Friday, December 28, 2012

Coffee is bad

What does Ramamritham have against coffee ? I would have thought the caricature of Ramaritham included a cup of coffee and The Hindu. Yet here's this venerable gentleman having an angst against coffee . Why ?

I am referring to IKEA's application to open retail stores across India. You may recall that the move to allow foreign owned retailers to set up shop in India is a recent one (Didi notwithstanding).  IKEA has been one of the first to submit their proposal, willing to bring it no less than Rs 10,000 crores of investment. You would have thought that they would be welcomed with open arms  - it is difficult to see boxed furniture being a threat to national sovereignty. But what they got was not a red carpet - instead they were treated with the full attention of Ramamritham. (in the guise of the Foreign Investment Promotion Board - FIPB)

I am no fan of IKEA stores. If you've been to one, they are all predictably the same format. You are forced to walk along one km of winding corridors that entirely destroy your sense of direction. You have to gaze at their full force of merchandise even if you want to buy a safety pin. After all those wanderings you are dying to sit down and rest your aching legs. Dutifully at the end of the trail you can buy a cup of coffee. Their format world over is the same.

Its the cup of coffee that has aroused Ramamritham's ire. Believe it or not, Ramamritham has turned down IKEA's application saying that they could not have a coffee shop - it appears that would become multi brand retail as the coffee is not IKEA branded coffee and hence would fall foul of the rules. Never mind the Rs 10,000 crores investment. FIPB is disallowing the proposal objecting to the coffee shop.

Finally the Commerce Minister had to intervene and suggest to Ramamritham that this is utterly nonsensical. He has asked IKEA to submit their proposal again and has promised them that he is partial to coffee.

Long long ago, when P Chidambaram was still a starry eyed reformer , he summoned a character called the Controller of Imports and Exports ( a terror those days) and asked him what he did. The worthy launched an impassioned plea as to how important and onerous his role was. PC's riposte was that he could perhaps understand that he had a role to play regarding imports, but pray, what was he doing trying to control exports ?? Within a few months he simply abolished the post.

I suggest he does a similar hatchet job on the FIPB. They perform no useful role. Open up investment in every sector barring maybe defence (even there there are arguments to  opening up for investment). Remember opening up for foreign investment does not mean that they can violate the law of the land. That provides the country ample protection against misbehaviour.

The only way to deal with nonsensical behaviour of objecting to the coffee shop is to abolish Ramamritham entirely.  Can Anand Sharma, the Commerce Minister, take a leaf out of his old predecessor and abolish the FIPB ?

PS :Newcomers to this blog who may not have been introduced to Ramamritham may get acquainted here.

Friday, December 21, 2012

Bye Bye New York Stock Exchange

OK - the title is pure hyperbole. The New York Stock Exchange (NYSE) is going nowhere. But the company that owns NYSE is just being bought over. The curious part of the story is that the acquirer does not really want the NYSE, but it comes as part of the package- so he has to take it !

Here's the deal. NYSE is part of a conglomerate called NYSE Euronext. The conglomerate consists of NYSE itself, Euronext, which is a combination of three European stock exchanges and Liffe which is a London based derivatives exchange. NYSE and Euronext are ugly spinsters nobody wants. The beauty amongst the beasts is Liffe. For it is the sexy new hottie - a derivatives exchange.

And therein lies the story. In the modern day casino , that is finance , equity exchanges like NYSE are worthless as businesses. Margins are supposedly low. Stock exchanges are the places where almost all companies that require capital list and that's where investors channel their savings into productive investment. One would have thought that  the raison d'être for financial markets was to fulfill that objective, but obviously I am an old foggie.

In today's world, the money is all in running commodities exchanges,  derivatives markets etc - not boring old equity. The acquirer is a company called ICE that did not exist before 2000 (for the record NYSE was founded in 1817). ICE purely handles derivatives trading. The career of Jeffrey Sprecher, the CEO of ICE says it all. He started his career building power plants.  But he realised that there was more money (in facts tons more money) playing on financial contracts relating to power than in generating power itself. So he started ICE , obscurely in Atlanta, in 2000. See where he has got to in 12 years.

We've now come to a stage where even the NYSE is an unattractive prize - in fact positively repellant. Given a choice Mr Sprecher would probably spin off NYSE, or sell it off somewhere or simply forget about it. Unfortunately that is politically simply unthinkable. So he has to live with it and make pious noises of how important it is.

Its a symptom of where the world is going.  This post is one sided and biased (whoever said that a blog has to be objective !). Derivatives markets are not all evil and equity markets are not all saints. Both serve useful economic purposes. But you can see where this is headed. Esoteric, ununderstandable financial structures are getting to be more important than the underlying asset itself. That's why, a wise old fox from Omaha, back then in 2003, called derivatives a weapon of mass destruction.

Many years ago, when the world was a simpler place and when this blogger was a young man (!), he went to 11 Wall Street, entered the visitors gallery of NYSE and gazed at the trading floor in awe.  Little did he know that not in the too distant future, this lovely lady was going to be thrown out into the street as an ugly old crone.

Saturday, December 15, 2012

Round the world for one day

How would you like to chuck it all and travel around the world ? Tempting isn't it ?? Well that's exactly what two wonderful persons I know are doing right now. They blog about it here - follow it if you are interested in traveling ; its a gripping account of far away lands. If you fancy yourself on the road from Rangoon to Mandalay or on the Silk Road between Bukhara and Samarkand, then this is the travelogue for you.

I happened to be in Spain and voila, discovered that they were in Spain too  - Ah the wonders of the internet. I was in Madrid and they were in Granada, so emailed them to meet at Seville which is where I spent a magical day today with them.

No doubt they'll get to updating their blog on this day in Seville. Their blog is still in Turkey, whilst they have physically moved on to Greece and onwards to Spain. They'll write about the Catedral de Santa María de la Sede (Seville Cathedral), an imposing and awesome structure where we stood reverentially in front of the bones of Christopher Columbus interred there. And about the Reales Alcázares de Sevilla (Alcazar) - the palace where you could feel the legend of 100 virgins a year demanded by the Moors from the Christians.  Or the bullring, the oldest in Spain - this being off season, thankfully there were no bullfights. There was the rain in Spain, but it was the gentle variety that added to the charm and mystique of the place.

Its their call to write on the place. Mine to write on the experience with them. Wanderlust is always an instinct of man; and those who wander have a treasure trove of experience. Travel broadens the mind and travelers make wonderful company. If they are as nice as M and V, the time with them transcends words. It was only a day, but to me it seemed that I had somehow partaken of their entire adventure. I had walked with them, had shared the sights, had felt the tug of the journeyers. It was a very special day. As we sat in the station sipping a cup of coffee waiting for the train to take me back, I couldn't but think a wee bit of chucking it all and following in their trail ! Gracias M & V for the magic.

While I come back home to India, they go onwards to Morocco, to Mauritania and wherever else the road beckons. Good luck M &V. May you have many more wonderful experiences and the joys of visiting many a land. 

For me, I am thankful, that for a day, just a day, I trod the path with you. Round the world, at least for one day.

Saturday, December 8, 2012

The strange case of John McAfee

Do you use McAfee anti virus software ? Chances are you probably do. If so, or even if not, you may be interested in the strange story of John McAfee. I'm not sure if its comic or tragic - decide for yourself. In any case its a prime candidate for the script of Gils' soon to be shot Blockbuster from Chollywood  ! (If you want to know what Chollywood is, it is a pun on that stunning  "centre of the world"  where the said blogger now lives and has become completely enamored of )

John McAfee is not your  typical geek. Firstly he was born in 1946 (now which geek can claim that !). While he was working in Lockheed , his computer got infected with one of the first viruses that ever came to prominence - Brain. Readers of my vintage might remember that this originated from Pakistan. which prompted lots of hand wringing in India about loss of software primacy !  McAfee got so pissed that he started writing software to combat viruses. In due course he founded McAfee Associates, the antivirus company which he took public in 1992. In 1994 he quit, cashing in all his stocks and reportedly made some $100 m. So far , very typical of software entrepreneurs. But from now on, his life has been anything but typical.

He retired to the back of beyond in Colorado (where ?)  and became a yoga guru. He established a yoga retreat there and penned a book on yoga. He introduced all sorts of new concepts including "observational yoga" where , I believe, you relax on an easy chair, munch snacks and watch others doing yoga.

In 2008, when the financial crisis hit, apparently he lost a lot of money. He then sold everything in the US and moved lock stock and barrel to Belize (double where ?) He started doing research on herbal medicines in heavily armed compounds. He acquired a reputation as a mad scientist and that led to raids suspecting drug production. He frolicked around with young women, justifying that as an example of trickle down theory - by arguing that parents in Belize constantly promote their daughters to men with money, and he was only obliging thereby increasing family incomes.

But over the last couple of months, his story went even wilder. He got into an argument with his neighbour who complained of his dogs barking. McAfee then claimed that his dogs had been poisoned and therefore he had to shoot them. Shortly afterwards, the neighbour was found murdered. When the Belize authorities wanted to question him, he claimed he was being framed and went into hiding leading the authorities on a wild chase and taunting them through tweeting and blogging constantly. Suddenly he surfaced in Guatemala  claiming political asylum. Guatemala would have none of it and is currently going to deport him back to Belize. The Belize Prime Minister has called him "extremely paranoid; even bonkers".

He blogs at In true spirit, his start page is whacky - but don't worry; it is safe.

Spare a thought for Intel, which now owns McAfee Anti virus suite of products. What an advertisement for your brand .........

Thursday, November 29, 2012

Cash transfers instead of subsidies

India is embarking on a major revamp of its social security system - replacing subsidised food, fertiliser, fuel, etc etc with direct cash transfers to the bank accounts of the "poor". Is this good or bad ?

The current system involves heavily subsidised foodgrain, fertilisers, fuel, etc being made available to ration card holders through the public distribution system. This suffers from a whole host of problems. Bribery, corruption, pilferage, etc ensure that only a fraction of the stuff ends up in the hands of the targeted people.  In some areas like fuel, cooking gas cylinders are widely misused and the diesel subsidy lands into the pockets of rich car owners. The waste is so incredible that something ought to be done.

The solution proposed is to eliminate all subsidies progressively and instead simply transfer cash by electronic transfers to bank accounts of the target population. Initially it will cover various anti poverty schemes, then extend to cooking gas and kerosene and only finally to food and fertiliser. The Aadhar scheme is intended to enable foolproof identification. This way middlemen and cheats are largely eliminated. The poor use this money to buy their requirements from normal shops selling products at market prices.

The scheme has lots of advantages. Firstly corruption will go down, although it will not be eliminated. The middlemen taking cuts will be put largely out of business. The country's subsidy bill will drastically fall - as the waste will significantly reduce. The entire rotten public distribution system can be disbanded (although it works quite well in states like Tamil Nadu and Chattisgarh).  Today's technology can ensure that fraud and stealing can be drastically reduced.

However, my worry is that once cash reaches the intended family, what will they use it on. The problem is that their buying behaviour is not predictable or controllable. Undoubtedly many men will use this money to drink . Families will use this money for atrocious causes such as dowry, or  to show status. The brilliant book, Poor Economics, draws on extensive research to prove how their decisions might not seem rational. Research shows, even with present incomes, the poor could spend 30% more on food, if they cut out liquor and tobacco.  When they buy food, the choices are not based on calories or nutrition, but on taste and style. On the medical front, they shun expenditure on low cost preventive measures like mosquito nets or chlorine tablets, even when provided free, and instead go to the local quack for a costly useless injection.

Of course, it is not for me, or anybody else, to prescribe what any individual wishes to spend money on. But I certainly have a problem if my tax rupees  go to fund drinking liquor.

Cash transfers have worked in some other countries, notably the Bolsa Familia in Brazil. But this is a conditional transfer scheme - they get a small amount of money ($12 a month) if  the children stay in school, mothers attend pre natal care, etc etc. India plans to give some $70 a month or so as a straight dole.

On balance cash transfers appears a good thing, but it is not an altogether perfect solution and needs to be implemented with care (not gunghoism). It is wise to recall how Kamaraj in the 1960s raised the literacy levels in Tamil Nadu. With great insight he introduced the mid day meal scheme. Families sent children to school so that they could have a square meal. I doubt the move would have been that effective if he had instead given cash for them to buy a meal.

Sunday, November 25, 2012

Oh ! What a mess

Come on Argentina. How often do you ask everybody to cry for you ?  On Wednesday, a US District Court Judge detonated an atom bomb (metaphorically, thankfully), in the world of financial markets. As usual, Argentina was at the centre of it. Here is the story, with a little bit of history.

In 2001, Argentina defaulted on its sovereign debt - one of the rare instances of a major country doing so. A default essentially means that a country has no money on the due date to repay a loan it had taken and tells the creditors to fly a kite. The consequences of such an action are drastic - the country immediately becomes an international pariah in financial markets and nobody would lend to it anymore. That has been Argentina's lot for the last decade, and the situation Greece is desperately trying to avoid today.

When Argentina defaulted, most of its creditors got together and negotiated a "restructuring package" which meant that they would get something back at least - spread over a long period of time. It was a crappy deal for the creditors, but at least they would get something. They did this settlement twice- once in 2005 and again in 2010.

Two hedge funds Elliott Associates and Aurelius Capital, however chose not to negotiate and filed a case in the US courts asking for payment in full. The court gave its sentence last Wednesday, which is the metaphorical atom bomb I referred to. The judge ruled that Argentina will have to pay in full to these two hedge funds who sued, even in priority to the vast majority of creditors who settled ! The amount is some $1.3 bn.

This action is like poking a stick in a hornet's nest. All sorts of ramifications abound. First is the predictable response from Argentina, telling the US judge to go stuff himself, saying he cannot order a sovereign nation to do anything. But since the original debt was issued in the US and in dollars, there is some jurisdiction for US courts. However, short of sending in the army, how would the US enforce this decision ? It is hardly likely to start a war to satisfy two hedge funds.  It can resort to freezing Argentinian assets and the like, creating a messy situation.

The creditors who negotiated and settled are crying foul. They will have to wait for some 30 years and get a percentage of the amount, whereas these two funds are supposed to get their money in full immediately. They are suing to stay the decision giving these two funds priority. So anybody who negotiates in future is an idiot. Greece, which is trying to negotiate a restructuring package currently is quivering in the boots.

Then there is the question of a nation "starving" to raise money to pay "evil hedge funds". An angle that is sure to stoke the fires against wicked capitalists. Cristina Fernandez, the Argentinian President, who can effectively rabble rouse, is already singing this tune.

Argentina is appealing (interestingly while saying that the US courts should f@&* off at the same time !) . This will go all the way to the US Supreme Court. 

All this raises the issue of countries borrowing too much and not being in a position to pay the debt back. Very often the money borrowed is wasted away - in subsidies, doles, etc etc. Every country is guilty of this; just witness what the US is up to with debt at completely unsustainable levels - where are they spending the money they are borrowing ? - in fighting wars in Iraq and Afghanistan, in providing free health care to the elderly and the poor and doling out money to the unemployed. How will any of this yield a return so that the debt can be paid back ? Every country is simply borrowing more to pay back the original debt and keep doing exactly what it has been doing.

 Oh ! What a mess.

Sunday, November 18, 2012

What happens behind closed doors in a bedroom

What do people do in bed, other than sleeping ? Should be an easy one, isn't it. Well, it turns out not to be so easy. No, it's not what you thought.  Apparently, the activity that is most often done in bed is working ! 

This blogger has often moaned about the complete encroachment of the office in to the home. The awful mobile phone started the trend. The tyrannical Blackberry, despite offering the serious affliction of arthritis of the thumb, turned zillions into addicts.  The tablet completed the victorious rout. The office has completely taken over the home. Wife and kids - can you move to the garage please. 

You know that working in bed is a reality when you see companies offering products that "improve your productivity" while in bed. I had thought that such a claim would strictly be in the realm of the magazines of a certain slant, but apparently these come with a U certificate. Take the example of this bed (online price $5,999)

No, this doesn't rock and shake. Apparently it has more prosaic qualities. It has power sockets built in and one side of the bed can be propped up to let you work while the other side remains flat for your spouse to continue sleeping.

Or how about this laptop holder from IKEA. 

Or something called the "Pyramid Pillow". While it helps you prop up the tablet, apparently its USP is that it can stop pens from getting lost under the sheet.

What is the world coming to ? The future of the human species is under grave threat, if the result of groping in a dark bedroom yields a pen !  If the dominant sound is a ping, instead of what you would expect (no; not a snore !) . When you missed "action" with your spouse (or the significant other) because it was not on your Outlook calendar ? All right, I shall stop here.

Isn't there anything sacred anymore under the onslaught of the office. Can't you retreat into a private sanctuary of your bedroom, without the office crowds joining you. That is why I am dead against the promise of video calling. If I have to do a call from bed, I would rather not have the calling party see me in my pajamas, or worse ! And I certainly don't want to see the other in curlers - and I thought she was very pretty.

Do me a favour. Erect a minefield around your bedroom and shoot the office if it tries to encroach. If your guard is slipping, remember this blog post. And remember that we would all not have been born if the second most common activity that happened in the bedroom was working !

Monday, November 12, 2012

The incomparable Bill Gates

I remain confounded as to why Bill Gates is not universally loved in this world. Ask people at random to name the greatest living person  and you'll get a wide variety of names. But I bet, you won't see the name of Bill Gates very much. And yet , to me, he would rank right up alongside with Nelson Mandela for that honour.

Why ?;  do you ask ? here's why.

There have been many incredibly successful businessmen in the world. Few can deny that Bill Gates is one of them. But he is only one of many; many preceded him, and no doubt many will succeed him. But even in the success, you should laud his lifestyle - never ostentatious, low key, with class and style and the very epitome of what a successful businessman should be.

And then he gave virtually all his money to charity. In this, he is rare, but not unique. Others have donated large sums before too. The list of business tycoons, who have been major givers for social causes is an illustrious list.

But he is absolutely unique, in that not only did he give money, but that he quit corporate life and is now an active manager and leader of the Bill and Melinda Gates Foundation. He has brought his incredible business and organisational talents to the the social work his Foundation is doing. In that he stands alone. No comparable peer is anywhere close to him in this regard. 

If you don't know what the Bill and Melinda Gates Foundation do, visit their website. They have been one of the major players in the virtual eradication of polio around the world. Their work in Global Health is stupendous - he leads the fight against tuberculosis, malaria, cholera, AIDS, and such diseases that affect the poor. The work they do in women's health and family planning is like nothing the world has ever seen. Just witness the latest innovation awards that they sponsored. It was not in some sexy field in social work. It was in innovation in toilet design - sanitary facilities being the single largest problem and the largest cause of disease in the poor world. Who else can think of the Reinvent Toilet award ?

Listen to one of his TED talks here, where he dealt with malaria and education and you'll know what I mean.

Its not just the work that Bill and Melinda do. Its the way they do it. They have brought management excellence and governance to the social field where it was sorely lacking.  On a scale that is staggering. The social sector has been transformed by the Gates Foundation. They bring business discipline - project plans, funding, evaluation, corrections and results to the social field. They work with governments and make sure governance is good enough for the money to reach where it should. Most governmental aid disappears down the pockets of the corrupt. Not so with the Gates Foundation. Nobody dares to steal their money or produce poor results - he runs the programs with the same ruthlessness as in business. He works with governments to influence policy. He doesn't dicatate from corporate headquarters - he is on the field in every poor part of the world. He could remain cocooned in luxury - he instead chooses to visit the most difficult regions in the world. I can bet that he has seen more of India than any reader of this blog has - or for that matter, more than many many Indians.

He does all this with little fanfare. There are no sound bites, no photo ops. He doesn't care for any recognition ; not does he even contemplate indulging in many of the antics the rich do. He is truly a class act.

Is he a perfect human being ? Of course not. He has his faults like anybody else. He does go wrong. He is geeky. Not glamorous. In his business days he has been ruthless to competition like any businessman. But what he has achieved and the manner he is achieving them is almost saintly. Show me one other human being who does more for this world. If ever there is a role model for any businessman, nay, any man or woman, you have to  go a long way to find somebody better than Bill Gates. 

Tell me, why is Bill Gates not the prime candidate for the Nobel Peace prize every year ?

Sunday, November 4, 2012

Companies need a geography lesson

Ahhh ! If only the world was as simple as 50 years ago. Global companies found it quite simple then to divide the world ; there were only three regions in the world - America, Europe and Rest of the World. If you were an American company, 70 % of your revenues came from America, 27% came from Europe (Oh god; we have to improve there) and 3% came from Rest of the World (where's that ?). If you were an European company, 70% came from Europe, 27% from America (the bloody Yanks) and 3% from Rest of the World (where's that ?) Quite simple.
Alas life has got a bit more complicated for global companies. How to cut the world ? A popular division is to split as America, Europe and Asia Pacific. That threw up a problem - what about Africa (where's that ?). So came EMEA - Europe Middle East and Africa. Right - President Americas, President EMEA and President APAC.
That threw up more problems - does it make sense to group France and Mali in the same group ? And Venezuela and US didn't seem the same either.  So companies moved to split as per the continents - North America, Latin America, Europe, Africa and Asia.
That threw up more problems. In Europe, Western Europe was dead and declining. Central & Eastern Europe was growing at 35% per annum. Lumping them together under the same management seemed daft - they required completely different strategies. And what to do about Japan & China. Japan was more like Europe. China was an altogether different story. And was Dubai Asia or Africa ??
So companies started inventing "clusters" - the world was North America, South America, Western Europe, CEE, Africa & Middle East, South Asia, North Asia and South East Asia & Australia. Each had a President.
But that's got its own problems. Australia was more like the UK than Asia. Japan and China got still grouped together. So what to do ??
So, how to carve up the world ? In the good old days, geriatric Brits (since Britain owned most of the world), in smoky pubs, took out a world map and drew some random straight lines - how straight the line depended on how many beers they had had.  That's how country borders were created - if you see a map of Africa for example, that's why many so many national boundaries are straight lines. Never mind that it divided tribes, or ran halfway through a lake , and so on.
Now the same thing has been going on in companies. Substitute geriatric Brits for political company bosses, and smoky pubs for company boardrooms, and exactly the same things happen. There isn't a single company where this is being rearranged every three years.  Empires are made and they fall, just like in the political world.
I suggest that company bosses enroll for Geography 101 with Sriram,  before they start to draw their lines ! They might become a little more educated on the world.
Meanwhile readers are invited to present their own pet carve up of the world !

Sunday, October 28, 2012

Even crooks deserve a fair deal

Remember Jérôme Kerviel  ?  OK, very excusable if you have forgotten who he is. He was the rogue trader who almost brought Société Générale ( a reputed French bank) to its knees. This happened in 2008. Kerviel was a trader who punted like crazy in the casino, that is euphemistically called financial markets - he was making gigantic bets that involved European stock index futures. The whole thing unraveled, he was fired, Société Générale tottered and ultimately lost € 4.9 bn.
Criminal proceedings were launched against Jérôme Kerviel  and he was sentenced to prison and a fine. He appealed, and, on Friday, lost his appeal. What caught me was the quantum of the fine. He was fined € 4.9 bn, the quantum of the loss that Société Générale incurred.  A fine of € 4.9 bn ???? Kerviel has no money and is unemployed and probably unemployable. How on earth is he expected to pay  € 4.9 bn ?
This is outright crazy. The judges have fallen hook line and sinker to Société Générale's assertions that it didn't know what was happening and that Kerviel acted alone. PPPPlease ........ That, to put it mildly, is nonsense.  His bosses must have been cheering loudly as long as he made profits and have thrown the book at him, when the whole thing collapsed.  The bank didn't know ??????? Baloney.
Société Générale , and the judge, argue that the massive fine is to prevent him from capitalizing on his story by writing a book (which he has done) or making a movie. That is extreme logic. Every crook tries to make money from his infamy. Jeffrey Archer wrote a whole book about his prison experience and sold God knows how many copies. The fault is not that of the crook - the fault is with those who buy the book or go see the movie. 
Kerviel is not your ordinary villain. Sure he broke company rules and did unauthorized trading. But then a few thousand bankers have done the same . He made no money personally - even his bonus wasn't obscene. He was a case of gambling instincts gone completely out of control. Does he deserve a € 4.9 bn fine ?
The logic that employees are personally responsible to make good the losses that arise if they violate the rules is a dangerous one. Sometimes company rules are not explicit. Sometimes bosses nod and wink when they expect employees to do things that are shall we say, fifty shades of grey ! If I were to calculate the possibility of personal liability, when taking a business decision, I would never make a decision in the first place. Something like this is what is happening in Indian government circles today - no babu is making any decision for fear that Kejriwal will allege that he is corrupt. Everything has ground to a complete halt.
It is a reflection of the anger against bankers that public opinion has no sympathy for Kerviel. Nobody, but a few busybodies have raised a whimper. I however think this is an outrageous court decision. Kerviel deserves to be punished. He deserves to go to jail. But he should not be fined € 4.9 bn.
It is a mark of civilized society that even crooks are given a fair deal.

Wednesday, October 24, 2012

Bir Hakeim - A Guest Post

Readers of this blog would be familiar with Ravi Rajagopalan. Ravi is a very dear friend, a brilliant guy, with an incredible array of interests and knowledge. His cover drive might not have the silken grace of a David Gower, but that's the worst you can say of him. As you might have gathered from comments on my previous post, he is a military buff too and he was motivated enough by my take on El Alamein to write a guest post. As you will see, much better content, much better prose and much better pictures than I am ever capable of. So here is the story of Bir Hakeim , as told by Ravi.

The River Seine cuts through Paris, dividing the city neatly between the elite and the hoi-polloi.  Northwest of the city lie the salubrious environs of the 16th Arrondisement. The Passy metro station serves the inhabitants of this quarter, connecting Line 6 from the North to the 15th Arrondisement across the river  over a double-decker bridge built in 1904. The beautiful wrought-iron columns of the bridge would be familiar to movie enthusiasts.  Marlon Brando and Maria Schneider are pictured walking separately and unknown to each other on the bridge one cloudy Paris morning in the opening sequence of “Last Tango in Paris”. As you start walking on the bridge towards the South, you cannot miss the spectacular rise of the Eiffel Tower on the left. No matter how many times you cross the bridge in a day, the sight of the Tower will never fail to make you sigh at its sheer beauty. You reach the Ile de la Cygnes (Island of Swans) in the middle of the river.  The bridge widens out on the left hand side into a balcony popular with lovers. On the corner of the balcony is affixed a bronze plaque completely ignored by resident and tourist alike.

This is the Pont de Bir Hakeim.

Bir Hakeim has disappeared from maps today. It was an abandoned oasis and former Turkish fort south of Tobruk in the Libyan desert.  South of Bir Hakeim lay one of the great empty stretches of sand in the Libyan desert impassable to man and beast. In 1942, with war having come to North Africa, it was the last of the points on a line drawn from the Mediterranean Coast south towards the Libyan desert west of Tobruk where the Allies girded themselves against General Rommel’s Afrika Korps and Italian Armed Forces.  Tobruk was one in a line of ports which would be staging points for the Allies to try and hold off Rommel as he drove towards the Suez Canal in British-held Egypt to cut off the sea route to India and the Persian Gulf to the Allies.

France prepared for the Second World War with a strong Air Force and an impregnable set of defences along with Ruhr called the Maginot Line.  In May 1940, after eight months of relative quiet, German forces attacked north of the Maginot Line driving west. By mid-May the British Expeditionary Force was encircled and heroically escaped through Dunkirk in Belgium on anything that could float. The Wehrmacht swung south and raced towards Paris. The French armies fought as best as they could but were defeated by superior tactics.  Eight weeks after the Blitzkrieg began, in June 1940, France surrendered.  The German Army entered Paris and marched down the Champs Elysees.  General Charles de Gaulle escaped to England rather than surrender to the enemy. 

Outside France, most French forces surrendered to the Germans once the homeland fell. Except for small groups of stubborn men. None so stubborn as General de Gaulle, who repeatedly called on the French to fight and pleaded with the Allies to take these small groups of men seriously, to take France seriously.  With military losses mounting all over the world, there was no room for sentiment.  Some French forces were allowed to fight alongside the Allies wherever they could be found.  General de Gaulle had symbolic value and emotional significance, but no military value. He was tolerated.

In February 1942, Rommel began his drive towards Tobruk from the west.  Facing him was the British 8thArmy under General Sir Claude Auchinleck, consisting of British, Australian, Indian, New Zealand, South African and (a few) Free French regiments.  Large parts of the Libyan desert cannot support heavy trucks and tanks. The plan was to move along the coast as far south as possible, surround Tobruk and take it.

Bir Hakeim was allotted to a couple of thousand assorted French troops and Foreign Legionnaires. In overall command was General Marie Pierre Koenig – a colourful character.  Knowing that the Germans would hit Bir Hakeim to take Tobruk from the south, he prepared as best as he could, laying minefields and hidden explosives and preparing fortifications.  He had about 3000 men, and was vastly outnumbered.

The assault began on the night of May 26, with the Italian armored regiments leading the attack.  Successive waves of Stuka dive bombers pounded the French positions.  German tanks soon joined the attacks. The attacks were non-stop, the fighting was hand-to-hand at places.  Water was short – a situation made worse when Indian POWs released by the Germans in the desert a few days before wound up at Bir Hakeim needing medical assistance.  General Koenig kept his position resupplied as best as he could, and he held off the Germans.

Rommel now turned his full attention to Bir Hakeim by the first week of June, realizing that he had a serious problem with his supply lines if he did not take the position.  Respectful emissaries were sent to General Koenig under white flag, offering fair terms if they surrendered.  The emissaries were respectfully spurned.  The fighting resumed with renewed ferocity.  Fresh German forces now surrounded Bir Hakeim and it was clear that the position would not survive.

General Koenig realized he was done for.  He then did something remarkable.  He asked wounded French soldiers to man defensive positions and to continue to fire on the enemy.  The rest of his troops essentially drove through the French minefield in a daring move to escape north towards British positions.  Men and vehicles were lost but the vast majority made it through.  General Koenig was driven by Susan Travers, a British woman serving in the Foreign Legion in Bir Hakeim!

On the night of June 11, German forces broke through to Bir Hakeim, only to find a couple of hundred wounded Frenchmen. They had been delayed by three weeks. History says Rommel ignored an order to kill all prisoners and ensured these brave men were treated well in captivity.

Tobruk did fall to the Germans.  The German forces did reach El Alamein, to be met by General Montgomery, the new commander of the Eighth Army, who then famously “hit Jerry for six”.

The significance of Bir Hakeim is that France was able to tell the world its spirit was not dead.  The fighting soul of France was alive and well.  The easy contempt with which some Allied commanders treated the French due to their spectacular defeat turned to grudging respect. About 3000 Frenchmen held off 45000 German and Italian troops. By delaying Rommel for three weeks, the French ensured that the British were able to reinforce their positions east of Tobruk.  And ultimately, it contributed to Rommel’s defeat.

The plaque at the Pont de Bir Hakeim is simple and moving.

“At Bir Hakeim from May 27 to 11 June 1942, the First Free French Brigade repulsed furious assaults from two divisions of the enemy and affirmed to the world that France has not ceased combat”.

Saturday, October 20, 2012

The Battle of El Alamein

We should not forget.

We are a generation that, thankfully, has not seen war. But the baser instincts of man are never very far from the surface. Even in our lifetimes we have seen horrors - Afghanistan, Iraq, Yugoslavia, Rwanda, Congo. But thankfully, nothing on the scale of World War II. Mankind should never forget the horrors of war.

This week is the 70th anniversary of the Battle of El Alamein, one of the turning points of World War II. El Alamein was a dot in the Egyptian desert. Today it is a beach resort, then, it was in the middle of nowhere. But on the unforgiving desert sands was fought one of the most important wars of World War II. The Afrika Corps of Field Marshal Rommel was winning everything in its path. All through Europe, and elsewhere, the Germans and Italians were winning everything and the Allied Forces couldn't seem to do a thing about it. But at El Alamein, the tide was turned. Montgomery's forces defeated Rommel and the Germans were pushed back, and from then on it was only retreat. There were more important and strategic battles, like Stalingrad, or brutal, like Kursk, or impacting the whole population like the Battle of Britain, or remote and miserable like Guadalcanal but the two battles of El Alamein will remain one of the most important of the World War. It prompted Churchill to say those famous words - " This is not the end, it is not even the beginning of the end. But it is, perhaps, the end of the beginning." Church bells were ordered to ring all over England. And Churchill said, " Before Alamein we never had a victory, after Alamein we never had a defeat." It was one of those rare battles that was made into a movie, The Battle of El Alamein,  showing the Italian side of the battle, rather than the British or German side.

The current generation of Indians may not remember that World War II touched India as well. Of course, many Indians fought with the British and Allied Forces all over the world. But the Japanese invasion came to India's shores. In the battle of Kohima, the Japanese were halted and turned back. Even today, the exact spot where the Japanese were stopped - the tennis courts of the Commissioner's bungalow and an old tree that was shot out are still preserved as memorials of the War. You can see them if you go to Nagaland. Commonwealth war cemeteries dot the region - in Kohima, in Imphal and a few other places. They are immaculately preserved and the epitaphs on the tombstones will bring a tear to the eye. They were all 19 or 21 years old, they were from far away - Scotland or Australia and they fell defending India. On many of their tombs are inscribed the poignant lines - "Go back home and tell them, for your tomorrow, we gave our today "

There are about 60 or 70 veterans of El Alamein who are there today to commemorate the 70th anniversary and to remember their fallen comrades. It is unlikely that there would be another event of this nature - for the veterans are all in their mid nineties.

Which is why it is all the more important that we read about the War. To be told of the horrors.

We should never forget. For, if we do, we will repeat it.

Saturday, October 13, 2012

Spare a thought for the poor Iranians

There is economic cataclysm going on in Iran. What guns and rhetoric have failed to do might be achieved by grubby old economics - the downfall of the nut cases who have been ruling Iran for sometime.

The Iranian rial has plunged into free fall. It declined by 25% in one week in October against the US dollar. Since the beginning of 2011 it has fallen by 70+%. It was some 10,000 rial to the US $ in 2011. Its now around 30,000 rials to the US $. The rial is now virtually worthless. Inflation by official estimates is some 25%, in reality more like 70%. There is economic chaos.

Why is this important ? You only have to look towards  the street protests that have sprung up in Iran to see how this is affecting everybody in Iran - the rich, the poor, and yes, even the mullahs. But, wait a minute. Iran is oil rich, right ? It should be rolling around in wealth. And yet, the country  is in deep crisis and the population is suffering.  Why ?

If ever there was an example of how a rotten government can destroy its people, it is Iran.  By all rights Iran should be a rich country. It is an ancient and rich culture and full of extremely bright people. And above all, it is swimming in oil. But unfortunately it has a government that must surely compete with North Korea and Zimbabwe for the title of the worst government in the world. It exports terrorism, it dips its fingers into every trouble spot in the region - it finances the Hezbollah in Lebanon, it backs the Syrian regime, it supports the Hamas in Gaza........ It is trying its best to build a nuclear bomb.

Consequently it has pissed off the world. Crippling economic sanctions have been the result. Nobody bar Russia and China, and to some extent India, is trading with it. It has been kicked out of SWIFT - the international banking settlement system. Therefore everybody, including Russia and China have to deal with it via the back door.  If anybody trades with Iran he has to virtually receive suitcases of cash in return. That's not easy to do on scale. So even exporting oil has become difficult.

End result is that the rial is plunging like a stone. So everything becomes incredibly more expensive. Food prices are doubling. Luxuries, which might even be necessities in other parts of the world, are becoming unthinkable. The common Iranian, like most others in the world, cares two hoots about religious purity and dogma. He wants to fill his stomach. And then wants to buy a mobile phone. After that he wants to post on Facebook. Simple.  If you deny that from him for too long and make him slide backwards, his patience will break and he will burn the beards of those who are stopping him. 

So for Israel and the hawks in America, here is a pleasant thought. You don't have to nuke Iran to stop them from acquiring nuclear weapons. The rial is doing the job for you brilliantly. With a bit of journalistic license I say, the bill is mightier than the bomb !

Tuesday, October 9, 2012

Economics Gangnam Style

What ?? You don't know what Gangnam Style is ? It is the K-Pop (Korean Pop) sensation that has taken the world by storm. It  is No 2 on the UK and US pop charts, watched on You Tube some 400 million times . Everybody , it seems, wants to prance like a horse . Even the West Indies team, on winning the T20 World Cup, gave an energetic rendition of Gangnam Style (note the absence of the word cricket in this sentence !). Well, if you haven't heard of the original before, you can add to the 400m+ views by watching it here - beware, you have to practice prancing like a horse while doing so.

This blogger is seriously musically challenged and has no qualifications to write a music post - that being the domain of experts like Suja.  Or like another esteemed reader of this blog who runs his own radio station. Instead he shall demonstrate his "hipness" by linking economics to Gangnam Style !

HTC (a Taiwanese company) just declared its quarter's results announcing a 80% drop in profits. At the same time Samsung (a Korean company) announced a 85% rise in profits. You see its all got to do with Gangnam Style coolness. Galaxy S3 is cool, HTC Desire isn't. Five years ago, you wouldn't dream of owning a Hyundai car. Today, its quite OK to park your Equus next to a Japanese or German equivalent and not be subjected to hoots of derision. Or consider Amore Pacific an increasingly successful cosmetics company - after all if South Korean girls can look so young and pretty, there must be something in the cosmetics they use ! South Korea is just not ships or steel anymore. Brand South Korea is going places - Gangnam style.

The country which has the biggest lessons to learn is China. China desperately wants to be loved and is nonplussed when nobody seems to love it. It would dearly love to export "soft power" in addition to its undoubted "hard power". But it tries to do that by pouring money into CCTV globally- now it must take a seriously self flagellating masochist to watch CCTV for more than 1 minute. It shoots itself in the foot by going after anybody who said hello to the Dalai Lama. It threatens war over a few rocks in the middle of the sea. It stands no chance of global embrace by doing such things. It only results in Huawei not being allowed to sell much in the US. Nobody is going to proudly claim to own a Haier washing machine or even a Lenovo laptop. Instead it should unleash the creative forces of its wonderful people. Make them prance like a horse. Or if they like, maybe waddle like a panda. Preferably Gangnam style !

Tuesday, October 2, 2012

Stooping to conquer

I am getting tempted to write political posts, despite all my resolutions to stay away from that area. The culprit is my good friend Sriram who continuously tempts me in that direction with incisive writing in his excellent blog. We then debate and counter debate on email !!

So made a guest post there - taking the crazy liberty of  writing a letter to the President of the United States !