Brookings: Experts - William J. Antholis

Portugal and the Euro Area: A Conversation with Portuguese Minister of State and Finance Vítor Gaspar

Tue, 26 Mar 2013 10:00:00 -0400

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March 26, 2013
10:00 AM - 11:30 AM EDT

Saul Room/Zilkha Lounge
Brookings Institution
1775 Massachusetts Avenue NW
Washington, DC 20036

In 2011, Portugal suffered a sudden stop in international financing, triggering an abrupt adjustment process. As the crisis in the euro area continues, Portugal continues to feel its impact, with the recession entering a third consecutive year in 2013 and unemployment reaching record highs.

On March 26, Global Economy and Development at Brookings hosted a conversation with Portuguese Minister of State and Finance Vítor Gaspar on the challenges Portugal faces as the euro area looks to find a path toward recovery. Mr. Gaspar was appointed minister of State and Finance in June 2011. Gaspar is also a professor of economics, having taught at various Portuguese universities. He holds a Ph.D. in economics from Universidade Nova de Lisboa. . He was the head of the Bureau of European Policy Advisers at the European Commission from January 2007 to February 2010. From September 1998 to December 2004, he served as the director-general of research at the European Central Bank. Prior to that, he held various high ranking positions in government and at Banco de Portugal.

Brookings Managing Director William Antholis moderated the conversation.

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Portugal and the Euro Area: A Conversation with Portuguese Minister of State and Finance Vítor Gaspar

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Mr. Tsipras Comes to Washington

William J. Antholis and Domenico Lombardi — Fri, 25 Jan 2013 09:45:00 -0500

Editor's Note: Greek opposition leader Alexis Tsipras spoke at Brookings on January 22 during his first trip to Washington. While at Brookings, Tsipras discussed Greece's austerity measures, its image in the international community, the country's relationship with the Euro zone, and its potential for economic growth.

The new head of Greece’s opposition party, Alexis Tsipras, came to Washington this week. Mr. Tsipras has become a key player in the Euro Crisis. His meteoric rise in the polls and close second-place finish in Greek elections last summer rattled global financial markets. His pre-election rhetoric raised the possibility of a Greek exit from the common currency, which could have led to a domino-like collapse of the Euro.

Mr. Tsipras's trip to Washington was his first, meeting with government officials, members of congress, policy analysts, Greek American groups and the public. He brought with him members of his SYRIZA party, which literally translates as the Coalition of the Radical Left. That name makes Americans nervous, since America has never had a viable socialist party. SYRIZA, for its part, outflanks the socialists to their left, so many Americans were doubly nervous.

Optimists and pessimists could both find what they were looking for in his visit. As one American with whom he met said privately, “We agreed on somewhere between 40% and 60% of what he said. So let’s call it 50-50.” That assessment is about right.

Mr. Tsipras delivered four core messages. He found a receptive audience for two, but less so on two others.

Tsipras Success. Tsipras has consistently argued that the austerity measures that Europe has forced on Greece will not create growth.

Many in Washington agree. If Europe had had an Obama-style stimulus plan and a Bernanke-style monetary policy, Greece would not have become the Achilles Heel of Europe. Instead, lack of fiscal and monetary support has lead to a shrinking economy, unemployment, fear and hopelessness in the Greek public.

In fact, continuing to focus on political sustainability is Mr. Tsipras’s most effective argument. Economic and political reforms must be "owned by the people" of Greece, or the country will not be able to heal itself. That means that both growth and sacrifice need to be shared fairly. He cited the recent U.S. fiscal cliff agreement that led to a slightly more equitable tax system, targeting the truly wealthy. And his own recommendations are not to nullify the current agreement between Greece and its European lenders, but instead to renegotiate a more gradual approach to a balanced budget. Public employees need to feel part of the agreement.

Second, at a personal level, Mr. Tsipras sought to shed the caricatures that have shaped the international image of the Greek left. In a country where leftists have historically been incendiary, prone to violence, and aggressively anti-American, Mr. Tsipras came across as genial, courteous, pragmatic, and eager to hear American views. While he certainly has strong ideological leanings, he showed himself to be someone genuinely interested in hearing suggestions and even criticisms. He spoke warmly about President Obama’s inaugural calls for social justice. And he held himself up as the last best hope of Greece falling into the hands of the neo-fascist Golden Dawn party.

In that regard, many noted his recent trip to Brazil, where he met with former President Lula da Silva. In the 1990s, Lula famously shed his militant image to become a beaming and gregarious icon for a globally integrated and competitive Brazil. Should Tsipras become prime minister some day, he seemed to say, he would be just such a leader.

Tsipras Trip-ups. Mr. Tsipras has a ways to go in convincing his skeptics on his third core argument: that the Euro zone needs Greece as much as Greece needs the Euro zone. He has repeatedly argued that Greece’s last two governments have too easily caved to the pressure of northern Europeans to accept austerity measures in exchange for new bailouts.

Some are still nervous about contagion from a Greek exit. By so brazenly playing the game of chicken with northern Europeans, Tsipras still keeps them up at night.

Many others, however, now believe that the European Central Bank and other Euro zone countries have defended themselves from the impact of a Greek default and return to the Drachma. Most Greek debt is now owed to the EU, ECB, and IMF, not private bondholders. That means that the contagion is less scary, and largely under control.

Ironically, Mr. Tsipras himself seemed a bit nervous when presented with the idea that Greece could or should leave the Euro zone. If that happened, it would take away his biggest bargaining chip.

Finally, Mr. Tsipras failed to convince people on a fourth point: that he has a positive vision for growing Greece’s economy. Whether Greece stays inside the Euro or reverts to the Drachma, it will still need to make major changes in its economy to attract foreign investment and boost its exports.

Tsipras avoided engaging on a concrete discussion of what would make Greece’s economy more competitive. He dismissed the idea that Greece was Europe's last communist economy -- saying that privatization had not happened because there really was nothing to privatize.

He also said that the focus on deregulating certain industries (pharmacies and hair salons) was a distraction to take away from the oligarchs' own complicity in crime and corruption. There was a lot of talk from him and his party about taking aim at “robber barons” and “wealth redistribution”. While many Americans would certainly support equitable taxation and real jail time for real criminals in Greece, redistribution for its own sake is likely to scare away many investors.

The small good news here is that Mr. Tsipras regularly referred to the need to attract foreign investment, and he was keen to meet with investors. He also made allusions to developing strategies for key industries such as tourism, export agriculture, or energy. Still, the details of that strategy have yet to be worked out.

In this regard, many were quite concerned about his political strategy in the coming weeks and months. The situation in Greece has just begun to calm down, and the country will soon prepare for the critical tourist season. When I asked Mr. Tsipras if SYRIZA would avoid strikes -- which have been so damaging to Greece's image in the world -- he said that each society had its own way of dealing with politics. “Politics is not tea and crumpets.” There is certainly a place for expressing dissent. But allowing a minority of Greeks to regularly shut down the economy is not democracy as Aristotle envisioned: the art of ruling and being ruled in turn.

There was an echo of the dark side of public employees in Athens this week. The head of the striking Athens metro worker’s union was asked if his union would follow orders to report to work or be fired. “Over my dead body.” Not tea and crumpets, indeed.

Over the coming months, Mr. Tsipras and SYRIZA will have ample opportunities to demonstrate that their definition of radical means not putting all of Greece out of work simply to win power. If, on the other hand, they can find a way to paint a positive vision for the future and an equitable role in the Euro zone, then the SYRIZA glass may become more than half full.

Authors

Image Source: © Charles Platiau / Reuters

Greece and the Economic Challenges Ahead: A Conversation with Greek Opposition Leader Alexis Tsipras

Tue, 22 Jan 2013 14:15:00 -0500

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January 22, 2013
2:15 PM - 3:45 PM EST

Falk Auditorium
Brookings Institution
1775 Massachusetts Avenue NW
Washington, DC 20036

On January 22, Global Economy and Development at Brookings hosted Alexis Tsipras, the leader of the Greek opposition, for a conversation about Greece and the economic challenges ahead. Tsipras’ remarks touched on themes including: economic and social prospects for his own country; the relationship between Athens and the rest of Europe, including what reforms are needed in Greece and Europe to address the crisis; and what role, if any, the U.S. can play in assisting Greece and Europe tackle their current problems.

Alexis Tsipras is the leader of the SYRIZA coalition. Both Mr. Tsipras and the SYRIZA coalition have been vocal opponents of European austerity measures in response to the euro crisis. Those positions have led to a surge in public support for both the SYRIZA coalition and for Mr. Tsipras personally, placing either at, or near, the top in various Greek opinion surveys in recent months. Mr. Tsipras is the youngest person ever to lead the official-opposition party in the Greek Parliament.

Brookings Managing Director William Antholis provided introductory remarks and, with Brookings Senior Fellow Domenico Lombardi, moderated the discussion with Alexis Tsipras, including questions from the audience.

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Low Carbon Development in the United States and China

Fri, 14 Dec 2012 10:00:00 -0500

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December 14, 2012
10:00 AM - 11:30 AM EST

Saul/Zilkha Rooms
Brookings Institution
1775 Massachusetts Avenue NW
Washington, DC 20036

The United States and China are the two leading emitters of greenhouse gases in the world. The individual approaches and results achieved in both the U.S. and China, including the success or failure of efforts at meaningful collaboration between the two countries will have a major impact on the global picture. China has decided to establish trial cap-and-trade systems in seven localities with a view to rolling out a nationwide system in 2016. The United States has also experimented with various approaches locally and nationally to reducing greenhouse gas emissions.

On December 14, the John L. Thornton China Center at Brookings hosted Qi Ye of the Climate Policy Initiative (CPI) and Tsinghua University for the launch of CPI’s third Annual Review of Low-Carbon Development in China. Professor Qi, who is known throughout China as a leading expert on local level compliance and reporting on national environmental policy, discussed China’s past experience with facilitating low-carbon development and its future prospects, with a focus on China’s planned cap-and-trade system. He was joined by Brookings Managing Director William Antholis, a former White House climate change official, who discussed national and local action on climate change in the United States, and reflected on his own travels across China and India earlier this year. Brookings Senior Fellow Kenneth Lieberthal, who leads Brookings’s yearly U.S.-China Clean Energy Conference, moderated the discussion.

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Low Carbon Development in the United States and China

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Education and the Post-2015 Development Agenda

Wed, 05 Dec 2012 12:30:00 -0500

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December 5, 2012
12:30 PM - 5:30 PM EST

Falk Auditorium
Brookings Institution
1775 Massachusetts Avenue, N.W.
Washington, DC 20036

As the 2015 expiration date for the Millennium Development Goals (MDGs) approaches, the goal of achieving universal access to primary education is unlikely to be realized. Worldwide, 61 million children still do not have access to primary school and millions more are in school but not learning basic skills. In response, United Nations Secretary-General Ban Ki-moon launched a five-year global education initiative, Education First, at the U.N. General Assembly this September, calling on local governments and the international community to prioritize quality education leading up to and following 2015.

On December 5, the Center for Universal Education at Brookings hosted a discussion on the role of education in the post-2015 development agenda. Building on the launch of Education First, the panelists discussed how to reach the remaining children with no access to school, and improve the quality and relevancy of education for all children and youth.

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Keynote Address: Education and the Post-2015 Development Agenda

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The Next Phase of the U.S.-Turkey Strategic Partnership

Tue, 04 Dec 2012 14:30:00 -0500

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December 4, 2012
2:30 PM - 4:00 PM EST

Saul/Zilkha Rooms
Brookings Institution
1775 Massachusetts Avenue NW
Washington, DC 20036

For decades the United States and Turkey have benefited from a dynamic, multifaceted relationship. President Barack Obama highlighted the importance of this partnership when he traveled to Turkey on his first trip overseas in 2009. Since then, however, the Middle East has undergone a profound transformation, Turkish-Israeli relations have deteriorated, Europe has stagnated under a financial crisis, and the situations in Syria and Iran have become increasingly volatile. Each of these developments has posed challenges for the relationship and raised questions about whether U.S. and Turkish strategic priorities may be diverging.

On December 4, the Center on the United States and Europe (CUSE) at Brookings hosted a discussion exploring U.S.-Turkish relations during President Obama’s second term. Panelists included: Brookings Nonresident Senior Fellow Ömer Taşpınar; Kemal Kirişci of Boğaziçi University; and Soli Özel of Kadir Has University. Brookings Managing Director William Antholis and Ümit Boyner, chair of the Turkish Industry and Business Association (TÜSİAD), provided introductory remarks. CUSE Director and Senior Fellow Fiona Hill moderated the discussion.

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Obama Win Is a Gift for Greeks

William J. Antholis — Thu, 08 Nov 2012 14:06:00 -0500

Greek political leaders have not had much cause for celebration in the last four years. Last night's victory by President Obama was no different— it did not lead to dancing in the streets of Athens. But it certainly was a cause of major relief.

Across the political spectrum, Greek leaders have seen President Obama as someone who has urged European leaders to not force a Greek exit from the eurozone.

By comparison Greeks did not know Mitt Romney very well. And what they did know, they did not like. The prospect of a victory by Mitt Romney caused great anxiety across the political spectrum in Greece— even among Greek conservatives.

Time and time again during the campaign, Mitt Romney went out of his way to warn Americans that if they did not get their fiscal house in order, they would be heading towards a crisis that he called "the road to Greece."

His comments led many Greeks to fear that a Romney presidency would promote a message of fiscal austerity, rather than one of growth and solidarity. That was particularly a concern as Greece has begun to convince many European counterparts that austerity is a one-way street leading to a break-up of the eurozone.

Even Greece's leftist parties were relieved. In the past, Greek leftists have used a caricature of American capitalism to stoke fervor against free-market democracy. Yet in the current circumstances, Greece's leftists have come to fear a situation where Greece was even further marginalized in Europe.

Now the focus shifts away from the United States, and back to Greece. All Greek political leaders know that what an American president does or says will only have a marginal effect of what is important right now for Greece.

Greece's leaders know that their fate lies in their own hands. Greece's own actions are most critical to their future— especially getting their own fiscal house in order and reforming the excessive regulations that constrict their economy. Greece's own right-of-center government is taking these steps right now, in exchange for interim support from the rest of Europe.

Of course, Greeks also are aware that this European support will continue to shape its future— particularly aid from counterparts in Germany, the Netherlands, and Scandinavia, which have been most reluctant to help.

In fact, the relief that many Greeks feel at an Obama victory is one based on the largely constructive role the Obama administration has played with these European nations, as well as with international bodies such as the International Monetary Fund.

Obama's quiet diplomacy on this front has already led to a decline in anti-American sentiment and improved US-Greek relations— especially when compared to the last four decades.

So for the next four years, Greece will have an American president who knows and understands why Greece's role as a member of the European Union must be preserved.

The president's team knows this is not only in Greece's interest but also in America's interest. During the first Obama term, several fledgling American economic recoveries were stunted by setbacks in European recovery efforts.

What remains uncertain for Greece's leaders is how much President Obama can help to encourage the rest of Europe to support Greek reforms. Will a re-elected Obama lean even harder into Germany and northern Europeans to provide a clear signal that Greece will not be left behind?

And if he does so, how public should those efforts be? In Europe's convoluted internal politics, if Obama is too public in pushing Germany and others to support Greece, it could backfire and undermine those efforts. In that case, Greeks might need to be wary of Americans bearing gifts.

For now at least Greeks will breathe a sigh of relief and consider those questions tomorrow.

Authors

William J. Antholis

Publication: Huffington Post

Image Source: © Jason Reed / Reuters

Civil Conversations: Restoring Civility to the Debt Discussion

Tue, 09 Oct 2012 10:00:00 -0400

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October 9, 2012
10:00 AM - 11:30 AM EDT

Falk Auditorium
Brookings Institution
1775 Massachusetts Avenue NW
Washington, DC 20036

As political discussion has devolved more and more into hyperbole and vitriol over the past few years, solutions to the critical issues that face the nation - including our mounting deficits and national debt - have proven elusive. How to bring this discussion back to substantive issues, as opposed to partisan rhetoric?

On October 9, as part of her Civil Conversations Project, Krista Tippett of American Public Media's radio show On Being moderated a discussion at Brookings with Senior Fellow Alice Rivlin, former director of the Office of Management and Budget and Congressional Budget Office and Pete Domenici, former Republican senator from New Mexico and a senior fellow at the Bipartisan Policy Center. Both renowned for their work on budget issues, they have created a bipartisan alliance, and discussed what they have learned, what is happening below the radar of partisan rancor, and what is at stake as the nation grapples with the debt crisis and political stalemate. Brookings Managing Director William J. Antholis delivered opening remarks. After the discussion, panelists took questions from the audience.

You can follow the conversation on this event on Twitter at hashtag #CCP2012.

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Civil Conversations: Restoring Civility to the Debt Discussion

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The Future of Trade: A Conversation with World Trade Organization Director-General Pascal Lamy

Mon, 01 Oct 2012 16:15:00 -0400

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October 1, 2012
4:15 PM - 5:45 PM EDT

Falk Auditorium
Brookings Institution
1775 Massachusetts Avenue NW
Washington, DC 20036

On October 1, Global Economy and Development at Brookings hosted the director-general of the World Trade Organization (WTO), Pascal Lamy, for a conversation about the future of international trade. As production and supply become ever more global, the paradigm for trade is shifting rapidly away from mercantilism to "made in the world." The conversation focused on the evolving patterns and methods of trade, global value chains, the rise of non-tariff measures, and recent trends in regionalism in trade.

Pascal Lamy has served as the director-general of the WTO since September 2005. Prior to his appointment, he was the trade commissioner at the European Commission. His civil service career began in the French Inspection Générale des Finances and at the French Treasury. For nine years from the mid-1980s to the mid-1990s, he served as chief of staff for the president of the European Commission, Jacques Delors. Lamy has also worked in the private sector as part of the team to rescue the struggling Crédit Lyonnais, as well as in academia as the president of the European integration-focused think tank “Notre Europe.”

Brookings Managing Director William Antholis provided introductory remarks. Kemal Derviş, vice president and director of Global Economy and Development, moderated the discussion with Director-General Lamy, which included questions from the audience.

You can follow the conversation on this event on Twitter at hashtag #BILamy.

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The Future of Trade: A Conversation with World Trade Organization Director-General Pascal Lamy

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Olympic Glory: Designed in U.S., Made Globally

William J. Antholis — Fri, 27 Jul 2012 00:00:00 -0400

The debate about whether Ralph Lauren’s uniforms for U.S. Olympic athletes should be made in America has turned a legitimate question into a farce.

The issue is: What’s the right way to think about U.S. brands and American competitiveness in an increasingly global marketplace?

During this economic slowdown, it is legitimate for the U.S. Olympic team to show concern about people out of work.

If the United States is to continue leading in the global economy, it is important to demonstrate that globalization pays dividends at home – especially during times of high unemployment in America.

So at a moment of high visibility — like the opening ceremonies of the Olympics – it’s understandable that many Americans wonder whether U.S. athletes should wear uniforms made in China.

Read the full op-ed at politico.com »

Authors

William J. Antholis

Publication: POLITICO

Image Source: © Suzanne Plunkett / Reuters

Geography of H-1B Workers

Wed, 18 Jul 2012 09:00:00 -0400

Event Information

July 18, 2012
9:00 AM - 12:30 PM EDT

Falk Auditorium
Brookings Institution
1775 Massachusetts Avenue, N.W.
Washington, DC 20036

This year, it took only ten weeks for employers to reach the nation’s overall cap on the H-1B visas they need to hire immigrant workers in specialty occupations—three times faster than last year. Yet debates over the program suffer from a lack of information about where demand for H-1B workers is highest, and the role that the program plays in addressing local labor market needs.

On July 18, the Metropolitan Policy Program at Brookings hosted a forum presenting a regional analysis of the H-1B visa program, highlighting how foreign-born skilled immigrants in the United States contribute to the country’s metropolitan economies. Panelists from the public and private sectors discussed the report’s findings and their potential impact on current economic and immigration debates.

After each discussion, panelists took audience questions. Participants joined in the discussion on Twitter using the hashtag #metroH1B.

Following this event, Brookings's Jill Wilson answered questions on the H-1B visa program in a live POLITICO web chat.

Neil Ruiz's event presentation and remarks are available. In addition, in a video previewing this event, he describes the demand for skilled labor.

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Geography of H-1B Workers

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Nine Weeks, Eleven States, One India

William J. Antholis — Fri, 20 Apr 2012 15:26:00 -0400

Nine weeks, eleven states, three conferences, three lectures, four seminars, a dozen “dinner seminars,” and sixty-odd interviews with policy-makers, journalists, scholars, NGOs, and business leaders. Getting to all those sessions required fourteen in-country flights (over 10,000 air kms), two trains, fifteen cars, eleven mini-vans, two boats, six auto-rickshaws. Not that I was counting.

My mission: to learn and describe how India’s states shape the nation’s world view. I was joined by my wife and two daughters, ages 8 and 10.

In a phone call this week, just after I had left India, Jaswant Singh summed up much of my nine weeks in three sentences. “The rise of states is the most significant political development in the country today,” India’s great statesman told me. “The states that comprise the union of India could be countries in themselves. They virtually have been different countries in the past.”

Many Indians still debate whether it matters when it comes to foreign policy. “Delhi is in charge.” “India is not a federal system— it is a unitary system with federal features.” “People in the states don’t care about global issues.” Time and again, government officials, journalists, academics and other analysts rattled off for me the “three lists”— the public responsibilities that belong to the center, to the states, and to both in partnerships. Foreign policy belongs to the center. End of discussion.

Except that people across the country kept talking about the distinct global issues that matter to them. Tamil Nadu looks to Singapore, Malaysia, Indonesia and Thailand— and especially to Sri Lanka. And they care about the global tech revolution. Mumbai watches— and weighs in on —the Straits of Hormuz and piracy off the west coast of Africa. Gujarat cares about Middle East oil, and joins Jammu and Kashmir in a persistent focus on Pakistan.

And then there are largely domestic issues that also shape India’s world view— and how the world views India. That certainly includes counter-terrorism policy, and foreign investment laws, and energy policy (especially renewable and nuclear energy). It even extends to domestic issues such as infrastructure, or a goods and services tax to replace inter-state tariffs —both of which might speed up foreign investment.

Intentionally or not, India’s states’— and their leaders —are shaping India’s approach to the world. And state leaders increasingly are working with one another on issues that extend beyond India, whether it is counter-terror policy or the goods and services tax.

That is healthy in any democracy. In the U.S., the San Francisco Bay Area cares about worldwide intellectual property protection … and H1-B visas. Florida cares about Latin America. New York cares about global finance and immigration. And California, Florida and New York— not to mention West Virginia and Texas— all care about global climate change policy, each in their own way.

India’s national identity is secure enough that it will not be harmed by a further devolution of power to states and localities on a range of issues. The system is becoming more inclusive, and it is taking advantage of impressive state-level leaders across the country, from a range of parties. I was surprised to discover that below the state level, local officials have considerably less authority than at the same level in the United States.

Still, harnessing and steering local dynamism remains a challenge. Federalism can become a problem when states fail to see the bigger picture. Many foreign companies worry about the fracturing of parties as only leading to gridlock. And in Mr. Singh’s words, “Indian foreign policy toward Sri Lanka should not simply be dictated by Madras, our approach to Pakistan determined in Jammu and Kashmir, our approach to Bangladesh in West-Bengal.”

In today’s India, in today’s globally integrated economy, that means both managing a parliamentary coalition and also working with Chief Ministers from opposition parties. Taken together, that is a difficult— indeed, dangerous — two-handed juggling act. Top-down no longer seems to work. Leading requires listening and forging pragmatic partnerships.

That is the new reality. Regional parties provide more direct representation of India’s states in New Delhi. And local control directly affects citizens in a global age. The challenge for any Indian leader— as for any American leader —is to craft a clear vision for the country, and to work with state leaders and representatives to bring all of them along.

After nine weeks in India, I felt very much at home.

Editor's Note: This piece originally ran in India Today.

Authors

William J. Antholis

Publication: India Today

Image Source: © B Mathur / Reuters

Nitish Kumar: India’s Man from Hope?

William J. Antholis — Tue, 20 Mar 2012 11:34:00 -0400

“The thieves had AK-47s. Our police had old guns from the British colonial days. The thieves had the latest SUVs. Our police vehicles would break down. Five police officers would get out of the car, and push to get it started. Then it would make a big sound as the engine kicked-in. Every criminal nearby could hear it."

With a sly grin, Nitish Kumar, the chief minister of Bihar, told me the story of the state’s hard times … and its comeback. Seven years later, over 70,000 criminals are behind bars. India’s most crime ridden, corrupt, and economically failing state is now one of the best governed and perhaps the most effective in fighting corruption.[1]

Bihar’s economic performance during Nitish Kumar’s term has also been spectacular— just a fraction behind Gujarat. His agenda of “growth with justice” has made him the second most admired chief minister in India, ranking right behind Narendra Modi of Gujarat, in a recent India Today survey.

Don’t be surprised if Nitish (as he is generally called), and not Modi, ends up becoming prime minister of India someday. Nitish and Modi’s parties both belong to the opposition National Democratic Alliance (NDA). While the NDA has been led by Modi’s party (the BJP), Modi's opponents are so numerous and strong that he may not be a viable Prime Minister.

Nitish, by comparison, has few detractors— other than the 70,000 criminals he helped to convict. Even Prime Minister Manmohan Singh (the man he could replace) has praised the “…Nitish government in many areas, including administrative reforms.” Though Nitish’s JDU party is mostly limited to his home state of Bihar, its agenda cuts across caste and religion.

Twenty years ago, the U.S. elected a president from a small, landlocked farm state with high illiteracy, poverty, and a history of corrupt government. He combined a progressive agenda that appealed across race and class. But he was able and willing to work with conservatives in fighting crime, promoting fiscal discipline, and individual responsibility.

If Bihar’s chief minister ends up becoming prime minister, it will have been for two reasons: his accomplishments in a key rural state; and his ability to master the dynamics of India’s coalition, religion and caste-politics.

Nitish’s accomplishments: Bihar’s miracle. When Nitish took over, many had written-off Bihar as a failed state whose most prominent industry was kidnapping, and whose biggest export was people. Gangsters sought ransom from anyone with any wealth or education. Doctors and teachers flooded out of the state. So too did young men, in search of jobs in Maharashtra or Tamil Nadu. Bihar’s greatest revenues were their remittances. Elsewhere in India, politicians would run nativist campaigns against Bihari immigrants.

Before Nitish, Bihari officials used the state’s power to secure wealth for themselves— including allowing local “protection” and kidnapping rackets. The British journalist Ed Luce vividly described this in his terrific book In Spite of the Gods: The Rise of Modern India. “Lower-caste politicians do not unite the lower orders by stressing what they have in common. Instead, they slice them up by focusing on what divides them. It is much closer to ethnic politics than to class politics.”

Nitish’s predecessor— and his one-time mentor— Lalu Prasad Yadav, had mastered the art of caste-based politics. Worse than in almost any other state, Lalu tacitly allowed local criminals to run small, well-armed fiefdoms.

Even keen observers, such as Luce, did not expect much of Nitish. Nitish was a former Lalu deputy who came from a different lower caste, and several candidates in his Janata Dal United (JDU) party had criminal backgrounds. “Even in defeat, Lalu’s logic lived on,” wrote Ed Luce. “I have little doubt that he will be back.”

Luce was not alone in underestimating Nitish’s combination of courage and fairness. Nitish overhauled his police force— recruiting younger officers, upgrading its equipment, and even pulling in the army reserve for a time. But what was most important— and difficult— was applying the law equally across caste and political lines. “The key,” Nitish told me, “was willpower and determination to be fair.”

Nitish worked with police and prosecutors to emphasize not just arrests, but open and expeditious trials. They convinced witnesses to testify, personally vouching for their safety. “What was important was to send a signal that [their] government was competent.” Bihar’s trial and conviction rates went from being among the worst in India, to right near the top.

Nitish demanded that all civil servants declare their assets each year, then posted those disclosures on the state’s website. “Though most people in Bihar are honest and law-abiding, lawbreaking is part of human nature. What government can do best is to expose it and prosecute it. If government is not fair and law-abiding, then it is hard to expect the same of society.”

He then focused on the economy. In his first five years— from 2005-2009— the state grew on average at 11%. The state reported 14% growth in 2010-2011.

Bihar was starting from a low base. Per capita income was below $300/year. It has almost doubled in seven years, but is still under $500/year— less than a third that of Gujarat. “But we have fertile land and hard working people. Bihar’s greatest asset is its people.”

Bihar certainly has a lot of people. In a territory smaller than Arkansas, Bihar has thirty times the population. In other words, Bihar squeezes 100 million people— as many as all of rural America— into a state that is only about 250 miles across its mid-section. And though it is densely populated, it is dramatically rural. Nine out of ten Biharis live in the countryside; its biggest city, Patna, has only 5 million people.

Just as a certain former governor of Arkansas ran a campaign on “It’s the economy, stupid,” Nitish’s campaign had a results-oriented message. “I went to the villages and told people: if you don’t see tangible changes, then tell me and I won’t run again.”

Nitish prioritized roads, which were essential to generating enough livelihoods to keep people at home. “India says Bihar has 40,000 villages. But if you count all the settlements, it is more like 200,000. But people felt cut off.” His goal was to get them all paved, and to connect them with broadband wireless.

Better roads also made it easier for kids to get to school— which Nitish says is his passion. He provided free mid-day meals, uniforms and bicycles to increase attendance. Perhaps more importantly, he hired 150,000 new teachers. That’s 50% more than next door in Uttar Pradesh, a state with twice as many people. Illiteracy approached 30% of the general population, and 70% among women. He placed special emphasis on girls’ education, cutting female illiteracy to 40%. That included not just teaching “the girl child,” but also targeting adult women illiteracy.

And, again, his effort to include women in local education and self-government schemes was also done for all of Bihar, without regard to caste or religion. “Women voted irrespective of caste for Nitish Kumar in 2009,” explained Amitabh Srivastava, a Bihar-based reporter for India Today. “Nitish created a caste-neutral constituency of women. That was his social and political breakthrough.”

Ironically, the focus on women has helped bring migrant men back home. As investment and construction have come to Patna, the Bihar Institute of Economic Studies estimates that migration is down 25%-30%, causing shortages and wage increases on construction worksites as far afield as Mumbai and Chennai, as reported in The Economic Times. Food processing, light manufacturing, and even tourism (Bihar is the global birthplace of Buddhism), have brought many value-added businesses to the state.

Though Bihar is landlocked, Nitish also became comfortable with thinking internationally. He rattled off for me the list of international agencies that he works with in Bihar— the World Bank on job creation, the Asian Development Bank and Japanese foreign aid agency on roads, the UNDP and UNICEF on health, education, and children’s issues, and the UK’s development agency on governance. Bill and Melinda Gates recently traveled to Bihar to praise Nitish and his team’s model for development, especially on public health issues.

So it is no surprise that Nitish is extremely popular in Bihar. In 2010, in a four-party race, his party ran in coalition with the nationalist BJP. Together the two parties won a commanding 80% of the state assembly— with Nitish’s party getting the lion’s share.

Local Parties, All-India, and National Coalitions. Nitish's local success is the rising trend in India. Four of India’s most important states are now governed by local parties. Uttar Pradesh, Bihar, West Bengal, and Tamil Nadu together have a population just short of 500 million. Like Nitish’s, these local parties increasingly appeal across caste and religion to “All-India.” That's what happened next door to Bihar in Uttar Pradesh earlier this month, when Akhilesh Yadav led the Socialist Party to a commanding victory in state elections.

When it comes to national politics, the local parties also are increasingly important. Neither of the national parties is strong enough alone to form a majority. The Congress Party controls 38%, and the BJP controls only about 20% of the 543 seats in Parliament.

Few analysts expect either party’s support to grow large enough in the near term to win a majority in the 2014 parliamentary elections. The Congress Party badly lost state elections in Uttar Pradesh earlier this month. It was a personal rebuke for Rahul Gandhi, who campaigned hard and— to his credit— took responsibility for the defeat. The party also does have many strong chief ministers, but none have the national name recognition to galvanize the party.

The BJP did slightly better in UP, but across India the party still largely appeals to upper caste Hindus and urban dwellers. The BJP has yet to settle on a leader. Modi is certainly the most popular candidate. But because of the 2002 riots, many analysts suspect that he would drive away secular, Muslim and lower-caste voters. And that is assuming he is eventually cleared by the courts for his involvement in the riots.

As a result, local parties are likely to remain king-makers for some time, needed by the Congress Party or the BJP to form a governing coalition.

Currently, Mamata Banerjee's Trianmool Congress in West Bengal has made a fragile alliance with the Congress Party to help form the country’s governing coalition. Nitish's JDU sides with the BJP in the opposition. Akhilesh's Socialists in Uttar Pradesh and Jayalalitha's AIADMK in Tamil Nadu remain neutral.

Parties such as Nitish’s JDU or Akilesh Yadev’s Socialists or Jayalalitha’s AIADMK that depend on Muslim support are less willing to let the BJP lead a national coalition. That would particularly be the case if Modi is at the head of the coalition, even if they might be willing to share power with the party. Instead, they might look for a new hybrid— an All-Indian local politician from a local party to head the NDA.

It is precisely in his caste-neutral, religion-neutral appeal that could make Nitish that candidate someday. He would have to bring together not just more conservative NDA members, but also some of these other big-state local parties which have a more inclusive and development oriented appeal. Some have even speculated that these parties could form a new coalition that presents an “All-India” mosaic made up of many local colors.

Could Nitish Kumar be India’s man from Hope? He is certainly a political leader worth watching.

William Antholis is managing director of the Brookings Institution and a senior fellow in Governance Studies. The views in this piece are his own, and do not reflect the views of the Brookings Institution.

[1] See especially Bibek Debroy and Laveesh Bhandari, Corruption in India: The DNA and the RNA (New Delhi: Konark Publishers, 2012), Ch. 6, section 4: “The States Lead the Way”. Bihar edged out Gujarat as the state that most effectively raises corruption cases, sees them to trial, and successfully convicts.

Authors

William J. Antholis

Image Source: © Adnan Abidi / Reuters

India’s Most Admired and Most Feared Politician: Narendra Modi

William J. Antholis — Fri, 16 Mar 2012 09:38:00 -0400

Meet India’s most admired and most feared politician: Narendra Modi. The world’s largest democracy, India, could elect him Prime Minister. And the world’s leading democracy, the United States, currently does not issue him a visa.

I spent ninety minutes with Mr. Modi earlier this month at his Chief Minister’s residence in Gujarat – a state of 60 million people, about the same size as France, Britain, or Italy, and practically twice as big as California.

More than any other state leader in India, Modi is shaking up national politics. In a January survey by India Today, he again ranked as India’s top performing Chief Minister. For the first time, he also was the top pick for national Prime Minister. The percentage who favored him had doubled over last year, vaulting him past Rahul Gandhi.[1]

I had heard about Modi — from all sides—all across India. “India’s most effective public official.” “If given five years, he would transform India’s economy.” “He cannot be forgiven for the riots.” “Gujarat borders on a cult of personality.”

In person, Modi comes across as an effective administrator, a proud Indian nationalist, and a committed if not zealous Hindu. He also is a policy maven—introverted, precise, and even passionate about the most technical of subjects. On almost all of these issues, his Gujarat is pushing, not following, New Delhi and India.

Modi welcomed me, and handed me eight pages of single-spaced answers to questions that I had submitted in advance. “This way we can just have a conversation.”

With no prompting, Modi raised Gujarat’s 2002 riots, which are his “brand” in India— the single event for which he is known by nearly all Indians.

“I had never run anything before, and I had never run for elected office” he said. “And then the Godhra train incident happened.”

On February 27, 2002, fifty-eight Hindus were killed on a train in the Gujarat town of Godhra, returning from a pilgrimage. The next day, Modi called for a day of mourning— which some mourners took as an invitation to riot. Gujarat exploded, with the death-toll reaching a thousand people, mostly Muslims. India has known murderous riots, but had never before seen them live on cable TV in horrific, unspeakable detail.

Many Indians saw Modi either as complicit, or at least indifferent to Muslim suffering. Accusations persist that he directed the police to allow attacks on Muslims; that he sought to cover up the worst of the crimes; or that he failed to prosecute Hindu nationalists.

No formal charges have been made against Modi, though a special investigation has produced a lengthy confidential report. India’s Supreme Court recently turned the whole matter back to local courts of Gujarat. It is for this reason that despite his popularity, many observers doubt that his BJP party will put him forward as their Prime Minister candidate.

The U.S. government has found enough reason for concern that in 2005, the State Department revoked Mr. Modi’s visa. They cited a provision that bars any government official who "directly carried out, at any time, particularly severe violations of religious freedom."

Modi has never apologized. “I was just installed in my position the day before.” He had been formally elected and sworn in on February 26^th, having been acting Chief Minister for six months, mostly overseeing response to Gujarat’s 2001 earthquake.

Later he told me in general terms about his years in office, “I have made mistakes, and my government has made mistakes. What is important is that we recognize them, evaluate what we have done, and then fix them.” Last September, he led a state-wide fast for “peace, unity, and harmony.” He has started to reach out to the Muslim community, expressing “pain … for the families who had suffered.” Opponents fear a slick charm offensive, making him a more presentable candidate to someday become Prime Minister. Many think Modi must show greater contrition and give explicit acknowledgement of his failings.

Modi may be branded by the riots, but what he really wanted to talk about was Gujarat’s economic miracle. Gujarat’s economic performance is without peer in India, growing an average 10% each year for a decade. That is faster growth than almost any place on earth, including most of China. Some argue that this might have happened regardless of Modi, but what is clear is that on most key policy matters, he has defied the logic and design of Delhi policy-making. “I want to develop Gujarat to develop India.”

After the earthquake and the riots, Modi launched a “Vibrant Gujarat” conference in 2003 to market the state to Indian and foreign investors. He established simple rules: “We will not pay any incentives and will not accept any bribes. But I will provide single window facilitation, quality power and water, and will honor my commitments.” One Gujarati businessman told me that he had been suspicious back then, and had doubted that any company would ever actually invest. But they did. According to state published reports, pledged investments have grown from 76 MOUs amounting to $14 billion in 2003, to nearly 8,000 MOUs signed in 2011 for $450 billion.

Unlike Chinese-style urban manufacturing that draws workers from the country-side, Modi also targeted rural development. “If it does not work in the villages, it will not work in the city.” His eyes light up when discussing infrastructure, agricultural colleges, solar energy, and climate change. “I prioritized four things,” he said, holding up his four fingers, and then pulling each one down in turn: “Water, electric power, connectivity, and distance education.”

Against considerable protest by environmentalists— both in Gujarat and in New Delhi – Modi expanded a dam in Gujarat’s north. The arid state’s fields are now irrigated. In three years, he also did what no other state has done: provide reliable electric power. “We now have high quality power all day, every day, in every village.” Modi simply started charging people for electricity’s true costs. They were willing to pay, once they realized that it would be more reliable. “Once farmers had power, they wanted to buy electric appliances.”

He also made sure all villages were equipped with roads and high-speed phone connectivity. He has placed special emphasis on rural schools, especially on “educating the girl child” to wipe out female illiteracy.

He practices what he preaches. Each spring, in the hottest month of the year, he demands that all his officials join him to work in the fields, helping farmers plant their crops. “The week is a travelling open university… From Lab to Land.” Before Modi, Gujarat already was known around the world for its “white revolution” in expanding milk production. Modi discussed at length his further efforts on behalf of cattle health— a religiously loaded theme among practicing Hindus.

Modi also has led the way in India in discussing climate change and renewable energy. After asking for a two-day tutorial from Rajendra Pachauri, the award winning head of the UN’s Intergovernmental Panel on Climate Change, Modi came up with a comprehensive plan to cut fossil fuel use in Gujarat— including India’s first state-level ministry for climate change.

Working with the Clinton Climate Initiative, he is betting on renewable energy— hydro, wind, biodiesel, and especially solar energy. Again, he is pushing New Delhi. The Central government, for instance, demands that any solar panels it purchases be primarily manufactured in India. Modi’s Gujarat buys them wherever he can at the cheapest cost. Before a recent G-20 summit, Modi told me, “I suggested to the Prime Minister that we create a global alliance of solar abundant countries.”

He summed up all of this work in a glossy book called Convenient Action: Gujarat’s Response to Climate Change. Sound familiar? It is directly modeled on Al Gore’s Inconvenient Truth, though it emphasizes what Gujarat has done, as opposed to what Gore hopes America might someday do. Critics respond that many of the actions listed in the book were not intended to address climate, and have raised their own questions about Modi’s environmental record.[2]

When he handed me a copy, he included with it Mahatma Gandhi’s Autobiography. “For me, this is a moral issue. You don’t have a right to exploit what belongs to future generations. We are only allowed to milk the earth, not to kill it.” For Modi-as-environmentalist, it seems, all the world is a holy cow.

I asked Modi about the growing involvement— and even coordination —of the states’ Chief Ministers on issues of foreign policy. He grew cautious. “I want to develop my state to help develop the country,” he said. “Foreign policy belongs to the Center.” He was careful when discussing recent disputes over a National Counter Terrorism Center, which has been opposed by several Chief Ministers. “The Center and States both have equities. The Center simply needs to do a better job of consulting. An accommodation will be found.”

He declined to discuss the particulars of Iran’s nuclear policy or its oil trade with India, saying that was also the responsibility of the Center (though much of the oil is processed in Gujarat). But he did say that one should not be selective about state sponsors of terror. “One policy should fit all.”

I took this to mean that if India believes Iran is supporting terror, then it should deal with the consequences – which would be a breach with current policy. But just as easily, he could have been sending a message that America’s own support of Pakistan while opposing Iran is also a double standard.

He made clear that he considers Pakistan (which shares a border with Gujarat) to be a state sponsor of terror. “They provided shelter for Bin Laden, and they continue to support terror. Terrorism is against humanism. In all human societies, there can be no tolerance for terror.”

Modi’s difficult relations with Gujarat’s Muslims are well known in Pakistan. As a result, his growing popularity in India could become a potential flashpoint in the tense relationship between India and Pakistan.

Modi was also careful when discussing his own economic diplomacy, including trade missions to China, Europe, and Japan, making clear again that he felt that India should be represented in foreign policy by the Central government in New Delhi, not the states. That said, he has written Prime Minister Singh, asking whether the states can have their own representatives at key embassies overseas. He expressed great interest in the fact that American states often have their own offices, independent of U.S. embassies.

On his trade mission to China: “China is good at making things. Gujarat is also good at making things. We can compete with China or cooperate with them.” He told officials in China that he would prefer cooperation, including Chinese investment in Gujarat. But he also told them that their support of Pakistan, “a state sponsor of terror,” makes him question how committed they are to global norms. “They listened to me and were polite. I do not think it will change the way they behave.”

I came away thinking that this was a man America needed to know better. He may never be able to move past his role in the 2002 riots. But he is a talented and effective political leader, and will continue pushing New Delhi and not following. He has successfully tackled some of India’s toughest problems, but also has touched its most sensitive nerves. He is wrestling with major global challenges, with all the complexities that implies for a man with strong nationalist convictions. One thing is certain— he will continue to be a force in Indian politics.

[1] Modi was picked by 24% of those surveyed, far ahead of the Congress Party’s Rahul Gandhi, who received 17%. That was a switch in the outcome a year earlier, where Gandhi received 21% to Modi’s 12%. India Today, “Who Should be the Next PM?,” Cover Story, January 28, 2012.

[2] See for instance Kinjal Desai, “’Convenient Action’ Conveniently Ignores?” Daily News and Analysis, June 23, 2011.

Authors

William J. Antholis

Image Source: © Amit Dave / Reuters

The World’s Fourth Largest Democracy Votes: Uttar Pradesh, India

William J. Antholis — Wed, 07 Mar 2012 18:03:00 -0500

Editor's Note: An version of this post originally appeared on March 5, 2012, and has been updated to include the election results.

The world watched Sunday as Vladimir Putin won Russia’s presidential election. On Tuesday, election results will be announced in an even bigger state—and one where democracy is far more robust: Uttar Pradesh.

Never heard of it? Uttar Pradesh, weighs in at 200 million people, but is not an independent nation. It is India’s biggest and most symbolically-loaded state. UP by itself would be the world’s fourth biggest democracy, and fifth biggest country -- behind China, the rest of India, the United States, and Indonesia. It is bigger than Brazil, Mexico, Russia, or Japan.

Elections here are the most significant in India, other than national parliamentary elections (currently slated for 2014). They directly impact national politics. UP’s members of India’s national parliament take up eighty-five of the 543 seats. Regardless of party, they pay careful attention to the mood of the state’s electorate. If the nation’s governing parties do well in UP, members of parliament feel compelled to stay in line. If opposition parties do well in UP, look for more gridlock in Delhi.

Since UP is the poster child for many of India’s economic and social challenges, outcome here said a lot about how India’s voters will let their leaders view the world. Though foreign policy rarely enters discussions in UP, if voters here are restless, leaders in Delhi may feel constrained to domestic affairs.

UP’s cultural riches are abundant. The holy Ganges River snakes across the length of the oblong state. It is the home of the holy city, Varanasi – a major pilgrimage center for Hinduism, Buddhism and Jainism. UP also has the Taj Mahal – India’s global icon, built by the Moghul (i.e. Muslim) Emperor Jahan.

But despite its treasures and diversity, poverty in UP is endemic and grinding. It may be one fifth of India’s population, but it contributes less one tenth of India’s GDP. Once-proud textile factories have shuttered. Nearly two-thirds of the state is rural, and the average person lives on less than $2 a day. The question for UP is not how to catch up to the economic powerhouses of Maharashtra, Tamil Nadu and Gujarat. Rather, it aspires to be a middle tier state such as Andra Pradesh and West Bengal. Right now, ambitious people in UP move elsewhere in India; their remittances an important source of income back home.

UP’s second challenge is social. Poverty here is superimposed upon one of the most deeply engrained caste systems in all of India. And like caste, religious conflict here remains barely below the surface. The city of Ayodhya has become a symbol across India of Muslim-Hindu tensions. In 1992, a Hindu rally turned into a riot that completely demolished a 16^th century mosque, which was thought to have been built at the birthplace of the Hindu Lord, Ram. The 2002 Gujarat riots were sparked when 58 Hindus were killed on a train returning from a pilgrimage to Ayodhya.

In these elections, social issues dominated. The defeated Chief Minister, Kumari Mayawati, and her party – Bahujan Samaj Party, or Majority People’s Party – aim to represent those who have been “vanquished, trampled upon and forced to languish in all spheres of life.” That means Dalits (untouchables), other backwards castes (literally called “OBCs”), and religious minorities.

Mayawati is herself a Dalit. She won a landslide here five years ago, promising to transform the state. For the first time, Dalits had their own Chief Minister. It is hard to overstate the psychological impact on a population that had suffered generations of both abuse and neglect. Her 2007 election was as meaningful to lower castes in Uttar Pradesh as was Barack Obama’s to African Americans – if not more so.

It was also a watershed moment for governing the state. No party had owned an outright majority in the state assembly since the mid-90s. Now, Mayawati was firmly in charge. In the words of Brown University’s Ashutosh Varsheny, she had an “opportunity to combine the politics of dignity … and the politics of economic development.”

Mayawati’s face is everywhere. She is ubiquitous in the newspapers, TV news, and daily conversations across the country. She went on a spending spree, building hundreds of statues (including of herself) across the state as a symbol of the rise of the untouchable class. She also built roads and hired 100,000 teachers. Over her five years in office, UP posted 7% economic growth, just below India’s average.

Still, her opponents reminded voters that UP state has not advanced on the UN’s human development index. Mayawati herself is regularly accused of corruption.

Campaign news coverage mostly focused on Mayawati’s fight with Rahul Gandhi, who was auditioning to be the face of the Congress Party. Rahul is the Harvard educated son of the current Congress Party chief, Sonia Gandhi. Rahul’s father (Rajiv), grandmother (Indira), and great-grandfather (Nehru) all have been prime-minister. Someday he could become the first successive fourth-generation prime minister in any modern democracy. Mayawati taunts Rahul, calling him “the Prince.”

Though Congress has run the country since 2004 (and for much of India’s history as an independent country), it has lost its way lately – and has not governed in Uttar Pradesh for two decades. In the state, a succession of upper-class (and upper-caste) Congress Party leaders ignored the lower castes. Other states moved ahead; Uttar Pradesh fell behind. The BJP and then the Socialists rose to power in UP. Mayawati herself sprung from the Socialists, and sharpened her message to appeal to the lowest castes.

Rahul went negative, attacking Mayawati as all symbolism, with no economic gains and lots of corruption. But he also played his own form of identity politics, filling the slate of Congress candidates in UP with Muslims, Dalits and other backward castes.

Rahul Gandhi’s challenge to Mayawati was not just about how she runs the state. He was also making his debut, and trying to give new birth to the Congress Party’s brand. Since great-grandfather Nehru’s time, Congress has appealed to “all India” regardless of language, religion, caste, or class. He was trying to revive Congress’s role as India’s unifying national party. His failure to do so is already interpreted as a sign of stalled momentum in the run-up to the 2014 parliamentary elections.

The big winner yesterday was the Socialist Party, which won an outright majority. Its new face is Akhilesh Yadav – himself the son of the founder of the Socialist Party and a former Chief Minister of UP. In many ways, the elder Yadav built the Socialists as one of the original regional parties – focusing on the decline of India’s northern industrial base under Congress Party rule. But the Socialists also were notoriously corrupt, and were beaten badly by Mayawati’s break-away faction.

So Akhilesh Yadev, like Rahul Gandhi, is attempting a generational overhaul. Unlike Rahul, who attacked Mayawati, Akhilesh’s campaign was relentlessly positive, focused on a simple message of economic development. Where father Yadav was anti-technology, Akhilesh promised to give every student a laptop. He ran his campaign on Facebook, Twitter, and call centers. He appealed at once to farmers directly, and also to aspiring urban youth.

Akhilesh also continued the Socialist’s traditional outreach to Muslims, with which it ranks high. But unlike Rahul, he didn’t promise party offices, but simply that development will lift all boats. His message: how you feed yourself is as important as how you see yourself. He also has been expelling party goons left and right, sending the message that this is not just his father’s party. Unlike Rahul (whose many believe aspires to be Prime Minister), his vision is largely confined to UP.

The fourth major party, the BJP, also contested in UP, and also beat the Congress Party. Given the importance of Hinduism in UP – not to mention the importance of UP to Hinduism’s history – the BJP is surprisingly weak here. The party’s appeal has largely been to upwardly mobile upper caste Hindus. Elsewhere, the BJP (and conservative Hindus) have benefited from economic liberalization. Here in UP, that success has not trickled down to the lower castes.

With national elections about two years away, the BJP wanted to show that it can again be entrusted with both economic growth and social harmony. That means playing it cool this time around, fighting for incremental gains, and potentially gaining a brokering role in UP.

Sorting out the national significance of the election results will consume the Indian media for the coming weeks. In particular, the spin-cycle has begun about what this means for Rahul’s future.

The deeper social and economic dynamics may be more important. Many have argued that Mayawati’s rule was a necessary moment for UP, Dalits have had their day in the sun, and now it’s time to move on. But Mayawati’s defeat does not mean that identity politics are dead. Dalit dignity is established, and they are now an electoral force that can no longer be taken lightly. But in the cultural heart of the country, it could also be true that economic development has begun to trump identity politics.

Authors

William J. Antholis

Politics in Tamil Nadu, India: Jayalalitha Strikes Back

William J. Antholis — Fri, 24 Feb 2012 00:00:00 -0500

Tamil Nadu is widely (and correctly) regarded as laid-back, affluent, literate and peaceful. That is, until it comes to politics. In fact, no state beats Tamil Nadu for sensational, flamboyant and cinematic political battles.

If a movie were to be made about today’s politics in Tamil Nadu, it might be called:" Star Wars III: Jayalalitha Strikes Back."

Film-star turned politician, J. Jayalalitha was voted back in to the job a year ago for her third turn at the job. She thumped her arch-rival M. Karunanidhi — himself a former film star and producer and a five-time Chief Minister. Star Wars, indeed.

Jayalalitha rode the wave of public outrage at the enormous 2G scandal that has rocked all of India.[1] Karunanidhi’s DMK party and his family were at the core of the scandal. India’s telecommunications minister, A Raja—a Tamil and DMK stalwart—was arrested in 2010, allegedly for overseeing a rigged 2G spectrum auction. The winning bids came in almost $40 billion below fair market value. Karunanidhi’s own daughter was also charged, and spent six months behind bars. Both are awaiting trial. The Congress Party in Delhi was rocked by the scandal, appearing to tolerate the corruption of a key coalition partner.

Jayalalitha swept into power, and has focused on sweeping out all vestiges of DMK rule. Her first target was the newly constructed state legislative assembly and government building. Karunanidhi had built the modernist $200 million capital in the middle of a faded yet bustling downtown Chennai. He’d rushed to open the office complex before the 2011 state elections. Prime Minister Manmohan Singh and Congress Party chief Sonia Gandhi had both flown to Chennai for the ribbon cutting.

Jayalalitha took pleasure not only in defeating Karunanidhi, but also in undoing his extravagance. The entire government and all legislative assembly members moved back to Fort St. George—the old, faded colonial-era government buildings along the waterfront. The lavish new complex will be converted into a public hospital and a medical school. In a single scene, Jayalalitha provided health services and higher educational opportunities for the people, and also demolished Karunanidhi’s monument to himself. Back in Delhi, the Congress Party has gotten the message: Jayalalitha should not be taken lightly.

Indeed, she seemed to relish in the comparisons with Congress Party Chief, Sonia Gandhi. Like Mrs. Gandhi in Delhi, Jayalalitha herself welcomed Secretary Hillary Clinton to Chennai last year. The two chatted about Sri Lanka and other South Indian concerns, such as high-tech and foreign investment. Though Jayalalitha’s own views on foreign policy are still forming, her friend and advisor Cho Ramaswamy considers her to be a nationalist, who is starting to see the benefits of a strong relationship with the United States.

If Jayalalitha’s grandstanding were all theatrics, it might be bad for Tamil Nadu. But, in fact, she seems committed to making a difference. She consistently targets the huge deficits run by Karunanidhi, and has began to tackle subsidies that were draining public coffers. She surprised many in 2011 by actually raising bus and milk prices. She has committed to increases in education spending, including providing laptops for all students in 10^th-12^th grade.

Jayalalitha’s next step appears to be tackling Tamil Nadu’s huge infrastructure deficits that have slowed its otherwise impressive decade of growth. Since my first visit to Chennai in 2001, the state has experienced over $130 billion in investment, in both manufacturing and in software services. The region also has leveraged its great universities, its port and its quality of life to attract $5 billion in foreign investment, particularly in manufacturing. Ford and Hyundai and Nissan and Renault all build cars there.

But many have come to question is whether Tamil Nadu can keep up with Maharashtra and Gujarat. “Many investors are playing arbitrage with the big three states … and Tamil Nadu is starting to lose,” one investor told me privately. And that’s where the state’s infrastructure gap comes in.

The need for better roads, sewers, water, ports, and electricity are apparent to all. In January alone, Jayalalitha announced several infrastructure investment initiatives. The city hosted a smart growth conference. A new bus rapid transit system is being planned. And later this month, Jayalalitha herself is expected to launch “Vision 2025” —a planning document that would outline as much as $30 billion in public investment over the next decade.

Investors are watching closely. Of particular interest is electricity. “Gujarat is killing us on power,” one Tamil Nadu state official told me.

In the neighborhood where I lived—the upscale urban village of RA Puram—the power went out every day at 2 pm. The outage was always brief—whether I was at our cottage, or a private home, an office, a restaurant, or a hotel. Within seconds, the back-up generator would kick in.

Tamil Nadu is not alone, of course. Across India, power remains caught between private investors and government regulations and subsidies. The national government remains committed to subsidized electricity for poor farmers. In practice, free “agricultural” power is abused, and prices are kept artificially low for the other power. That means that state power corporations eventually run out of both money and fuel. They are forced to ration energy to all customers. And most industries and wealthy households have to go on international markets to buy fuel for back-up generators.

Still, Jayalalitha has pledged that she will tackle this set of issues. One energy investor gleefully reported that they were expecting Jayalalitha to raise prices by as much as 40%—allowing investment to finally turn a profit.

But while she has said she would reform the electricity sector, she has been cautious on one major decision that could provide power to the state. Nearly 400 miles south of Chennai, at the tip of the Indian subcontinent, sits the nearly completed Russian-built nuclear reactor at Kudankulam.

If the reactor goes live later this year, it would provide 2,000 megawatts of electricity. The central government holds authority over nuclear energy and has built and paid for the reactor. Yet Jayalalitha holds the final approval on opening the facility. It would appear to be a quick and easy decision for her (even if the reactor itself was over 25 years in development.)

Still, Jayalalitha has proceeded with caution. She has instead backed the protests from local fishermen who fear “an Indian Fukushima,” in the words of Mahatma Gandhi’s grandson. While several experts have vouched for the reactor’s safety, south India was hit hard by the 2006 Tsunami. Having a reactor sitting on that very coast stirs fears among the locals.

Many observers think that Jayalalitha will ultimately concede to the math of economic development—and also use the controversy to extract additional concessions from Delhi. The biggest cost to her is to appear to value the energy-hungry industries in Chennai above the environmental safety of near-subsistence fishers in south Tamil Nadu.

By all accounts, the chief minister possesses a sharp mind, and prides herself on asking hard questions, making quick (though not impulsive) decisions, and being a prudent administrator. While not a technocrat, she does take the merits of arguments seriously—both the policy merits, and the political merits.

Still, many officials in her own government wonder if she has the attention to detail needed to keep up with other fast-growing states. Ministers and bureaucrats have been reshuffled on a regular basis—including the recent banishment of her closest political advisor. Whether she has done that to root out corruption or to sideline potential rivals remains unclear.

But if the legacy of “Jayalalitha III” really is going to be that of good governance, she will have to do something few Indian political leaders have done. She will have to not only get rid of corrupt enemies and friends. She will have to not only make tough policy choices. She will also have to invest in the capacity of her own party members and in the state bureaucracy.

The title for that film, if she chooses to make it, might be: "Star Trek: The Next Generation."

[1] Jayalalitha’s AIADMK party actually slated a smaller number of candidates in 2011 than they had five years earlier, but they won an enormous percentage of seats. For a thorough, and somewhat contrary analysis, see N Gopalaswami & Praveen Chakravarty, “The myth of the astute voter,” Business Standard, May 23, 2011.

Authors

William J. Antholis

Mumbai Elections: How India’s Regional Politics Affect the Country’s Future

William J. Antholis — Wed, 15 Feb 2012 17:45:00 -0500

This week, I will profile India’s three most important states. Maharashtra, Tamil Nadu and Gujarat are as different as New York, Texas or California. In fact, since each state has its own official language, the better comparisons may be with England, France and Germany. Their chief ministers are no more alike than Andrew Cuomo, Rick Perry and Jerry Brown—or Nicholas Sarkozy, David Cameron, and Angela Merkel.

Friends and "frienemies": Maharashtra is India’s richest and most important state. With over 100 million people and the highest GDP per capita of a major state, it spans the full range of India’s industrial, rural, and cultural diversity.

Moreover, its capital, Mumbai, is India’s largest, most cosmopolitan, and most complicated city—an all-in-one financial, manufacturing, and entertainment capital. Scores of Indian companies headquarter here. Mumbai is New York, Los Angeles, and Miami rolled into one. Only New Delhi comes close in importance.

Prithviraj Chavan, a Berkeley-trained engineer, is Maharashtra’s Chief Minister. He is the ultimate manager, appointed his post a year ago by Sonia Gandhi's Congress Party. In New Delhi, he successfully ran key national ministries such as atomic affairs, personnel, scientific affairs, and parliamentary affairs.

Now Chavan is back in Mumbai. He must wake up each morning wondering what he did to deserve this job. For all of his hometown’s riches and charms, it faces immense challenges: insufficient roads and sewers, and an insatiable thirst for water and power. Those deficits are compounded daily by a fast-growing population. Mumbai has about 12 million people in the city itself, and about 30 million in the metro region.

While Chavan is well-regarded by business leaders and academics, he inherited a nearly impossible job. In the capital city alone, he is a technocrat fighting a war against not one, but two political machines. That two front war will witness a critical battle tomorrow: the Mumbai Municipal elections.

The first front is with Mumbai’s Municipal Authority, currently run by the Shiv Sena party. Chavan's Maharashtra state headquarters are less than two miles from the Mumbai Municipal Authority, both a short walk to the iconic Gateway to India. But the two governments might as well be on different ends of the country. In fact, being farther apart might be better for the city and state.

Mumbai city and Maharashtra state battle over education, infrastructure, and public housing—the last item being crucial in a city with over 8 million living in slums. The Municipal Authority is controlled by the party boss Bal Thackeray, and his son Uddhav, who have ruled the city for two decades. They built their machine to fight the influx of non-Maharashtrans who flooded into the city’s slums. “Hordes of people are coming in,” Bal Thackeray recently told The Hindu. “Who will provide them amenities?”

Shiv Sena and their allies in the BJP have built their party on explicit appeals to the “Hindu civilization”—similar to the emphasis on “Western Civilization” or “Judeo-Christian values” at the center of American conservatism. The Shiv Sena also consistently argues against New Delhi, and argues for local control in decision-making, administration, and taxation.

Under Shiv Sena, local rule has been a mixed bag in Mumbai. It’s most recent accomplishment is the new Sea Link bridge that connects the northern suburbs to the financial and business districts, cutting a half hour of travel. On the other hand, Sea Link (and many other) projects have been notorious in failing to meet deadlines and failing to match their projected budgets. Government contracts regularly go to friends of the Shiv Sena.

The winning bids are preposterously low—so low that they could not possibly meet the specifications appropriate for the road or bridge in question. That leads most outside observers to suspect a bribe was also paid. So when the projects are then implemented, they come in way over budget. The city of Mumbai ultimately has to come back to Maharashtra or to Delhi to bail them out.

So Chief Minister Chavan is trying to beat the Shiv Sena based on a platform of cleaning up corruption. He is promising better administrative performance, especially on infrastructure. He also is targeting the non-Maharashtrans who have moved into the city slums. His big promise: greater and faster access to public housing.

The population in Dharavi—the place made famous by Slumdog Millionaire—are the emerging swing voters of Mumbai. Like the ghettos of New York in the early 1900s, many Dharavi dwellers have moved here to live and work—something my 9 year old-daughter could glimpse in a recent visit. Dharavi residents are not resigned to their fates. They are upwardly mobile. They wait for permanent housing, and hope for clean water, sanitation, and electricity. In appealing to the slum-masses, Chavan and his party argue that the state is a more capable and inclusive administrator than is the corrupt Municipal Authority.

If politics were only about wrestling with Mumbai city, Chavan might be able to muscle through. Instead, he also wages a battle with his own coalition partners in the state legislature. Chavan’s Congress Party controls 82 seats (21%), and forms a coalition with the break-away National Congress Party (NCP), which controls 62 seats (16%), as well as a number of smaller parties. Moreover, the Congress Party also needs NCP votes to form a government in Delhi. Though the NCP provides only 9 out of 262 votes in the national governing coalition, that is a critical block.

The NCP's boss is Sharad Pawar—a sugar magnate from Pune, and a former Chief Minister of the state. Pawar is happy to wield the enormous power that his NCP votes bring. In Delhi, he traded in his 9 votes in parliament so he could hold the post of Agriculture minister. In that job, he has gone slow on liberalization of farming—much to the chagrin of domestic and foreign investors in Mumbai who want to develop India’s agricultural riches.

In Maharashtra, Sharad Pawar also wields power. His nephew, Ajit Pawar, is the Deputy Chief Minister. His portfolio includes responsibility for finances, giving him an effective veto over anything Chavan wants to do. Like his uncle, Ajit has been deeply involved in agricultural issues. So while Chavan might fight to reform the power or water sector to help in the development of urban areas, the Pawar family will fight to make sure that agricultural interests are not ignored. In a state where about the half the people are still rural, that means steering resources to the countryside.

Given that tense alliance, every state or national election provides the Congress and NCP an opportunity to reset the balance. In advance of municipal elections in Mumbai, for instance, Sharad Pawar has enjoyed reminding voters that Chavan “has not been elected directly by the people.” Pawar taunts Chavan regularly, bragging that the NCP does not “look North [to Delhi] for directives.”

"The Congress Party is destined to fight an endless battle to defeat its friends," explained the great columnist and editor, MJ Akbar (and a non-resident Brookings fellow). The fighting doesn't end, since relative weight in state and national voting bodies is critical for how far any government leader can move an issue—whether it is reform of power, or water, or roads, or housing, or education.

How Chavan navigates these friends and ‘frien-emies’ will go a long way in determining the future of India's most important state and city. A strong Congress Party showing on Thursday would indicate that good governance may be a winning message with a rising working class, in Dharavi and beyond.

Once the municipal elections are over, however, Chavan’s attention will turn to national elections, which could happen as early as next year. And Chavan will naturally be pulled away from Mumbai, and will have to focus on the poorer, more agricultural parts of the state.

So if Chavan is going to follow through on his promises to Mumbai, he will have to empower—or more accurately, liberate—local authorities to act on his promises. That will mean doing something that few Chief Ministers have done in the past—building up real capacity at the city and neighborhood level.

If he doesn’t do that, then Indian politics may really resemble cricket, where the batters stay the same, but just keep changing places.

Authors

William J. Antholis

Image Source: William Antholis

India's G-7: Local Leaders with Global Interests

William J. Antholis — Mon, 06 Feb 2012 00:00:00 -0500

For a quarter century, the G-7 ruled the planet. From the mid-1970s to the late 1990s, leaders of the world’s seven top democracies would meet once a year to manage global affairs. They calibrated exchange rates, printed money, provided more development aid, imposed sanctions against outlaw nations, and issued political declarations. They even effectively went to war in Kosovo. The group eventually added Russia, and morphed into the G8. Then China, India and ten other countries were brought in to form the G20. But for years the G-7 was a compact, select, and like-minded body of advanced market democracies that led the pack.

India has a G-7. And to a large degree, those states rule this country. India’s seven biggest states have about 736 million people — just shy of the G-7’s current 746 million. At current population growth rates, those seven states will likely surpass the original G-7 in the next 3 or 4 years. The seven largest economies in India (a slightly different group than the seven largest populations) make up over 50% of India’s GDP — about $800 billion USD. At expected growth rates (between 7% and 9% per year), they will lead India past most of the traditional G-7 nations.

What are the seven most important states in India? And who are their leaders? This is an admittedly arbitrary exercise. But it is also instructive. My choice would combine population, economic size, and economic productivity. Population is critical, since influence in Delhi depends on how many parliamentary votes one controls — or one could control. But economic productivity also matters — overall GDP, as well as GDP per capita and the rate at which economies are growing. To that end:

State	Chief Minister	Pop (mn)	GDP ($US bn)	GDP per capita ($USD)	Pop % Rural	Growth (2010-2011)
Uttar Pradesh	Kumari Mayawati	200	128	640	78	7.0
Maharashtra	Prithviraj Chavan	112	224	2,000	55	8.1
Bihar	Nitish Kumar	104	46	442	89	9.3
West Bengal	Mamata Banerjee	91	96	1,055	68	8.4
Andra Pradesh	N Kiran Kumar Reddy	85	123	1,447	67	5.7
Tamil Nadu	J. Jayalalithaa	72	119	1,653	52	9.4
Gujarat	Narendra Modi	60	104	1,733	57	10.2

Each of the seven chief ministers listed above is a major force in India. Open any newspaper or magazine on a given day here— in any city — and you are likely to see at least three of them, and sometimes as many as five. Unlike the G-7, they never meet as a distinct group. But, as the saying goes, what happens in Bihar doesn’t stay in Bihar. Politics in each of these places has real national and international impact.It is easy to cluster them into three categories.

First is “old India”— embodied in the poorer states of the “Hindi-belt” in rural North India. Here, politicians aim to out-deliver for the poor. Kumari Mayawati, from massive 200 million-strong Uttar Pradesh, aspires to be the voice of the most downtrodden. Next door, in the even poorer, caste-divided, land-locked state of Bihar, Nitish Kumar has made it hip to be square. He has brought a nerd-like focus to social and economic performance.

Second are the newly emerging industrial engines of India, where GDP matters. Narendra Modi, from mid-sized Gujarat (a mere 60 million people), leads the pack. Modi combines machine-like efficiency with charismatic (and many say destructive and divisive) nationalism. In sharp contrast is J Jayalalitha from Tamil Nadu— the South Indian film-star turned FDI queen, who spends considerable time courting multinationals to build cars and cell phones on the outskirts of Chennai. And technocratic Prithviraj Chavan has just taken over Maharashtra —the manufacturing and financial capital of the country.

Finally, straddling these extremes are states such as Andra Pradesh and West Bengal – each of which is bigger than Germany but as poor, per capita, as Nicaragua. Chief ministers in these states have learned the hard way that the rural poor may not be ready for a full-speed-ahead embrace of globalization. Globally-focused cities such as Hyderabad and Kolkata have prospered in recent years, but politicians have not necessarily benefited. Over two-thirds of the people in these states still live in the countryside, and they have made their voices heard when they’ve felt ignored.

How chief ministers balance local and global forces has a real effect on national politics. Chief ministers have significant influence over the members of parliament from their party who are sent to Delhi. And many of them secretly or openly aspire to be prime minister some day.

If a chief minister such as Mayawati is in a coalition with the governing party in Delhi, she can use her block of parliamentarians to extract promises or resources from the governing coalition. That includes messing with complex international decisions such as the rules on foreign investment.

If a chief minister, such as Modi, is from a party that is out of power in Delhi, his efforts at the state level can contrast with or even undermine efforts of the central government. That can include bucking national bureaucrats in attracting foreign investment or damming rivers, or regulating power. It also can mean condoning anti-Muslim sentiment that complicates India’s tense relations with Pakistan.

Some are “managers.” Some are “mission-driven.” Some are “populists.” Three of these seven chief ministers are women — each of whom found a different path to power in a male-dominated country. In contrast to the Delhi-based managers who have run the country for sixty-five years, the new breed brings a feel for local politics. But they also have distinct views of the international economy will transform India — for better or worse.

Over the next several blog posts, I will try to sketch who these people are, how they see the world, and where they are taking India.

Sources:

Population and rural/urban population totals: Government of India, Ministry of Home Affairs, Office of the Registrar, Provisional Population Totals 2011, http://censusindia.gov.in/2011-prov-results/paper2/prov_results_paper2_india.html

GDP for states and per capital GDP: Unidow, VMW Analytic Services, Economy of the Federal States For Year 2011 & Population for Year 2011. These figures are in nominal GDP, as opposed to Purchasing Power Parity, which would probably be considerably higher.

Growth rates for states: State Planning Commission of India, Per Capita Net State Domestic Product at Constant (1999-2000) Prices (as on 25-10-2011), http://planningcommission.nic.in/data/datatable/0211/data%20100.pdf

Authors

William J. Antholis

Obama, South India, and the High Ground of High Tech

William J. Antholis — Tue, 31 Jan 2012 00:00:00 -0500

Much of South India watched President Obama’s State of the Union last week ... live at 7:30am on a Wednesday morning. Many groaned when the president called for efforts to limit outsourcing. But others sensed that the president was ready to open America’s doors to tourists, foreign students, and fledgling entrepreneurs.

If the president does move on immigration, one audience in Chennai will certainly feel the impact. They're not Indians. They are a small group of Americans working here, on the front lines of globalization. Fourteen U.S. visa officers — our best and brightest young diplomats — are serving here on one of their first tours of duty. The current class includes several who started their careers as lawyers, professors, and IT professionals.

Each visa officer interviews over one-hundred South Indians a day. “While three of us conduct traditional diplomacy, more than two-thirds of the consulate staff issues visas,” says Matthew Beh, the senior political reporting officer at the Consulate. “And it doesn’t cost the taxpayer a dime. In fact, our team turns a profit for the American public.” Like most senior diplomats, Matt started out as a visa officer.

Depending on how you view the global economy, the U.S. visa officers stationed in Chennai are either sentries or synergists. In one view, they are protecting American workers in a flat world where computer chips and container ships make jobs magically disappear. In the other view, they are helping to build live human bridges that span borders and connect hills of innovation. In reality, they are both.

About 40% of the visas issued here are for tourists and students. In two minutes or less (on average), a consular officer must determine whether or not someone is legitimately going to stay for three weeks with their aunt or uncle in Michigan, or whether or not they really are attending MIT or UNLV. A nervous glance, stutter, or twitch might indicate that, in fact, they hope to indefinitely stay to work in a motel chain in South Florida.

More than half of the processed applications lead to interviews that last much longer— as long as seven or eight minutes. These are for the coveted high-skills temporary work visas. India's best and brightest line up and pay hard currency for the famous H1-B-visa (special skills), and the less well-known L-visa (intra-company).

Unlike tourist or student visas, the "non-immigrant work visas" lead directly to a well-paying job —especially by Indian standards. A mid-level programmer in India makes about $15,000 a year. The same position in America will earn them five or six times that amount.

Of course, that causes many Americans to fear that Indians are taking their jobs. So visa officers have to determine whether theapplicant has “special skills” required by the H1-B and L-visa regulations.

South India leads the world in sending high-tech workers and entrepreneurs to America. Last year, Indians received 53% of the roughly 200,000 temporary U.S. work visas issued worldwide. And a full half of these H1-B and L visas granted to Indians — over 25% of the global total — came through the United States Consulate here, which covers Chennai and Bangalore. Last year, South India sent twice as many high-tech workers to the United States as did all of China.

Many visa officers in Chennai were stationed here precisely because they had IT sector experience before joining the Foreign Service. In fact, one of them was born in Bangalore and came to the US on a student visa before going into IT work. He then became a citizen, married, and joined the Foreign Service. He and his colleagues are pretty tough judges of whether to grant these visas, especially if there are Americans qualified for the same position.

Yet visa officers are not just sentries. They are also potentially synergists. When they do their job well, they clear the way for Indians who bring high-tech dynamism to the U.S. economy. At first, these workers might get paid less than an American with similar skills. But that salary will be earned in the United States, not in India. That higher salary will be spent in America on food, real estate, health care, cars, and taxes. Moreover, by bringing in the best and most entrepreneurial of Indian talent, any single one could become the next Vinod Khosla — the famous Indian-born Silicon Valley engineer and venture capitalist behind some of the biggest breakthroughs in computing.

One South Indian entrepreneur made the case to me quite succinctly: “We are accustomed to talking about trading goods and the movement of capital. But there is a new world of trade—the ability of our ideas and our services and our people to move about the planet.” This gentleman should know. Born in Chennai, he received his masters and doctorate degrees in the United States in aerospace engineering, and spent 17 years in Michigan working for the research unit of an American auto company.

Now he is back in Chennai, working on various joint-ventures with western companies on advanced technology manufacturing. He also sits on the global technology advisory council of a major American manufacturer, where he preaches the importance of innovation in products and processes.

These businessmen make you realize that the world is not simply flat. In a flat world, information workers would just stay back in Chennai and Bangalore and send their services over the internet. In today’s hilly world, place matters.

It is one thing to say you work as a programmer for Infosys or Cognizant in Bangalore. It is another entirely to say you spent three years working for them in New Jersey or Boston, or went to the Bay Area to work for Intel or Cisco or Google. Or that you got your degrees at Princeton and Michigan.

Indeed, the battle is not between India and the United States, or even all of India and all of the United States. Chennai and Bangalore work with the Bay Area, Boston, suburban New Jersey, or central Michigan. Key industries from each of those places are doing battle with forces in their own societies who are opposed to expanded opportunities for people to cross borders, provide services, and share ideas face-to-face.

President Obama’s tough talk on outsourcing seems balanced by an understanding that the mobility of minds and bodies can bring value to the U.S. economy. Expanding these opportunities would mean that the high-grounds of high-tech would become better connected.

Authors

William J. Antholis

In India, Two States, but One Nation

William J. Antholis — Tue, 24 Jan 2012 00:00:00 -0500

Chetan Bhagat's, Two States: The Story of My Marriage, is a mega-hit pop-novel in India. Tamil girl (Ananya) meets Punjabi boy (Krish).

Two States is a not-so-subtle metaphor for how India becomes comfortable with internal cultural immigration and assimilation.

Imagine My Big Fat Greek Wedding, where a Greek boy meets a Finnish girl. Ok, that’s the story of my marriage. But recently Finland opposed bailing out Greece. The Finns have even suggested that Greece be kicked out of the EU.

So, in the Indian version, Ananya and Krish’s families also hate each other. But they eventually learn to tolerate, and even embrace, their differences.

When Krish moves to Chennai to court Ananya’s family (and work for Citibank), it’s the story of India’s “mosaic” — a Punjabi living in Tamil Nadu. Since India liberalized its economy, internal integration has accelerated. (Note: Krishna works for a U.S. bank.) And it’s not just rising young love-seekers like Krish in Two States. It is also hundreds of thousands — perhaps millions— of Biharis and Karnatakans and others migrating to Chennai, Mumbai, and Ahmadabad seeking day-labor work.

Bhagat points to this in the book as the wave of the future — and as something to be embraced.

As the father of the bride says: “When your child decides to love a new person, you can either see it as a chance to hate some people — the person they choose and their families. Which is what we did for a while. However, you can also see it as a chance to love some more people. And since when did loving more people become a bad thing?”

And then, (spoiler alert) Ananya gives birth to twins. The birthing nurse asks: “You are from two different states, right? So what will be their state?”

Krish responds: “They’ll be from a state called India.” In other words, like my kids (and most Americans), they’re mutts.

As I have heard in meeting after meeting, there are far deeper cultural challenges ahead for Indian national identity. India’s medley of languages, religions, castes, and classes are all are obstacles to a common identity. But after six decades, there is little doubt that a common identity does exist in the “new India”, even if it is always being contested by one narrower identity or the other.

On the one hand, that seems incongruous with the emergence of local control. At the same moment India is watering down local identities and creating a national one, it seems odd that they also are enhancing the control of local authorities. Or at least starting to do so.

But in a continent-wide federation, national identity is almost a requirement. Secession becomes much less likely when identity no longer conforms directly with geography. The rights of minorities — religious, ethnic, economic— can be less easily cast aside. So it just may be that India is now comfortable enough with a national identity that it is allowing local voices to flourish.

That was James Madison's vision for the U.S. Constitution in his Federalist Paper #10. Madison called for a continent-wide republic that would prevent hostile local "factions" (that is, state governments) either from oppressing or from seceding.

America’s challenge was that we started out with exceptionally strong states. Despite a common language and cultural heritage, as well as a short but sturdy constitution, our major flaw was that we lacked a national government. Madison wanted to shift some power from the states to the national government, but then in turn limit that central government with the separation of powers.

This included incorporating the echo of federalism in our Senate — equal representation for each state, regardless of size. Keep in mind, at the founding, Senators were elected by state legislatures. They were seen as Ambassadors to Washington.

The downsides of America’s “strong states” federalism have been obvious. The unresolved tension between the Federal government and the states was only finally settled by a terrible civil war. And even after the war, the Senate has been the “cooling saucer” (in Madison’s phrase), giving small states leverage in legislation—especially treaties. That has limited America’s ability to act on a range of national and international priorities.

But the positives also should not be forgotten. Strong state governments have left a legacy of local control that has led to (relatively) productive city and state political systems. States are the laboratories of democracy. And they groom national leaders in both political parties.

India is now experimenting with moving in that direction. Fearing secession, oppression and civil war, Nehru built a very strong and authoritative central state. Now, after six decades of mosaics and cultural melting, the question is not whether to empower states. The question is how, when, and over what issues should authority be returned to Indian states and cities.

Authors

William J. Antholis

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