Friday, November 28, 2008

down but not out

Despite the bloodshed, India's confidence is already shining through.

Jason Overdorf and George Wehrfritz
NEWSWEEK (November 28, 2008)

You couldn't strike a blow closer to the heart of Indian finance. Mumbai's downtown waterfront—the setting of the terror attacks—has been the national economic gateway since the days of the British Raj; its stock exchange sits between the two hotels besieged by gunmen, and the country's largest business groups are all headquartered nearby. So one might imagine that the gunmen who killed at least 155 people had done grave damage to one of the world's fastest growing major economies—and they'd be wrong. "There are far more important things going on in the global economy at the moment than terrorism in India," says Daniel Melser, senior economist with Moody's in Sidney. As horrific as the attacks were, he adds, "the economic impact will be secondary."

In the coming days and weeks, India's resilience will be on full display. The show of confidence actually began Friday, when Mumbai's main stock exchange—open even as Indian commandoes were still clearing the area of terrorists—rose slightly on the day, in contrast to the NYSE post 9/11, or London markets after the 2005 bombings, which fell sharply. It may well fall further as the full impact of the worst terror attacks to hit Mumbai since a coordinated bombing campaign destroyed the stock exchange, targeted the main railway station and killed some 250 people in a single day back in 1993, but most experts agree that the jitters will eventually subside. "In the short term I'd expect that the effect will be completely negative," said Saumitra Chaudhuri, a member of the prime minister's economic advisory council. "People who do business with India will think twice about visiting, and they'll also think twice about taking any Indian exposure. But all this will pass in a month or two, [and] I don't think in the medium to longer term there will be any lasting damage."

The attacks, in short, haven't changed the India "story" that investors find so alluring. The country remains a standout among emerging markets for its large middle class, thriving service sector and low export dependency. Unlike much of the rest of Asia, its economy is driven mainly by household consumption, which makes it uniquely resilient in today's global downturn. And with growth centers in a variety of industries and geographic locations across the country, the economy isn't vulnerable to a knockout strike of the sort any terror group could deliver. All of which should keep domestic growth relatively robust and prevent foreign investors from growing too skittish—provided Indian authorities quickly reestablish order. The latest attacks "obviously escalated things … so threat perceptions [will] go up dramatically," says Subir Gokarn, chief economist at Crisil, the India arm of Standard & Poor's. "One could take New York, which despite 9/11 got back on its feet, as an example. I think Mumbai will do the same, provided the system responds strongly. That's where the uncertainty is now."

India's tourism industry is unlikely to escape a major shock. "Incredible India"—the government's flashy tourism promotion campaign—is now virtually certain to fall short of its goal of doubling arrivals from last year's five million by 2010. It may even move backwards, as did Bali's tourism trade after the 2002 nightclub bombings, losing more than a third of its traffic overnight. Yet in truth, Indian tourism is anything but incredible in a numerical sense, so all the specter of terrorism can do is erode its already small base. By comparison, Bali alone will garner 2 million foreign visitors this year, and China is expected to improve upon the 137 million it attracted in 2007. With India's GDP at about $1 trillion and tourism contributing just more than $10 billion of that, the impact of even a major slowdown would be minor.

Experts are focused on two real risks. One is that India's counterterrorism preparedness won't improve. The challenge is to remake a tiny national police force comprised mainly of high-school graduates trained to do little but wield sticks to keep unruly crowds in order. The second risk is that terrorists like the ones who paralyzed Mumbai will incite sectarian unrest between India's Hindu majority and their Muslim neighbors, who make up just 14 percent of the country's 1 billion people. Indeed, with national elections due next year, the incentive is there for leaders of political parties divided along religious and geographic lines to ramp up the extremist rhetoric to rally their core supporters—regardless of what it does to India's business climate.

So far most politicians seem to be taking the high road. L.K. Advani, leader of the opposition Bharatiya Janata Party has toned down his oft-vitriolic Hindu nationalism and called for a unified response to the terror attacks from all political parties. Gokarn says the accommodating tone is "very encouraging" but adds that, to be effective, bipartisanship must beget "an institutional framework that the next government can very quickly act on, regardless of who is in office." If not, and additional terror attacks create the impression that India's security situation is deteriorating, the gloss that its economy emits could start to come off the India story.


the rise of the hindu right

Jason Overdorf
From the magazine issue dated Dec 1, 2008

It's election season in India, and that's bad news for the hapless Congress party. Six states go to the polls in the coming month, in what some experts are calling a bellwether for next year's general election. And though the races are too close to call, some pundits say Congress is likely to fare poorly. But that's not the worst of it. The slack in four of the contests may be taken up by the opposition Bharatiya Janata Party (BJP)—a Hindu nationalist organization that's surging in strength in a new, more aggressive form. In an especially worrisome twist, police say they recently uncovered possible links between BJP-associated Hindu nationalist organizations and suspected Hindu terrorists—a first for a mainstream Indian party.

The BJP's renewed appeal can be explained, at least in part, by timing. Under the leadership of Prime Minister Manmohan Singh, who is not known for his political acumen, Congress has lost the last eight state elections in a row. Now the worldwide financial crisis has sent inflation spiraling and slowed growth, further damaging the government's chances. The BJP hopes to capitalize on the bad economic conditions when voters head to the polls in Chhattisgarh, Delhi, Jammu and Kashmir, Madhya Pradesh, Mizoram and Rajasthan this month. While nothing's guaranteed, many observers expect Congress to get trounced. "Their machine is in tatters," says Mahesh Rangarajan, a Delhi University political analyst.

While that's bad for Congress, it wouldn't necessarily be a problem for India—but for two things. First, the state elections could well forecast the fate of the Congress-led ruling coalition, the United Progressive Alliance (UPA), in next nationwide poll, which must take place before May 2009. (The UPA's own rural-development minister recently said the state votes represented a "mini general election.") And second, the BJP has taken a nastier turn since it last led the country in 2004.

To get a sense of the shift, consider the BJP's candidate for prime minister this time around. Lal Krishna Advani is an aging rabble-rouser who in the mid-1990s helped gather a huge Hindu mob that tore down the 16th-century Babri Mosque, leading to riots that killed more than 2,000 people (Advani was later cleared of criminal charges). He is far more radical than his predecessor, Atal Behari Vajpayee, who served as prime minister from 1998 to 2004. And Advani's heir apparent is Gujarat's chief minister, Narendra Modi—who has been denied entry to the United States for his alleged role in the 2002 riots in Gujarat that killed more than 1,000. Not long after the riots, Modi warned a crowd that Muslims were trying to erode India's Hindu majority by having many children. "We have to teach a lesson to those who are increasing the population at an alarming rate," he said.

Then there's the alleged terror link. Since Oct. 24, the state of Maharashtra's Anti-Terrorism Squad has arrested 10 Hindu nationalists—including a lieutenant colonel in Army intelligence, a prominent Hindu spiritual leader and a former party worker from the BJP's student wing—for suspected involvement in a 2006 attack previously blamed on Muslim extremists. The case has yet to come to trial and the suspects maintain they are innocent. But the news, if true, would mark the first known terrorist bombing in India's history involving Hindu extremists—rather than Muslim radicals, separatists or Maoist revolutionaries—and the story has shocked the country. Rather than disown the suspects, however, BJP grandees have leapt to their defense. On Nov. 10, party president Rajnath Singh said that "whosoever believes in nationalism cannot be a terrorist," and on Nov. 12 he complained that "this government is targeting Hindu spiritual leaders without evidence … We find this investigation very suspicious."

The explanation for the BJP's rightward tilt lies with its increased reliance on its parent organization, the Rashtriya Swayamsevak Sangh (RSS). During the Vajpayee years and in the run-up to the 2004 national elections, the BJP generally tried to divorce itself from anti-Muslim vitriol and the RSS. But the debacle of that campaign—in which Congress won a stunning victory despite the consensus that the BJP had presided over an economic boom—gave nationalists the upper hand. The BJP's defeat reminded its leadership that it remains a cadre-based party united by its ideology, not a charismatic leader. And the bulk of those cadres come from the 4.5 million-member RSS. The RSS advocates a philosophy known as Hindutva and favors turning India into a Hindu state (the country's population is 80 percent Hindu) and designating religious minorities as second-class citizens. Without its nationalist ideology it wouldn't be clear what the BJP stood for. On most issues, the party's positions are actually very similar to Congress's (both parties advocate further economic reform and increased ties to the United States, for example).

The RSS is now suspected of connections to terrorism. Some of the current suspects belong to a heretofore-unknown group called the Abhinav Bharat, which is not officially linked to the RSS but espouses an identical Hindutva ideology. And the Anti-Terrorism Squad claims to have established links between the suspects and official RSS outfits. "You actually have for the first time evidence linking all kinds of front organizations of the [RSS family]," says political analyst Praful Bidwai. Since the '90s there have been several incidents of "accidental explosions at bomb-making operations run by [Hindu] fanatics," Bidwai says. "But this is the first time … the RSS has been linked to a conspiracy."

You might assume that such ties, unless repudiated, would hurt the RSS's popularity and the BJP's electoral chances in India, which is the world's largest democracy and a secular one at that. Unfortunately, that's not how things have transpired in the past. In fact, some of the BJP's prior electoral victories followed bouts of incendiary anti-Muslim hatred and actual violence. Vajpayee was first elected prime minister following the Babri Mosque riots, for example, and the mayhem in Gujarat in 2002 helped Modi win a thumping victory in that state, even though—or because—he was blamed for delaying police action to protect Muslims. Now, by casting the government's terror investigation as an anti-Hindu conspiracy, the BJP hopes to repeat this formula today and unite the faithful. "The various wings of the [RSS]—and it's a vast organization—will rally together," says Rangarajan.

If the electorate follows suit, it could lead to another big victory for the BJP—but a big step backward for India as a whole.


an underpoliced society

Jason Overdorf
In a terrifying attack that held India riveted for the past 48 hours, a group of highly trained and deeply committed terrorists seized top Mumbai hotels and a prominent downtown building Wednesday, holding more than 200 people hostage for the better part of two days. As special-forces operations to rescue hostages and flush out terrorists wind down, investigators are only now beginning to piece together how the attackers got into the city and took over the properties. India's foreign minister and others within the government are beginning to point the finger of blame at Pakistan—whose intelligence service India believes is a habitual sponsor of terrorist activities on Indian soil.

NEWSWEEK's Jason Overdorf spoke with Ajai Sahni, editor of the South Asia Intelligence Review and executive director of the Institute for Conflict Management, a New Delhi-based think tank that studies terrorism, about the implications.

Newsweek: How are these attacks different from previous terrorist attacks on Indian soil?
Ajai Ajai Sahni: First is the fact that the sheer scale of attacks is unique. We've had similar kinds of attacks in Jammu and Kashmir fairly regularly, commando-terrorist attacks. We've also seen something comparable in terms of the type of attack in Delhi and the attack on Parliament in 2001. So the pattern is not completely new to certain areas. But it is certainly new in Mumbai, and the sheer scale is unprecedented.

Moreover most attacks outside Jammu and KASHMIR—with the exception of the Parliament attack—have been bomb attacks, usually improvised explosive devices variously placed in soft targets. This is the first time we've seen something like this in a major urban center with quite as many participants. We're certainly looking at between 40 and 50 terrorists who appeared to have landed and launched the attack on Mumbai.

I saw a quote from intelligence sources that an attack of this nature would take 2-3 months to plan. Does that sound like a reasonable assessment?
It's not only a question of a plan. I would like to suggest that [the attack] would have taken a much larger time to mount because the kind of training that is evident and the degrees of motivation that are evident in these terrorists would take literally years to generate.

So this is probably the most organized attack we've seen in India?
You see there are different types of organizations. In the Mumbai blasts in 1993, you had extremely meticulous planning required. What I'm talking about here is a much longer gestation in terms of preparation of manpower—compared with what would be required for the mere placement of bombs.

What conclusions do you draw from that if any?
Well, you've had fedayeen-type attacks in other theaters in India—certainly in Jammu and KASHMIR and in the Parliament attack in Delhi. But this represents a simple escalation of scale in such attacks that will create definitive problems. And what it has also demonstrated is the enveloping vulnerabilities of the Indian system; we do not really appear to have the necessary defenses in place to quickly contain the impact. Even if we are not able to prevent such attacks (and no country can expect to completely exclude the possibility of such strikes), certainly the capacity for containment of the attack is extremely wanting.

News reports suggest that Israelis, Americans and Brits were singled out, segregated and held—possibly for hostage negotiations. What is the significance of this focus on foreigners?
The significance of this focus on foreigners is these are regarded as the prime enemy group, so to speak, by people who are engineering these attacks. Beyond that there does not seem to be any intention on the part of the terrorists to negotiate for any kind of deals or concessions, or the release of prisoners. No such thing has been discussed. It appears that they seem to have come here simply to kill and to die. So we do not see any meaningful kind of effort to initiate negotiations during these attacks.

At this point does there seem to be any kind of signature that could link these attacks to any group that Indian intelligence is already tracking?
There are several little factors that tell you [the perpetrators are] among a certain limited group of suspects. But there are no hard signatures. Fedayeen attacks of this nature on a much smaller scale have been often witnessed in Jammu and KASHMIR and the groups responsible have mainly been Lashkar-e-Toiba and Jaish-e-Mohammed. If you look at the Parliament attack case, it was principally JEM involved there. What we are seeing is that the possibility of a large number of Indian citizens may also have been involved. There is no definitive identification at this juncture, although several people have been arrested and several of the terrorists have been killed. So we are looking at the usual group of suspects but we are still not definitively clear about their identity.

An outfit called Deccan Mujahedeen is taking responsibility.
That does not exist. That's a red herring intended to divert attention, an effort to project that this is an internal Indian problem, that this has nothing to do with outside forces. Whether Indians were involved in this or not, this could not have been executed without outside assistance or backing.

What are the major repercussions of this attack? The head of Mumbai's antiterrorism squad and several other top cops were killed. Is that a major foul up by law enforcement, to have such key figures exposed on the front lines?
The difficulty here is that once again we have a force that is barely learning how to cope with these things. This is, as far as Mumbai is concerned, an unprecedented pattern of attack. They haven't had something like this before. And the problem in India is that we do not have any systems in which large proportions of force and force leaderships are trained to respond to terrorist attacks. You've basically got a system where you learn on the job. And regrettably the price for that kind of extremely inefficient system is usually paid in blood.

Intelligence sources are saying the attacks bear the hallmarks of an international conspiracy. Do you read that as a precursor to claims that Al Qaeda or Pakistani intelligence may be involved in these attacks?
It would be one or other. I don't know if it would be Al Qaeda per se. But it could be Al Qaeda-related groups, certainly. Even Lashkar-e-Toiba is under the umbrella of Al Qaeda. All these groups we are speaking of as suspects are in some sense linked historically to Al Qaeda. All these groups are also linked to the Pakistan intelligence establishment. So we don't see the possibility of an operation of this scale being mounted without the backing of groups that either currently or historically have links with Al Qaeda or Pakistan intelligence.

In last couple of years, the scope of domestic involvement in terrorism has come as a wake-up call to Indian intelligence. Do you think there is always a reluctance to look inside India's borders first?
I think there is a problem of perception over here with Indian media rather than any problem with the intelligence or law enforcement agencies. Because they have been identifying and neutralizing Indian groups for certainly the past two decades, including Islamist groups in India. So there is no suggestion that they only look for outsiders. It is clearly recognized that even where outside agencies are involved, there are Indian facilitators … as partners or participants in terror attacks. And now we find Indian initiators. But I don't see any proclivity to try to brush this under the carpet in enforcement agencies. They follow what they find as leads. Yes, in certain cases you might find there is a tendency to start looking at groups that have international linkages at the very outset, but that's because of precedent rather than bias. If groups that have been involved in the past have been Pakistan-backed or Pakistan-based, then when a new attack of a certain pattern occurs, it is natural to look in that direction. That becomes the principle line of your investigation, but it doesn't necessarily dictate your conclusion.

What is significance of the timing? Elections are underway.
No significance whatsoever. Because if you take a look at the pattern of attacks, you will always find something or the other happening—elections, big international meetings, etc. These are post facto linkages that we try to establish in trying to determine unique motives. There are no unique motives. The motives of these attacks is basically to inflict the most harm on the system as is possible. And to propagate the extremist cause to the widest possible audience. That's it. This is a long war. Every time a new sort of bullet is fired you don't ask why these people are shooting at us. It's basically part of that long war.

A hostage situation like this is relatively unusual for India. Are there any precedents or policies in place about whether or how to negotiate?
Hostage situations are per se not new. But unfortunately there seems to be no clarity or consistency in the actual policies adopted. After such an event, there is usually a great deal of posturing, and declarations that there will be "no negotiation with terrorists" are made. But the particular government or particular negotiators on the ground and their perceptions determine the direction and outcome of any particular hostage crisis. So I'm afraid even if there are policy declarations, they have never been consistently followed.

In 1993 India saw terror attacks that were a response to anti-Muslim rioting. Do you think the opposite could happen now—i.e., community unrest because of these attacks?
Mumbai has been seeing many such attacks. Ever since 1993, there have been attacks of varying magnitudes every year or two—more than one a year. In each case … there has not been [major] rioting. If there has been rioting at all, it has been occasionally by the community that has lost a lot of people. For example, after the Malegaon bombing [an attack on the predominately Muslim town of Malegaon last September], there were Muslims rioting against the police or rioting in general against public property or private property. There have been no riots targeting the other community. So I would like to suggest that a certain measure of maturity has been visible in the popular response to this. I cannot say the same for certain elements of the extremist fringe groups who seem to be rather eager to prove their machismo and aggression.

Is an investigation into alleged Hindu terrorists a political powder keg, or are most people still relatively even-keeled about the situation?
I personally think people are still relatively even-keeled. If anything, this should impose a greater measure of restraint on the political parties that have been going a bit overboard in politicizing the issue of terrorism, whether it is perpetrated by Hindu extremists or Muslim extremists. As far as mainstream parties are concerned, I think there will be pressure for moderation after these attacks. There has been a very, very slow inching towards a consensual understanding of terrorism. Unfortunately it has not yielded a consensual policy as yet. But I suspect this will build greater public pressure on political parties to stop playing partisan politics, and get down to the fundamental issue of how best to respond …

The fact of the matter is you have Hindus who are terrorists. You have Muslims who are terrorists. You also have Christians who are terrorists. And you will find several other denominations that have proven their capacity for terrorism. We must realize that terrorism is simply a method by which civilians are intentionally targeted. That's it.

This is the sixth attack this year and the political party BJP is claiming the government is soft on terror. But the media is also wondering if India has become a soft target. Is India vulnerable to terror attacks because of any particular failure in the police system? Or is that because it is such a huge place it is difficult to police?
I think India is extremely vulnerable. And the fundamental reason for that is that this is a state that has neglected security for decades. Investment in policing was considered a nondevelopmental—and consequently wasteful—expenditure. We are one of the most under-policed societies in the world. We have a ratio of 126 police per 100,000, whereas the Western ratio is 250-500 plus per 100,000.

Also, our police are under-equipped and under-resourced across the board. There is no really hard counterterrorism core to policing in India, despite our decades of experience as a target of terrorism. Consequently there is absolutely no doubt that India is vulnerable to terrorism and will remain so in the coming years.

I think this government as well as its predecessor has been equally inept and equally neglectful on the issue of terrorism …The principle task of law enforcement and law-and-order management and counterterrorism is the state's under the Indian constitution. It is the responsibility of the state governments that are run by various parties in the country. All major parties have some states under their control. With very rare exceptions, the quality of counterterrorism has been abysmal.

This is one of the first times in recent years that such high-profile places have been attacked. Will that have an impact in drawing more attention to the issue?
This is not first time. There have been several attacks that have targeted the elite. The most significant of these was the Parliament attack, where the core of system of governance, the democratic polity itself, was attacked. And that did see a much higher quantum and quality of response than any preceding attack. So it is correct to believe that attacks on elite targets tend to provoke a greater and more effective response on government's part.