From Volume 7, Issue 27 of EIR Online, Published July 1, 2008
Asia News Digest

Delhi Foresees Collective Security System for Mideast

June 23 (EIRNS)—India's decision to invite Syria's President Bashar al-Assad on a June 17-21 trip to India is part of a new-think in New Delhi, that foresees the necessity of a collective security system for the Middle East, wrote a former Indian ambassador to Turkey in the Asia Times online daily.

India came to realize that the U.S. policy of isolating Syria has not only failed, but with Iraq lying in shambles, Syria's weight in the Arab world is rising. At the same time, New Delhi was looking for a way to get its Middle East policy on an even keel, having loosened its relations with the regional Islamic nations in order to build up security cooperation with Israel in recent years.

This came about following a reevaluation of India's bilateral relations with Iran, prompted by the Indian External Affairs Ministry under the leadership of Minister Pranab Mukherjee. Mukherjee made a major foreign policy speech at the Emirates Center for Strategic Studies and Research in Abu Dhabi in May, in which he described Iran as a "significant role-player in regional and world affairs." Mukherjee explained, "I believe that engagement with Iran is important. Such engagement can play an effective role in promoting peace and stability in West Asia, particularly in Iraq and Palestine as also in Syria and Lebanon, while supporting the regional and global effort in combating extremism and terrorism. In this regard, I must mention that Iran plays an important role in Afghanistan. The international effort under way there would also benefit from greater engagement with Iran."

He pointed out that Delhi needs to position itself as a player in West Asia, which it regards as a "part of India's extended neighborhood," and where "we need to look collectively at the common regional challenges we face—political, economic, and social—and discuss these issues and find solutions together."

The speech followed Iranian President Mahmoud Ahmadinejad's brief stopover in Delhi in April. Mukherjee is scheduled to visit Iran for the second time in six months, in July.

India and Myanmar To Sign Investment Agreement

June 23 (EIRNS)—New Delhi has sent its junior Minister of Commerce Jairam Ramesh on a June 22-25 visit to Myanmar, to sign an investment protection agreement and decide on converting border commerce into normal trade. Ramesh will offer credit totaling $84 million to Myanmar. "He will also offer $2 million for 16 power transformers that were damaged in the cyclone, as well as $200,000 for the repairs of the Buddhist monastery Shwedagon Pagoda, also hit by the storm last month," a ministry official said. India was one of the first countries to rush aid to Myanmar after Cyclone Nargis hit on May 2-3, leaving 134,000 people dead or missing by latest count.

One of the agreements would be for a $20 million credit line for an aluminum conductor steel-reinforced wire-manufacturing facility. The United Bank of India and the Myanmar Economic Bank would agree to an arrangement to implement the border trade agreement at Moreh in Manipur.

But the crux of discussions during Ramesh's trip will center around accelerating the path-breaking Kaladan multi-modal transit project that will provide a shorter route to India's northeastern states, and later to Southeast Asian countries, through Myanmar. India will seek to ensure that the project is completed by May 2012, a year ahead of schedule. At present, all traffic is routed through the narrow and congested "chicken neck" corridor via the Indian states of Assam and West Bengal.

Ramesh is expected to visit the Sittwe port on the Bay of Bengal. The facilities at the port will be expanded to accommodate goods traffic, under an agreement signed by the two governments in April this year. From Sittwe, the Kaladan River will be made navigable for 225 km, up to Kaletwa. From there, a 62-km highway will take the traffic to the India-Myanmar border in the Indian state of Mizoram. A road from the border will link the project to India's National Highway 54. The sea distance between Kolkata and Sittwe is about 540 km. India is financing the entire project.

Indian Minister Asks OPEC To Curb Oil Speculators

June 27 (EIRNS)—Addressing energy ministers of the OPEC countries in Jeddah, Saudi Arabia on June 23, Indian Finance Minister P. Chidambaram blamed financial speculators for driving up the price of oil, causing misery to billions, and urged the OPEC countries to move against them.

"Questions have been raised about the fundamentals of the oil industry," Chidambaram said, "and there is need for the oil industry to reassert its leadership in price formation and not remain a passive spectator of speculation and paper trading in oil." On the doubling of international oil prices in the last ten months, from $70 a barrel in August 2007 to over $140 today, Chidambaram said, "There is ample evidence that large financial institutions, pension funds, hedge funds, etc., have channelized billions of dollars, nay, trillion of dollars, into commodity investments and commodity derivatives." He claimed these financial transactions were unregulated and highly opaque and the demand for oil generated by these funds was, therefore, purely speculative.

Chidambaram offered OPEC a price band mechanism, which, he thinks, would cool prices in the global market. Under the mechanism, consuming countries would guarantee that oil prices will not fall below an agreed level, while producing countries would ensure that oil prices do not rise above a guaranteed level. According to the finance minister, this was the only way to shelter the world from volatility and unpredictability in oil prices. Cautioning the oil producers that they would also suffer if the global economy slowed or slipped into recession due to high oil prices, he said the current level of prices was in the interest of neither the producers nor the consuming countries.

Vietnam Crisis: Failure To Sell Bonds

June 25 (EIRNS)—Vietnam, faced with British-orchestrated capital flight, the threat of a full-scale collapse of its currency, and runaway inflation, plans to try selling about $18 million in local currency (dong) bonds on June 27, but is facing another failure. The government failed last week, for the seventh time in a row, to raise funds on the bond market, with no buyers for its offers of two- and three-year bonds, and demands for 14% interest rates on 15-year bonds. The last successful sale was Feb. 28, selling two-year bonds for 7.68%.

The bonds are intended to fund infrastructure projects, including roads, bridges, and ports.

Although Vietnam was not involved in the 1990s hot-money bubble in Asia, which exploded when George Soros and his hedge fund cohorts pulled the plug in 1997, the country subsequently joined the World Trade Organization and opened up to the speculators, becoming the "hottest" growth spot in Asia. Now, it faces the consequences.

Prime Minister Nguyen Tan Dung is in Washington, meeting with President Bush and cabinet members. Several U.S. firms signed deals for investments in Vietnam, including Alcoa, which will cooperate with a state firm to develop the nation's aluminum industry; and Motorola, which signed a telecom deal.

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