A US-Indian military deal hinges on an equal partnership



In 1941, when the British Empire was on the ropes following the German takeover of France, US President Franklin Roosevelt ignored isolationists within his country to launch the Lend-Lease programme. In present-day terms, Roosevelt delivered $720 billion (Dh2.6 billion) worth of military equipment, mostly to Britain. The naval vessels that were handed over enabled Britain to hold off German U-boat "wolf packs" and continue to receive essential supplies.

Apart from the British, both China and the USSR received combat supplies from the United States, the so-called "arsenal of democracy", despite the niggling detail that neither was conspicuously democratic.

There are parallels to today, although things have certainly changed since the 1940s. Economic power is moving from west to east, while China has thus far wisely avoided a military conflict with any of its neighbours since its 1979 invasion of Vietnam. However, it is a reality that decades of robust economic growth have given Beijing a heft that has begun to alarm other countries.

Of its neighbours, only Japan, Vietnam and India have significant military capabilities. The Australian military is hobbled by its small population and massive coastline, while South Korea needs to concentrate on its northern border rather than participate in a broader theatre.

Given its huge potential and population, the most significant player - apart from China - within the region is India. However, when compared to its neighbour to the northeast, India's economy and domestic technological skills are primitive. The country has squandered decades in setting up a high-tech base that, except in a few areas, has been a failure. More than 80 per cent of core defence equipment still needs to be imported. As for the Indian economy, it is less than a third of the size of China's (which had half the GDP of India in 1949).

What India has in plenty is trained manpower, as well as a military that has been continuously primed for combat since its inception. In contrast, China's People's Liberation Army forces have rarely seen a weapon fired in anger; those who have participated in combat operations in the past have almost all left the military.

But the fact remains. Although India's ruling Congress Party has spent an average of $9 billion (Dh33 billion per year) on purchasing defence equipment, mainly from France, Russia, Israel and the US, the reality is that India's economy cannot support the navy and the air force it would need to face a challenge in Asia.

There is only one way forward, which would be for the United States to once again begin a Lend-Lease programme of sorts, handing surplus military stock to India and, on a smaller scale, Vietnam. Surplus stock might include naval vessels, aircraft and ammunition - this is the only practical way by which the Indian and Vietnamese militaries could reach the needed level of combat capability.

Such a mobilisation would not be directed against China, in view of that country's avoidance of combat for the past 33 years. The enhanced capability would be a guarantee against any country or other player that used force to interfere with the freedom of the seas and skies vital to modern commerce. While the 1940s Lend-Lease was focused on war, a new programme would be geared towards preventing a conflict by creating a deterrent force on continental Asia.

The equipment and the technology would probably be less up to date, although it would have to be of sufficient quality to deal with regional threats, including non-state threats such as piracy.

For close to a decade, negotiations between the US and India on Logistics Supply Agreement have foundered on Washington's insistence that it be given a unilateral right to enter sensitive Indian military facilities at will to inspect the equipment that it had supplied. Both that supply agreement and the proposed Communications Interoperability and Security Agreement have conditions attached that dilute India's sovereignty.

Given India's unhappy history with western colonialism, even a western-friendly government in New Delhi has been unable to sign either agreement. In the 1940s, the relationship between the US and the UK was one of equals, whatever the difference in their financial capabilities. Unless a similar, Rooseveltian approach is taken by the Obama administration, all of its talk of a "pivot to Asia" will remain a television sound bite or a talking point at international conferences, rather than be expressed in reality.

Just as Asia has changed with geopolitics, it is time for the US to abandon the Second World War-era Atlanticist thinking that has underpinned its strategy since the 1940s. If Asia is to achieve a genuine military balance, credible enough to prevent the adventurous from resorting to conflict, the US will need to implement a 21st century version of Lend-Lease with India and Vietnam as the principal beneficiaries.

In tandem, India and Vietnam's militaries would be a counterbalance in Asia against any force that attempted to establish a hegemonic force, such as those that once forced Europe to war.

MD Nalapat holds the Unesco peace chair at Manipal University and is a former editor of The Times of India

Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

A State of Passion

Directors: Carol Mansour and Muna Khalidi

Stars: Dr Ghassan Abu-Sittah

Rating: 4/5

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Nepotism is the name of the game

Salman Khan’s father, Salim Khan, is one of Bollywood’s most legendary screenwriters. Through his partnership with co-writer Javed Akhtar, Salim is credited with having paved the path for the Indian film industry’s blockbuster format in the 1970s. Something his son now rules the roost of. More importantly, the Salim-Javed duo also created the persona of the “angry young man” for Bollywood megastar Amitabh Bachchan in the 1970s, reflecting the angst of the average Indian. In choosing to be the ordinary man’s “hero” as opposed to a thespian in new Bollywood, Salman Khan remains tightly linked to his father’s oeuvre. Thanks dad. 

SCHEDULE

Saturday, April 20: 11am to 7pm - Abu Dhabi World Jiu-Jitsu Festival and Para jiu-jitsu.

Sunday, April 21: 11am to 6pm - Abu Dhabi World Youth (female) Jiu-Jitsu Championship.

Monday, April 22: 11am to 6pm - Abu Dhabi World Youth (male) Jiu-Jitsu Championship.

Tuesday, April 23: 11am-6pm Abu Dhabi World Masters Jiu-Jitsu Championship.

Wednesday, April 24: 11am-6pm Abu Dhabi World Professional Jiu-Jitsu Championship.

Thursday, April 25: 11am-5pm Abu Dhabi World Professional Jiu-Jitsu Championship.

Friday, April 26: 3pm to 6pm Finals of the Abu Dhabi World Professional Jiu-Jitsu Championship.

Saturday, April 27: 4pm and 8pm awards ceremony.

The five pillars of Islam

1. Fasting 

2. Prayer 

3. Hajj 

4. Shahada 

5. Zakat 

If you go:
The flights: Etihad, Emirates, British Airways and Virgin all fly from the UAE to London from Dh2,700 return, including taxes
The tours: The Tour for Muggles usually runs several times a day, lasts about two-and-a-half hours and costs £14 (Dh67)
Harry Potter and the Cursed Child is on now at the Palace Theatre. Tickets need booking significantly in advance
Entrance to the Harry Potter exhibition at the House of MinaLima is free
The hotel: The grand, 1909-built Strand Palace Hotel is in a handy location near the Theatre District and several of the key Harry Potter filming and inspiration sites. The family rooms are spacious, with sofa beds that can accommodate children, and wooden shutters that keep out the light at night. Rooms cost from £170 (Dh808).

The specs

Engine: Four electric motors, one at each wheel

Power: 579hp

Torque: 859Nm

Transmission: Single-speed automatic

Price: From Dh825,900

On sale: Now

THE SPECS

Engine: 6.75-litre twin-turbocharged V12 petrol engine 

Power: 420kW

Torque: 780Nm

Transmission: 8-speed automatic

Price: From Dh1,350,000

On sale: Available for preorder now

Results:

Men’s wheelchair 200m T34: 1. Walid Ktila (TUN) 27.14; 2. Mohammed Al Hammadi (UAE) 27.81; 3. Rheed McCracken (AUS) 27.81.

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COMPANY PROFILE
Name: Kumulus Water
 
Started: 2021
 
Founders: Iheb Triki and Mohamed Ali Abid
 
Based: Tunisia 
 
Sector: Water technology 
 
Number of staff: 22 
 
Investment raised: $4 million 
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Formula Middle East Calendar (Formula Regional and Formula 4)
Round 1: January 17-19, Yas Marina Circuit – Abu Dhabi
 
Round 2: January 22-23, Yas Marina Circuit – Abu Dhabi
 
Round 3: February 7-9, Dubai Autodrome – Dubai
 
Round 4: February 14-16, Yas Marina Circuit – Abu Dhabi
 
Round 5: February 25-27, Jeddah Corniche Circuit – Saudi Arabia