August 25, 2003

25 dead, 150 injured in Bombay blasts

This is more than a little disturbing. In the September issue of Strategic Investment, I reported that three containers of cobalt-60 were stolen from a steel factory in Jamshedpur, India. You can see from this map that Jamshedpur is on the eastern side of the country while is on the opposite side next to the Arabian sea. Doesn't really matter though, does it? Next time, it COULD be a dirty bomb. And next time (there will be a next time) it could have more destabisling effects on financial markets (see below), especially if it happens in say, Tokyo, Sydney, or Riyadh. Why India this time? First, this is happening in India and not Indiana largely because the real struggle now for radical Islamists is to prevent their own cultures from accepting modern values. Destroying your own secular institutions does far more to sow chaos than destroying American buildings. Second, India is a microcosm of the big ideological struggle of our time: Islam vs. the Secular State. The separation of Muslim Pakistan from secular India never really solved the problem. India has 15 official languages. It's the world's largest democracy, in terms of population. Hindus, Muslims, Christians, Sikhs, and Buddhists live and work together. In some ways, you can see why it's a prime target for militant Islam. India is a test case for modernization without Westsernization. It seems like India is well on its way to becoming a pluralistic, thriving, market economy. You can see why Islamic terrorists find that prospect threatening. After all, if India can chose modernity and succeed despite its many ethnic challenges, it would prove to rest of Southwest and Southeast Asia that you can have modernity without having to accept American culture. Once that idea is an established fact (prosperity and secular government with the freedom to worship the way you want), it becomes very difficult to stop. Better to blow it to bits now, before it has time to mature and improve people's lives. And this isn't the first time either, according to the Star of Malaysia. "Earlier Monday, the government archaeological agency released a report on a religious site in the northern town of Ayodhya, claimed by both Hindus and Muslims. That dispute has been blamed for previous explosions in Bombay, including a series of bombings in 1993 that killed more than 250 people and injured 1,000. Police blamed Islamic militants. They said those blasts were in retaliation for the 1992 destruction by Hindu mobs of the 16th-century Ayodhya mosque, and to avenge Muslim deaths in riots that followed. Some Hindus claim the mosque was built centuries ago on the ruins of a Hindu temple that marked the birthplace of their supreme god, Rama" The Hindustan Times reports that "Share values virtually crashed on the country's leading bourses at mid-session after reports of blasts which rocked the business capital, driving the BSE index down by over 180 points, placing it at 3943.66. " Can stock markets ever fully price in this kind of thing? Some folks would say "yes." In fact, I recall hearing some people say the bear market would really be over by now if there wasn't a lingering terrorist threat--in essence that there's an unseen but constant ceiling on stock prices because of terrorism. But this kind of thinking implies that once the terrorist threat is licked, stocks will be untethered from geopolitical forces. And THAT is absolutely not true at all. The chief feature of the kind of terrorism that is now a permanent part of our lives is that it attacks the institutions of Western culture, not its armies. Going after the stock market in Mumbai is a lot easier than say, attacking an army base. And in the end, a lot more effective at achieving the ultimate end, which is to fracture the culture and clear the way for a small minority to impose its religious will on the majority.


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