June 23, 2011

U.S. SEES VAST UNTAPPED TRADE POTENTIAL WITH INDIA

[In 2010, India ranked 12th among U.S. trading partner, with bilateral trade of $48.8 billion, according to the U.S. Census Bureau. That pales in comparison to the $456 billion in U.S. bilateral trade with China, its No. 2 partner after Canada.]

REUTERS

Reuters – Treasury Secretary Timothy Geithner
gestures as he testifies before the House
Committee on Small Business …
WASHINGTON: Finance officials from the United States and India will work to find ways to access the vast untapped trade potential between the two countries in economic talks next week, a senior Treasury official said on Wednesday.

The official told a news briefing that closer economic cooperation and greater market access would help make India one of the top 10 U.S. trading partners.

The talks, led by Treasury Secretary Timothy Geithner and Indian Finance Minister Pranab Mukherjee, will focus on infrastructure development, capital markets reforms, cooperation on the Group of 20 efforts to reduce trade imbalances, and efforts to combat money laundering, the official said.

One area for discussion will be ways to open India's "relatively closed" capital markets and banking sector to foreign investment, the Treasury official said.

"It's an issue for India as it seeks to maximize its growth potential. It's clearly important for India to develop long-term capital markets to provide adequate financing for infrastructure, which is a major constraint to India's growth," the official said.

[ For complete coverage of politics and policy, go to Yahoo! Politics ]

The talks follow on an initial set of discussions between U.S. and Indian officials in April 2010 in New Delhi.

In 2010, India ranked 12th among U.S. trading partner, with bilateral trade of $48.8 billion, according to the U.S. Census Bureau. That pales in comparison to the $456 billion in U.S. bilateral trade with China, its No. 2 partner after Canada.

Through April this year, India ranked 13th on the U.S. trade partner list, just behind oil exporter Venezuela.

INVESTMENT UNCERTAINTY

The Treasury official noted that U.S. firms' direct investment in India has fallen off slightly in the past couple of years, which he attributed to uncertainty in the regulatory and operating environment. Greater transparency and exchange of information so that businesses can better anticipate their returns on their investment would help, he said.

He acknowledged that long-standing corruption problems in India were "an impediment to investors looking to commit substantial sums of money."

The biggest opportunity for U.S. companies is India's massive need for infrastructure development, where firms can provide expertise in engineering, financing and the capital equipment needed for the ports, expressways, airports, railways and power grid that India needs to improve the efficiency of its economy, the official said.

The official's remarks came as U.S. Trade Representative Ron Kirk met with Indian Minister of Commerce and Industry Anand Sharma in Washington to discuss market access for U.S. firms and other bilateral issues on Wednesday.

"The booming bilateral trade and investment flows between the United States and India support tens of thousands of critical jobs in both countries, and we know that will only grow significantly in the coming years." Kirk said in a statement. "However, to continue and grow our successes both India and the United States must take concrete steps to resolve long-standing market access and investment concerns."

Next week's economic talks are not expected to cover a long-delayed U.S.-India civil nuclear technology agreement nor India's difficulties in financing its oil trade with Iran without violating international sanctions on Tehran, the official said.

A DIVINE WIND BLOWS AGAINST IRAN’S PRESIDENT

[The divine leader is also permanent, while elected presidents serve a maximum of eight years. Mr. Ahmadinejad’s predecessors — Ali Akbar Hashemi Rafsanjani and Mohammad Khatami, who also clashed with the supreme leader over prerogatives — have gradually faded from view.]
By  
Two rivals and an icon: President Mahmoud Ahmadinejad of Iran,
center; Ayatollah Ali Khamenei, left; and Ayatollah Ruhollah Khomeini.
CAIRO — President Mahmoud Ahmadinejad of Iran, seeking to repair a politically reckless rift with the country’s supreme leader that is leaving him isolated and embattled, recently portrayed their relationship as one of “father and son.”
Conservative clerics, convinced that the ambitious, messianic president remains determined to supplant them, rebuked Mr. Ahmadinejad for elevating his own station.
“The relationship with the leader of revolution should be the relation between the guide and the guided,” growled Mojtaba Zolnour, the supreme leader’s representative to the Revolutionary Guards, in a speech in Qum, Iran’s religious center. “What does it mean to say that my relation with the leader is like the relation of a son to his father. This is nonsense. This is deviant discourse!”
Since April, an unusually public battle has escalated between two men long seen as ideological soul mates — Mr. Ahmadinejad and the supreme leader, Ayatollah Ali Khamenei.
Web sites supportive of the president have been shut down, and hecklers drowned out some of his speech to mark the anniversary of the death of the founder of the Iranian revolution, Ayatollah Ruhollah Khomeini. Much blame for the split is directed at Esfandiar Rahim Mashaei, Mr. Ahmadinejad’s chief of staff and a former director of the Cultural Heritage and Tourism Foundation, itself often portrayed in the Iranian press as a font of corruption.
Former staunch conservative allies among the clergy, in Parliament and in the military have abandoned the president in droves, voicing their allegiance to Ayatollah Khamenei while labeling the presidential circle a “deviant current.”
Fundamentally, the fight conforms to a pattern of presidential politics that has troubled the Islamic Republic since the 1979 revolution. The system allows for two presidents, one divine, the other democratic. The divine leader, Ayatollah Khamenei, holds most of the power levers, controlling the military, the judiciary and the state broadcasting services.
The divine leader is also permanent, while elected presidents serve a maximum of eight years. Mr. Ahmadinejad’s predecessors — Ali Akbar Hashemi Rafsanjani and Mohammad Khatami, who also clashed with the supreme leader over prerogatives — have gradually faded from view.
Mr. Ahmadinejad is determined to avoid their fate, and that, say Iran experts, set off the current showdown.
“The game they are playing now is Ahmadinejad trying to politically maneuver himself to gain more power, while Khamenei tries to contain him,” said Mustafa el-Labbad, director of Al Sharq Center for Regional and Strategic Studies in Cairo. “It is a struggle motivated by politics and economics, being presented by some as an ideological and spiritual struggle.”
It started in April, when Mr. Ahmadinejad tried to fire Heydar Moslehi, the intelligence minister, and the supreme leader ordered him reinstated. Mr. Ahmadinejad pouted at home for 11 days, returning only after the supreme leader signaled that the president, too, could be replaced.
Mr. Ahmadinejad was elected twice using Ayatollah Khamenei’s political machine. But he wanted to build his own patronage system and source of funds, separate from the intelligence network loyal to the supreme leader, to elect candidates in the 2012 parliamentary elections and most important, in the 2013 presidential race, according to Iran experts.
Mr. Mashaei is often named as the likely candidate, although he demurs. But he and Mr. Ahmadinejad are suspected of helping to license private banks and to shift government contracts away from the Revolutionary Guards, who are loyal to the supreme leader, to finance their own political goals, said Mehdi Khalaji of the Washington Institute for Near East Policy.
By openly contradicting the supreme leader in April, Mr. Ahmadinejad provoked many Iranians to turn against him. Since then, he has been engaged in a running skirmish over every cabinet appointment, including the oil minister, the sports minister, the foreign minister and deputy foreign minister. Mohammed Sharif Malekzadeh, the deputy foreign minister, lasted barely three days, resigning Tuesday amid an uproar.
In late May, Parliament voted to investigate vote-buying by the Ahmadinejad government during the 2009 election, which some lawmakers charged entailed $80 for each of nine million votes. The fact that the pro-democracy Green Movement made accusations of widespread fraud in that very election was ignored.
Former staunch allies in Parliament like Ruhollah Hosseinian now complain that Mr. Ahmadinejad spread “despair and bewilderment” among the leader’s adherents.
In creating a vision of an Iran less dominated by clerics, Mr. Ahmadinejad has evoked Iranian nationalism, redolent of pre-Islamic Persia, and holds that Shiite Muslims do not need the clergy to engage with the Hidden Imam, a messiah-like figure who Mr. Ahmadinejad predicts will return soon.
Then there is the matter of djinns. Several aides arrested in recent weeks have been charged with evoking djinns, or secret spirits, and dabbling in other dark arts. Traditionalist clerics abhor the president.
“They don’t like his suggestions that he alone is so close to the Hidden Imam — the connotation is that he has a privileged position is religiously problematic,” said Vali Nasr, the author of “The Shia Revival.” “They don’t like his messianism, they don’t like his meddling in religious affairs, they see his populist folksy brand of Shiism as a threat.”
Mr. Ahmadinejad once suggested that Ayatollah Mohammad Taghi Mesbah Yazdi, not the supreme leader, was his spiritual guide, and the ayatollah returned the favor by declaring his 2005 election victory a “miracle.”
But Ayatollah Mesbah Yazdi declared in a May interview that the president was bewitched by his chief of staff. He has called presidential aides “garbage” and the “greatest danger to Islam.” Curbing Mr. Ahmadinejad would help Ayatollah Khamenei mend his own fences with the clerics in Qum.
Past fights pitting Ayatollah Khamenei against elected presidents stayed mostly private. “They tried to remain behind the curtain,” Mr. Khalaji, the analyst, said, whereas Mr. Ahmadinejad excels in the street fighter school of politics. “The same way he talks about Israel and the United States is the way he talks about his domestic opponents.”
Ayatollah Khamenei would find it difficult to break with Mr. Ahmadinejad entirely, Iran experts say. The two men appeal to the same constituency among poorer Iranians, so the supreme leader risks alienating his base. For another, pushing Mr. Ahmadinejad into open opposition would create further instability within a system still shaky after the pro-democracy protests that were violently suppressed in 2009.
“If he leaves the government with a solid base of support and ends up sitting in the Parliament or sitting at home throwing hand grenades, he is going to be difficult to manage,” Mr. Nasr, the author, said.
Some analysts suggested that Mr. Ahmadinejad might try to escalate the confrontation with world powers over Iran’s secretive nuclear program in an effort to prevent his own early demise.
But the current tug of war is expected to continue at least through the parliamentary elections in March 2012, and Mr. Ahmadinejad’s allies are likely to be disqualified from running.
If the fight becomes too pronounced, Ayatollah Khamenei might move to impeach him. Some of his parliamentary allies have already invoked the impeachment of President Abolhassan Bani-Sadr in 1981 after he clashed with Ayatollah Khomeini.
“The issue is going to become, is this the end of the Ahmadinejad era or is there life for his brand of politics and his group beyond the presidency?” Mr. Nasr said.
Artin Afkhami contributed reporting from Washington, and Lara El Gibaly from Cairo.