Saturday, December 6, 2008

Problems of being "close to the ground"

How many times as an analyst, I have seen business leaders in a state of denial. The steel sector was a beautiful case in point in the current year. While the world economy was going in a tail spin, steel magnates kept insisting that prices would not fall "because raw material prices were up". It never ceases to amaze me how many times even very senior and experienced managers will talk in this way - almost as if someone has mandated that their business should make money, and therefore cost escalation will always be absorbed by their customers. I see this as a problem of being too close to the day to day business of the company. This creates a myopic vision - where anyone with a 50,000 feet view will tell you that a business decision is silly, while the "expert" who lives and breathes the business, will continue to justify his following the most recent trend. My conclusion - speak to corporates to understand their business model and the current business situation, but DO NOT make the mistake of assuming that they have the ability to forecast beyond the next week. The analyst ought to know more! (which is also the reason of the existence of the likes of Mckinsey and other strategy consultants).

We see this now in the response to the recent Mumbai terror attacks. Most "experts" are focused on providing guns and armour to the domestic police force. As if this would in anyway reduce or protect India from these attacks - the problem is external and will remain so. Body armour for all police will come at a cost of medicine, school education or such alternate use of money - a problem we do not wish to address. Luckily, no one in India asks for where budgetary provisions will come from. I find that even responsible journalists with demonstrably developed strategic sense get into this loop.

Vardarajan, of The Hindu, someone whose coverage of the noxious India US nuclear deal was exemplary, seems to have fallen in this trap - excerpts from his recent post
The Pakistani Army would very much like a military crisis on the border with India because that would relieve the pressures it was facing on the Afghan front. “Our dilemma is that we don’t want to play their game — we want them to continue being engaged in the fight against terrorism in the west because that’s also our war. But we can’t give them a pass either. The perpetrators have to be fixed.”

It was because of this complexity, the sources added, that India’s public response has been very limited.
This has to rank amongst the most hilarious justification of pussilanimity anywhere - the bully has just slapped me, but you know he is also doing that to a few others, so we should not distract him.

What can I say - I guess I am a war monger and not to be taken seriously!

4 comments:

Nikesh Sinha said...

Tandy

Let us examine India's policy options one by one.

1. War against Pakistan: While being the most talked about option, it has implications that are unacceptable to the world at large. I will daresay that we too might find such an action unacceptable because of its implications. Senior army commanders tell me that opening a conventional war window in a nuclear door is not an objective that can be achieved by threatening to capture territory or by bringing a nation down to its knees. While we do have conventional arms superiority, what is a major issue is 34,000 American + NATO troops on what is de facto Pakistani soil. Uncle Sam is not likely to be equally supportive in face of all out hostilities.

2. Take out ISI HQ: A good policy option. This is probably executable with some degree of finesse. We might even get some ground intel support from the Yanks on this. However, this is akin to war. I understand that this policy option implies that the Pakis will not open nuclear buttons to launch mode but then that will be a one step away option. The only way this can be done is to use a surrogate power to execute this (Israel maybe) but getting such a power without a clear tacit understanding with the Yanks will be teribly counter productive.

3. Surgical strikes on Muzaffarabad and Muridke training camps: This would be akin to President Clinton's attack on Afghanistan post the attack on USS Cole. We will get some kudos at home and hopefully we will not lose an aircraft in the attack. It might even be possible to get Pakistan to not scramble aircrafts in response. While a reasonable option for India, its impact on the internal contradictions in Pakistan would be immense. Moreover, we will see and increase in attacks for a while.

4. Get Pakistan to extradite specific people known to be terrorists and then execute them. The current dialogue between India US and Pakistan is focussed around this.

5. This is what I call my own option: Send troops to Afghanistan. This needs clearance by NATO and US but I think we should be able to get that approval. This means that Pakistan cannot afford to remove troops from the Western border that they have been threatening to do. If simultaneously, we mobilise on our borders, there will be a pincer movement that will catch Pakistan with nowhere to go. I think we should then not demand that the Pakistanis do anything except co-operate on the War on Terror. two things will happen. One the ISI will think many times before executing a Mumbai style attack again. Two, our strategic depth will forever make Pakistan vulnerable to being totally destroyed.

Over to you.

Blunderbuss said...

Hi Nikesh

Thanks for your comment. First, we have to agree that irrespective of the choice of option, the chance that it will result in an all our war CANNOT be ruled out.

The only way we can totally eliminate the possibility is not to do anything at all.

Assuming, for the moment, that this is NOT the option we wish to explore, the choice is only between (1) how much damage we are prepared to accept (2) Planning for the exit option - in the event we have a war.

Let's start with the options you have outlined.

(4) Pak says NO - or equivalent - this reverts to some of the other options. For it to say YES, will require some other option to have been exercised for the cost of saying NO to have gone up beyond acceptable levels.

(5)Is no different from 1 - if we are prepared to go in. Failing which, it satisfies no one except the Yanks. Which brings us back to 1,2,3

(2) and (3) are similar. These can be first steps, and should have been executed ASAP. However, as you point out, this can result in war, with all its ramifications.

And then there was (1)....

As you can see, except of bluster, it all comes back to playing "Chicken" and the one who blinks first loses.

You have missed out the most important option - take out the nuclear strike capability of Pakistan. We will not be able to do it alone. But this is a case where the objectives of major powers is congruent with ours. We run the risk in case it fails. We need to induce Israel/US to helps us with TECHINT, and the equipment to do it, and then proceed. This is the only path that is left for a permanent peace.

Nikesh Sinha said...

Tandy

Let me take the option of taking out nuclear assets. This is a tough one. How do you take nuclear assets out?

You can take a nuclear reactor out. So, you can stop further enrichment of uranium but then what do you do about current nuclear assets?

All nuclear assets are placed in separate places so that there is no accidental fallout. In times of crisis, these are put together in a usable format.

Last estimates give Pakistan a capability of between 40-50 bombs. The number could even be higher. To take this stockpile out is not possible. I have my grave doubts that there is any covert/overt possibility that exists anywhere to take out the nuclear option of Pakistan.

Therefore, that is not a policy option.

Ultimately, war is the panacea for al evils but if we can achieve this without actually going to war but using the threat of it to get what we desire is the desired result.

The other of doing this is to make the economic costs unacceptable. The only problem you face with such an approach is that we have to be prepared for Pakistan to fail. That is dangerous.

However, as a policy option, this is this is doable and the international community can play a big role.

We need a long term strategy that combines all these which has to be fine tuned as time passes.

Ultimately, we have to transition Pakistan from a military led society to a democratic process led society.

Blunderbuss said...

Nikesh,

Clearly there are no easy answers. However, the good part is that atleast this problem is symmetrical - Pakistan has the same problem.

While it may not be easy to trace all the nuclear assets (which is why we need US help), they need to be assembled and launched. We should be able to take out most of the delivery capability. Also, assuming that this is done through either a covert operation or through the help of a friendly country, it will not be easy to respond.

On the other point - economic blockade - I have already commented earlier. The Pak army control 70% of the market cap of the country and if we can make their business unviable, it will atleast cut off some of the financing.

Pakistan is already unstable and a basket case economically. Without overseas support, they have already collapsed. It seems strange that the world is paying to sustain its "migraine" (to quote M Albright). So what happens if they collapse - atleast there will be a concerted global attempt to secure their nuclear weapons - which suits us.

The key point remains - I hope the powers-that-be realise that NOT doing anything this time is NOT an option.

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