Punish The Guilty, Recover The Loot

Irespective of how the current impasse in the parliament over the demand for a joint parliamentary committee (JPC) to probe into the massive 2G  spectrum scam unfolds, it is clear that the country is being pushed deeper into the murky morass of crony capitalism. 

Actually, crony capitalism is a tautology.  Capital in its urge to maximise profits invariably seeks to bend, if not, violate all rules and regulations. Nepotism in awarding contracts, sweet heart deals in disposing off public properties (like, for instance, the  outrageous sale of public sector, Balco and Centaur Hotel, Juhu, Mumbai by the earlier NDA government) and creating illegal and new avenues for money laundering and looting public resources are some of the forms that crony capitalism takes.


The capitalist state puts in place certain rules and institutionalises regulators to ensure adherence to these rules in order to provide a level playing field for the capitalists. However, given the fundamental nature of capitalism, where the big fish eats the small ones, these rules and regulations are pushed to the limits of violation.  Capitalism inherently breeds cronyism. 

In countries like India, late entrants into the global capitalist system, (particularly when it embraces the neo-liberal economic trajectory of globalisation) such cronyism becomes all pervasive trapping in its web governmental institutions, indeed, the entire government itself.  This has precisely been the case in the current 2G spectrum scam, with the Supreme Court now dragging in the prime minister and his office. 

To illustrate how such crony capitalism operated in this 2G spectrum scam, consider the following:

For the release of the fourth license and the spectrum needed  for operationalising  the corresponding universal access service license in January 2008, the communications ministry adopted a completely inexplicable principle of `first come first served’ as well as a license fee based on 2001 price.  These 2G licenses were priced at 2001 levels allegedly to ensure that the spectrum should not become expensive, presuming that the benefit would be passed on to the consumers.  However, this was nowhere ensured through the license terms and conditions. As a result, the parties who had secured these licenses have sold or are selling their shares at huge profits.

The deal between UAE’s telecom operator Etisalat and a Bombay-based builder’s Swan Telecom has brought out the magnitude of largesse being doled out.  Swan Telecom bought a license for 13 circles along with the necessary 2G spectrum for a paltry Rs 1,537 crore.  Subsequently, it had sold 45 per cent of its stake to Etisalat for $900 million without putting up any infrastructure, let alone starting operations.  This, therefore, was the market price for the spectrum at around $ 2 billion, as against the price of $300 million SWAN paid.  With the present exchange rate, this would mean that Swan had got a value 5.9 times of what it had paid just eight months earlier in January 2008 without having spent a single paisa in operationalising its license. The government has actually got only one-sixth of what it should have got, had it gone through a fresh auction route – a loss of Rs 4,500 crore to the exchequer.

But this is not all.  Even this loss proved to be an underestimate when one finds the details about the later Unitech-Telenor (of Norway) deal.  Here, Unitech like Swan had not spent a single paisa for executing its license.  It had sold a 60 per cent stake of the telecom firm,  which had paid Rs 1651 crore as license fee for all the 23 circles which it had applied for, to Telenor.  Obviously, Unitech got a better return on its sale because it had given away majority stake and had larger number of circles.  Unitech had got 6,120 crores. Unitech, thus, had got a valuation which is seven times more than  what it had paid.   

For a number of these corporations, who were awarded the so-called 'first come first served' licenses, the promoters are either unknown or shadow companies. This further reinforces the doubts regarding the bona fides of these companies as also the intent of the policy.

In the interests of the country, it is absolutely essential that this colossal scam must be thoroughly probed. Hence the demand for a JPC.  The JPC must not only identify the culprits and prepare the grounds for their punishment, but it must also study the manner in which the system has been so grossly manipulated to allow such a scam to take place. On this basis, more effective rules and regulations must be drawn up to ensure that such known avenues of manipulation are minimised, if not plugged. 

Probing the 2G spectrum scam is not only in the interest of upholding political morality.  This is absolutely essential. The probe, however, must also result in recovering to the national exchequer the loss estimated by the CAG to be  of a mammoth Rs 1,76,379 crores. Our estimations of this loss, stated in these columns earlier, is to the tune of Rs 1,90,000 crores.  All those who have been allocated the 2G spectrum at throw away prices must be made retrospectively to pay the difference.  The benchmark can be the  auction price of the 3G spectrum that is available in public domain.  The licenses of those corporates who refuse to do so must be cancelled and these must be freshly auctioned. 

Again, the recovery of these monies, unscrupulously looted, is not only to reassert public morality.  This recovery is much needed to improve the livelihood of the vast mass of the Indian people.  Take for instance, the issue of food security.  It has been estimated that to provide all Indian families (APL and BPL) 35 kg of foodgrains at Rs 3 a kilo, it would cost an additional food subsidy of Rs 84,399 crores.  The loot in the 2G spectrum scam is nearly double of what is required to provide food security to all Indians.  Or, for that matter, to ensure education for all, it is estimated by the National Institute for Educational Planning and Administration (NIEPA) to cost Rs 34,000 crore annually for the next five years.  A  total of Rs 1.7 lakh crores.  This is less than what has been looted in this 2G spectrum scam.  The scam accounts for nearly six times of the health budget proposed for this year.

A government that continues to wear the pretence of concern for the aam admi must be forced to speedily uncover the manner in which such a colossal loot of our country’s resources has taken place.  Further, the government must be forced to recover this loss and put these huge sums of money to provide the much-needed food security, education and health for our people. 


From People's Democracy

True Colours Of The Nuclear Deal

(Okay, you don't agree with me. So here's Dr PK Iyengar, Former Chairman of the Atomic Energy Commission - midwife (nay one of the fathers of our indegenous nuclear programme) and known opponent of Manmohan Singh's sell-out to the US making the same point. And if you think India has made a breakthrough deal with France - bypassing the US - you've got another thing coming. But more of that tomorrow)

 

The US House of Representatives has passed a bill (H. R. 7081) that approves the 123 Agreement, but which is contradictory to the assurance given by the Prime Minister to the nation. An identical version is before the US Senate for voting. Even as late as 26 September 2008, the Prime Minster was seeking an agreement that would ‘satisfy India’. This has not come to pass, and it will be interesting to see how the Indian government and the Indian media will ‘spin’ this into a victory for India. The Indian side is supposed to have been unhappy with the language. The fact is that one is not worried about the language, but the content and compulsions of the Bill.

Why is the House bill not satisfactory? Even the title of the Bill, ‘United States-India Nuclear Cooperation Approval and Nonproliferation Enhancement Act’, makes it clear that they seek to press their non-proliferation agenda. The Bill makes a number of things explicitly clear, and reveals the true colours of the nuclear deal.

(1) The 123 Agreement is subject to the provisions of the Hyde Act and the Atomic Energy Act, and does not supersede them.

This is said, in so many words, twice in the Bill. Section 101 (page 3, lines 16-21) says that: “The Agreement shall be subject to the provisions of the Atomic Energy Act of 1954, the Henry J. Hyde United States-India Peaceful Atomic Energy Cooperation Act of 2006, and any other applicable United States law.” Section 102 (page 6, lines 8-12) reiterates that: “Nothing in the Agreement shall be construed to supersede the legal requirements of the Henry J. Hyde United States-India Peaceful Atomic Energy Cooperation Act of 2006 or the Atomic Energy Act of 1954.”

Therefore there is now no question of differences in the ‘interpretation’ of the 123 Agreement. Irrespective of what we think we are bound by, the Americans have made it abundantly clear that they are bound by the Hyde Act and the Atomic Energy Act, and the 123 Agreement does not supersede either of them. If we conduct a test it is now abundantly clear that, as per the provisions of the Hyde Act and the Atomic Energy Act, it is the end of the nuclear deal.

(2) In the event of a disruption of fuel supply from the US, the Americans will not help arrange for fuel from another country.

Article 5(b-iv) of the 123 Agreement says that in the event of fuel disruption the US will help India get fuel from ‘friendly supplier countries’. But it seems that the Congress is having none of this. Section 102 (page 5, lines 4-12) of the Bill explicitly states that in the event of fuel disruption, not only will the US not help arrange for fuel from other countries, but it will also “seek to prevent the transfer to India of nuclear equipment, materials, or technology from other participating governments in the Nuclear Suppliers Group (NSG) or from any other source.” Since this sentence is not in the 123 Agreement, the Indian government will probably claim that we are not bound by it. However, the simple reality is that if there is a disruption of fuel from America, for whatever reason, the Americans will work hard to ensure that we do not get it from any other source.

(3) There will be no transfer of enrichment technology, and even permission for reprocessing imported fuel may be denied.

This is the most disturbing clause in the Bill. Sec. 204 of the Bill (page 14, lines 11-19) says explicitly that before the 123 Agreement enters into force (according to Article 16), the President has to certify that the US will work with NSG countries to “agree to further restrict the transfers of equipment and technology related to the enrichment of uranium and reprocessing of spent fuel”. So, one of the major advantages we were expecting from the NSG waiver and the 123 Agreement will not be forthcoming. But this Bill goes even further. Section 201 makes it very clear that any future proposal for reprocessing needs explicit approval from the US Congress, and the Congress retains the right to refuse (page 13, lines 1-4). This is a new twist, and extremely dangerous, because it leaves us completely at the mercy of the Congress. The same section also says that the US will pursue efforts with other countries to ensure that reprocessing of fuel from those countries will also be governed by ‘similar arrangements and procedures’.

This seems to suggest that the US would even like the existing arrangements with Russia for the Kudankulam reactors to be modified along the proposed lines. The same would also apply to any other supplier. It is surprising that in spite of our being a ‘strategic partner’, the US wants to restrain our fuel-cycle developments. This shows, again, that India is not being treated as an equal, in spite of the fact that for decades India has developed reprocessing and enrichment technology on its own, and produced plutonium for fast-breeder reactors as well as enriched uranium for the submarine reactor.

 These explicit statements in the House Bill only reaffirm what many of us have been saying for a long time. The 123 Agreement does not supersede, and is constrained by, the Hyde Act and the Atomic Energy Act. The House Bill has added new constraints. The entire Indo-US nuclear deal, which must now be taken to comprise of the Congress Bill, the 123 Agreement and the Hyde Act, is in contradiction to the July 2005 Joint Statement, because it doesn’t give India the status of an advanced nuclear state enjoying the same obligations and benefits as others. The nuclear deal does not allow cooperation in enrichment or reprocessing technology. The nuclear deal does not guarantee fuel supplies or a fuel reserve. In the event of a breach of the 123 Agreement, the US will not work with its allies to find alternate solutions – on the contrary it will pressure them to act against Indian interests. ‘Full cooperation’ in civil nuclear power is meaningless without assurances of fuel supply and technological cooperation in the fuel cycle.

 The House Bill also makes it clear that the US continues to impose on us the existing non-proliferation regime, and is not ready to recognize India as a nation with advanced nuclear technology. President Bush may have made many promises, but he will not be around to fulfill them. The reality is that the nuclear deal will not bring us as equals to the nuclear table. It will only serve to tighten the non-proliferation regime around us, make us dependent on the nuclear cartel for fuel, and completely cripple our strategic programme.

If the government’s intention is to import nuclear reactors and fuel, a simple bilateral agreement, which guarantees application of safeguards to the reactors, the fuel, and the end products of reprocessing the fuel, would have been sufficient and meaningful. There is already a precedent for this. In the nuclear deal with Russia, the irradiated fuel from the Kudankulam reactors can be reprocessed in India, provided this is done under IAEA safeguards. The plutonium that is produced in these reactors, when separated, will also attract IAEA safeguards. This is perfectly understandable, and India has accepted this. Why this should not be applicable in a more friendly agreement with the US, is incomprehensible.

 In 1974, when India was less developed and had a bleaker future, Indira Gandhi  was able to stand firm in supporting a strategic programme, in spite of ominous warnings of the retribution that would follow. It is ironic that in 2008, when India is in a much stronger position, economically and geopolitically, her own party is ready to betray her legacy and put on nuclear shackles, for a few dollars more.

Dr PK Iyengar

30 September 2008

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US Senate Committee Shafts India On Nuclear Deal

By Roger Alexander

Critics of the Indo-US Nuclear Deal in India – including eminent scientists who nurtured India’s nuclear programme during its infancy along with the entire opposition in Parliament - have consistently pointed that the deal is rooted in the Henry J Hyde Act and comes with many strings attached.

However, the government’s spinmeisters and their surrogates in the corporate media have continually claimed that the Hyde Act with its “prescriptive” clauses is only an “enabling legislation” that India can safely ignore for it is bound only by the 123 Agreement which is a legally binding international treaty.

Now that the US Senate Foreign Relations Committee has approved and forwarded a bill titled ‘The United States-India Nuclear Cooperation Approval and Nonproliferation Enhancement Act' to the Senate floor for ratification, it has become abundantly clear that the pro-deal spinmeisters in India have their task cut out to prove that only the provisions of the 123 Agreement – and not the Hyde Act and other tough US laws - will determine Indo-US nuclear commerce and that everything else in the US’ “internal political process” are extraneous and not binding on India.

First and foremost, contrary to the spin being dealt out by Prime Minister Manmohan Singh and his minions in the Cabinet, the bureaucracy and the corporate media, the 123 Agreement’s conformity with the Hyde Act is iterated in the bill titled the United States-India Nuclear Cooperation Approval and Nonproliferation Enhancement Act states in sub-section (d) titled ‘Rule of Construction’: “(N)othing in the Agreement shall be construed to supersede the legal requirements of the Henry J Hyde United States-India Peaceful Atomic Energy Cooperation Act of 2006 or the Atomic Energy Act of 1954.”

Indeed, the bill clearly states that when signed into law by President Bush, the United States-India Nuclear Cooperation Approval and Nonproliferation Enhancement Act has to be in strict conformity with the Hyde Act. Besides, in the event India tests an explosive devise, the US would not simply “discourage” other Nuclear Supplier Group (NSG) members to deny India nuclear equipment, materials and technology to India but work to “prevent” such transfers, reports Aziz Haniffa for rediff.com.

(Do link to Aziz Haniffa on rediff.com for his excellent Washington coverage of the Nuclear Deal – no Indian media outlet has been as comprehensive. This blog is greatly beholden to him and rediff.com for the coverage on this topic.)

If this is not good enough to make you sit up and look, senior Congressional sources told Haniffa that Congressman Howard Berman, chairman of the House Foreign Affairs Committee, also provided considerable input into the Senate Committee’s legislation with his staffers and that Senate panel staffers working in concert crafted a bill that could possibly be cloned in the House of representatives for floor action. (Berman is not obliged to call for hearings from the Bush Administration and can directly recommend to the House a bill that mirrors the Senate’s document.)

It will be recalled that Bremen, even though he reluctantly supported the passage of the Hyde Act, now wants append additional conditionalities – especially on fuel supply, weapons testing, and export of reprocessing technologies – to India.  

Now these are some of the many issues that the UPA’s spinmeisters have to grapple with to explain why the Deal is not a sell-out:

In Section 101, titled Approval of Agreement, and sub-section (b) with regard to Applicability of Atomic Energy Act of 1954, Hyde Act, and other provisions of Law, the legislation approved by the Committee says, “The Agreement shall be subject to the provisions of the Atomic Energy Act of 1954, the Henry J Hyde United States-India Peaceful Atomic Energy Cooperation Act of 2006, and any other applicable United States law.”

In Section 102 of the bill titled, Declarations of Policy; Certification Requirement; Rule of Construction, and the sub-section which dealt with Declarations of Policy Relating to Meaning and Legal Effect of Agreement, the legislation clearly lays out: “Congress declares that it is the understanding of the United States that the provisions of the United States-India Agreement for Cooperation on Peaceful Uses of Nuclear Energy have the meanings conveyed in the authoritative representations provided by the President and his representatives to the Congress and its committees prior to September 20, 2008, regarding the meaning and legal effect of the Agreement.”

Indeed, the bill clarifies that the commitments regarding fuel supplies are political and not legally binding. It will be recalled that senior Bush Administration officials, led by Undersecretary of State for Political Affairs William Burns, under intense questioning by the Acting Chair of the panel Senator Chris Dodd and others whether the 123 Agreement commitment regarding fuel supplies were only political commitments and not legally binding in the event that India tested, testified before the Committee on September 18 acknowledged that they were the former.

That is not all. Subsection (b) of Section 102, titled Declarations of Policy Relating to Transfer of Nuclear Equipment, Materials, and Technology to India says: “Pursuant to section 103(a)(6) of the Henry J Hyde United States-India Peaceful Atomic Energy Cooperation Act of 2006, in the event that nuclear transfers to India are suspended or terminated pursuant to title I of such Act, the Atomic Energy Act of 1954, or any other United States law, it is the policy of the United States to seek to prevent the transfer to India of nuclear equipment, materials, or technology from other participating governments in the Nuclear Suppliers Group or from any other source.” (Emphasis added)

Note, the word “prevent” has replaced the earlier “discourage,” adding on a more punitive component in the case of India testing a nuclear devise.

The conditionalities do not end here. Sub-section (2) also eliminates India being the beneficiary of any additional material, when it states: “(P)ursuant to section 103(b)(10) of the Henry J Hyde United States-India Peaceful Atomic Energy Cooperation Act of 2006, any nuclear power reactor fuel reserve provided to the Government of India in safeguarded civilian nuclear facilities should be commensurate with reasonable reactor operating requirements.”

The Americans are convinced that Manmohan Singh - blinded as he is by the legacy spiel to "unshackle" India from a "nuclear aparthied regime" and his specious "lasting legacy bit - will play along and sign on the dotted line. Congressman Gary Ackerman, (D, New York), who chairs the House Foreign Affairs Subcommittee on South Asia, while acknowledging that the were some changes from the original 123 Agreement and the Hyde Act, told Haniffa that all of this was nothing serious but just “a political issue.” 

He went on to argue: “The issue of testing is there - that the deal is off if there’s testing. So, then you can have a challenge from the Left politically in India, saying that India gave in to this or that or the other thing. But that’s a political question because India says it’s not going to test anyway…So, if it’s not going to test, it’s only a psychological barrier…My view is get the darn thing done and we’ll worry about the politics there, the politics here later. That’s what politicking is - who gets blamed, who gets the credit…Let's get it done. That the main issue - keep the eye on the ball. That’s the prize.”

So there you have it. Either India has to accept the ‘United States-India Nuclear Cooperation Approval and Nonproliferation Enhancement Act’ in the manner in which the Foreign Relations Committee it has presented to the full Senate, and will most probably be akin to the House of Representatives’ resolution given Berman’s “assistance” to the Foreign Relations Committee.

Indeed, one senior Administration source told Haniffa, if India rejects the Senate Committee bill, “It wouldn't be just looking a gift horse in the mouth - particularly when timing is of the essence - it will be kicking it in the mouth.” Meaning, India can leave it or lump it.

Going by his statements during his current visit to the US, Prime Minister Manmohan Singh seems to have already made up his mind to lump it. But will his government and party be able to weather the political tsunami - that will certainly castigate him for doing a Mir Jaffar (a sell-out) – that will follow in the wake of his reckless action if he does indeed and go ahead and sign the 123 Agreement without taking Parliament into confidence, as he solemnly promised in the Lok Sabha (whiile tabling his reply to the trust mothion moved by him) on June 23?

ends