Putin - Savior or Tyrant?

I and an uncle of mine, who has varied interests and great knowledge on middle east, had a discussion on Russia's action in the middle east, especially Syria, where the Russians under Putin had taken the fight to ISIS and the Syrian rebels in support of President Bashar al-Assad. While I agree with his assessment that what Russia does is noble and good, I didn't necessarily subscribe to his view that Russia would emerge the next super power from the ashes of World War 3.

It is rather ironic (not that much, this Wired article claims it is common at this time of the year and gives tips on how to win) that the discussion happened on Christmas when the whole world celebrated the birth of Jesus Christ, prince of peace (Oops, not the whole world, many Russian Orthodox churches celebrate it in January). So is Putin a Savior who would restore Russia to former glory or a tyrant who would run Russia to the ground. I have my own reasons, which I discuss below, as to why the latter is more likely to happen though I would love the possibility of the former happening. Who doesn't like a triumphant, underdog story?

Economy

Russia is no longer the heavy weight it used to be among the BRICS nations. In fact most nations including Brazil and China are fighting high inflation and severe slowdown in their economies. The sanctions imposed by the European Union and the USA after the Crimean annexation and subsequent play in Ukraine is also having a negative effect on the Russian economy.

The fall in oil prices, whether it is being orchestrated by Washington, Riyadh or Moscow itself, the fact remains that Russia is suffering along with the other oil economies. Saudi Arabia is likely to raise debt which would help them fill in the void left behind by the plunging oil in their treasuries. Alaska is also proposing to bring in higher income tax rates after nearly three decades to plug dwindling oil revenues. Saudi Arabia (AA-) is better placed than Russia (BB+) in ratings by S&P and hence would have a clear advantage here.

The allies also play an important role here. On Russia's side we have got Syria, Iran and Iraq for now. Syria is still battling ISIS and have conceded large swathes of land to the self proclaimed Caliphate. Iran recently won a diplomatic victory in getting the West remove crippling sanctions against it by agreeing to go slow on its nuclear weapons program and is unlikely to antagonize them again. Iraq is still rebuilding itself from the invasion by the United States and subsequent IS menace. There are other countries such as China on the fence, which is battling its own financial crisis at home and also concerned about USA's involvement with its regional rivals. The other countries are too small or economically weak to bring anything substantial to the table.

Against Russia we have Saudi Arabia and Turkey, two of the most powerful countries in the middle east. Israel can also be counted in as also Pakistan. The United Arab Emirates can bankroll the fight for long. Though these countries are economically sound if push comes to the shove they can be backed by the Americans and the Europeans with their large purses miffed by age old Soviet adversity and recent Russian action in Ukraine and Syria.

Advantage: Anti-Russia coalition

Military

The Soviet Union was a formidable military power but the same cannot be said about the Russians. When the Russians battled Georgia over South Ossetia and Abkhazia their performance was assessed and found to be lacking by both International and Domestic experts. Though their performance had significantly improved during the Ukraine and Syrian conflicts, it is still not the kind that would upset the Anti-Russian coalition. Russia's allies are also not in a very strong position. Iran has dated weaponry and is dependent on Russia for its' supplies. So is Syria and most of their weapons fell into rebel hands when Syrian soldiers defected to join the rebel ranks.

China, who is sitting on the fence on Syria, if it decides to join would be a game changer. China has weapons that are either imported or copies of some of the world's most renowned. However, the question is whether they will enter the war. Chinese economy is already in a slowdown and being a trade economy heavily dependent on exports of finished goods, war is bad news. A slowing economy doesn't augur well for domestic politics either. But if they were to enter despite these they might be aggressively engaged more locally in the South China Sea, Tibet and India. Also entering the middle east in support of the Russians and the Shias against the Sunnis may lead to loss of relationship with the Pakistanis. Moreover, the Uighur problem in Xinjiang may peak considering the fact that Uighurs adhere to Sunni practices.

Contrast this with the Anti-Russia coalition. In the middle east we have Turkey, Saudi and Israel ready to defend against Russian action. The United States and its allies would be ready with arms and ammunition to back them up. Considering that Turkey is a NATO member, any attack on them would invite NATO ire which might affect Russia closer to home than in Syria. Probably the reason why Turkey downing a Russian fighter has more or less received muted response.

While Russian performance have significantly improved since 2008 it still doesn't match its opponent and allies.

Advantage: Anti-Russia coalition

Domestic Politics

A country need stability internally to project power externally. This is important, especially in this age, when the enemy actively uses internal disturbances as a policy to attack. Russia in this front has many active instability factors - separatists, drugs, demographics, corruption, mafia and oligarchs. The fact that Russia lacks any credible opposition to highlight excesses by the Government and most of the fourth estate being owned by the Government or state run companies doesn't help either. Divergent views aren't tolerated, be it from a Journalist, physicist or from that of a Chess Grand master, they are silenced either by assassination or intimidation. In a full scale war these can be put to maximum use to divert  Kremlin's attention from the battle field.

Iran too faced protests soon after elections in 2009 like Russia did after Putin came to power in 2012. The supreme leader, Ayatollah Khamenei, is still a central figure and a force to be reckoned with, known for his fierce anti-west tirade. Though the current Iranian president, Hassan Rouhani, is a moderate, who was able to strike the deal with the west on Nuclear energy, he still is very much influenced by the Ayatollah is an open secret. There is a civil war going on in Syria and Iraq isn't exactly peaceful either.

China has a more complicated problem at hand. The bond that holds the Chinese people together is that the economy has been growing, providing opportunities, keeping them busy. So busy that they have never felt the need to fight for government services, labor incentives and freedom. The unraveling economy can have a cascading effect on the cheap labor which might make the local population to raise against the state in protest. Apart from this there is the restive province of Xinjiang with the muslim Uighurs who are fighting against the Han Chinese for autonomy. Tibetans too are protesting the presence of Chinese in their land. All this flash points could be activated if China decides to side with Russia in the war.

On the other side we have dictatorships too - UAE, Saudi Arabia, et cetera. However, these don't have an imminent threat of losing power. Turkey has a vibrant democracy so does Israel and Pakistan, at least on paper. The other American and European powers have a strong mature democracy and institutions to take care of internal issues freeing their leaders to concentrate on the war, should the need arise.

Advantage: Anti-Russia coalition

It is simple to dismiss all the above as western propaganda. But a propaganda targeting whom would be a valid question. If it is to shape public discourse to prepare them for a war then it is not happening. People today are more connected and war averse than before. And in this age of Wikileaks, Snowden, Anonymous and a free press, a propaganda of this scale, if it was one, would have been easily called out as one. Contrarily it is countries like Russia and Iran which have a press high on propaganda.

So is a great war in the offing then? I would say, NO!

Russia, Europe and America are too smart for it. The great powers have more or less understood that war creates more problems than it solves. We have seen Europe, once the world's hot spot for conflicts, kick out all misunderstandings and merging together for good. Russia went ahead and created a trade union combining Belarus, Kazakhstan and Russia into an Eurasian Customs Union. USA is consolidating its friendship with Mexico and Canada and is extending a hand of friendship to even former enemies such as Cuba.

So Putin - a savior or tyrant? A savior to his people thanks to the propaganda that is going on in Russia and among the Russian people. A tyrant to the west and all who view Russia as a threat including Ukraine, Georgia, et cetera. What Putin actually is a smart negotiator, a shrewd businessman and a sly fox. His negotiation skills came to the fore when Syria was to be punished by the policeman of the world. He means business when he says he would protect Russian interests (which include ethnic Russian population in other countries) under threat using force. When the heat is on him he turns around, withdraws to negotiate and concludes his business - the French saw it during Georgia, Germany and Europe in Ukraine and the United States probably would see it in Syria.

Disclosures:

• I am a big fan of Russia, the country that demonstrated how Communism (me a fanboi) can work (albeit for a short time with all the inefficiencies).
• I also like spies (have read most works of Tom Clancy, Robert Ludlum and watched most Bond movies) and hence Putin, the KGB agent, naturally commands my admiration.
• I understand that no one can be without bias but I am working on containing mine.

Cash on Nash to Lash at Communism but it's not making a Dash despite the Bash!

I haven't watched or read 'A Beautiful Mind' and hence when someone told me that John Nash and his wife met with a fatal car accident I just joined in a collective gasp. Only later did I learn that Nash was the genius behind the famed 'Nash Equilibrium'. My tryst with Nash's work was during management studies and my respect grew when I found the man's work helped various fields from economy to psychology. May their souls rest in peace and equilibrium.

John Nash won the Nobel memorial prize in economic sciences in 1994 despite his contributions primarily had to do more with mathematics than economics. He had very less interest in economics too. Then why economics? Well could be because Nobel prize didn't recognise mathematicians (Alfred Nobel supposedly lost his lady love to a mathematician) and hence economics, as a centrist would tell you. Or because Nash's work helped in economics the most than other fields as a conservative would tell you. Or because it was all a big fat conspiracy by the western world as a communist would tell you.

Why is it a conspiracy some might wonder? Well the reason is though the work itself was devoid of any particular politico-economic ideology it was used to further the 'capitalism is best' idea. 

The crux of the Nash Equilibrium in layman's terms can be defined as - when two or more person strategise rationally for his/her own benefit taking into account the others' decisions they are said to be in an equilibrium and would tend to achieve the most optimal result. Extending this to economics one might conclude that if each player is selfish and is after his/her own betterment then each would achieve optimal performance (wealth). Thus it was arrived that capitalism and free markets were good. Businesses compete in a free market for their own selfish goals and eventually making the market a better place to live in for all.

Uh huh but, Houston, we have a problem! Not all humans can be expected to be rational in this age. In today's cut throat competition, businesses employ hook or crook methods to make money. Bribes are freely given and taken, competing businessmen not companies are eliminated, cartels are formed, resources, environment and the unassuming, innocent, Homo sapiens are exploited. The term for all this in vogue is crony capitalism. But by definition it's a free market, no one is stopping the others from doing all the above and they are well within their right of being selfish!

And not just that! Inequality, a serious problem engulfing the world, is feature of this capitalism says a new age economist who has done some serious research. He has compiled his work into a book 'Capital in the Twenty-First Century ' which incidentally is a best seller (I keep falling asleep while reading it, promised myself to get back after finishing Gone Girl). He is a Frenchman with a very French sounding name, Thomas 'no not Friedman' Piketty. 

This video though dated gives a clear understanding of Inequality in the USA which sells the American dream

And it makes sense. Can someone start with millions or even billions of the green back from the best of Wall Street and aim to compete successfully against the likes of Costco or Walmart in their own game? They may disrupt them with an alternate delivery channel like what Amazon or eBay does but in their own game of brick and mortar behemoths? Not unless they have really shitty management. Even in the alternate channel the success of the disrupter lies in the failure of the disrupted. If Google waked up to the potential of a social network earlier, I doubt Facebook would even exist today.

Thus in a capitalist economy, the haves have a clear advantage over the have nots and some government intervention is needed to bring about a level playing field.

And Mr. Piketty isn't quite finished yet. He comes with his analysis on previous revolutions like the French and Bolshevik goes on to make a scary formula

Where, r is rate of returns from capital, g is the growth rate and boom is a boom - a revolution that could overthrow capitalism and in turn democracy as we know it.

It is high time we get something to replace Capitalism. Communism may not be the answer, but a hybrid socialism could very well be the optimal solution.

Systemic Bias.?!

The other day a friend of mine was asking me about Educational loans. Given my brief association with the Banking sector and the fact that my dad is still in active service with a Public Sector Bank, I have become some kind of a 'go-to-guy' for basic information regarding banking products. The friend's friend on whose behalf he was enquiring had aspirations to make it to a foreign university in a European country and my friend was quite excited, understandably, given that the aspirant was quite studious and well deserving. However, there was a problem. The aspirant's family was into agriculture full time and his dad, despite being quite successful, didn't possess any substantial assets other than massive farm lands.

Now that was bad news. The banking sector in India has been undergoing a silent crisis in the form of NPAs (Non Performing Assets) for some time now. A lot of corporate loans viz. Kingfisher have gone bad and many including Adani, GMR, et cetera are expected to go bad and not just that there has been a lot of delinquencies in the personal loans segments as well, especially Education, Home and Car loans, due to drying up of the job market. The picture was never green as far as Agriculture was concerned. It was almost a given that the Agriculture loans are either written off by the Banks or the Government at some point of time. Moreover, most public sector banks won’t accept Agricultural land as mortgage because they cannot go after it if the loan is defaulted as easily as they could with other property and also because in some states it’s illegal. If the banks were a little more cautious in extending credit earlier they wouldn't be so neck deep in trouble, the banks having realized that have pulled up their socks and in the process bringing untold misery to deserving loan applicants.

Recently a couple of news made headlines. Current Account Deficit (CAD) increases; driven mainly by Gold imports, Money Laundering by Banks expose by Cobrapost, Tax evasion and its impact on the fiscal deficit, Moneylenders, et al. I personally feel that the Banking structure in our country has directly resulted in such irritants in the system and I am going to follow the family and how their quest for funds for a legitimate and noble cause might come from unscrupulous and dubious sources.

There was a time not long ago when farmers can submit a proof of possession of agriculture land and Gold ornaments and collect nearly 75% of the value of the Gold as loan at a mouth watering interest rate of 7%. This was when Gold was at its all time peaks and there was a possibility that the interest rate might further go down to 5% with excess government subsidies. At that time the interest rates on Term deposits with the Bank was around 8% and technically if one invests the loan amount back in the bank they can earn up to 3% net interest margin (NIM). Just to give a perspective the NIM of popular banks during the same period hovered around the same figure give or take 1%. Now that gold has climbed down from its historic highs, the common man, especially small farmers, believing the trend would be repeated is trying to amass as much as they can, driving volumes up. Now RBI and Government had stepped in to douse the fire kindled by the passion for the fiery yellow metal which they could have done earlier and avoided the whole situation now. Now they blame the obsession of people with Gold, however, they were prima facie the reason for this obsession.

Turned away from the Banks and having already pledged all their Gold, the family might approach a Moneylender. These days’ moneylenders are exclusively servicing clients turned away from Banks and financial institutions and charge them interest which amounts to as much as the principle in many cases if not more. Over and top of this, since they aren't regulated, they take lands or other properties, even those banned from being mortgaged as security. None of the money that transfers hands goes through any bank accounts or anything, thus the whole transaction is as good as never happened, no taxes, nothing.

Now the family probably has enough money, however, he would have to wire a part of that money as college fees and other expenses. Now the Banks which had earlier turned them away due to systemic reasons will have to act intermediaries to transfer the amount. Call it strung by guilt of not able to help a hard working farmer and setting it right or to earn some precious commission from the wire transfer, the banks would give out some precious ‘advise’ on how to do it without arousing the suspicion of the Income Tax Department.

The money borrowed would soon be back doubled or tripled and end up with the money lender as black money. The banks might bend backwards to convert it to white counting on precious commissions, anyway, if not they some other bank would do it and the process goes on. If the farmer was able to get help through official channels easily this whole trail could have been avoided.

I have personally seen how farmers and small businessmen suffer because they don’t have proper banking access. RBI’s ‘Financial Inclusion’ through opening banks all over the country alone will not help achieve anything. Some prejudice against such debtors and systemic bias in the system should be corrected for real betterment of the society.

A new meaning of Ethics.?! Is Ethics really absolute?

Wipro, one of the largest and well recognized Indian company involved in Information Technology, Consulting, Business Process Outsourcing services and other product manufacturing in the non-IT space (which they have decided to demerge) has been named as one of the most ethical companies in the world by a leading think-tank, Ethisphere Institute in their annual rankings.

Immediately my thought went to an Economic Times report on IT companies spending substantial amount of money in Lobbying. Then my grouse was whether the employees whose jobs depended on such activities complain about corruption in India. 

Between January and March this year (2011), Wipro spent nearly $60,000 (Rs 27 lakh) to lobby lawmakers and other officials about restrictive visa rules and policies that favour local companies. - The ET report

However, many pitched in to 'educate' and 'enlighten' me that Lobbying was legal in the United States of America. But I couldn't take it - will a corporate bend back on its motto of maximizing shareholder's wealth to appease a stakeholder? I don't think so. Why then would a government bend back (fewer jobs at home for the general public) to appease the stakeholders (foreign/domestic investors/players)? And the process that assists this, lobbying, is legal? I can't buy it.

Ethics are absolute. 

The Ethisphere Institute's website on the World's Most Ethical Companies Ranking website starts with this line. I don't think so. If two countries, India and USA, can have two different take on something as simple as lobbying on whether it is legal (Radia tapes and Walmart controversies), and am not even comparing USA and Venezuela (Comrade Chávez, RIP!). How then can ethics be absolute?

I believe ethics or for that matter any trait can only be relative. And the award can at best be named World's Most 'Legally Compliant' Companies Ranking.

DISCLAIMER 

(I know the work ain't a 'Vishwaroopam' or as true and open about IIPM, still why take the chance in case someone brings it up as an Amicus curiae!)

• I have nothing against Wipro, in fact, I have become a fan of Mr. Azim Premzi with all his philanthropic activities and support for higher taxes and his choice of car (a Toyota Corolla 1.8 Petrol, I was told).
• I understand the pains and effort that has gone in putting up the list by the Ethisphere Institute. Really Commendable.
• I am an Indian and am proud an Indian company has figured in there.

Lessons from the roads

We, Indians (including me of course), could always use a lot of Road lessons. But today I discovered that the infamous Indian roads have something to give.

The festival of lights, Diwali, is just around the corner and the conservative southern city of Chennai is bursting at its seam with people and traffic. The fact that most of the city’s migrant workforce are hurrying back to their hometowns to spend time with their family is stretching the infrastructure of the city to its limit. The city’s police have been doing a good job in controlling the chaos from spiraling out of control and at times employ tactics that blows me over. Just the other day at the Wavin junction in Mogappair the police signaled me to drive on the right side of the road to clear the area. He held traffic on all sides of the four way junction to let us pass and he did well, he was able to clear the logjam at close to twice the speed of what he could do by using only one side of the road as mandated by laws.

The laws require us to drive on the left side of the roads (reminds me of the joke – when a foreigner asks an Indian as to which side of the road they drive – the left or right, the Indian supposedly replied that they drive on what is left of the road! :)) but the traffic constable wanted me to break the law. The reason is the infrastructure constraints, a problem with the system. When the infrastructure improves the law would automatically be followed.

Of late the Indian society has been hearing about scandals and scams and corruption. Everyone talks about punishing the guilty but no one talks about addressing the source of the problem, including Mr. Anna Hazare and Mr. Arvind Kejriwal. A Gestapo like power wielding Jan Lokpal with jurisdiction over the judiciary, legislature and executive is not the solution nor shaking and breaking the system going to help.

Remember punishing me or the constable or both is not addressing the problem, improving the infrastructure is going to make the problem disappear. Dear politicians and civil society warriors please start driving your own vehicles; there are lessons to be learnt from the roads too. :) 

The Dark Knight and Corruption Nightmares..

It was a Corporate Banking assignment which had been due about a week back and I had submitted it late, as usual. The professor, Mr. Sridharan, an ex banker, wanted us, management grads, to contemplate the depreciation of Indian Rupee, the reasons and solutions and submit it as a two page essay.

My essay was scrutinized for the content and the learned professor pointed out a glaring mistake in my report. I had included corruption as a reason for the depreciation. Well, he was right, I had included it after much deliberation to fill in the empty space (well I had forgotten about the solution part and listed just the reasons and hence the empty space!).

Today after reading two news articles, one about the upcoming fast by Team Anna and another about Russian ambassador, Mr. Alexander Kadakin, ‘warning’ about the investments by India’s ONGC in oil exploration in Russia might run into a Russian Winter if the Supreme Court judgment on license cancellation has adverse effect on Russian Sistema Telecom’s Indian venture, I can’t help but believe corruption does play a role, albeit, a trivial role. Well it isn’t the corruption, literally, since Russia is more corrupt than India. All the vigilantes that have raised against corruption, drawing more airtime and in the process a lot of negative publicity to Indian corporate, government and putting the pressure on a reform-starved Judiciary to deliver overzealous verdicts to appease a corrupt population making them believe they are being forced to be corrupt.

I may be prejudiced here given my disgust for Team Anna and their campaigns which I feel distort facts. I would like to see an honest, non-corrupt bureaucracy with a transparent government at its helm but then I have a feeling that it is like an ideal engine (a carnot engine), possible only theoretically. Even the country lauded for its non-corrupt system has them all.

Well it is Batman season and let me take a quote from the movie.

..as a symbol I can be incorruptible..

Harvey Dent: When their enemies were at the gates, the Romans would suspend democracy and appoint one man to protect the city. It wasn't considered an honor, it was considered a public service. 
Rachel Dawes: Harvey, the last man who they appointed the Republic was named Caesar and he never gave up his power. 
Harvey Dent: Okay, fine. you either die a hero or you live long enough to see yourself become the villain. 

Now do I have to tell you who I think are the enemy and Caesar in case of India? Fine, Corruption is the enemy and Lokpal or the Corruption Crusaders may well be the Caesar.


God save my country!!!