Analysis in Robert Kaplan’s “Monsoon” – Similar to Analysis of Sub-Prime CDOs?

Editor’s Note:  We spoke with Mr. Robert Kaplan before writing this final article in our series of reviews of “Monsoon”.  We thank him for his courtesy. We also thank Random House, the publisher of Monsoon and the Press Staff at Center of New American Security for their help. 


Remember the Financial Crisis and the Bailout of the Banks in 2008? The Banks, the Ratings Agencies and Multi-billion dollar Investment Management Firms somehow got the analysis of Sub-Prime CDOs utterly and totally wrong. Within a very short period of time, CDOs rated “AAA” by Ratings Agencies with complex, “proven” risk models proved to be essentially “junk”. Within a few months, “AAA” rated securities purchased by brilliant managers at Lehman, Merrill & others proved to be worth only pennies on the dollar.

Of course, we remember all this vividly and painfully. But what does this have to do with Robert Kaplan’s book called “Monsoon” about geo-strategic analysis of the Indian Ocean?

A great deal, in our opinion. Allow us to tell you why we think so.

Look at the history of America in Asia. Every possible advantage has been with America; the world’s most dominant military; a vast intelligence apparatus; a massive analytical framework with legions of analysts for scenario creation, analysis and counter-measures. Yet, despite this overwhelming superiority, America blew up in Vietnam and America is in a deep, deadly quagmire in Afghanistan.

Why? Because America got caught on the wrong side of history, as we wrote in July 2010. We have repeatedly expressed our basic tenet in this Blog that the American media is entirely European-Christian in its outlook & training. Things outside that ken, they simply don’t get. What they don’t get, they ignore.

It is a relief to see that Robert Kaplan agrees with us. He writes in his August 2010 monograph South Asia’s Geography of Conflict, “…American political class has no understanding of India’s (own historical and geographical situation).” In the next paragraph, Kaplan writes, “Indeed, America has come to grief in the past by not understanding local histories. India is much too important for us to commit a similar mistake.”

But as we read “Monsoon”, we realize that while Robert Kaplan can talk the talk very well, he is unable to walk the walk. That is the central problem of “Monsoon” in our opinion.

Mr. Kaplan is a serious student. We have no doubt about his intelligence or his diligence. He has gone farther in “Monsoon” than all other European-American writers. For example, Kaplan admits that Alexander’s campaign in the Indus Valley was a disaster. He recognizes that Afghanistan was a Buddhist country for centuries. No other European-American analyst has gone that far.

His personal due diligence is very impressive. He told us that he traveled from Kashgar in China’s Xinjiang province across the Karakorum pass at 18,000 feet to Gilgit, in Pakistan-Occupied Kashmir and then south to Islamabad. This is the same journey that China hopes to make easy by constructing a railway from Kashgar to Gilgit that connects to Pakistan’s rail network. From our reading of his thoughts and from our conversation with him, we have developed deep respect for Mr. Kaplan’s scholarship about geographical analysis.

But then, we also have deep respect for the brilliance, the depth of analytical thinking, the dexterity of the quantitative models of the analysts at Lehman, Merrill, Moody’s, S&P etc. These folks did substantial due diligence before rating CDOs or selling CDO-based securities to multi-billionaire qualified smart investors who had their own armies of professional, brilliant, diligent analysts. These hordes of analysts ran scenario analysis and looked back in history for over 50 years before rating, selling or buying these securities.

So where did these analysts go wrong? They did not go back far enough in history. The Wall Street Analysts went back 50 years in their study of the housing market. Everyone in 2004-2007 was satisfied by this long, diligent look-back. How wrong were they? They should have looked back 70 years. They should have looked back to the 1930s, the last time in history when economic conditions were similar to the conditions in 2007. Had they done so, they would have realized in 2007 that their models would have blown up in that deflationary cycle.

This is exactly the mistake Robert Kaplan has made in “Monsoon”. He did not go far enough in his look-back of the history of the Indian Subcontinent. He simply studied the Portuguese, British texts and adopted their analytical framework. He followed the British in extolling the virtues of the Mughals and adopted the Kabul-Lahore-Delhi view of Indian history. Just like the CDO analysts of Lehman & Merrill, Robert Kaplan did not look back far enough.

Kaplan writes, “Let me be clear: I am very bullish on India”. Like most European-American scholars, he speaks glowingly of India as a birthplace of many religions. He acknowledges that Christians, Jews and Zoroastrians have lived peacefully in India for hundreds and thousands of years. But, like most European-American writers, Kaplan does not acknowledge the origin or the foundation of this tolerance. He ignores the history, the culture, the social foundation of 80-95% of India’s population, the real and original history of India.  

Panjab and Afghanistan

In his chapter on Baluchistan and Sindh, Kaplan spends more than a page on the Moenjodaro and Harrapan civilizations. From there, he jumps to the Kushan Dynasty near the beginning of the Christian era. Kaplan does not discuss the formation of the Vedic civilization in the intervening period in today’s Af-Pak region and ignores the dominance of this civilization for hundreds or thousands of years before Buddha.

Today’s Indian Civilization is the same as that Indian Civilization formed at the beginning of known time. The Rg-Ved is the oldest religious text known to man. No other country or society in the world can claim the same continuous civilization for so many thousands of years. Today’s Greece exhibits no continuity in thought or culture from the Greece of Athens or Sparta. Yesterday’s Egypt or Mesopotamia have no relevance to today’s Egypt or Iraq. Today’s Iran has no relationship with the Persia of Avesta.

But today’s India does. The Vedic culture, the Bhagwat Geeta, the Ramaayan and the Mahaa-Bhaarat are alive in every one of India’s villages. It is through them that today’s India gets its tolerance and acceptance.

Afghanistan is a part of this Indian history. Every Indian knows about the story of Bharat & his mother Kaikeyi from the Ramaayan and the story of Shalya as the charioteer of Karna in the Mahaa-Bhaarat War. These figures were from Gandhaar, the kingdom in today’s Afghanistan.

Since Mr. Kaplan likes maps, let us include a couple from wikipedia that show Indian history in today’s Afghanistan.
 

 
                (Geography of the Rg-Ved)       &
nbsp;                               (Arjun’s conquest in Mahaa-Bhaarat)

We are not sure what Mr. Kaplan knows about Indian History or Legends. Perhaps like most European-American writers, he considers these Legends as beneath history. But the same writers rarely write about modern Israeli-Arab conflicts or wars without discussing the legends of David, Gideon, Joshua. The fact that Jerusalem was the capital of David is considered very relevant in today’s Israel. And relevant it is. Because these legends form the core, the historical foundation of today’s Israeli society.

But the same European-American writers, including Kaplan, tend to completely and totally ignore the history of Vedic or pre-Buddhist India. There is no mention of Ramaayan or Mahaa-Bhaarat in “Monsoon”. There is no mention of the origin of the Vedic Sages or their Ashrams in today’s Af-Pak region. 

This studied ignorance has a great deal to do with the faults in Kaplan’s analysis of today’s India. This is why Kaplan describes Indian history in terms of the conquests from Afghanistan, beginning with the Kushans and ending with the Chagatai Turk Mughals. This is why Kaplan describes India’s tolerance as arising from Mughal King Akbar and then from the British.

Mr. Kaplan did not have to look back all the way to Vedic or pre-Buddhist history. He could have simply gone back to the early Christian or Muslim era. The Gupta Empire had conquered lands as far as the Amu Darya river in today’s Uzbek-Kazakh region. The Gupta Kings and their predecessors had always considered the Afghan-Tajik-Uzbek lands as their suzerains.

The Indian civilization from the Vedic period to the 6-7th centuries CE was a conquering civilization. They believed in expansion of their influence, their lands and their wealth via military campaigns. This is why today’s India still considers Afghanistan as a part of the Indian sphere. 

If a dedicated scholar like Robert Kaplan chooses to not get this, noboby else in today’s European-American elite circles will. The result is what we see. A lack of any historical perspective in America’s analysis in today’s Af-Pak and the resultant failure of American diplomatic & foreign policy in Afghanistan. 

Gujarat

Kaplan’s analysis of Indian history begins with the Islamic attacks on North India. This is seen in his chapter on Gujarat. Like everything else, Kaplan looks at Gujarat from the point of view of Delhi. He describes Gujarat’ history as beginning with Akbar’s conquest in 1572. He makes the bold and, to us, utterly dumb statement that “It was by conquering Gujrat that Akbar saved India from disintegration, and from falling further into the hands of the Portuguese…”. He goes on to suggest that this invasion by Akbar made the Gujaratis into traders. 

Gujarat owes its prosperity and its pride of place in India to Shree Krishna. It was Shree Krishna and his Yadav clan who migrated to Gujarat from their homeland in Mathura in North-Northeastern India in the Mahaa-Bhaarat period. There the Yadav became traders. Through trade, the Yadav became extremely wealthy and consequently so militarily dominant that no empire in India could defeat them. Dwaarkaa, the capital built by the Yadav in Gujrat, became known as the Golden Dwaarkaa.

This is not just ancient history. To this day, the standard Gujarati greeting is “Jai Shree Krishna” (Victory to Shree Krishna). Frankly, Mr. Kaplan, if you don’t understand Shree Krishna, you cannot hope to understand Gujarat. It is a bit like if you don’t understand David, you cannot hope to understand today’s Israel.

Getting back to modern Gujarat, Robert Kaplan describes as “staggering”, the ambitions of Gujarat’s chief minister Narendra Modi to exceed South Korea as an economy. Why this adjective? Gujarat has a larger population than South Korea and has a larger area. As Kaplan himself writes, “South Korea is a vast peninsula open to major sea-lanes like Gujarat”.

Frankly, this is an exceedingly important discussion. Not many people know that in 1800, India (like China) had about 25% share of the world’s GDP*. This shrunk to less than 1% by 1947 when the British left India.  How could India get back to that sort of share of the world’s GDP? By getting Gujarat to the size of the South Korean economy, by getting industrial Maharashtra close to the economic size of Germany, by getting Panjab, Tamil Nadu and other historically competent states to their rightful economic potential. 

It is this prospect of India becoming a vast economy like Europe, with India’s many states rivalling Europe’s many states in economic size, that draws long term investors to India and persuades America to build a long term partnership with India. But to really understand this prospect, Robert Kaplan would have to understand core India and not the British-created View from Delhi of India.


The British View – Mughal & Maratha Empires

We don’t have a real complaint about the British view of India from the British standpoint. The British created the view that suited them. But we have a real complaint about America adopting wholesale the British viewpoint on India and basing American analysis on it. America is very different from Britain and American interests in India are very different than those of the colonial British.

Scholars like Robert Kaplan can help America in developing a valid and sensible viewpoint of India. Unfortunately Mr. Kaplan fails to do that in “Monsoon”. Regrettably, Kaplan falls for the lazy and  convenient practice of following the British viewpoint.


                                (source – wikipedia)

The biggest enemy the British faced in India was the Maratha Empire from Pune, near Mumbai. Look at the wikipedia map above. The area in orange is the Maratha Empire and it occupies about 80% of today’s India. The small blue part to the east is the British ruled territory in today’s Bengal. The dark blue part to the southeast of the Maratha Empire is the Portuguese territory around Goa. This was about 200 years after Akbar. So you can see the fallacy in Kaplan’s statement (see section on Gujarat above) that Akbar saved India from falling into the hands of the Portuguese.  

By late 18th century, the Maratha Empire had been weakened by internal dissension and by breakaway generals. The British were able to defeat the breakaway generals one at at time and then defeat the central rule of Pune. Only then, could the British seize control of India.
 
Keeping control of India was quite different. The British needed an aura of legitimacy and they needed to keep the Hindu majority quietly compliant. So the British proclaimed themselves as the successor regime to the Mughal Empire and kept the Mughal emperor on the throne. They preserved all the great Mughal monuments in Delhi and in North India. It was convenient history that suited their purpose of legitimacy and for persuading the majority Hindu population of its subject status. After all, the British Christian rule was succeeding the Mughal Muslim rule. The rule by the Hindus, of the Hindus and for the Hindus was a concept never to be uttered under British rule.

This is why the British behaved very differently with the defeated Marath
a rulers. The British destroyed the palaces, the forts and monuments in a planned, deliberate manner. They tried to de-legitimize the Maratha Empire and to establish the concept of Hindu rule as an insurrection against the “legitimate” Muslim Mughal emperor in Delhi.

The British continue this characterization to this day. Just read the Financial Times of London. Almost every single India related article in that newspaper reeks of this old British point of view. But this should not surprise anybody. The British described George Washington in a similar manner. When America became predominant and the British needed good relations with America, then and only then did the British change their description of George Washington. The British will do the same when India becomes predominant and when the British need the Hindu majority of India. The British will always do what is best for them. 

But we do mind Robert Kaplan and his European-American colleagues who blindly adopt the British view of the Mughals being “legitimate” Muslim rulers of India and the Marathas being “insurgents” in their own country.  

The Maratha Empire had realized that throwing the Afghans beyond the Khyber Pass was critical to India. This is why the Maratha Armies crossed the Indus river and captured Attock in 1758. They defeated the Afghan armies that ruled the North West frontier Province in today’s Pakistan. When Ahmed Shah Abdali of Kabul’s Durrani Empire invaded Delhi, a Maratha Army marched from Pune to fight him.

Ignoring this history is ignoring how today’s India looks at Afghanistan. Ignoring how today’s,  yesterday’s and Vedic India looks at Afghanistan is the reason why American policy continues to flounder in Afghanistan. The main blame for this ignorance lies with India. Weak Indian governments have been unable to enunciate their goals clearly and they have not built the military infrastructure to implement the goals they have in their minds and hearts.

But the blame for America’s problems in Afghanistan lies squarely with America and with the failure of American policymakers to understand history. And in our opinion, the blame begins with authors like Robert Kaplan and books like his book “Monsoon”. 

The book “Monsoon” is about naval strategy in the Indian Ocean. So let us touch on a bit of recent naval history that Robert Kaplan may not know. Shivaji Maharaj, the founder of the Maratha Empire, had the vision to establish a blue water Navy in the late 17th century. The Maratha Navy had a brilliant commander named Kanhoji Angre . Under Sarkhel (Admiral) Angre, the Maratha Navy defeated the British, Dutch and Portuguese navies and dominated the seas around the Maratha coasts. Predictably, the Portuguese and British texts describe Angre as a pirate and demean his accomplishments. In contrast, the Indian Navy recognizes Angre as a great patriot and a brilliant admiral. The Western Naval Command of the Indian Navy is INS Angre , named after Kanhoji Angre.

We do not mean to suggest that Robert Kaplan deliberately misinterprets Indian history. Our discomfort is that he simply relies on British and Portuguese texts to understand Indian history. That is why his book “Monsoon” goes so awry in its analysis of Indian history.

A Classic Analytical Technique from Investing

In investing, one always looks for long term bases on historical charts. Sometimes, you see an asset class base for a long period of time and then begin to break out from its long term base. Investing in  asset classes that break out of long term bases has been a proven strategy for huge, sustainable, long term returns.

When we see Indian history on a long term chart, we see about a 1,000 year base formed by core India, a period of consolidation. Today, we see core India beginning to break out of its long base. Today, we see an American attempt to invest in this breakout of core India.

We do not know whether this breakout of core India will be sustained. We do not know whether America will invest in this breakout for the long run or simply as a trade. But if the breakout of core India proves sustainable and if America stays with it as a long term investment, it will be a huge win for both America and India.

But successful investment in an asset class breakout requires historic study of the asset class far back,  way back before the long term base to the earlier period of highs of that asset class.

In the context of “Monsoon”, it requires a study of Indian history way back to the successes of core India, the period before Muslim, Christian or even Buddhist eras. It would require jettisoning the colonial British, Portuguese or the Islamic frameworks and looking back to India of say 1,500 BCE to about 900 CE.

Without such a look back, analysts would simply repeat the mistakes of the CDO analysts of Lehman, Merrill and others of simply looking at recent history.

Robert Kaplan has made this mistake in Monsoon. We hope that he corrects it in his next work. America and India would both benefit if he does.

Send your feedback to editor@macroviewpoints.com

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