How Britain stole $45 trillion from India

By Jason Hickel
Source

3a4683d7f99349baa4791de15b662965_18.jpgLord Louis Mountbatten, the last Viceroy of India, and his wife, Lady Edwina Mountbatten, ride in the state carriage towards the Viceregal lodge in New Delhi, on March 22, 1947 [File: AP]

There is a story that is commonly told in Britain that the colonisation of India – as horrible as it may have been – was not of any major economic benefit to Britain itself. If anything, the administration of India was a cost to Britain. So the fact that the empire was sustained for so long – the story goes – was a gesture of Britain’s benevolence.

New research by the renowned economist Utsa Patnaik – just published by Columbia University Press – deals a crushing blow to this narrative. Drawing on nearly two centuries of detailed data on tax and trade, Patnaik calculated that Britain drained a total of nearly $45 trillion from India during the period 1765 to 1938.

It’s a staggering sum. For perspective, $45 trillion is 17 times more than the total annual gross domestic product of the United Kingdom today.

How did this come about?

It happened through the trade system. Prior to the colonial period, Britain bought goods like textiles and rice from Indian producers and paid for them in the normal way – mostly with silver – as they did with any other country. But something changed in 1765, shortly after the East India Company took control of the subcontinent and established a monopoly over Indian trade.

Here’s how it worked. The East India Company began collecting taxes in India, and then cleverly used a portion of those revenues (about a third) to fund the purchase of Indian goods for British use. In other words, instead of paying for Indian goods out of their own pocket, British traders acquired them for free, “buying” from peasants and weavers using money that had just been taken from them.

It was a scam – theft on a grand scale. Yet most Indians were unaware of what was going on because the agent who collected the taxes was not the same as the one who showed up to buy their goods. Had it been the same person, they surely would have smelled a rat.

Some of the stolen goods were consumed in Britain, and the rest were re-exported elsewhere. The re-export system allowed Britain to finance a flow of imports from Europe, including strategic materials like iron, tar and timber, which were essential to Britain’s industrialisation. Indeed, the Industrial Revolution depended in large part on this systematic theft from India.

On top of this, the British were able to sell the stolen goods to other countries for much more than they “bought” them for in the first place, pocketing not only 100 percent of the original value of the goods but also the markup.

After the British Raj took over in 1858, colonisers added a special new twist to the tax-and-buy system. As the East India Company’s monopoly broke down, Indian producers were allowed to export their goods directly to other countries. But Britain made sure that the payments for those goods nonetheless ended up in London.

How did this work? Basically, anyone who wanted to buy goods from India would do so using special Council Bills – a unique paper currency issued only by the British Crown. And the only way to get those bills was to buy them from London with gold or silver. So traders would pay London in gold to get the bills, and then use the bills to pay Indian producers. When Indians cashed the bills in at the local colonial office, they were “paid” in rupees out of tax revenues – money that had just been collected from them. So, once again, they were not in fact paid at all; they were defrauded.

Meanwhile, London ended up with all of the gold and silver that should have gone directly to the Indians in exchange for their exports.

This corrupt system meant that even while India was running an impressive trade surplus with the rest of the world – a surplus that lasted for three decades in the early 20th century – it showed up as a deficit in the national accounts because the real income from India’s exports was appropriated in its entirety by Britain.

Some point to this fictional “deficit” as evidence that India was a liability to Britain. But exactly the opposite is true. Britain intercepted enormous quantities of income that rightly belonged to Indian producers. India was the goose that laid the golden egg. Meanwhile, the “deficit” meant that India had no option but to borrow from Britain to finance its imports. So the entire Indian population was forced into completely unnecessary debt to their colonial overlords, further cementing British control.

Britain used the windfall from this fraudulent system to fuel the engines of imperial violence – funding the invasion of China in the 1840s and the suppression of the Indian Rebellion in 1857. And this was on top of what the Crown took directly from Indian taxpayers to pay for its wars. As Patnaik points out, “the cost of all Britain’s wars of conquest outside Indian borders were charged always wholly or mainly to Indian revenues.”

And that’s not all. Britain used this flow of tribute from India to finance the expansion of capitalism in Europe and regions of European settlement, like Canada and Australia. So not only the industrialisation of Britain but also the industrialisation of much of the Western world was facilitated by extraction from the colonies.

Patnaik identifies four distinct economic periods in colonial India from 1765 to 1938, calculates the extraction for each, and then compounds at a modest rate of interest (about 5 percent, which is lower than the market rate) from the middle of each period to the present. Adding it all up, she finds that the total drain amounts to $44.6 trillion. This figure is conservative, she says, and does not include the debts that Britain imposed on India during the Raj.

These are eye-watering sums. But the true costs of this drain cannot be calculated. If India had been able to invest its own tax revenues and foreign exchange earnings in development – as Japan did – there’s no telling how history might have turned out differently. India could very well have become an economic powerhouse. Centuries of poverty and suffering could have been prevented.

All of this is a sobering antidote to the rosy narrative promoted by certain powerful voices in Britain. The conservative historian Niall Ferguson has claimed that British rule helped “develop” India. While he was prime minister, David Cameron asserted that British rule was a net help to India.

This narrative has found considerable traction in the popular imagination: according to a 2014 YouGov poll, 50 percent of people in Britain believe that colonialism was beneficial to the colonies.

Yet during the entire 200-year history of British rule in India, there was almost no increase in per capita income. In fact, during the last half of the 19th century – the heyday of British intervention – income in India collapsed by half. The average life expectancy of Indians dropped by a fifth from 1870 to 1920. Tens of millions died needlessly of policy-induced famine.

Britain didn’t develop India. Quite the contrary – as Patnaik’s work makes clear – India developed Britain.

What does this require of Britain today? An apology? Absolutely. Reparations? Perhaps – although there is not enough money in all of Britain to cover the sums that Patnaik identifies. In the meantime, we can start by setting the story straight. We need to recognise that Britain retained control of India not out of benevolence but for the sake of plunder and that Britain’s industrial rise didn’t emerge sui generis from the steam engine and strong institutions, as our schoolbooks would have it, but depended on violent theft from other lands and other peoples.

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Iran Turns to Traditional Partners As EU Tarries On Bypassing US Sanctions

 

Local Editor

Foreign Minister Mohammad Javad Zarif says Iran is working with its traditional partners such as China, Russia and India to circumvent the US sanctions.

Zarif told reporters in New Delhi Tuesday that the European Union is moving more slowly than expected to facilitate non-dollar trade with Tehran through a mechanism called the special purpose vehicle (SPV).

“We continue to work with the Europeans for the special purpose vehicle but we will not wait for them [to act],” said Zarif who arrived in the Indian capital late Monday for a three-day visit.

“We are working with our traditional partners like India, China and Russia so that we continue to serve the interests of our people,” he added.

EU foreign policy chief Federica Mogherini said last Wednesday that efforts to implement the special purpose vehicle for trade with Iran would continue well into 2019.

So far, the Europeans have defaulted on two deadlines which they had announced for bringing the SPV into operation. The vehicle purportedly aims to ensure economic benefits for Iran from staying in a 2015 nuclear deal after President Donald Trump recanted it in May.

On Saturday, Foreign Ministry spokesman Bahram Qassemi said Iran “holds Europe definitely responsible for failing to implement the financial mechanism,” warning that the bloc should account for the “consequences” of the delay.

EU foreign policy chief Federica Mogherini said last Wednesday that efforts to implement the special purpose vehicle for trade with Iran would continue well into 2019.

So far, the Europeans have defaulted on two deadlines which they had announced for bringing the SPV into operation. The vehicle purportedly aims to ensure economic benefits for Iran from staying in a 2015 nuclear deal after President Donald Trump recanted it in May.

On Saturday, Foreign Ministry spokesman Bahram Qassemi said Iran “holds Europe definitely responsible for failing to implement the financial mechanism,” warning that the bloc should account for the “consequences” of the delay.

Indian refiners to resume Iran oil imports

On Monday, Indian industry sources said state-run Bharat Petroleum Corp and Hindustan Petroleum Corp will each import 1 million barrels of Iranian oil in February after a gap of three months, taking the nation’s overall purchases from Tehran to 9 million barrels.

Top refiner Indian Oil Corp will lift 5 million barrels, while Mangalore Petrochemicals Ltd will buy 2 million barrels, Reuters quoted the sources as saying.

Earlier this month, New Delhi exempted rupee payments by Indian Oil Corp to Iran for crude oil imports from steep taxes.

“Iran has been and will be a reliable source of oil supply to India,” Zarif said on Monday as he arrived in New Delhi to take part in an annual research forum attended by economists and entrepreneurs.

Zarif said he had used the opportunity to bring along “a big economic delegation” comprising of representatives from the private and state sectors for talks with their Indian counterparts.

Iran and India, the minister said, have maintained their good relations in the wake of the resumed US sanctions.

He cited “a good banking agreement with India which was signed following the sanctions, through which imports and exports as well as other financial needs will be handled.”

Source: News Agencies, Edited by website team

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The Horror Stories Told About Syria Are Happening in India on a Monumental Scale

By Adam Garrie
Source

While the infowar regarding the state of human rights in Syria has largely died down on both sides, the violent targeting of religious and ethnic minorities, government forces shooting at unarmed civilians, the cultural cleansing of religious and other minorities and an epidemic of rape that is cheered on by ruling party loyalists, continues to foment throughout India and Indian Occupied Kashmir (IOK). Far from being recent trends, a long standing set of problems seem only to be growing worse.

A rape plague 

In January of 2018, Asifa Bano, an eight year old Muslim girl was kidnapped by a gang of Hindutva extremists where she was gang raped and murdered inside a Hindu temple. This horrific incident became symbolic of a crime wave against minorities in India where women are often the foremost victims of horrific sexual assaults.

In June of 2018, it was reported that five female activists in the Indian state of Jharkhand who were attempting to document and stop human trafficking in the region, were themselves kidnapped and gang rapped at gunpoint.

The seriousness of the rape epidemic in India is compounded by the fact that powerful political figures and so-called “philosophers” have not only justified but endorsed rape as a political and social weapon against minorities, including and especially Muslim women.

According to Pakistani-American journalist Riaz Haq,

“It is hard to say how many of the rape victims were Muslim. What is known, however, is the exhortation by iconic Hindutva leaders to rape of Muslim women. Vinayak Damodar Savarkar, one of founders of right-wing RSS who Prime Minister Modi describes as “worthy of worship”, is among them. After getting elected as to the highest office in India, Modi paid tribute to Savarkar by laying flowers at his portrait that hangs in India’s Parliament.

VD Savarkar, in one of his books titled Six Glorious Epochs of Indian History, elaborates on why raping of Muslim women is not only justified but encouraged.

Savarkar has used revisionist Hindutva history to exhort his followers to rape Muslim women as payback for historic wrongs he believes were committed by Muslim conquerers of India. ‘Once they are haunted with this dreadful apprehension that the Muslim women too, stand in the same predicament in case the Hindus win, the future Muslim conquerors will never dare to think of such molestation of Hindu women’, he writes”.

 

What one is witnessing in India is more than an average crime epidemic but is part of a wider systematic breakdown in society that has seen Muslim men lynched for allegedly slaughtering a cow for beef, entire Muslim families murdered for allegedly eating beef, Muslim women and children raped because they are considered subhuman by Hindutva extremists and other minority groups as well as so-called Dalits – members of Hinduisms “untouchable” caste treated much the same.

Government supporting Hindutva extremists kill and terrorise Muslims 

While India’s secular democracy still exists in theory, in practice extremist Hindu groups that at both regional levels and now at a national level are threatening to erase not only the history of important periods in India’s development that were shaped by Islamic characteristics, but in so doing, the forces of political Hindutva are erasing the cultural and religious identify of millions of modern day Indian citizens.

Today, the greatest victims of acculturation and oppression in modern India are Indian Muslims – particularly those in northern India. Northern India remains the political heartland of the ruling political faction BJP as well as its allied militant group RSS. The year 2002 remains a watershed in the post-colonial history of India as it was then in Gujarat state that a violent pogrom was instigated against Muslims leaving up to 2,000 dead. Most worrying, the Chief Minister of Gujarat in 2002 was a man called Narendra Modi who is now India’s Prime Minister. Many witnesses to the violence in Gujarat continue to assert that Modi’s state government as well as police and other public authorities intentionally allowed the violence to spiral out of control when clearly it is the duty of any government to quash violence and enforce an orderly rule of law.

In the years since the BJP formed the current Indian government, the rise of so called “cow protection mobs“, the phenomenon where gangs of extremist Hindus attack and often lynch Muslims accused of eating or trading in beef products, has also skyrocketed. In many cases, the Muslim victims of murder and vicious assault were simply targeted for being Muslims rather than for having anything to do with butchering cows, selling or eating beef.

The contemporary assault on Muslims in India however is not just limited to the mob violence which is clearly sanctioned by elements of the ruling party and their far-right allies. The historic city of Allahabad in the Indian state of Uttar Pradesh has recently been the site of controversy after the BJP’s Uttar Pradesh Chief Minister Yogi Adityanath decided to unilaterally rename the city Prayagraj. This is a clear attempt to erase the history of the Mughal Empire which incidentally was the pre-1947 sovereign entity which came closest to uniting all of what was now India.

One of India’s most internationally famous monuments, the Taj Mahal was built on the orders of Mughal Emperor Shah Jahan as an Islamic shrine for his wife. While Indian tourism associations promote the Taj Mahal as one of the country’s top destinations, the Archaeological Survey of India have now taken the decision to prohibit Muslim pilgrims from worshipping in the Taj Mahal’s mosque on every day of the week except Friday.

This attempt to de-Islamify one of the world’s most recognisable Islamic shrines is yet another attempt to erase Muslim history and specifically Mughal history from the collective consciousness of modern India.

But beyond the attempts to culturally cleanse Islam from India, it was recently reported that a Uttar Pradesh Assembly member of the ruling BJP just stated that he is ready to bomb minorities who claim that their safety is no longer guaranteed in India.

Such behaviour however should not be surprising as the ruling party of India is associated with the RSS – a movement that is in effect an officially sanctioned violence squad.

Indian Occupied Kashmir’s year of death 

The Washington Post recently confirmed that 2018 was the deadliest year for Kashmiris in IOK for a decade. Kashmiri media have cited an end of year report by the Jammu and Kashmir Coalition of Civil Society (JKCCS) which details the nature of the state violence against mainly young protesters demonstrating for the right to national self-determination.

According to author Sagrika Kissu:

“As per the figures released by JKCCS, a total of 160 civilians were killed in incidents of violence in 2018 in the Valley. Among those killed were18 women and 31 children – the highest in the last decade – including an eight-month-old baby, Nitin Kumar, who was killed in cross-border firing in Pallanwala. According to the report, a total of 586 people were killed in 2018 in Kashmir. Among 586 people killed in Jammu and Kashmir, 160 are civilians, 267 are militants and 159 are members of Indian armed forces and Jammu and Kashmir police, the report added.

Meanwhile, in contrast, government figures show a decline in killings. In reply to a written question in Rajya Sabha on Wednesday, Minister of State for Home Affairs, Hansraj Ahir, said, ‘Altogether 140 terrorists were killed by security forces in Jammu and Kashmir between June and December 2018 during which 426 stone pelting incidents were also reported in the state.’ However, these  figures have allegedly created more distrust among people in Kashmir who think that ‘government is hiding the human rights violations in the valley’, say human rights activists.

According to the JKCCS report, most civilian deaths were reported from South Kashmir, the region which saw sustained violence in 2018. Almost 85 civilian killings were recorded from four districts of South Kashmir – Kulgam, Anantnag, Pulwama and Shopian. North Kashmir recorded 24 civilian killings, while Central Kashmir witnessed killings of 13 civilians. Near 180 instances of internet blockade were recorded in 2018. The report also documented surging cordon and search operations in the valley.

In 2018, at least 275 Cordon and Search Operations (CASOs) were conducted across Jammu and Kashmir, which resulted in the killing of 267 militants, the report said. According to data compiled by Association of Parents of Disappeared Persons and JKCCS, at least 143 encounters took place between Indian armed forces and militants following CASOs. In 2018, at least 120 cases of damage to civilian houses were reported in Jammu and Kashmir in which 31 houses were completely burnt while 94 were partially damaged, the report said.

The report also talked about the decade-high suicides among security forces, as ’20 armed force personnel claimed their lives’ – the highest in the past 10 years. 2018 also saw an uptick in the usage of force and pellets at protestors. ‘In 2018, 191 incidents of excessive use of force were recorded. Firing on protestors, use of pellet shotguns, beatings and physical assaults by Indian armed forces have been routinely reported. According to a newspaper report, from May 1 to 9, around 115 people were admitted in Shri Maharaja Hari Singh Hospital (SMHS) for pellet and bullet injuries. Out of these, 74 had received pellets, with 60 among them having injuries in their eyes. According to a surgeon treating the injured at the hospital, government forces had been firing bullets on chest, neck, head and abdomen, which showed their intention to kill,’ the JKCCS report said.

The year also saw the youngest pellet victim, 19-month old, Hiba. A pellet had hit her right eye and was later removed by doctors but yet the chances that she might lose her eyesight in the affected eye are high.

The report also underlined the less-acknowledged instance of vandalism. In 2018, at least 120 cases of damage to civilian houses were reported in Jammu and Kashmir in which 31 houses were completely burnt while 94 were partially damaged. ‘The burning and destruction of civilian properties is not just a form of collective punishment against the local population but an act which renders scores of families homeless,’ the report said”.

Conclusion 

Now that the war in Syria is dying down, those who claimed that their main concern in respect of Syria was the human rights situation, ought to shift their focus to India. To do anything less would be seen by millions in south Asia as a symptom of utter hypocrisy. As India’s Muslim population stands at 172 million while Syria’s total population is around 18 million, in terms of sheer scale, the problems in India are too big to be ignored according to the precedent set by those following events in the Levant.

With the government attempting to lie about its atrocities in IOK, with politicians from the ruling party threatening to bomb civilians while others have applauded child rape and with no clear action plans to put a meaningful end to the wholesale violence against Muslims and other minorities by government supporters, the so-called international community could gain credibility if it sought to shine a light on India that had been shone so brightly on Syria in recent years.

A two part Pepe Escobar report on the China, Pakistan and the new Great Game

December 30, 2018

A two part Pepe Escobar report on the China, Pakistan and the new Great Game

by Pepe Escobar (cross-posted with The Asia Times – here and here – by special agreement with the author)

The new Great Game on the Roof of the World

On top of the graceful Baltit Fort, overlooking the Hunza Valley’s Shangri-La-style splendor, it’s impossible not to feel dizzy at the view: an overwhelming collision of millennia of geology and centuries of history.

We are at the heart of Gilgit-Baltistan, in Pakistan’s Northern Areas, or – as legend rules, the Roof of the World. This is an area about 70,000 square kilometers (27,000 square miles) crammed with spectacular mountain ranges and amidst them, secluded pristine valleys and the largest glaciers outside of the Polar region.

The location feels like vertigo. To the north, beyond the Batura Glacier, is the tiny northeast arm of Afghanistan, the legendary Wakhan corridor. A crest of the Hindu Kush separates Wakhan from the regional capital Gilgit. Xinjiang starts on Wakhan’s uppermost tip. Via the upgraded Karakoram highway, it’s only 240 km from Gilgit to the Khunjerab Pass, 4,934 meters high on the official China-Pakistan border.

What used to be called the Russian Pamir, now in Tajikistan, can be seen with naked eyes from one of the peaks of the Karakoram. To the east, past Skardu and an arduous trek that may last almost a month, lies K2, the second highest peak in the world, among a mighty group north of the Batura Glacier (also known as Baltoro), which is 63km long.

Receding Hopper Glacier

The receding Hopper Glacier in northern Pakistan. Photo: Asia Times

To the south lies Azad (“Free”) Kashmir and slightly to the southeast what locals define as Indian-occupied Kashmir. The former King of Kashmir agreed to be part of India after Partition in 1947 but troops were airlifted to the northern state and after a year of fighting, India went to the UN. A temporary ceasefire line was established in 1948 and runs down from the Karakoram towards the Nanga Parbat – the killer mountain, dividing Kashmir into two virtually sealed halves.

Massive mountain ranges

Driving across the Karakoram Highway (see part 2 of this report) we were face to face with three massive mountain ranges running in different directions. The Karakoram roughly starts where the Hindu Kush ends and then sweeps eastward – a watershed between Central Asian drainage and streams flowing into the Indian Ocean.

original Silk Road, parallel to K’koram hwy

The ancient Silk Road is seen above the Karakoram Highway. Photo: Asia Times

Driving across the Karakoram Highway (see part 2 of this report) we were face to face with three massive mountain ranges running in different directions. The Karakoram roughly starts where the Hindu Kush ends and then sweeps eastward – a watershed between Central Asian drainage and streams flowing into the Indian Ocean.

The Himalayas start in Gilgit and then run southeast through a cluster of high peaks, including the Nanga Parbat, directly on the Islamabad-Gilgit air route (flights by turboprop only take off if weather around the Nanga Parbat allows).

Strategically, this is one of the top spots on the planet, a protagonist of the original Great Game between imperial Britain and Russia. So it’s more than appropriate that here is exactly where a protagonist of the New Great Game, the China-Pakistan Economic Corridor (CPEC), the flagship project of the New Silk Roads, or Belt and Road Initiative (BRI), actually starts, linking western China’s Xinjiang to the Northern Areas across the Khunjerab Pass.

Karakoram politics

CPEC is the supreme jewel in the Belt and Road crown, the largest foreign development or investment program in modern China’s history, loaded with way more funds than years of US military aid to Islamabad.

And we are indeed in Ancient Silk Road territory. Looking at the millenary trail parallel to the Karakoram, lovingly restored by the Aga Khan Development Foundation, it’s easy to picture the great Chinese traveler Hiuen Tsang traversing these heights in the 7th Century, and naming them Polo-le. The Tang dynasty called it Great Polu. When Marco Polo trekked in the 14th Century, he called it Bolor.

Early last month, I was privileged to drive on the upgraded Karakoram Highway along CPEC all the way from Gilgit to the Khunjerab, and back, with multiple incursions to valleys such as lush, pine-forested Naltar, Shimshal (manufacturers of sublime yak wool shawls), Kutwal and receding glaciers, such as Hopper and Bualtar.

The Karakoram Highway was originally conceived in the 1970s as an ambitious political-strategic project able to influence the geopolitical balance in the subcontinent, by expanding Islamabad’s reach into previously inaccessible frontiers.

Now it’s at the heart of a trade and energy corridor from the China-Pak border all the way south to Gwadar, the port in Balochistan in the Arabian Sea a stone’s throw from the Persian Gulf. Gwadar looks likely to be a crucial springboard to China becoming a naval power – active from the Indian Ocean to the Persian Gulf and on to the Mediterranean, while CPEC, slowly but surely, aims to change the social and economic structure of Pakistan.

Previous Pakistani prime minister Nawaz Sharif, the controversial “Lion of the Punjab”, was an avid CPEC supporter after he won the 2013 elections. At the time current Prime Minister Imran Khan’s Tehreek-e-Insaf (PTI) party, winner of elections held in July, had already polled second nationwide and rose to power in the strategic Khyber-Pakhtunkhwa province – straddling the area between Islamabad and the tribal belt.

Sharif, in June 2013, when he was about to enter negotiations with the Chinese, was lauding what would become CPEC as an infrastructure scheme that “will change the fate of Pakistan”. So far that has translated mostly into new hydroelectric dams, coal-fired power stations, and civil-nuclear power. The China National Nuclear Corporation is building two 1,100 MW reactors near Karachi for nearly $10 billion, 65% financed by Chinese loans. This is the first time that the Chinese nuclear industry has built something of this scale outside of their country.

More than a dozen CPEC projects involve power generation – Pakistan is no longer woefully energy-deprived. These projects may not be as sexy as high-speed rail and pipelines, which could arrive much later; after all CPEC in its planned entirety runs to 2030.

Of course, monumental business decisions will have to be addressed; the staggering cost – and state of the art engineering – involved in building a railway parallel to the Karakoram; and the fact that oil pumped via a pipeline from Gwadar to Xinjiang might cost five times more than via the usual sea lanes all the way to Shanghai.

A map shows the route of the China-Pakistan Economic Corridor. Photo: Wikimedia Commons/ Wanishahrukh

A map shows the route of the China-Pakistan Economic Corridor. Photo: Wikimedia Commons/ Wanishahrukh

What Imran wants

Imran Khan is way more cautious than Sharif, who had a “China cell” inside his office and commanded the Pakistani Army to set up a 10,000-strong security force to protect China’s CPEC investments.

But Khan knows well about the firepower behind CPEC: the Silk Road Fund, the Asian Infrastructure Investment Bank (AIIB), CITIC, Bank of China, EXIM, China Development Bank. The Chinese Academy of Social Sciences (CASS) projects that BRI could mobilize as much as $6 trillion in the next few years. What Khan wants is to negotiate better terms for Pakistan.

China’s ambassador to Pakistan, Yao Jing, never tires to stress that Pakistan’s serious debt problem relates to the initial phase of CPEC, due to the massive import of heavy machinery, industrial raw materials and services.

As I learned in Islamabad in various discussions with Pakistani analysts, Khan actually wants to expand CPEC and prevent it from leading Islamabad towards an unsustainable debt trap. That would mean tweaking CPEC’s focus away from too much infrastructure development to technology transfer and market access for Pakistani products. Financing for agriculture projects, for instance, could come via CPEC’s Long Term Plan, which unlike the so-called Early Harvest Plan does not come with a price tag attached and can be negotiated freely between Islamabad and Beijing.

According to a 2016 IMF report, $28 billion in projects included in Early Harvest will be completed by 2020: $10 billion to develop road, rail and port infrastructure, and $18 billion in energy projects via Foreign Direct Investment (FDI), with Chinese firms using commercial loans borrowing from Chinese banks.

CPEC though is an extremely long-term endeavor. Other CPEC investments in energy and transportation infrastructure financed by China will be finished only by 2030.

A new CPEC emphasis on industrialization via technology transfer would allow Pakistan to produce some of what China imports. That would imply reneg otiating the Pakistan-China Free-Trade Agreement (FTA), getting to the level of preferential treatment that China offers to ASEAN. Essentially, this is what Imran Khan is aiming at.

Hail the Ismailis

Gilgit-Baltistan is the safest place in the whole of Pakistan. Here, there’s no “terror threat” by the Pakistani Taliban or dodgy al-Qaeda or ISIS spin-offs. Major spoken languages are Shina and Burushaski, not Urdu. The population is overwhelmingly composed of Ismaili Shi’ites – like Karim Shah, an encyclopedia of Central and South Asian history and culture reigning over a cave of wonders in Gilgit where anything from authentic heads of Gandhara Bodhisattvas to 18th Century silk Qom carpets from a Persian royal family can be found.

Karim Shah and his cave of wonders in Gilgit. Photo: Asia Times

Karim Shah and his cave of wonders in Gilgit. Photo: Asia Times

We spent hours talking about Khorasan, the original Kipling-esque Great Game, Col. Durand (who drew the Durand Line separating Pashtuns on both sides of an artificial border), the Kashmir question, the astonishingly complex geo-eco-historical system of the Northern Areas, and of course, China.

Shah imparted the impression – confirmed by other traders – that the local population may see some tangible CPEC-related benefits, but does not know exactly what Beijing wants. Chinese visitors – engineers, bureaucrats – are remote; tourism has not picked up yet, as in the case of the Japanese, who have been Northern Areas enthusiasts for decades. Thus, an improvement in Xi Jinping’s “people-to-people exchange”, a key component of BRI, seems to be in order.

Legend rules that Hunzakuts, the inhabitants of the glorious Hunza Valley, are descendants of three soldiers of Alexander the Great who married beautiful Persian women of high aristocracy. While Alexander campaigned along the Oxus, the three couples traveled across the Wakhan corridor, discovered the marvelous valley, and settled down.

The tolerant Islam they came to practice centuries later is impervious to Gulf proselytizing. When I crossed an austere village by the Karakoram, visibly out of place, my Ismaili driver Akbar noted that these were “Sunni Wahhabis”.

Finding Gandhara art in Gilgit made perfect sense. Gandhara historically formed a sort of fertile and irrigated triangle between the Iranian plateau, the Hindu Kush and the first peaks of the Himalayas. Between the 6th Century BC and the Islamic invasions, it was the crossroads of three cultures: India, China and Iran. And it was here that an extremely original Greco-Buddhist art and culture flourished, way after Greek power had waned.

Gandhara Bodhisattva head, Gilgit cave of wonders

A Gandhara Bodhisattva head in Karim’s shop in Gilgit. Photo: Asia Times

The Kashmir question

As a new 21st Century crossroads, CPEC faces stern challenges – from geology (constant landslides and floods in Gilgit-Baltistan) to wobbly security in Balochistan, threatened by a combination of separatist and religiously or politically manipulated movements. I was not able to visit Gwadar and the south of CPEC even though contacts in Islamabad supplied military sources with an application for a NOC (No Object Certificate, as it is known on Pakistan) weeks in advance. The military response: too “sensitive”, as in dangerous, for a lone Western journalist, especially in the aftermath of the Aasia Bibi case.

China will need to find a way – perhaps via negotiations inside the Shanghai Cooperation Organization – to mollify India on CPEC’s route straddling Kashmir.

In 1936 the British made a deal with the Maharaja of Kashmir, getting Gilgit on lease for 60 years. But then came Partition. At the time the Kuomintang – in power in China, before Mao’s victory – was engaged in secret negotiations to restore Hunza’s fabled independence as a new state allied with China. But the Mir of Hunza finally decided to join the newborn Pakistani nation.

Few may remember that, during the 1950s, way before the India-China border war in 1962, there was trouble on the China-Pakistan border, when Beijing seized 3,400 square miles of Kashmir, including parts of old Hunza, whose Mirs always recognized Chinese suzerainty. When the British had first seized Hunza in 1891, the Mir actually fled to China.

Zhou EnLai visits Baltit Fort in early 60s

This puts into perspective some fabulous documents preserved at Baltit Fort, like China-Baltistan trade agreements and a picture of Zhou EnLai visiting the fort in the early 1960s.

It’s also fascinating to remember that at the time Zhou Enlai already thought about Karachi – no Gwadar at that time – connecting to an “ancient trade route, lost to modern times, not only for trade but for strategic purposes as well”. Xi Jinping has definitely read his Zhou EnLai thoroughly.

China Baltistan trade agreements

Historic trade agreements between China and Baltistan. Photo: Asia Times

Nowadays, the President of Azad (Free) Jammu and Kashmir, Sardar Masood Khan, always stresses that “unlike Indian propaganda”, the Pakistani side is “thriving politically and economically”, and CPEC could also be beneficial for Indian Kashmir. As it stands, this remains a red line for New Delhi.

Once in a lifetime chance

At the National Defense University in Islamabad, I was shown a paper by Li Xiaolu, from the Institute of Strategic Studies at the National Defense University of the PLA detailing how Beijing hopes that “by opening China’s west to Central and South Asia, building better transportation infrastructure, and by encouraging trade with South and Central Asian countries, the development of manufacturing, processing and industrial capacities in Western China can be promoted”.

Now compare it with road and rail infrastructure improved across Pakistan being able to turn the whole nation into an actual trade corridor, while the Pakistani Navy improves its defense in deep-sea waters with Gwadar positioned as a third naval base and offering support for Chinese ships across sea lanes close to the Middle East and Northern Africa.

No wonder Chinese analysts share a virtual consensus about traditional Chinese wisdom favoring unity for prosperity – a key plank of CPEC and BRI – and prevailing over containment and confrontation.

For CPEC to work, Beijing needs three things: a political solution for Afghanistan, which is already being worked out inside the SCO, with China, Russia, India, Pakistan and Iran (as an observer) directly involved; stable relations between India and Pakistan; and certified security across Pakistan.

Beijing is actively encouraging closer connectivity between Afghanistan and Pakistan, with the Quetta-Kandahar railway and the Kabul-Peshawar highway. CPEC is actually expanding from the Karakoram to the Khyber Pass, trespassing the artificial Durand line along the way.

In contrast, multiple factions in Washington continue to twist all possible faultlines to thwart these projects, with a propaganda campaign designed to portray BRI as a swamp of corruption, incompetence, a “debt trap” and “malign” Chinese behavior.

Yet among all BRI corridors, material progress across CPEC is more than self-evident. I saw every village in the Northern Areas with electricity and most of them linked by fiber optics, a stark contrast to when I traveled a severely dilapidated Karakoram, twice, two decades ago.

Pakistan now has a once in a lifetime chance to harness its geographical location – with borders intertwining centuries of history and culture with Iran, Afghanistan, Central Asia and the Middle East – to set itself up as a key bridge between the Middle East and both the Mediterranean and Western China.

Rumors abounded in Islamabad that Imran Khan is aiming for an international standard university in the capital, positioned as a center of study and research tracking the new mosaic of an emerging multipolar world. Young people power will be more than available, like Jamila Shah, currently at the National Defense University, doing a masters in Peace and Conflict Studies, and working with an NGO, the International Rescue Committee. Jamila, from Hunza, in Gilgit-Baltistan, is the face of Pakistan’s future.

Jamila Shah

Jamila Shah. Photo: Asia Times

Still hostage to a corrupt oligarchy, cartelized industries, falling exports (60% of which are textiles), and with almost half of their youths aged from five to 16 out of school, Pakistan faces a Sisyphean task.

Economist Ishrat Husain has correctly noted that Pakistan’s model of “elitist growth” must be replaced by “shared growth”. Enter a modified CPEC opening the path ahead, hopefully like those cargo trucks defying the slippery, snowy Khunjerab full blast.

CPEC trade Pak style

Trade on the China Pakistan Economic Corridor. Photo: Asia Times

Up next: On the road in the Karakoram 

On the road in the Karakoram

On the Pakistani side, a wooden house serves as a small customs office fronted by “the highest ATM in the world” – though you try a foreign credit card at your peril. The Chinese side boasts an intimidating, metal-plated James Bond-esque structure with no humans in sight.

This is ground zero of the China-Pakistan Economic Corridor (CPEC), the point where the revamped, upgraded Karakoram Highway – “the eighth wonder of the world” – snakes away from China’s Xinjiang all the way to Pakistan’s Northern Areas and further south to Islamabad and Gwadar, on the Arabian Sea.

From here it’s 420 kilometers to Kashgar and a hefty 1,890 km to Urumqi, the capital of Xinjiang. But going south is where the fun really begins.

highest ATM in the world

World’s highest ATM. Photo: Asia Times

Traveling the Karakoram from Gilgit, the capital of the Northern Areas, to the Khunjerab and back is an exhilarating road trip along CPEC and its spin-offs. And it’s a crazy carousel.

Psychedelic Pakistani trucks, Chinese container road warriors – some trying to subdue the Khunjerab without chains on their tires – packed minivans plying the Hunza-Xinjiang route, Silk Road motels, the smell of curry interfacing with the best apricot juice in the world, roadside butchers, shacks advertising themselves as “Silk Road Investment & Credit Society Ltd,” many a Pak China Gateway Hotel, checkpoints consisting of a roadside table and a bunch of papers kept from flying away by pebbles, stashes of yuan crisscrossing rupees and dollars and messy, multi-level “people to people exchanges.”

Chinese container truck up the Khunjerab with no chains on tires

A Chinese container truck ploughs over the snow without chains on its tires. Photo: Asia Times

It’s one of the greatest road trips on earth. And in geopolitical terms, it may be the greatest.

Mind the yaks

Karakoram North starts at the environmentally protected Khunjerab National Park, where yaks roam freely on the road and ibex and marmots are easily spotted nearby. But there are no Marco Polo sheep, much less snow leopards. (Though local Ismailis insist a few dozen reside in the park.)

The Yak and Sheep Highway

Yak and sheep roam the highway. Photo: Asia Times

The first serious pit-stop in the Karakoram is Sost, which used to be the Pakistani border in the old days – as when I traveled the road, twice, 20 years ago by jeep from Kashgar. Now, the bustling trade entrepot is the HQ of the Silk Road Dry Port Sost. Chinese lorries unload their cargo and Pakistani trucks take up the relay to transport the merchandise all across the nation. It appears modern and well-organized. Everything proceeds smoothly.

entrance to the dry port at Sost

Entrance to the dry port at Sost. Photo: Asia Times

Snaking south, we pass right under the spectacularly receding Passu Glacier. In a nearby village, a funeral is in progress, with the crowd taking over the road alongside yaks and buffalos and interrupting traffic at will.

The receding Passu glacier by the Karakoram

The receding Passu Glacier by the Karakoram. Photo: Asia Times

The upgraded Karakoram is an apotheosis of Pak-China Friendship Tunnels – all exhibiting the obligatory commemorative billboard extolling a geopolitical friendship soaring “higher than the highest mountain.”

One of many Pak-China tunnels

One of the many Pak-China tunnels. Photo: Asia Times

This is CPEC in effect. It is astonishing when compared to the recent past. Between the Hunza and Gilgit rivers flowing parallel to impeccable asphalt worthy of an autobahn, a fiber optic cable runs all across the Northern Areas.

Chinese engineering has performed miracles. Around 160km south of the Khunjerab we drive around Attabad Lake, which totally submerged the road after a landslide in January 2010. For over five years there was simply no China-Pakistan overland trade, although some went via Kashgar-Gilgit flights. The solution by the China Road and Bridge Corporation had to be a tunnel – completed in 2015.

Attabad lake, now negotiated via a tunnel

Attabad Lake, now negotiated via tunnel. Photo: Asia Times

Trade along the Karakoram is bound to pick up – after years at less than 10% of total China-Pak trade, which tends to flow especially from Guangdong and Zhejiang provinces, not Xinjiang. Some stretches of the highway remain prone to constant landslides, rockslides or floods, which require a number of 24/7 rescue and maintenance teams. These are Pakistani, while the SUVs of the police in the Northern Areas have been supplied by China.

The heart of the New Silk Roads, or Belt and Road Initiative (BRI) infrastructure projects are road and railway lines. These do not cost a fortune per se; the expense is in the construction costs for bridges and tunnels. Russia spent over $4 billion on its Kerch Strait bridge to the Crimea. New Silk Road costs will be exponentially higher. Tunnels can be way more expensive than bridges.

Where the Himalayas rise

From the Karakoram it’s sometimes possible to catch a glimpse of the formidable Nanga Parbat – Kashmiri for “Naked Mountain,” later nicknamed the “Killer Mountain.” It has never been climbed in winter, and is actually a series of ridges which anchors the western Himalaya range, culminating in an ice crest at 8,126 meters above sea level. That is the ninth highest peak in the world and the second in Pakistan after K2.

Glimpse of the mighty Nanga Parbat

Heading into the mighty Nanga Parbat (on the right). Photo: Asia Times

As we approach Gilgit, the road signs – in English, Mandarin and Russian – say 468 km to Abbottabad (site of the Osama bin Laden endgame) and 583 km to Islamabad. Way down south, in less mountainous terrain, I’m told the odd rockslide gives way to occasional floods.

South of Gilgit, the Chinese once again are in frantic building mode, attacking the road starting from the Karakoram to the strategic Mecca Skardu. The road, according to local Ismailis, should be ready before 2020.

meeting of the Karakoram, the Hindu Kush and Himalayas

Where the Karakoram, Hindu Kush and Himalayas meet. Photo: Asia Times

And then, on a bend of the revamped highway, the intersection of the Karakoram, the Hindu Kush and the Himalayan mountain ranges – bordering the confluence of the Gilgit River with the Indus, now flowing south all the way to the Arabian Sea – spreads before us. Nearly 85% of the Indus discharge happens between May and September, out of snow and glacial melt, propelling the monsoons. Abdul, the painter of the Karakoram, is applying the finishing touches to a white-clad viewing point.

Abdul, painter of the Karakoram

Abdul: Painter of the Karakoram Highway. Photo: Asia Times

The China-Pak embrace

The building of the original Karakoram – an engineering tour de force – took no less than 27 years and claimed the lives of over 1,000 Chinese and Pakistani workers.

The Karakoram Highway is much more than a road; it’s a rolling, graphic emblem of the China-Pakistan geopolitical embrace, surmounting all manner of economic, cultural, geological and security barriers over decades to the benefit of a strategic objective. And the strategic objective now is CPEC as the flagship BRI project.

At the recent opening ceremony of the China International Import Expo in Shanghai, where he was guest of honor, Pakistani Prime Minister Imran Khan described CPEC, including the Karakoram highway, as a “vital link” for China and Pakistan with the Middle East and Central Asia. “CPEC is a mechanism to connect China, the Middle East and Central Asia that also opens ways for fresh investment and paves the way for new markets,” he said.

Khan also reassured his hosts – as well as domestic public opinion – that his new government is engaged in deep, meaningful reforms to ensure transparency and accountability; virtual ghosts as far as Pakistani business is usually concerned.

“Pakistan has an array of resources, minerals and renewables amidst the most diverse landscape,” Khan said, adding that his country is a leading exporter of sports goods, medical instruments and IT products, and has promising, 100 million-strong human resources under the age of 35. So, the potential is immense.

Islamabad is all in on completing CPEC up to 2030, with projections of up to 3% added to annual GDP growth, as industrial output is bound to rise with more electricity courtesy of CPEC investments and more production coming from Chinese-style Special Economic Zones.

CPEC’s Long-Term Plan (2017-2030), released one year ago, defines four priorities in Pakistan: Gwadar Port; energy projects; transport infrastructure (as in upgrading of the Karakoram); and industrial cooperation. Imran Khan’s government (see Part 1 of this report) is aiming for Pakistan to position itself, via CPEC, as the key hub uniting the overland Silk Road Economic Belt and the Maritime Silk Road.

The big plan

This implies, geopolitically and economically, an even stronger, trans-regional, China-Pakistan alliance in contraposition to India and Washington. The US reaction to BRI in 2018 was to unleash a whispering campaign to try to discredit it. Beijing, for its part, expects India and Pakistan to at least discuss their political differences inside the Shanghai Cooperation Organization.

From now on, China’s far west and south – Xinjiang and Yunnan – have to become the top drivers of the Chinese economy. Upgrading their road, rail and energy infrastructure and closely linking them to South Asia and Southeast Asia is essential for China to keep growing – all that boosted by crucial energy connectivity via a gas pipeline from Turkmenistan, an oil pipeline from the Caspian in Kazakhstan, further massive gas shipments from Siberia, and, further down the road, a possible gas pipeline from Gwadar port to Xinjiang parallel to the Karakoram.

Will it work? The Karakoram, Hindu Kush and Himalayas have seen it all come and all go over multiple millennia. So why not? The upgrading of the greatest geological and geopolitical road trip on earth is a start.

Karakoram checkpoint

Karakoram Highway checkpoint. Photo: Asia Times.

Karachi Killer Assassinated in Afghanistan: RAW False Flag or Modi’s Blunder? — Astute News

The Baloch separatist mastermind behind the recent terrorist attack against the Chinese consulate in Pakistan’s largest city of Karachi has been assassinated by a suicide bomber in Afghanistan after he was reportedly sent there by India in an effort to distance New Delhi from its proxy after that audacious incident, raising serious questions about whether […]

via Karachi Killer Assassinated in Afghanistan: RAW False Flag or Modi’s Blunder? — Astute News

CPEC and The New Great Game on the Roof of the World — Astute News

On top of the graceful Baltit Fort, overlooking the Hunza Valley’s Shangri-La-style splendor, it’s impossible not to feel dizzy at the view: an overwhelming collision of millennia of geology and centuries of history. We are at the heart of Gilgit-Baltistan, in Pakistan’s Northern Areas, or – as legend rules, the Roof of the World. This […]

via CPEC and The New Great Game on the Roof of the World — Astute News

Will India Help Iran Avert U.S. Sanctions-Related Medical Crisis?

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by Aveek Sen, Mojtaba Mousavi, and Udayan Tandan

Zeinab, the mother of a four-year-old girl suffering from blood cancer, says that “Mina has been under medication for nearly five months. The doctor had prescribed her pills recently and Mina has to take them every night for three years straight.” Zeinab adds, “We are spending really difficult days both physically and emotionally. It’s okay if you have no food at home, but in hospitals, there should be medicine for patients, for children. Whatever sanctions you’re imposing, don’t restrict medicine.”

Restrictions on importing pharmaceutical active ingredients reduced Iran’s medicine production during the last round of U.S. sanctions in 2012. “I am a PSC patient and I need Mesalazine and Ursobil on a daily basis,” said Amir, 29 who was diagnosed in 2008 with primary sclerosing cholangitis (PSC), a liver disease. “In 2012, I couldn’t find enough Mesalazine and my colitis activated again. That was an awful experience. The doctors told me that without regular intake of the medicines, I face serious damage to my liver. It may overtime metamorphose into colorectal cancer.” 

U.S. officials have said repeatedly that the sanctions are designed to target the Iranian “regime,” and it has even issued a waiver for humanitarian goods. But in action, by imposing sanctions on Iranian bank transactions, the United States is effectively blocking the only way to buy medicine for Iranian patients.

“When banks are terrified to handle Iran-related transactions, it means we cannot even buy medicine, and if we do, we cannot transfer them into Iran since airlines won’t accept cargoes destined for Iran,” says a senior manager in an Iranian firm importing pharmaceuticals, speaking on the condition of anonymity.

Fear is the main weapon that the United States is using to enforce its sanction policy against Iran. “The fact is that the banks are so terrified by the sanctions that they don’t want to do anything with Iran,” said French ambassador to the UN Gerard Araud to The New York Times. “So it means that there is a strong risk that in a few months really there will be shortage of medicine in Iran.”

On October 3, 2018, judges at the International Court of Justice ruled that the United States had to remove “any impediments” to the export of humanitarian goods, including food, medicine and spare parts, and equipment and services necessary for the safety of civil aviation. The United States argued the ruling was a “defeat” for Iran, saying it already allowed humanitarian-related transactions.

“Excluding medicines from sanctions is just a false claim,” says Iranian Health Minister Hassan Ghazizadeh Hashemi. “We have many medical cargoes need to be transferred quickly but there is no airplane or ship to transfer them into Iran due to US sanctions.”

“If imports of drugs into the country are stopped right now, we are able to meet 50 percent of the nation’s need for medicines,” says Akbar Barandegi, the director general for pharmaceutical affairs at the Iranian Food and Drugs Organization.

Iran faced a shortage of life-saving medicines in 2012-13 due to economic sanctions imposed by the EU and the United States. Medicines were exempt from the sanctions. However, Europeans were reluctant to supply pharmaceuticals, primarily due to payment concerns since Western banks were wary of handling financial transactions with Iran.

In these circumstances Iran turned to India for a supply of essential life-saving drugs. The Indian pharmaceutical industry is known worldwide for its quality generic drugs. Indian pharma majors like Cipla, Ranbaxy, and Glenmark supplied Iran with bulk drugs, active pharmaceutical ingredients, and generic formulations of drugs used in the treatment of lung and breast cancers, brain tumors, and heart ailments, among others. In the cases of Cipla and Ranbaxy, they provided medicines to Iran despite having a major presence in the U.S. market.

With U.S. sanctions kicking in once again, Iran’s position has become precarious for it may face trouble importing essential items like food and medicine. Ajay Sahai, the director general of the Federation of Import-Export Organisations, remains cautiously hopeful since the United States has of yet not provided clarity on this issue. Also, he points out, if European companies bend to U.S. pressure, Indian pharmaceutical companies could again step in, particularly small- and medium-sized enterprises with no exposure to the U.S. market. India has also already obtained a sanctions exemption on oil imports, and the payment mechanism between the two nations has been resolved. Sahai notes that Iranians will be eager to import from India in exchange for what India owes in oil payments.

Century Pharma is one Indian enterprise well-positioned to help Iran. It’s been in the business of manufacturing active pharmaceutical ingredients for the past three decades and has been regularly exporting to Iran, according to the company’s managing director, Janak Sheth. In fact, Century Pharma has already received two big orders from Iran in the last week.

Every time Iran faces tight sanctions from Western countries, its trade with Asian countries, especially southeast Asian states, increases until whenever Iran decides to expand its relationship with the West,” says Javad Aminian, an expert in Iranian relations with South Asia. “So, we expect Iran’s trade with Asia to rise again during the new round of sanctions.”

Aveek Sen is an independent journalist working on cybersecurity and the geopolitics of India’s neighborhood, focusing on Pakistan, Afghanistan, Iran, and Bangladesh. @aveeksen. Udayan Tandan was a former legal consultant at the Enforcement Directorate and currently practices law in New Delhi. @udayantandan. Mojtaba Mousavi is the founder and editor of the Tehran-based analytical website, IransView.com. His writings on Iran’s foreign policy appeared in different Iranian and international media including Al-Monitor and Al-ahram weekly. @mousavimojo

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