Preparing for a Dollar War and Shifting Sands of a New Economic Order!

The trajectory of geo-political trends with regards to tariff wars, renegotiation of multilateral trade deals unilaterally by the US, the EU -US geo strategic equation with US demands to fund more of the Security, moving of manufacturing back to the US and its focus on reducing trade deficits are impacting the dollar.

In the short term, Dollar is likely to have a surge and that is being seen now. However, Putin's latest remarks in the Energy Conclave in Russia give a strong indication that there is a counter reaction that is forming through convergence of diverse interest amongst other players.

The EU economies, notably Germany and France, despite their misgivings about Russia are being forced to reconsider their positions and their dependence on the interlinked economic system with US and its Dollar.

China is facing a tariff war with the US and as the largest owner of the US Dollar reserves and US debt (US Treasury bonds) it is in an unfamiliar territory. With slowing down of its economy and raising internal debt, it cannot afford to lose access to the US market, but a stronger dollar can also be beneficial in the short term given the reserves and debts it has. It is also facing a huge energy problem with increasing oil prices and strengthening dollar.

Which leads us to the next international pole in terms of energy, OPEC and Oil producing countries. Sustained pressure on them by the US to increase production and bring down prices on one hand while it is cutting down the overall availability with sanctions on Iran and impending sanctions on Russian Oil. This is being further compounded by increasing internal economic pressures and economic crisis in almost all Gulf states including Saudi Arabia which is recording massive budget deficits.

India is headed for an election year and one cannot ignore the impact of price surge due to fuel price rise. Huge programmes are being funded with tax revenues from Oil and this leaves very little room to keep petrol prices down. India too is facing a problem of an orchestrated attack on its capital markets as well as on Rupee. It is in fact under an economic attack while it is undergoing a transformation and clean up of the financial systems internally at the same time. That is a huge challenge.  On the positive side  economic growth is good; monsoon is good, but the increasing dollar and increasing fuel prices can undo or at the minimum cramp Indian economic management flexibility.

Over the last 4 years, thankfully the government has been working consistently on 4 fronts

1. Building up of energy security through - building strategic reserves, forward negotiating contracts, diversifying sourcing, non dollar denominated contracts, increasing alternatives to POL internally, consumption management through redirected subsidies & keeping price high to moderate demand

2. Long term alternative building - Push on renewables, International Solar Alliance, creating non fossil fuel based alternative grids, etc

3. Securing Growth through Investments to create national demand instead of depending on exports thereby insulating from both currency pressures as well as trade related pressures

4. Working on creating alternative energy (ISA) and financial systems (BRICS) that can withstand American pressures using the Dollar or the financial system that is controlled by them on the basis that the Dollar is the de facto universal reserve currency. This is being done under the auspices of BRICS and a plethora of bilateral arrangements and regional arrangements where the trade and investments will not be in dollar.

The convergence of interests in protecting themselves against American unilateral exceptionalism across these otherwise diverse group is forcing a turn of events that may see the first steps in the coming together of an international coalition of powers, motivated purely by their own national interests, to formulate together a strategy to move the global financial order away from the omnipotent dollar basis to a new basis of perhaps a basket of other currencies that will include Chinese Yuan, Russian Rouble and Indian Rupee besides the Euro.

The American isolationism and unilateral withdrawal being carried out by Trump Administration is likely to have an enormous impact on American economy too. In the short time, it looks like the benefits of a strong dollar and a high performing stock market coupled with increased manufacturing is going to work for America. It may even ensure that Trump second term is achieved.

At the same time, it is also likely to have an impact on the global arrangements that has held the US led western dominance in place post WWII. The renaissance of China and India and the revival of Russia as an energy power will accelerate the shift from Europe and American dominance to Asia. Technology trends and new energy ideas will reduce the prominence and wealth of the Middle East.

In the medium term if the US persists with its inward looking policies and unilateralism in using the status of the Dollar to exert its geo-strategic muscle, then the others will respond in a manner that removes the vital cog that is the Dollar's status as the world's most acceptable reserve currency and replace it with several currencies.

When that happens, the US Debt will come home to roost as the World's appetite to underwrite US spending will start to ease off.

The current trajectory of events seems to suggest this. Hence Putin's warning in the recently held Energy conclave where he alluded to the US actions being akin to cutting the branch one is sitting on is a crucial signal of how things are likely to take shape.

There is a lot of ground to be covered before such a thing like the replacement of the Dollar as the universal reserve currency can happen. but it is now more likely to happen than not. It a more question of when and how that shift and change in the global financial system will happen and not whether it will.

Just a ramble! Take it for what it is worth!

India and China – Reading the Tea Leaves – A new start?

India and China – Reading the Tea Leaves – A new start?

The events related to Dalai Lama are a signal that needs to be understood. I have tried to piece together if the GoI’s reticence of late is a function of certain international understandings and developments. It is not easy to piece together a narrative based on observed actions on this but a few things have to be considered carefully:

1. PRC have time and again protested vehemently about Dalai Lama visiting Arunachal Pradesh and GoI has not paid heed to any such noise and simply went ahead with it.

2. PRC was vehemently opposing the development projects, especially road and rail links in Arunachal Pradesh; the GOI not only went ahead but doubled the intensity and pace

3. PRC vehemently opposed visit by PM, not only did the PM visit he also toured extensively and made sure a Cabinet Minister was touring the place every month

4. Dalai Lama accorded a traditional and ceremonial welcome in Arunachal Pradesh with full government support

5. There were more than one instance of intense standoff both during visit by Xi and during Modi's visit to PRC across different theatres and the IA did not back down. On more than one instance, it demonstrated speed and increased ability to bring in force capability to theatre zone and never backed down

6. The CPEC - Not only did the GOI register objections, but acted swiftly to circumvent through Char Bahar. GOI also clearly stated that it would not allow CPEC in disputed territory and activated a Balochistan campaign across the world as a message to China on what can happen.

7. Surgical strike inside Myanmar and then on Pakistan clearly demonstrated the willingness and operational capability to strike across border if needed

8. Doklam - This was a test case where India, in a sense, initiated a stand off, by not acting as per established pattern. It was India which went in and stopped construction activity at force. The Chinese did not expect this (since 1950, India only used to take up such protests over border meetings - old Nehru era policy, which it sought to break away from in 1962 disastrously) change of policy. Tried all their tricks bilaterally, trilaterally and internationally. PRC failed in both diplomatic and military fronts to make India budge.

9. China's Israel - Pakistan has been isolated and is being hounded through a series of well-timed interventions, the latest being the FATF. Whenever Pakistan has tried to break free or tried to inflict high cost, India has publicly punished Pakistan with Surgical Strikes being the latest. In this one fact that needs to be noted, that Indian punishment has been almost always following any act by the Chinese in supporting Pakistan.

10. Well planned series of demonstration of both Theatre Defence and improved arsenal and delivery capability in the nuclear sphere have been made to the Chinese with China specific missile capability.

11. Straight challenge to Chinese assertions to South China Sea area with increased participation and patrolling jointly and bilaterally with nations of the region and coordinating with Indo Pacific powers to provide a strong counter point to China power projections and ambitions

12. On the engagement side too, there has been a lot of activity to build better people to people relationship with China, growing exchange of views and common stance wherever possible such as environmental and trade and investment arrangements; strong pitch for mutual investments in each other's economy, bringing up and nurturing a financial network to balance the stranglehold of the west on international financial network through initiatives like BRICS Bank

13. Energy is another area where, besides competition for energy sources, there has also been cooperation in terms of Solar energy
.

It is in this light, that we can and must evaluate and examine the Dalai Lama celebrations being moved out of Delhi and the governmental "non-endorsement".

The steps mentioned above have had a deep impact on Chinese governmental positions. Coupled with the internal and international dynamics at play inside China and the tough economic choices it faces, there has been a recalibration of Chinese attitude towards India.

Chinese culture and their sense of history does not allow for any overt acceptance of change in policy and acceptance of the reality that India is not a pushover anymore. The concept of "face" will not allow for the same. However, equally important is the innate Chinese penchant for being realistic and practical.

It is this aspect, along with the other factors mentioned above, that I believe, that has forced the Chinese government to reach out to India.

1. China, for the first time, started acknowledging that the Indian economy is on a strong path of growth and it called out that India is emerging as a leading power in Asia. In typical back handed fashion, it "advised" India that it should not believe that it can be a power by throwing its weight around.

2. China has time and again, tried to reiterate that it is not opposed to India's economic growth and development and said it wants to partner with India. It has reiterated its desire to close out difference on border at the earliest.

3. China's has called for CPEC to be even renamed and invited India to its OBOR initiative and officially went on record to state that any misgivings on this with India can be discussed and solved.

4. Despite bravado and crude threats, it backed down on Doklam and agreed to a practical resolution after its failure to elicit support against India

5. Despite its many attempts to support Pakistan against India, especially on designation of Masood Azhar and Hafeez Saeed as terrorists, it has stopped short of antognising India by going too far despite many attempts by Pakistan - latest being its refusal to stall Pakistan entry into grey list at FATF

These are real changes in Chinese stand and posture, despite their strenuous attempts to mask it, the same has been acknowledged by India and the rest of the world.

In this context, China perceives that Tibet will reach an inflexion point sometime in the future and the trigger could be the inevitable demise of Dalai Lama at some point. An increasingly powerful and willing India can create tremendous challenges for China, if China tries to harm India through proxy (Pakistan) or directly.

Contrary to the facade of stability, China too has simmering and strong fault lines that can explode. Tibet, Xinjiang, Taiwan and the existing disparity of wealth, corruption and tremendous economic improvements that leads to an increasingly aware and demanding population are all there.

Added to this is the generational change in leadership and the new elite power struggles. All this in the context of economic long term issues coming to roost.

This assessment and reality has, I believe, forced China to not only recalibrate its equation with India but also engage discreetly with a powerful Indian government to push through a broad arrangement that allows for the peaceful rise of China as a rival to the US in the world order.

In this recalibration, China may have finally come to the conclusion that it is far better to have a good relationship with India rather than trying to compete or contain India, thereby pushing it away to the US side and making India a rallying point across ASEAN and Indo-Pacific region for other powers who are wary of China's ambitious plans.

In my view, this could mean preparing for a post Dalai Lama settlement for Tibet that is supported and endorsed by India. Now only India can make that happen, as it is one country that has the leverage over Dalai Lama. Dalai Lama too would be anxious to see some sort of an arrangement that allows for him a modicum of self-rule in Tibet in his lifetime.

That can happen very well if there is a Sino-Indian detente. If the benefits of such a detente far outweigh a the so called benefits of containing/breaking India with the help of the likes of Pakistan, then China and India have the civilizational maturity to actually make it happen.

It is this logical extension that gives meaning and a reasonable explanation to the "downgrading" of Dalai Lama anniversary and the governmental sponsorship of the same. The indications are that China and India have engaged themselves to recalibrate their relationship and there is some kind of rapprochement planned with regard to Tibet. I am also venturing to guess that this is being done with the Dalai Lama being kept in the loop as is evidenced by the lack of any official disappointment on the GOI stance from the side of the Tibetan Government in Exile.

As usual a ramble, take it for what it is worth!

Jaya Jaya Shankara! Hara Hara Shankara - Pranaams to my Guru Sri Jayendra Saraswathi Shankarycharya!

Pranaam to my Guru! Vande Guru Paramparam!


Memories coming flooding back. As a 11 year old, I remember going and having his darshan when he was camping at Secunderabad (where we stayed at that time) near Skandagiri temple (built by him). It was in a workshop shed that he stayed for more than a month. Almost every alternate day, parents would take us (elder brother and me) and we would watch with interest as he performed Chandramouleswara puja.

Easily approachable, He would always have  a word with us youngsters, he would ask what we had for lunch/tiffin etc and give us sugar candy and drakshai (dry grapes) as prasadam. But when he went for his Snanam and after doing his Japam proceeded on stage to do the Puja it was a transformation. His face would be radiant, eyes flashing as he looked at everyone and then he would remain still as he did the 2 hour plus puja (five times a day). He used to walk everywhere. We were fascinated to see the elephants, horses, camels, cows that accompanied the camp.

Many people would throng the venue! I also distinclty remember the Mahaperiyava, his guru, Chandrashekara Saraswathi join the camp, to see him was to see Eswara himself. There used to be lectures by Swamijis and I also remember that one day Mahaswami made the great poet Kannadasan speak in his presence. I was too young to recollect what he said, but Kannadasan spoke with tears streaming his face.

He then went on to Ramchandrapuram BHEL complex and stayed for a few days there. At the end of it he proceeded further and we had to bid him goodbye. The entire crowd walked with him and did not want to leave him. He stopped, spoke gently to us and reminded us to be truthful and follow Dharma at all costs. "Protect and worship the cows, protect Vedas and Veda Vidwans, Be contended". He asked us not to follow him or feel sad. He said he was a Sanyasi and he had to travel as per his Guru's Agnya. He smiled and walked on. When he reached an elevated spot, he stopped suddenly and turned around and smiled his famous smile and blessed us all. That image is now before me as I type.

Later on many years later, I myself had a 11 year old son, and as is custom in many Tamil Brahmin homes, any function has to be first informed to Acharya Gurudeva and on his benediction only, things must commence. He was visiting Chennai and it so happened he was camping near my house in the next road in Kamakshi Temple.

My wife and I went along with our kids and did Vandanam and informed him of the intention to perform Upanayanam to my son. He asked what was his name and said, "so you have named the young lad with a name similar to mine." He enquired about our ancestry, blessed us and my wife sat in front of  him and sang Soundarya Lahiri. He closed his eyes and sang with her!

I gently submitted to him that I wanted to be given an opportunity to spend an equal amount of money that I intended to spend on my son's Upanayanam for a righteous cause. I sought his directions on what I should do. He closed his eyes for some time and then said, " Do one thing, there is an organisation started by Paramacharya called Veda Pata Nidhi Trust, that provides pension to indigent priests and Veda Vidwaans in their old age and also takes care of Antima Samskara of these people as they cannot afford it. You donate it to them. Their benediction will protect and bless the child with all that is good."

He then asked someone to give me the name of the concerned person and his number. Foolishly, I lost it and for many years that pledge was unfulfilled until 2 years ago. Both Acharyas (Sri Jayendarar and Shankara Vijayandarar) returned to the same place near my house. My son was in his 12th grade. We went and did Vandanam, Sri Jayendarar was withdrawn and was quite weak but he looked at us benignly and blessed.

I gathered courage and approached Sri Vijayanderar and told him of my unfulfilled promise. I told him I did not remember the name of the trust nor the person's name. In a flash, he told me the name and the person and made sure that I got the contact details. I then called Sri Jayaraman of the Trust and that very evening fulfilled the promise to Guru and payed the money to the trust. Since then I keep paying the amount every year.

In my life, I have seen his relentless energy to fulfill every Agnya of his guru, the great Mahaswami. He traveled relentlessly across the length and breadth of India till his very last. Never stayed in the same place beyond 2 days. Earlier it was by padayatra that he went around India. In later years it was by the famous saffron Innova. Even during the last year, when he was visiting Chennai, again near my house, he would do the first puja without fail as per the Agnya of his guru. Sharp at 5:30 AM.

Two days ago he was fully participating in the ongoing Brahmaotsavam of Kanchi Kamakshi. Maybe the Divine Mother wanted to give him a Kailasa Darsanam this time and he transcended his mortal coils to reach Siva-Paravati.

I will miss the physical presence of my Gurudeva, but the continued legacy of Guruparampara lives on with the divine presence of Sri Shanakara Vijayendra Sarawsathi Shankaracharya. Sri Jayendrar has joined his Guru, Chandrashekarenda Saraswathi in the Spiritual Plane and  will continue to shower the impartial grace and compassion (Karunavilasam - the matham is) that is the very badge of the Guru Parampara of Kanchi Kamakoti Peetam, on us all.

In particular, Sri Jayendarar's stupendous contributions to the cause of Dharma will live on through the multi various institutions and movements that he initiated across the length and breadth of this ancient land called Bharath, much like his first preceptor Adi Shankaracharya once did!

Jaya Jaya Shankara! Hara Hara Shankara!