MonitorsPublished on Feb 16, 2012
Bhutan's honeymoon with democracy seems to be facing its first challenge, that too from unexpected quarters. For a nation that boasts of measuring its national wealth in terms of Gross National Happiness (GNH) and not conventionally in GDP.
No way out of rupee crunch
< class="heading1">Analysis

Bhutan’s honeymoon with democracy seems to be facing its first challenge, that too from unexpected quarters. For a nation that boasts of measuring its national wealth in terms of Gross National Happiness (GNH) and not conventionally in GDP, the current difficulty rupee crunch is an added problem. The issue is not only serious for the nation but also quite unique.

The current issue stems from a liquidity crunch, which is a symptom of deep-rooted weaknesses in the country’s economic fundamentals rather than just a central macro-economic challenge in contemporary terms. At the same time, the nation has to address both supply-side and demand-side constraints, as well.

The new democracy is largely dependent on its giant southern neighbour, India, for almost all trade and communication with the outside world. It meets 80- 90 per cent of all its needs through imports from India. Almost 96 percent of all food and processed food and beverage imports are derived from India. This excludes essential fuel imports which amounted to Nu 30.8 billion in 2010 and the huge expatriate labour force imported to work in the construction industry. For the year 2010-11, Bhutanese have spent over Nu 2.5 billion on health and education in India. Besides these, the import of construction and installation-related services are largely met by India. This alone has increased by 17.6 percent or Nu 1.2 billion in 2010-11.

The national currency, ngultrum’s value is pegged against the Indian rupee, which is a valid tender in Bhutan. The ngultrum as a currency came into existence only in 1974 when the Kingdom decided to have an alternative to the rupee, which at the time was the sole tender. Despite the introduction of the ngultrum, the rupee is widely accepted as a currency and its demand has not really shrunk over the years.

The high dependency on the rupee is largely driven by structural factors. First, Bhutan’s open borders and trade agreements with India have resulted in creating an environment that’s largely dependent upon both imports and exports involving the larger neighbour. All these transactions are largely carried out in rupee and not in any other currency. The second factor is that the economy is agriculture-based and engages four-fifth of the total work-force. This, in the absence of exclusive production of any one product, limits the scope of Bhutan’s exports to India, thereby losing the opportunity to earn foreign exchange reserves.

The third factor that has added to the existing woes is the fact that the nation has limited avenues to support industrialisation and a skilled labour force. Incidentally, the skill-based labour market is largely driven by Indians. This expatriate labour force either earns in rupees or exchanges the local currency for rupee, thereby driving the demand for the Indian currency. The same holds true of immigrants from Bhutan, who usually end up in India, in the process converting the ngultrum in their possession into the legal tender that is acceptable in India.

The structural issue that the nation faces is largely driven by other considerations and not by traditional money market factors. The central bank, the Royal Monitory Authority of Bhutan (RMA), or for that matter any other financial institution fails to play a significant role in creating a rupee-reserve. Incidentally the RMA’s responsibility lies only in managing the foreign reserves, and not in either creating one or formulating suitable policies for the purpose.

This situation is also aggravated by the presence of Indian banking institution and the overall relations between the banking sectors in the two nations. Despite the measures taken by the Government to limit or control the nation’s dependency on the rupee, the free flow of bank overdrafts negates such measures. This is also aggravated by the small but formidable informal network for money transfers.

Bhutan’s foreign exchange reserves largely comprise international donor assistance. But then this avenue too is shirking since all such borrowings are becoming increasingly commercial rather than concessional, especially for developmental activity and the hydro-power sector. Incidentally the rupee question is partly addressed by commitments made by New Delhi for Bhutan’s development through the Five-Year Plans in and for India.

The need for the hour is for Thimphu is to explore avenues that would enable it to earn foreign exchange, including rupee. This can be addressed by increasing the exports and reducing imports. But then this proposition seems to be a non-starter since imports from India outpaces exports. For the year 2010-11,imports from India grew by 43.4 per cent, an abnormal phenomenon. The Government is trying to tackle the situation by drafting a new FDI policy that would promote investment in Indian rupees, thereby earning the much-valued foreign currency. Yet, this too may not address the liquidity issue completely.

A blessing in disguise for Bhutan is its continuing close ties with India and the confidence flowing from the same. This relationship has always come to the rescue of Bhutan in testing times, and the current one is no different.

(The writer is a Research Assistant at Observer Research Foundation)

< class="heading1">Analysis

Assembly poll results hold the key to economy

Dr Satish Misra

There is and has always been and possibly in foreseeable future also will remain a very close relationship between politics and economy. This is particularly true of democratic dispensations. At the time of writing this analysis, there are two political scenarios possible on March 6 when the results of the five-State Assembly elections are declared by the Election Commission of India -- either the country would start moving towards mid-term polls to Parliament or the ruling UPA Government in New Delhi would complete its full term and the General Election would take place as scheduled in 2014.

If election results from Punjab, Uttarakhand, Manipur, Goa and particularly from Uttar Pradesh went the Congress way -- that is to say, if the Congress Party wrests power in Punjab and Uttarakhand from the Opposition and improves upon its tally in UP from 22 to over 60, then the Government of Prime Minister Manmohan Singhwould be in a position to push reforms and bite the bullet. Positive results from Manipur and Goa would be additional dividends for the UPA.

On the other hand, if the ruling ShiromaniAkali Dal-BJP alliance returns to power in Punjab, and the BJP-led Government in Uttarkhand too beat anti-incumbency by registering the second successive win, then the countdown for the General Election would begin. The BSP’s return to power either on its own strength or in company of the BJP in Uttar Pradesh, it would definitely be interpreted as the rejection of the policies of the Centre’s policies, and thus would be termed as loss of popular will in UPA-II. This would embolden the Opposition and the only course open for the Alliance would be to call early elections to Parliament.

In the first scenario, the task of Finance Minister Pranab Mukherjee would become easier as the Opposition, particularly the BJP, would have to pause and redefine its strategy. If the Government manages to get the pending Bills of Lokpal, Land Acquisition, Judicial Accountability and others passed then a bold budget would become a reality. At the same time, the Government would have to take the Opposition on board to carry out much-needed reforms and passing of the crucial Bills in parliament. The responsibility is collective and no one can escape from it.

The Indian economy too, like many other global economies, witnessed a downward trend in 2011 as the projected GDP growth for 2011 came down to 6.9 per cent from the promised figure of 8.5 per cent. Though it is not easy to predict the trajectory of economic growth for 2012, there are some green shoots visible in some areas and sectors of the domestic economy. It seems that prospects are not as bad as compared to the preceding year. Many indicators strongly suggest that higher economic growth is well within reach. But growth cannot be taken for granted. The country at large and the UPA-II Government in particular would have to labour hard to create a policy regime in order to achieve it. In this, the role of the Opposition is going to be equally crucial.

Inflation, particularly food inflation, has been in a negative zone. Overall inflation fell to 7.5 per cent in December 2011 from 9.1 per cent in November. Reserve Bank of India’s strict monetary policy, keeping interest rate high for almost two years, appears to be easing out. RBI had raised rates 13 times between March 2010 and October 2011, making it one of the most hawkish central banks anywhere.On January 24 this year, the RBI cut cash reserve requirements by 50 points to ease the tight liquidity conditions, indicating a policy shift towards reviving growth after fighting inflation for almost two years. If the trend continues, then one is likely to see the revival of industrial and business activities.

The benchmark stock index is up nearly 15 per cent this year while the rupee has risen about eight per cent from its 2011 close, with both registering the sharpest gains in more than a decade. The rupee gained 7.45 per cent against the dollar in January, which according to experts is the best monthly gain in the last 17 years.

There are reports that consumer market is also showing positive signs as January, 2012 figures suggest that shoppers have begun to purchase. Sales of TVs, tablets, smart phones, laptops and desktops and apparels have seen an upward trend which is continued may see bigger volumes. The export picture in 2011 was very bleak as markets in Europe and the US were facing squeeze in the light of Eurozone crisis and American debt crisis.

Despite these early signs, there are still many ifs as the growth ultimately would depend on many national as well international factors. Internationally, there are some positive signs. The euro-zone crisis is nearing a solution. Employment figures in the US are also on positive. Growth in BRICS countries is on a rising path.

It is true that Finance Minister Pranab Mukherjee has a difficult job of balancing diverse and often enough contradictory interests. In his Union budget, to be presented on March 16, he would have to follow a strategy which can create a favourable environment for growth without stoking embers of inflation which also ensure employment growth. If inflation rises beyond a certain limit then the RBI is bound to tighten the money supply which is a serious constraint on investment initiatives. At the same time, not only he would have to ensure fiscal discipline as fiscal deficit rose in 2011-12 to 5.5 per cent from 4.7 per cent in 2010-11, he would also have to ensure the job growth as jobless growth has serious social fallout.

But the timing of the next budget, immediately after the electoral results of five states assembly elections is such that the Finance Minister could take bold steps as the general elections are away in 2014 and next round of assembly elections are slated for later this year in which the Congress does not have much leeway. This coming budget is going to be the last opportunity for the Finance Minister to even take hard and unpleasant decisions and the next budget in 2013 would have to take care of popular expectations and aspirations in the light of the 2014 general elections. Since, the government formation would be due in May, 2014; the budget that year would have to be an interim one or Vote on Account.

That is why, Minister Mukherjee can afford to be innovative and present a roadmap for reforms which alone could create a framework for growth. Investors are waiting impatiently for Government to lay down a policy regime which ensures level playing field and adequate returns on their money.That is why March 6 is a crucial date for both Indian economy and politics.

(The writer is a Senior Research Fellow at the Observer Research Foundation)

< class="heading1">Country Reports

< class="heading12boldGeorgia">Rewriting hydro deals

The 8th Empowered Joint Group meeting between the Government of Bhutan and India has revisited the terms of references on joint hydro-power projects. The two sides after prolonged negotiations have agreed that the Indian developed projects will be handed over to Bhutanese authorities after a period of 35 years.

The Indian PSU’s who are the primary promoter of these hydro-electric projects have agreed to pay a 12 per cent royalty during the loan period and 18 per cent royalty after that. The PSU’s will also enjoy corporate tax holiday of ten years. The two Governments have also agreed that all commercial ventures will be decided by the laws of Bhutan.
< class="text11verdana">Source:, February 12, 2012.

< class="heading12boldGeorgia">FDI approved

The foreign direct investment (FDI) division of the Ministry of Economic Affairs (MoEA) has approved two new proposals for FDI worth Nu 322.5 million. The two projects are that of Bhutan Concast Private Limited, a Nu 210 million investment in Pasakha, and Bhutan H20, a Nu 112.50 million mineral water project in Paro.

Government officials said that a few proposals have been put on hold because the draft FDI regulations are under review. The Ministry is yet to finalize the draft rules and procedures for FDI’s as it is trying to simplify the rules so as to attract more investors.

Till date India has 11 FDI proposals followed by Singapore with four and the US, three. There are also proposals from Germany, Thailand, Denmark and the UK. Out of 29 proposals approved so far, 10 are already functional while others are under construction. According to official records, most of the FDIs are for hotels and resorts.

In terms of investment, the Dagachu Hydro-power Project is the biggest FDI with an initial investment of Nu 8,016 million while G4S Security Services has generated the highest employment opportunities for 450 people.
< class="text11verdana">Source:, February 11, 2012.

< class="heading12boldGeorgia">Barter trade with West Bengal

The Government of Bhutan is formalising a barter agreement with the Indian State of West Bengal. The agreement that been worked out will been in working out an electricity barter arrangement between the two for the winter and summer period from 2012-16.

The two sides will supply the other with elasticity during lean periods without any financial transaction.
< class="text11verdana">Source:, February 15, 2012.

< class="heading12boldGeorgia">Economic opportunities in Iran

India emerged as a major new irritant on Thursday in Western efforts to isolate Iran, announcing that it was sending a large trade delegation there within weeks to exploit opportunities created by the American and European anti-nuclear sanctions that are increasingly disrupting Iran’s economy.

The trade delegation announcement coincided with new reports that India, an important consumer of Iranian oil, had eclipsed China for the first time as Iran’s No:1 petroleum customer last month, subverting efforts by the United States to persuade other countries to find non-Iranian sources for their energy needs or risk onerous penalties under a new American sanctions law.
< class="text11verdana">Source:, February 9, 2012.

< class="heading12boldGeorgia">Strong ties sought with Saudi Arabia

India and Saudi Arabia have looked at ways to enhance bilateral ties during the two-day visit of Indian Defence Minister A K Antony.

Defence Minister Prince Salman bin Abdulaziz Tuesday met Antony in the presence of Deputy Minister of Defence Prince Khalid bin Sultan bin Abdulaziz, reported Saudi Press Agency (SPA).

This was the first time an Indian Defence Minister was visiting Saudi Arabia. The trip began on Monday.
< class="text11verdana">Source: The Times of India, February 15, 2012.

< class="heading12boldGeorgia">Air India ups Boeing demand

Air India Ltd (AIND) increased its demands for compensation from Boeing Co. (BA) to about $1 billion following the plane-maker’s delays in delivering new 787 Dreamliner, an Indian Civil Aviation Ministry official said in New Delhi.

The talks won’t affect deliveries, and there’s room to negotiate until all 27 Dreamliners on order have been handed over to the State-owned airline, said the official. Boeing, based in Chicago, declined to comment.
< class="text11verdana">Source:, February 10, 2012.

< class="heading12boldGeorgia">’Made in India’ show in Pakistan

Trade ties between India and Pakistan are expected to get a boost as New Delhi reaches out to the business community across the border, starting Monday to assure them about the positive impact of normal trade ties. Commerce minister Anand Sharma will undertake a rare journey to Pakistan, leading a large delegation of senior officials and top businessmen as the two hostile neighbours take baby steps to normalise trade and economic relations.

The private sector led by industry chambers has put up an "India show", in Lahore and Karachi - the first ever trade exhibitions from India where over 100 exhibitors are participating. Firms representing pharmaceuticals, textile, gems and jewellery, chemicals and petro-chemicals are showcasing products
< class="text11verdana">Source: The Times of India, February 11, 2012.

< class="heading12boldGeorgia">Interceptor missile scores with direct hit

India moved closer to the deployment of the fledgling, home-grown Ballistic Missile Defence (BMD) system on Friday (February 10) when an interceptor missile achieved a direct hit and destroyed an incoming target missile at an altitude of 15 km over the Bay of Bengal.

With this success, India joined a select band of four countries which have ballistic missile defence capabilities.
< class="text11verdana">Source: The Hindu, February 11, 2012.

< class="heading12boldGeorgia">New telecom policy outlined

India Wednesday unveiled the broad contours of a new telecommunications policy that aims to simplify licensing rules, encourage mergers and acquisitions, and bring greater transparency to a sector tarnished by graft allegations. This is the third time the Government has formulated a policy for the sector, after similar moves in 1994 and 1999.

Allegations of rigging in a sale of licenses and bandwidth in 2008 led to the arrest of lawmakers and company executives, put the government under pressure and prompted the Supreme Court to cancel 122 licenses allotted without auctions.
< class="text11verdana">Source:, February 16, 2012.

< class="heading12boldGeorgia">India helps end deadlock

In a bid to help Maldivian stake-holders to end the political deadlock, Foreign Secretary RanjanMathai visited Male and met with leaders, including President Mohammed Waheed Hassan and his predecessor, Mohammed Nasheed, apart from DRP Opposition Leader Thasmeen Ali, the Speaker of the People’s Majlis and the Chief Justice of the Supreme Court.

"In the interests of national reconciliation and to encourage harmony between our citizens, the Government of National Unity will hold discussions with all relevant parties to conduct elections by an early date. The Government of National Unity will work towards the conditions that will permit such elections to take place including any necessary constitutional amendments," Mathai said while talking to the local media. "Our understanding is that elections would be held as early as considered feasible by all concerned. This is to be discussed by the parties," he said further.

In New Delhi, the Official Spokesperson of the Ministry of External Affairs stated that India welcomed President Waheed’s announcement on the agreement among all political parties "to the blueprint that restores calm to our Islands and sets out the next steps for our nation ? Roadmap for a Possible Way Forward".
< class="text11verdana">Source:

< class="heading12boldGeorgia">New Vice-President

President Dr. Mohamed Waheed Hassan Manik nominated prominent businessman Mohamed WaheedDeen as the Vice-President of the Maldives. Talking to the media, President Waheed said that the nomination of WaheedDeen would be submitted to Parliament for approval.

Deen’s appointment came after President Waheed had stressed that he would appoint a Vice-President with no political affiliations and urged all political parties not to influence his decision.
< class="text11verdana">Source: Haveeru Online, February 16, 2012.

< class="heading12boldGeorgia">NLD membership soars

The National League for Democracy’s re-entry in to politics since last year has been welcomed with open arms. The party on Tuesday, February 14 claimed that it has sold close to half a million membership forms over the last few months. The party is hopeful that those who had got the membership forms Kyat 100 a piece would eventually become member. At present it is not clear that how many individuals were old members who were asked to rejoin the part since its legal re-entry into national politics.

It is expected that all those who turn in their application forms will become members of the part. But then faith of former party members who broke away to form the National Democratic Front before the 2010 election is uncertain. Incidentally the party hopes to achieve its all-time high of a million members that it enjoyed in early 1990’s.

Irrespective of the size of the party members, NLD and its leader Aung San SuuKyi received a hero’s welcome from all section of the society. The SuuKyi’s election rally for the upcoming by-election had attracted large number of NLD sympathisers.
< class="text11verdana">Source:, February 14, 2012.

< class="heading12boldGeorgia">By-election observers: To be or not to be

US Senator John McCain a few weeks ago had called for international observers to monitor the April 1 by elections and said that that one would have to look carefully at the electoral process. But then the European Union Development Commissioner, AndrisPiebalgs has said the independent overseer is not a necessity. This comes in light of the Commissioner observation that the political situation in the nation provides an environment for the people to judge for themselves.

These observations were made by AndrisPiebalgs while addressing the media after he had announced a Euro 150 million development aid. This aid package comes despite the existing economic sanction that the EU has imposed upon Myanmar.
< class="text11verdana">Source:, February 15, 2012.

< class="heading12boldGeorgia">No probe into HR abuse

The Chairperson of Myanmar’s Human Rights Commission, Win Mra had said that it was premature for the newly established body to investigate into incidents of human rights violation in the ethnic region of the nation. The Chairperson has said that investigation into alleged cases of human rights abuses at this point of time would be inappropriate since the government and a number of ethnic groups are engages in a talks or peace process. He said that national reconciliation is a political process and the human rights issues at this juncture could be inappropriate.
< class="text11verdana">Source:, February 15, 2012.

< class="heading12boldGeorgia">Indian ban on migrant-ownership

The Local authorities in Churachandpur district of Manipur, India, are preparing to ban Myanmarese migrants from owning weaving houses. The reason for such a ban is that the Myanmarese owned establishment lack proper permits and licences. This ban that’s yet to come into force would not affect immigrate labours in this sector.

At present there are 10 Myanmarese owned weaving houses in Chiengkonpang, Ngathal and Kawnpui. At the same time it is believes that the ban has been motivated to protect the interests of local business since the Myanmarese owned establishment are more competitive than their Indian counterparts.
< class="text11verdana">Source:, February 14, 2012.

< class="heading12boldGeorgia">Ex-police chiefs get jail-term

A Special Court has convicted three former chiefs of the Nepal Police and two procurement suppliers, including a foreign national, in the biggest ever corruption scandal, popularly known as the Sudan scam, that defamed Nepal internationally and tarnished the institutional image of Nepal Police.

But the special tribunal in the same verdict passed unanimously by its three judges acquitted 31 former and incumbent police officers as it found them working under chain of command pressure in the decision to procure armored personnel carriers (APCs) and other logistics for Nepal Police peacekeepers deployed in war-ravaged north African country Sudan in 2007.

The court slapped two-year imprisonment on all three former police chiefs -- Om BikramRana, Hem BahadurGurung and Ramesh Chandra Thakuri-- and various fine amounts on others depending on the level of involvement in corruption in the procurement, which were later found to be substandard and obsolete.

According to the charges-heet filed by the Commission for Investigation of Abuse of Authority (CIAA) last July, altogether Nepali Rs 288 million was embezzled in the procurement of the APCs and other logistics. A UK-based supplier, Assured Risks Company, had supplied the substandard APCs and other logistics through its local agent, ShambhuBharati, of Bhagawati Traders.
< class="text11verdana">Source:, February 14, 2012.

< class="heading12boldGeorgia">Unilever to resume operations

The management and the protesting workers of Unilever Nepal have expressed their readiness in resuming operations of the closed multinational company, with both parties in dispute agreeing to initiate talks and work simultaneously.

The verbal agreement was reached on February 14 during a meeting held at the Labor Office in Hetauda. The Basamadi Factory of Unilever Nepal has remained closed since February 5 after the factory’s workers launched a strike demanding 50 per cent hike in salary and allowances, interest-free housing loan of Nepali Rs 1 million per person and house maintenance allowance of Rs 100,000 per person per year.

Unilever management said the demands were placed at a time when the remuneration of staff was raised by 69 per cent between 2009 and 2011, as against rise in company´s profit of 37.3 per cent in the same period.

The incident at Unilever is said to have has set a bad example for other foreign investors who are looking at Nepal for future iinvestments.
< class="text11verdana">Source:, February 15, 2012.

< class="heading12boldGeorgia">Black-listing likely by FATF

There has emerged a possibility that Nepal may be put in the ’black list’ of the Financial Action Task Force (FATF) if Parliament fails to pass the anti-money laundering Bill by February 18. Some 16 political parties have submitted a memorandum to PM BaburamBhattarai stating that failure to endorse the bill would tarnish Nepal’s image in the international arena.

Three different bills on money laundering, mutual legal assistance and organised crimes are pending in parliament due to opposition by UCPN (Maoist)’s hardline faction-aligned lawmakers.
< class="text11verdana">Source:,, February 16, 2012.

< class="heading12boldGeorgia">Law for caretaker govt

After much deliberation the 20th Constitutional Amendment that was tabled by Law Minister MaulaBakhshChandlo was passed. The amendment dealt with the formation of a caretaker government through consensus and the increase of the Election Commission member’s tenure. It also seeks to protect the status of the 28 parliamentarians who were suspended by the Supreme Court recently.

However, Imran Khan rejected the Amendment and demanded the setting up of an independent election commission that consisted of credible individuals and who were trustworthy. He warned the Government that there would be civil war if it did not carry out this demand.
< class="text11verdana">Source: Dawn February 14, 16, 2012.

< class="heading12boldGeorgia">Indian Commerce Minister at Lahore Expo

Indian Commerce Minister Anand Sharma made a visit during the three day exhibition of Indian products at Lahore Expo Centre, to discuss trade and commerce. He was accompanied by 120 industrialists. He signed three agreements for further liberalization in bilateral trade, mutual assistance in customs matters, recognition of Bureau of Indian Standards and the Pakistan Standard and Quality Control Authority.

"India is committed to walk along with you (Pakistan) on the road to peace and prosperity for the future generation," said Sharma. He also said that through sustained dialogues the hurdles that the two countries have been facing were being removed.

However, the cabinet delayed the finalisation of the negative list for trade with India as many expressed their reservations over the issue. Under the existing positive list regime, the two sides can trade less than 2,000 items.
< class="text11verdana">Source: Dawn, February 14, 15, 2012.

< class="heading12boldGeorgia">US finding on Balochistan rejected

The United States Committee on Foreign Affairs convened a congressional hearing in order to discussBalochistan. This House oversees US Foreign Assistance programmes and therefore if the hearing leads to conclusions f human rights violation in Balochistan, there was chances for a halt in funds. However, many feared that there could be serious misinterpretations as the panel did not have a Baloch representative. Many were sceptical about the US decision to support the Baloch nationalists or their cause.

Interior Minister Rehman Malik said that there was a third force that was directly responsible for the crisis in the Province. He also said that 85 per cent of the Aghan-i-Huqooq-i-Balochistan package had been spent on various development projects.

Pakistan Ambassador to the US, Sherry Rehman rejected the hearing and its conclusions and termed it ’ill-advised and ill-considered’ and would therefore result in severe repercussions for the relations of the two countries.
< class="text11verdana">Source: Dawn, February 9-11, 2012.

< class="heading12boldGeorgia">Air route for NATO supplies

The government temporarily has given permission for the restart of NATO goods and supplies to Afghanistan through the country’s airspace. The items that have been allowed through aircrafts were food items and therefore considered perishable. The Defence Minister Ahmed Mukhtar that the decision to fully restore supply lines completely depended on Parliament.
< class="text11verdana">Source: Dawn, February 15, 2012.

Sri Lanka
< class="heading12boldGeorgia">Army probes LLRC observations

Army Commander Lt-GenJagathJayasuriya has appointed a five-member Court of Inquiry to inquire into the observations made by the Lessons Learnt and Reconciliation Commission (LLRC) in their report on civilian casualties that are alleged to have occurred in the final phase of the war.The team is also probing the contents of the Channel 4 video footage.

The Court of Inquiry commenced its proceedings in January. The Court is headed by Major General Chrishantha de Silva, the present Commander of the Killinochchi Security Forces Headquarters.

Gen Jayasuriya said such an inquiry was warranted in view of the zero-tolerance policy on the breach of humanitarian laws. Such as been the consistent policy of the Sri Lanka Army since its inception in 1949.

A Court of Inquiry is an initial fact-finding process akin to a non-summary inquiry by a Magistrate. If there is a prima facie case disclosed against any person from the evidence led before the Court of Inquiry, a General Court Martial is convened to try the alleged offender or offenders.

The General Court Martial has the jurisdiction that is identical to a High Court Trial-at-Bar and can pass any sentence, including the death penalty.
< class="text11verdana">Source: Daily Mirror Online, February 12, 2012.

< class="heading12boldGeorgia">UNHRC concerns ’unethical’

Sri Lanka’s U.N. mission on Tuesday dismissed as "unfair and unethical" concerns raised by UN Human Rights chief NaviPillay about the appointment of a Sri Lankan army general to an advisory panel on peace-keeping.

Pillay said she had informed UN Secretary-General Ban Ki-moon of her misgivings about Gen Shavendra Silva, Sri Lanka’s Deputy UN Ambassador, who commanded the Sri Lankan army’s 58thDivision during the final assault against the LTTE in 2009.

"We find it difficult to understand the concerns being articulated at present, on the basis of unconfirmed allegations and accusations," Sri Lanka’s UN mission said in a statement."This is unfair and unethical," it said. "Certainly, it is not consistent with any notion of fair play."
< class="text11verdana">Source: Daily Mirror Online, February 15, 2012.

< class="heading12boldGeorgia">Karzai to visit Pakistan

President Hamid Karzai will be visiting Pakistan where he will urge Islamabad to give the Afghan negotiators access to the Taliban leadership. This move comes after the recent visit of Pakistan foreign minister to Kabul where the two nations agreed to improve relations. There are expectations of trilateral talks with Iran that would also commence in Pakistan shortly.

The country celebrated the 23rd anniversary of the soviet departure. The Soviet army pulled out on 15th February 1989 ending nearly a decade of occupation in their effort to assist the communist regime in Afghanistan.
< class="text11verdana">Source: Daily Press, February 14, 2012.

< class="heading12boldGeorgia">Parliament to clear mining deals

Experts in the country have commented on the need for Wolsie Jirga’sapproval before the licensing of mines to contractors. This would add the necessary safety and prevent corruption. There is criticism to this because the Wolsie Jirga does not possess the necessary technical competence to assess the contracts.

The High Office of Oversight and Anti-corruption chief Dr.AzizullahLudin mentioned that large amount of revenue from the Hairatan port for 2010 ? 2011 is unaccounted for. This amounts to nearly US $70.8 million. Director QaziNajib The head of the port has dismissed these allegations as baseless and has stated that the revenue was well documented and no amounts have been missing.
< class="text11verdana">Source: Outlook Afghanistan, February 12-13, 2012.

< class="heading12boldGeorgia">New nominations for ministers

The Presidential Palace has reported the introduction of nine nominees for ministerial positions. Their names have been introduced to the House of Representatives for a vote of confidence. The ministries for which the new nominations have been made have been held by acting ministers for the last two years. The nominations became controversial and sparked debates between President Hamid Karzai and the House of Representatives.

Finance MinisterHazrat Omer Zakhilwalwasalso summoned by the Senate and the House, for giving his recommendations for altering the budget. They also summoned the Interior Minister on the death of eight civilians following an air raid by NATO forces in Kapisa Province.
< class="text11verdana">Source: Khaama, February 15, 2012; Outlook Afghanistan, February 13, 2012.

< class="heading12boldGeorgia">Sit-in to remove govt

Khaleda Zia, chairperson of main Opposition Bangladesh Nationalist Party (BNP), had said that the ruling Awami League government will be crippled and forced to quit power through a peaceful sit-in after her party’s proposed rally in Dhaka on March 12. Khaleda Zia also informed that a peaceful and people-based programme will be announced after March 12 and requested people to participate in it.

Reiterating her demand for restoration of the caretaker government system, BNP chief said that nothing short of a non- party neutral government will be acceptable to her party. Zia claimed that elections cannot be free and fair under the Awami League government, and using EVM (electronic voting machine). She further said that the Awami League government is frightened to see people participating in the programmes hosted by BNP; so, the Government wants to hold elections staying in power. Begum Zia categorically said that no election will be held in the country under Awami League Government.

However, the ruling Awami League had informed that there was no scope for the reinstatement of the election-time caretaker government system. Party leaders believe the opposition BNP is trying to create confusion regarding the next general elections by hosting protest movements. Meanwhile, political tension continues to grow centring the opposition’s grand rally on March 12 as the ruling Awami League is planning to launch counter programmes in the capital on that day.
< class="text11verdana">Source: The Daily Star, February 14-15, 2012, New Age, February 14, 2012.

< class="heading12boldGeorgia">Santos finds new gas

Australian hydrocarbon company Santos had discovered a structure with good potential of gas reserve near the Sangu gas field in hydrocarbon block 16 in the Bay of Bengal. Sangu is the first offshore gas field in Bangladesh. Petrobangla, state owned Hydrocarbon Company, informed that Santos had completed drilling well and now it will conduct drill stem test to assess the possible recoverable gas from the reserve.

Officials of Petrobangla claimed that Santos would start supplying gas from the well by March since there is no need to install pipeline and other infrastructures since the well is near the Sangu gas field, Santos will use the same infrastructures for gas transmission.
< class="text11verdana">Source: New Age, February 14, 2012.

< class="heading12boldGeorgia">Arms deal with Moscow

A delegation of Russian defence exports giant Rosoboronexport visited Dhaka to give final shape to the proposed arms purchase deal worth $850 million between Russia and Bangladesh.

Rosoboronexport, which sold military hardware worth over $11 billion worldwide in 2011, had shown interest in supplying arms and ammunition after Moscow assured Dhaka of providing fund on suppliers’ credit.
< class="text11verdana">Source: New Age, February 13, 2012.

< class="heading12boldGeorgia">India to up water fees

India had agreed to increase the annual maintenance fees that it pays to Bangladesh for using waterways facilities under a protocol between the two countries. The current fees paid by India to Bangladesh is Taka 5.50 crore. India has agreed to raise the fees to Taka 10 crore. The decision was reached following a meeting between officials of the two countries in Dhaka this week.

The decision will be finalised at the secretary-level meeting on renewal of the waterways protocol within next month. Since 1972, India has been enjoying limited transit and transhipment facilities under the protocol, which is renewed every two years. The existing protocol will expire in March this year. Mohammad Alauddin, joint secretary of the shipping ministry, led the Bangladesh side while his counterpart MC Jauhari led the Indian side in the two-day Dhaka meeting.
< class="text11verdana">Source: The Daily Star, February 14, 2012.

< class="brown12verdana">Contributors:

Afghanistan: Haripal Brar;
Bhutan and Myanmar: Sripathi Narayan;
Bangladesh: Joyeeta Bhattacharjee;
India: Satish Misra;
Nepal: Akanshya Shah;
Pakistan: Aarya Venugopal;
Maldives & Sri Lanka: N Sathiya Moorthy;

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