Beyond Capital

Polemics, Critique and Analysis

Archive for February 2006

Bush’s Passage to India: Why Does India Carry His Water?

leave a comment »


A few days from now, Bush will go to India and reaffirm his newfound love, becoming the only Republican President to visit India after Nixon. Bush and his ‘mouthpieces’ are quite vocal about their need of India – to compete with the EU, to check China, to control unpredictable regimes and to expand the war on terrorism etc. But it is quite interesting to note how India’s consistent positive response to these advances is generally taken as paradoxical, or else simply as succumbing to ‘external’ pressures. However if we take notice of the transformation of Indian capitalism and of the aspirations of the Indian ruling class, we can easily find the reason behind this mutuality.

India has already expanded its interests beyond South Asia and other neighboring economies. It has business assets and interests to secure both in developed and underdeveloped worlds. In fact, Indian capital has been ‘flying’ through legal and illegal routes since 1956 when the Birla group of companies made a large-scale investment establishing a textile mill in Ethiopia. In the late 1970s-early 1980s, the phrase “third world multinationals” was popularized to differentiate them from the first world multinationals. It was generally perceived that unlike the latter, which were motivated by the firms’ internal growth process, third world multinationals were products of demand-side bottlenecks, the statist restrictions on monopolistic and trade practices, other imperfections and distortions created by the state and political forces. This argument is negated by the fact that the companies going abroad where mostly those who had profiteered in the phase of ‘interventionism’. They were firms having “a diverse and established presence at home”. As one scholar from that period, Rajiv Lall noted in his study “Multinationals from the Third World: Indian Firms Investing Abroad” (Oxford University Press, 1986): “These firms tend to be part of large industrial houses with a conglomeration of holdings that give them an imposing rule in the Indian market.”

However, until 1978, majority equity participation in firms abroad was generally prohibited. Despite this, the Indian firms investing abroad managed to retain management control. After that, the pace of capital export has been unceasingly maintained, with its tremendous unimpeded nature in the post 1991 phase. The post-1991 scenario has rendered new directions to the Indian “export of capital”. The State itself has emerged as a leading segment in this trade, concentrating on sectors that allow a smooth process of capital accumulation domestically and internationally–energy and finance, being true to its role of expressing the general conditions of accumulation and devising overall economic strategy.

The energy requirements of India’s economy have been constantly increasing and as a result indigenous corporate oil interests have evolved, which initially were restricted to brokerage in export and import. But as the regulation for the outflow of Indian capital for investment and acquisitions abroad has been eased out, there has been heavy investment to ‘proactively’ secure energy supplies from abroad. Indian oil companies, especially, Oil & Natural Gas Corporation­Videsh Ltd (OVL), are acquiring assets in oilfields in Russia, Latin America, the Middle East and ex-Soviet Central Asian republics. India is particularly using its erstwhile non-aligned image to gain access to the African oil and gas fields – Chad, Niger, Ghana, and Congo in particular. In Sudan, it has already made its largest investment acquiring the assets from a Canadian company, which left Sudan after human rights organizations charged it of committing genocide in Darfur region. On this front, once again, China is India’s main competitor and collaborator, as both have been trying to ‘secure their energy supplies’ in the context of bigger players.

One may point out that these are still public sector endeavors. However, on the contrary, there have been increasing efforts to open up India’s energy market for private investment, and domestically it is already in place now with Reliance Industries Ltd (RIL) and other private corporates expanding themselves in petroleum and power sectors. Further, at the present fluid state of India’s capitalist expansion, the public sector leadership provides a systematic character to the expanding tentacles of Indian capitalism. Because of the specific character of property relations and rent system involved in it, the oil sector is totally different from other industries and requires state-to-state relation for any negotiation to succeed. In the present state of uncertainty in the energy sector internationally, even if India further liberalizes this sector, its international expansion will remain largely a government affair. Further, especially after 1991, state companies in India have been increasingly corporatized, independently competing for the access to finance and capital markets, and strategizing on their own expansion. The corporatist character of the state-owned enterprise brings together several individuals, having interests and aims distinct from the State, who make contributions during the course of development of the enterprise in the capacity of managers and investors. The State is only the initial investor of the enterprise, while its subsequent expansion is dependent on factors internal to it and its presence in the market. Eventually the state’s ‘share’ is effectively reduced, and the enterprise acquires an independent character similar to the private sector. This leads to crises–on the one hand, the state and the managers are frequently in conflict, and on the other, the state control is de-legitimized.

In fact, the crisis is already evident in India. The Indian government and the managers of its Public Sector Undertakings (PSU) are increasingly at loggerheads over risk assessment etc. For example, OVL’s commitment to corporatism and market is coming increasingly in conflict with its political directors. Recently, OVL had successfully bid a 45 percent stake in a Nigerian oil and gas field. It was the only case where it could beat the Chinese. But in the end it had to face, as some OVL officials put, “a huge embarrassment” and “a loss of credibility” because the government turned down its proposal at the very last moment on the ground of it being “risky”. This must be understood in the context of the political debate over divestment in the profit making PSUs. It remains a very contentious issue. Moreover, the left support to the present Indian government has moderated the Indian state’s intensive neo-liberalism, scuttling its recent vigor. Therefore, it needs to put stop to the statist expansion in the energy sector by other means, by playing the political game of calling the investments risky, and motivating the private corporate sector to come up. Besides this, a private-public partnership in the energy sector is already in place, domestically with private oil companies like RIL, while internationally with “diasporic” capital like Mittals.

Recently, some analysts have argued that India’s expansionary involvement with oil-producing countries for securing energy supplies itself is risky as these countries are in conflict with the United States over human rights or non-proliferation issues. And the latter will tolerate India’s alliances only to the extent they are trade-focused. A “diasporic” apologist of the Indian submission to the “American Imperium”, Economist Deepak Lal (Business Standard, November 15 2005) argued that this risk “could involve not merely putting the “Gurkhas” on the oil field, but in essentially taking over the country”. Quite unabashedly, he argues, “If these foreign investments are to be made on a commercial basis by an Indian oil company, it would be best to privatize the state-owned companies and let them then decide whether such investments are in their commercial interest.” However, he concedes, “The Indian government could justifiably use its diplomatic clout to help [a private investment project] fructify”. Does not this diplomacy include an employment of “gunboats and Gurkhas”?

Besides energy, another sector where the “public” is supposed to be in command in India is the banking sector. Indian banks too have been buying assets in Africa and Asia. Significantly, this expansion is a typical case of what was classically conceptualized as “finance capital”–a merger of banking and industrial interests. These state-run banks have been providing financial resources to overseas Indian projects, both private and public. More importantly, they are involved in giving loans, credit lines and other financial helps to fragile economies for infrastructure building and other industrial projects on the condition that they will employ Indian firms. In other words, the banking sector expansion has been an important vehicle in exporting Indian capitalist interests overseas, and also reclaiming the Indian “diasporic” interests, as they are increasingly using these financial institutions to their advantage. The “public” nature of this expansion gives it a ‘systematicity’, which otherwise would have been lost in the global market. Further, it creates a direct linkage between the Indian state and capital.

However, “most outward FDI goes to the manufacturing sector, especially, pharmaceuticals”, and non-financial services that account for as much as 36% (UNCTAD, “India’s outward FDI: a giant awakening?”), and here it is the private sector that reigns. Definitely, whether “public” or “private”, they involve imminent “risks”. However, these risks can be India’s asset too. On the one hand, the unstable polities in countries hosting these investments legitimize India’s political intervention to secure its economic assets and interests. In the post-9/11 political parlance, this is what is termed as overseas “security interest” of a powerful country. The recognition of this ‘interest’, the ability to legitimize it by manipulating ‘global opinion’ and forming favorable international alliances constitute the criteria for becoming a power.

On the other hand, India’s mastery of ‘unreliable’, and ‘rogue’ polities, and its ability to forge indigenous clients in those polities make it a worthy partner for other global powers whose recent hyper-interventionism has reduced their own ability in this regard. Conflicts in Afghanistan and Iraq have further attested this inability of the US hegemony, at least–political forces against which wars were waged in these countries were erstwhile US allies. These conflicts are symptomatic of the crisis of the US hegemony more than the unipolarity of the post-Cold War era. Unlike the ideology of the “Soviet threat”, the post-Cold War ideologies of human rights and non-proliferation could not form the legitimate basis for forging international alliances, since the duplicity of the “global powers” on those same accounts are too apparent. In fact, the orientalist bases of these ideologies have further curtailed the First World’s ability to directly manipulate political forces in the “third world”. At this juncture, ‘mediocre’ powers like India could become relevant interfaces between the two worlds, for perpetuating and sustaining global capitalism and its political structure.

Answering some objections

There are two points that can be raised regarding the “export of capital” from India–that it is quantitatively insignificant, and that the biggest host of the Indian export is the United States and other First World countries.

Regarding the first point, the export is not so insignificant, as the ratio of outward to inward Foreign Direct Investment (OFDI/IFDI) is significantly high and increasing, amounting to around 20% in 2005, while in 1997 it was less than 6%. However, even if we concede this point what matters more is the ability and will of a State to defend the rising interests from this insignificant amount–how does this OFDI shape up the character of Indian capital and state, irrespective of its amount? How much it has affected India’s relationship with the Nepalese, Sri Lankan and other neighbouring economies and polities? How much it has defined India’s intrusion in the African economies (like Sudan, Libya, Nigeria)? How much it has helped in evolving India’s aggressive oil interest, especially since OVL has invested in many African and ex-Soviet Central Asian republics’, Vietnamese, even Cuban oilfields? How much it has defined the active Indian interest in the oil price war, in lowering the “differential oil rent” accrued by the oil economies, and hence how much it has shaped the Indian hobnobbing in the Middle Eastern politics, its vote on the IAEA resolution on Iran?

As far as India’s investment in the US, which hosts the largest chunk, is concerned, it makes the Indian economy (like many other economies) dependent on the ups and downs in the American market. Since Indian capital is just one of the many players here, the Indian state’s task as the protector of its capitalist class (Non resident Indian (NRI) or non-NRI) is to provide it an edge in the competition. This makes the Indian state, furthermore, subservient to global coalitions. On the whole, the OFDI brings Indian capital and state in the consortium of global imperialism, which is presently under the police administration of the US (this status of the US is defined economically, politically and historically.


Written by Pratyush Chandra

February 25, 2006 at 8:50 pm

What the US Ambassador Taught Nepalis

leave a comment »


Recently, the United States has been anxiously trying to pre-empt every possible uncomfortable situation in South Asia. Its ambassadors are actively intervening in internal political debates in South Asian countries. Of course, it is nothing new for the US, but in order to understand specific implications of this activism in specific contexts, the peeping tom has to be caught red-handed at the site of the crime and interrogated. The ambassador in India was recently in the dock for threatening Indians to behave well on the Iran issue. Now it is the turn of the ambassador in Nepal, James F. Moriarty. However, for our convenience, Moriarty has been too explicit in his conduct.

For the complete article:

Written by Pratyush Chandra

February 21, 2006 at 12:11 am

Posted in Imperialism, Nepal

Cartoons, Anti-Semitism and the “Aestheticisation of Politics”

with one comment

Pratyush Chandra

The way the European press and politicians behaved on the issue of the publication of “anti-Islamic cartoons” can really be interpreted as, a Haaretz journalist puts, “a new breed of anti-Semitism. But the Semites, in this case, are not Jews.” (1)

It is worth pondering, why did these European “cartoonists” choose to indulge in this sort of “freedom of expression” at the time when they knew it would be volatile to do so. Either it was an act of sheer cheap commercialism, or it had a political meaning – a journalistic contribution in the hegemonist World ‘War on terrorism’. This “contribution” serves one major purpose – to provide an ideological sustenance to this war, by creating and homogenising “the enemy”, and of course its mirror image – a homogenised West, the land of the “advanced” people terrorised by the “backward” Orient. What is happening now seems to evidence the designs.

There might have been wider underlying international political economic reasons that brought Hitler to power, but the ideology of anti-Semitism was essential for its sustenance. Today’s Western mode of dubbing all movements of self-determination in the Middle East (which goes against the interests of the Western Powers) as “Osama’s conspiracy” is not very dissimilar to “the Myth of the Jewish World Conspiracy and the Protocols of the Elders of Zion”. The myth of “Osama” (if we separate it from Osama the man, if he is really one) itself can sustain the Western militancy and its regional cohorts throughout the globe for a long time to come, not only against the “Islamic” forces, but also, and more so, against any “rogue” states and movements (leftists or nationalists).

For example, already, now and then ‘journalists’ report about Osama’s “shadows” emerging in different places in the Indian subcontinent. One was sighted in Sri Lanka with the Liberation Tigers of Tamil Eelam (LTTE) just after 9/11.(2) Moreover, the Indians have traditionally found Pakistan’s Inter-Services Intelligence (ISI)’s involvement in every uncomfortable movement of ‘self-determination’ within its territory, and after 2001, it has become synonymous to Al Qaeda’s involvement. Interestingly, nowadays ‘reports’ regularly come about ISI’s role in the radical left movement of India too. It has already been ‘spotted’ in Nepal’s communist upsurge. And of course, through ISI, it’s Al Qaeda that operates!!! So the target is set and reasoned!

In the case of Hitler, anti-Semitism of one sort (with the ghost of “the Elders of Zion” and their protocols) could enable him to invade regions with negligible Jewish population or influence, and to be on continuous war. Now, it is anti-Semitism of another sort (with the ghost of Osama and his audiovisual tapes) that provides reason to the global ride of the international ‘security guards’ to wage their ‘crusades’. The time is not far when we will find Osama’s shadow roaming in Latin America too. Or, may be it has been already spotted, and the “investigative report” is awaited.

The timing of the publication of these cartoons is very important to understand their significance – the ongoing war in Iraq and the ensuing discomfiture, continuing embarrassment of the Europeans over their ineffectiveness in the Middle East (lately on the Iranian issue), humiliation in their efforts to outrun the Americans throughout the globe, the Hamas victory… The First World rulers have many reasons to be upset. Their anxiety is heightened by their inability to completely monopolise critical information, whose unhindered transmission despite all kinds of borders and boundaries erected through international negotiations, intellectual and material property rights have virtually recreated an alternative world of commons. The ‘ dynamic’ reproduction of the ruler’s real self in its ever-changing forms by the immense ‘horde’ of ‘commoners’ is bound to make him anxious, and this is what forces him time and again to aestheticise politics – to occlude critique. And what else is the ‘official’ function of the media? What else can be the function of these cartoons? To force the readers, viewers and listeners to “think with one’s blood’. And that’s what they are doing.


(1) Bradley Burston, The New Anti-Semitism, cartoon division, Haaretz (February 6, 2006)

(2) Osama hand in glove with LTTE, The Times of India (September 22, 2001),

Written by Pratyush Chandra

February 7, 2006 at 3:16 pm

%d bloggers like this: