Potential Implications of Russia’s Military Involvement in Syria

Ranjit Gupta

Russia’s massive military intervention in Syria that began on 30 September 2015 took the world by complete surprise. Moscow has inducted 12 Su-25 ground-attack aircraft, 12 Su-24 bombers, six Su-34 strike fighters, four Su-30 fighters, 21 helicopters – including 16 Mi-24 attack helicopters – as well as six tanks, and 15 artillery pieces etc. at their air base in Latakia, Syria, in addition to 500 military personnel. They conducted a cruise missile attack from across the Caspian Sea, demonstrating hardware and capabilities that were insofar not witnessed. They have been engaged in daily and increasing airstrikes primarily against the anti-regime Islamist groups including the al Qaeda affiliate, Jabhat al-Nusra, as well as the Western-supported Syrian National Army and other ‘secular’ groups, with only a few directed against the Islamic State (IS). In contrast to about 7300 – less than 2500 in Syria – airstrikes carried out by the US-led coalition in Iraq and Syria since August 2014 (according to Secretary of State Kerry speaking in Vienna on 30 October 2015), the Russians have already carried out almost 1000 airstrikes in Syria in just one month.

Russia has clearly signaled that it has returned to West Asia in a big way and is determined to protect its interests.

The primary objective appears to be to bolster Syrian President Bashar al-Assad’s regime for the immediate short term. Adding focused momentum to a far more aggressive approach towards fighting the IS is the secondary objective, but for the longer term. The US and its allies have been hypocritically criticising Russian intervention even though they themselves have been doing precisely the same for decades but particularly after the widespread unrest that swept across the Arab world since the winter of 2010-2011.

The Russian intervention is already proving to be a game-changer. It has been a godsend for Assad, greatly boosting the regime’s sagging morale and that of its armed forces. His army had been greatly weakened due to defections, mainly of the Sunni conscript element, and due to the non-stop fighting over the past four years; the regime has been steadily ceding territory to the IS as well as to the myriad of other Islamist groups funded and armed by Qatar, Saudi Arabia and Turkey. Assad had been finding it increasingly difficult even to hold on to cities and territory in the strategically vital Aleppo, Damascus, Hama, Homs and Idlib Provinces. With robust air cover provided by Russian airstrikes, Assad’s forces can start liberating and holding territory particularly in the extremely strategically vital corridor connecting Damascus and Aleppo. Russian help provides Assad’s military the distinct possibilities to regain the upper hand in the conflict at least in Western Syria.

Russian intervention has paved the way for open and enhanced Iranian involvement in Syria. Last week, Brig Gen Hossein Salami, Deputy Commander, Islamic Revolutionary Guards Corps, said Iran is increasing the quality and quantity of its presence in Syria with Iranian officers providing tactical help for Syrian commanders in direct battles, as well as weapons and ordnance, operational assistance and help with strategic planning. It is believed that they are between 1000 to 2000 Iranian troops in Syria.

Despite its unhappiness the US has perforce had to sign a MoU with Russia to ensure that there are no accidental run-ins between their two air forces operating in the Syrian airspace. It has also been forced to modify its tactics by the deputation of 50 Special Forces personnel in the war against the IS, with the possibility of increase in the numbers.

“Russia's entrance, given its potential and capabilities, is something we see is going to have an effect on limiting terrorism in Syria and eradicating it,” Egyptian Foreign Minister Sameh Shoukry said in a televised interview broadcast on 03 October 2015. Iraq too has requested Russian airstrikes. Israeli Prime Minister Benjamin Netanyahu, accompanied by high ranking senior military officers paid a visit to Russia two weeks ago. The US and Saudi Arabia had egregiously prevented Iran from participating in international conferences on Syria – this has suddenly changed and Iran was an active participant in the 19-nation conference held in Vienna earlier this week. Russia and Iran will ensure that Assad is not defeated in the battlefield. That being the case, the Saudi demand that he should step down before negotiations can commence to end the civil war is totally and absolutely unrealistic and will simply not happen. Only Russia and Iran can persuade Assad to make compromises and therefore these two countries are completely indispensable to reaching a solution which ends the civil war.

Those advocating regime change need to seriously ponder over the fact that today, the internal situations in both Iraq and Libya are far worse than they were when Saddam and Gaddafi were in power. Intrusive military interventions by foreign countries in Libya and Iraq are not examples to be emulated but instead shunned.

Russia’s intervention in Syria is going to prevent regime change through such means. The huge array of different and competing Islamist jihadi groups, including thousands of foreigners, cannot possibly come up with a cohesive and acceptable alternative government. It is beginning to appear that Assad is going to be around for some more time at least but the civil war is no nearer to ending yet.

Iran Nuclear Deal: Implications for India

Summaiya Khan

The fruition of the nuclear deal between Iran and the P5 +1 seems rewarding to all involved. Iran, according to the Comprehensive Joint Plan Of Action (CJPOA), has agreed to conduct its nuclear programme in a restrictive manner. The plan requires Iran to freeze all uranium enrichment and to place its nuclear sites under IAEA safeguards. In return, Iran anticipates the termination of all economic and diplomatic sanctions imposed on it by the UN Security Council (UNSC), the European Union (EU) and the US.

The deal’s effect could impact India’s energy sector in particular. India is the second largest importer of crude oil from Iran next only to China. A stable and integrated Iran is in the national interest of India. It is because of this that India initially endorsed Iran’s right to a peaceful nuclear programme. Even when Iran was slapped with sanctions, India along with China and Russia continued transactions with Iran as India is against the unilateral imposition of sanctions. However, in 2005, with the ongoing Indo-US nuclear deal negotiation, India had to vote against Iran’s nuclear programme at the IAEA. India also had to limit trade with Iran as under mounting pressure from US.

Now with the deal being struck, India could re-engage itself with Iran in terms of transaction of energy resources. India and Iran have an annual bilateral trade of about US$ 14 billion. India owes Iran about US$8.8 billion dollars for oil that it was unable to clear due to sanctions and the scrapping of the Asian Clearing Union (ACU) by the Reserve bank of India (RBI). Though India tried to clear its oil bills through Turkey and other alternate means, it was made difficult by the US as it asked states including India not to carry out any trade until an understanding was reached. In the now changed environment, India would not only be able to clear its bills, but also purchase oil at a cheaper rate. Iran also gains from the deal as it can now have access to Indian goods that include pharmaceutical products, Basmati rice etc. The deal could open up other collaborative avenues between India and Iran. India could have a stake in various Iranian enterprises as Iran would require India’s assistance in the construction of ports, railway lines and so on.

The sanctions also stalled the transfer of natural gas to India through a pipe-line connecting India, Pakistan and Iran (IPI). The construction of this pipe-line was shelved due to security concerns between India and Pakistan. There are possibilities that talks on this project could be resumed. President Pranab Mukherjee at a conference on 'Cooperative Development, Peace and Security in South and Central Asia', addressed the need to revive the IPI, develop the Chabahar Port, and use the port to forge close ties between the Persian Gulf states. Chabahar is of strategic significance for India as its development would provide a route for India to trade with Afghanistan and Central Asia, bypassing Pakistan. The deal has geo-strategic implications for India as the lifting of sanctions could open up the possibility of establishing an international north south corridor that would allow quicker access to Eurasia. As Central Asian states have energy deposits in abundance, the route could be viable for India to access these resources.

The deal is also a spur to the Indian banking and insurance sector. Public sector banks that include the State Bank of India (SBI) and the Industrial Developmental Bank of India Ltd (IDBI) hope to revitalise financial transactions with Iran. While sanctions were imposed on Iran, trade with Iran was processed through a Kolkata-based public sector bank. With the sanctions now being lifted, these public sector banks could be empowered to support the expected trade with Iran and process the payment of India’s oil imports. India could anticipate an increase in foreign exchange through remittances by Indian expatriates in Iran.  

Despite these prospects, however, India has its own concerns regarding the openings afforded by the deal.  

India would have to bargain with Iran on a competitive basis as Iran might accord less preference to India with other stakeholders in Iran’s trade, which would include China, Russia, Turkey and the European states. India has begun to forge closer ties with Israel; it also has decades of linkages with the West Asian states - the Gulf Cooperation Council (GCC) in particular - with thousands of Indian expatriates that help bring remittances to India. As Israel and several West Asian states are at loggerheads with Iran, India must tactfully use its diplomacy to balance its equations. With a deal of this nature that has multi-dimensional implications for India ranging from the economic to the geostrategic, India must capitalise on the opportunities that the deal offers. 

The way forward in the struggle against austerity in Greece

Alex Lantier

The broad participation of hundreds of thousands in yesterday’s one-day protest strike against austerity in Greece is a signal that the working class is seeking to fight against the European Union (EU) and the Syriza (“Coalition of the Radical Left”) government.

Opposition is growing after Syriza betrayed its January election promises and trampled the landslide “no” vote in its July 5 referendum on austerity. Seamen, port workers, rail and subway workers, hospital and pharmacy workers, and teachers all followed the strike call. High school and university students also held mass marches in cities across Greece against Syriza’s planned social cuts.

Syriza has absurdly postured as a supporter of a strike against its own policies, based on its long-standing alliance with the unions who called the strike.

“The demands of workers and the working mobilization in general are becoming particularly critical, which should be directed against the neo-liberal policies and extortion on the part of the economic and political centers in and outside Greece,” Syriza’s Labor Policy Department declared. “The fight against the extreme neo-liberal policies that are opposed to our people continues even more intensively.” It pledged to fight for “housing, satisfactory salaries and pensions, health care and education for all.”

What a fraud! Syriza and the EU are working together to attack all the fundamental social rights won by the working class in the 20th century. Universal health care no longer exists in Greece, and Syriza is threatening to launch mass evictions of families in arrears on their mortgages, slash minimum pensions to a miserly €392 per month and impose new cuts in education funding.

Each day brings fresh evidence that Syriza is a merciless enemy of the working class. It had declared that, as a “radical left” party, it would not use police to attack the people. On Wednesday, however, it sent police to attack and arrest workers striking against layoffs and wage cuts at the Spider General recycling plant in Giannena. Yesterday it had police clear Athens squares of protesters waving banners that read, “No to new and old austerity memorandums.”

The upsurge of social struggle against Syriza only raises with greater urgency the need for a comprehensive political and strategic reorientation of the working class. The record of the Syriza government is a stark warning that forms of social mobilization such as yesterday’s one-day protest strike have failed.

Since the EU’s austerity offensive began five years ago, Greek workers have held no less than 41 one-day national strikes, supposedly to pressure governments to adopt more favorable policies. These did not shift or even noticeably slow the austerity policies of successive Pasok, New Democracy and Syriza governments. Together, they have carried out the greatest attack on living standards of Greek workers since the Nazi Occupation during World War II.

After the experience of the Syriza government, it is has become clear to ever larger numbers of people that the parties that control trade union struggles—Pasok and the self-proclaimed “radical” parties like Syriza as well—back austerity. They tie the working class to Greek capitalism, which is moribund, crumbling under its debts, unable to create new jobs for millions of unemployed, and committed to its ties to the euro, the EU and NATO.

Today, the International Committee of the Fourth International is publishing a detailed statement, “The Political Lessons of Syriza’s Betrayal in Greece,” that elaborates the way forward for workers, youth and socialist-minded intellectuals seeking to fight against this reactionary political establishment.

Reviewing the Greek debt crisis and refuting Syriza’s arguments in defense of its policies, the statement points to the historical and political significance of the exposure of Syriza as a reactionary, anti-working class party. The working class cannot defend itself from unprecedented economic crises and savage assaults from the entire ruling class by electing “left” capitalist governments.

The working class is being reminded why, in October 1917, the Russian workers were compelled to overthrow capitalism in a revolution led by the Bolshevik Party of Vladimir Lenin and Leon Trotsky. There is no way forward except the revolutionary road. This requires an assault on the capitalist class, the confiscation of its wealth, the seizure of the banks and major productive forces by the working class, and the creation of workers states pursuing socialist policies across Europe and the world.

The statement also explains the political and historical basis on which to build parties in Greece and internationally to lead the working class in such revolutionary struggles. It analyzes the class gulf separating the ICFI’s Trotskyist critique of Syriza from the rationalizations for Syriza’s policies offered by the entire international fraternity of petty-bourgeois parties and anti-Marxist academics sympathetic to Syriza.

These political forces hailed Syriza, falsely predicted that its election would be a great step forward against austerity, and reacted with indifference to its attacks on the working class. Their outlook, rooted in their privileged class interests, found its most virulent expression in the irrationalist, “post-Marxist” proclamations of the late professor Ernesto Laclau, whose insistence that the working class was finished as a political force was enormously influential inside Syriza. Today, these forces stand exposed as political reactionaries, complicit in Syriza’s attacks on the Greek people.

The ICFI alone, based on its defense of the principles and historical continuity of Trotskyism, opposed Syriza and warned that it would attack the workers. The statement summarizes the ICFI’s analysis of the evolution of Syriza’s various Stalinist and ex-student radical factions into pro-capitalist parties at the time of the restoration of capitalism in the USSR. Such analyses allowed the ICFI to make unique and farsighted warnings about Syriza, which stand as a historic vindication of the decades-long struggle to defend the revolutionary perspective of Marxism.

Global markets cheer dismal economic figures

Andre Damon

Stock markets in Europe and the Americas began November with a rally on Monday, following a surge in October that produced the biggest monthly increase in global stock prices in four years. America’s NASDAQ 100 index closed Monday at its highest level in a decade-and-a-half.

The Dow Jones Industrial Average rose more than 8 percent in October, the Euro Stoxx 50 climbed by more than 11 percent, Japan’s Nikkei was up by more than 5 percent and China’s Shanghai index surged nearly 9 percent.

What the markets are currently celebrating is not an improvement in the economic situation, but rather a barrage of negative economic data showing that the world economy remains mired in slump and is slowing further. The divergence between the financial markets and the real economy reflects the immense growth of financial speculation and parasitism, which has accelerated since the 2008 Wall Street crash.

The financial aristocracy sees economic stagnation as a positive incentive for central banks to continue pumping limitless sums of cheap credit into the financial markets, underwriting the inflation of stock and bond prices and subsidizing an orgy of profit-making, adding to the fortunes of the world’s billionaires. The other side of this process is relentless austerity and wage-cutting directed against the working class, and an unprecedented growth of social inequality.

The pattern continued Monday, as stocks rose while economic data fell. The Institute for Supply Management said its US manufacturing index fell for the fourth straight month in October, hitting its lowest level in two-and-a-half years, and figures from China showed its manufacturing sector unexpectedly contracting for the third straight month. In Europe, economic growth is insufficient to ward off the danger of deflation.

These are but the latest in a series of economic data points indicating a general slowdown in economic growth, including reports last week that orders for business equipment in the US fell, along with new home sales. The government reported last month that the US gross domestic product rose by only 1.5 percent in the third quarter, down from 3.9 percent in the second.

All over the world, governments and central banks are responding to the persistent malaise in the real economy by cutting interest rates further, ramping up quantitative easing (central bank bond purchases), or, in the case of the US Federal Reserve, delaying long drawn out plans to begin gradually raising interest rates for the first time in nine years.

Nearly six months after the European Central Bank (ECB) began a quantitative easing money-printing operation to the tune of €60 billion a month, European consumer prices were unchanged last month, showing that the central bank had failed to bring inflation anywhere near its target of 2 percent. Economists polled by Reuters were “almost certain” that the ECB would either expand its quantitative easing program or further lower interest rates this year.

Even after having cut interest rates six times over the past year, China’s central bank is expected to take further accommodative measures in the coming months.

The Federal Reserve, which delayed its plans to begin raising interest rates at its meetings in September and October, is expected by many economists to put off any move toward normalizing monetary policy until next year.

The markets are also buoyed by record levels of mergers and acquisitions and other parasitic operations such as stock buybacks. The extraordinarily easy monetary policy, combined with immense corporate cash hoards, has fueled a wave of mergers, particularly in the US health care sector.

Health care companies targeted for mergers and acquisitions were among the biggest beneficiaries of Monday’s rally. Dyax Corp. jumped 30 percent after Shire agreed to buy the drug maker for at least $5.9 billion, while Pfizer Inc. climbed 3.5 percent in anticipation of its announcing a takeover of Allergan.

Stock prices for oil producer Chevron soared Monday after the company announced it was cutting 7,000 jobs, bringing total job cuts at large publicly traded energy companies to nearly 113,000 since June 2014.

Internationally, the markets cheered the electoral victory of Turkey’s ruling Justice and Development Party (AKP), following a campaign characterized by widespread attacks on opposition parties and the press. The banks welcomed statements by AKP President Erdogan pointing in the direction of more pervasive authoritarian rule. The Turkish lira surged 4 percent against the dollar, while the country’s main stock index spiked by 5.5 percent.

These developments reflect the further consolidation of control over the world economy by the most parasitic, rapacious and reactionary sections of the capitalist class. They are engaged in a process of plunder, in which resources are diverted from productive investment to finance financial manipulations that boost the fortunes of the rich and the super-rich at the expense of society’s productive forces.

Last April, the International Monetary Fund acknowledged that there was no prospect any time soon of a return to normal rates of economic growth. It pointed to a 25 percent decline in productive investment in the older industrialized countries as the major factor in the ongoing slump. What it did not mention was the role of the new financial aristocracy and financial parasitism in this process.

This reality was summed up Monday in a Bloomberg News write-up of a research note sent to clients of Bank of America, which sought to quantify the impact of central bank policy since 2008 on social inequality. The report began by noting that there have been 606 separate interest rate cuts by world central banks since the collapse of Lehman Brothers in 2008, together with $12.4 trillion in central bank asset purchases.

Citing the unpublished report, Bloomberg wrote, “An investment of $100 in a portfolio of stocks and bonds since the Federal Reserve began quantitative easing would now be worth $205. Over the same time, a wage of $100 has risen to just $114.”

It added, “For every $100 US venture capital and private equity funds raised at the start of 2010, they are now raising $275, but for every $100 of US mortgage credit extended five years ago, just $61 was extended and accepted this June.”

It continued: “For every job created in the US this decade, companies spent $296,000 buying back their stocks, according to the New York-based [Bank of America].”

These are indices of an economic system in mortal crisis. The separation of the process of wealth creation for the ruling elite from the process of material production and the creation of real value reflects a decay and breakdown of the capitalist system at a fundamental level. The financial bubbles being inflated by governments and central banks are not sustainable. They are setting the stage for an even greater financial crisis than the Wall Street meltdown of 2008.

This global crisis of the capitalist system is likewise creating the conditions for a new eruption of the class struggle and a growing working class audience for the program of socialist revolution.

Japan’s economic outlook worsening

Nick Beams

The Bank of Japan decided not to further expand its quantitative easing program at its meeting last Friday, possibly because to have done so would have amounted to a tacit admission that its massive financial asset-buying program of $665 billion a year has failed to revive the world’s third largest economy. But failed it has.

Gross domestic product, preliminary data for which will be released on November 16, is expected to have contracted at an annualised rate of 0.2 percent in the third quarter, following a decline of 1.2 percent in the second. Such a result would mean that Japan has entered what is known as a technical recession—two consecutive quarters of negative growth.

The contraction is being driven by the slowdown in China—where growth is at its lowest point since the global financial crisis of 2008–2009—and its associated effects, including falling growth in emerging market economies and weakness in capital spending in Japan.

Amid great fanfare, Japan’s central bank governor Haruhiko Kuroda launched the quantitative easing program in April 2013, promising to double the country’s monetary base, end the grip of deflation and kick-start its stagnant economy. However, some two and half years on, deflationary pressures show no sign of abating.

At last Friday’s meeting, the BoJ extended the date of its commitment to return inflation to the target range of 2 percent by six months, to March 2017. Government data, also released on Friday, showed that core consumer prices, excluding food, contracted by 0.1 percent in September from a year ago. Other figures showed that household spending fell in September by 1.3 percent, compared to the same month a year ago. Consumption levels in Japan are now lower than they were in 2012.

Not only have the BoJ’s monetary policies failed, the outlook is clearly worsening.

According to Kiichi Murashima, chief economist at Citigroup in Japan: “The BoJ’s monetary accommodation over the past two and a half years has only had a limited impact on Japan’s growth and inflation.

“Policymakers had expected a much larger impact on the economy. And the deterioration in the global economic outlook, including developments in China, will make Japanese companies more cautious about expanding business investment and raising wages.”

At a press conference following the BoJ meeting, Kuroda tried to maintain an upbeat tone, saying that the delay in reaching the inflation target was “mainly due to falling oil prices” and that “the basic trend of prices is steadily improving.” It is doubtful whether his words cut much ice.

Kuroda left open the possibility for further quantitative easing measures, saying that there was “no limit” to the BoJ’s policy options.

The chief market economist at Mizuho Securities, Yasunari Ueno, was among those not impressed. The central bank’s decision to maintain its existing policy, he said, “threatens a loss of credibility among overseas investors about the bank’s conduct of policy and exposes it to doubts that the 2 percent inflation target is now just empty words.” Despite the “regime change” in monetary policy instigated by Kuroda, he “may now be fairly criticised for the same failings that dogged his predecessor.”

The growing concerns in business circles about the Japanese economy and its future prospects were outlined in a Financial Times interview with Sadayuki Sakakibara, the chairman of the major Keidanren business group. He said that while so-called Abenomics had worked well for the past three years, recent data meant that the country faced a “do-or-die” moment.

Business, he said, should help the economy by increasing investment and increasing wages, in order to boost consumption spending. That prospect is hardly likely under conditions of a slowing Chinese economy.

The significance of the Japanese situation is underscored when viewed within the context of the global economy as a whole. The world’s largest economy, the US, is now experiencing lower growth, with real gross domestic product increasing by an annual rate of 1.5 percent in the third quarter, compared to 3.9 percent in the second.

The second largest, China, has recorded a growth rate of 6.9 percent, below the level of 8 percent designated by the Beijing regime as necessary to maintain social stability, and the third largest, Japan, is on the brink of recession. Other major economies in the Asian region are also being hit by the China slowdown, with growth in both Taiwan and Singapore virtually stagnant in the third quarter.

While showing a small upturn, the level of output in the euro zone has still yet to reach that attained before the global financial crisis.

The impact of the China slowdown is ripping through wide sections of the global economy. It has resulted in a five-month-long contraction in the Canadian economy in the first half of a year, with only small increases registered in the three months to August. The Brazilian economy, which is highly dependent on exports to China, remains in recession.

So-called emerging markets, many of them relying on the export of one or two commodities, are also being heavily impacted.

Last week the International Monetary Fund forecast that economic growth in sub-Saharan Africa would slow this year to its lowest level since 1999 and only increase modestly next year.

As the Financial Times noted in a report published yesterday: “Enthusiasts for the ‘Africa Rising’ story of rapid growth on the continent have spent much of the past 15 years strongly denying that the impressive economic performance was essentially about selling commodities to China. That confidence is currently being severely tested. Prospects have darkened considerably. Growth momentum in much of sub-Saharan Africa is petering out.”

As the various components of the global economy—from the major countries through to emerging markets—experience stagnation or outright recession, stock markets continue to climb, boosted by the flow of ultra-cheap money from the world’s central banks.

After sharp declines in August and September, world markets came roaring back in October, with the FTSE World Index climbing by 7.8 percent, its biggest monthly gain in four years. This is not an indication of economic health. Rather, it is the fever chart of mounting contradictions that portend the eruption of a major crisis.

Deutsche Bank to cut up to 35,000 jobs

Marianne Arens

Over the next two years, Deutsche Bank plans to cut 9,000 staff positions, as well as another 6,000 jobs at its external service providers. The move was announced by John Cryan, the new co-CEO, in Frankfurt last Thursday.

In addition to these job cuts, another 20,000 positions are threatened due to the planned sale of Postbank and other subsidiaries. The number of acutely vulnerable jobs could even exceed these 35,000, because the figures are based on full-time positions and do not account for the bank’s many part-time employees. This represents the biggest round of cutbacks ever announced by a single bank.

As many as 4,000 of the 9,000 planned job cuts will take place in Germany, where some 200 branches, mainly in major cities, will be closed. About 50 of the 750 branches were closed down in the past year.

The bank intends to withdraw entirely from ten countries, mainly from Latin America and Scandinavia, and shed its shares at the Chinese Hua Xia Bank. The job cuts are expected to bring Deutsche Bank savings of approximately €3.8 billion (US$4.2 billion) by 2018.

The bank’s record loss of €6.2 billion (US$6.8 billion) in the last financial quarter is cited as justification for the widespread sacking of its staff. It was the greatest loss in the bank’s 145-year history and notably greater than in the financial crisis of 2008. The supervisory board approved the new austerity measures last Wednesday—with the full support of votes from the ten workers’ representatives!

Although the bank made significant losses, they were deliberately exploited to enforce a major reorganisation that entailed the massive loss of jobs. The losses stem mainly from write-downs on shares that were overvalued on the stock market. The shares in subsidiary banks like Postbank and other financial institutions are so overvalued that Deutsche Bank now faces additional losses of about €5 billion (US$5.5 billion).

The business desk of the ARD evening news reported that Postbank had been acquired at the height of the financial crisis in 2008 “to finance the wild speculation of investment bankers with the savings of Postbank depositors.” The sale of Postbank has been on the cards since April.

Deutsche Bank also needs reserves of €1.2 billion (US$1.3 billion) to meet the costs of penalties for criminal practices. It is involved in several expensive court cases relating to fraud scandals. The most notorious is the Libor scandal, in which Deutsche Bank participated in the systematic falsification of the Libor benchmark interest rate. These financial manipulations brought the banks enormous profits and defrauded small investors, homeowners and retirees of millions of dollars.

In addition to the Libor and Euribor manipulations, there are other on-going lawsuits involving the Kirch media group. Former Deutsche Bank CEO Josef Ackermann is accused of complicity in the bankruptcy of the group. Also underway are proceedings relating to tax evasion in connection with the trading of CO2 pollution quotas. Another suit is being pursued in the US, where Deutsche Bank is accused of engaging in questionable mortgage transactions.

The many lawsuits and vast penalties have led to bitter clashes with the shareholders. During a “shareholder revolt” at the annual meeting in June 2015, former CEO Anju Jain was dismissed and replaced by John Cryan.

During the financial crisis of 2008-2011, Jain was chief financial officer of the Swiss UBS bank and subsequently worked as a hedge fund consultant. He took over as head of the Deutsche Bank executive board together with Jürgen Fitschen, although Fitschen was himself involved in the manoeuvres and illegal machinations of his former boss, Anshu Jain.

Last Thursday, ARD news compared the situation at Deutsche Bank with the Volkswagen scandal, raising the question: “Can you compare Deutsche Bank’s loss of billions with the decline of VW?” ARD compared the value of a Deutsche Bank share in 2007 (€120, US$132) to their present value of €25 (US$27.52), suggesting that in this respect “the decline of Deutsche Bank is even more severe than that of Volkswagen.”

The main reason for the radical reorganization of Germany’s largest bank is intensified competition on the world market.

Despite the worsening of the crisis in the real economy, stock markets continue to soar. Huge profits acquired from precarious financial products cause more and more capital to flow out of the real economy, as long as the financial casino is in full swing.

The transfer of investments from the productive sector to financial speculation exacerbates the global economic crisis and leads to mounting conflicts among the major powers. Deutsche Bank, the largest financial institution in Germany and its most important “global player,” is embarking its restructuring measures and job cutting programme in order to prepare for these conflicts.

These moves are supported by the trade unions, which assist the bolstering of the bank in the guise of promoting German interests. Ver.di boss Frank Bsirske, himself a member of Deutsche Bank’s supervisory board, declared on the union website last Thursday that he would welcome as a “necessary and correct procedure,” if Deutsche Bank were to simplify its structures, invest in the IT sector and effect a “retreat from high-risk areas.”

The company’s works council boss, Alfred Herling, also announced in a statement: “Securing the bank’s future viability is of key importance to us workers’ representatives, too.”

The disastrous predicament confronting workers has been consciously prepared by trade union leaders for months. In the Postbank employees’ labour dispute in April, Ver.di suddenly reached agreement with the supervisory board and strangled their recently begun strike.

At a press conference on Thursday, Deutsche Bank CEO Cryan revealed just how close cooperation with the Ver.di union has become, when he gave assurances that the job cuts would be made “in consultation with our works councils.”

UK government admits spying on British population for decades

Mark Blackwood

Confirmation of a top-secret programme designed to spy on the British public was revealed earlier this month by Home Secretary Theresa May.

Introducing the draconian Investigatory Powers Bill to the House of Commons, May announced that MI5, the UK’s spying agency, has engaged with the approval of the government, in the bulk collection and analysis of citizens’ personal date for almost 15 years.

In her attempt to justify an even more far-reaching surveillance dragnet, May stated, “The Bill will make explicit provision for all of the powers available to the security and intelligence agencies to acquire data in bulk. That will include not only bulk interception provided under the Regulation of Investigatory Powers Act and which is vital to the work of GCHQ [Government Communications Headquarters], but also the acquisition of bulk communications data, both relating to the UK and overseas.

“This is not a new power. It will replace the power under Section 94 of the Telecommunications Act 1984, under which successive governments have approved the security and intelligence agencies’ access to such communications data from communication service providers.”

Successive governments have allowed the bulk collection of phone calls, text messages as well as email records of British citizens, using obscure “national security directions” contained in an obscure clause in a three-decades-old act. As the BBC noted, “the existence of the clause was public but few understood how sweeping its use could be.”

The clause was utilised by the Labour government of Tony Blair prior to the invasion and occupation of Afghanistan and Iraq and was sanctioned by other home secretaries, including May. British telecoms companies have routinely passed the personal data of their customers to MI5 for analysis and have only been worried that this would one day become public knowledge.

In 1984, the year the Telecommunications Act became an Act of Parliament, a huge wave of working class militancy erupted across Britain against the Conservative government of Margaret Thatcher. The miners who struck for an entire year were dubbed by Thatcher as “The Enemy Within.” Miners faced state-orchestrated strike breaking, police brutality and mass arrests—all facilitated by the state surveillance carried out against the National Union of Mineworkers and miners themselves via the counter-subversion operations headed by MI5 with the active support of GCHQ.

Both MI5 and GCHQ have operated since the Telecommunications Act came into force without any statutory accountability. This was only introduced in February of this year because of the revelations made public by Edward Snowden that GCHQ was operating a massive illegal spying network in collusion with the US National Security Agency.

May never explained the domestic political origins of the Telecommunications Act’s provisions, insisting instead that MI5 and British telecoms companies have only conspired with each other since the 9/11 terrorist attacks in the United States.

May made these operations public only because the government is seeking a new framework to legalise its existing spying operations and to extend them in order to deal with the growing social anger over its policies of war abroad and austerity and cuts at home.

The routine handing over of the data of everyone in the UK is a long-standing demand of GCHQ. In November 2013, within hours of taking up the post of GCHQ director, Robert Hannigan published a statement in the Financial Times, prior approved by Prime Minister David Cameron, demanding that British and US telecom and social media firms deepen their collaboration with the security agencies.

Another Financial Times article noted that “although he [Hannigan] does not mention it by name” he “wants to see the UK government’s communications data bill—the so-called snoopers’ charter —passed into law.”

Within the space of a year, this charter, in the name of the Investigatory Powers Bill, is to become law.

Following Snowden’s revelations in 2013, the government argued that GCHQ collected “only” metadata, not “content” and such data had been collected and passed on for “national security” and anti-terror purposes. No details were given by May about the longstanding programme undertaken by MI5, or what they are capable of doing with metadata.

The bulk collection of metadata is what makes sweeping state surveillance of citizen’s possible. Metadata is the source of state surveillance programmes. It was Snowden who revealed, through GCHQ’s Tempora programme, that the vast amount of metadata swept up was fully computer-readable and searchable.

Simon Phipps, president of the Open Source Initiative (OSI), describes the practice of the “bulk collection” of data as follows:

“They accumulate data from any source that’s public or which they have a legal principle that they believe makes the data fair game, storing it for long periods in huge ‘data lakes’. They then use various justifications such as warrants and notification to secret courts to ‘go fishing’ in the data lake.”

Philips explained how metadata is used for surveillance purposes:

“The metadata remains readable no matter what we do, making it possible to triangulate even on encrypted messages. Triangulation means using apparently innocent data from other places to disclose hidden data that they and your message all have as context. For example, if I know someone's location is at a clinic, that they have recently purchased goods from a high-street chemist and that the web sites they have recently visited are about pregnancy, I don’t actually need to *read* the text of the e-mail to their boyfriend to guess what it’s probably about.”

Responding to May’s statement Snowden stated that the metadata being collected is the “comprehensive record of your private activities. It’s the activity log of your life.”

During 2014, some 517,000 requests were made to the home secretary by the security services, with the aim of securing a warrant, to grant them full access to the content of emails or to listen to calls of those whose metadata was sifted. Given this fact, just how much metadata was analysed to lead the security services to make such requests?

According to the Guardian the security services have been creating huge “bulk personal datasets containing millions of items of personal information.” The BBC’s Gordon Corera reported that the practice was “so secret that few even in MI5 knew about it, let alone the public.”

Under the Investigatory Power Bill, data retrieval, together with the hacking of citizens’ computers, web cameras, mobile phones, microphones, wiretapping, the planting of viruses and spyware on a target machine by the security services is to be legalised. Internet service providers are also required to record each website visited for 12 months and make such data is available upon request.

The government already spends several billion pounds annually on its spying operation against British citizens, but even more financial and human resources are now to be handed over.

This week Chancellor George Osborne announced a further £16 billion in spending cuts. The Treasury is also slashing a further £12 billion in welfare spending. At the same time as he announced these cuts Osborne said, “Over the next five years we will substantially increase the number of people across all three secret intelligence agencies [GCHQ, MI5 and the UK foreign spying force MI6]…”.

Drug maker Novartis pays $390 million to settle kickback claims

Brad Dixon

Last month Swiss drug maker Novartis agreed to pay $390 million to settle a federal case charging that the company allegedly gave kickbacks to specialty pharmacies in order to boost sales of its products. The US Justice Department was preparing to seek $3.35 billion in damages if the case went to trial. As part of the settlement, the company admits to no wrongdoing and, in fact, continues to employ the same tactic.

According to a June court filing by the Justice Department, Novartis allegedly orchestrated kickback schemes to promote its iron chelation drug Exjade and its immunosuppressant drug Myfortic.

Novartis gave rebates to the specialty pharmacy companies Accredo, BioScrip and US Bioservices in exchange for recommending that patients get refills of Exjade; likewise, the company gave “performance rebates” to five other specialty pharmacies (Kilgore’s, Bryant’s, Baylor, Twenty Ten, and Transcript) to induce the pharmacies to recommend Myfortic over the competitor drug CellCept and generic versions of CellCept.

The court filing stemmed from a 2011 whistleblower lawsuit brought by a former Novartis sales manager who claims the company paid doctors for travel and speaker dinners in exchange for prescribing the company’s drugs. The filing states that as a result of the kickback scheme, the specialty pharmacies received $492.9 million in reimbursement from Medicaid and Medicare for Exjade and $14.6 million in reimbursement for Myfortic.

The company says that the rebates are used to ensure patient compliance. Chief executive Joe Jimenez says that Novartis continues to employ this “quite common” practice. “We continue to maintain that specialty pharmacies must continue to play a role in ensuring patient adherence,” he said in a statement announcing the settlement. “How that is going to play out as to whether we change our behavior or not remains to be seen.”

Valeant Pharmaceuticals, which is notorious for purchasing drugs from other companies and then dramatically hiking their prices, is facing similar questions from the Justice Department over its relationship to the mail-order specialty pharmacy Philidor Rx Services LLC.

Pharmaceutical companies often use specialty pharmacies to distribute and administer their products because it is a way of ensuring that their high-priced drugs get sold, instead of less-expensive generic alternatives. Specialty pharmacies were initially established to assist patients with complex drugs that required complicated administration for diseases like cancer or rare genetic disorders, but are now used for more common ailments.

“What was started as administering complex, costly drugs has been co-opted as a sales/marketing tool to drive the growth of minor differentiation standard retail drugs,” says Ronny Gal, a pharmaceutical analyst at Sanford Bernstein, a global asset management firm, as quoted in the New York Times .

Novartis was formed in 1996 through the merger of Ciba-Geigy and Sandoz. It is now the largest pharmaceutical company in the world, with global sales of $47.1 billion in 2014.

The company has gained notoriety over the pricing of its cancer drug Gleevec, which has more than tripled in price since it was first approved in 2001. In the late 1990s and early 2000s, the company unsuccessfully sought patent protection for Gleevec in India in an effort to sell the drug for $2,666 per month, instead of the $177-266 per month priced by generic competitors.

In 2010, the company’s US subsidiary, Novartis Pharmaceuticals Corporation, paid $180 million to resolve allegations it was selling its seizure drug Trileptal for off-label uses, pleading guilty to misdemeanor misbranding of the drug. It also paid $237.5 million to resolve civil allegations of off-label marketing of five other products: Diovan, Exforge, Sandostatin, Tekturna and Zelnorm. In addition to illegally marketing the products for unapproved uses, the company is alleged to have offered doctor’s financial inducements to prescribe the drugs, including entertainment, travel, and payments for speaker programs.

As a result of the 2010 settlement, Novartis signed a “Corporate Integrity Agreement” requiring the company to establish an internal compliance program for the next five years. Since the most recent violations took place within this five-year period, Novartis could have potentially been excluded from lucrative contracts with federal health care plans, but the Justice Department chose not to pursue this in its filing.

The Novartis settlement is but another example of the rampant criminality and parasitism found throughout the pharmaceutical industry. Indeed, these companies see cash settlements for criminal behavior as merely the cost of doing business, even as the Justice Department has ramped up the size of the penalties.

Recent major settlements include the $950 million paid by Merck in 2011 for downplaying the cardiovascular safety risks of its pain drug Vioxx; the $1.6 billion paid by Abbot Laboratories in 2012 for the off-label promotion of its seizure drug Depakote; and the $3 billion paid by GlaxoSmithKline in 2012 for the off-label marketing of its anti-depressant drugs Paxil and Welbutrin, various kickback schemes, and withholding safety data from the FDA to downplay the health risks associated with its diabetes drug Avandias. According to FiercePharma, the pharmaceutical industry was fined $14 billion for such practices between 2002 and 2012.

While the actions of these drug companies have placed millions of lives at risk, the civil and criminal penalties are paltry in comparison to the industry’s profits. Between 2003 and 2012, for example, the 11 largest drug makers made $711.4 billion in profits, according to an analysis of corporate filings by the lobbying group Health Care for America Now (HCAN). Novartis alone pulled in $83.1 billion during this period.

France declares state of emergency after ISIS terrorist attacks kill over 100 in Paris

Alex Lantier

Horrific scenes of bloodshed filled the streets of Paris last night, as multiple simultaneous terrorist attacks starting around 10 p.m. claimed at least 140 lives and left at least 110 wounded, including dozens in critical condition.

Shortly before midnight, French President François Hollande announced that France was closing its borders and imposing a state of emergency under a 1955 law that suspends key democratic rights. Several areas of Paris were on lockdown early Saturday morning, and authorities called on Parisians to stay inside, as police helicopters circled overhead and paramilitary police and army units deployed across the city.

According to anonymous high-ranking officials cited by the media, there were at least seven nearly simultaneous terrorist attacks, which were likely coordinated. These attacks included:

* At the Bataclan theater in Paris’ 11th district, a team of three or four gunmen armed with grenades took hundreds of people hostage at a concert of the Eagles of Death Metal, an American band. According to some concertgoers who managed to flee the scene, the gunmen were shouting “Allah Akbar” and “This is for Syria.” Paramilitary police units stormed the building shortly after 12:30 a.m. Saturday, killing two terrorists. They said they found horrific scenes inside, with over 100 dead.

* Three bombs went off at restaurants and a cinema near the Stade de France stadium just north of the city, in the near suburbs, where tens of thousands of fans were watching a football match between France and Germany. One of the bombs was reportedly activated by a suicide bomber. According to initial reports, there were four dead and 50 wounded, including 11 in critical condition, in these attacks. Hollande, who was at the Stade de France watching the game, left for the Interior Ministry after the blasts, but the game was nevertheless allowed to continue to its conclusion.

* On Bichat street in Paris’ 10th district, there were 14 dead and 20 wounded including 10 in critical condition, according to Fire Department figures, after a series of drive-by shootings carried out by gunmen in a black car at several restaurants. Further shootings occurred across the area nearby, which is a popular hangout on Friday nights.

* There were four dead and 21 wounded, including 11 in critical condition, in shootings on the nearby Avenue de la République.

* There were 19 shot dead and 23 wounded, including 13 in critical condition on Charonne street.

* There were seven wounded, including three in critical condition, in shootings on Boulevard Beaumarchais.

* There were reports of other shootings in several other locations across downtown Paris, including at the Forum des Halles shopping area.

Authorities had been aware of potential threats earlier in the day. A bomb threat phoned in at noon to the Hotel Molitor, where the German national football team was staying, forced the evacuation of the hotel, which was sealed off with police tape before it was searched and then declared safe two hours later.

In a brief public address before attending a Council of Ministers meeting at midnight, Hollande announced that he had ordered an all-out deployment of the security forces and an intervention by the military.

“Two decisions will be taken: the state of emergency will be decreed, which means several places will be closed off, and traffic will be limited in certain areas,” he said.

Hollande continued: “The state of emergency will apply across the country. The second decision I have taken is to close the borders, so that the people who have committed these crimes can be apprehended. We know where this attack came from. We must show compassion and solidarity, but we must also show we are united.”

Though Hollande remarked that French officials “know where this attack came from,” as of this writing no terrorist group has taken responsibility. However, several media reports suggested that the attacks were carried out by members of the Western-backed Sunni Islamist militias fighting President Bashar al-Assad’s regime in Syria.

Former CIA director James Woolsey told ABC News that since the United States, France and other countries had killed top “management” of the Islamic State in Iraq and Syria (ISIS) militia, “We have to realize we are at war.”

The immense sympathy for the victims and the terrible suffering that their families will endure does not relieve us of the responsibility of assessing the source of this tragedy. If, as seems likely, the attacks were carried out by European veterans of ISIS or a similar militia, the hundreds of dead and wounded in the streets of Paris are victims of imperialist wars in the Middle East, waged for cynical geopolitical ends, that are now spiraling out of control.

Twelve years ago, when the Bush administration launched an illegal invasion of Iraq, the French government, foreseeing the disaster that would flow from the war, refused to participate. The reintegration of France into NATO’s military command in 2009, followed by its decision to join the United States and other NATO powers in Middle East wars in 2011, has proven to have disastrous consequences.

The French political establishment backed Islamist militias in proxy wars for regime change in Libya and Syria, encouraging its citizens to join these militias by widely presenting them in the media as “revolutionaries” fighting Gaddafi and Assad. Now these forces, trained to carry out terrorist attacks and guerrilla warfare in the Middle East, are returning home. This has created a political environment in which terrorism can flourish and spread rapidly, and as a result the war has come home to France.

“The danger comes from a more or less large team of guys from theaters of operation where they were blooded, maybe Syria or Libya, Yemen, who find weapons at home (in France) and go into action,” commented Yves Trotignon, the head of French foreign intelligence’s anti-terrorist services, to AFP. “Guys who are determined and ready to die, who have studied the target and are solid from an operational point of view can do enormous damage. The number of veteran jihadists is increasing every day.”

Since the Kouachi brothers waged their deadly terrorist attack on Charlie Hebdo in January, the ruling elite has reacted to such dangers not by shifting away from the policy of war for regime change in Syria, but by building up the state’s anti-democratic police powers.

After Hollande’s announcement, reporters on iTélé repeatedly said that France is at war, and that numerous harsh measures specified by the 1955 state of emergency law would be put into effect. The law allows French authorities to impose curfews, carry out arbitrary searches of private homes at any time, censor the press, impose military tribunals, order the house arrest of individuals without trial, close public places, and collect private weapons.

The last time the state of emergency was invoked was in 2005, when it was partially invoked in response to mass suburban riots provoked by the electrocution of two youth fleeing police. However, the last time all these powers were invoked by the French state was in the years after its promulgation, when it was used to impose a state of emergency in Algeria in a failed attempt to crush the revolt against French colonial rule in Algeria.

Media reported that there are plans for mass searches in the Paris area later today. Schools and universities, as well as all Paris public facilities, are to be closed and some political parties are closing down their campaigns for next month’s regional elections.

Class justice in America: Eight-year-old charged with murder

Eric London

On occasion, a criminal case involves facts so tragic and a state response so brutal that the true nature of class relations is laid bare.

Such is the case in Birmingham, Alabama, where the district attorney’s office announced Tuesday that it is charging an eight-year-old boy with first-degree murder. The boy allegedly beat a one-year-old child to death because she would not stop crying. Now he faces a possible thirteen-year jail sentence.

The state has also charged the deceased child’s grieving mother, 26-year-old Katerra Lewis, with manslaughter for allegedly leaving the children alone—something Lewis and her attorney deny.

The events leading up to the charges provide a picture of social reality in the world’s foremost capitalist superpower.

On the night of the child’s death, Katerra Lewis was living with a family friend and her friend’s five children on Birmingham’s northeast side. The neighborhood is typical of so many working-class areas—streets filled with potholes, no streetlights, and poverty rates for nearby zip codes ranging between 20 and 45 percent.

Located 2,000 feet from the deafeningly loud landing strips at Birmingham’s international airport, the small house at 71st Street and 2nd Avenue was home to at least 8 people, including 6 young children.

Lewis and her child were living under the stress of such cramped conditions because she—like millions of Americans—was unable to win a coveted voucher for a housing subsidy under Section 8 of the Fair Housing Act. Lewis was placed on a waiting list, which commonly entails a wait of 3 to 6 years. Waiting lists have grown longer as a result of the Obama administration’s decision to slash funding for the subsidy program.

After confronting a lifetime of economic brutality, the young mother and the eight-year-old boy have been hit with the full force of the state. On October 11, police arrived at the house and took both the boy and Lewis into custody. A six-year-old sibling was also questioned and gave testimony that the police will likely use to corroborate the murder charge.

Birmingham Police representative Lieutenant Sean Edwards spoke about the child as if he was a hardened criminal: “I guess the eight-year-old took it upon himself and began to commit violent acts against the one-year old, and the one-year-old could definitely not defend herself.”

The charges against the mother are part of a brutal campaign to portray the most impoverished sections of society as criminal and subhuman. Birmingham Police spokesman Edwards said the manslaughter charge “definitely sends a message that this type of behavior, this type of irresponsibility on behalf of a parent, is totally unacceptable.”

The response of the state and the media has a certain unhinged character, reflecting a society in deep crisis. The corporate press has leapt on the story, publishing the mother’s mug shot under headlines such as: “Mom denies she partied while eight-year-old killed toddler” (New York Post), and “8-year old charged with murder of one-year-old while mothers went to nightclub” (Timemagazine). Echoing these antisocial sentiments, the New York Times wrote Wednesday that there are “no easy answers” to the question of whether the state should charge an eight-year-old with murder.

These are the latest in a spate of charges against children by prosecutors in the United States. In August, prosecutors in Detroit, Michigan charged an eleven-year-old with manslaughter in a gun-related death. Earlier this year, Tennessee officials filed murder charges against an eleven-year-old who shot his eight-year-old neighbor.

The United States incarcerates children at a rate that far surpasses the rest of the world. According to the Equal Justice Initiative, almost 3,000 children have been convicted and given life sentences without the chance of parole. On any given day, 10,000 children are held captive in adult jails and prisons, where they face high chances of sexual assault. Tens of thousands more are held in juvenile centers that are so commonplace they are called by their nickname, “juvies.”

For the working class and youth in America, the so-called justice system is ruthless and remorseless. The prosecution of children is of a piece with the “law and order” agenda of both big-business parties. Every social problem in the United States is treated as a police question, an occasion to increase the powers of the state and its bodies of armed men.

But while the courts imprison children who do not have the mental capacity to understand the implications of their actions, police officers who kill or maim children regularly escape prosecution. No charges have been brought against the police officer captured on video gunning down twelve-year-old Tamir Rice in Cleveland in November 2014. This week, the prosecutor involved in the case selectively leaked another “expert opinion” aimed at preparing public opinion for the cop’s exoneration.

For every 1,000 people killed by the police, only one officer goes to jail. These are not the only criminals whose actions are sanctioned or even praised by the government. No criminal charges have been brought against those responsible for CIA torture, for waging wars of aggression, for the drone murders of thousands of civilians, for ordering the bombing of the Doctors Without Borders hospital in Afghanistan, for illegal NSA surveillance, or for the 2008 financial crash.

This is the state of the “justice system” in the United States, the function of which is to terrorize and brutalize the working class and enforce the ruling class’s policies of poverty, inequality and war.

India, China and the Indo-Pacific

Rini Babu

The phrase ‘Indo-Pacific’, which has been drawing significant attention of late, was first officially articulated in Australia’s Defence White Paper in 2013. In addition to being a geographical construct, the Indo-Pacific can also be seen as a changing network of nations. Against this background, it would be pertinent to ask why this term is gaining traction now and what roles are envisaged for India and China in it. 

Both India and China have geo-political and geo-economic reasons for their interest in this spatial construct. Running countries as big as India and China demands energy, and this region has it in abundance. 

India and the Indo-Pacific
Capt (Dr) Gurpreet S Khurana, Executive Director at National Maritime Foundation, in his article ‘Security of Sea Lines: Prospects for India-Japan Cooperation’ analyses the idea of the Indo-Pacific from an Indian perspective. He writes that as a regional or spatial concept, it serves India’s interests as a growing regional power. 

It is clear that the present NDA government wants to revamp the Indian economy by attracting more foreign investments. Since the majority of its trade relations are through the sea, resolving the present and future maritime threats by giving more attention to the Indo-Pacific construct is of prime importance. India has declined China’s offer to join the latter’s Road and Belt project, as there are fears that it might be a means to contain India. Modi’s visit to India’s neighbouring Indo-Pacific regional nations, prior to his visit to China, implies not only the strategic importance of the region for India, but also shows how India wants to counter possible Chinese threats China in the Indian Ocean Region.

In keeping with the pragmatic nature of India’s foreign policy, the Indo-Pacific construct allows India to further enhance its Look East/Act East Policy. Australia’s strategic position in the region makes it important for India’s Act East Policy. Australia, in turn, in its attempt to balance its dependence on China, has signed new agreements for security cooperation with India. The insecurity India feels from the growing influence of China has led to intensified defence and security cooperation with Japan, Vietnam and the US, strengthened security ties with ASEAN, and deepening cooperation with islands in the Indian and Pacific Oceans. Modi’s recent engagement with the Indian diaspora in Australia, Fiji, Mauritius and South Korea was an attempt to highlight historical and cultural linkages, which is essential to increase India’s role in the region. 

China and the Indo-Pacific
China has been drawn towards Indo-Pacific to satisfy its economic and energy requirements, like India. The US’ presence in the region has also contributed to China’s increasing interest in the Indo-Pacific. The Trans Pacific Partnership (TPP), a free trade agreement initiated by the US, excludes China and it has been speculated that this is an economic tool to contain China’s rise in East Asia. 

The Indo-Pacific has many critical sea lanes of communication (SLOC) that are crucial for China’s energy transportation. China has long been using its strategies to reach out and find a permanent position in the Indian Ocean Region because the area is viable for long-term infrastructure development to reduce transport dependency through the Straits of Malacca. The availability of other choke points along these SLOCs, the Sunda Strait and Lombok Strait, which connect China to the mainland is also a contributing factor. 

The similarities between India and China are not only in their size and population but also in their national interests. Both of them have a large economic drive: China to maintain its global position and India to increase its import surplus. Maritime security is also an essential to both. These reasons have led to both the countries investing time, energy and capital in the Indo-Pacific region.