[sacw] South Asians Against Nukes Dispatch (29 dec.99)

[Harsh Kapoor]

South Asians Against Nukes Dispatch (29 dec.99)
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#1. Economic logic of national security [in Pakistan]
#2. Safety in Indian nuclear plants: Assurance is not enough
#3. No to War, no to Nuclear Bomb": Movie directors
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#1.
=46riday Times
24 December 1999

Economic logic of national security

Post-test sanctions definitely hurt Pakistan's economy. That is why,
argues Ejaz Haider, strategy is too serious a business to be left to
strategists

New Delhi is indicating it might sign the Comprehensive Test Ban Treaty
before US President Bill Clinton's visit to South Asia. This is a
significant development and throws up the question of how Pakistan's
must respond to it: Should it sign the CTBT before India does or should
it adopt a wait-and-see policy?

An allied question can be: On what basis must Islamabad decide to sign
or not sign the CTBT with or without India signing it? The strategists
would refer to "national security" as the basis for any such decision.
But what constitutes national security? Is it a narrow, piecemeal
concept linked merely to the acquisition and maintenance of nuclear
capability or is it a holistic concept involving a triad of external,
internal and economic security? These questions are important since
Pakistan reacted to India's tests last year without heeding the signals
the economy was giving. After the tests, sanctions made an already
precariously balanced economy keel over. It was only in November 1998
when Washington bailed Islamabad out that the economy could barely stand
up.

The situation is still more or less the same and the country needs a
bailout. Yet, strategists continue to put faith in the primacy of
external security and link it to the maintenance of nuclear capability.
Two different documents throw some light on what Pakistan bargained for
last year when it followed India blindly into the nuclear pit. Their
significance lies in how Pakistan must now factor in economy in any
future formulation of national security policy.

While observing the impact of post-nuclear tests sanctions on the
country's economy the State Bank of Pakistan's annual report for 1998-99
concedes the country suffered an acute balance of payments crisis during
the year because of economic sanctions and other factors such as world
recession. In fact, the SBP report records 1998-99 as "one of the most
difficult years in the history of Pakistan".

This is how the SBP report puts it: "Following the nuclear explosion[s]
by Pakistan in May 1998, the G-7 countries imposed a range of economic
sanctions against Pakistan. The IMF suspended the ESAF and EFF programme
with Pakistan as also the new Official Development Assistance. The pace
and...level of economic activity [was] also adversely affected by a
sharp decline in the private capital inflows and erosion of confidence.
On November 12, 1998, foreign exchange reserves stood at $415 million."
Such was Pakistan's dependence on IMF and ODA assistance that the
situation eased up a little only after the "resumption of inflows of
resources including reactivation of agreement with the IMF [and the]
rescheduling of debt".

The SBP report reveals nothing new. But it is significant for one
reason. It notes the precarious health of the economy on the eve of the
nuclear tests and suggests that this factor was not taken into
consideration by our strategists when they formulated their strategic
doctrine of tit-for-tat nuclear testing last year.

Despite evidence to the contrary some analysts still argue the sanctions
did not hurt Pakistan since it was already under US sanctions when it
tested. Their argument is that the economic collapse was owed to years
of mismanagement and was not the effect of sanctions. This is merely an
attempt to paper over the conflict between strategy and economy within
the narrow paradigm of national security that exists in this country and
that is loath to assign the "economy" its rightful place. At worst, this
argument tries to justify a decision on the basis of a flawed reasoning
by twisting facts.

There is no gainsaying the economy had been mismanaged and was merely
limping along when Pakistan decided to test but that is the whole point.
Economic mismanagement had led the country to a heavy dependence on the
IMF and following the decision to test when "the US-led coalition
withheld IMF support, the resulting collapse of confidence created a
balance of payments crisis and a significant decline in economic
activity".

Contrarily, if Islamabad had decided against testing at the time and in
the manner it did, it could have driven a hard bargain with Washington
with economy being the centrepiece of any deal. Pakistan was barely
afloat at the time it tested. The sanctions deprived it of the crucial
capital inflows it needed to even stay afloat. Without the much-needed
relief in November 1998 it would have sunk. At the time Washington
waived some of the sanctions to offset a complete collapse of Pakistan's
economy, the country's foreign exchange reserves stood at US$458 million
down from US$1.4 billion in May 1998. Even the reserves on the eve of
its tests were in short-term, high-interest commercial loans and equaled
only about six weeks of imports. Experts say the country needed around
US$2 billion in net inflows to avoid loss of reserves. It is difficult
to see how anyone can still justify the decision to test on the basis of
economic logic.

Perhaps the most comprehensive study so far on the impact of sanctions
on India and Pakistan has been done by Daniel Morrow and Michael
Carriere. Captioned "The Economic Impacts of the 1998 Sanctions on India
and Pakistan," the study has been published in the Fall issue of The
Nonproliferation Review.

Morrow and Carriere argue the sanctions had a "marginal" impact on India
and a "significant" impact on Pakistan. Evaluating the broader issue of
whether sanctions can be a disincentive to future proliferation
attempts, they look at the cases of India and Pakistan and contend that
sanctions can be made to work as a significant disincentive. Even in the
case of India whose "foreign exchange reserves of US$26 billion equaled
about six months of imports" - as opposed to Pakistan's US$1.4 billion -
Morrow and Carriere argue the sanctions impacted foreign direct
investment and would also have affected flows of official foreign aid if
the sanctions had remained in place long enough.

However, in the case of Pakistan the Glenn Amendment-related sanctions
as also other multi-lateral sanctions led to a complete collapse of the
economy. The blockage of the IMF funding played havoc with market
confidence, "which affected the capital flows, the exchange rate, and
aggregate GDP growth in Pakistan".

Looking at economic indicators through the year, Morrow and Carriere
establish beyond doubt that sanctions heavily impacted Pakistan's
economy. "New private inflows virtually stopped. Foreign exchange
reserves fell to extremely low levels. In early November, just before
President Clinton waived a number of sanctions on Pakistan and India,
Pakistan's foreign exchange reserves stood at $458 million, a
dangerously small amount. [Given Pakistan's US$10 billion annual import
bill this means import reserves for barely two weeks.] The open market
(kerb) rate for the Pakistani rupee depreciated from Rs. 45 to the
dollar in early May to Rs. 63 in mid-July - a 28 percent depreciation.
By the end of 1998, when most of the sanctions had been lifted, it
remained 16 percent below its pre-test value."

At the time Islamabad pinned many hopes on a relief package from the
Islamic Development Bank (IDB). Emissaries were sent to negotiate a deal
with IDB and foreign and finance ministers made statements - that were
obviously false - that the IDB had agreed to shortly release the rescue
package. Morrow and Carriere say: "The delay on an IMF support package
also thwarted Pakistan's hope of receiving financial support from the
Arab world. A $1.5 billion rescue package, consisting of funds from Arab
private banks and financial institutions and arranged by the Islamic
Development Bank (IDB), continuously delayed throughout the summer and
fall of 1998, as the IDB tied these funds to Pakistan's need to
straighten out its relationship with the United States and the IMF
[emphasis added]. By September 10, 1998, all the IDB was able to offer
was $200 million of its own funds."

The impact of sanctions can also be gauged from the manner in which the
economy, especially the stock market, reacted to positive news following
the July 16 Senate vote on Brownback Amendment. The KSE, which on July
10 had reached an all-time low of 777.26 points, reacted positively to
the news jumping up to almost 7 percent. According to Morrow and
Carriere: "This upward trend continued until the end of the week, when
the market closed 14.8 percent higher than it had started at the
beginning of the week, compared to a 6.8 percent jump in all other Asian
markets."

The KSE also saw a rally during the two weeks leading up to the
September 1998 UN General Assembly meetings on the back of expectations
that UNGA meetings would result in easing of sanctions. The index rose
by 9.8 percent. Later, on November 7, the KSE witnessed a 10.5 percent
rise - the market's sharpest single-day rise since India and Pakistan
tested - after receiving news on the waiver announcement and the
resumption of IMF funding. Morrow and Carriere conclude their
observation on the impact of sanctions on Pakistan thus: "In summary,
because of its prior vulnerability, the Pakistani economy was severely
affected by the withdrawal of IMF financing...and by the indirect
effects of this withdrawal on other capital flows to Pakistan."

Clearly, the essential point in all this is that policy-makers need to
incorporate the factors necessitated by economy into any formulations on
strategy. In fact, it is a misconception to treat strategy and economy
separately. The argument that "survival" comes before "economics" is not
only flawed it is downright perverse because "survival" itself is not a
narrow concept and is essentially linked to the holistic concept of
national security. Therefore, any strategic formulation must consider
economy as a sine qua non of the national security policy. Strategy is
too serious a business to be left to "strategists", especially nuclear
strategists, who have learnt the art of narrowing the concept down to
nothing. There is reason to believe the present government is aware of
this. Pakistan's policies have already allowed India to go on the
offensive while the bomb, for all the fanfare, has failed to put the
brakes on our downwards slide. One hopes the present government's
emphasis on reviving the economy would force it to look at the concept
of national security afresh.
_________
#2.
ANANDA BAZAR PATRIKA (Bengali daily),
Calcutta, 2 November 1999

Safety in Indian nuclear plants: Assurance is not enough

BY PRADIP DATTA

A. Gopalakrishnan, a former chief of India's Atomic Energy Regulatory Board
(AERB), disclosed recently that in 1995, the AERB had prepared a list of 130
flaws in different nuclear installations in the country. Some of them were
nuclear enrichment plants. He said that safety standards at the older nuclea=
r
plants were so low that severe accidents like the one occurring at the
Tokaimura uranium plant in Japan could occur here too.

According to Gopalakrishnan, the excessive secrecy in the functioning of the
department of atomic energy (DAE) and the the constraints on the independent
functioning of the AERB were responsible for the situation.The AERB works
under the DAE, which can suppress any incident or information on the pretext
of national security under the Official Secrets Act.

In spite of the pressure of the People's Union for Civil Liberties, the DAE
had suppressed the AERB report recommending, among other things, changes in
the core coolant system essential for avoiding core meltdown at a reactor.

Some time back, the DAE itself conducted a survey on the possibilities of
human errors at Indian reactors. This report was also not published.

As soon as Gopalakrishnan's statement came out, R. Chidambaram, chairman of
the Atomic Energy Commission, told journalists that Indian nuclear
installations
had enough safety arrangements to prevent an accident like Tokaimura occurin=
g
here in the next 150 years.

There is little ground to be assured by Chidambaram's words. Two reactor
disasters have been behind the global ebbing of enthusiasm over nuclear
energy. First, the Three Mile Island accident in the USA in 1979, and
second, the 1986 Chernobyl disaster in the USSR.

America had 47 reactor accidents of various proportions in the decade
preceeding the Three Mile Island disaster. Those were also kept under wraps.
People came to know about them after the Three Mile Island accident.
Before that, the US experts used to claim that it was impossible for an
accident to happen at TMI. Immediately after the disaster, the US Congress
said it could be repeated any time.

Similarly, it became known after the Chernobyl disaster that a number of
people knew about the serious flaws in reactor concerned earlier. The top
Soviet nuclear scientists just lied about safety. Only a few days ago the
Japanese authorities, too, used to boast about their safety standards. Now
we know that workers at JCO Corporation, Tokaimura, had little idea of these
standards and did not even wear radiation measuring badges to work.

One should ask Chidambaram whether the reactors and their safety arrangement=
s
in India are more developed than those in the USA, Russia, Japan, France or
Germany. India generates slightly more than one per cent of its electricity
(1,086 MW) from nuclear power plants. It sends its technologists to acquire
skills to these countries and buys technology from them.
______________
#2.
India Today
http://www.india-today.com/moviemasala/spice.html
December 1999

No to War, no to Nuclear Bomb": Movie directors

Jamshedpur: A ten-day International Film Festival, featuring 57 movies from
11 countries, on the theme "No to War, No to Nuclear Bomb" began on
December 11.

=46ilm-maker Asoke Viswanathan, while inaugurating the festival said that
modern cine directors are not
making merely entertaining films but also realistic ones with social
concerns. A retrospective of Israeli cinema will be showcased during the
festival and a delegation from that country would attend it.

Movies of young and debutant Indian filmmakers will be the highlight of
the festival and films by Vijay Ketan Misra, Susanta Misra, Santana
Bordoloi, Rituporno Ghosh, Deepa Mehta, Gautam Ghosh, Rajen Khosla and
Kaizad Gustad will be screened.

An exhibition of rare photographs on the nuclear bomb devastation at
Hiroshima and Nagasaki was also opened.