I am writing with reference to the Op-Ed: ‘A new alignment is emerging,’ by Mohammad Amjad Hossain (September 27).
   In this context, it may be interesting to take a look at what an eminent Russian scholar says about the prospects of Sino-Russian relations. Andrei Piontkovsky, executive director of the Centre for Strategic Studies in Moscow, recently wrote: ‘Last week (in August), Russia and China held joint military manoeuvres in the presence of both Russian President Vladimir Putin and Chinese President Hu Jintao. But a new strategic alliance between the two countries is not likely, as it is China that poses the greatest threat to Russia, although many in the Kremlin seem blind to this as they rattle sabres at America and the West.’
   Dr Piontkovsky points out that China has territorial claims on Russia. China has a population of more than one billion while Russia, which is much bigger in size than China, has a much smaller population of only about 150 million. In fact, vast Russian territories bordering China are extremely sparsely populated — only about six million — and China sees them as ‘vital space’ for its expansion. He also points out that on September 2006, China’s People’s Liberation Army conducted a large 10-day exercise, involving the Shenyang and Beijing military districts, the two most powerful of China’s seven military districts. Shenyang abuts Russian Armed Force’s Far Eastern District, and Beijing shares borders with Russia’s Siberian Military District. During the exercise, Shenyang units advanced 1,000 kilometres into Beijing district, where they engaged in joint war games.
   According to most military observers, the Beijing/Shenyang exercises seemed to be a practice for a possible operation against Russia. As Dr Piontkovsky writes: ‘The geography of the exercises, and the offensive nature of the task undertaken, leave little doubt that Russia was cast in the role of ‘potential adversary.’ Such show of force is an ancient, traditional Chinese political technique.’
   Andrei Piontkovsky concludes: ‘Paradoxically, these [Beijing/Shenyang] exercises were undertaken during a period when bilateral political and economic ties appeared on the surface to be at their highest point. ... And China is succeeding, most importantly reinforcing Putin’s anti-American and anti-Western agenda. While Beijing/Shenyang exercise should have indicated to Russian leaders that China’s intentions may not always be benign, Russia’s political and military leadership seem not to sense any threat. ... Thirty-six years ago, Richard Nixon and Mao Zedong turned the world politics upside down, as both America and China realised that it was the Soviet Union, and not each other, that posed the greater threat. Vladimir Putin needs his ‘Nixon moment.’ Alienating the West is a foolish strategy when the greatest long-term threat to Russia comes from the East.’
   Once China and the Soviet Union considered themselves as fraternal communist countries, only to become most deadly enemies later. This time, Russia might again face China as a mighty economic and military superpower, threatening its empty and resource-rich regions in the Far East which China covets and needs. Amjad Hossain might draw a different conclusion if he looks into the real picture which is obscured by propaganda.
   Mahmood Elahi
   Ottawa, Canada

I have read your editorial ‘Pitting beneficiaries against benefactors of corruption’. I agree with you. If there were any manipulations by the political authorities in this GATCO case, the bureaucrats in question, as servants of the republic who are oath-bound to protect national interest, should surely have taken a strong position against the move. They could have made their opposition public or even stepped down in protest.
   Gopal Sengupta
   Canada

Inflation is the buzz word nowadays. No wonder it has drawn the attention of the policymakers, researchers and different institutions. Probably after ‘corruption’, ‘inflation’ is the most uttered word in Bangladesh. But to us – known as general masses – inflation is the name of a ‘nightmare’. The suffering caused by the incredible price hike is beyond imagination. The people of this poor country are simply struggling to live their daily life.
   The inflation rate was 4.5 per cent in 2005, which has now reached over 7.49 per cent on an average basis (10.10 per cent on point to point basis). What do these numbers signify? In a span of less than two years price has increased by massive 66 per cent! Certainly, the level of income of the people didn’t increase in that ratio. One of the statistics shows that, the estimated GDP growth on PPP (purchasing power parity) basis in 2007 over 2005 would be 12.21 per cent. The gap between these two figures is good enough to depict the misery of the people. We do feel helpless when responsible people of the government try to justify price hike by saying that purchasing power of the people has gone up. Yes, it has – but sir, please see the gap between the Consumer Price Index and PPP.
   Lots of research works have been done recently to find out the reasons and how to curb the same. It is sometimes really confusing. Some experts say the reason is cost-push which happens because of supply shocks like flood, drought, oil–price hike etc. A good number of experts have different views altogether as they try to label it as demand-pull which is caused when the aggregate demand surpasses the aggregate supply.
   Both the schools of thoughts have their logics. In case of cost-push inflation price is pushed up by increases in costs of factors of production, such as oil. It is true that, the price of oil has gone up significantly over the last two years – from USD25/barrel in mid 2003 to USD70/barrel now! Supplies of some of the commodities like milk powder, rice, edible oil have also been affected because of lesser production across the globe. Apart from the normal economic reasons, Bangladesh economy is greatly affected by some uneconomic causes. One such cause is ‘Syndication’. We do have different opinions here as well — even at the top level of government. Some of the top officials accept the fact of the existence of ‘syndicate’ while some others reject outright the same! In one of the latest researches conducted by the CPD reveals that, the imports of the essential commodities are controlled by a few of the big importers and as a result of that there is every chance of manipulation. The study suggests increasing the number of importers in order to have balance and perfect competition. It is also said that the differences of prices between wholesale and retail market is somewhat abnormal. There are flaws in the overall supply chain of the commodities which are also sometimes responsible for price hike.
   Experts who advocate the demand-pull inflation explain that, aggregate demand of the economy has increased because of strong export earnings, expansionary fiscal policy, hefty inflow of remittances and higher growth rate of money supply. The year-on-year growth rate of broad money increased from 11.9 per cent in June 2004 to 18.2 per cent in May 2007. This excessive growth in money kept the real interest rate (actual cost of borrowing after adjusting for inflation) relatively low. The lower real interest rate in turn has stimulated consumption, investment, and government spending, resulting in an overall increase in the aggregate demand for goods and services.
   The Central Bank is expected to follow the ‘Contractionary Monetary Policy’ to fight inflation. The objective of this monetary policy is to control the supply of money in the market and as a result the interest rate goes up which will eventually have negative impact on the aggregate demand. Higher interest rate affects consumption and investment spending. Initially, the governor of Central bank was in favour of this policy but as is the practice — hue and cry from different corners of the society forced him to change his earlier stance. A section of business community, economists and experts started screaming that, this policy of the central bank would have negative impact on the investment which is not at all conducive for the employment and growth. Although experts say that, the trade-off between inflation and real GDP growth rate is temporary. Once the economy comes out of the inflationary pressure, output growth increases.
   Government seems to have taken different measures although in reality we haven’t reaped any benefit out of those measures yet. One of the latest reports of ADB says that, ‘government’s recent administrative measures to counter inflation, such as investigations of certain businesses suspected of hoarding supplies, measures to regulate stock levels and prices, as well as its encouragement to new importers to enter the market for inducing greater competition, appear to have had no discernible impact on inflation. They have, rather, created uncertainty in the business environment, contributing to price pressures.’
   We the sufferers of this hard time feel that, lack of coordinated efforts contributed to this problem. At times we tend to analyse the situation from a single or narrow perspective rather than from a broader one. The prevailing inflation is caused by both ‘cost-push’ and ‘demand-pull’ factors and to fight this we need to have supply side measures along with demand side steps. Inflation and unemployment are the twin-evils of the economy, which require a comprehensive treatment no matter which factor triggers it first. There is a fear that, if situation doesn’t improve the nation might lead to a state of silence famine.
   Md Sazzadul Hassan
   Gulshan, Dhaka