Wednesday, December 03, 2008

Economic impact of Pakistani terrorism

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His crazed eyes said it all. Sadistic glee was etched across the face of the fidayeen captured by closed-circuit cameras at the erstwhile Victoria Terminus in Mumbai as he shot wantonly into the crowd of commuters headed home after a day’s work. By the time he and his band of 20-odd juvenile terrorists had been killed or captured — or had escaped — after killing nearly 200 people and injuring more than 350. Even though the government now says that there were only 10 terrorists, 9 killed and 1 captured and in interrogation, most security analysts around the world don't believe that. The feeling among Indian analysts is that the others, "May have disappeared into the western suburbs in preparation for a future attacks on places such as airports, key bus terminals and business premises such as BKC (Bandra Kurla Complex)."

"These attacks are simply to hamper India’s economic growth," saysMadhav Nalapat, professor of geo-politics at the Manipal University. "The ISI is desperate to stop India’s progress because this gives us more global clout and power, and that threatens them."

The economic focus of the attacks is also clear given their targets. While terrorists often hit economic symbols and civic landmarks, such as the veritable Taj Mahal Hotel (picture above), a symbol of India’s independence and dignity, the Pakistanis started their butchery at the Leopold CafĂ© in Mumbai, a favoured watering hole with backpackers and tourists.

Pallavi Dalal, a fashion designer, says she was enjoying drinks with friends at Leopold when the gunmen came. "We only managed to get a table at a far corner near the side entrance, and that saved us," she says. "When we heard a loud crackling noise, we looked around and saw these two chaps crossing the road and firing into Leopold with automatic weapons. We ran out from the side entrance and down the lane into the first building we saw. Firing blindly, they then ran down the lane we had escaped, towards the Taj Hotel. They were shooting all the time, sometimes with one hand, and only stopped to renew the magazine of what we sensed were AK-47s."

That the Pakistani terrorists then rounded up people with British, American and Israeli passports has furthered reinforced this view with the public. "The terrorists are trying to shatter confidence in India among the global community," says Nivedita Dasgupta, a Mumbai-based independent corporate trainer.

The government knew terrorists used the sea route to transport the explosives used in the 1993 Mumbai blasts, and even had fresh warning from the army and intelligence agencies about the possibility of terrorists hitting Mumbai via the sea. The IB source says that a combined meeting of agencies — held a few days before the attacks — called for a review of coastal security. But all this failed to stop Ismail and his fellow fidayeen, who came to Mumbai from Karachi via the Rann of Kutch in Gujarat using firstly the MV Al-Husseni, a Pakistani merchant vessel provided no doubt by the Pakistan navy. They then hijacked the Kuber, an Indian fishing vessel and brutally murdered its crew and wore their clothes and other effects, like red threads on the wrist, to pass off as fishermen.

Already, IHS Global Insight, a US economic forecasting firm, has raised India’s security risk rating by 0.25 to 3.50 "to reflect the continued volatility in Mumbai and the potential for coordinated attacks in separate locations". The British High Commission and American Embassy have also issued travel advisories. And it is estimated that even if 10 per cent of foreign companies restrict travel to India over the next year, the country could loose $1-7 billion in investment.

Air France and KLM have already cancelled flights to Mumbai, and with aviation also hurting because of the anti-government demonstrations in Thailand, there is a growing sense of panic in the industry. Several large tour operators are defaulting on payments, including Raj Travels, which has already defaulted on its payment to airlines.

The terror attacks have also jeopardised the CphI, among the largest global conventions on pharmaceuticals, which was to start on Friday at the Bombay Exhibition Centre. The conference was expected to do business to the tune of Rs 500 crore, and now stands postponed to 2009. Many of the 5,000-10,000 attendees expected are already backing out, says Ajit Kamath, chairman of Arch Pharmalabs, who was helping organise the event. Kamath now worries that China, which has projected its relatively terror-free image with much success, might appear more attractive as a business destination in the short term.

For now, all politicians are making the right cooperative noises. But this is expected to change soon as the BJP, Left and Congress have very divergent views on how to deal with terror. Professor Madhav Nalapat says that over the past four years, the UPA government has forced the security apparatus to follow a "politically correct approach" that is backfiring. "Some sensitive localities have not been entered, searched, etc., for years. And now I fear things are running out of control," he says. Some intelligence reports have maintained there are 100,000 fidayeen waiting in India for attack orders. And Nalapat says, "It could take 10-20 years to end the problem unless we get serious."

Businessworld
Inputs by Gurbir Singh, Gauri Kamath, Dhanya Krishnakumar, Shalini S. Sharma, Noemie Bisserbe, Pierre Mario Fitter, Manashwi, Sreevalsan Menon, Janhavi Abhyankar and Deepti Bose

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