NSF Participants:

Our next program will be conducted in conjunction with the Northern Nevada International Center.  The event is free, but please make sure to RSVP or you will not be let into the event.  Please note the RSVP process is therefore different for this event, but will go back to normal for our January program.

 

General Ward

Summary and PowerPoint of the Presentation on…

India and the Rise of Narendra Modi

Implications for China and the U.S.

Atul Minocha provided a comprehensive overview of India today and the significance of its new Prime Minister, Narendra Modi.  Minocha emphasized the vast diversity in India; e.g., while 55 Indians are on the Forbes Billionaires list, 1/3 of the population lives below the poverty line.  It is a country that is mostly Hindu, but has significant Muslim and other religious populations.  It is a country of over 2,000 ethnicities, 22 official languages and a diverse and growing economy (albeit, varies significantly by region).

The election of Modi brings to power a very different Prime Minister.  On the one hand, Modi, as head of Gujarat Province, presided over the worst communal riots since Indian independence.  His role placed him on the “do not issue a visa” list by the U.S.  Still, Gujarat has been a model of economic growth and Modi’s popularity extends well beyond the Hindu population.

Minocha discussed India’s relations with China and the U.S., emphasizing Delhi’s “nonalignment status” during the Cold War.  That irritated the U.S., but U.S. support of Pakistan also riled Indian leaders.  With respect to China, both Minocha and Dr. Xiaoyu Pu stressed that relations between the two countries were fairly far down on the list of urgent concerns.  Both stressed that while India primarily looked east, west and south, China’s focus is on the nearby seas and relations with big powers Japan, Russia and the U.S. and it’s “allies”.  The two countries share a border, but one that is on the “roof” of the world.  While there are border flare ups, relations have been stable if not overly friendly.

Pu stressed that the U.S/China relationship was more volatile than that between Beijing and Delhi, and America and China needed to be cautious that growing frictions, particularly in the South China Sea, did not escalate.  Both felt that with India and China having new leaders in Narendra Modi and Xi Jinping, there would be opportunities for enhanced cooperation between the two Asian powers, as well as periods of friction.

Atul Minocha is an Indian born entrepreneur and author who now resides in the Reno area.  China born Dr. Pu is a professor at UNR and was a post-doctoral fellow at Princeton and Harvard.

India China US PowerPoint

The Untold Story of a Key Maneuver that

Hastened the Downfall of the Soviet Union

By Tyrus W. Cobb

I wrote my dissertation at Georgetown on the “Ramifications of the Soviet Energy Dilemma” in 1982.  A key thesis was that the Soviet Union was very vulnerable because of its heavy dependence on the export of oil and gas for hard currency revenues, and that the United States and the west had significant leverage through their technology and investment potential to influence Soviet behavior.  This message was not immediately well received, as the belief that the USSR was economically and militarily strong and capable of asserting its will across the globe, held sway.

However, key figures in the Reagan administration did come to understand the heavy Soviet dependence on its oil/gas exports to earn badly needed hard currency.  Consequently, that meant that any steps that served to increase the availability, and decrease the global price, of oil and gas would impose severe hardships on the USSR.

That was particularly the case since the Soviets were devoting such a significant portion of their GNP to the defense sector. Any action taken that would decrease hard currency earnings would mean that Moscow would have to shift resources to other sectors—including personal consumption—to compensate for the lost revenues.

I had also advocated that the US and its allies withhold technology and investment the USSR badly needed to extract petroleum, since the easy to drill oil fields in the western regions of the country had been exhausted and future production would have to come from more remote and inaccessible regions deeper in Siberia and offshore. And that exploration and production would require extensive western technology and investment.

The U.S. and the Saudis collude to cause Moscow extreme hardships

When Mikhail Gorbachev assumed the mantle of power in 1985, he already knew the precarious state of the Soviet economy and its critical dependence on oil and gas revenues.  He also appreciated that the USSR must have Western technology and investment in order to maintain energy production at then current levels.

That same year the United States undertook actions to put the Soviet economy under greater pressure by working with key oil producers to greatly enhance production. Specifically, CIA Director Bill Casey leaned on the Saudis to “turn on the spigot”.  They did, expanding production 5-fold, and in doing so, the vast new quantities of oil reaching the world market suddenly depressed the global price of oil to under $10 a barrel, down from a high in the $60 range.  This caused the Soviets to lose at least $40 billion in revenue.

While that one action cannot be assigned full responsibility for the ultimate collapse of the Soviet Union, it certainly played a major role, as Soviet officials later admitted. Former Russian acting Prime Minister, Yegor Gaidar, for example, has cited this US-Saudi action as the critical piece in the unraveling of the USSR.  Gaidar stated:

“We are certain about the date the Soviet Union started to collapse.  It was not August of 1991 or December of the same year.  The process began September 13, 1985, when Saudi Arabia’s Minister of Oil Industry Sheikh Yamani declared that his country changed its oil policy, stopped curbing down oil extraction and restored its share in the oil market.  In the next 6 months oil production in Saudi Arabia increased dramatically.”

More recently, Russian analysts have been more direct in asserting that the quick increase in Saudi production resulted from “collusion between the United States and Saudi Arabia”. They are right. The NYT’s Tom Friedman quoted a Russian analyst saying that the “joint action” taken by the U.S. and Saudi Arabia in 1985 caused the collapse of the Soviet Union. According to Friedman:

The Russian newspaper Pravda published an article on April 3 (2014) with the headline, “Obama Wants Saudi Arabia to Destroy Russian Economy.” It said: “There is a precedent [for] such joint action, one that caused the collapse of the U.S.S.R. In 1985, the Kingdom dramatically increased oil production from 2 million to 10 million barrels per day, dropping the price from $32 to $10 per barrel. [The] U.S.S.R. began selling some batches at an even lower price, about $6 per barrel. Saudi Arabia [did not lose] anything, because when prices fell by 3.5 times [Saudi] production increased fivefold. The planned economy of the Soviet Union was not able to cope with falling export revenues, and this was one of the reasons for the collapse of the U.S.S.R.

Because of the sudden increase in oil availability after this action, the global price of oil dropped. The following chart dramatically shows the rapid decline of the price of oil from 1981 to the almost historic low of $10 in 1985:

Oil Graph

 

Conclusion:

I think we can safely conclude that the Reagan administration decision to have Director Casey persuade the Saudis to ramp up oil production in 1985 was a, if not the, critical event leading to the dissolution of the Soviet Union. Former Reagan National Security Advisor, Robert “Bud” McFarlane, confirmed to me that the Saudis agreed with our suggestion on stepping up oil production, and did.

Rae Huffstutler, at the time head of the Soviet Division at the CIA, wrote back to me that while the spike in oil production and consequent drop in prices was a principal factor in the collapse of the USSR, it was not the only cause. Rae writes,

“Some of their woes might be ascribed to pressure from the West to deny a wide array of technology and equipment, some to our joint policy with oil producers, but mostly they did it to themselves with a command economic system that was inefficient and corrupt, and a Party leadership that would not make difficult decisions.”

I might also note that contemporary Russian analysts, such as the one Freidman quoted, have charged that exactly the same thing is happening today—that the U.S. is colluding with major oil producers to flood the world with oil, thus depressing prices and dramatically reducing Moscow’s foreign exchange earnings, which account for almost 50% of all revenues the government takes in!

However, unlike 1985, there is no evidence, despite Russian hysteria and a desire to assign blame for their economic woes on a “foreign conspiracy”, that there is any global plot to drive oil prices down. That drop is the result of: (1) Market forces, such as fracking and other new technologies, which have spurred petroleum and gas production across the globe, especially in North America; and (2) Decreased global demand due to the 5-year recession, increased fuel efficiency in the transportation sector, and alternative energy sources entering the market.

Having said that, one might wonder if Moscow is once again facing an existential economic crisis driven by a surge in global oil production…..as it did in the late 1980’s! Ah, but that is a topic for a future piece!

 

Tyrus W. Cobb served as Director of Soviet, European and Canadian Affairs on the National Security Council from 1983-88.

 

 

Final Announcement for our November 12th Meeting… 

INDIA AND THE RISE OF NARENDRA MODI

Implications for China, the U.S. and the Asian Balance of Power

with

Atul Minocha

and a commentary by Dr. Xiaoyu Pu

The Ramada, 9:00 a.m., Wednesday, November 12th

With over 1.2 billion people, India is the second most populous country in the world but is expected to surpass China by 2025.  More than 50% of the people are below the age of 25, representing more than 2,000 ethnic groups and every major religion.  India selected the controversial Narendra Modi, former Chief Minister of Gujarat state, as its 15th Prime Minister to rule over this ethnic and religious salad bowl.  Under Modi, Gujarat became an economic dynamo, but he also presided over India’s worst communal riots in decades, a 2002 slaughter that left almost 2,000 Muslims dead.

At the same time, Modi has been widely praised for his bold economic policies, which are credited with creating an environment with a high rate of economic growth in Gujarat.  Modi also gained national significance as a key strategist for the Bharatya Janata Party, and led the BJP to victory over the long ruling and very staid Congress party.  Despite being known as a Hindu nationalist, Modi’s election has been widely greeted across India’s various ethnic groups and regional variations.  He recently made a very well received state visit to the United States, made more interesting by the fact that he was on a “denied visa list” for so many years!

The election of Modi as India’s new Prime Minister comes on the heels of the selection of Xi Jinping as China’s new President.  It will be interesting to see how the new leaders of the world’s most populous countries manage their difficult and contentious relationship, as well as relations with America.

Minocha will discuss the current political and economic order in India, and review the sensitive ethnic divide in the country.  He will focus on the rapid rise of Modi– who is he, what are his policy goals, what does his election mean for relations with China and the United States.  Xiaoyu Pu will provide us with a Chinese perspective on Modi and how that election might impact contentious relations between Beijing and New Delhi.  Both will also discuss the implications of these changes for U.S. policy in the region.

Atul Minocha was born and raised in India.  He came to the U.S. “for 2 years” in 1987 to get his MBA from Yale, and has remained here since. Minocha is a partner in Chief Outsiders, a marketing consulting company, and also teaches graduate students at Hult International Business School in San Francisco.  Dr. Xiaoyu Pu is an assistant professor at UNR.  He received his PhD from Ohio State University and was a post doctoral fellow in the Princeton-Harvard “China and the World” Program.  His articles and commentaries have appeared in major journals and media outlets.

Please join us for what will be a very interesting discussion. A full breakfast will be served ($15 Members, $25 Non-Members, and $10 for students with ID and military personnel in uniform; free for WWII veterans). We recommend that you arrive by 8:30 to enjoy some breakfast, coffee and conversation.

You are encouraged to RSVP by clicking HERE. You may also RSVP e-mailing info@nationalsecurityforum.org. Just a reminder, after the forum, we will be accepting new and renewal membership applications for the July 1, 2014 – June 30, 2015 period. Forms will be available at the forum, though you can also access the application form by clicking HERE. For your convenience, we accept cash, check and credit card payments for both the breakfast and membership fees.

Colleagues: While we wish we could take credit for arranging our very interesting National Security Forum on India under Modi, and the China-India-US relationship, to coincide with President Obama’s Asian trip, but we can’t. Guess we didn’t realize how fast Obama would “want to get out of Dodge” after the Midterms!

Seriously, the President will be in Beijing at the time our Forum convenes Wednesday. Here is the White House announcement on the President’s trip:

Statement by the Press Secretary on the President’s Travel to Asia

The President will travel to China, Burma and Australia from November 10-16.  In China from November 10-12, President Obama will attend the APEC Leaders Meeting and APEC CEO Summit.  Upon the conclusion of the APEC Leaders Meeting, the President will participate in a state visit with President Xi Jinping of China.  In Burma from November 12-14, President Obama will attend the East Asia Summit (EAS) and the U.S.-ASEAN Summit in Nay Pi Taw, and hold a bilateral meeting with President Thein Sein.  In Rangoon on November 14, the President will participate in a town hall event with participants in the Young Southeast Asian Leaders Initiative (YSEALI) and meet with Aung San Suu Kyi.  In Brisbane, Australia from November 15-16, the President will participate in the G20 Leaders Summit and deliver a speech on U.S. leadership in the Asia-Pacific.  Details on additional meetings and events will be forthcoming.

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And here is the link to the NSF site with information on our Forum on India and the Asian relationships. Just click on to the link to get the information on the Forum and RSVP instructions.

www.nationalsecurityforum.org

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As you know, controversial Indian Prime Minister Narendra Modi just wrapped up a very successful state visit to the US, made the more interesting given that up to just days before his trip he was on a proscribed “do not allow into the US” list (for his alleged role in Hindu massacres of Muslims). There is also no hiding that in the past relations between the U.S. and India have been very strained, in part due to New Delhi’s close ties with the former Soviet Union during the Cold War.

Times have changed! Here is an article from the India press on his visit:

INDIA NEWS

Indian Leader Modi Moves Closer to U.S. as Differences Persist

Modi Says Will Seek Closer Ties on Counterterrorism and Intelligence Sharing

Updated Sept. 30, 2014 7:37 p.m. ET

Obama and Modi      Prime Minister Narendra Modi, left, and President Barack Obama in the White House Oval Office on Tuesday.  Associated Press

WASHINGTON—The U.S. and India agreed to forge closer defense and security ties at a White House meeting between President Barack Obama and Indian Prime Minister Narendra Modi, but the talks didn’t produce a breakthrough on disagreements that have hobbled ties in recent years.

Officials said they hoped Mr. Modi’s visit served to shrug off inertia and move beyond the shadow of past problems, as the two sides agreed to a modest range of infrastructure and finance partnerships that could provide building blocks for future advances.

The visit on Tuesday ended without an extended joint appearance or news conference featuring the two leaders, one indicator of difficulties between the two countries, which include India’s move to block a trade agreement at the World Trade Organization.

Mr. Modi said he expects the countries to soon find a solution to the WTO dispute that takes India’s food security concerns into account.

Another issue involved U.S. concerns about India’s nuclear liability law, which has prevented progress on a 2005 civil nuclear deal that had been meant to transform U.S.-India ties but became a symbol of their stagnation. On that, the two sides agreed on a new interagency group to try to iron out differences, officials said.

Modi Waving  Prime Minister Narendra Modi, waving in front of the Mahatma Gandhi monument at the Indian Embassy, vowed to cooperate on key issues after a meeting with President Obama in Washington on Tuesday. Jonathan Ernst/Reuters

Despite months of groundwork laid by cabinet secretaries and other top officials, the visit lacked any big-ticket announcements, such as those resulting from Mr. Modi’s earlier meetings with Japanese Prime Minister Shinzo Abe and Chinese President Xi Jinping, who pledged $35 billion and $20 billion respectively in investments over five years. Washington usually leaves major investments to the private sector.

However, the visit erased any lingering question over Mr. Modi’s status in the U.S., which revoked his visa in 2005 over his alleged role in religious riots in his home state of Gujarat in India in 2002.Mr. Modi visited a monument to Indian independence leader Mahatma Gandhi, and the two leaders visited the monument to Martin Luther King Jr.

“The president really did enjoy the opportunity to visit with Prime Minister Modi,” White House spokesman Josh Earnest said following the meeting.

For Mr. Modi, the most crucial parts of the trip may have been his meetings with heads of businesses in New York and Washington. At a speech to U.S. and Indian businesses in Washington on Tuesday, Mr. Modi said that since taking office, he had embarked on a quest to build confidence in the Indian economy among investors, promising them less red tape, adequate infrastructure and an easy business environment.

Mr. Modi is hoping his interactions will translate into deals in the coming months.

Ajay Banga, the head of MasterCard, said at the event Tuesday that Mr. Modi’s visit would be remembered as one that turned the tide of India-U.S. relations. “This is a defining moment in a defining relationship,” Mr. Banga said.

Obama and Modi walking    Indian Prime Minister Narendra Modi attended a dinner hosted by U.S. President Barack Obama at the White House on Monday.  Agence France-Presse/Getty Images

The security agreements involved a U.S. and Indian decision to take “joint and concerted efforts” against Pakistan-based militant groups, including the Lashkar-e-Taiba and Jamaat ud-Dawa networks that have launched deadly attacks on Indian soil.

Syed Akbaruddin, a spokesman for the Foreign Ministry, said the two sides would work together to dismantle havens of these networks and disrupt tactical and financial support to them, suggesting that the U.S. would put pressure on India’s rival neighbor Pakistan, whose once-close relations with Washington incensed Indian officials.

In a brief statement at the White House after the two-hour meeting, Mr. Modi said the U.S. was an integral part of India’s “Look East – Link West” policy, and mentioned enhanced cooperation in the Asian-Pacific region, which is in flux owing to China’s rise and increasing military assertiveness.

The shifting balance of power in Asia has driven the U.S. to seek closer ties with India as a democratic bulwark against China. Mr. Modi’s government has announced ambitious plans to modernize its military as India prepares to counter China and potential regional instability following a drawdown of U.S. troops in Afghanistan.

Among agreements, the U.S. pledged to help India transform three of its cities into modern “smart cities” and agreed to help upgrade the water and sewage system in a hundred more.

The U.S. and India announced a partnership on improving resilience to climate-linked disasters and an initiative to boost investments, to be led by the U.S. Treasury Department and the Indian Finance Ministry.

Experts watching Mr. Modi’s visit for signs of future cooperation between the two countries said the challenges were evident.

“The thing that’s going to be important for both sides is to continue to find some time for this relationship, when both sides are going to be busy with other domestic and foreign-policy priorities,” said Tanvi Madan, director of the India Project at the Brookings Institution in Washington.

Human-rights advocates, meanwhile, expressed disappointment that Mr. Obama chose not to showcase that issue.

John Sifton, Asia advocacy director at Human Rights Watch, said it was “pretty spectacularly disappointing” that the countries’ lengthy joint statement made no mention of religious freedom.

Mr. Earnest said the topic of human rights and inclusive governance were discussed in leaders’ private conversation