Hafeez is roaming around free, Pak must act: PM

Prime Minister Manmohan Singh, who is on a four-day State visit to the United States, spoke to CNN's Fareed Zakaria.

Here are excerpts from the interview ...

When you look at Afghanistan, do you believe that the American presence there has contributed to stability and is contributing to stabilising the situation?

Well, all I can say is, the rise of Taliban in Afghanistan created a major problem for the world, and that the disappearance of the Taliban regime is, indeed, a blessing for the global society, global polity.

The United States is trying to stabilise the situation in Afghanistan, is trying to help President Karzai establish a stable government there. What is Pakistan's objective in Afghanistan, in your view?

Well, I sometimes fear that Pakistan's objectives are not necessarily in harmony with the US objectives. Pakistan sometimes feels that the Americans are short-term maximisers, that if the pressure continued, they will not have the courage to stay put, they will walk away, and that Afghanistan will become a natural backyard for Pakistan to influence its policies and programmes.

So, you think they want an Afghanistan that is amendable or a Pakistani puppet?

Yes, I think that is -- that appears to me.

Is it your sense that the Pakistani government and the Pakistani army are taking active measures to destroy the Afghan Taliban, as distinct from the Pakistani Taliban?

Well, who am I to judge?  I think what Secretary of State Hillary Clinton, when she was in Pakistan recently, I think she did ask, publicly, that Quetta Shura, the leaders of Afghan Taliban -- where are they?  That cannot be unknown to the people in Pakistan.

So, that is an indication of things that are happening on the ground.

Do you think that the Pakistan Army will ever take on the Afghan Taliban, those terrorist elements that attack not Pakistanis, but Afghans, Indians, perhaps Westerners?

I am not certain that the Pakistan army will take on those elements.

Who do you think is running Pakistan right now?

Well, I think the most important force in Pakistan is the army. We would like democracy to succeed and flourish in Pakistan. But we have to recognise that the power today rests virtually with the army.

Do you feel that you have a partner in Pakistan right now with whom you can negotiate?

Well, I don't know whether we have a partner right now. I think when General Pervez Musharraf was there I used to ask him. And he said, "Well, I am the army. I represent the armed forces. I represent the people."

Now I don't know whom to deal with.

When you look at the situation in Pakistan, do you worry about the collapse of the state and the nuclear weapons moving into the hands of either some radical element within the army or terrorists?

Well, we worry about all these contingencies. But the Americans have assured us that they are satisfied that's not going to happen.

Do you feel that Pakistan has done enough to bring to justice, and to give you intelligence about, the terrorists who planned the Mumbai attacks?

No, they have not done enough.  They have taken some steps. I have discussed this matter with Pakistan Prime Minister Yousuf Raza Gilani at Sharm el-Sheikh.  We signed a statement. He assured us that he will do -- Pakistan will do -- all that is possible to bring to justice the perpetrators of Mumbai massacre.

But it's our feeling that Pakistan has not done enough. Hafeez Sayeed is roaming around free. Maulana Masood and other terrorist elements like the Lashkar-e-Tayiba, which is actively involved -- according to Pakistan's own admissions -- is actively involved in perpetrating this massacre in Mumbai.

They are moving around freely. So, a friendly Pakistan, a government in Pakistan, which would be equally determined to tackle terrorism would, I think, take the case to its logical conclusions. But that has not happened.

Do you see any prospects for productive negotiations on Kashmir with Pakistan? Because you were quite close to some kind of a deal with President Musharraf before he had to leave office.

Well, I have publicly stated that there can be no redrawing of borders. But our two countries can work together to ensure that these are borders of peace, that people-to-people contacts grow in this manner in which people do not, I think, worry whether they are located on this side of the border or that side.

If trade is free -- trade, people-to-people contacts and our both countries competing with each other to give a life of -- to enable the people on both sides to lead a life of dignity and self-respect -- those are issues which we can discuss. We can reach agreement.

You have famously had a very good relationship with President George W Bush. Do you have any apprehension that the Obama administration will not be as favourably disposed towards India as the Bush administration was?

I have no apprehension that our relations with the United States would in any way suffer because of the change of administration.

When one travels around India these days and reads the newspapers, talks to people, you get a sense of a great deal of connection and interaction with the United States at every level -- at the level of business, at the level of universities. Is the relationship between Indian society and American society actually now stronger than that between the Indian government and the American government?

Well, our relations at the people-to-people level are of great significance.  The fact that there is a large community in the United States, people of Indian origin, the way they have flourished, the way they have contributed to the growth of the American economy, I think, that has changed the image of India.

And I often say to our guests from abroad that these days, there is hardly a middle class family in India who doesn't have a son, a son-in-law, a brother or a sister, or a sister-in-law in the United States. I think that is a great incentive for our two countries to look to further development of our relationships.

You are going to go to Washington with some specific objectives.  One of them will be to get the United States to ease up on some of the restrictions in terms of transferring nuclear technology to India. That is, in a sense, the operationalisation of the nuclear deal that you signed with President Bush. Do you worry that there might be undue restrictions placed on these transfers, and that the Obama administration may be too concerned about issues of nuclear proliferation and will not transfer technology to you?

We are a nuclear weapons state, but we are responsible nuclear power. We have an impeccable record of not having contributed to unauthorised proliferation of these weapons of mass destruction.

So, I think India does require, I think, greater consideration of the global community. India needs to industrialise. India needs to operate on the frontiers of modern science and technology. And therefore, restrictions on dual-use technologies affect our growth.

We need an annual growth rate of 8 to 9 per cent to get rid of chronic poverty, ignorance and disease, which still afflict millions and millions of people in our country. And in that context, industrialization and transfer of dual-use technologies can play a very important role.

Let me ask you to put on your hat as an economist. You're a very distinguished economist. What is your reaction to this extraordinary global financial crisis that seemed to come out of the blue, seemed to have a much greater impact than anyone was able to foresee initially? What made the system meltdown one year ago?

Well, lax regulation and monetary policies, which were far too liberal. They should have been tightened much earlier. But they were not tightened. And therefore, this, coupled with laxity of regulation, contributed to these bubbles, which had to burst.

Isn't it ironic that India and China, and a couple of other of the emerging market countries, during the boom were actually much more vigilant with regard to their monetary policy -- raising interest rates, restricting credit -- whereas, in the West, there was a somewhat lax attitude, as you say. One usually thinks of the advanced industrial world as having better economic policy than emerging markets or Third World countries.  But it seems as though the roles have reversed.

Well, I don't wish to comment on individual countries' policies. But certainly, we were more prudent. Events have shown that this prudence has paid us rich dividends. Our banking system has not been exposed to the distressed assets of the type the banking system in other countries have been exposed. And therefore, our natural prudence plus, I think, the good supervision of our banking system by the regulatory authorities, have contributed to this favourable outcome.

Do you think this crisis casts a doubt, or casts a poor light, on the American model? And does this in some way affect America's power, its soft power, if you will? I mean, America was seen as the leading example of capitalism around the world, the advanced model. And is that now cast in doubt?

Well, there is a temporary setback. There's a temporary questioning about the relevance of the American model. But I have seen these things much before.

I think, way back in the late '60s, a very famous economist at Yale, Professor Robert Triffin, wrote that very famous book, Gold and the Dollar Crisis, and saying the days of the dollar as the reserve currency of the world are over, that the United States should take a lead to move to a more neutral asset.

But things changed. And the United States recovered from difficult economic situation. It has shown remarkable capacity to bounce back -- the entrepreneurial spirit, which is a hallmark of the American enterprise system. I have no doubt that these things are not permanent, irreversible shifts, but that the American economy has the capacity to bounce back to its normal growth point.

So, the Russian government and the Chinese government in various ways have been suggesting or hinting that they might prefer a world without the dollar as the reserve currency. You do not share that view.

No, no.  And as far as I can see right now, there is no substitute for the dollar. And even the Chinese are hesitant. After all, the fact that they hold $2.5 trillion of reserve assets, they have not disposed of even a fraction of them -- that is a measure of the confidence that the world has in the dollar.

There are problems. There is the confidence problem, which can be very destabilising. But my own feeling is that we have not entered an era of irreversible shift in economic strength of the United States.

What do you think about the prospect of the rise of China within Asia? This is an economy already three times the size of India's economy, and is still growing faster than India's economy.

Well, I think the rise of China has contributed handsomely to sustaining the growth momentum in the world economy. And as far as India is concerned, I have said it many times that India and China are not in competition. We believe that there is enough economic space for both our countries to realise the growth ambitions of our respective countries. And that's the attitude, which guides us in dealing with China.

But you know, outside visitors go to China, and they go to India. And they are struck by the energy with which the Chinese are both building infrastructure, the ease with which you can set up businesses. And they wish that they could see a similar process in India.

Well, I have no hesitation in saying that I think development in India cannot be a carbon copy of what happens in China. And the Chinese system is very different.

We are a functioning democracy. And even if you want to acquire land, I think you run into serious problems. And democracy is slow-moving. I always believed that it may be slow-moving in the short term, but in the long run, an arrangement which has the backing of the people at large will prove to be more durable.

Do you think India's rise in that sense has a lesson to teach the world?

I think, India, if it succeeds in remaining a functioning democracy, and simultaneously tackling problems of poverty, disease, illiteracy, that, if we do succeed, I think that is going to be an international public good. It would have lessons for the evolution of the countries of the hitherto Third World in the 21st century.

And so, the fact that there are very few countries of India's size, which have remained functioning democracy throughout the 60 years of our independence, I think the world has to recognise that, if we do succeed, it will have some bearing on the evolution of the countries of the Third World in the 21st century.

Photograph: SnapsIndia