China Economy Weekly: Beijing Moves on Trade and Investment; Soaring Property Market; Labour Activism Against Apple?

Hu Reiterates China's Economic Policy: Chinese President Hu Jintao has said that the government should stick to the pro-active fiscal policy and moderately loose monetary policy in the second half of this year to ensure a stable and relatively rapid economic development.

More efforts should be made to strengthen economic forecasts and warning systems, as well to coordinate economic policies, Hu added.

China Seeks Trade Balance, Not Surplus: China will continue to seek balance instead of surplus in trade and it will oppose any form of protectionism, Chinese Premier Wen Jiabao said at a joint news conference with visiting German Chancellor Angela Merkel.

China This Week: Drills In The Yellow Sea; China’s Energy Progress; Dalian Pipeline Blast

These efforts should be praised and not criticised, particularly when compared with any major country that claims to double its exports to alleviate unemployment pressure, Wen added.

Wen made the remarks amid growing concerns that China's export growth would gradually drop despite the strong momentum in June.

China will continue to stimulate domestic demand as well as stick to an appropriately loose monetary stance and pro-active fiscal policy, Wen said, declaring that policy stability will be the government's economic priority in the second half of this year.

China Sticks to Opening-up Policy: Chinese Premier Wen Jiabao has denied that the investment environment in China is worsening, as he invited more foreign companies to put money into the country.

Foreign firms have voiced concern that China's indigenous innovation policy might provide incentives for government bodies to purchase products developed by Chinese companies. The World Bank in a July report gave China a low investment environment ranking.

But the amount of foreign direct investment (FDI)  that flowed into China in the first half of the year rose 19.6% year-on-year, according to data from the Ministry of Commerce (MOC). China attracted $12.51 billion in FDI in June alone, up 39.6% year-on-year.

Wen said, "Foreign investment will not pour into a country where the investment environment is worsening." He asserted that China has relatively good infrastructure as well as a fair and stable market environment.

China's 2010 Foreign Trade Trend: A "high-low" trend was emerging for China's foreign trade in 2010, as growth in the first half would be stronger than in the second half of the year, Yao Jian, a spokesman with Ministry of Commerce told a briefing Tuesday.

China's exports will only moderately increase in the next half of the year, since tightening monetary policies in emerging economies, such as Brazil and India, and the European sovereign debt crisis will curb overseas demand, Yao said.

The country's total value of imports and exports jumped 43.1% percent year-on-year to $1.35 trillion in the January-to-June period, but the trade surplus was down 42.5% to $55.3 billion U.S. dollars.

"Wrong" to Hit at Outbound Investment: Countries including the United States and India should not politicise outbound investment by Chinese enterprises or abuse investment protection tools to shield their own industries and jobs from the financial crisis, the Ministry of Commerce said on Tuesday.

China's outbound direct investment (ODI) surged by 24% from a year earlier to $55.18 billion during the first six months, the ministry said. The investment mainly went to sectors such as mining, commercial services, manufacturing, wholesale, and retail.

Despite the rapid growth, Chinese investment abroad has been frequently blocked by other countries, especially the US and India, during the past few months.

China May Reform Yuan Exchange Rate Calculation: China may calculate the yuan's exchange rate against a basket of currencies, instead of only against the US dollar, Hu Xiaolian, deputy governor of the People's Bank of China said in a signed article published on the PBOC website.

There should be various currencies in the effective exchange rate basket to reflect the diversity of China's trade and investment activities, Hu added.

Agreement for Business with Hong Kong: The People's Bank of China, and Hong Kong's Bank of China (Hong Kong) Limited, signed a revised Settlement Agreement on the Clearing of Renminbi (Yuan) Business in Hong Kong.

"There will no longer be restrictions on banks in Hong Kong in establishing renminbi accounts for and providing related services to financial institutions; and individuals and corporations will be able to conduct renminbi payments and transfers through the banks," said Norman Chan, the chief executive of the Hong Kong Monetary Authority.

Foreign Investors Eye China's Real Estate: China's property market has seen soaring investment from foreign institutional investors, driven by strong expectations of currency appreciation this year.

According to international real estate advisor Richard Ellis, the value of en bloc property transactions in 15 Chinese cities has hit 49.9 billion yuan ($7.36 billion) in the first-half of this year, among which 19.4 billion yuan came from foreign institutional investors, 10.2 billion yuan from Hong Kong, Taiwan, and Macao, and the remaining 20.3 billion yuan from mainland investors.

Total investments in the first six months of this year were almost five-fold those from the same period of last year.

China Honors All WTO Entry Commitments: China has honoured all the commitments it made when entering the World Trade Organization (WTO), said Yao Jian, spokesman of Ministry of Commerce, on Tuesday.

"China has set up economic and trade mechanisms in line with WTO rules and requirements, and become one of the most open markets in the world," he said.

Yao added that China will further cut tariffs on agricultural and industrial products by about 30 percent according to the latest Doha round of talks.

US Labour Group Offers Help with Apple: A San Francisco-based labour council wants to help its counterparts in Guangdong Province press IT giant Apple to allocate more profits to its scandal-hit Chinese manufacturer to improve the treatment of Chinese workers.

Apple Inc is a major brand customer of Foxconn Technology Group, which employs more than 800,000 people on the Chinese mainland, mostly in Guangdong.

The latest offer came after a dozen Foxconn workers committed suicide by jumping off buildings in the company's premises in the first six months of this year.

A 19-year-old intern from the Dongfang Vocational School of Technology in Hebei province died on Tuesday morning after he fell from his sixth floor dormitory at the plant in Foshan of Guangdong, Chimei said in a statement on Wednesday.

Police are still investigating the case.

The Latest from Iran (19 July): Criticisms and the Leader

1845 GMT: Academic Corner. A follow-up to our stories that 30 Tehran University professors were being "retired", ostensibly because they had completed their period of service....

Professor Rouhollah Alami said he suddenly received news about his dismissal from Tehran University officials. He had been at the university for 22 years but had 14 years left to retirement.

1735 GMT: Pressing the Government. Reformist MP Darius Ghanbari has noted, "Apparently some ministers have 'special immunity'," since the Minister of Interior, Mostafa Mohammad Najjar, did not reply to his question from April and did not appear even once in the Majlis.

1725 GMT: After the Bombings. Iran has closed the Taftan post on the Pakistan border, about 55 miles southeast of Zahedan, the site of last Thursday's double suicide bombing. Reports indicated this has caused significant supply problems for inhabitants.

NEW Iran’s Made-Up Stories: Fars News Busted by “Zionist” Journalist Ghazi
NEW Iran Analysis: Voices Raised — Removing the Supreme Leader (Verde)
Iran’s New Guidance: Good, Good Lovin’ (But Only at Night)
Change for Iran: Why Twitter Has Made a Difference
The Latest from Iran (18 July): Bazaar Resolutions?

1640 GMT: Reformist Rift? MP Ahmadreza Dastgheib of the Imam Khomeini Line has blamed reformists, especially non-academics, for not spreading their ideas throughout society. Dastgheib said that "we" should have explained our theories to all sectors of society but that this is obviously impossible today.

The MP added that a "big mistake" was that former President Mohammad Khatami, given his recognition in Iran, did not run for the presidency in 200.

1625 GMT: Pictures of the Day (2). Mehr News, which is far from an anti-Government site, posts a series of photographs illustrating the effect of power outages on Iranian industry:



1620 GMT: Picture of the Day. Filmmakers Mohammad Nourizad and Jafar Panahi are reunited. Both were released this spring on bail, Nourizad after six months in detention, Panahi after three.

1500 GMT: Challenging the Supreme Leader. Fereshteh Ghazi offers an analysis of journalist Isa Saharkhiz's statement in court --- covered in our opening update (0555 GMT) and a separate analysis --- refusing to offer a defence and challenging the authority of Ayatollah Khamenei.

1455 GMT: Watching Larijani. OK, here's what Larijani said publicly today in Geneva after his meeting with UN Secretary-General Ban Ki-Moon: "We need a new plan [on Tehran's nuclear programme] in which Iran's rights are completely supported....The problems of Iraq and of Afghanistan after occupation, which have caused an increase in the production of illicit drugs and led to the spread of terrorism, are the result of wrongful US policies and actions. “

Yeah, yeah. But what did Larijani say in private?

1450 GMT: We've posted a feature in which Fereshteh Ghazi exposes the made-up news of Fars and gets called a "Zionist" for her efforts.

1340 GMT: Sanctions Front. The Wall Street Journal, citing "Western officials", targets the European-Iranian Trade Bank AG (EIH) for helping Iran to get around international sanctions.

The officials allege that EIH has been "conducting euro-denominated transactions on behalf of Iran's Bank Sepah", involving business with Iran's Defense Industries Organization, the Aerospace Industries Organization and the Islamic Revolution Guards Corps.

The newspaper also carries an interview with India's petroleum secretary, who says "the latest round of U.S. sanctions against Iran could complicate the activities of Indian state-controlled companies that are looking to invest in Iran's oil and gas sector".

Elsewhere, a memorandum, signed by Turkish Public Works & Housing Minister Mustafa Demir and Iranian Minister of Housing & Development Ali Nikzad in Tehran, envisages cooperation in the construction sector. The memorandum commits to exchange of information and experience, cooperation in public housing projects, research and training of experts, production of construction materials, and use of products of latest technology.

1335 GMT: Rafsanjani Watch. Faezeh Hashemi, the daughter of Hashemi Rafsanjani, has given a lengthy interview about her views on the political and legal situation. Amidst that discussion, she reiterated that her father would not return to lead Tehran Friday Prayers until there was political reconciliation. (Rafsanjani's last Friday Prayer was 17 July 2009.)

In another passage of the interview, Hashemi rebutted charges that she was accumulating private wealth: "I am a normal woman. My husband provides for me and I have no income."

1215 GMT: Where's Mahmoud? In a speech broadcast on state TV, President Ahmadinejad told industrialists in northern Iran, "[The US] adopts a resolution to force a dialogue, but this cowboy logic has no place in Iran."

Ahmadinejad continued with the defiance, "They say we have intelligence that Iranians will most likely build one atomic bomb. Well, this is a lie, but let's say it is true. How many atomic bombs do you have? The Americans themselves say 5,000 plus....Is someone who has 5,000 fourth and fifth generation atomic bombs, with very advanced launchers, afraid of one bomb? They are not afraid of one, not of a hundred, not of a thousand (bombs). They are afraid of the collective awakening of the Iranian soul."

Yet --- and forgive me if I am reading too much into Mahmoud's rhetoric --- there may have been a glimpse that Ahmadinejad would like to get back to last autumn's discussions: "We are for negotiations, but to do so you have to sit down like a good boy."

1050 GMT: Claim of Day. An Iranian cleric explains, "We have made swimming pools and Jacuzzis in Evin for prisoners."

0950 GMT: Iran's Networks. Dr. Gholamreza Kashi, speaking in a conference about social networks and identity at Iran's Strategic Center, has said that the "first (older) generation" are not represented in media and the "second generation" has no possibilities to make its views known.

0945 GMT: Power Outage. Ebrahim Jamili of the Iran Chamber of Commerce has demanded that the Ministry of Energy pay for the heavy losses of private companies due to power shortages. He noted that Iran's claims to be the leading power in the region do not fit with "putting production in chains".

0940 GMT: Parliament v. President (cont.). More counter-attacks against the Government and media seen as its supporters....

Tehran Emrooz claims that insults against Speaker of Parliament Ali Larijani, in demonstrations in front of the Majlis, were instigated by editors of Hemmat magazine. Tehran Emrooz adds that some of those editors were arrested recently after attacking Hashemi Rafsanjani, senior clerics, and Seyed Hassan Khomeini.

Azam Taleghani, former MP and head of the Society of Islamic Revolution Women of Iran, has said that some hardliners have finally realised they cannot continue without co-operation with reformists.

Leading MP and Government critic Ahmad Tavakoli is reportedly gathering votes against a Government order that all governmental advertisements are given to the daily newspaper Iran.

0935 GMT: The Zahedan Bombings. With the toll from last Thursday's double suicide bombing at 27 dead and 311 injured, Abbas Ali Noura, one of three MPs from the Zahedan area who have resigned, says that people of the area expect the dismissal of the Minister of Interior.

0924 GMT: Parliament v. President. MP Hassan Ghafourifard has accused the Government of violating the principles of the Constitution by not presenting its legal decisions on the budget, saying the Majlis will not approve the economic plan if these decisions are not presented. MP Shahabeddin Sadr adds that the claims of the President's office are untrue, and the Parliament has not received the decisions.

Speaker of Parliament Ali Larijani adds in a letter to Ahmadinejad that payments to managers of Free Trade zones are illegal.

0920 GMT: Shifting Politics. An intriguing story in Khabar Online, linked to Ali Larijani....

Tehran Mayor Mohammad-Baqer Qalibaf has reportedly started his campaign for the next Presidential elections, due in 2013. The kick-off was in Zanjan and --- here's a twist --- it was staged by a committee of "reformist" hardliners.

Now is Khabar implicitly backing Qalibaf and this notion of "reformist hardliners" --- as an alternative to the not-so-reformist hardliner who is currently President --- or damning Qalibaf through such an association?

0915 GMT: The Nuclear Scientist/Non-Scientist Defection/Abduction Story. Rooz Online, from an "informed source", claims Shahram Amiri is being held in security quarantine after his return to Iran from the US.

0900 GMT: Not-at-All Hypocritical Headline of Day. Press TV: "Iran Slams Canada on Human Rights".

But it gets "better" in the body of the story, which is the continuation of an Iranian campaign against Ottawa over its handlings of protests at the G20 summit earlier this month:

Speaking to reporters on Monday, Iranian Foreign Ministry Spokesman Ramin Mehmanparast said, "Canadian officials should provide a response to all questions and ambiguities regarding human rights violations in their country."

"Such instances of brutal and deadly approach by the Canadian police, the interference of security forces in the private lives of citizens and violations of rights of the native people have recurrently happened during this Canadian administration," Mehmanparast noted.

The Iranian spokesperson went on to criticize Canada for its illegal and brutal approach toward protestors during a recent summit in Toronto, arguing that "The issue of human rights is an international commitment and countries should not brush aside such matters by resorting to political justifications."...

"Repeated violations of citizenship rights and assaults against protesters are not an issue that one can keep silent on," he further stressed.

0750 GMT: We have now posted an analysis by Mr Verde, "Voices Raised --- Removing the Supreme Leader".

0625 GMT: Labour Watch. HRANA summarises regime pressure on unionists, from the retrial of Mansur Osanloo to other detentions and intimidations.

0555 GMT: We begin this morning with two pointed critiques of "legitimacy".

Journalist Isa Saharkhiz, detained 13 months ago, appeared in court yesterday. A copy of the full text of his statement has been brought out and published: it is a rousing denuncation of those who have crushed "democracy", "free elections", "human rights" and the "republic", and it pays special attention to one man. "Ayatollah Seyed Ali Khamenei has trampled the Constitution."

It is unknown whether Saharkhiz was able to read the statement in court, but we do have a picture as he left:



Prominent academic Sadegh Zibakalam cannot be quite so direct in his criticisms --- after all, he is a public figure who is not detained --- but his latest interview is still pretty sharp. He points to a "brain drain" and division of clergy in governmental and non-governmental roles. The power of legal forces like Parliament and the judiciary has been diminished, while the power of "irresponsible forces" on the rise.

And Zibakalam considers that the worst result of the post-election dispute has been an irreversible collapse of legitimacy, asking, "Is it possible to bring people back to vote?"

The Latest from Iran (10 July): The Plot Against the President

1915 GMT: Thanks to readers for keeping the news and analysis coming in. We're taking a personal break today (between you and me, it's the daughter's birthday party) and will be back with a full service from Sunday morning.

1910 GMT: Political Prisoner Watch. Behzad Arab Gol, a member of Mir Hossein Mousavi’s election campaign team, has been released from prison on a bail of more than $100,000 after more than six months in detention.

NEW Iran Exclusive: The Plot to Remove Ahmadinejad, Act II
Iran Document: Detained Student Leader Tavakoli on 18 Tir & Protest (6 July)
Iran Analysis: Assessing the Bazaar Strikes & a Political Twist (Verde)
The Latest from Iran (9 July): Remembering 18 Tir?

1320 GMT: Heat? What Heat? The Government's holidays on Sunday and Monday for "excessive heat" seems to have disappeared for factory workers.

The Iranian Labor News Agency quotes the head of the Tehran Work and Social Affairs Organization, who says factories will be open even though government offices will be closed

An EA correspondent asks, "If the new holidays were due to hot weather, why would you close down offices but not factories whose workers would be affected more by the heat?"

1315 GMT: Remembering. Human Rights Activists News Agency reports that 2000 people were at Beheshte Zahra cemetery yesterday to remember loved ones, including those killed in post-election conflict.

1305 GMT: Supreme Leader "Justice and Peace --- Unless You're America". Meeting Iranian officials and ambassadors to commemorate Eid-al-Mab'ath, the day when Muhammad was appointed to prophethood, Ayatollah Ali Khamenei offered greetings of "justice, peace, and security for all humans".

That is, with one exception. The Supreme Leader said Islam was opposed to "corrupt" Washington, with its huge budget to wage wars in Iraq and Afghanistan and to help Israel maintain instability in the Middle East.

1105 GMT: Holidays Because of Weather Heat or Political Heat? Peyke Iran claims The head of Iran's national weather service has said his unit did not advise holidays on Sunday and Monday because of high temperatures: the "weather is no hotter than normal".

Hmm.... maybe it's the Government that is especially sensitive to the heat these days.

1100 GMT: The Right Civil Disobedience. Iranian political scientist Ramin Jahanbegloo, now living abroad, talks to Rah-e-Sabz about protest and "ending the culture of violence". Assessing opposition strategy, he declares, "Using violence as an excuse does not justify it."

0920 GMT: The Battle Within. Conservative politician Morteza Nabavi has said that President Ahmadinejad's supporters "promote an Islam without clergy".

MP Younes Assadi has warned that, if Minister of Welfare Sadegh Mahsouli "does not change his actions", he will be called to account before the Majlis during next three months.

0900 GMT: International Development. Islamic Republic News Agency highlights the signing of six agreements in New Delhi between Iranian and Indian delegations. The pacts cover cooperation in new and renewable energy, small industry, science and technology, and pulp and paper production.

0855 GMT: Labour Front. Rah-e-Sabz claims that 200 drivers at the Tehran and Suburbs Bus Company (Sherkate Vahed) are on the verge of dismissal.

0715 GMT: Oil Squeeze. Reihaneh Mazaheri, writing in Mianeh, reports from traders that Iran is discounting oil between $3 and $7 per barrel to prop up sales amidst sanctions and reduction in demand.

0710 GMT: Power Cut. Rah-e-Sabz claims that some parts of Tehran have gone 12 hours without electricity.

0700 GMT: Larijani v. Ahmadinejad. Back to our special analysis of the rising challenge to the President --- Agence France Presse has noticed something is up, quoting from a speech by Ali Larijani on Friday in Karaj:

If we want to stand up to our enemies, we need to improve the economy. Iran has big oil and gas reserves -- the way to use that wealth is not by handing out money to people but by using it to develop the nation's productive capacity. Social justice... means providing universal employment not giving monthly handouts to stop people starving....

How can you ask an ordinary villager to respect the law, if politicians don't?...We in Parliament will not allow anybody...to disregard the law because that's an act of rebellion and a shameful violation.

0610 GMT: We begin this morning with an exclusive report and analysis, based on information from a range of sources, "The Plot to Remove Ahmadinejad, Act II".

Meanwhile, after an 18 Tir which passed relatively quietly, even though it was the anniversary of the 1999 university demonstrations....

The Bazaar Strikes

The bazaars will now effectively be closed from this past Thursday to Monday --- the Government, because of "extreme heat", has added Sunday and Monday as public holidays to today's religious holiday of Mab'as.

Robert Tait offers an overview and analysis of the situation in an article for Radio Free Europe/Radio Liberty.

Mousavi's Moves

In what has been a most active week for Mir Hossein Mousavi --- even if the effect of his moves is unknown at this point --- the opposition figure has added a statement on "The Diversity of the Green Movement", rejecting the need for a leader. He has met with reformist students to suggest, that if those who caused the catastrophe of 18 Tir (the suppression of the 1999 demonstrations) were punished, the post-election attacks on the universities dormitories would not have occurred.

In Rah-e-Sabz, Mehdi Jalali asks, "Do we want a secular Mousavi?" Jalali asserts that Mousavi could never be secular but points to his three promises of freedom of expression, freedom of assembly and organisation, and free elections as a basis for mutual trust.

Political Prisoner Watch

Video has been posted of a telephone interview with recently-released human rights activist Narges Mohammadi, who claims she was abused and put in solitary confinement. She had a pulmonary embolism in prison and is still very weak.

Afghanistan Projection: Pakistan's "Strategic Depth" & Endless War (Mull)

EA correspondent Josh Mullis the Afghanistan Blogging Fellow for The Seminal and Brave New Foundation. He also writes for Rethink Afghanistan:

If everything works out perfectly in our counterinsurgency strategy, or if congress forces a binding timetable in line with popular support, the United States will begin slowly drawing down its forces in Afghanistan in July 2011. It's only the start, it will be tremendously slow, and the military leadership will likely fight it every step of the way (if Iraq is any indication, that is).

Afghanistan: Republican Chairman Steele Stumbles, “Progressive” Reaction Fumbles (Mull)

July 2011. That's one year from now --- 12 months. If June's casualty numbers remain constant, more than a thousand Americans wi'll die before then, at minimum another $80 billion will be spent, and then we just start leaving. After that there's no clear evidence of exactly how long it will take before the US has completely removed its military presence from Afghanistan, and possibly Pakistan, Uzbekistan, Kyrgyzstan, etc., although there's no evidence we're planning on leaving those places either.

This is a good thing. It's good that Congress is starting to listen to its constituents, and is taking action to hold President Obama to his timetable for withdrawal. Afghanistan is America's longest war, and with such ethereal objectives as "stability" and "preventing safe havens for extremism", the war can seem endlessly un-winnable, stretching on for decades as long as we're content to let it happen. That we have a goal in sight, July 2011, is absolutely a victory.

Unfortunately, it's not good enough. Pakistan's national security policy of supporting terrorist groups and militias as proxies against India, known as "strategic depth", is accelerating out of control, and they are either deliberately or inadvertently engineering a globalized religious war, a clash of civilisations. Both terrorist and insurgent elements are evolving, with the Taliban co-opting Al-Qa'eda's idea of religious war to legitimize its fight against the Pakistani state, and Al-Qa'eda in turn co-opting the Taliban's objective of confronting India to legitimize the sub-continent as the premier theater of global jihad. Hawkish India, for one, will not take these developments lightly.

If pressure on Congress is not increased, if the US remains on the slow, ambiguous timetable it is on now, it will be caught right in the middle of this clash. The bloodbath of Iraq in 2006 was only a preview of what will happen if there is a civil war in Pakistan, or a (nuclear?) war between Pakistan and India. Or both. If the US does not expedite its withdrawal, as well as dramatically reform its policies toward the region as a whole, we will very quickly be sucked into that conflagration.

"Strategic Depth", Pakistan's support of militants, is a carefully crafted national security strategy. However, it is easiest to understand in the context of state-sponsored terrorism. During the 1970s and 1980s, many Arab governments supported terrorist groups as a form of internal security. The oppressive Arab dictators would facilitate terrorist recruiting and training so long as they went off to wage jihad in Lebanon, or Palestine, or Israel, or anywhere else but at home. In doing so, they ensured that any violent radicals were engaged elsewhere, while clinging to scraps of Islamic legitimacy for their brutal police states. It is "strategic depth" for domestic purposes.

Pakistan's calculation is just the same, only adapted to military and foreign policy. Pakistan is able to wage a war against India through terrorism and militancy (Taliban puppets in Kabul, Lashkar-e-Taipa puppets at home), while maintaining some legitimacy with its own constituency (elite Punjabi Pakistanis). Furthermore, Pakistan's military-owned industries are able to win massive amounts of contracts and investments from the US and China among others, and in return offer up meaningless victories (capturing an Al-Qa'eda commander for the Americans, shutting down a Uighur training camp for the Chinese). All the while the Army safely maintains its truly-important insurgent assets for use against India. It is state-sponsored terrorism as foreign policy, and it's been very successful for them so far.

But the terrorists and militants themselves also benefit from this relationship, and they may now be adapting beyond the control of the Pakistani military and intelligence services. Just as the Arab governments discovered, state-sponsored terrorism always comes back to bite you. Syria learned from Lebanon, Egypt learned from the Muslim Brotherhood, and the Saudis learned from Al-Qa'eda that it is only a matter of time before the militants turn on you. In the same way, the Taliban is now turning from the US in Afghanistan and onto the Pakistani state.

We see this in the recent attack on a Sufi Muslim shrine in Lahore, Pakistan. Sufi are the majority in Pakistan, centered in its Punjab region with the country's elite. The Taliban, with their Deoband Islam, are in the minority, focused in the Pashtun tribal areas. The shrine bombing shows that Al-Qa'eda's idea of war for Islamic purity has taken hold within the Taliban, and they are able to pivot from a local liberation movement fighting the Americans to a religious jihad against the Pakistani state as represented by the heretical Sufi Islam.

China Hand writes:

Beyond the demands of Deobandi faith, igniting a religious struggle against popular Sufism is almost a tactical necessity. Fighting against the Pakistani army and Frontier Corps is not the same as battling the NATO and U.S. unbelievers in Afghanistan.

The Pakistan Taliban are locked in a battle with the military forces of an Islamic state and need the trappings of a sustained Islamic religious struggle inside Pakistan in order to sustain its legitimacy, motivate its followers, and divide its opposition.

In fact, attacking Sufi religious practices is probably integral to the entire Taliban strategy of polarizing Pakistani society by attacking a weak link—the popular but difficult to defend (on strict Islamic terms) worship of local saints whose interred bodies reputedly have magic powers.

The central province of Punjab hosts several important Sufi shrines, raising the terrifying specter of attacks on heterodox religious practices in Pakistan’s heartland by an ostentatiously righteous, militant, and ascendant religious group whose stated mission is to rescue Islam not only from the West but from idolatry within its own ranks.

And, as a reading of Sikan indicates, challenging popular Sufism also means challenging the authority of the custodians who obtained legitimacy, wealth, and power from their control of the shrines and promises to link the Taliban to a populist, anti-elitist message that may find resonance in the impoverished areas of Pakistan far beyond its Pashtun base.

There's not much hope that even the Sufi majority can withstand an open civil war against the Deobandi minority:

If the conflict comes, the [Sufi] are likely to be outgunned.

The Pashtun Deobandi are militant, supported by zakat (Islamic charity contributions) from Saudi Arabia, and have numerous friends and supporters within Pakistan’s security apparatus.

The pacifist, underfunded, and underorganized Barelvi—with the exception of the reliably violent MQM in Karachi—appear to be reliant upon Pakistan’s rickety and equivocal civilian government to take the battle to the Taliban.

Those numerous friends and supporters within the security apparatus is the "strategic depth," the state sponsorship. That sponsorship may have given them enough strength to finally ignite an all-out civil war. At that point we are no longer talking about isolated Pashtun insurgencies and rural-urban disparities, we are looking at the complete collapse of Pakistan as a recognizable entity. Like Iraq, Pakistan is a wealthy, militarized, and industrialized society and the consequences of its shattered social fabric will be hell on earth. Only Pakistan also happens to have an extensive nuclear weapons arsenal. Iraq, famously, did not.

In addition to the Taliban, the Pakistani Al-Qa'eda franchises have also adapted with the support of "strategic depth". They are now carrying out attacks against targets in India, claiming other Pakistan-supported militant attacks as their own, or both.

From Raman's Strategic Analysis:

There are two types of messages purporting to be from Al Qaeda relating to India. The first are video or audio messages of Osama bin Laden and Zawahiri relating to the global jihad and the global intifada in which there are references to India, including Kashmir. These have been authenticated by Western intelligence agencies on the basis of voice recognition. They are in the form of general criticism of India or general threats and not specific.

The second are messages claiming responsibility on behalf of [Al Qaeda fil Hind, "Al-Qaeda in India"] for specific acts of terrorism in India such as the Mumbai suburban train explosions of July 2006, the Mumbai terrorist strikes of 26/11 and the Pune German bakery explosion and warning of future acts of terrorism against global sports events in India. These are messages circulated through the Internet or through phone calls by persons whose voices could not be identified. There is no way of establishing the authenticity of these messages. We must take them seriously for further investigation and strengthening physical security. At the same time, we should take care not to walk into any trap of the ISI to divert suspicion away from the LET and other Pakistani jihadi organizations and from the ISI for serious acts of terrorism in Indian territory by creating an impression that those were carried out by Al Qaeda.

So there's no concrete evidence that Al-Qa'eda in India exists as of yet, but the perception that it does exist is growing. Even if it is Pakistani intelligence services trying to create a mythical Al-Qa'eda, that doesn't change the fact that each new terrorist attack in India will be seen as a victory for Al-Qa'eda's jihad. And with each new "victory" come new "foreign fighters" willing to take up arms. The myth becomes reality, whether you want it to or not. And not only in India, but in Kashmir as well.

Eric Randolph writes:

On 15 June, Al Qaeda announced that it has a new branch, Al Qaeda in Kashmir (AQK), according to a report in Jane’s Terrorism and Security Monitor [subscription needed]. The group is apparently led by Mohammad Ilyas Kashmiri, who claimed responsibility for the February bombing of the German Bakery in Pune, India. [...]

The announcement of AQK is significant, however, since it shows Al Qaeda trying to bolster what it clearly thinks is an emerging front in the global jihad: India. The LeT have already shown an interest in extending anti-Indian militancy beyond localised issues such as Kashmir. The LeT opposes India not just because of specific policies and actions, but for its very existence - as a perceived enemy of Islam. Hence, attacks such as those in Mumbai, as well as earlier bombings in which it is likely to have played a role, strike at symbols of India’s success – its economic growth and its acceptance into the global (i.e. Western) community. The appearance of the Al Qaeda brand name in the region is part of this process: framing the conflict between India and Pakistan as a global, ahistorical phenomenon, divorced from immediate political concerns and thus insulating the jihad from any progress in negotiations between the two governments.  Who belongs to which group is less important than the symbolism that this latest development suggests.

Al-Qa'eda can fully open the entire sub-continent as a theater for jihad, and coupled with the collapse of nuclear-armed Pakistan and the presumable Indian military response, we have the Clash of Civilizations. Pakistan vs India becomes Islam vs the Hindu Superpower. And stuck right there in the middle of it is 100,000 US troops in Afghanistan, soon to be controlled by a Taliban-Karzai power-sharing government, a puppet of Pakistan's "strategic depth". To say it will be ugly is an epic understatement.

We may be in the process of pulling ourselves back from the brink of endless war in Afghanistan, but that doesn't stop anyone else from sucking us back in. Whatever our pretensions about 9/11 and denying terrorists a safe haven in Afghanistan, there's no turning back once we've been sucked into a massive blowout on the sub-continent.

Congress must be forced to not only institute a binding timetable for the President, but to accelerate that timetable in every conceivable way possible. Funding must be cut, programs discontinued, missions aborted. Nothing the US could (doubtfully) accomplish before July 2011 will change the events in Pakistan and India. We can eradicate the corruption in Kandahar, but that won't deter the Deobandi-Sufi civil war in Pakistan. We can install perfect governments-in-a-box in every single province in Afghanistan, it won't stop Al-Qa'eda from waging its jihad in Kashmir and India. We can't afford the blood and treasure that the war is costing now, much less if it explodes across the region.

The US must accelerate its withdrawal timetable, but it also must dramatically reform its policy toward Pakistan. Waiting another year before beginning to leave Afghanistan is also another year spent dumping billions of dollars and sophisticated military technology into the hands of Pakistan's military and intelligence services, those most responsible for the stoking the civil war and terrorism with their "strategic depth." The US must engage with and empower the democratically elected civilian government. It is they who must be strengthened in the battle against extremism, not the Army and ISI. But even this is simply taking yet another side in yet another civil war, and if the past is any indication, the US is by no means guaranteed success even if we try.

It is good to celebrate what has been accomplished in ending the war. It is good that 65% of Americans now support the timetable, and that congress is starting to act on that. But more pressure must be brought to bear on your local representatives. The timetable must be sped up, the US must begin drawing down before July 2011 and certainly at a much faster pace than is currently planned. The maneuvering for a post-US Afghanistan has accelerated out of control, and if we don't move fast enough, if  Congress isn't forced to step up efforts, there may be no such thing as a post-US Afghanistan. Quite frankly, if we don't start leaving now, we may never leave at all.