CRISIS IN THE OFFING

The unexpected four blistering attacks by terrorists on New York and Washington on 11th September 2001 have dealt a stunning blow to the global economy, which the Indian Finance Minister, Mr Yashwant Sinha described as: "The situation in the entire world is very grave and it will have a telling impact on the Indian economy. Developments in the US have already hit the world economy, and India can be no exception." There has been heavy drawing of funds by top US companies having high stakes in India, and an alarming situation prevails in the Indian Stock markets with the Sensex plunging downwards sharply every day.

India has foreign exchange reserves of $45 billion, which to some extent can act as a buffer and stall the impact of recession, but on the whole it has been a disastrous first week for Indian trade and businesses, including ours at Godrej, with markets crashing to record lows as a result of these unfortunate and senseless attacks.

Board rooms in Mumbai are busy with their Directors planning strategies on how to deal with this holocaust suddenly thrust upon them.

As luck would have it, two of our biggest corporates, Reliance Petroleum and TELCO, where the former was planning a mega issue in the US, and the latter’s rights issue was in the pipeline, both had to bear the maximum brunt of the World Trade Centre bombings. The common man will just not think of investing his money in equity instruments at such a time. Let alone these two corporate giants, the fate of many other Software companies also hangs in the balance. What will happen to the ailing Voltas planning to be taken over by the media giant based in Ahmedabad, The Gujarat Samachar? It is anyone’s guess at such a time whether they will take over the company or not. It is for the shareholders to decide.

It was just five days earlier on 6th September that the American Ambassador to India, Mr. Robert Blackwill, while addressing a business gathering in Mumbai had said it was Osama bin Laden who was the biggest threat to both USA and India, and it was time for both countries to join hands and wipe out terrorism. Osama bin Laden didn’t give both Governments even time to think of what strategy to adopt, for just five days later on the 11th he struck at four different points simultaneously in America, and sent the world in mourning.

The immediate impact on the US economy was felt when Continental Airlines, their fifth largest carrier, announced on 15th September that it would reduce its long-term flight schedule by 20 percent, and would be compelled to lay off 12,000 employees after the hijacking attacks on the United States. The airlines have a strength of 56,000 employees. The reason for this harsh decision was the drastic decline in demand for air travel caused by the dreaded suicidal attacks of the terrorists. In the words of their Chairman and CEO, Gordon Bethune: “The US airline industry is in an unprecedented financial crisis. Our industry needs immediate Congressional action if the nation’s air transportation system is to survive” Prior to 11th September, Continental Airlines and their subsidiaries flew more than 2,500 flights a day across America.

Afghanistan has been in the throes of war since the past many years. It has been at the crossroads of history in spite of being remotely placed and surrounded by Pakistan, Iran, Tajikistan and Turkmenistan in Central Asia.

By the time this issue is out, damage done by the US Government’s threatened attack on Afghanistan for sheltering - as President Bush says - the “prime suspect” Osama bin Laden, the Saudi-born dissident, will be known. Not that such a move by the Americans is acceptable to the Afghans who still feel obliged to protect this despot, even if it means loss of thousands of innocent Afghanis, many of whom have already fled the country.

When one looks back in history, one finds that numerous battles have been fought on Afghan soil, beginning with Alexander the Great who conquered the hill tribes in what was then the Persian empire while on his way to India much before his death in 323 B.C.

In the 19th century, the British tried twice to invade Afghanistan in an attempt to protect India’s borders.

Russia invaded Afghanistan on 25th December 1979 in order to protect its southern borders. Nine years later in 1988 they were compelled to retreat, leading to the break-up of the USSR.The irony of this war was the support USA gave to the Islamic militants, including Osama bin Laden, to drive out the Soviets from Afghanistan.

At present Afghanistan is controlled by the Islamic fundamentalist Taliban government, which has the full backing of Pakistan.

In recent times, since the last 23 years, Afghanistan has been involved in different wars which has shattered their economy. The question is will it be able to stand up to this new onslaught in trying to shelter just one man? Will terrorism be totally wiped out to protect economies from crumbling in this way? Only time will tell.

- P.D.M.