analyst, Matthew Hedges, writes that, “Aside from the obvious reasons and closeness of these two countries, the Jordanian forces are the most professional military force in the Arab world”, while the “Moroccan military has been involved in security training operations across the GCC with many governments and have a long history of cooperation.”  According to the Saudi Foreign Ministry reports, the Joint Military Command would have up to 100,000 troops under the Council, a substantial number of which will be from the two countries in exchange for substantial financial support to their economies.

Apart from Jordan, another country that has long aspired to join the GCC is Yemen, but several factors have hindered a positive response to its requests. The instability and unrest Yemen has seen over the years and the growing influence of Al-Qaeda in the Arabian Peninsula (AQAP), Yemen’s support for the 1990 invasion of Kuwait by Iraq, and internal corruption resulting in mismanagement of resources and foreign aid, its low literacy and unemployment rates and extreme poverty, extensive food insecurity and water shortage etc., all contribute to the challenge the GCC members see about Yemen’s inclusion into the alliance. The Shi’ite rebels in areas of Yemen bordering Saudi Arabia, allegedly receiving support from Iran, have also been of serious concern for the Gulf members, and provide GCC enough reason to not open its doors to Yemen.

Despite their concerns, the GCC members do not plan to abandon Yemen, and are constantly exploring ways and means to support Yemen’s development and security concerns. Saudi Arabia pledged US$1.25 billion to Yemen in the aftermath of the Arab Spring, in addition to significant monetary and military support from other GCC members. A GCC office in Sana’a, Yemen, was also opened in October 2012 to explore options of effective aid disbursement, as a show of GCC commitment to regional security and development.

To its credit, Yemen has traditionally provided a ready supply of low-skilled workers for other Arab countries, and its strategic location also provides a link to the Suez Canal, that could be a safer route to the GCC countries for exporting oil. GCC recognizes that providing support to Yemen for its economic and social development and a peaceful political transition is directly linked to regional and global peace and security, and remain committed to stepping in if needed.

The Gulf States have much in common and the confederation idea might work well, even if the EU-style union is not immediately possible because of the inherent authoritarian character of the Arab regimes, but the benefits of finding a unified voice from a position of strength in the global arena might soon tip the scale in its favor. However, the far-reaching implications of going forward with the proposal and adding new members require not only thorough examination but also a strong commitment based on realistic expectations.

SouthAsia Magazine, December 2014

Development with Accountability

The results-based financial aid mechanisms used by the World Bank Group focus more on output and encourage transparency and accountability to achieve results

Access to reliable public services is crucial for any society to flourish but even more so for developing countries where the lack of basic necessities has resulted in everyday challenges that stunt intellectual growth and discourse. These public services have a direct effect on economic uplifting of low-income communities and include quality education, accessible healthcare, safe drinking water, essential sanitation, electricity and reliable communication systems. 

Developing countries have long utilized foreign aid from international governments and agencies to supplement their own efforts for development spending. However, often dealing with corrupt regimes or private sector corruption, the donors are faced with a constant challenge of preventing the misuse of their funds. In this regard, result-based aid approaches have shown a considerable positive impact on the accomplishment of agreed-upon objectives. Various measures utilized so far include outcome-based aid (OBA), conditional cash transfers (CCTs), cash-on-delivery (COD) and performance-based contracting. The COD model is increasingly popular and sometimes considered the most effective approach among all results-based mechanisms. It focuses on demand rather than supply and offers more flexibility to recipients in how the outcomes will be accomplished. It also has the added advantage of eliminating performance risk for donors. The COD models are usually built into existing government or private programs. 

The OBA is an important part of the World Bank Group’s range of result-based solutions for development finance. It can be defined as a result-based financing mechanism that promotes “the provision of basic public services by delegating the delivery of outputs, such as working water connections, to a third party (typically a private operator) in exchange for the payment of a subsidy upon delivery of specific outputs.” This is not an entirely new concept and goes back to the 1960s when South Korea was the recipient of reproductive healthcare services through OBA schemes. However, its increasing use is a welcome step towards balancing accountability with the success of a project. 

This approach has been shown to work well in many sectors, including education and healthcare but is not applicable in the funding of large investments in power, mining, railways and ports. Sometimes the use of the OBA element is done only as part of a traditional project. Due to its success, the use of OBA has grown considerably in the last decade. It encourages innovation, decreases costs and promotes accountability. 

The use of the OBA strategy was launched for 22 projects by the WBG in its 2002 Private Sector Development Strategy 3, with an estimated value of about US$100 million. By 2009, the number of projects increased to 127, reaching 59.5 million beneficiaries worldwide. The WB also helps pilot OBA projects through the Global Partnership on Output-Based Aid (GPOBA) launched in 2003, which is a multi donor-funded partnership program supported by the Department for International Development UK, the Netherlands, Sweden, Australia and the International Finance Corporation (IFC). 

The focus of the GPOBA is public service delivery systems of healthcare, energy, water and education in developing countries for the most affected marginalized sections. GPOBA’s dedication and commitment to responsible development spending is clear from its annual report for 2013: “To date, the GPOBA has provided nearly 5.9 million poor beneficiaries with access to energy, water, sanitation, telecommunications, health and education. With total funding commitments equaling $161.3 million, GPOBA’s portfolio of projects is expected to reach over 9.7 million people.” In 2013 alone, the GPOBA “disbursed a record $25 million in subsidy funding, benefitting more than 2.3 million poor people…As a result of this excellent performance, it received the World Bank excellence awards for two projects. The Lesotho Hospital Public-Private Partnership (PPP) project was recognized by the Sustainable Development Network Vice Presidency Unit (SDN VPU) for its strength in leveraging partnerships across the World Bank Group.” 

OBA schemes, which are utilized for projects in education, bridge the gap between the cost of providing quality education and the funds available. The challenge, however, lies in being able to measure the success of the project in terms of achievement and learning as opposed to just enrollment or attendance. While both aspects are equally important, they are governed by factors not necessarily in control of service providers or donors. Hence, a combination of result-based mechanisms may be employed, such as OBA and COD together, so that other than performance monitoring and verification done before subsidy disbursement, a certain amount of money may also be allocated for each extra child enrolled or for each child that successfully completes a certain level of achievement in an independent standardized testing. Such an approach gives the project a better chance of measurable success. 

Four successful OBA educational schemes funded by the World Bank Group in the GPOBA report are worth a mention. These schemes aimed at achieving improvement in enrollment, attendance and quality of education for school children, as well as learning opportunities for adults. The projects included the Female Secondary Assistance Programs in Bangladesh Phase I and II (FSSAP) with subsidy disbursement at $130 million, the Lifelong Learning and Training Project in Chile with over $100 million disbursement, the Punjab Education Support Project in Pakistan with subsidy disbursement value of $77.5 million, and the Balochistan Education Support Project (ESP) worth $2.1 million. The funding sources for these programs were mainly the World Bank Group’s IDA and IBRD along with some host governments and private sector support. 

The success of these projects rested on various measures and incentives provided to the targeted groups of marginalized or low-income communities, including vouchers and free tuition to students, bonuses for teachers and competitive grants for institutions, a step-by-step performance evaluation through independent testing and clear contractual guidelines on adherence to pre-established targets for an agreed-upon period of time. This commitment of stakeholders to shared goals and measurable outcomes was crucial to a successful completion of the projects.

Two energy projects in Nepal and Bangladesh supported by the WBG have also been similarly identified for their success. The Nepal Biogas Project 2003 supported the installation of 26,363 biogas plants on an OBA scheme with a strong monitoring system. A 2013 survey by Motherland Energy Group Pvt. Ltd. showed that 90 percent of the plants have remained functional since installation and retain high satisfaction among users while providing efficient and cost-effective energy solutions. Similarly, the 2002, Solar Home Systems (SHS) for the Rural Electrification and Renewable Energy Development project in Bangladesh was launched to manage power supply challenges in rural areas. It employed an output-based approach with a three year microcredit system. The World Bank Group contributed $13.95 million. The project has benefitted 2.4 million people with 480,000 SHS since. 

In healthcare, a similar variety of results-based schemes have also been employed by the World Bank Group through its Health Results Innovation Trust Fund. As reported by the Organization for Economic Co-operation and Development (OECD), two polio eradication programs in Nigeria and Pakistan were successfully completed, using what is termed as a “buy-back made possible as a direct result of confirmation of immunization results, or conversion into grants of concessional loans.” 

A 2009 IDA review of RBA approaches details a number of other successes in the realm of results-based aid, evident of the success of the strategy of RBF. These include “32 ongoing or closed OBA projects for which information on beneficiaries reached is available.” They have reached 17.3 million people – increasing access to energy for 5.7 million beneficiaries, providing education to 2.7 million poor children, improving healthcare coverage for nearly one million people and improving access to clean water for over 900,000 poor people. A total of 87,591 km of roads were or are being rehabilitated and maintained under projects that are currently active or closed. The 14 closed projects for which information is available have benefitted 12.5 million people. As per expectation, “Out of the 22 closed OBA projects with their ratings for Implementation Completion and Result Report available, 90 percent of development outcomes were rated either ‘satisfactory‘ or ‘highly satisfactory‘.” 

The case against traditional input-based aid processes is growing as they are found lacking in many ways, causing loss of funds and missed opportunity for development. At the same time, the advantages of a result-based approach become clearer through project completion reports. A World Bank study quoted by the Center for Global development (CGDEV) found corruption to be a leading challenge to the effectiveness of traditional foreign aid for development spending. The CGDEV report details the heavy cost of traditional aid monitoring and transparency measures required for effective management: “The World Bank annually spends at least $30 million on internal audit and institutional integrity departments and suspension and sanctions boards. This does not include the cost of 417 full-time procurement and financial staff members and 200 procurement-accredited staff members who monitor compliance with financial-management and procurement standards. Nor, of course, does it account for the staff in recipient-country governments who actually implement the procurement and financial procedures.” It also noted that while traditional input-tracking programs try to control corruption by specifying what can and cannot be purchased with funds and then monitoring how money is used, “results-based programs manage corruption by only paying when results are achieved. As a result of this fundamental difference in design, results-based programs do not have direct costs associated with monitoring and controlling corruption.” 

Though the OBA is also not without its challenges, and a combination of factors are required for it to be successful, the advantages still outweigh disadvantages. No case of fraud has yet been proven in a result-based program so far by any agency, though over-reporting or under-reporting sometimes present somewhat of a challenge, as does the challenge of ensuring pre-financing of outputs, especially in the private sector before reimbursements can be made based on performance. When faced with corrupt regimes, the absence of transparency in legal or regulatory arrangements is a discouraging factor for sustained development but timely intervention can save the day. An example of this was seen in an OBA project between the World Bank and a Southeast Asian country mentioned in the report by the CGDEV. The said project was cut short as soon as allegations of corruption surfaced, just in time to check any major or incurring loss. 

Development planners and practitioners mostly see corruption as the amount of money diverted from a program. However, the actual extent of the cost, when measured in a failure to deliver essential services, is much greater not only for the donor but more for the recipient community that would have benefited from its successful implementation. It is no surprise then that the World Bank Group has increased the use of OBA approaches, and included them in the “2008 Sustainable Infrastructure Action Plan (World Bank 2008), the 2009 Private Sector Development (PSD) Strategy Update (World Bank 2009), and the 2007 World Bank Strategy for Health, Nutrition and Population (World Bank 2007). The sectors involved are transport, ICT, health, water & sanitation, energy, and education sectors.” 

Foreign aid provides countries with limited resources the opportunity to tackle challenges of sustainable economic growth. Unless the growth benefits trickle down to those most in need, sustainable progress is not possible. However, without checks and balances established at every step of the process, many well-intended funds end up in the form of personal spending allowances stashed away in off-shore accounts or are lost to some other form of corrupt practices, such as bribes, at a heavy cost to the recipient community and donor. In order to ensure that aid is utilized to maximum benefit, early or intermediate evaluation along with RBA approaches appear to be the best way to go. Simply put, RBA is a development opportunity with accountability.

 South Asia Magazine October, 2014

The Muslim Question

The 16th Indian Lok Sabha has the lowest number of Muslim MPs ever. What does this signify for the future of Indian Muslims? By Tahera Sajid

An exercise conducted every five years, the Indian general elections were held in nine phases from April 7 to May 12, 2014, to elect the 16th Lok Sabha from 543 parliamentary constituencies of the 28 Indian states. In a country of 1.237 billion, 814.5 million people were eligible to vote, making this the biggest-ever elections in the world. The results were historic in many ways. The two major political forces in the contest were the National Democratic Alliance led by the Bharatiya Janata Party and the United Progressive Alliance led by the Indian National Congress. While the NDA won a total of 336 seats in a house of 543, the BJP won 282 – or 51.9 percent. This clear majority allowed the BJP to form its government without support from other parties. The UPA won 58 seats, of which the Congress won 44 (8.1 percent), facing the worst political defeat ever in a general election. This clear mandate for the BJP is unprecedented and, on face value, shows the voter’s confidence behind the political force or the dogma represented by a party known for its nationalist agenda. Many critics consider the meager representation of Muslims in the Lok Sabha at 4.2 percent (23 out of 543) to be a blow to inclusiveness, especially when seen in the context of the Muslim population representation in India – 13.4 percent. This stands out even more in states like Uttar Pardesh where the Muslim population is more than 18.5 percent, and which has elected 45 Muslim MPs to the Lok Sabha since independence but has offered no Muslim candidate this time. The 23 Muslim MPs belong to eight states and 11 parties and offer a scattered and diluted presence at best for India’s largest minority community. As Christophe Jafferlot observed in The Indian Express, this situation “will not help them to build a cohesive presence in the House nor to weigh much within their own parties.” Even the induction of Najma A. Heptulla, the lone Muslim in Modi’s cabinet, who holds the portfolio of Minister for Minority Affairs, is seen as more of cosmetic than functional value. What does such a sweeping victory of a Hindu nationalist party say about India’s pluralism and secularism? More importantly, what does this victory predict for the future of Indian Muslims? There are two strong opinion camps on this issue. The first is of those Muslims who fear and foresee further marginalization, unfair social treatment and hindered social development, threat to life and property, passing of contentious and controversial laws and selective application of justice in cases of communal violence. The second camp believes that while the polarization of Muslim and non-Muslim voters due to riots affected voting trends in areas like western UP, another major reason is the disappointment of Indian Muslims with the Congress’s fraudulent secularism based on ‘all talk and little action’. Syed Ubaidur Rahman, the author of Understanding the Muslim Leadership in India, supports this idea, “The average Muslim's refrain is the same as that of the 'aam aadmi', that the Congress lost because of rising food prices and corruption.” For decades, the Congress promised jobs and educational quotas to Muslims but failed to deliver on its promises. Social indicators place Muslims as performing socially and economically below national averages, even when recognized as educationally, economically and socially disadvantaged under Other Backward Class (OBCs) by the Indian Constitution, and deemed eligible for targeted uplifting schemes. They continue to have the lowest literacy rates among all minority communities in the country, at 67.6 percent in 2012, as against the national rate of 74 percent. They also remain under-represented in business and the professions, such as medicine and law, etc. Muslims of Indian origin living overseas largely support the same narrative. Hamida Hirani, an Indian Muslim living in the U.S., has called the vote "less pro-Modi and more anti-Congress". She emphasizes that “the Congress party has not delivered on promises it made under the banner of secularism and the condition of Muslims has not improved despite decades of Congress rule. Things might get worse before they get better but since Modi is a known hardliner, his policies and actions will be under more scrutiny and that might help Muslims in the long run. People are desperate for change.” Modi has been widely condemned for the 2002 Gujarat massacre of Muslims and was not allowed to enter the U.S. and the U.K. for years. However, the success of his economic policies in Gujarat is also a well-acknowledged fact. The voting trend in areas where Muslims are a substantial part of the population has shown that many young people are desperate for economic opportunity and seem willing to overlook the BJP’s anti-Muslim history to focus on Modi’s strengths in governance and development. In choosing the BJP, they are simply rejecting economic deprivation to welcome economic prosperity. The analysis by Simon Denyer in the Washington Post also supports this mindset: “The promise of Mr. Modi and the reason for his wide lead in the polls is clear: a tough, practical and corruption-free record of economic management, though he never apologized for the massacre of 2002. As chief minister of the Gujarat state, Mr. Modi has overseen growth averaging 10 percent a year over the past decade, significantly higher than for the country as a whole.” Modi also appears to be rising to the occasion and adapting to the role of a national leader. Dr. Syed Zafar Mahmood, President of the Zakat Foundation of India, has written about Modi’s desire to offer “inclusive growth opportunities” to Muslims, quoting Modi’s remarks at the joint session of the parliament in his write-up. “We will have to undertake focused activity and initiate special purpose schemes. I do not consider such schemes as appeasement; rather I see these as an instrument of ameliorating the life of Muslim community," he wrote. However, Dr. Mahmood has also cautioned that words must be followed by action. He points out that contrary to the BJP’s manifesto which promises to ensure a peaceful and secure environment where there is no place for either the perpetrators or exploiters of fear, the BJP government has not taken effective action on the recent murder of Pune resident Mohsin Shaikh or the Muzaffarnagar riots. The perpetrators of the riots continue to threaten and harass Muslims while the defeated BJP candidate Naresh Tikait even went so far as to declare that the riots “were a trailer; we can even throw you (presumably Muslims) out of the country.” In conclusion, although India is a nation composed of many diverse ethnic and religious groups, with their own complex group dynamics, one thing common to all is their aspiration for a better life. Hence, in the elections, Indian Muslims appear to have disregarded religious affiliation of candidates, rejected political opportunism of false secularism and opted for change. It is now up to the BJP to prove itself worthy of their trust. As prime minister, Modi must honor his role as a national leader and deliver on his promise of development for all, discarding the mantle of a nationalist leader with a divisive agenda. The ball is in his court, and the world is watching.

SouthAsia Magazine, July 2014

GOING STRONG AT 65

“Our strength and capabilities are inherently based on forming, sustaining, equip­ping, and training an adaptive force in which the only constant in the geopolitical terrain is change.”

(General Philip Breedlove, Commander SACEUR)

The international community today is constantly under threat from terrorist agendas, and economic challenges that affect and endanger entire populations. As individual countries struggle to find solutions, often more success is seen through formation of alliances. The most successful of these alliances utilize analyses from diverse perspectives and combine resources to accelerate processes of change for desired outcomes. The North Atlantic Treaty Organization, (NATO) has been one such force of positive change throughout its 65 year history, and proved itself to be the most durable alliance in history.

Signed into existence in Washington, D.C. on April 4, 1949, with 12 members, today this robust 28-member alliance is a model of cooperation and strength. Achieving substantial success in its missions over the years, NATO has actively worked with member states and partnered with 41 countries and individual stockholders from across the globe, impacting strategic decisions and providing informed global perspectives. 

The first Secretary General of NATO, Lord Ismay, had famously stated – what would appear very short-sighted and naïve now – that the organization's goal was, "to keep the Russians out, the Americans in, and the Germans down." Needless to say, perspectives on partnerships and priorities have changed significantly since then, and adapted to shifting geopolitical realities. NATO has formed strong bonds with Russia through NATO-Russia Council (NRC) since 2002 and worked on many fronts together. As Gen Breedlove recently observed in the Turkish Policy Quarterly, 2014: “While NATO has different views with Russia in certain areas such as missile defense, there are many other areas in which we are working together in order to achieve the goals set out at the NATO-Russia Council summit in Lisbon in 2010.” Areas of cooperation include counter-narcotics and piracy, scientific and technical fields, civil emergency response, nuclear weapons issues, crisis management etc. Since 2008, Russia has also provided land transit routes to the NATO-led International Security Assistance Force (ISAF) in Afghanistan across Russian territory. 

Taking up the cause of women and children suffering the repercussions of living in current or previously active war zones, NATO also actively supports the UN to implement its Women, Peace and Security agenda outlined in the United Nations Security Council Resolution (UNSCR) 1325. This and other similar UN resolutions, “… call for full and equal participation of women at all levels in issues ranging from early conflict prevention to post-conflict reconstruction, peace and security.”  (UN sources)

Over the years, NATO has evolved into a vibrant organization, focused on resolving conflict and supporting the cause of peace, drawing ever more strength from adapting to changing times. NATO has been actively involved in supporting the cause of peace in countries around the world. After the collapse of the Soviet Union which heralded the end of the Cold War, the focus on active crises brought NATO into Bosnia in the 1994 Bosnian war; then into Afghanistan as part of the security and training force working with the Afghan Government starting 2003 to date, and into Iraq for technical assistance and training from operational phase starting 2004 to 2011, to a sustaining role during 2012 and 2013. Since 2008, NATO has also successfully conducted counter-piracy operations around the Horn of Africa to protect the busy sea route, especially for international humanitarian vessels, including those of the UN World Food Program (WFP). NATO also participated in the 2011 air campaign in Libya to implement the UN Resolution, UNSCR 1973.

Of all the missions, however, NATO’s involvement in Afghanistan remains its longest and perhaps toughest combat commitment to date...  

Read full article at SOUTHASIA, Going Strong at 65

A RELIABLE PARTNERSHIP

Struggling to cope with lack of funds, corrupt regimes, or well-intentioned but ineffective leaders, the development process in countries of South Asia is frequently derailed. In this context, the World Bank Group (WBG) has long honored its commitment to South Asia by identifying issues, mobilizing communities and supporting initiatives of governments, community organizations and other stakeholders to keep the development process rolling.

World Bank Group (WBG) has long been a crucial development partner in South Asia, with an impressive portfolio of 215 International Development Association (IDA)/International Bank for Reconstruction and Development (IBRD) projects. By 2012, WBGs total net commitments for South Asia reached $38.7 billion, and the lending program for 2013 offers $8 billion. A brief review of the WBG’s contribution is as follows:

Economic growth opportunities:

According to the World Bank’s (WB) most recent poverty figures on South Asia, about 571 million people (44% of the developing world’s poor) survive on less than $1.25 a day. WBG’s Development Marketplace (DM) offers a competitive grant program that funds innovative, sustainable projects offering services for low-income groups. “DM has awarded, in aggregate, US $60 million to Social Enterprises identified through country, regional, and global competitions.” Onno Ruhl, World Bank country Director in India, has acknowledged that, “The World Bank Group is committed to supporting innovative models and programs that support underserved communities, particularly in low-income states. The DM provides an opportunity to understand what works and under what conditions as a means to improve services to the poor.”

The World Bank Group’s Country Partnership Strategy (CPS) for India is based on a lending program of $3 billion-$5 billion each year from 2013- 17 to encourage inclusiveness of economic growth, cut poverty to 5.5% by 2030 from 29.8%  in 2010, and increase the share of people living above the threshold to 41.3% from 19.1%.

In Bangladesh, the World Bank sponsors 50% of the operating budget of the Infrastructure Investment Facilitation Center (IIFC) since its inception in 1999, to promote and facilitate public private partnerships in infrastructure projects offering expertise in evaluation, negotiation and implementation. Another very successful WBG supported initiative in Bangladesh is The Rural Electrification and Renewable Energy Development Project (RERED, which established Solar Home Systems (SHS) in remote areas as an alternative for electrification. Registered under the Clean Development Mechanism (CDM) for carbon credits, the project helped installation of 2 million solar home systems by 2012. The repeater Rural Electrification and Renewable Energy Development Project II (RERED II) approved in September 2012 is working to cover an additional 2.5 million people.

With crucial WBG support, Nepal succeeded in attaining the first Millennium Development Goal ahead of schedule to reduce its poverty levels by half, with a percentage drop from 53.1% in 2004 to 24.8% in 2011.

In Sri Lanka, 200,000 households in 1,000 post-conflict villages have benefited from infrastructure/productive investment by WBG, allowing for rehabilitation of 650 km roads, and 12,000 ha of land brought back to production.

In Pakistan, 4.7 million families have received income support of $12 per month, 5.2 million micro-credit loans were provided since 2000 by the Pakistan Poverty Alleviation Fund supported by the Bank, and 12 million customers supported by IFC investment in power sector.
Information and Communications Technologies (ICT)

In the field of information and communications technologies, the World Bank helps developing countries improve “access to affordable connectivity, transform delivery of basic services, drive innovations and productivity gains, and improve competitiveness”. Its consistent support for ICT sector reforms has drawn over US$30 billion private investment for mobile network infrastructure in IDA countries.

Young adults account for half of the unemployed in South Asia. To engage the technology-savvy youth and their unemployment challenges, and to encourage ownership of ideas and their implementation, the World Bank and Microsoft recently launched a successful South Asia Regional Grant Competition in Bangladesh, Maldives, Nepal and Sri Lanka, titled: “Youth Solutions! Technology for Skills and Employment”.

In Nepal, The World Bank also funded the Violence Against Women (VAW) Hackathon this year. Participants explored ideas and solutions to combat gender-based violence while supporting victims. As Maria Correia, the World Bank’s South Asia Social Development Manager, noted: “We realize that engaging youth and tapping into their passion and creativity is critical for breaking out of the cycle of gender violence. Young people have the greatest potential to change their society and the future.”

WB also hosted a conference in Kathmandu with Oxfam International, Joining Forces to Overcome Violence against Women. The event brought together policy-makers, practitioners and volunteers actively working to check gender-based violence in South Asia. Isabel Guerrero, World Bank Vice President for South Asia, reiterated the Bank’s commitment to fight gender injustice in South Asia, “We will be present here in Nepal with women and opinion leaders from all of South Asia to break the silence. Together, we want to understand the complexity, scale and gravity of Violence Against Women, so that we can take a step forward to overcome it.”

Human Resource Development

Strengthening human resource by ensuring access to basic necessities like healthcare and quality education is crucial to development. In the area of health, WBG lays emphasis on fulfilling nutrition needs of women and girls, and providing skilled birth attendants to check infant and maternal mortality. As a result of WB’s support, 99.5% of deliveries take place in medical facilities in Tamil Nadu, and in Nepal, the maternal mortality rate has declined from 538 in 1996 to 380/100,000 live births.

Education projects focus on school enrollment rates and vocational training. The World Bank has made significant contribution towards education reforms in Sri Lanka, Pakistan, Bangladesh and Nepal. In Sri Lanka, 2,825 classroom blocks have been built; in Bangladesh, Girls’ enrollment in secondary schools jumped from 47% (2007) to 55 % in 2012; in Nepal, net primary enrollment has increased to 95% and gender parity in primary education has been achieved. In Pakistan, secondary school graduation rate has increased from 30% to 39% during 2008-11, and rural female-male primary net enrollment rate ratio increased from 61% to 72% in 2007-11 in Sindh. The World Bank has provided support to the government’s education reform program in Punjab from its inception, “providing financing of close to $800 million over the last 10 years, helped provide 34 million free textbooks to more than 11 million students in the 2010-11 academic year, helped hire more than 200,000 new teachers since 2003 and improved school infrastructure by adding toilets, boundary walls, and new classrooms”.

Accountability and Transparency in Governance

The Bank supports greater accountability and transparency for governments in order to deliver better services and benefit economic well-being. Supported by the World Bank Institute (WBI), the Dhaka based Affiliated Network for Social Accountability South Asia Region,( ANSA-SAR) and Global Partnership Fund (GPF), promote and strengthen the concepts and practices of social accountability by holding workshops, discussions and deliberation on development-related issues.

In Bangladesh, the Bank has supported the Local Governance Support Project (LGSP), since 2006, to strengthen accountable forms of local governance. Recognizing its positive impact, the Government has requested the Bank for extension of LGSP-approach to other local government levels.

South Asia Social Accountability Network (SasaNet) is another initiative taken by the Centre for Good Governance (CGG) and World Bank to develop a broader understanding amongst various Government and Civil Society Organization towards Social Accountability in promoting good governance. In India and Sri Lanka, SasaNet has used Citizen Report Cards and Community Score Cards in demanding greater accountability and efficiency in the delivery of public services, including healthcare.

Addressing Weather-related Hardships

            Isabel Guerrero, World Bank South Asia Vice President, has rightly said, “We have a moral imperative to protect the most vulnerable people, standing in the path of climate-driven hardship…we have a duty to respond.”

The South Asian region is experiencing effects of climate change, including, inconsistency and intensity of rainfall, increase in droughts in India, Pakistan and Afghanistan, fast melting glaciers in Nepal, and rising sea levels affecting coastal areas of Bangladesh, the Maldives and Sri Lanka.

South Asia’s expected population increase from 1.6 billion people in 2010 to 2.2 billion by 2050 (WB) will notably strain the scarce resources further. To successfully navigate the worst effects of climate change, “major investments in infrastructure, flood defenses, drought and heat resistant crops are needed”. The Bank is contributing towards provision of services in irrigation and drainage, reforesting water-logged land, and facilitating process of climate-smart agriculture (CSA) for food security.

Regional Cooperation Goals

 The World Bank has always emphasized regional economic cooperation, sharing of information and capacity building through mutual analysis and dialogue. The Bank’s policy studies focus on finding constraints that make South Asia one of the least integrated regions of the world, with lowest level of intra-regional trade. The regional trade is even less than sub-Saharan Africa.WBG suggests focus on “trade in goods, services, and electricity, people-to-people contact, and cooperation in water resources management among Bangladesh, Bhutan, India, Pakistan, and Nepal”. An example of regional cooperation in SA brokered by WB is the Indus Water treaty between India and Pakistan in 1960. The World Bank arranged development funds of US $893.5 million, and facilitates dispute resolution and a court of arbitration.

In short, over the last many decades the World Bank has supported South Asia’s regional development process, reenergizing nascent economies and stabilizing existing ones through timely and consistent provision of funds and expertise and proved itself to be a truly reliable partner.

Note: Data for this article was obtained from The World Bank sources.

 SOUTHASIA MAGAZINE, OCT 2013

The Risky Business

Afghanistan is infamous for its unending chaos and unchecked poppy production. As international forces gear up to leave, concerns are mounting about escalating ethnic tensions and an ever-expanding drug market in the aftermath.

The projection of the 2013 report of the United Nations Office on Drugs and Crime (UNODC) is that Afghanistan’s contribution to the world drug market will be about 92% of the total opium production by 2014. This report, Afghanistan Opium Risk Assessment 2013, rightly refers to the trend as a “worrying situation.”

Historically speaking, the earliest account of poppy cultivation in Afghanistan was seen around 300 years ago. Over the years, fluctuations of stability in Afghanistan have generally shown corresponding increase and decrease of poppy cultivation trends. After joining the UN in 1946, Afghan King Zahir Shah placed a ban on poppy production temporarily and Afghanistan moved steadily towards prosperity and modernization with extensive economic and technical support from the U.S. in the 1950s. This lasted till 1979 when the Soviet invasion halted the process. A decade of war claimed heavy loss to life and infrastructure – destroying roads, irrigation canals, food processing factories, cotton gins and fruit markets – and the ensuing chaos ruined major economic activity creating an environment of desperation and crime, ideal for growth and use of opium. As the Soviet forces withdrew in 1989, warring tribal factions fought for control and by 1994 the Taliban had emerged as the dominant force controlling almost 80% of the land. Not much economic or social progress happened during Taliban rule and by 2000, Afghanistan’s opium production reached 75% of the world’s total. Helmand province in the South took the lead with almost 52% and Nangarhar province with 24% of total opium production in the country.

In July 2000, Mullah Omar, Afghanistan’s de facto head of state, surprisingly placed a ban on opium production. Enforced with strict measures, even threats to life and property, this resulted in unprecedented reduction in poppy cultivation. The UNDCP Donor Mission recorded complete success of the ban and confirmed the result in the Annual Opium Poppy Survey. At the October 2001 session of the UN General Assembly, it was acknowledged that, “…This year’s production [2001] is around 185 tons. This is down from the 3300 tons last year [2000], a decrease of over 94 per cent. Compared to the record harvest of 4700 tons two years ago, the decrease is well over 97 per cent.” Later, however, the agencies observed that the ban’s real objective was to create an artificial shortage to hike prices of heroin, not eradication. The UNDOC report cautioned, “If Taliban officials were sincere in stopping the production of opium and heroin, then one would expect them to order the destruction of all stocks existing in areas under their control.” Although, no hard evidence was found of stockpiling on a large scale, the fears expressed by UNODC were widely shared in the international community. After the U.S.-led invasion of Afghanistan in 2001 and the fall of the Taliban, the warlords and drug dealers once again exploited the chaos and soon enough the opium production rose up to 85%, and has only increased since.

Some reasons for this persistence include the farmers’ reliance on what they consider dependable income necessary for survival. The poppy crop pays for all the food their families need, the stalks serve as firewood, its ash is used to make soap and the seeds are utilized for cooking oil. The farmers also lack trust in their government’s credibility and ability to build roads, bridges, and canals, and alternate livelihoods. Officials are accused of letting foreign aid for agricultural projects disappear into corrupt government coffers, and letting the people starve while buying fancy property in Dubai and the U.S. for themselves.

This corruption allegedly reaches the top levels of government, including the President, Hamid Karzai himself. His late half-brother, Wali Ahmed Karzai, was ironically also on CIA payroll (New York Times, July 2009). The report also alleged that President Karzai is reluctant to check drug lords in his political power base in Southern Afghanistan where most of the opium production takes place and Wali Karzai, who was killed in 2011 by a trusted commander presumably over a drug related dispute, was openly accused of eagerly filling in the vacuum created by removal of other drug lords by the U.S. military and the Karzai government.

Finding an effective solution to issues like opium production in Afghanistan is a complicated task. As a nation, Afghanistan constitutes a mix of several ethnic, linguistic, and regional groups fighting for control over territory and resources. The current Afghan government’s jurisdiction is largely ineffective outside Kabul. Deep ethnic divisions tear apart the societal fabric, millions are displaced, disabled and struggling to survive, lawlessness is a way of life, no worthwhile educational or healthcare system stands, and there is a huge dearth of professional, skilled personnel. Hence, there are no short cuts or quick-fix solutions possible in the current scenario. The opium problem cannot be seen as an isolated issue, but rather a part of the larger broken system.

For any program to be successful, it would have to be community based and not seen as being imposed from outside. The government needs to work sincerely and deliver on its promises to build its credibility and help the Afghan people move forward. The Afghan government will also need all the help it can get from the international community. The world community needs to acknowledge that besides the poverty and corruption factor, it is the demand in the First World that encourages the heroine business; a simple question of supply and demand. The opium benefits the international drug markets more than the producing countries, as acknowledged by U.S. State Department, and quoted by the Voice of America in a 27 February 2004 broadcast, “Afghan heroin sells on the international narcotics market for 100 times the price farmers get for their opium right out of the field.” Clearly, eradicating opium production is a collective responsibility. 

SouthAsia Magazine , June 2013. 

Building From Abroad

Millions of Bangladeshi migrants around the world are diligently working and sending back money to support development efforts in their home country.

The demand for human labor in the international community due to economic globalization ensures a constant flow of migrant workers, especially from developing countries. Bangladeshi workers have also long availed the opportunity of working abroad to not only stabilize their personal finances but also support development efforts within Bangladesh, one of the most populous nations in the world, making it a major manpower exporter in the international community.

Traditionally, Bangladeshi migrant workers have chosen destinations in the Middle East, South-East Asia and some Western countries. As figures from the Bangladesh Bureau of Statistics (BBS 2010) show, the number of migrants from 1976 to 2009 was 5.5 million. According to the World Bank 2010 report, the main direction of this outflow is to Middle Eastern countries like Saudi Arabia, the United Arab Emirates, Kuwait, Oman, Bahrain, and Qatar. Percentage-wise, this amounts to about 70% of the Bangladeshi migrant worker population, with Saudi Arabia hosting almost half of them. Singapore and Malaysia also claim a considerable share. Bangladeshi migrants to Western countries like the United States, the United Kingdom and Canada are more permanent settlers from urban and middle-class backgrounds, rather than contract laborers.

Prior to 2003, the Bangladeshi migrant worker population showed much gender disparity. Due to serious concerns raised about the mistreatment of women workers as victims of sexual exploitation and human trafficking in host countries, the Bangladeshi government placed a ban on their migration. Consequently, they made up less than 1% of the worker outflow. However, economic pressures forced the government of Bangladesh to lift the ban in 2007 and, within one year, the figure for female migrants spiked to 5% of the total. This step was aimed at empowering Bangladeshi women and was applauded by women’s rights organizations around the world.

Unfortunately, the safety concern of both male and female workers remains unaddressed. One major contributing factor is that Bangladesh has not ratified the 1990 UN Convention on the Protection of the Rights of All Migrant Workers and Members of their Families. Although a signatory to the convention, the Bangladeshi government has resisted ratification for fear of jeopardizing the active recruitment of its citizens and the resulting loss of potential benefits to its economy. Many human rights groups have criticized the government for not doing enough to uphold the rights of workers and their families despite their huge contribution to the country’s economy.

According to a 2009 national survey conducted by the International Organization for Migration in Bangladesh, another important area of concern for migrant workers is the high cost of moving abroad. This is largely due to a collusion between corrupt businesses, recruiters and government officials. Forced by an inability to finance their trip and find alternative arrangements, workers give in to promises of cost-effective processing of papers and obtain illegal falsified documents, most often unknowingly. These undocumented workers are attractive to employers looking for cheap labor and zero liability but carry huge potential for forced labor, debt bondage, exploitation, sexual abuse and human trafficking. To provide maximum benefits to the economy and social sector, this widespread corruption and exploitation needs to be effectively curtailed.

The importance of remittances cannot be emphasized enough for a developing country like Bangladesh, as various developmental studies suggest. Remittances have emerged as the key driver for economic growth in Bangladesh. This often serves as a more stable form of investment than foreign aid or even foreign investment. International development organizations, such as the International Labor Organization (ILO), International Monetary Fund (IMF), World Bank and the Asian Development Bank (ADB), are increasingly citing migrants’ remittances as a tool to promote development, though the effectiveness of these depends on how remittances are utilized, whether in consumer markets, savings or investment in education, healthcare, businesses, etc. Whatever the case may be, these remittances have certainly helped Bangladesh improve its international credit rating, which forms the basis for, and brings in, investor trust and confidence in transactions at international levels.

A heavy drain to the total estimated inflow of remittances is the use of unofficial channels. Several micro-studies in Bangladesh have shown that only half of the remittances are sent through official channels and the rest through unofficial means. To encourage usage of formal channels, the Ministry of Expatriates’ Welfare and Overseas Employment (EWOE) has been set up and is working to provide a system of efficient management of the migration sector.

Despite this issue, official remittances to Bangladesh made it the eighth largest remittance-recipient country in the world in 2010, according to World Bank MRF 2011. Remittances amounted to more than US$11 billion, representing 13% of the Gross Domestic Product. In 1976-77, migrant workers contributed US$49 million, which grew to US$9,689 million in 2008-2009. The global recession in 2008-2009 affected the number of migrants from Bangladesh, as did the political instability in the Middle East, but official government figures showed that remittance inflows during that time were still higher than the level of foreign direct investment and the total foreign aid received. Careful analysis by various development agencies revealed that the returning migrants from the Middle East were more inclined to bring their savings back home, while those who chose to stay sent their earnings home instead of risking life savings to political unpredictability.

The migration of Bangladeshi skilled, semi-skilled and unskilled workers is quite diverse in terms of destinations and the benefits from their labor are also manifold. There is much room for improvement in how the flow of this important source of income may be managed to increase the mutual benefit to individuals and the wider society. Most importantly, this includes providing protection to the migrant workers at home and abroad before expecting any return benefit from them.  

Building from Abroad , Feb, 2013

Maldives - a Plummeting Economy

The beautiful island nation of Maldives is in the news constantly for its climate-related troubles, but concerns regarding business challenges for foreign investors are no less important.

It is not surprising that any perceived threats to foreign investment in a country automatically plummets investor confidence and the economy suffers a heavy blow. The Maldivian economy thrives on tourism mainly, but also relies heavily on foreign investment. Some Indian companies seem to be at loggerheads with the new Maldivian government over contracts awarded by the previous regime. Although the present regime has assured Indian investors of support, recent events seem to point otherwise.

Maldives is the smallest Asian country located at just 1.5 meters above sea level, and suffers severe effects of global warming. Politically, it has not seen much stability since it gained independence from the British in 1965, and has been ruled by successive authoritarian governments, each bringing a new set of issues like increasing debts etc. The last government of President Mohamed Nasheed faced many challenges, both natural – like the 2004 tsunami – and man-made – such as unfriendly parliament Opposition majority. President Nasheed was forced to resign in February 2012 following country-wide streets protests, and his vice president, Mohammed Waheed Hassan, was sworn in as the new President.

Not surprisingly, this long time trend of upheavals has affected the economy adversely, although many countries are lending support to the Maldivian government. According to the U.S. State Department, the Government of Maldives (GoM) “receives help from the US as a beneficiary country under the Generalized System of Preferences (GSP) program for duty-free exports entry to the United States”, providing ease of access for businesses to the rich American market. Up until 2007, the Maldivian economy managed a growth rate of 6.6%. However, the recent political changeover, and the new regime’s subsequent efforts to dissociate itself from actions of the last one, is not doing any favors to the country’s economic situation.

Recently, two major Indian investment projects of GMR Infrastructure Ltd. and Tata Housing Group have been in the media limelight for facing onslaught of false charges and roadblocks in their efforts to complete their projects by the present regime. Since the contracts with these groups were awarded during the regime of former President Nasheed, popular consensus is that the opposition by most of the current coalition partners of the new government is based solely on political motivations.

As widely reported in the media, GMR group's largest private investment in South Asia, the over $500-million Ibrahim Nasir International Airport in Male, has run into rough waters, while a realty project being co-developed by Tata group subsidiary, Tata Housing, is also facing land-related issues in the country.

Not only is employee safety threatened, the political groups are demanding scrapping the whole GMR deal and awarding the project to local firms, even seeking to discredit the Indian High Commissioner Dnyaneshwar Mulay, and calling for the Indian Prime Minister, Manmohan Singh’s help in annulling the deal. Allegations of corruption are being levelled against GMR to make a strong case.

A GMR spokesperson has reportedly denied all allegations and accused the government of going back on its word, strongly condemning “Public statements and press conferences of some government ministers and coalition party leaders” which are “clearly aimed at arousing public sentiments against GMR and creating undue challenges…,”. The spokesperson clarified that, “GMR was granted required approvals and licenses to operate…made huge investments in development of arrival duty free area. However, the government later revoked the license citing that earlier the license was given in error. Similarly, the GoM passed an amendment to Business Registration Bill to restrict any foreigner to carry on Duty Free business, cargo clearance business, and bonded warehouse business at the airport. This step is clearly directed against GMR.” It would be interesting to see how the government resolves this issue since GMR made it clear it was willing to work with the GoM “within the framework of the concession agreement” having invested $200 million already but not losing its credibility to false allegations.

In the case of the $200 million Apex Realty project of Tata Group, despite signing a contract, the Maldivian government seeks to take over the site for its own use. Apex Realty was contracted to build 10,000 housing units to resolve severe housing shortage issues in Maldives owing to high population density and lack of basic infrastructure. The GoM has offered Apex Realty an alternate site, but other problems still persist in settling the issue amicably, not to mention discouraging future investment by this first time foreign investing firm.

Although the President Press Secretary Masood Imad was quoted in various media sources as saying, "This government will not target any investment, Indian or otherwise, unduly. The assurances given by the President securing foreign investments in Maldives are valid and stand true,", actions speak louder than words.

The Maldivian government is projected by some sources to be close to an economic collapse, but unable to appreciate the importance of investor confidence. Some media reports have quoted an official asserting that Maldives badly needs the promised $25 million bailout from India to be able to hold up its various commitments to its own people, and cannot afford to lose major Indian investors it is currently harassing due to politically motivated decisions. Perhaps the saving grace for Maldivian economy so far has been the flourishing tourism industry. The political situation notwithstanding, most resorts reportedly remain fully booked throughout the tourism season.

For long term gains, however, the GoM needs to carefully assess its options and resolve disagreements between the corporate and the political sectors to secure a stable investment future. Not just the Indian companies, but other investors may start looking for alternate partners in the region or even relocating existing businesses before long, and with the huge climate crisis looming in the background as it is, Maldives needs all the help it can get. It is time to rise above petty politics and encourage steady progress.  

SouthAsia, Dec 2012