PESD has concluded a two year collaborative study on the Indian natural gas market with three India research groups- A.T. Kearney, Indian Institute of Management - Ahmedabad, and Integrated Research and Action for Development (IRADe). The study explores gas demand to the year 2025 in the three main gas consuming sectors within India - electricity generation, nitrogenous fertilizer production, and industrial applications - under a range of different policy and economic scenarios.

The study concludes that coal is likely to remain the dominant fuel in the power sector, but opportunities exist for gas in reducing regional air pollution and providing peaking power. For the fertilizer sector, significant opportunities exist to import cheap fertilizer, thereby reducing domestic gas demand, but political constraints will likely buoy gas demand. Industrial consumers will benefit from increased supplies from LNG to displace expensive liquid fuels, but cheap coal remains the dominant fuel for many industrial applications.

Regional air pollution constraints in the power sector - already underway in certain parts of India could reduce carbon dioxide emissions by over 100 million tonnes per year. Reforms underway in the Indian coal sector, however, could bring a surge in new supplies, which would undermine the opportunities for gas in the power sector.

From an international supply standpoint, India doesn't appear able to guarantee the offtake of a proposed large natural gas pipeline from Iran within the next 10-15 years, making the project very difficult to justify from a financial risk standpoint.

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Ray Salvatore Jennings is a practitioner scholar with extensive experience within war to peace transitions in over 20 countries including Iraq, Afghanistan, Lebanon, Indonesia, Bosnia-Herzegovina, Serbia, Montenegro, Kosovo, Macedonia, Peru, and Sierra Leone. Over the last twenty years, he has served as country director and senior consultant with the United States Institute of Peace, the United Nations, the United States Agency for International Development, the World Bank, and many non-governmental organizations. He has served as a Senior Fellow with the United States Institute of Peace, and as a Public Policy Scholar and an Eastern European Research Scholar with the Woodrow Wilson Center for Scholars in Washington, DC. He is currently conducting research with the Stanford University Center for Democracy, Development and the Rule of Law on comparative cases of democratic breakthrough, teaching post-conflict reconstruction and transitional development at Georgetown and Syracuse Universities and is a social development consultant to the World Bank on Middle East and North African affairs. He is the author of numerous articles and is co-authoring a book on democratic breakthrough with Michael McFaul. His media appearances include CNN, CSPAN, NPR and the BBC.

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Daniel C. Sneider
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Within weeks of 9/11, Japan dispatched ships to the Indian Ocean to provide fuel and other support to the Western forces waging the war in Afghanistan.

It was the first time since World War II that Japan sent forces abroad to support an overseas military conflict, although in a noncombat role. American policymakers hailed Japan as a loyal ally, willing to put "boots on the ground."

Come Nov. 1, however, the Japanese ships will be heading home.

American officials worry that, after taking steps to shed its postwar pacifism, Japan will now shirk its role as an ally in international security.

But these concerns are alarmist. The Japanese government, even its liberal opposition party, has shown a desire and commitment to contribute to global security.

A renewal of the law authorizing the mission in Afghanistan is now increasingly unlikely, since the opposition Democratic Party of Japan (DPJ), which opposes the measure, won a shocking victory in last summer's elections for the upper house of parliament. While the ruling conservative Liberal Democratic Party (LDP) is still determined to reauthorize the military role, it faces significant public opposition and a tough road in the parliament.

Some American officials and experts have issued bellicose warnings that not renewing the mission would signal a dangerous retreat from Japan's responsibilities in the world and undermine the security alliance. Others accused DPJ leader Ozawa Ichiro of being irresponsible, even "anti-American."

These remarks are clumsy and unfair. The possibility of Japan's return to a lesser security role is real enough, but its mission in Afghanistan is the wrong test of the country's reliability as an ally.

In reality, the maritime mission has become largely symbolic. As for Mr. Ozawa, if Americans would listen carefully to his arguments, they would find that he seeks to expand, not contract, Japan's global security role.

What the US sees as backtracking on global responsibility is actually something else --opposition, shared by Japan's liberal and conservative parties, to the American decision to invade Iraq. Once carefully buried behind the appearance of alliance solidarity, it is now surfacing.

Ozawa and his party have been unusually open in questioning the Iraq war, characterizing it as a war without clear international justification. According to reliable accounts, Japanese Prime Minister Fukuda Kazuo privately shares that view, as do others in the LDP.

US officials critical of the DPJ for avoiding a greater security role for Japan should remember that the party supported the antiterrorism law when it was passed in 2001. But they refused to support its renewal later after the Iraq war began. Over time, senior DPJ members say, the mission's original purpose got muddied with military operations in Iraq. Japanese and American officials deny that any diversion took place, but the Pentagon admits that ships engage in multiple missions and there is no way to segregate how fuel is used.

The new version of the law proposed by the LDP explicitly narrows the role of the Navy to supporting antiterrorist interdiction operations, a backhanded acknowledgment that there was no clear separation from the Iraq war.

Ozawa has long advocated a more visible security role for Japan outside its borders, calling on the government to send forces to aid the Gulf War in 1991 and pushing through legislation allowing Japanese participation in UN peacekeeping operations.

Japanese peacekeepers, however, are restricted to noncombat missions. Despite inching toward a larger security role, the government stands by an interpretation of Japan's American-authored antiwar clause in its Constitution that bars the use of force for anything other than to respond to an attack on themselves. But Ozawa has long contended that the constitutional bar should not extend to UN activities.

This month, Ozawa proposed that instead of the maritime force, Japan should send peacekeepers to Afghanistan under the auspices of the UN-authorized international security forces, and to Sudan as well.

Ironically, the ruling conservatives reject that as unconstitutional, arguing it would be an act of collective defense rather than self-defense.

"If Japan is to really be an ally of the US ..." Ozawa wrote, "it should hold its head up high and strive to give proper advice to the US." And in order to do that," he continued, "Japan had to be willing to put itself more on the line by sharing responsibility for peacekeeping, not just sending a few boats out of harm's way."

These are ideas that should be embraced, rather than denounced, by American officials.

Reprinted by permission by the Christian Science Monitor.

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Once the jewel in the crown of the formidable British Empire, India has been surrounded by myth for years. After gaining independence in 1948, this often misunderstood country found itself faced with a new sense of freedom -- and along with it, enormous burdens and challenges. While exotic, mysterious, and seductive, it has also become an economic force to be reckoned with. With the fourth largest economy in the world, the largest youth population on Earth, and a thriving middle class, India is the second-most-preferred destination for foreign investment. But very few Americans truly understand what a rich and powerful country it has become -- or its role as a global power, center of outsourcing, and potential partner with the United States.

From the country's thriving film industry to its burgeoning high-tech industry, as well as its attempts to stabilize its economy, India Arriving offers a fascinating glimpse into the real India, with all of its assets and all of its faults.

Author Rafiq Dossani goes beneath the veil surrounding India and considers the many ways it has begun to emerge onto the world stage. He explores its birth as an independent nation and forces like political shifts, social reform, and education that have helped to shape a new India. Honest and revelatory, India Arriving provides a deeper understanding of a country that promises to be the next major player in the world economy.

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UNAFF, which is now completing its first decade, was originally conceived to celebrate the 50th anniversary of the signing of the Universal Declaration of Human Rights. It was created with the help of members of the Stanford Film Society and United Nations Association Midpeninsula Chapter, a grassroots, community-based, nonprofit organization. The 10th UNAFF will be held from October 24-28, 2007 at Stanford University with screenings in San Francisco on October 17 and 18, East Palo Alto on October 19 and San Jose on October 21. The theme for this year is "CAMERA AS WITNESS."

UNAFF celebrates the power of films dealing with human rights, environmental survival, women's issues, protection of refugees, homelessness, racism, disease control, universal education, war and peace. Documentaries often elicit a very personal, emotional response that encourages dialogue and action by humanizing global and local problems. To further this goal, UNAFF hosts academics and filmmakers from around the world to discuss the topics in the films with the audience, groups and individuals who are often separated by geography, ethnicity and economic constraints.

Over three hundred sixty submissions from all over the world have been carefully reviewed for the tenth annual UNAFF. The jury has selected 32 films to be presented at this year's festival. The documentaries selected showcase topics from Afghanistan, Bolivia, Canada, Chile, China, Croatia, Cuba, France, Haiti, Kenya, Kosovo, Iceland, India, Iran, Iraq, Ireland, Iran, Israel, Italy, Lesotho, Macedonia, Mongolia, Nigeria, Norway, Palestine, Peru, Romania, Russia, Saudi Arabia, Serbia, Spain, Sudan, Uganda, the UK, Ukraine, the US, Vietnam and Zambia.

Cubberley Auditorium (October 24)
Annenberg Auditorium (October 25-28)

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There is no consensus as to what outsiders can or should do in response to the dire situation inside Burma (Myanmar). At least that was the impression left by a vigorous discussion at a standing-room-only event convened by SEAF on October 18, 2007 on "Burma's Crisis: What Should Outsiders Do?"

Reviewing the protests that broke out in Burma in August 2007, swelled into mass demonstrations for democracy, and were brutally repressed by the junta in September-October, Maureen Aung-Thwin, who heads the Open Society Institute's Burma Project, argued for targeted sanctions. In her view, for example, cutting the flow of tourists to Burma would be less effective than spotlighting China's ties to the junta in the run-up to the 2008 Beijing Olympics, when Chinese leaders would be especially sensitive to embarrassment. But if positive change could be achieved through engagement, that too would be worth trying, in her estimation.

Zarni, an author, activist, and visiting research fellow at Oxford University, differed from Aung-Thwin in recommending constructive and coordinated engagement. And whereas she thought that the political situation inside Burma, if it were to change at all, could change rapidly, Zarni argued that "gradual change is the only solution." Yet just as Aung-Thwin welcomed engagement, if that could promote democracy, protect human rights, and reduce the suffering of Burmese, so was Zarni amenable to sanctions if they could effectively serve such ends.

The willingness of both speakers to entertain a range of options reflected the difficulty of inducing change in Burma from the outside, and the corresponding inclination to be eclectic about options. One speaker from the floor went so far as to suggest that only physical intervention from the outside could end the repression. But of all the proposals suggested, that one appeared to be by far the least realistic.

Several speakers urged that China, India, and/or the Association of Southeast Asian Nations (ASEAN) be persuaded to put pressure the regime. But there was little faith in the room that Burma's immediate neighbors would sacrifice their economic interests, including access to Burma's natural gas, for the sake of promoting political reform. The sense of pessimism prevailing in the room prompted one person in the audience to suggest later that all one could hope to do was extend humanitarian aid to the Burmese people and wait for political reforms that might never arrive.

Suharto's authoritarian "New Order" regime in Indonesia unraveled quickly in 1998. Aung-Thwin recalled a conversation she had had that year with an expert on Indonesia. He had told her he expected the New Order to last a long time. Three weeks later, Suharto resigned.

Aung-Thwin offered this anecdote by way of suggesting that events in Burma, too, could someday catch observers by surprise. Also surprising, in view of this discussion, would be the effectiveness of any external action, on the full spectrum from sanctions to engagement, to induce the democratization of Burma.

The Asia Society Northern California and the Center for Southeast Asian Studies at the University of California-Berkeley co-sponsored this event with Stanford's SEAF. Of course none of the three is responsible for the opinions expressed on the panel or during the Q and A.

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Shorenstein APARC's Senior Research Scholar, Rafiq Dossani, invited to participate in an online debate on indian outsourcing.

Pro: Not as Tempting

by Sabrina Siddiqui, intern, BusinessWeek, and a senior at the Medill School of Journalism at Northwestern University.

There is no doubt that over the last decade, India fortified its rule over the shared services and outsourcing (SSO) sector. Access to low-wage yet skilled workers allowed local global technology services giants Infosys (INFY), Tata Consultancy Services (TACSF), and Wipro (WIT) to employ tens of thousands of Indians to do work for such multinational corporate clients as Bank of America (BAC), Microsoft (MSFT), and Ericsson (ERIC).

But a recent study by Frost & Sullivan consolidates the idea that India's outsourcing has already peaked, and there are a number of factors to blame:

The Rupee Riddle. Earlier this year, the Indian rupee appreciated 8.4% against the U.S. dollar and touched 41.14 to the dollar, its highest rate in nine years. A significant reason for concern for the outsourcing sector, the upward value of the rupee continues to put a squeeze on earnings. By April, 2007, it had cut margins by about 2.5 percentage points.

Cost (In)Efficiency. Companies looking to outsource have long seen India as their most cost-efficient vehicle. But with wage inflation running 15% to 25% per year, India can no longer use the siren song of its labor being the cheapest. Competitors like China can offer their services at a lower cost, while firms like Infosys are stuck recruiting from outside the country, because the comparable Indian staff is growing too expensive.

That Age-Old Infrastructure. As much as the economy continues to boom, how long can it sustain its position when IT operations spend considerably on backup systems to fight regular blackouts? And the 300,000 engineering students who graduate each year may be short of the level needed to support modernization of infrastructure and industry growth. (Not to mention that the peculiarly accented "Doug Smith" on the computer help desk is a little too hard for U.S. callers to comprehend.)

So if you assume you're being rerouted by tech support to a call center in Bangalore, guess again. It seems India's grasp on the SSO market is at long-term risk, and it just so happens that your call might be answered by someone in Shanghai.

Con: Plenty of Spice Left

by Rafiq Dossani, Stanford University and Martin Kenney, University of California, Davis

Notwithstanding the occasional news stories about companies returning work earlier offshored to India, the logic behind offshoring and its financial impact (both on outsourcing firms operating in India and their American clients) remains intact. First, the logic: A fresh engineer costs $8,000, including benefits, on average in Bangalore. Even a "Google-quality", presumably equivalent to the best Google can hire anywhere (in fact, Google offers its India recruits the option of working in Silicon Valley if they so desire) costs $30,000. These wages are much lower than in the U.S. and will remain that way for at least a decadeespecially if the ambitious graduation targets of Indian education policymakers are realized.

Of course, there are problems in doing work long distance: Coordinating the work of global teams is costlier than coordinating such work locally. The intellectual property issues could be important. But offshoring is now tried and tested enough, and large corporations are deeply committed to it.

By 2010, many large multinational corporations like IBM (IBM) will have their largest workforces in India. This is creating a relatively rich ecosystem in a number of Indian cities, especially Bangalore.

Already, for a number of these firms, their Indian operations are being declared global centers of excellence, whose value goes well beyond just cost savings. Undoubtedly, some smaller firms have faced high initial costs, but even they, particularly the technology firms of Silicon Valley, have committed to Indian operations. Firms such as Infinera (INFNO) and HelloSoft have substantial Indian operations that are critical to their success. For them to retreat would require a major reorientation of their business strategy.

The appreciating rupee will, like rising wages, affect offshoring decisions. However, the Indian system integrators such as TCS, Infosys, and Wipro, which are also being squeezed by costs, have experienced profits rising at about 35% a year for the past decade and enjoy margins in excess of 20%. This provides ample room to absorb rising costs.

There can be little doubt that the Indian ecosystem is maturing. However, the growth of offshoring to India has not peaked.

Reprinted by permission from BusinessWeek.

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The Third Annual Globalization of Services Conference will explore the following questions:

  1. The changing geography of system integrators: The incumbent system integrators (SIs) are building up their developing nation service provision capability through acquisitions and internal expansion. The thrust of their expansion is to add capacity quickly. Can they manage it effectively? At a slower pace, the Indian SIs are doing the same in developed and developing nations: adding low cost workforces in developing countries, buying relationships in developed countries. Can they manage it effectively. Will growth rates and margins converge; if not, why not? What are some of the interesting differences between firm strategies?
  2. The changing business models of system integrators: The Indian system integrators appear to be driving a new, metric-based quality model that is driving price compression. Is this strong enough to provide a permanent advantage? IBM and others are responding with a combination of superior technology, client relationships and domain expertise, drawing upon their established strengths while also expanding in India and other low-cost developing countries. Are we witnessing a convergence to a common business model? Is there a European perspective? Is it different and does it make a difference?
  3. Product firms' globalization strategies (separate sessions on established and new firms): The IT product firms have to balance several additional factors that service firms like the SIs do not face when they globalize; among them, intellectual property protection, business development, managing innovation, research team coordination and marketing. How is this working, and what business models are they experimenting with? What are the differences between an established firm versus a startup?

All participants will receive a copy of Dr. Dossani's newest book India Arriving: How this Economic Powerhouse is Redefining Global Business. Details of this can be found through the link below. Provided through the generosity of Arada Systems.

Details about the previous two events can be found at:

Globalization of Services

The Second Annual Globalization of Services Conference

Conference Sponsors:

Bechtel Conference Center

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Jacob Shapiro (speaker) is a CISAC postdoctoral fellow. His primary research interest is the organization of terrorism and insurgency. His other research interests include international relations, organization theory, and security policy. Shapiro's ongoing projects study the balance between secrecy and openness in counterterrorism, the impact of international human rights law on democracies' foreign policy, the causes of militant recruitment in Islamic countries, and the relationship between public goods provision and insurgent violence in Iraq and Afghanistan. His research has been published in International Security, International Studies Quarterly, Foreign Policy, and a number of edited volumes. Shapiro is a Harmony Fellow at the Combating Terrorism Center at the United States Military Academy. As a Naval Reserve officer he was assigned to the Office of Naval Intelligence and the Naval Warfare Development Command. He served on active duty at Special Boat Team 20 and onboard the USS Arthur W. Radford (DD-968). He holds a PhD in political science and an MA in economics from Stanford University and a BA in political science from the University of Michigan.

Jeremy Weinstein (discussant) is an assistant professor of political science at Stanford University and an affiliated faculty member at CDDRL and CISAC. Previously, he was a research fellow at the Center for Global Development, where he directed the bi-partisan Commission on Weak States and US National Security. While working on his PhD, with funding from the Jacob Javits Fellowship, a Sheldon Fellowship, and the World Bank, he conducted hundreds of interviews with rebel combatants and civilians in both Africa and Latin America for his forthcoming book, Inside Rebellion: The Politics of Insurgent Violence. He has also worked on the National Security Council staff; served as a visiting scholar at the World Bank; was a fellow at the Woodrow Wilson International Center for Scholars; and received a research fellowship in foreign policy studies at the Brookings Institution. He received his BA with high honors from Swarthmore College, and his MA and PhD in political economy and government from Harvard University.

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Jacob N. Shapiro Speaker
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The Comprehensive Nuclear Test Ban Treaty (CTBT) is a pivotal litmus test to determine a nation's "walking-the-walk dedication" on nonproliferation matters. The September Article XIV conference to obtain Entrance-Into-Force was attended by delegations from Iraq, Iran, Pakistan, China, Russia, and 101 other nations, but not the United States, North Korea, and India (1). The views of key global diplomats on the purpose and direction of the CTBT will be cited, followed by an analysis of funding and regional acceptance.

Official proceedings were adjourned for a two-hour session with three non-diplomats and Ambassador Jaap Ramaker (UN Conference on Disarmament chief CTBT negotiator) (2). The technical presentation on CTBT monitoring progress (2005-6 CISAC study) will be summarized (3). Monitoring has advanced since the 1999 Senate defeat by lowering the monitoring threshold from 1 kt to 0.1 kilotons (1-2 kt in a cavity), and by improvements in regional seismology (results of 2006-DPRK test and other data), correlation-wave seismology, interferometric synthetic aperture radar, cooperative monitoring at test sites without losing secrets, radionuclide monitoring improvement by a factor of 10, and other results. This presentation showed that the CTBT was effectively verifiable, in accordance with the Nitze-Baker definition.

CTBT has not been discharged from the Senate's Executive Calendar, thus the United States cannot legally resume nuclear testing without a Senate vote to discharge it. The NPT regime is in trouble; Article IV will mostly allow sensitive fuel cycle operations. The overlap between NPT and CTBT will be discussed. The statement of concern on CTBT by Senator Kyl (Cong. Record, 10-24-07) will be examined. Lastly, a path to Entrance-Into-Force for the CTBT will be described.

David Hafemeister was a 2005-2006 science fellow at CISAC. He is a professor (emeritus) of physics at California Polytechnic State University. He spent a dozen years in Washington as professional staff member for Senate Committees on Foreign Relations and Governmental Affairs (1990-93 on arms control treaties at the end of the Cold War), science advisor to Senator John Glenn (1975-77), special assistant to Under Secretary of State Benson and Deputy-Under Secretary Nye (1977-78), visiting scientist in the State Department's Office of Nuclear Proliferation Policy (1979), the Office of Strategic Nuclear Policy (1987) and study director at the National Academy of Sciences (2000-02). He also held appointments at Carnegie Mellon, MIT, Stanford, Princeton, and the Lawrence-Berkeley, Argonne and Los Alamos national laboratories. He was chair of the APS Forum on Physics and Society (1985-6) and the APS Panel on Public Affairs (1996-7). He has written or edited ten books and 140 articles and was awarded the APS Szilard award in 1996.

(1) http://www.ctbto.org/reference/article_xiv/2007/article_xiv07_main.htm

(2) http://www.vertic.org/news.asp#ctbtreport

(3) D. Hafemeister, "Progress in CTBT Monitoring Since its 1999 Senate Defeat," Science and Global Security 15(3), 151-183 (2007).

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David Hafemeister Speaker
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