= IPSG Newsletter  = 
Newsletter of the Indian Progressive Study Group, New York.  
Vol. 10 , No. 1, February 1996  
ASCII Version for Email Distribution. 
The year 1996 has greeted the people of India with a wake-up  
call: it has served them notice that the political parties  
as they exist are not going to deliver them out of their  
economic and political woes in the next general election.   
In the coming months, many spectacles will be enacted to  
persuade the electorate to put one or the other of the  
political parties or coalitions to power - but no one is  
promising the people that they will come to power through  
this election.  Will the Indian electorate make a move to  
come to power?  
While there is a vast popular disenchantment with the  
status-quo, the set-up of the present election laws and the  
party system makes it impossible for people to effect any  
change.  A beginning can be made if people select their own  
candidates from among their peers and then go on to elect  
one of these peers, thereby defeating the candidates of the  
major parties.  If the selection step is conceded to the  
major parties and their leadership (the party leader must  
sign the nomination paper of any candidate before it can be  
filed accounting for the mad rush for party tickets in front  
of leader's homes before nomination deadlines), people will  
have lost any prospects for having their say.  The major  
political parties are the pillars of the present status-quo  
and the voting process is set up as the mechanism to seek  
the endorsement of the electorate for the status-quo.  
It will be wrong to say that there will be no change in the  
policies of the new government after the elections.  In  
fact, there will be quite a few changes.  This is dictated  
by the fact that many arrangements that were worked out  
during the cold war among different sections of the ruling  
circles need to be changed.  Some old arrangements have  
become obsolete and some new arrangements have to be  
institutionalized.  But people's interests and the  
affirmation of their rights are not going to take place if  
the status-quo is not defeated.    
Elections have not yet been called - it is an opportune time  
to have broad discussion on this idea of renewing the Indian  
election system through Selection before Election.  
- Dr. Raj Mishra.  
Within the last few weeks, a number of cases involving  
current or former political personalities have been filed in  
the courts in India.  Heads of political parties, government  
ministers and other high level personalities have been  
implicated in the "Jain Hawala" pay-off scheme under which  
money had been illegally paid to seek favors from the state.  
Many questions have been raised by this move.  Were the  
payments illegal because some currency laws were broken?   
Were they illegal because the Jain brothers received some  
favors in exchange?  Or were they illegal because the  
recipients were in leading positions either in their parties  
or in the government?  In other words, is this entire affair  
just something pertaining to the legal and juridical domain?  
It is becoming more and more apparent that the unfolding of  
the corruption case is first and foremost a political  
unraveling.  India is not the only country where this  
unraveling is taking place.  Italy, Japan, South Korea,  
Canada, Britain and so on are just a few of the other  
countries undergoing similar experiences.  The forces who  
are prosecuting the accused, and the accused themselves,  
were never unaware of how power is exercised in these  
countries.  If the matter remains confined in this manner to  
the legal arena, the aim of the prosecutions will also not  
be to alter the way this power is exercised.  
The unraveling scandal begs for the people to look at how  
political power works in India and how political parties act  
as "gate-keepers" to that power.  How can power go to the  
hands of the people and away from the hands of the political  
parties and their leaders is the question that this scandal  
forces us to deliberate upon.  For if the leaders of  
political parties did not wield power, and if the essence of  
that power were not a privilege distribution system, why  
would the Jains have given any money?  Can we not  
collectively work to bring in a new power structure that  
will disempower the parties and empower the people?  The  
parties then will have a new role - to help facilitate  
people come to power and wield it for their benefit.  
- Dr. Raj Mishra.  


by V. Siddharth  
If there is one flaw fatally paralysing U.S. foreign policy  
today, it is Washington's presumption that the entire world  
is waiting to fall in behind its leadership.  Long after it  
has become abundantly clear other powers no longer share a  
common interest with it on many economic and geo-strategic  
issues, the U.S. is still trying to keep up the pretense of  
being the dominant superpower in a supposedly "unipolar"  
world. Its recent policies towards Iran are a case in point.  
On May 1, 1995, U.S. President Clinton declared a unilateral  
trade embargo against Iran. Its principal effect was to ban  
the annual purchase of $4 billion worth of Iranian oil by  
U.S. companies. While the Iranian economy is not expected to  
suffer, the embargo has raised already tense relations  
between the two countries to a more dangerous level.  
Ever since the Iranian revolution, Washington has maintained  
a position of unremitting hostility towards the Islamic  
Republic and considers it the principal threat to U.S.  
interests in the region. Since the end of the Cold War, Iran  
has headed Washington's list of "outlaw states".  U.S.  
strategic doctrine envisages the rapid projection of  
military power as "regional crises" unfold and calls for the  
near-permanent stationing of a substantial force structure  
in the two regions considered most vital by Pentagon  
planners: the Persian Gulf and Korean peninsula.    
In the Gulf, this policy takes the form of what is called  
"dual containment" - i.e. the effort to jointly neutralise  
Iranian and Iraqi opposition to U.S. hegemony in the region.  
The U.S. has therefore tried its utmost to weaken both these  
states economically and politically. In the case of Iraq,  
Washington is the strongest advocate of continued U.N.  
sanctions - despite strong opposition from Russia, China and  
France - while for Iran, the U.S. has tried its best to  
isolate the regime by flimsy allegations about nuclear  
weapons and terrorism.  Shortly after the U.S. embargo was  
announced, Secretary of State Warren Christopher told  
reporters: "In addition to opposing Russian and Chinese  
nuclear cooperation, we'll be calling on our G-7 partners to  
undertake a comprehensive review of their economic ties to  
Iran." He stressed that "this is all about American  
leadership ... I hope that other countries will respond to  
that leadership."  
Unfortunately for Washington, the international response to  
the embargo has been overwhelmingly unfavourable. French  
Prime Minister Alain Juppe stated that France did not  
believe in unilateral embargoes and that it preferred to  
conduct a "critical dialogue" with Iran rather than isolate  
it. Germany's Economics Minister Guenter Rexrodt said he did  
not believe an embargo was the appropriate instrument for  
"influencing opinion in Iran and bringing about changes that  
are in our interest".  
Like the Europeans, Tokyo has long rejected U.S. calls to  
cut its links with Iran. Two years ago, Japan ended a long- 
standing freeze on aid to Iran when it agreed to a 150  
billion yen ($1.6 billion) package for the Karun-4 power  
project. Last year, Japan irked the U.S. again when it  
agreed to reschedule $2 billion of Iran's short-term loans.  
Under U.S. pressure, Japan has held up the next tranche of  
the Karun-4 loan but refuses to cancel the deal.  
For their part, Russia and China - whose nuclear deals with  
Iran precipitated the present U.S. embargo - have refused to  
reconsider their relations. Russian Foreign Minister Andrei  
Kozyrev has said Iran is being "unfairly singled out" by the  
U.S. Soon after Russian President Boris Yeltsin promised  
Clinton the nuclear deal would be reviewed by a joint Russo- 
U.S. commission, his Nuclear Energy Minister stressed the  
reactor sale would proceed unhindered.  
Why has the U.S. been so unsuccessful in getting its friends  
and allies to follow its lead on Iran? In other capitals,  
Washington's allegations about Iran's nuclear ambitions and  
sponsorship of terrorism are treated with scepticism: the  
perception is that what the U.S. is really concerned about  
is oil. And in a global economy increasingly prone to  
protectionism, trade wars, coercion and sharp competition,  
what's good for the U.S. on the oil front may not  
necessarily be what's good for other big powers.  
In a recently released study, the Pentagon emphasises that  
nearly two-thirds of the world's proven oil reserves lie  
below the Persian Gulf region and predicts that the world  
will be even more dependent on this oil in the 21st century.  
It states that the most important regional security concern  
for the U.S. remains the unhindered shipment of oil from the  
Persian Gulf. The Pentagon argues that the flow of oil is  
vulnerable to Iranian and Iraqi "blackmail" and that Gulf  
allies like Saudi Arabia lack the ability to bear the costs  
of "security" without "potentially dangerous domestic fiscal  
and political challenges". Hence, it continues, the U.S.  
needs to beef-up its presence in the region. Soon after the  
Pentagon study was released last month, the U.S. announced  
plans to deploy a strengthened version of the Maritime  
Interdiction Force currently stationed in the Gulf.  
According to Iran, the plans are "an indication of the U.S.  
military policy to strengthen its hegemony and ... make  
permanent its illegitimate presence in the Persian Gulf".  
If the world is expected to be more dependent on Persian  
Gulf oil, this is especially true for countries of the Asia- 
Pacific region, e.g. China (which became a net oil importer  
in 1993), India  and Japan.  According to industry analysts,  
the Asia-Pacific region is likely to displace North America  
as the world's biggest oil market early next century.  
Because of its rapid economic growth, demand for oil in the  
Asia-Pacific region is predicted to hit 21.63 million  
barrels per day (bpd) by 2005, up from a current 14.2  
million bpd. The Japanese have traditionally never worried  
about Middle East "rogue regimes" interrupting the flow of  
oil. Even during the worst years of the Oil Crisis, Japan  
made bilateral deals with oil exporters - much to the  
consternation of the U.S.  As a senior Japanese diplomat  
puts it: "Who will control the oil is a serious issue for  
the U.S. ... but it is not a very serious issue for Japan.  
It is, of course, better that oil is in friendly hands. But  
experience tells us that whoever controls oil will be  
disposed to sell it". Japan is a major importer of Iranian  
oil and bought 165.80 million barrels of Iranian crude in  
1994, 21.4 percent more than the year before.   
All told, Iranian oil accounts for nearly 10 percent of  
Japan's crude imports.  Japan knows it can always do  
business with Iran or any other regional regime but is wary  
of the long-term consequences of what might happen if a  
global economic rival gains the kind of unchallenged  
position the U.S. had in the Middle East prior to the  
Iranian Revolution. China, Russia, Germany and others also  
share the same wariness. From a strategic point of view, as  
trade wars escalate, warships ostensibly positioned to  
secure the smooth flow of oil from the Gulf can also one day  
be used to obstruct supplies.    
In other words, the refusal of these powers to go along with  
the U.S. boycott of  Iran is also a refusal to accept  
unchallenged U.S. dominance in the Gulf region, and hence  
over oil supplies in general.   
There is another factor as well, which is that as the dollar  
continues its slide, the U.S.'s ability to dominate the  
world oil market is also declining. Indeed, this April Iran  
proposed denominating its oil sales to Japan in yen and  
while Japan did not accept the offer, a switch is possible  
if Iran succeeds in getting other OPEC members to move away  
from dollar pricing.  
This is bound to cause tension because, as one oil industry  
analyst put it, "Washington will not be pleased with the  
loss in demand for dollars, and U.S. oil companies are not  
going to like it either".    
Apart from its challenge to U.S. hegemony in the Persian  
Gulf, Iran's attempts to build close ties with Central Asia  
and its lucrative oil and gas industries has greatly piqued  
Washington. After intense pressure, the U.S. was able to  
block Iranian participation in the Tengiz oilfields of  
Kazakhstan but Teheran is continuing its diplomatic  
initiatives undaunted.  The Iranians have proposed that oil  
from the Caspian region be pumped to their ports on the Gulf  
as this would be much cheaper and safer than building  
pipelines westward through Chechnya and Georgia. The U.S.  
opposes this proposal and because U.S. companies dominate  
most of the consortia controlling Caspian oilfields, Iran's  
proposal has little chance of being accepted. The U.S. is  
keen to have the pipelines running through Georgia and into  
Turkey.  Russia, on the other hand, favours a route through  
Grozny and then on to the Black Sea. From there, oil can be  
shipped to Bulgaria and further on to Greece or even Serbia  
for eventual export to world markets. But with continuing  
instability in the Balkans and Caucasus, the option of  
shipping oil through Iran might one day begin to look quite  
attractive for Russia. It is against this backdrop that  
President Rafsanjani's recent call for Iran and Russia to  
"coordinate" their long-term oil and gas policies should be  
Iran's budding links with China are also viewed as ominous  
by Washington. Rafsanjani has frequently spoken of an "Asian  
Trading Bloc" consisting of China, Iran and India. China is  
cautious but sees broader links with Iran as an important  
step in realising its own global ambitions. Just two weeks  
after Clinton announced his embargo, Beijing agreed to  
treble its imports of Iranian crude. A few days later, it  
signed trade and investment deals with Teheran worth $2  
The U.S. has therefore found out - once again - that the  
world does not dance to its tune. Nearly five years after  
the collapse of the Soviet Union, a stable equilibrium has  
yet to be reached. The causes for this are objective.  
Washington's failure to establish its modus vivendi is a  
reflection of the weakening of U.S. power at a time when  
global rivalries show signs of sharpening and peoples  
everywhere are awakening to the need to defend their  
national sovereignty. As a result, American policy is in  
disarray from Iran and Bosnia to Cuba, China and Japan. The  
U.S. establishment may well be spilt between "isolationists"  
in Congress and advocates of energetic "engagement" in the  
White House but both sides attach a premium on using  
coercive methods like sanctions, embargoes and even armed  
threats to further U.S. interests. The world may not be  
unipolar but the dangers of the unipolar illusion have not  
disappeared. The future security of the world will depend a  
great deal on the extent to which countries everywhere stand  
up to the use of force as an instrument of policy and  push  
for the genuine democratisation of international affairs.  

                      Lessons from Latur 
                        by V. Siddharth
As a nation long accustomed to official lethargy in the face of 
natural and man-made disasters, it is hardly surprising that the  
second anniversary of the earthquake which devastated Latur and  
Osmanabad passed by without much protest. Despite the efforts of many  
NGOs and district officials, thousands of victims continue to  
languish in tin sheds without access to basic amenities. While some  
innovative work is being done for the in situ retrofitting of damaged  
properties, the most important part of the rehabilitation programme -  
the resettlement of 52 villages - remains dogged by delays, shoddy  
construction and allegations of corruption. "Marne vaale mar gaye,  
khaane vaale kha gaye", a person in Killari told me with a sense of  
resignation. The burden of the past two years had even robbed him of  
his capacity for anger. 
According to official figures, only 3,000 of the 14,000 new 
houses required in Latur have been handed over to the victims. Even  
this figure is misleading because many of these houses are of such  
indifferent quality that their occupants feel safer sleeping in  
makeshift huts. The official explanation is that people are scarred  
by the psychological trauma they have been through. But leaky walls  
and the rapid appearance of cracks in new houses is not quite the  
cure doctors would prescribe. 
Killari, the village where more than 1400 people died in one 
night, is today a sprawling slum of tents and sheds perched rudely on  
both sides of the Latur-Umerga road. Construction of the new village  
started in July 1994 with a part of the money lent by the World Bank  
to the Maharashtra Government. In keeping with the World Bank's  
insistence that private firms be engaged in public projects to  
supposedly increase efficiency, Kirloskar Management Consultants were  
hired as project supervisors for a fee of about Rs. 2 crores. The  
actual construction of New Killari was then farmed out to four  
contractors: Skyline of Bangalore, IV Reddy of Hyderabad, Mulay  
Brothers of Aurangabad and KETI Constructions of Indore. 
Ever since construction began, however, the villagers charged 
that the work was sub-standard and that the houses erected were  
totally unsafe. Despite several letters from Killari's indefatigable  
sarpanch, Dr. Shankarrao Parsalgre, to the Chief Minister and senior  
bureaucrats, no action was taken. The official reason: since  
Kirloskar was being paid to detect faulty work, there was no need for  
the government to intervene. Finally, in July 1995, the new collector  
of Latur, Mr. Arvind Kumar acted on the villagers' complaints and  
ordered the work to stop. Mr Kumar is convinced the work is of  
extremely poor quality and has collected cement samples from every  
single house built in Killari. He has even made a 15-hour video tape  
showing the precise defects in each house. 
Indeed, most engineers visiting the Killari site usually come 
away appalled. According to M.N. Joglekar, an Executive Director at  
HUDCO, who visited the site with the renowned earthquake expert Prof.  
A.S. Arya of Roorkee University, "there can be no two opinions ...  
the quality of the work there is absolutely awful. Basically, the  
cement has not been cured. We were surprised to find 'concrete'  
blocks in which we could make a hole with one finger". Testing of the  
Killari concrete blocks by the DRDA revealed a load-bearing capacity  
well below the required 35 kgs per square cm. Other allegations  
include inadequate washing of sand and weak plinths. During a recent  
visit to Killari, the sarpanch showed me many houses in which the RCC  
(reinforced cement concrete) columns had absolutely no cement. 
The Collector's order to suspend the work stirred up a minor 
controversy. According to villagers, World Bank officials were  
furious with him for allegedly overstepping his authority. Kirloskar  
site engineers blame the villagers for not cooperating with them and  
say the collector had no business interfering as per the terms of the  
contract. Arvind Kumar rejects this argument. "The DM has a lot of  
authority to stop illegal work. What they are doing is plain  
cheating, it is a cognisable offence. It is the contractors and  
Kirloskars who are solely responsible for the shoddy work. They are  
getting paid. Why should the villagers be blamed?" 
According to Mantralaya sources, the state government was also 
reportedly unhappy with the Collector's decision and asked IIT  
engineers to appraise the Killari work. The villagers are sceptical:  
"If concrete blocks can be broken on one's head, what is the need of  
an IIT report to say Kirloskar's work is bad?", one person asked.  
IIT's report - for which comprehensive testing has not even begun -is  
expected to take at least several months. The villagers whose story  
was flashed all around the world and in whose name millions of  
dollars were collected have no hope of being resettled any time soon. 
Although Killari is an extreme example of what ails the 
rehabilitation programme, many of the NGO-built villages also suffer  
from inferior construction and inadequate supervision. In  
Ganjankheda, where houses were built by CASA, Chincholi Jogan, where  
houses were donated by Lijjat Papad, and Killari Tanda, in which the  
Tata Relief Committee had taken up work, the houses suffer from  
cracks, severe seepage and leaks. 
There are, however, several villages where NGOs and public 
sector companies like HUDCO have done conscientious work. Malayalam  
Manorama's work in Banegaon, CARITAS' work in Talni and ADRA's work  
in Gubal are considered good examples of careful construction. In  
Tembhi, HUDCO is retrofitting the old houses on their original site  
by strengthening the foundation and walls while preserving the  
original facade of the village. 

Interestingly, both the Shiv Sena and Congress (I), which had 
made a big show about "adopting" villages before the elections have  
since abandoned their promises. The Congress(I) has formally  
withdrawn its offer to provide housing to the 500 families of Jawalga  
Pomadevi while the Shiv Sena has stopped its funding for Limbala Dau  
saying that now they have won the elections, they will get the state  
government to pay. 
Taking note of the appearance of cracks in some of the houses, 
the Aurangabad Bench of the Bombay High Court had ruled in August  
that the government's Programme Management Unit (PMU) immediately  
investigate whether the cracks were due to design flaws or faulty  
materials. But PMU engineers in Latur admit that they have yet to  
take action. On October 12, the Aurangabad Bench finally served  
Contempt of Court notices on Chief Minister Manohar Joshi and two  
senior bureaucrats for ignoring its earlier orders regarding the  
speedy rehabilitation of earthquake victims. 
Despite the court's intervention, people in Latur are not very 
optimistic. The main problem plaguing the rehabilitation effort is  
that the entire programme militates against effective government or  
popular control over its key aspects. This is a reflection of the  
World Bank's own anti-regulatory ideological biases as well as of the  
state government's willingness to abdicate responsibility for the  
actual execution of the programme in favour of the voluntary sector  
and private consultants. The government ostensibly exercises control  
through the PMU but all decisions - from the layout of resettled  
villages to the approval of Bid Evaluation Reports - are referred to  
the World Bank, making delays inevitable. Rather than leading to  
"participatory development", decision-making is highly centralised and  
World Bank officials have acquired a reputation for arrogance.  
According to Vinayak Patil of village Kawtha, "one World Bank  
consultant told us: 'You didn't have toilets before. You had mud  
floors. So why should we give you concrete floors and toilets?' I  
asked him whether he wanted us to live like animals or human beings.  
Later on we found out he was being paid Rs. 10,000 a day for giving  
this sort of advice". 
Predictably, great care has been taken to preserve the class 
inequalities of the resettled villages by assigning house and plot  
sizes not strictly on the basis of family size but on the amount of  
land a family has. Thus, a landless family of nine, for example,  
would receive only a 1575 square foot plot with a 250 square foot  
house while a family of four with a landholding of eleven acres would  
receive two plots of 5000 square feet each and a 750 square foot  
house. This is clearly a violation of Article 14 of the Constitution.  
Gender discrimination has also flourished: while women workers at the  
Kirloskar site are paid Rs. 40 a day, men are paid Rs. 50. Of course,  
this is a problem with society at large but in such a prestigious  
project - where the World Bank and government are deciding even  
minute details, it is surprising that they should be powerless on  
this front. 
In conclusion, serious thought needs to be paid to whether the 
private consultant-contractor driven approach favoured by the World  
Bank is appropriate for such projects. Relief and rehabilitation -  
especially of earthquake victims - is too sensitive an issue to be  
allowed to be tainted by the profit motive of private consultants who  
turn a blind eye while their contractors cheat. Local administrative  
officers are certain that had the Killari work been under government  
management, for example, and an attempt made to involve the local  
villagers at every stage of the project, corrective measures could have  
been launched much faster. 
Partly in response to the slow implementation of the 
rehabilitation programme, certain NGOs have begun to question the  
logic of relocation, or even the wisdom of the government itself  
rehousing the earthquake victims. But people have a right to  
relocation if the original village site is unsuitable for physical or  
socio-psychological reasons. Similarly, people have a right to  
housing and it is the duty of the government to guarantee that right.  
The conclusion to draw from Latur's experience is not that the  
government should not provide extensive relief, but that it should  
provide effective relief. If it claims that it does not have the  
resources or skills to do this itself, it should at least ensure that  
those who do, perform the work properly. The participation of civic  
and voluntary organisations in relief work should be welcomed.  
However, the government must treat theirs as a complementary effort  
and not as a replacement for tasks the government itself is duty-  
bound to execute.