News Wrap

A G D

Younger brother Anil Ambani-owned Reliance Communications or RCom filed for bankruptcy on 01 February 2019. The company ridden with a debt of over Rs 45,000 crore had been in talks with its many lenders, to reach a settlement, for over a year. The National Company Law Tribunal had admitted three insolvency petitions against RCom filed by the Swedish company, Ericsson, for pending dues of Rs 1150 crore, in May 2019. RCom at that time, moved the National Company Law Appellate Tribunal to stave off bankruptcy, and agreed to pay Ericsson Rs 550 crore, as settlement. Failure to that led to contempt of court petitions against Anil Ambani in the Supreme Court. Options being scarce, the company finally approached the NCLT in February 2019, to seek a resolution of its debt position, which is a formal declaration of bankruptcy. Less than a week after Anil Ambani's company went bankrupt, another of his companies was showing off its wares. A group of journalists were invited to the Dassault Reliance Aerospace Limited at Mihan in Nagpur (Maharashtra) on 07 February 2019. At the manufacturing facility at Mihan, there was a display of "the first cockpit front section of Falcon 2000 series" produced by the company to be handed over to Dassault Aviation. It was claimed that the facility would roll out fully assembled Dassault Falcon 2000 business jets in about three years.

In July 2015, Anil Ambani incorporated Reliance Aerostructure Limited and applied for land in Mihan Special Economic Zone (Nagpur), and was allotted land in August 2015. Dassault Aviation chose RAL as its partner to set up the joint venture, which would implement the offsets contracts, that is manufacture products in India, running into thousands of crores. The Falcon cockpit on display in February 2019, was its first offering. Not a single Rafale jet has arrived in India. The report of the Comptroller and Auditor General of India on the Rafale deal has been sent to the President of India on 12 February 2019. The CAG report states that the deal signed by the Modi government in 2016 to procure 36 Rafale jets from France's Dassault was 2.86% cheaper than the Rafale deal negotiated during the previous Congress-led regime in 2007. The former French President has stated that the Indian government proposed the name of the Ambani group. Dassault trade unions have said that the deal with Reliance was a "trade off" for the company to get the contract. Anil Ambani has no experience in the defence sector, and yet has become Dassault's chosen partner with 51% stake in the joint venture. Anil Ambani's businesses are already floundering. His forays into the media (Reliance Media Works) is ridden with debts. Reliance Infra which was to run the Delhi Airport Metro Expressway for 30 years, has pulled out because of mounting losses.

The CAG report points out that the Modi government's "Letter of Comfort", rather than a sovereign guarantee by the French government, benefited Dassault, due to the absence of such guarantees. The deal which was being negotiated in 2007, included a 15% bank guarantee against advance payments.

End of a nuclear pact
When Russia failed to meet a deadline to destroy the illegal cruise missile, the 9M729, USA on 01 February 2019, pulled out of Intermediate–Range Nuclear Forces (INF) treaty, and soon Russia followed. In December 2018, America's NATO allies backed America. Under the earlier treaty, USA and the Soviet Union in 2005, had scrapped all ground based missiles, with a a range of between 500 and 5500 km (310-3400 miles) weapons that could quickly reach targets deep into enemy territory. It was becoming harder for USA to win inspections of 9M729, perhaps in return for allowing Russia to look at what it says is a suspect American missile-defence launcher in Romania. It is increasingly acknowledged that conventional (not nuclear) missiles will play a central role in future wars. Countries like China, India and Israel have piled up INF-range missiles, as USA and Russia have destroyed theirs. Russia has reportedly deployed four battalions of the 9M729 (nearly 100 missiles) that allow it to strike targets across Europe quickly and precisely—including NATO's nuclear weapons. The INF treaty is the only pact to ban an entire class of nuclear weapons, will thus expire in August 2019. As option for NATO would be to rejig the American-led missile defence shield in Poland and Romania, so that it could cope with Russian cruise missiles like the 9M729, rather than just Iranian and North Korean ballistic ones. Russia still sees USA as a threat after the end of cold-war competition. Besides missiles in Kaliningrad, there are Russian missiles in Chukotka, that can at least reach Seattle. There is a possibility to trigger a replay of the Cuban missile crisis. The US army is working on a Precision Strike Missile (PTSM) due in 2023. Its range could easily be extended beyond the current INF ceiling of 499 km. Guam is the likeliest host for American missiles in Asia, if Japan is less enthusiastic, which is over 3000 km from Shanghai.

Iranian Revolution
On 01 February 1979, Ayatollah Khomeini returned back to Iran, from exile in Paris. He was greeted in Iran's capital Tehran, by what some believe to be the largest crowd in history. Ten violent days later, the Shah Mohammad Reza Pahlavi's government resigned, and the army gave way to the revolutionaries. In 2019, Iran is nominally democratic, but unelected mullahs still wield the real power. Forty years on, university enrolment has increased, services for the poor have improved, and the economy is more diversified. The ayatollah mandated the veil for women and banned broadcast music, which he compared to opium.

More than 150,000 educated Iranians leave Iran each year, among the world's highest rates of brain drain. Younger Iranians attend mosque less frequently than their parents did. The clerics' main tool of oppression is the Islamic Revolutionary Guard Crops (IRGC). Khomeini did not trust the Shah's army, so he gathered the armed groups that supported the revolution into a single force, the IRGC. In the face of US sanctions, Iran has developed a "resistance economy" which is diverse and self-sufficient in some areas, but hardly efficient. Iran today ranks near the bottom of the World Bank's Ease of Doing Business Index, and Transparency International's Corruption Perceptions Index. In January 2018, thousands of Iranians took to the streets to protest against corruption, repression and rising living costs. There are only failed uprisings, but daily protests continue in Iran, as the economy sinks.

Frontier
Vol. 51, No.37, Mar 17 - 23, 2019