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India Learns Link between Security and Prosperity

January 8, 2009


The terrorist attacks in Mumbai last November were the latest eye-opening perturbations that remind us that security and prosperity are inextricably linked [“Indian Businesses Push for Security,” by Rama Lakshmi, Washington Post, 17 December 2008]. Immediately after the attacks on the World Trade Center towers in 2001, U.S. businessmen learned that their bottom line was going to be affected significantly. Some sectors, of course, were more than others. Indian businessmen learned the same lesson following the attacks in Mumbai.

“Four days after gunmen struck Mumbai, prominent business leaders met in the distant southern Indian city of Bangalore to vent their ire. The leaders, from India’s biggest technology, software and biotechnology companies, said the attacks on the nation’s business hub would shatter investor confidence in the Indian economy, participants recalled. They demanded that the government provide them with automatic weapons, grenades and military support to safeguard their facilities. ‘We feel vulnerable; we are the soft targets for terrorists. In Mumbai, they attacked the heart of our economy,’ Kiran Mazumdar-Shaw, chief executive of the biotech company Biocon, said in an interview. ‘We have to be prepared. It is a wake-up call for the business community in India.’ Biocon and the other business technology companies are working with the authorities in Karnataka state, of which Bangalore is the capital, to develop a security force for the city’s industry sector. … The Federation of Indian Chambers of Commerce and Industry in New Delhi [have] offered to pay a special tax if the government did not have the resources to counter terrorism.”

That businesses are willing to help the government pay for increased security is a good thing. That they want the government to provide them with “automatic weapons and grenades” is not such a good thing. I’m in favor of the government providing most security in the form of well-trained and ethical military and police forces. Companies certainly have the right to protect their property by hiring security guards or hiring private security firms, but private security personnel need to work well within the limits of the law so as not to become vigilantes or paramilitary forces. The indictment of Blackwater operatives for their actions in Iraq demonstrate what can happen when such forces believe they are free to operate under their own rules. Nevertheless, one can understand why business people are concerned about security.

“At least 171 people died and more than 230 were injured in [the November 2008] attacks in Mumbai, the latest in a series of bombings that have ripped through several Indian cities since May [2008]. But analysts are just now grasping the damage from the attacks on an economy battling the global financial slowdown. After years of dizzying growth of more than 9 percent, India’s growth estimate for the current fiscal year has been reduced to 6 percent, a seven-year low. Even before the attacks, industrial production and exports had slumped. Critical sectors such as tourism, airlines and the outsourcing industry are beefing up security because of the recent attacks. But industry members contend that if India does not evolve a concerted counterterrorism policy soon, foreign investment will be frightened off. As soon as the siege of the Oberoi Trident and the Taj Mahal Palace & Tower hotels was shown live on television, foreign tourists and business travelers began canceling trips. Business conferences were called off. Several governments put out travel advisories cautioning their citizens against visiting India. For the first time since 2002, the Indian tourism industry, which employs 40 million people, has seen a drop in business of more than 2 percent. More than 5 million foreign tourists visited last year, bringing in more than $11 billion. The industry had lately been growing at a rate of 12 to 14 percent and had hoped to grow by 20 percent this year.”

The challenge for a democracy is balancing security with civil liberties. No one who has tasted freedom wants to live in a police state that recklessly spies on its citizens and restricts their movements. And people certainly don’t want to be confronted by private security firms that shoot first and ask questions later. In the heated and emotional aftermath of a terrorist incident, however, long-term consequences of security decisions are sometimes forgotten. A blogger named P. Venugopal provides a good example of those calling for more security (both public and private) and fewer restrictions on private security firms [“Allow Tatas to take on terrorists“]. He writes:

“It defies imagination how four gun-toting terrorists could walk freely into one of Mumbai’s imposing landmarks, the Taj Hotel, and play with the lives of the inmates for full three days, before shooting them down en masse. Were there no security guards, official or private, around to stop the foursome in their tracks? Why did Ratan Tata, one of India’s most resourceful businessmen who owns the hotel, not engage a well-trained private security force to provide fool-proof security to his hotel? The sad reality is that the government would neither provide security personnel to guard private establishments, nor would allow the managements to deploy well-equipped private security forces to defend their establishments. … Laws stand in the way of private managements equipping their private security with the most sophisticated weapons like AK-47 freely accessible to the terrorists. In the wake of the Mumbai terror attacks, India Inc has approached the government for increased terror protection. Private security firms want the government to issue bulk license for firearms. Some private companies have decided to raise their own private security force to strengthen security in their various locations. Some have engaged international risk assessment firms to advise them on bolstering security. Even as we think of setting up one more investigation agency to tackle terror, the Government has to address the question of easing the regulations on private security forces. Many business leaders and IT majors have volunteered to take charge of the security of their establishments, provided the government removes the legal hurdles. … While the Army is best left to defend our borders, the government should involve the private sector in a big way to strengthen internal security. More so, when our Tatas and Ambanis are all too willing to take up the challenge.”

Real problems occur when government forces and private security forces respond to the same incident. But one can understand how, in the absence of a well-organized and disciplined government capability, people want to take matters into their own hands. It’s the wild west all over again. Private security firms in India are expecting to double their $5 billion dollar business sector over the next four years. Lakshmi reports that calls for increased private security forces are especially loud from the tourism and IT sectors:

“Tourism industry representatives proposed a special security force, made up of former military personnel, to provide an additional tier of protection at monuments, bus stops and train stations. … Another sector that intelligence agencies regard as a likely terrorism target is India’s new growth engine — the flourishing information-technology and outsourcing industry that employs millions of young software engineers. In the wake of the Mumbai attacks, the new mantra in the weekly meetings of several companies is ‘security preparedness,’ and foreign clients are insisting that they subject their facilities to thorough searches, screen employees and vendors and beef up safety drills.”

When it comes to terrorism, good security begins with good intelligence. Shooting terrorists as they walk through the door or drive up in their car loaded with explosives is the last line of defense — a line you hope they never reach. Good intelligence requires cooperation and information sharing. Instead of asking how they can get more guns, business people should be asking how they can help the government obtain better intelligence. As noted above, finding the right balance between security measures and civil liberties is not easy. It requires vigilant people seeking ways to ensure that populations remain safe as well as vigilant people ensuring that recommended measures don’t cross the line into tyranny.

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