Cyberwhat?

Back in 1983, the world was a simpler place. The economy looked healthy, there were only four channels on the TV - and, if you believed Hollywood at least, the biggest threat to world security was a pimply teenager with a computer. Matthew Broderick's turn in the film WarGames, as a nerdy kid who accidentally blunders into a highly classified computer system that controls the US nuclear arsenal and proceeds to take the world to the brink of nuclear war, didn't win many awards. But it made its mark on millions of people around the world - and introduced us to the stereotype of the precocious young hacker.

The film plugged into every paranoid star-wars fantasy from the Reagan era but now it is unlikely to elicit more than a snigger. The prospect of a cyberwar launched by someone too young to drink is, frankly, ridiculous. Isn't it?

In fact, the implications of a cyberwar are, right now, being carefully considered by intelligence chiefs in Britain and around the western world. Their nightmare? A co-ordinated strike that targets businesses, public services, central government, the financial sector and communication systems.

In the worst-case scenario, what might start slowly - a few propaganda messages here, a hacked website there - could quickly spread. The already hammered British economy might soon be crippled as the nation's bank accounts are drained of their funds - stripping billions out of people's hands in seconds - and major online shops including eBay and Amazon fail.

Elsewhere, communications networks could come under fire, with phone, internet and mobile systems quickly collapsing. The transport network might fail, too, causing air-traffic control computers to go haywire, rail systems to break down, traffic light systems to be reprogrammed. The ensuing chaos would create panic around the country, with airports from Heathrow to Glasgow on high alert, facing the horrifying prospect of midair collisions as the aircraft above them are fed wrong information. While the emergency services struggle to cope with the confusion, they could fall victim to attacks themselves. A stream of fake messages and alerts might send fire engines to the wrong locations, and ambulances to hospitals already filled with patients.

And the coup de grace? Hidden programs inside the country's electricity grid might then jump to life, shutting down power supplies, creating targeted blackouts, even sending nuclear reactors into freefall.

Such a doomsday scenario might sound drastic - more of a cyber-apocalypse than a cyber-attack - but it is one that has been outlined many times by the Metropolitan Police, MI5 and the Joint Intelligence Committee. The US Navy investigator and cybercrime specialist Kenneth Geers characterises the typical response of powerful individuals as they hear this doomsday scenario outlined as a sort of unbridled terror inspired by technology. "More than one senior official said they've had so many cyber-briefings now that they don't want to turn their computers on any more," he says.

Geers identifies a number of potential weak spots in the system, including websites of "pure economic value" (such as banks and online shops) as well as telecommunications systems and the electricity grid.

"In the worst case? [Someone] invading your own infrastructure and using your own tools against you," he says. "Tell your troops to move in the wrong direction, or your missiles to fire on your own cities ... anything in your imagination."

Hidden in the shadow of crumbling Soviet tower blocks on the outskirts of the Estonian capital Tallinn sits a compact military post that looks pretty much like any other. The base carries the official name of Cooperative Cyber Defence Centre of Excellence, but is usually referred to by the code name K5. Soldiers march across the small parade ground, passing a selection of camouflaged vehicles as they troop to and fro. Heavy weaponry is dotted around the buildings, while on one side of the plot a discreet armoury holds a stock of emergency weapons.

Behind the security gates and razor wire, however, this is a different kind of military operation - the unlikely frontline in Nato's attempt to prevent a global cyberwar. K5 is where the alliance's top computer experts - high-ranking researchers, academics and security specialists - work in teams to analyse potential cyberthreats, and predict exactly how Nato will fight virtual wars in the future.

Since the centre opened last year, few people have been granted a glimpse inside - but I am being given the chance to see exactly what takes place here. And so I find myself standing opposite Rain Ottis, a stout, serious-looking Estonian computer scientist who speaks flawless English, in the corner of K5's mess room. It would be easy to forget that this is a military station were it not for the fact he is wearing fatigues. I'm holding a cup of weak coffee in a Nato mug, and watching as a light rain starts falling on the barracks next door.

Ottis speaks with a calm voice, but is forceful about how we might need to respond to a future cyber-strike. His solution? Overwhelming response: a single, gigantic counter-strike that cripples the target and warns anyone else off launching a future cyberwar. He isn't sure what it would look like, but the show of force he envisages is so severe that the only thing he can compare it to is a nuclear attack - meaning, of course, that K5 could be the virtual equivalent of the Manhattan Project, the US-led secret programme to develop the atomic bomb.

"Obviously nuclear weapons do a lot more damage than a cyber-weapon would do in a physical sense - but a single cyber-weapon could have global consequences," he says. It feels as if we have come full circle from the contrived Hollywood paranoia of WarGames.

Fears over computerised warfare stretch back many years, but it was only in the early 1990s - when the internet started to become a more widely accepted technology - that researchers at Rand, the Pentagon thinktank, first coined the term "cyberwar". In a prescient 1993 paper, "Cyberwar is coming!", the analysts John Arquilla and David Ronfeldt argued that an online battle waged between two nations was almost inevitable - but that at least it would be less destructive than full-blown conflict.

Many of the cyber-attacks that have been identified in recent years have been linked back to China, which now has more internet users than anywhere in the world, and Russia. The growing animosity surrounding these reported strikes is developing into a new sort of cold war, played out by teams of cyber-spies sitting at computers in opposite corners of the globe.

Recent examples that have raised the tension include a hi-tech spy group known as Titan Rain, which successfully infected government computers in Britain, America and Germany, and GhostNet, a cyber-espionage network which targeted supporters of a free Tibet. Both were said to come from China, and possibly be directly linked to the People's Liberation Army - although researchers couldn't agree on the evidence. University of Cambridge researchers claim it was definitely the product of "agents of the Chinese government", while their colleagues at the University of Toronto say that it is too easy to presume guilt.

"Certainly Chinese cyber-espionage is a major global concern," the Canadian experts wrote in a report on GhostNet. "But attributing all Chinese malware to deliberate or targeted intelligence-gathering operations by the Chinese state is wrong and misleading."

Then, last week, it was widely reported that the US's power grid had succumbed to hackers. Given that America's security services are scrabbling for the attention of their new president, there's plenty of reason to be sceptical about these unsubstantiated and largely anonymous reports (American security whizz Kevin Poulsen says the timing of this uncheckable story is "unusually opportune"). Regardless, such stories are enough to convince the powers-that-be to take action: last week it emerged that the US Congress is considering legislation to massively increase the country's cyber-defences - including, potentially, a single official who is in charge of keeping civil systems, military networks and public utilities safe.

Inside Nato's own cyber-defence HQ in Estonia, the day-to-day business at K5 largely involves people staring at computer screens. Those expecting a vast, hi-tech control centre worthy of Nasa would probably be disappointed by the austere surroundings, which look more like they were lifted from a university hall than MI5 headquarters. Essentially, the centre is a hybrid of a global listening post and a thinktank. The 30 experts stationed here are tasked with gathering and processing intelligence and information, then giving scientists the information to simulate possible responses to cyber-attack.

The group is drawn from a range of Nato countries, and they spend their days analysing data that streams in from around the internet. One of those stationed at K5 is Geers, the author of a book called Cyber Jihad and the Globalisation of Warfare. Tall, slim, dark-haired and wearing civilian clothes, he tells me that we are paying the price for a headlong rush into using technologies without thinking through the potential consequences.

"In certain ways, this is a golden age for attackers," he says, in a careful voice. "Over the past 15 years, the world has rushed to connect networks together because they want to use their power. But the rush to connect everything to the internet was ahead of security."

With so much of the world now connected to the internet - billions of computers and mobile phones across a multitude of homes, banks, schools, shops and elsewhere - it is ripe for attackers to exploit the gaps in security. "It's a very big challenge for us to be able to leverage networks and the power of computers, while at the same time securing them."

In a side room, Geers' colleague Ottis tells me: "Espionage is something that countries and governments accept - it's always been there, and always will. But if we see attacks that target the citizen? That's different."

There is a particular reason for Ottis and his fellow Estonians to be concerned about the threat of cyberwar: in 2007, Estonia itself was the target of a massive internet assault, allegedly sparked by a political disagreement with Russia. Over the course of several weeks, Estonia's government, banking and commercial sectors endured a sustained barrage of online attacks that brought parts of the system - one of the most advanced and internet-friendly in the world - grinding to a halt.

Although the Estonians imply that the campaign was sponsored by the Kremlin, K5 officials admit they can offer no proof. But whoever was ultimately responsible, the strikes highlighted fears that technology is the weapon at the forefront of a new sort of cold war.

"This is definitely not science fiction any more," says Ottis. "We have plenty of examples where nation states have actually been involved - both on the offensive and the defensive side. Cyber-attacks are very efficient. You don't have to fly to the country you're attacking, you don't need a cell somewhere. All you need is a connection. What happens if your country gets targeted by 25,000 well-equipped, well-trained people who work to achieve the same goal? No country is ready for that."

The first step towards a proper cyber-defence is understanding who the actors behind a potential attack might be. But doing that requires information which, for the most part, is impossible to find. "Defence against cyberwarfare is extremely difficult," explains Peter Sommer, a computer security specialist and visiting professor at the London School of Economics. "Only the very unskilled leave pointers to their identities and locations."

Skilled hackers can implant targeted viruses inside their victim's computers and leave them to gestate for weeks, months or even years before activating them at a later date. There are numerous examples of such vast, destructive virus strikes - most notably the Conficker worm, which has infected more than 9m PCs worldwide in recent months. Right now nobody knows who created Conficker, or what its target might be. It has yet to fully activate, leaving security groups and antivirus companies on high alert. Some have suggested it is part of a criminal plan to steal identities by the million, or a dangerous cyber-weapon, or that it could simply be a gigantic prank. But even if the worm does prove the spark that ignites a full-blown cyber-conflict, its author would remain almost untraceable.

Just as any hard evidence to suggest the Russian military approved the Estonian cyberattack in 2007 is largely missing, so proving that China or Russia are directly responsible for other attacks is almost impossible. And, experts admit, it would be politically smart for a truly destructive organisation to mask their attacks and make them seem like they originated from a country already under scrutiny.

In truth, it could be almost anybody, almost anywhere. Rudimentary hackers' toolkits are available to buy cheaply online, while an illicit black-market trade in more complex tools takes would-be attackers out of the reach of the authorities on the so-called "darknet". And while a highly intelligent virus such as Conficker may have required some skill to program, other hackers may succeed simply by having the time to experiment rather than any great raw ability. (Gary McKinnon, the Briton accused of hacking into Pentagon computers, bumbled his way into supposedly secure networks by guessing that the password had not been changed from the default "password").

There is also an increasingly blurred line between what action the state sponsors (which would qualify as full-blown international conflict) and what is being done in the name of the state - a sort of guerrilla warfare played out on virtual battlefields. With China's growing power leading to widespread suspicion and criticism in the western media, these groups - a mixture of roguish hackers, disaffected teens and intellectuals frustrated by stereotypes about their culture - see part of their job as defending the homeland, even while they reserve the right to criticise it from the inside.

Rebecca MacKinnon, a Hong Kong-based journalist and academic, has identified this burgeoning ideology as "cyber-tarianism" - where highly connected citizens are critical of government repression but fiercely nationalistic at the same time.

"A lot of people don't want a western-style democracy," she told a conference in California last month. "Before the Olympics last year, Chinese students protested all over the world at what they saw as biased western media accounts." These protests included a series of large-scale hacking attacks - on large targets such as the news channel CNN, and small ones such as pro-Tibet websites, which temporarily disabled them.

In China and Russia, this cyberforce is reckoned to be becoming more powerful - and more destructive. Dissident Russian nationalists have also been blamed for the Estonia attacks, while similar groups are appearing in other countries around the globe as internet connectivity spreads. Armed with technical know-how and a passionate cause, these ad hoc groups of individuals would seem increasingly important in the way these conflicts are playing out.

But it's still difficult to imagine what would actually happen if a full-blown cyberwar ever did take place. After all, movies like WarGames - stuffed with Hollywood exaggerations - surely stretch the limits of what can happen. Don't they?

by Bobbie Johnson

Buying Books

Citizen Kane

India´s 09 Elections (II)

Identity, not economic need, is the prime mover as the great democracy of India goes to the polls. The affluent can rest easy

• 
• Praful Bidwai

India's general election, which began last week, is as full of variety and dauntingly complicated as the country itself. The polling spreads over five phases lasting a month, with 714 million voters using more than 828,000 polling booths and 1.3m voting machines, which demand 6.1 million civilian and security personnel.

This time the scale of the enterprise isn't matched by its political content, with no grand issues at stake, no major ideological contentions, and no fault lines. But there is unprecedented horse-trading and political promiscuity. This is in contrast to the last election, five years ago, which became a referendum on the communal politics of the rightwing Hindu-chauvinist Bharatiya Janata party - most horrifically expressed in Gujarat's anti-Muslim pogrom of 2002 - and its claim that India was "shining". The BJP lost in 23 of 28 states.

In earlier elections too major issues were at stake - the self-assertion of previously voiceless underprivileged people, the decline of the Congress party, the rise of regional parties, and the mainstreaming of multiparty coalitions.

Today's electoral contention is multipolar, with two big blocs - the Congress-led United Progressive Alliance and the BJP-led National Democratic Alliance - and a still evolving Third Front comprising the left plus some motley regional formations. Then there are the as yet unaffiliated parties and individual entrepreneurs who would like to join a winning coalition when one emerges.

Policies and programmes aren't central to the campaign, which has been extraordinarily raucous and, in the first phase, violent. An example of abusive campaigning was the venomous attack on Muslims by Varun Gandhi, Nehru's great-grandson and the BJP's candidate in Uttar Pradesh. Gandhi threatened to chop up Muslims, and demanded that Muslim men be forcibly sterilised.

Logically, action against Gandhi should have come from India's autonomous election commission, which condemned his comments as pernicious and anti-democratic. But it cannot legally prevent Gandhi from contesting the election. It can only disqualify candidates after a court has sentenced them to two years or more. More than 3,000 people have been disqualified, but none during actual campaigning.

This institutional weakness is only one peculiarity of India's democratic system. Another is the central role of identities in the election bazaar - ethnic, caste, linguistic, regional and religious - and, less so, economic. The BJP wants to exploit politicised religious identities. Mayawati, the leader of the Dalits (fomerly known as Untouchables), uses the caste as her fulcrum. Equally significant are other identities, including low and middle castes (OBCs - Other Backward Classes - in officialese), regional and sub-regional, tribes and clans.

In the Hindi-speaking "cow belt" caste finds expression in parties with strong OBC profiles. These parties spun off the Socialist movement, which itself coalesced in the Janata party, the Congress's nemesis, in the 1970s. The south's dominant parties are also based on regional identities. Relatively large umbrella parties like the Congress shelter disparate groups, without subsuming them under a caste-neutral category.

Strangely, identities based on economic status play a far smaller role. Party manifestos don't directly address questions about acute poverty, lack of healthcare, education, sanitation or malnutrition - which affect half of India's children. Most parties don't even make pledges on redistribution, preferring palliatives such as free electricity, subsidised food, and even free TV sets.

Remarkably no party, not even on the left, demands that the rich be taxed adequately to generate revenue that can finance public services. The affluent in India pay among the world's lowest tax rates, usually under 20%. Nor is there inheritance tax in this super-hierarchical society where privilege at birth guarantees lifelong status.

The result is a disjuncture between what has been called the natural centre of political gravity and its actual centre. The former lies firmly on the left of the spectrum, reflecting the reality of persistent deprivation, structurally rooted poverty, disgraceful income disparities, and lack of equitable growth. But, given the peculiarities of India's political culture, the actual centre is diffuse and close to the centre-right.

Neither 150,000 farmers' suicides over a decade nor even the loss of millions of jobs during the current economic slowdown have provoked a strong policy-oriented response from most parties. In part this is because free-market ideas remain fashionable within the elite, which may represent only a tenth of society, but is vastly influential in shaping policy discourse and media-led perceptions. It's also because of India's sheer size. Each directly elected MP represents almost 2 million people. Small groups have virtually no voice in policy-making. Working people are poorly organised and hence feebly represented.

So don't expect this election to produce dramatic change - unless the BJP wins. If a Congress-led coalition or a regional parties-plus-left alliance wins, change will be modest.

• Praful Bidwai is the co-author of South Asia on a Short Fuse: Nuclear Politics and the Future of Global Disarmament

Good Food

The world's 50 best restaurants 2009, according to San Pellegrino

The world's 50 best restaurants 2009 (and 2008 ranking in brackets)

1 El Bulli, Catalonia (1)

2 The Fat Duck, UK (2)

3 Noma, Denmark (10)

4 Mugaritz, Basque Country (4)

5 El Celler de Can Roca, Catalonia (26)

6 Per Se, US (6)

7 Bras, France (7)

8 Arzak, Basque Country (8)

9 Pierre Gagnaire, France (3)

10 Alinea, US (21)

11 L'Astrance, France (11)

12 The French Laundry, US (5)

13 Osteria Francescana, Italy (new entry)

14 St. John, UK (16)

15 Le Bernardin, US (20)

16 Restaurant de l'Hotel de Ville, Switzerland (27)

17 Tetsuya's, Australia (9)

18 L'Atelier de Joel Robuchon, France (14)

19 Jean Georges, US (17)

20 Les Creations de Narisawa, Japan (new entry)

21 Chez Dominique, Finland (39)

22 Ristorante Cracco, Italy (43)

23 Die Schwarzwaldstube, Germany (35)

24 D.O.M., Brazil (40)

25 Vendome, Germany (34)

26 Hof van Cleve, Belgium (28)

27 Masa, US (re-entry)

28 Gambero Rosso, Italy (12)

29 Oud Sluis, Netherlands (42)

30 Steirereck, Austria (new entry)

31 Momofuku Ssam Bar, US (new entry)

32 Oaxen Skargardskrog, Sweden (48)

33 Martin Berasategi, Basque Country (29)

34 Nobu, UK (30)

35 Mirazur, France (new entry)

36 Hakkasan, UK (19)

37 Le Quartier Francais, South Africa (5)

38 La Colombe, South Africa (re-entry)

39 Asador Etxebarri, Basque Country (44)

40 Le Chateaubriand, France (new entry)

41 Daniel, US (41)

42 Combal Zero, Italy (re-entry)

43 Le Louis XV, France (15)

44 Tantris, Germany (47)

45 Iggy's, Singapore (new entry)

46 Quay, Australia (new entry)

47 Les Ambassadeurs, France (45)

48 Dal Pescatore, Italy (23)

49 Le Calandre, Italy ( 36)

50 Mathias Dahlgren, Sweden (new entry)

Source: S. Pellegrino

This Is Not A Paperclip

Elections: South Africa 2009

The struggles of a young democracy

By John Humphrys

“ Perhaps it is unrealistic to have expected all of South Africa's many problems to have been solved in a mere 15 years ”

It's an odd business returning to somewhere you lived when you were a relatively young man, bringing up children who now have children of their own.

I was in my late twenties when I first reported from South Africa. I moved here to set up a television news bureau in 1977 and lived here for three years.

Those were the dark days of apartheid when only white people were allowed to vote and the only black people you saw in the posh suburbs were servants.

I came back again for the Today programme in 1994 to watch that depraved system buried for once and for all in the first free elections. On the night of 2 May 1994, I was in the ballroom of Johannesburg's biggest hotel to join the party at which the guest of honour was Nelson Mandela - the first black president of this country.

So, 15 years later, here I am again. And what do I find? Well, on the face of it, many things seem unchanged.

I went back to my old house in the posh suburb of Saxonwold and just about the only black men I saw were walking the streets wearing bright yellow jackets with the word "security" printed in large letters on the back - private guards hired by the rich whites to help them sleep easier in their beds at night.

And in the houses - black maids, black gardeners and black chauffeurs. Nothing changed there then.

It was the same in the smart hotels and restaurants - almost all whites sitting at the tables and almost all blacks serving them.

Wrong colour

But when I left the city and drove out into the high veld towards Pretoria, I saw hard evidence that some things really have changed.

Rough squatter camps have sprung up - whole families living in tiny, tumbledown shacks with no running water and no decent sewage systems.

These sorts of places have existed in South Africa for as long as I can remember. The big difference is that it is white people living in these particular squatter camps now, not black.

One burly Afrikaner with a huge white, bushy beard told me with more sorrow in his voice than anger: "Yes, it's true. Everything is turned upside down. Now it's the blacks that are on top and we are on the bottom."

He told me that people like him needed help from the government to survive. I asked him why he couldn't get a job and help himself.

He looked as me as if I were stupid: "Wrong colour, wrong skin. Ja?"

I wondered if he accepted that hard-line whites like him had it coming - that the tables had been turned and they were now getting a dose of what they had been dishing out for half a century.

He shrugged: "Ja. I guess you could say so…."

Township squalor

Their camp was a pretty squalid place, but at least it was surrounded by grassland and trees.

For real, unimaginable squalor you need to go to the townships. Alexandra is home to more than 800,000 people, the majority of them living in shacks squashed so close together a rat can barely squeeze between - and God knows there are plenty of rats.

And yet, on the outer edges of this township are row upon row of brand new homes standing empty. In heaven's name why?

They may be modest but they are palaces compared with the shacks. They have plumbing for toilets, running water - unimaginable luxuries.

The local authority says they are still empty because they ran out of money to complete them. The shack dwellers say it's because of corruption - they are being saved for friends of the powerful and ANC party officials.

I spoke to a group of women who had taken over the homes and squatted there until they were thrown out by the police. They were planning another raid as I left them. They told me they would not be voting in the election.

"Why bother?" one tough old woman demanded of me.

"It changes nothing that we have the vote. If we want something, we have learned that we must take it."

She went further than that. She talked about the start of a new revolution to overthrow the ANC and give power back to the people.

I heard that from others, too, including the bishop of the Central Methodist Church Paul Verryn.

He has allowed his church to be used as a sanctuary by thousands of refugees from Zimbabwe who sleep there every night. We watched them crowding into the building as it grew dark - so many of them that they covered every square inch of floor, including the stone steps. That's where they slept, night after night after night.

And they were the lucky ones. Another couple of thousand can't get in. They have to find somewhere else to sleep. It is strange and deeply unsettling to see this expression of utter poverty in the heart of what is potentially the richest city on the continent of Africa.

Rewards of power

But perhaps it is unrealistic to have expected all of South Africa's many problems to have been solved in a mere 15 years. And there is no doubt that progress has been made - millions of new homes built, power and running water supplied to many more.

But the anger of the poor people I spoke to was made much sharper because they suspect that while they live in squalor, many of their leaders - the men and women who fought for their liberation - are reaping the rewards of power.

The man who will almost certainly become president, Jacob Zuma, has himself been under a cloud of suspicion for years, facing charges of corruption.

When the prosecuting authorities decided not to put him on trial there was a great deal of anger from people who suspected that political pressure had been brought to bear. He and his colleagues deny it fiercely.

I have known Archbishop Desmond Tutu for more than 30 years and I wanted to hear what he made of it all. Tutu won the Nobel Peace Prize for his part in the struggle for black liberation and has the respect of millions around the world.

They don't come more ebullient and charismatic than Tutu. His dynamism, energy and enthusiasm is infectious and his chuckle is enough to bring a smile to the stoniest face.

But he was strangely subdued when I met him. He once said - after Mandela came to power - that he expected to spend his old age sitting on the sidelines because his job had been done - democracy would do the rest.

Instead, he is clearly concerned that Zuma has not stood trial and faced up to the allegations in a court of law.

When I put that to one of the most senior figures on the ANC executive, she got very angry.

It was typical, she said, of the colonial attitude people like me bring to a country like South Africa. Her message was clear - we foreigners should keep our noses out of her country's affairs.

So, for my last interview, I went to see the man who made democratic elections possible - the last white president of South Africa, FW de Klerk.

It was he who freed Nelson Mandela and brought about the constitution under which he became president. Mr de Klerk, too, is clearly worried about the consequences of a Zuma presidency.

He hopes the elections will result in a sharp fall in support for the ANC which, he believes, is too powerful. But he told me he is not pessimistic for the future of South Africa.

Both he and Tutu believe democracy will survive. And so long as it does, there is hope. That, for what it's worth, is the message I take away from my visit here too.

Maybe I'll come back again in another 15 years and be proved wrong, but I hope not.

Elections: India 2009

India: Democracy's dance

Hundreds of millions of voters are expected to cast their ballots when India holds general elections over April and May. Ramachandra Guha explains what makes elections in the world's largest democracy special, and what is likely to happen this time.

“ The Indian elections of 2009 will be marked by colour, intensity and a mass involvement of individuals in democracy unmatched elsewhere in the world ”

In the first weeks of 1967, the Times of London dispatched a reporter to cover the Indian elections. Travelling around the country, he saw - or thought he saw - a mood of apathy and helplessness.

Some Indians he talked to had expressed a "readiness for the rejection of parliamentary democracy". The journalist himself was dismayed by the conflict and the corruption. He could spy "the already fraying fabric of the nation itself", with the states "already beginning to act like sub-nations".

He concluded that "the great experiment of developing India within a democratic framework has failed". Indians would thus soon vote in "the fourth - and surely last - general election".

Unfounded fears

That was not the first such gloomy prediction about India, nor would it be the last.

Through the 1970s and 1980s, as the country lurched from one crisis to another, fears were expressed that it might break up into many parts, or come under military rule.

Only after India celebrated its 50th anniversary in 1997 did these prophecies of doom finally go away.

The country was still marked by extremes of wealth and poverty, and by myriad social conflicts. But no one doubted any more that it would survive as a single entity. And all agreed that it was and must remain an electoral democracy.

In the summer of 2009 Indians will vote in the 15th general elections since independence.

The ruling coalition, known as the United Progressive Alliance (UPA), will have as its main challenger another patchwork of multiple parties, the National Democratic Front (NDA).

Each alliance is led by one major party - the Congress in the case of the UPA, the Bharatiya Janata Party (BJP) in the case of the NDA.

Both are "national" parties, with a presence in most parts of India. However, there will be dozens of lesser parties in the fray, each seeking to represent a particular state, region or caste group.

Over 700 million Indians will be eligible to vote. Perhaps 400 million will actually exercise their franchise, making this the greatest exercise of the democratic will anywhere and at any time in human history.

But what will this election be about? Who or what are the voters being asked to choose from?

Personalities and issues

At one level, the election shall be about individuals.

Both major fronts have announced their candidates for prime minister in advance.

The UPA's man is the incumbent, Dr Manmohan Singh, a politician of exceptional integrity and intelligence, with a reputation however for being soft and indecisive.

The NDA has put forward LK Advani, who is best known for leading the campaign to have a temple dedicated to the Hindu god Ram built on the site of a mosque demolished in 1992, in the northern city of Ayodhya.

Mr Singh is a few years short of 80; Mr Advani is several years older still. So, while announcing their names, the two major parties have also indicated who would be their heirs apparent.

As and when someone has to succeed Mr Singh, the Congress will offer Rahul Gandhi, the son, grandson and great-grandson of prime ministers. A handsome young man with charming manners, he is yet to show that he has the necessary will and drive to succeed in the harsh world of Indian politics.

The BJP's man-in-waiting is the Chief Minister of Gujarat, Narendra Modi. A capable administrator, Mr Modi is nevertheless tainted by the pogrom against Muslims that took place under his watch (and, some would say, with his encouragement) in Gujarat in 2002.

At another level, the election shall also be about issues, most notably, the economy.

The NDA fought and lost the 2004 elections on the slogan of "India Shining". It gloried in the high rates of economic growth then prevalent, to be shot down by the opposition's claim that this growth had not percolated down to the aam admi, or common man (and woman).

The UPA, wiser by the experience, will seek to showcase its waivers of crop loans and its programmes of rural employment.

The NDA will answer that, far from helping the poor, these schemes have merely promoted cronyism and corruption.

Thirdly, this election shall also be about identities.

The BJP will subtly - and sometimes not so subtly - hint that the Congress favours the Muslim minority, and that they will instead consolidate the claims and the pride of the majority Hindus.

Other parties will break down these religious monoliths in terms of caste, class and region.

Who will win?

There are several powerful regional parties in the south, representing one or other linguistic group, each more powerful in their state than either the BJP or the Congress. In northern India caste-based parties are strong. And the Communists have a major influence in the states of Kerala and West Bengal.

With reference to the Times correspondent in 1967, one can confidently state that these elections will not be the last to be held in India. Predicting their outcome is another matter altogether.

Any one of three results is possible. The winner could be a coalition headed by the Congress, a coalition headed by the BJP or a Third Front featuring neither.

In the last eventuality, the prime minister is likely to be Mayawati, the present chief minister of India's largest state, Uttar Pradesh. A woman from the Dalit or formerly Untouchable castes, she is admired for her courage and persistence but also feared for her vengefulness.

What we do know in advance is that the government that comes to power in the summer of 2009 will be a coalition, a weak coalition. This is not a happy augury for the interval between these elections and the next.

It is to the credit of democracy that millions of often poor and sometimes illiterate Indians vote freely and fairly. That said, the conduct of governments in India has tended to be capricious and arbitrary.

Having many parties in power at the centre is in one respect a reflection of democracy's deepening, a product of the representation of groups and regions previously excluded from government.

At the same time, the satisfaction of so many different interests leads to short-term rent-seeking rather than to rational policy. Smaller parties covet the most lucrative ministries, and the larger parties, simply to stay in power, are obliged to concede these to them.

Like the 14 others that preceded them, the Indian elections of 2009 will be marked by colour, intensity and a mass involvement of individuals in democracy unmatched elsewhere in the world.

But unless governance itself becomes more transparent and accountable, India will continue to be plagued by corruption and inefficiency of a scale unacceptable in a modern state presuming to speak for and serve the people.

Ramachandra Guha is the author of India after Gandhi: The History of the World's Largest Democracy. He lives in Bangalore.

300!

The Celtic Tiger

The lessons of Ireland

This riches-to-rags story is an example for Obama - and the world - of how not to run an economy

'What," asked my interlocutor, "is the worst-case outlook for the world economy?" It wasn't until the next day that I came up with the right answer: America could turn Irish.

What's so bad about that? Well, the Irish government now predicts that this year GDP will fall more than 10% from its peak, crossing the line that is sometimes used to distinguish between a recession and a depression. But there's more to it: to satisfy nervous lenders, Ireland is being forced to raise taxes and slash government spending in the face of an economic slump, policies that will further deepen the slump.

And it's that closing off of policy options that I'm afraid might happen to the rest of us. The slogan Erin go bragh, usually translated as "Ireland forever", is traditionally used as a declaration of Irish identity. But it could also, I fear, be read as a prediction for the world economy.

How did Ireland get into its current bind? By being just like the US, only more so. Like Iceland, Ireland jumped with both feet into the brave new world of unsupervised global markets. Last year the Heritage Foundation declared Ireland the world's third-freest economy, behind only Hong Kong and Singapore.

One part of the Irish economy that became especially free was the banking sector, which used its freedom to finance a monstrous housing bubble. Ireland became in effect a cool, snake-free version of coastal Florida.

Then the bubble burst. The collapse of construction sent the economy into a tailspin, while plunging home prices left many owing more than their houses were worth. The result has been a rising tide of defaults and heavy losses for the banks. And the troubles of the banks are largely responsible for putting the Irish government in a policy straitjacket.

On the eve of the crisis Ireland seemed to be in good shape, fiscally speaking, with a balanced budget and a low level of public debt. But the government's revenue which had become strongly dependent on the housing boom collapsed along with the bubble.

Even more important, the Irish government found itself having to take responsibility for the mistakes of private bankers. Last September Ireland moved to shore up confidence in its banks by offering a government guarantee on their liabilities thereby putting taxpayers on the hook for potential losses of more than twice the country's GDP.

The combination of deficits and exposure to bank losses raised doubts about Ireland's long-run solvency, reflected in a rising risk premium on Irish debt and warnings about possible downgrades from ratings agencies. Hence the harsh new policies. Earlier this month the Irish government simultaneously announced a plan to purchase many of the banks' bad assets putting taxpayers even further on the hook while raising taxes and cutting spending, to reassure lenders.

As I read the debate among Irish experts, there's widespread criticism of the bank plan, with many leading economists calling for temporary nationalisation instead. (Ireland has already nationalised one major bank.) The arguments of these Irish economists are very similar to those of a number of American economists, myself included, about how to deal with our own banking mess.

But there isn't much disagreement about the need for fiscal austerity. As far as responding to the recession goes, Ireland appears to be really, truly without options, other than to hope for an export-led recovery if and when the rest of the world bounces back.

So what does all this say about those of us who aren't Irish? For now, the US isn't confined by an Irish-type fiscal straitjacket: The financial markets still consider government debt safer than anything else. But we can't assume that this will always be true. Unfortunately, we didn't save for a rainy day: thanks to tax cuts and the war in Iraq, America came out of the "Bush boom" with a higher ratio of government debt to GDP than it had going in. And if we push that ratio another 30 or 40 points higher - not out of the question if economic policy is mishandled over the next few years - we might start facing our own problems with the bond market.

That's one reason I'm so concerned about the Obama administration's bank plan. If, as some of us fear, taxpayer funds end up providing windfalls to financial operators instead of fixing what needs to be fixed, we might not have the money to go back and do it right.

And the lesson of Ireland is that you really, really don't want to put yourself in a position where you have to punish your economy in order to save your banks.

• Paul Krugman, winner of the 2008 Nobel Memorial Prize in Economics, is a columnist for the New York Times, where this article first appeared

Water (II)

THE overthrow of Madagascar’s president in mid-March was partly caused by water problems—in South Korea. Worried by the difficulties of increasing food supplies in its water-stressed homeland, Daewoo, a South Korean conglomerate, signed a deal to lease no less than half Madagascar’s arable land to grow grain for South Koreans. Widespread anger at the terms of the deal (the island’s people would have received practically nothing) contributed to the president’s unpopularity. One of the new leader’s first acts was to scrap the agreement.

Three weeks before that, on the other side of the world, Governor Arnold Schwarzenegger of California declared a state of emergency. Not for the first time, he threatened water rationing in the state. “It is clear,” says a recent report by the United Nations World Water Assessment Programme, “that urgent action is needed if we are to avoid a global water crisis.”

Local water shortages are multiplying. Australia has suffered a decade-long drought. Brazil and South Africa, which depend on hydroelectric power, have suffered repeated brownouts because there is not enough water to drive the turbines properly. So much has been pumped out of the rivers that feed the Aral Sea in Central Asia that it collapsed in the 1980s and has barely begun to recover.

Yet local shortages, caused by individual acts of mismanagement or regional problems, are one thing. A global water crisis, which impinges on supplies of food and other goods, or affects rivers and lakes everywhere, is quite another. Does the world really face a global problem?

Water, water everywhere…

Not on the face of it. There is plenty of water to go around and human beings are not using all that much. Every year, thousands of cubic kilometres (km³) of fresh water fall as rain or snow or come from melting ice. According to a study in 2007, most nations outside the Gulf were using a fifth or less of the water they receive—at least in 2000, the only year for which figures are available. The global average withdrawal of fresh water was 9% of the amount that flowed through the world’s hydrologic cycle. Both Latin America and Africa used less than 6% (see table). On this evidence, it would seem that all water problems are local.

The trouble with this conclusion is that no one knows how much water people can safely use. It is certainly not 100% (the amount taken in Gulf states) because the rest of creation also has to live off the water. In many places the maximum may well be less than one fifth, the average for Asia as a whole. It depends on how water is returned to the system, how much is taken from underground aquifers, and so on.

But there is some admittedly patchy evidence that, given current patterns of use and abuse, the amount now being withdrawn is moving dangerously close to the limit of safety—and in some places beyond it. An alarming number of the world’s great rivers no longer reach the sea. They include the Indus, Rio Grande, Colorado, Murray-Darling and Yellow rivers. These are the arteries of the world’s main grain-growing areas.

Freshwater fish populations are in precipitous decline. According to the World Wide Fund for Nature, fish stocks in lakes and rivers have fallen roughly 30% since 1970. This is a bigger population fall than that suffered by animals in jungles, temperate forests, savannahs and any other large ecosystem. Half the world’s wetlands, on one estimate, were drained, damaged or destroyed in the 20th century, mainly because, as the volume of fresh water in rivers falls, salt water invades the delta, changing the balance between fresh and salt water. On this evidence, there may be systemic water problems, as well as local disruptions.

Two global trends have added to the pressure on water. Both are likely to accelerate over coming decades.

The first is demography. Over the past 50 years, as the world’s population rose from 3 billion to 6.5 billion, water use roughly trebled. On current estimates, the population is likely to rise by a further 2 billion by 2025 and by 3 billion by 2050. Demand for water will rise accordingly.

Or rather, by more. Possibly a lot more. It is not the absolute number of people that makes the biggest difference to water use but changing habits and diet. Diet matters more than any single factor because agriculture is the modern Agasthya, the mythical Indian giant who drank the seas dry. Farmers use about three-quarters of the world’s water; industry uses less than a fifth and domestic or municipal use accounts for a mere tenth.

Different foods require radically different amounts of water. To grow a kilogram of wheat requires around 1,000 litres. But it takes as much as 15,000 litres of water to produce a kilo of beef. The meaty diet of Americans and Europeans requires around 5,000 litres of water a day to produce. The vegetarian diets of Africa and Asia use about 2,000 litres a day (for comparison, Westerners use just 100-250 litres a day in drinking and washing).

So the shift from vegetarian diets to meaty ones—which contributed to the food-price rise of 2007-08—has big implications for water, too. In 1985 Chinese people ate, on average, 20kg of meat; this year, they will eat around 50kg. This difference translates into 390km³ (1km³ is 1 trillion litres) of water—almost as much as total water use in Europe.

The shift of diet will be impossible to reverse since it is a product of rising wealth and urbanisation. In general, “water intensity” in food increases fastest as people begin to climb out of poverty, because that is when they start eating more meat. So if living standards in the poorest countries start to rise again, water use is likely to soar. Moreover, almost all the 2 billion people who will be added to the world’s population between now and 2030 are going to be third-world city dwellers—and city people use more water than rural folk. The Food and Agriculture Organisation reckons that, without changes in efficiency, the world will need as much as 60% more water for agriculture to feed those 2 billion extra mouths. That is roughly 1,500km³ of the stuff—as much as is currently used for all purposes in the world outside Asia.

The other long-term trend affecting water is climate change. There is growing evidence that global warming is speeding up the hydrologic cycle—that is, the rate at which water evaporates and falls again as rain or snow. This higher rate seems to make wet regions more sodden, and arid ones drier. It brings longer droughts between more intense periods of rain.

Climate change has three big implications for water use.

First, it changes the way plants grow. Trees, for example, react to downpours with a spurt of growth. During the longer droughts that follow, the extra biomass then dries up so that if lightning strikes, forests burn more spectacularly. Similarly crops grow too fast, then wilt.

Second, climate change increases problems of water management. Larger floods overwhelm existing controls. Reservoirs do not store enough to get people or plants through longer droughts. In addition, global warming melts glaciers and causes snow to fall as rain. Since snow and ice are natural regulators, storing water in winter and releasing it in summer, countries are swinging more violently between flood and drought. That is one big reason why dams, once a dirty word in development, have been making a comeback, especially in African countries with plenty of water but no storage capacity. The number of large dams (more than 15 metres high) has been increasing and the order books of dam builders are bulging.

Third, climate change has persuaded western governments to subsidise biofuels, which could prove as big a disaster for water as they already have been for food. At the moment, about 2% of irrigated water is used to grow crops for energy, or 44km³. But if all the national plans and policies to increase biofuels were to be implemented, reckons the UN, they would require an extra 180km³ of water. Though small compared with the increase required to feed the additional 2 billion people, the biofuels’ premium is still substantial.

In short, more water will be needed to feed and heat a world that is already showing signs of using too much. How to square that circle? The answer is by improving the efficiency with which water is used. The good news is that this is possible: vast inefficiencies exist which can be wrung out. The bad news is it will be difficult both because it will require people to change their habits and because governments, which might cajole them to make the changes, are peculiarly bad at water policy.

…nor any drop to drink

Improving efficiency is doable and industrial users have done it, cutting the amount of water needed to make each tonne of steel and each extra unit of GDP in most rich countries (see first chart). This can make a difference. The Pacific Institute reckons that, merely by using current water-saving practices (ie, no technological breakthroughs) California, a water-poor state, could meet all its needs for decades to come without using a drop more.

Still, industry consumes less than a fifth of the world’s water and the big question is how to get farmers, who use 70-80%, to follow suit. It takes at least three times as much water to grow maize in India, for example, as it does in America or China (see second chart). In some countries, you need 1,500 litres of water to produce a kilo of wheat; in others, only 750 litres. It does not necessarily follow that water is being used unsustainably in the one place and not the other; perhaps the high-usage places have plenty of water to spare. But it does suggest that better management could reduce the amount of water used in farming, and that the world could be better off if farmers did so. Changing irrigation practices can improve water efficiency by 30%, says Chandra Madramootoo, of the International Commission on Irrigation and Drainage. One can, for example, ensure water evaporates from the leaves of the plant, rather than from the soil. Or one can genetically modify crops so they stop growing when water runs dry, but do not die—they simply resume growth later when the rains return.

The world might also be better off, at least in terms of water, if trade patterns more closely reflected the amount of water embedded in traded goods (a concept called “virtual water” invented by Tony Allan of King’s College London). Some benign effects happen already: Mexico imports cereals from US which use 7 billion cubic metres (m³) of water. If it grew these cereals itself, it would use 16 billion m³, so trade “saves” 9 billion m³ of water. But such beneficial exchanges occur more by chance than design. Because most water use is not measured, let alone priced, trade rarely reflects water scarcities.

To make water use more efficient, says Koichiro Matsuura, the head of UNESCO, the main UN agency dealing with water, will require fundamental changes of behaviour. That means changing incentives, improving information flows, and improving the way water use is governed. All that will be hard.

Water is rarely priced in ways that reflect supply and demand. Usually, water pricing simply means that city dwellers pay for the cost of the pipes that transport it and the sewerage plants that clean it.

Basic information about who uses how much water is lacking. Rainwater and river flows can be measured with some accuracy. But the amount pumped out of lakes is a matter of guesswork and information on how much is taken from underground aquifers is almost completely lacking.

The governance of water is also a mess. Until recently, few poor countries treated it as a scarce resource, nor did they think about how it would affect their development projects. They took it for granted.

Alongside this insouciance goes a Balkanised decision-making process, with numerous overlapping authorities responsible for different watersheds, sanitation plants and irrigation. To take a small example, the modest town of Charlottesville in Virginia has 13 water authorities.

Not surprisingly, investment in water has been patchy and neglected. Aid to developing countries for water was flat in real terms between 1990 and 2005. Within that period, there was a big shift from irrigation to drinking water and sanitation—understandable no doubt, but this meant less aid was going to the main users of water, farmers in poor countries. Aid for irrigation projects in 2002-05 was less than half what it had been in 1978-81. Angel Gurría, the head of the Organisation for Economic Co-operation and Development, talks of “a crisis in water financing”.

As is often the way, business is ahead of governments in getting to grips with waste. Big drinks companies such as Coca Cola have set themselves targets to reduce the amount of water they use in making their products (in Coke’s case, by 20% by 2012). The Nature Conservancy, an ecologically-minded NGO, is working on a certification plan which aims to give companies and businesses seals of approval (a bit like the Fairtrade symbol) according to how efficiently they use water. The plan is supposed to get going in 2010. That sort of thing is a good start, but just one step in a long process that has barely begun.

(From The Economist)

Water (I)

THE Chinese word for politics (zhengzhi) includes a character that looks like three drops of water next to a platform or dyke. Politics and water control, the Chinese character implies, are intimately linked.

Such a way of thinking contrasts with the usual view around the world, which argues that since humans cannot live without water, it should be a basic human right, available to all, preferably for nothing. The Chinese character points to a more useful approach. In many places water is becoming scarcer. Treating it as a right makes the scarcity worse. Some of the world’s great rivers no longer reach the sea. In many cities water is rationed. Droughts and floods are becoming more extreme. These problems demand policies. Ideally, efficient water use would be encouraged by charging for it, but attempts to do so have mostly proved politically impossible. A more practicable alternative is a system of tradable water-usage rights.

What used to be seen as separate, local difficulties—in California, the desiccated Aral Sea, the Sahel—now look more like manifestations of a global problem. As our article explains, many water problems have global causes: population growth, climate change, urbanisation and, especially, changing diets. It takes 2,000 litres (530 American gallons) of water to grow a kilo (2.2lb) of vegetables but 15,000 litres to produce a kilo of beef—and people are eating more meat. The problems also have global implications. Without a new green revolution, farmers will need 60% more water to feed the 2 billion extra people who will be born between now and 2025.

Yet there is, globally, no shortage of water. Unlike other natural resources (such as oil), water cannot be used up. It is recycled endlessly, as rain, snow or evaporation. On average, people are extracting for their own uses less than a tenth of what falls as rain and snow each year.

The central problem is that so much water is wasted, mainly by farmers. Agriculture uses three-quarters of the world’s water (urban use is trivial: most people drink two or three litres a day, on average, but 2,000-5,000 litres are used to make the food they eat). Because water is usually free, thirsty crops like alfalfa are grown in arid California. Wheat in India and Brazil uses twice as much water as wheat in America and China. Dry countries like Pakistan export textiles though a 1kg bolt of cloth requires 11,000 litres of water.

Any economist knows what to do: price water to reflect its value. But decades of trying to do that for agriculture have run into powerful resistance from farmers. They reject scarcity pricing for the reason that water falls from the skies. No government owns it, so no government should charge for it.

Cap and trade

There is a way out. Australian farmers have the right to use a certain amount of water free. They can sell that right (called a “usufructuary right”) to others. But if they want more water themselves, they must buy it from a neighbour. The result of this trading is a market that has done what markets do: allocate resources to more productive use. Australia has endured its worst drought in modern history in the past ten years. Water supplies in some farming areas have fallen by half. Yet farmers have responded to the new market signals by switching to less thirsty crops and kept the value of farm output stable. Water productivity has doubled. Australia’s system overcomes the usual objections because it confirms farmers’ rights to water and lets them have much of it for nothing.

Tradable-usage rights have another advantage: they can be used in rough and ready form in huge countries such as China and India that do not have meters to measure usage, or strong legal systems to enforce usage rights. Instead of sophisticated infrastructure, they depend on local trust and knowledge: farmers sell a share of their time at the village pump. A system like that works in parts of Pakistan’s Punjab.

Usage rights have flaws. At first, they confirm existing patterns of use that are often inefficient. Farmers can cheat, as Australians have found. They are, at most, a good start. But they would be better than what exists now, which is sporadic rationing and the threat of a giant crisis. Or what may come next, a mandatory mass conversion to vegetarianism.

Kernow & Devon

Eureka!

'Eureka machine' puts scientists in the shade by working out laws of nature

The machine, which took only a few hours to come up with Newton's laws of motion, marks a turning point in the way science is done

Scientists have created a "Eureka machine" that can work out the laws of nature by observing the world around it – a development that could dramatically speed up the discovery of new scientific truths.

The machine took only hours to come up with the basic laws of motion, a task that occupied Sir Isaac Newton for years after he was inspired by an apple falling from a tree.

Scientists at Cornell University in New York have already pointed the machine at baffling problems in biology and plan to use it to tackle questions in cosmology and social behaviour.

The work marks a turning point in the way science is done. Eureka moments, which supposedly began in Archimedes' bath more than 2,000 years ago, might soon be happening not in the minds of geniuses, but through the warm hum of electronic circuitry.

"We've reached a point in science where there's a lot of data to deal with. It's not Newton looking at an apple, or Galileo looking at heavenly bodies any more, it's more complex than that," said Hod Lipson, the computer engineer who led the project.

"This takes the grunt out of science by sifting through data and looking for the laws that govern how something behaves."

Details of the machine are described in the US journal Science. The study appears alongside a report from scientists at the universities of Aberystwyth and Cambridge describing the first discovery of new scientific knowledge by a laboratory robot.

The robot, called Adam, devised and performed experiments to investigate the genetics of bakers' yeast. When scientists did their own experiments, they came to the same conclusions. Ross's team is already working on a second robot called Eve.

Together, the papers raise the question of how the role of scientists will change over the coming decades. For now, scientists believe the new technology will work alongside them rather than relegate them to technicians who tap in data and perform maintenance tasks, but leave the real thinking to the machines.

The Cornell machine uses a computer program that can search through huge amounts of data and look for underlying patterns. For example, a falling apple will abide by Newton's second law, which is often stated as F=ma, where F is the force acting on an object, m is its mass, and a is its acceleration. When fed information on the mass of the apple and its velocity as it falls, the machine would be able to work out the equation.

Lipson tested the machine by giving it information from basic lab experiments, such as swinging pendulums and tiny cars that moved up and down tracks on a cushion of air. After crunching through the data, the machine pinged and displayed several laws of motion and conservation of momentum.

The system runs its own checks to decide whether the laws it has found are likely to be interesting. In the pendulum test, for example, the tip of the pendulum is always the same distance from the pivot, but this does not shed any light on the underlying physics.

After proving that the machine worked, Lipson's team set it to work on the complex problem of metabolism in biological cells. The computer produced some equations, which the scientists are still trying to make sense of.

"It's like going to an oracle and asking what's going on. You are given an equation, but you need to work out what it means before you can understand what's really going on," said Lipson.

The team say they also plan to look at problems in cosmology and even social behaviour, which could reveal the underlying laws at play when people form social networks on the internet.

"The real test now is whether it can discover new laws of nature and I believe it will. There's no way forward in a lot of sciences without tools like this," Lipson said.

Co-operatives

THESE are difficult times for the Fagor appliance factory in Mondragón, in northern Spain. Sales have seized up, as at many other white-goods companies. Workers had four weeks’ pay docked at Christmas. Some have been laid off. Now salaries are about to be cut by 8%. Time for Spain’s mighty unions to call a strike? Not at Fagor—for here the decisions are taken by the workers themselves.

Fagor is a workers’ co-operative, one of dozens that dot the valleys of the Basque country. Most belong to the world’s biggest group of co-operatives, the Mondragón Corporation. It is Spain’s seventh-largest industrial group, with interests ranging from supermarkets and finance to white goods and car parts. It accounts for 4% of GDP in the Basque country, a nation of 3m people. All this has made Mondragón a model for co-operatives from California to Queensland. How will co-ops, with their ideals of equity and democracy, cope in the recession?

Workers’ co-ops are often seen as hotbeds of radical, anti-capitalist thought. Images of hippies, earnest vegetarians or executives in blue overalls could not, however, be further from reality. “We are private companies that work in the same market as everybody else,” says Mikel Zabala, Mondragón’s human-resources chief. “We are exposed to the same conditions as our competitors.”

Problems may be shared with competitors, but solutions are not. A workers’ co-op has its hands tied. It cannot make members redundant or, in Mondragón’s case, sell companies or divisions. Losses in one unit are covered by the others. “It can be painful at times, when you are earning, to give to the rest,” Mr Zabala admits. Lossmaking co-ops can be closed, but members must be re-employed within a 50km (30-mile) radius. That may sound like a nightmare for managers battling recession. But co-ops also have their advantages. Lay-offs, short hours and wage cuts can be achieved without strikes, and agreements are reached faster than in companies that must negotiate with unions and government bodies under Spanish labour law.

The 13,000 members of Eroski, another co-operative in the Mondragón group and Spain’s second-largest retailer, have not just frozen their salaries this year. They have also given up their annual dividend on their individual stakes in the company. A constant flow of information to worker-owners, says Mr Zabala, makes them ready to take painful decisions.

It sounds conflict-free, but that is misleading. One of Mondragón’s many paradoxes is that worker-owners are also the bosses of other workers. People have been hired in far-flung places, from America to China, as the group has expanded. It now has more subsidiary companies than co-operatives. Mondragón has two employees for every co-op member. The result is a two-tier system. And when recession bites, non-member employees suffer most. They are already losing jobs as temporary contracts are not renewed. Like capitalist bosses, the Mondragón co-operativists must, indeed, occasionally handle strikes and trade-union trouble.

Some worry that Mondragón-style success kills the idealism on which most co-ops are based. Those within the Mondragón group are aware of the danger. Eroski wants to offer co-op membership to its 38,500 salaried employees.

The most successful co-ops, however, are those least shackled by ideology. Mondragón used to cap managers’ pay at three times that of the lowest-paid co-operativist, for example. But it realised it was losing its best managers, and that some non-member managers were earning more than member managers. The cap was raised to eight times. But this is still 30% below market rates, and some managers are still tempted away. “Frankly, it would be a bad sign if nobody was,” says Adrián Celaya, Mondragón’s general secretary.

Lately Mondragón has had trouble keeping successful co-operatives locked in. Irizar, a maker of luxury coaches, split off last year, reportedly because it no longer wanted to support lossmaking co-ops elsewhere in the group.

Henry Hansmann, a professor at Yale Law School, says co-ops often fall apart when worker-owners become too diverse. He points to United Airlines—not a co-operative, but once mainly owned by workers from competing trade unions—as an example of how clashing interests can kill worker ownership. By bringing in tens of thousands of new members at Eroski, many far from the Basque country, Mondragón risks falling into that trap. The group’s bosses believe, however, that the way forward is to promote the idea that co-operativism brings advantages. The global downturn may strengthen the group internally. As unemployment sweeps the globe, after all, there is no greater social glue than the fight to keep jobs.

The Tamil People

This is not a war on terror. It is a racist war on all Tamils

A colossal humanitarian tragedy is under way in Sri Lanka, and the silence from India is shameful. The world must step in

by Arundhati Roy

The horror that is unfolding in Sri Lanka becomes possible because of the silence that surrounds it. There is almost no reporting in the mainstream Indian media - or indeed in the international press - about what is happening there. Why this should be so is a matter of serious concern.

From the little information that is filtering through, it looks as though the Sri Lankan government is using the propaganda of "the war on terror" as a fig leaf to dismantle any semblance of democracy in the country, and commit unspeakable crimes against the Tamil people. Working on the principle that every Tamil is a terrorist unless he or she can prove otherwise, civilian areas, hospitals and shelters are being bombed and turned into a war zone. Reliable estimates put the number of civilians trapped at over 200,000. The Sri Lankan army is advancing, armed with tanks and aircraft.

Meanwhile, there are official reports that several "welfare villages" have been established to house displaced Tamils in Vavuniya and Mannar districts. According to a report in the Daily Telegraph, these villages "will be compulsory holding centres for all civilians fleeing the fighting". Is this a euphemism for concentration camps? Mangala Samaraveera, the former foreign minister, told the Telegraph: "A few months ago the government started registering all Tamils in Colombo on the grounds that they could be a security threat, but this could be exploited for other purposes, like the Nazis in the 1930s. They're basically going to label the whole civilian Tamil population as potential terrorists."

Given its stated objective of "wiping out" the Liberation Tigers of Tamil Eelam, this malevolent collapse of civilians and "terrorists" does seem to signal that the government of Sri Lanka is on the verge of committing what could end up being genocide. According to a UN estimate, several thousand people have already been killed. Thousands more are critically wounded. The few eyewitness reports that have come out are descriptions of a nightmare from hell.

What we are witnessing, or should we say what is happening, in Sri Lanka - and what is being so effectively hidden from public scrutiny - is a brazen, openly racist war. The impunity with which the Sri Lankan government is being able to commit these crimes actually unveils the deeply ingrained racist prejudice that is precisely what led to the marginalisation and alienation of the Tamils of Sri Lanka in the first place. That racism has a long history - of social ostracism, economic blockades, pogroms and torture. The brutal nature of the decades-long civil war, which started as a peaceful protest, has its roots in this.

Why the silence? In another interview Samaraveera says that "a free media is virtually non-existent in Sri Lanka today". He talks about death squads and "white van abductions", which have made society "freeze with fear". Voices of dissent, including several journalists, have been abducted and assassinated. The International Federation of Journalists accuses the Sri Lanka government of using a combination of anti-terrorism laws, disappearances and assassinations to silence journalists.

There are disturbing but unconfirmed reports that India is lending material and logistical support to the Sri Lankan government in these crimes against humanity. If the reports are true, it is outrageous. What of the governments of other countries? Pakistan? China? What are they doing to help or to harm the situation?

In the Indian state of Tamil Nadu the war in Sri Lanka has fuelled passions that have led to more than 10 people immolating themselves. The public anger and anguish, much of it genuine, some of it cynical political manipulation, has become an election issue.

It is extraordinary that this concern has not travelled to the rest of India. Why is there silence here? There are no "white van abductions" - at least not on this issue. Given the scale of what is happening in Sri Lanka, the silence is inexcusable. More so because of the Indian government's long history of irresponsible dabbling in the conflict, first taking one side and then the other. Several of us - including myself - who should have spoken out much earlier have not done so, simply because of a lack of information about the war.

So while the killing continues, while tens of thousands of people are being barricaded into concentration camps, while more than 200,000 face starvation, and a genocide waits to happen, there is dead silence from this great country.

It's a colossal humanitarian tragedy. The world must step in. Now. Before it's too late.

• Arundhati Roy is a writer and activist who won the Booker Prize for her novel, The God of Small Things