Opinion: ‘Terrorists want to destroy Pakistan, too’

By Asif Ali Zardari

The recent death and destruction in Mumbai, India, brought to my mind the death and destruction in Karachi on October 18, 2007, when terrorists attacked a festive homecoming rally for my wife, Benazir Bhutto. Nearly 150 Pakistanis were killed and more than 450 were injured. The terrorist attacks in Mumbai may be a news story for most of the world. For me it is a painful reality of shared experience. Having seen my wife escape death by a hairbreadth on that day in Karachi, I lost her in a second, unfortunately successful, attempt two months later.

The Mumbai attacks were directed not only at India but also at Pakistan’s new democratic government and the peace process with India that we have initiated. Supporters of authoritarianism in Pakistan and non-state actors with a vested interest in perpetuating conflict do not want change in Pakistan to take root. To foil the designs of the terrorists, the two great nations of Pakistan and India, born together from the same revolution and mandate in 1947, must continue to move forward with the peace process. Pakistan is shocked at the terrorist attacks in Mumbai. We can identify with India’s pain. I am especially empathetic. I feel this pain every time I look into the eyes of my children.

Pakistan is committed to the pursuit, arrest, trial and punishment of anyone involved in these heinous attacks. But we caution against hasty judgments and inflammatory statements. As was demonstrated in Sunday’s raids, which resulted in the arrest of militants, Pakistan will take action against the non-state actors found within our territory, treating them as criminals, terrorists and murderers. Not only are the terrorists not linked to the government of Pakistan in any way, we are their targets and we continue to be their victims. India is a mature nation and a stable democracy. Pakistanis appreciate India’s democratic contributions. But as rage fueled by the Mumbai attacks catches on, Indians must pause and take a breath. India and Pakistan and the rest of the world must work together to track down the terrorists who caused mayhem in Mumbai, attacked New York, London and Madrid in the past, and destroyed the Marriott Hotel in Islamabad in September. The terrorists who killed my wife are connected by ideology to these enemies of civilization. These militants didn’t arise from whole cloth. Pakistan was an ally of the West throughout the Cold War. The world worked to exploit religion against the Soviet Union in Afghanistan by empowering the most fanatic extremists as an instrument of destruction of a superpower. Strategy worked, but its legacy was the creation of an extremist militia with its own dynamic.

Pakistan continues to pay the price: the legacy of dictatorship, the fatigue of fanaticism, the dismemberment of civil society and the destruction of our democratic infrastructure. The resulting poverty continues to fuel the extremists and has created a culture of grievance and victimhood.

The challenge of confronting terrorists who have a vast support network is huge; Pakistan’s fledgling democracy needs help from the rest of the world. We are on the frontlines of the war on terrorism. We have 150,000 soldiers fighting al-Qaida, the Taliban and their extremist allies along the border with Afghanistan far more troops than Nato has in Afghanistan.

Nearly 2,000 Pakistanis have lost their lives to terrorism in this year alone, including 1,400 civilians and 600 security personnel ranging in rank from ordinary soldier to threestar general. There have been more than 600 terrorism-related incidents in Pakistan this year. The terrorists have been set back by our aggressive war against them in the Federally Administered Tribal Areas and the Pashtun-majority areas bordering Afghanistan. Six hundred militants have been killed in recent attacks, hundreds by Pakistani F-16 jet strikes in the last two months. Terrorism is a regional as well as a global threat, and it needs to be battled collectively. We understand the domestic political considerations in India in the aftermath of Mumbai. Nevertheless, accusations of complicity on Pakistan’s part only complicate the already complex situation. For India, Pakistan and the US, the best response to the Mumbai carnage is to coordinate in counteracting the scourge of terrorism.

Benazir Bhutto once said that democracy is the best revenge against the abuses of dictatorship. In the current environment, reconciliation and rapprochement is the best revenge against the dark forces that are trying to provoke a confrontation between Pakistan and India, and ultimately a clash of civilizations.

Opinion: ‘Terrorists want to destroy Pakistan, too’

By Asif Ali Zardari

The recent death and destruction in Mumbai, India, brought to my mind the death and destruction in Karachi on October 18, 2007, when terrorists attacked a festive homecoming rally for my wife, Benazir Bhutto. Nearly 150 Pakistanis were killed and more than 450 were injured. The terrorist attacks in Mumbai may be a news story for most of the world. For me it is a painful reality of shared experience. Having seen my wife escape death by a hairbreadth on that day in Karachi, I lost her in a second, unfortunately successful, attempt two months later.

The Mumbai attacks were directed not only at India but also at Pakistan’s new democratic government and the peace process with India that we have initiated. Supporters of authoritarianism in Pakistan and non-state actors with a vested interest in perpetuating conflict do not want change in Pakistan to take root. To foil the designs of the terrorists, the two great nations of Pakistan and India, born together from the same revolution and mandate in 1947, must continue to move forward with the peace process. Pakistan is shocked at the terrorist attacks in Mumbai. We can identify with India’s pain. I am especially empathetic. I feel this pain every time I look into the eyes of my children.

Pakistan is committed to the pursuit, arrest, trial and punishment of anyone involved in these heinous attacks. But we caution against hasty judgments and inflammatory statements. As was demonstrated in Sunday’s raids, which resulted in the arrest of militants, Pakistan will take action against the non-state actors found within our territory, treating them as criminals, terrorists and murderers. Not only are the terrorists not linked to the government of Pakistan in any way, we are their targets and we continue to be their victims. India is a mature nation and a stable democracy. Pakistanis appreciate India’s democratic contributions. But as rage fueled by the Mumbai attacks catches on, Indians must pause and take a breath. India and Pakistan and the rest of the world must work together to track down the terrorists who caused mayhem in Mumbai, attacked New York, London and Madrid in the past, and destroyed the Marriott Hotel in Islamabad in September. The terrorists who killed my wife are connected by ideology to these enemies of civilization. These militants didn’t arise from whole cloth. Pakistan was an ally of the West throughout the Cold War. The world worked to exploit religion against the Soviet Union in Afghanistan by empowering the most fanatic extremists as an instrument of destruction of a superpower. Strategy worked, but its legacy was the creation of an extremist militia with its own dynamic.

Pakistan continues to pay the price: the legacy of dictatorship, the fatigue of fanaticism, the dismemberment of civil society and the destruction of our democratic infrastructure. The resulting poverty continues to fuel the extremists and has created a culture of grievance and victimhood.

The challenge of confronting terrorists who have a vast support network is huge; Pakistan’s fledgling democracy needs help from the rest of the world. We are on the frontlines of the war on terrorism. We have 150,000 soldiers fighting al-Qaida, the Taliban and their extremist allies along the border with Afghanistan far more troops than Nato has in Afghanistan.

Nearly 2,000 Pakistanis have lost their lives to terrorism in this year alone, including 1,400 civilians and 600 security personnel ranging in rank from ordinary soldier to threestar general. There have been more than 600 terrorism-related incidents in Pakistan this year. The terrorists have been set back by our aggressive war against them in the Federally Administered Tribal Areas and the Pashtun-majority areas bordering Afghanistan. Six hundred militants have been killed in recent attacks, hundreds by Pakistani F-16 jet strikes in the last two months. Terrorism is a regional as well as a global threat, and it needs to be battled collectively. We understand the domestic political considerations in India in the aftermath of Mumbai. Nevertheless, accusations of complicity on Pakistan’s part only complicate the already complex situation. For India, Pakistan and the US, the best response to the Mumbai carnage is to coordinate in counteracting the scourge of terrorism.

Benazir Bhutto once said that democracy is the best revenge against the abuses of dictatorship. In the current environment, reconciliation and rapprochement is the best revenge against the dark forces that are trying to provoke a confrontation between Pakistan and India, and ultimately a clash of civilizations.

Editorial: Go To The Source - Make The Case

By M H Ahssan

Evidence is mounting of Pakistani links to Mumbai terror.

All roads from the Mumbai terror attacks seem to lead to Pakistan. The only captured terrorist is a Pakistani. He has reportedly revealed that he, along with a large number of heavily armed comrades, also Pakistanis, sailed from Karachi and hijacked an Indian trawler, the Kuber. The trawler has been found, with its crew missing, five miles from the Mumbai seashore. Only the body of their skipper, beheaded al-Qaeda style, was on board.

The pattern of the Mumbai attacks is fundamentally different from preceding terror attacks on Indian soil. Earlier attacks had seen crude explosive devices tacked on to bicycles or motorcycles and left in public places, triggered by timers or mobile phones. The Mumbai terrorists, however, were armed with Kalashnikov assault rifles, hand grenades and huge quantities of sophisticated explosives. They were trained in sustained combat and targeted not just Indians but foreigners as well, suggesting animus against India joined with a wider anti-western agenda. We can’t overlook the evidence anymore. This is far beyond the scope of indigenous Indian groups.

Prime Minister Manmohan Singh indicated indirectly, and foreign minister Pranab Mukherjee directly, that the attack was linked to Pakistan. American intelligence officials have said to US media evidence is mounting that a Pakistani militant group, most likely the Lashkar-e-Taiba (LeT), was responsible for the attack. New Delhi now needs to collate all the evidence and present it before international agencies. It’s also time for New Delhi to work together with the US, the UK and other concerned governments to evolve a common approach towards Pakistan, which is the world’s central terror hub. Meanwhile, the British foreign office is investigating reports that at least two of the terrorists were British citizens with Pakistani roots.

Even if one presumes that elements in the Pakistani government are not involved in the attacks, evidence points to Pakistani soil being used to mount these attacks on India. Islamabad can’t escape without accounting for this. It has promised full cooperation in investigating the attacks. In which case, how about apprehending Hafiz Saeed, who heads the LeT and roams freely in Pakistani cities, and handing him over to New Delhi or to international agencies? Or, how about rolling up the terror training camps in Pakistan-occupied Kashmir?

President Asif Ali Zardari’s government had announced that ISI chief Shuja Pasha would visit New Delhi but the decision was overturned, raising questions about who’s really in charge in Pakistan. The Bush administration has, till recently, tended to be indulgent towards the Pakistani military and the ISI but president-elect Barack Obama apparently sees things differently. There now needs to be a determined international effort to ensure Pakistan no longer remains the ground zero of terror.

Terror attack on Mumbai is not just about India: Mumbai’s latest encounter with terror was of a kind that the city or the country has not witnessed in recent years. In a testimony to the gravity of this particular assault, international news channels almost matched Indian outfits in tracking the developments by the hour, on the hour. This might be partially because foreign nationals were taken hostage by the terrorists but that’s not the only reason. The world realises that an attack of this nature on India has ramifications not just for this country, but for the global community as well.

Mumbai’s nightmare is being spoken of in the international media as the worst case of terrorism post-9/11. And the strong condemnations, and pledges of solidarity and assistance from various heads of state are only appropriate. Their unequivocal statements will hopefully translate into a shift in the way the world views, and responds to, India’s fight against terrorism. For far too long, the international community has viewed India’s security concerns through the Kashmir prism. But it has been abundantly clear for a while now that the border dispute with Pakistan is only part of the problem.

The real problem lies within Pakistan, Afghanistan and Bangladesh. The violent campaign of extremists in these territories against liberal, democratic values — and their commitment to the establishment of an altered world order, based on their exclusionary religious beliefs — not only destabilises the region but also puts the entire world at grievous risk. India offers itself as an immediate and symbolically potent target.

By striking India these terrorists are striking at the free world. It is therefore pertinent that powerful global players in the western world, and China, exert their influence on the administrations in Islamabad and Dhaka and compel them to put their houses in order. India, on its part, must also invest more in global efforts to fight the scourge of ideologically-driven terror.

But before that, it must step up diplomatic efforts in coordination with the rest of the world’s affected countries. To do this, it needs to disseminate a strong message through the global media about the sources of terror today. It needs simultaneously to develop a well-crafted communications strategy matching up to global standards. The world’s sympathy and understanding are there now. But not for long if New Delhi fails to make its case convincingly in the days to come.

MUMBAI SLUM SCAM - MILLIONS WILL BECOME HOMELESS

Half of Mumbai’s more than 15 million people live in slums. Most Mumbaikars consider the slums worthless but to others they are priceless real estate. Dharavi, Asia’s biggest slum, is next to the emerging corporate hub, the Bandra-Kurla complex. Land in the complex costs as much Rs 30,000 per sq m, and 535-acre Dharavi is worth Rs 6,500 crore. Dharavi is every property developer’s dream and they are achieving it in the name of slum rehabilitation.

S S Tinaikara, a retired IAS officer, was asked by the state to investigate slum rehabilitation schemes and his verdict was this: “all slum rehabilitation plans are meant to encourage corruption.” HNN team went undercover in Dharavi and rented a room. The objective was to meet the slum mafia and prove that the slum rehabilitation scheme is a scam and slum dwellers rarely get flats built for them.

The most prized piece of paper in a slum is a ration card, for owning it makes a person eligible for one of the 100,000 free flats to be built in Dharavi. And the mafia can get you a card for you. “The ration officers have piles of old, clear ration cards. They have touts who get customers for these ration cards. It doesn't matter if you are a Pakistani, Nepali, Bangladeshi, anybody can buy a ration card proving residence from any date.

You just have to pay the right amount of money,” says social worker N R Paul. People who can prove that they are residents of a slum on or before 1995 are eligible for flats under the Slum Rehabilitation Scheme. The slum mafia, for Rs 15,000, got HNN a ration card dated before 1995. Mafia rehabilitation scheme: When they couldn’t block the slum rehabilitation scheme, the mafia, corrupt builders, politicians and bureaucrats converted it converted into a massive scam.

The scam is simple: build and allot flats to people who are dead or are fictitious. Builders then sell the flats at market rates, instead of handing them over free of cost to slum dwellers. Of the 65,000 flats for slum rehabilitation, it is estimated that builders have earned Rs 5,000 crore through the scam. The scheme rewards builders for building slum rehabilitation flats by allotting them to develop a portion of the original slum. Dharavi’s slums for instance, would earn a builder as much Rs 40,000 per square foot.

Tinaikar’s report ripped apart the scheme. It alleged that crores were spent on building Slum Rehabilitation Authority (SRA) Office, but the authority’s meetings were held at the Housing Minister's residence Tinaikar said there was no credible process to distinguish a squatter or an encroacher from a slum dweller. Which left slum dwellers entirely at the builder's mercy. “Every page of the report is stinking with the fraud but everyone from the present government to the Opposition is involved so everyone is quiet,” alleges Tinaikar. Tinaikar’s allegations have merit. The next part of HNN investigation was meeting property developers and politicians allegedly involved in the scam.

A property broker told HNN on hidden camera he had “sold 40 percent of slum rehabilitation flats and there has never been a problem.” The slums were not sold to slum dwellers though. Between 1995 and 2000, Mumbai's Slum Rehabilitation Authority was to build 4 million low-cost houses of 225 square feet each, for the city's seven million slum dwellers. Everyone living in a Mumbai slum before 1995 was eligible for a free home. Barely 65,000 flats are ready today and even fewer have reached slum dwellers. Slum dwellers who protested the fraud were harassed and beaten up. Chandrashekhar Prabhu, a former board member of the SRA, admits the scheme is a huge scam. “Pay off slum dwellers and then create fake identities. Everyone is paid off and documents are forged—stamp paper, land records, consent letters. People who have never given consent are shown as having given consent,” says Prabhu. SRA flats by law cannot be sold for 10 years after allotment but in reality they are up for sale.

Here is what real estate agent Raj, “a SRA specialist”, told HNN in Goregaon. HNN: “We have been told that it is very difficult to get SRA flats?” Raj: “Who told you? We have sold 40 percent of the flats here and there's never been a problem, how can there be a problem with you. Can you show me any flat where there has been an issue? Ask anyone around here.” HNN: “How does this happen? What is the process?” Raj: “There is an allotment letter that is given (to slum dwellers). The letter will be given to you. You can get an affidavit done on this basis of that letter. Then you can get a ration card made.” The present target set for slum rehabilitation is 40 lakh homes. If that target is met, the profits that builders would make from illegal sales would be Rs 33 lakh crore—more than 400 times Mumbai's annual civic budget. To learn more about the scam, HNN approached a politician as newspaper reporters. Waqar Khan is reportedly on the new list of board members of the Maharashtra Housing and Area Development Authority. On hidden camera, he said this: “The money is going everywhere from the CM to Baba Siddique (of the Congress). Do you know what a big racket you are talking about? I can't go into all that. I'll have to work with all the MHADA people… names and projects just disappear from MHADA lists,” said Khan. Posing as builders, the HNN team met a group of slum dwellers who paid money to builders and their architects.

They said the builders had assured them that they would bribe SRA officials to push their project through. Bulldozers in Mumbai on Saturday started removing slums on roads and footpaths --- the second such campaign in two years. The Brihanmumbai Municipal Corporation (BMC) has got clear instructions from Chief Minister Vilasrao Deshmukh to clear the encroachments from all main roads and footpaths immediately.

The government tried a similar campaign two years ago, but was forced to stop when Congress chief Sonia Gandhi intervened on behalf of slum dwellers. Over 8,000 slums were cleared in Ambhojwadi in Malad in December 2004, but they reappeared in just a few weeks. The BMC learnt a lesson from that and will follow a ‘go-slow-and-steady’ mantra during the new campaign. "People demonstrated at the Churchgate Azad Maidan two years ago and the BMC had to stop. But this time the BMC will demolish encroachments in a planned manner and it won't fail," said Congress Corporator Aslam Shaikh. The BMC won't bulldoze big plots for the time being; the priority will be to clear roads encroached upon by slums. But after its failure at Ambhojwadi, the BMC will have to figure out how to do that. "Its an ongoing process. We will keep going back and will keep a check on them. It is the ward officer's responsibility (to keep roads clear). If they fail, they will be suspended," said Municipal Commissioner Johny Joseph. The demolition is supposed to make footpaths and main roads free, but it's only a matter of time before the bulldozers begin their clean up act clearing big plots like Ambhojwadi, which have been completely encroached.

The Maximum City is bursting at the seams and along with the average Mumbaikar, the high-end customer is also facing the heat in his quest for an upmarket flat in a swanky area. In fact a recent report by HR body ECA International suggests that Mumbai is the seventh most expensive city in the world for an expat manager looking for top class housing. The study compared rental prices for unfurnished three bedroom apartments in prime locations and found that Hong Kong is the costliest at a huge $8600 per month, Tokyo is second at $7360 and Mumbai takes the seventh spot at $5500 per month. "When compared with other cities with practically no FSI, Mumbai has FSI of around 1.3 which is restrictive. Also the urban land ceiling act has not been repealed which is blocking land further. All of these restrictions are pushing up prices further,” says Deputy MD, Cushman & Wakefield Sanjay Dutt. Other experts also blame the rising rupee and say at least a part of the upsurge in prices on the Indian currency which has moved up by 10 percent in the last year is responsible for the surge in prices. So in a dollar denominated survey, Mumbai has jumped a few ranks.

"The rising rupee is also an important factor. Mumbai has been at lower rank when rupee was at 48 (compared to the dollar),” says Chairman-Knight Frank Pranay Vakil. The state government's long announced plans of repealing the urban land ceiling act have so far come to nought and unless the act is scrapped chances of land opening up for development will remain slim. The words clean and slum don't go together, do they? But a small revolution set in the slums of Mumbai is changing that perception. So, if you associated slums with dirty cramped spaces, your opinion will soon change. Slums in Mumbai are doing some serious garbage management and getting a facelift. At Hanumannagar slum area in the eastern suburbs, garbage carts from one house to the other every morning to collect garbage. Vanita, a slum dweller tells she is doing now what she wouldn't have bothered doing a year ago—dumping dry and wet garbage separately. And her neighbours too are following her, thanks to a garbage disposal system that's turned their lives around.

“Our area is a lot cleaner than before,” says Vinita. Another slum dweller says, “Our standard of living has improved.” With support from NGOs, people living in the slum areas of Mumbai have adopted vermin composting to process the garbage locally. “Dumping garbage in a pit helps reduce cost of transport. It also avoids the pollution at landfill sites,” said Rishi Aggarwal, Program Director, NGO United Way. Wet garbage collected from homes is sprayed with microorganisms or EM solution, which helps in processing of the biodegradable garbage. A bed of sugarcane waste and cow dung is prepared and earthworms are added to speedup the processing. The garbage is transferred and covered with a layer of sand and a month later you get fine odorless manure rich in nutrients. Perfect for plants in the backyard. According to the municipal corporation slums contribute over 35% of the city's total waste. So far only a handful of the many slums in Mumbai have adopted this technique. It's a small step in the right direction giving way to cleaner living spaces and shining faces.

And unless this happens, there is very little that can cool the overheated rental market for upmarket properties. Its tough-as-iron commerce and enterprise have spawned mini-industrialists winning global contracts. Three sunny days after the last pre-monsoon shower, Sanaullah Compound is still mucky. That’s partly because the road was never really constructed, and partly because the marshy past of Dharavi’s geography resurfaces every monsoon. Oblivious to that and to the din of a driver revving unsuccessfully to get his vehicle’s rear wheel out of the muck, Aqil Ahmed scrubs away at a 4-ft plastic barrel, threadbare industrial gloves telling the tale of how caustic his soda mix is. Ahmed is a supplier of recycled drums—from huge sorbitol containers to metal barrels of anonymous chemicals, he washes the residue off, fits it with a pipe if you like, or a metal clasp around the rim for a neat old-goods storage drum.

A few hundred metres away, in 13th Compound, deals are struck for recycled cardboard goods, touched up television sets, refrigerators and computer monitors. From deeper inside 13th Compound come the sounds of tin cans being beaten into shape and the rattle of machines. There are about 150 units here—Mumbai’s biggest recycling industry. Not far away, young men turn squares of cardboard into packaging boxes, women string beads industriously, row upon row of bare-chested tailors hunch over whirring sewing machines, fried snacks are packed and sealed. At 2 pm, the humidity plastering their ganjis to their backs, the smells of sweat and gutkha mingling, Dharavi is at work, as if possessed—by a djinn of industry perhaps. Or perhaps they’re racing to keep up with the change.

For, the 144-hectare sprawl that will soon see global developers tearing down the shanties to make way for highrise apartments and offices will see no more “routine, government type of designs” in the words of IAS officer Iqbal Singh Chahal, the bureaucrat on special duty for the Rs 9,300-crore Dharavi Redevelopment Project. He says the new college buildings must look like IIM Ahmedabad; for the tailoring and leather industry that Dharavi is known for, the Government is talking to apex institutes like the National Institute of Design, the Central Leather Research Institute, the Footwear Design Council, the Gems and Jewellery Export Promotion Council, all to be invited to set up centres of excellence here, to give Dharavi’s famed industry and enterprise new direction and growth. The planners are applying what project management consultant Mukesh Mehta calls his ‘HIKES’ formula—Health, Income generating opportunity, Knowledge economy, Education and Socio-cultural growth—to create an “upwardly mobile class of slumdwellers, a new middle class” that enjoys better amenities than the middle classes ever did.

Actually, Round One of Dharavi’s big gentrification is over. Chivda, chakli and papad manufacturers are almost impossible to count, an army of food moguls inspired by the Ghasitaram factory housed in one corner of the slum. There are still doctors’ clinics with dubious degrees offering miracle cures for venereal disease, but there are also path-labs, computer classes, coaching classes for students and beauty salons. Even the jewellery shops in the Tamil quarters wear smart new signboards and banners displaying branded gold and diamond pieces. There are still sweatshops in every alleyway, but in the seven-storey commercial complex along the main road, right opposite the leather goods stores, at least a couple of hundred jeans and T-shirts manufacturers have set up shop. With recycling units, tanneries and metal smelting all set to go, Round Two could see the service industry take root in the country’s biggest slum—BPO, KPO units, office space, world class retail units, that’s what the planners say is in store for Dharavi’s commercial space. Still, not all of Dharavi’s industrialists are convinced. “I have a 3,000 sq ft home,” says Ramkrishna Keni, a self-styled leader of the fisherfolk Kolis, believed to be the original residents of Mumbai and among the first to take up residence at Dharavi. A matchbox home on the sixth or seventh floor is no good for his refrigerator, television set, washing machine, cupboard and cot.

“What about my fishing nets and implements?” he asks. Keni promised those gathered at a recent protest meeting that local developers could be persuaded to give Dharavi’s residents “400 sq ft each, why 225?” Officials point out calmly that Koliwada is not even in the project area. Chahal details the new industrial policy for Dharavi. Hazardous units will have to go, as will polluting units. That doesn’t render these residents ineligible for rehabilitation, assure officials; they must simply pick a non-polluting enterprise. Set to go: tanneries and scrap recycling. “Acchha,” says Aqil Ali when told of the plan, “So where will all of Mumbai’s juna purana samaan (waste) go?” His masters at this 20-year-old recycling unit taught him his most fundamental business theory well: Look for a demand, then supply it. “I’m going nowhere madam,” he says. “Come back whenever.”

After Chloe Ripoffs, what next? Not long ago, Dharavi’s leather entrepreneurs were garrulous; displaying Fendi, Chloe and Valentino catalogues whose designs were meticulously reproduced in their sweatshops. “For export only,” one owner of a series of leather goods manufacturing and retail units had said, showing pieces that would never make it to the display windows of the 100-odd retail stores lined up in Dharavi. After all, retailers from Dubai and other cities in the Middle East with significant tourist footfalls regularly place orders here for calf leather and buck leather articles that boast a quality and finish almost akin to the big brands. Every other leather manufacturer in Dharavi has an export licence, plus receipts showing tax payments running into lakhs. This enterprise is almost completely legit, design duplications apart. Now, the Central Leather Research Institute has been approached to set up a branch in the new Dharavi, to tap the rich potential and give it direction.

Dharavi’s own brands can make a mark, say planners. Still, though business is brisk like always, there is a now sudden disquiet under the harsh glare of global camera crews, an unwillingness to talk. “What about rents?” asks S Bagade, one store owner. Many leather goods factories here are located in rented properties, some in sub-let properties. “Will everybody be able to afford the new rents?” The Kumbharwada Question: “Community kiln? And how exactly will that work?” asks Dhansukh Parmar, president of the Prajapati Samaj Association in Kumbharwada, a colony of potters living in spacious homes along a winding lane and a warren of bylanes just off Dharavi’s main 60 Feet Road (the other is the 90 Feet Road).

It’s an odd question, since the 300-odd families who live in Kumbharwada exemplify community living so well, complete with their own balwadi and a rationing office that trades in cotton waste to fire the kilns, all of which are used by several families, often together. “The 225 sq ft space is just not enough,” Parmar says. “What about our drying yards, stacking space and ditches to store mud?” Mostly from Saurashtra and Kutch, the Prajapatis are a potter community, named after who they say is the Lord of Progeny or the Maker. With business slow except in the festival season which floods them with orders for kulhads, dahi haandis and diyas, many families are not full-time potters any longer. And those not engaged in pottery will simply get 225 sq ft of residential space, officials of the Slum Rehabilitation Authority have clarified, fuelling more discontent among the kumbhars. “Entire families, including college-going daughters, help out when there are large orders,” says Nanji Devalia, a community member who contested the recent corporation elections unsuccessfully. His key promise had been to reform the redevelopment plan for the potters.

More details can be browsed from http://www.hyderabadnews.net/newsnow3/dharavi-scam.htm

MUMBAI SLUM SCAM - MILLIONS WILL BECOME HOMELESS

Half of Mumbai’s more than 15 million people live in slums. Most Mumbaikars consider the slums worthless but to others they are priceless real estate. Dharavi, Asia’s biggest slum, is next to the emerging corporate hub, the Bandra-Kurla complex. Land in the complex costs as much Rs 30,000 per sq m, and 535-acre Dharavi is worth Rs 6,500 crore. Dharavi is every property developer’s dream and they are achieving it in the name of slum rehabilitation.

S S Tinaikara, a retired IAS officer, was asked by the state to investigate slum rehabilitation schemes and his verdict was this: “all slum rehabilitation plans are meant to encourage corruption.” HNN team went undercover in Dharavi and rented a room. The objective was to meet the slum mafia and prove that the slum rehabilitation scheme is a scam and slum dwellers rarely get flats built for them.

The most prized piece of paper in a slum is a ration card, for owning it makes a person eligible for one of the 100,000 free flats to be built in Dharavi. And the mafia can get you a card for you. “The ration officers have piles of old, clear ration cards. They have touts who get customers for these ration cards. It doesn't matter if you are a Pakistani, Nepali, Bangladeshi, anybody can buy a ration card proving residence from any date.

You just have to pay the right amount of money,” says social worker N R Paul. People who can prove that they are residents of a slum on or before 1995 are eligible for flats under the Slum Rehabilitation Scheme. The slum mafia, for Rs 15,000, got HNN a ration card dated before 1995. Mafia rehabilitation scheme: When they couldn’t block the slum rehabilitation scheme, the mafia, corrupt builders, politicians and bureaucrats converted it converted into a massive scam.

The scam is simple: build and allot flats to people who are dead or are fictitious. Builders then sell the flats at market rates, instead of handing them over free of cost to slum dwellers. Of the 65,000 flats for slum rehabilitation, it is estimated that builders have earned Rs 5,000 crore through the scam. The scheme rewards builders for building slum rehabilitation flats by allotting them to develop a portion of the original slum. Dharavi’s slums for instance, would earn a builder as much Rs 40,000 per square foot.

Tinaikar’s report ripped apart the scheme. It alleged that crores were spent on building Slum Rehabilitation Authority (SRA) Office, but the authority’s meetings were held at the Housing Minister's residence Tinaikar said there was no credible process to distinguish a squatter or an encroacher from a slum dweller. Which left slum dwellers entirely at the builder's mercy. “Every page of the report is stinking with the fraud but everyone from the present government to the Opposition is involved so everyone is quiet,” alleges Tinaikar. Tinaikar’s allegations have merit. The next part of HNN investigation was meeting property developers and politicians allegedly involved in the scam.

A property broker told HNN on hidden camera he had “sold 40 percent of slum rehabilitation flats and there has never been a problem.” The slums were not sold to slum dwellers though. Between 1995 and 2000, Mumbai's Slum Rehabilitation Authority was to build 4 million low-cost houses of 225 square feet each, for the city's seven million slum dwellers. Everyone living in a Mumbai slum before 1995 was eligible for a free home. Barely 65,000 flats are ready today and even fewer have reached slum dwellers. Slum dwellers who protested the fraud were harassed and beaten up. Chandrashekhar Prabhu, a former board member of the SRA, admits the scheme is a huge scam. “Pay off slum dwellers and then create fake identities. Everyone is paid off and documents are forged—stamp paper, land records, consent letters. People who have never given consent are shown as having given consent,” says Prabhu. SRA flats by law cannot be sold for 10 years after allotment but in reality they are up for sale.

Here is what real estate agent Raj, “a SRA specialist”, told HNN in Goregaon. HNN: “We have been told that it is very difficult to get SRA flats?” Raj: “Who told you? We have sold 40 percent of the flats here and there's never been a problem, how can there be a problem with you. Can you show me any flat where there has been an issue? Ask anyone around here.” HNN: “How does this happen? What is the process?” Raj: “There is an allotment letter that is given (to slum dwellers). The letter will be given to you. You can get an affidavit done on this basis of that letter. Then you can get a ration card made.” The present target set for slum rehabilitation is 40 lakh homes. If that target is met, the profits that builders would make from illegal sales would be Rs 33 lakh crore—more than 400 times Mumbai's annual civic budget. To learn more about the scam, HNN approached a politician as newspaper reporters. Waqar Khan is reportedly on the new list of board members of the Maharashtra Housing and Area Development Authority. On hidden camera, he said this: “The money is going everywhere from the CM to Baba Siddique (of the Congress). Do you know what a big racket you are talking about? I can't go into all that. I'll have to work with all the MHADA people… names and projects just disappear from MHADA lists,” said Khan. Posing as builders, the HNN team met a group of slum dwellers who paid money to builders and their architects.

They said the builders had assured them that they would bribe SRA officials to push their project through. Bulldozers in Mumbai on Saturday started removing slums on roads and footpaths --- the second such campaign in two years. The Brihanmumbai Municipal Corporation (BMC) has got clear instructions from Chief Minister Vilasrao Deshmukh to clear the encroachments from all main roads and footpaths immediately.

The government tried a similar campaign two years ago, but was forced to stop when Congress chief Sonia Gandhi intervened on behalf of slum dwellers. Over 8,000 slums were cleared in Ambhojwadi in Malad in December 2004, but they reappeared in just a few weeks. The BMC learnt a lesson from that and will follow a ‘go-slow-and-steady’ mantra during the new campaign. "People demonstrated at the Churchgate Azad Maidan two years ago and the BMC had to stop. But this time the BMC will demolish encroachments in a planned manner and it won't fail," said Congress Corporator Aslam Shaikh. The BMC won't bulldoze big plots for the time being; the priority will be to clear roads encroached upon by slums. But after its failure at Ambhojwadi, the BMC will have to figure out how to do that. "Its an ongoing process. We will keep going back and will keep a check on them. It is the ward officer's responsibility (to keep roads clear). If they fail, they will be suspended," said Municipal Commissioner Johny Joseph. The demolition is supposed to make footpaths and main roads free, but it's only a matter of time before the bulldozers begin their clean up act clearing big plots like Ambhojwadi, which have been completely encroached.

The Maximum City is bursting at the seams and along with the average Mumbaikar, the high-end customer is also facing the heat in his quest for an upmarket flat in a swanky area. In fact a recent report by HR body ECA International suggests that Mumbai is the seventh most expensive city in the world for an expat manager looking for top class housing. The study compared rental prices for unfurnished three bedroom apartments in prime locations and found that Hong Kong is the costliest at a huge $8600 per month, Tokyo is second at $7360 and Mumbai takes the seventh spot at $5500 per month. "When compared with other cities with practically no FSI, Mumbai has FSI of around 1.3 which is restrictive. Also the urban land ceiling act has not been repealed which is blocking land further. All of these restrictions are pushing up prices further,” says Deputy MD, Cushman & Wakefield Sanjay Dutt. Other experts also blame the rising rupee and say at least a part of the upsurge in prices on the Indian currency which has moved up by 10 percent in the last year is responsible for the surge in prices. So in a dollar denominated survey, Mumbai has jumped a few ranks.

"The rising rupee is also an important factor. Mumbai has been at lower rank when rupee was at 48 (compared to the dollar),” says Chairman-Knight Frank Pranay Vakil. The state government's long announced plans of repealing the urban land ceiling act have so far come to nought and unless the act is scrapped chances of land opening up for development will remain slim. The words clean and slum don't go together, do they? But a small revolution set in the slums of Mumbai is changing that perception. So, if you associated slums with dirty cramped spaces, your opinion will soon change. Slums in Mumbai are doing some serious garbage management and getting a facelift. At Hanumannagar slum area in the eastern suburbs, garbage carts from one house to the other every morning to collect garbage. Vanita, a slum dweller tells she is doing now what she wouldn't have bothered doing a year ago—dumping dry and wet garbage separately. And her neighbours too are following her, thanks to a garbage disposal system that's turned their lives around.

“Our area is a lot cleaner than before,” says Vinita. Another slum dweller says, “Our standard of living has improved.” With support from NGOs, people living in the slum areas of Mumbai have adopted vermin composting to process the garbage locally. “Dumping garbage in a pit helps reduce cost of transport. It also avoids the pollution at landfill sites,” said Rishi Aggarwal, Program Director, NGO United Way. Wet garbage collected from homes is sprayed with microorganisms or EM solution, which helps in processing of the biodegradable garbage. A bed of sugarcane waste and cow dung is prepared and earthworms are added to speedup the processing. The garbage is transferred and covered with a layer of sand and a month later you get fine odorless manure rich in nutrients. Perfect for plants in the backyard. According to the municipal corporation slums contribute over 35% of the city's total waste. So far only a handful of the many slums in Mumbai have adopted this technique. It's a small step in the right direction giving way to cleaner living spaces and shining faces.

And unless this happens, there is very little that can cool the overheated rental market for upmarket properties. Its tough-as-iron commerce and enterprise have spawned mini-industrialists winning global contracts. Three sunny days after the last pre-monsoon shower, Sanaullah Compound is still mucky. That’s partly because the road was never really constructed, and partly because the marshy past of Dharavi’s geography resurfaces every monsoon. Oblivious to that and to the din of a driver revving unsuccessfully to get his vehicle’s rear wheel out of the muck, Aqil Ahmed scrubs away at a 4-ft plastic barrel, threadbare industrial gloves telling the tale of how caustic his soda mix is. Ahmed is a supplier of recycled drums—from huge sorbitol containers to metal barrels of anonymous chemicals, he washes the residue off, fits it with a pipe if you like, or a metal clasp around the rim for a neat old-goods storage drum.

A few hundred metres away, in 13th Compound, deals are struck for recycled cardboard goods, touched up television sets, refrigerators and computer monitors. From deeper inside 13th Compound come the sounds of tin cans being beaten into shape and the rattle of machines. There are about 150 units here—Mumbai’s biggest recycling industry. Not far away, young men turn squares of cardboard into packaging boxes, women string beads industriously, row upon row of bare-chested tailors hunch over whirring sewing machines, fried snacks are packed and sealed. At 2 pm, the humidity plastering their ganjis to their backs, the smells of sweat and gutkha mingling, Dharavi is at work, as if possessed—by a djinn of industry perhaps. Or perhaps they’re racing to keep up with the change.

For, the 144-hectare sprawl that will soon see global developers tearing down the shanties to make way for highrise apartments and offices will see no more “routine, government type of designs” in the words of IAS officer Iqbal Singh Chahal, the bureaucrat on special duty for the Rs 9,300-crore Dharavi Redevelopment Project. He says the new college buildings must look like IIM Ahmedabad; for the tailoring and leather industry that Dharavi is known for, the Government is talking to apex institutes like the National Institute of Design, the Central Leather Research Institute, the Footwear Design Council, the Gems and Jewellery Export Promotion Council, all to be invited to set up centres of excellence here, to give Dharavi’s famed industry and enterprise new direction and growth. The planners are applying what project management consultant Mukesh Mehta calls his ‘HIKES’ formula—Health, Income generating opportunity, Knowledge economy, Education and Socio-cultural growth—to create an “upwardly mobile class of slumdwellers, a new middle class” that enjoys better amenities than the middle classes ever did.

Actually, Round One of Dharavi’s big gentrification is over. Chivda, chakli and papad manufacturers are almost impossible to count, an army of food moguls inspired by the Ghasitaram factory housed in one corner of the slum. There are still doctors’ clinics with dubious degrees offering miracle cures for venereal disease, but there are also path-labs, computer classes, coaching classes for students and beauty salons. Even the jewellery shops in the Tamil quarters wear smart new signboards and banners displaying branded gold and diamond pieces. There are still sweatshops in every alleyway, but in the seven-storey commercial complex along the main road, right opposite the leather goods stores, at least a couple of hundred jeans and T-shirts manufacturers have set up shop. With recycling units, tanneries and metal smelting all set to go, Round Two could see the service industry take root in the country’s biggest slum—BPO, KPO units, office space, world class retail units, that’s what the planners say is in store for Dharavi’s commercial space. Still, not all of Dharavi’s industrialists are convinced. “I have a 3,000 sq ft home,” says Ramkrishna Keni, a self-styled leader of the fisherfolk Kolis, believed to be the original residents of Mumbai and among the first to take up residence at Dharavi. A matchbox home on the sixth or seventh floor is no good for his refrigerator, television set, washing machine, cupboard and cot.

“What about my fishing nets and implements?” he asks. Keni promised those gathered at a recent protest meeting that local developers could be persuaded to give Dharavi’s residents “400 sq ft each, why 225?” Officials point out calmly that Koliwada is not even in the project area. Chahal details the new industrial policy for Dharavi. Hazardous units will have to go, as will polluting units. That doesn’t render these residents ineligible for rehabilitation, assure officials; they must simply pick a non-polluting enterprise. Set to go: tanneries and scrap recycling. “Acchha,” says Aqil Ali when told of the plan, “So where will all of Mumbai’s juna purana samaan (waste) go?” His masters at this 20-year-old recycling unit taught him his most fundamental business theory well: Look for a demand, then supply it. “I’m going nowhere madam,” he says. “Come back whenever.”

After Chloe Ripoffs, what next? Not long ago, Dharavi’s leather entrepreneurs were garrulous; displaying Fendi, Chloe and Valentino catalogues whose designs were meticulously reproduced in their sweatshops. “For export only,” one owner of a series of leather goods manufacturing and retail units had said, showing pieces that would never make it to the display windows of the 100-odd retail stores lined up in Dharavi. After all, retailers from Dubai and other cities in the Middle East with significant tourist footfalls regularly place orders here for calf leather and buck leather articles that boast a quality and finish almost akin to the big brands. Every other leather manufacturer in Dharavi has an export licence, plus receipts showing tax payments running into lakhs. This enterprise is almost completely legit, design duplications apart. Now, the Central Leather Research Institute has been approached to set up a branch in the new Dharavi, to tap the rich potential and give it direction.

Dharavi’s own brands can make a mark, say planners. Still, though business is brisk like always, there is a now sudden disquiet under the harsh glare of global camera crews, an unwillingness to talk. “What about rents?” asks S Bagade, one store owner. Many leather goods factories here are located in rented properties, some in sub-let properties. “Will everybody be able to afford the new rents?” The Kumbharwada Question: “Community kiln? And how exactly will that work?” asks Dhansukh Parmar, president of the Prajapati Samaj Association in Kumbharwada, a colony of potters living in spacious homes along a winding lane and a warren of bylanes just off Dharavi’s main 60 Feet Road (the other is the 90 Feet Road).

It’s an odd question, since the 300-odd families who live in Kumbharwada exemplify community living so well, complete with their own balwadi and a rationing office that trades in cotton waste to fire the kilns, all of which are used by several families, often together. “The 225 sq ft space is just not enough,” Parmar says. “What about our drying yards, stacking space and ditches to store mud?” Mostly from Saurashtra and Kutch, the Prajapatis are a potter community, named after who they say is the Lord of Progeny or the Maker. With business slow except in the festival season which floods them with orders for kulhads, dahi haandis and diyas, many families are not full-time potters any longer. And those not engaged in pottery will simply get 225 sq ft of residential space, officials of the Slum Rehabilitation Authority have clarified, fuelling more discontent among the kumbhars. “Entire families, including college-going daughters, help out when there are large orders,” says Nanji Devalia, a community member who contested the recent corporation elections unsuccessfully. His key promise had been to reform the redevelopment plan for the potters.

More details can be browsed from http://www.hyderabadnews.net/newsnow3/dharavi-scam.htm

Exclusive: Mumbai After-shocks Rattle Pakistan

By Syed Saleem Shahzad

Ten young men from the Pakistan-based Lashkar-e-Taiba (LET) were sent on a "sacrificial" mission to Mumbai. Nine of them were killed - as they were expected to be - in battles with Indian security forces during their three-day rampage last week.

What did not go according to plan was the capture of 21-year-old Ajmal Amir Kesab, who has given details of the militants' plot that was hatched by elements of Pakistan's Inter-Services Intelligence (ISI) and the LET, including the training of the mission's members at PNS Iqbal (a naval commando unit in Karachi) and at Mangla Dam near the capital Islamabad.

This single arrest has played very badly with the separate plans of Pakistan's strategic quarters, the LET and al-Qaeda. And beyond the escalating tensions between India and Pakistan, the crucial question now arises: Will Pakistan succumb to Washington's pressure to meaningfully clamp down on the LET - it is already banned - and the ISI forward section officers whose collusion resulted the Mumbai saga?

"Everybody wishes for a war between India and Pakistan," a middle-ranking member of the LET told HNN on condition of anonymity. "Had prayers not been prohibited for the battle to happen, today all mujahideen would have been praying Qunoot-i-Nazela for battle between India and Pakistan as this is the key for success for the mujahideen from Afghanistan to India." (The Qunoot-i-Nazala is a prayer offered when there is extreme pressure from the enemy and God is asked to remove all fear and pressure and grant victory.)

The militants obviously want their war, but the United States now wants war on the militants, and therein lies a major problem.

US Admiral Mike Mullen, chairman of the Joint Chiefs of Staff, is in Islamabad, as is Secretary of State Condoleezza Rice, following her visit to India. HNN contacts say that Mullen's overriding message will be for Pakistan to get serious about the LET, which has renamed itself Jamaatut Dawa, and the ISI officers involved in the Mumbai plot.

HNN earlier outlined how a low-level ISI forward section head (a major) allowed what was a plan to attack Kashmir in India to be turned into the Mumbai assault. Ironically, it was as a result of US pressure that changes were made at the top levels of the ISI, resulting in the situation in which the major was able to make his fateful decision, seemingly without the knowledge of his superiors.

Washington's pressure now puts the Pakistani military on the spot, and it will be a real test for new Chief of Army Staff, General Ashfaq Parvez Kiani, and the army's relationship with militants.

The chief of the Jamaatut Dawa, Hafiz Muhammad Saeed, was in Sukkur, a city 363 kilometers north of the southern port city of Karachi, on November 26 and was scheduled to travel to Karachi. But after the Mumbai attack on November 27, he was urgently summoned to Rawalpindi, the garrison city twinned with Islamabad, to attend a high-profile meeting held in the Office of Strategic Organization.

He was told that the Indian air force was on high alert and asked what possible plans he had if India unleashed a war. Saeed assured that the LET would be the first line of defense against the Indian navy in the Arabian Sea through its marine operations, and that it would escalate its activities in India and Kashmir. He added that he would tell militants in Pakistan's troubled North-West Frontier Province (NWFP) to hold their fire against the Pakistani security forces.

At the same time, because of the threat of Indian strikes, all militant training camps in Muzzafarabad, the capital of Pakistan-administered Kashmir, were evacuated.

A top-level ISI official then held a background briefing for journalists in Islamabad in which he said if India mobilized its forces along the border, all Pakistani forces would be withdrawn from NWFP, where they are fighting Taliban and other militants. Controversially, he said that hardline Pakistani Taliban leader Baitullah Mehsud and others would support Pakistan if India waged war on the country.

Further, the Pakistani security forces initiated a dialogue process with the Taliban in the Swat Valley to discuss terms and conditions for pulling out the Pakistani troops.

The Mumbai attack relied on local al-Qaeda-linked militants (Indian Mujahideen) such as Abdus Subhan Qureshi (Tauqir). He had cased the Jewish community center that was attacked and where several people were killed. His information was that it was being used by Israeli intelligence - Mossad.

Information on such key targets was passed on to the LET, and its well-trained commandos then carried out their meticulously planned operation in which only 10 men held Mumbai hostage for 72 hours.

Abdus Subhan had planned other attacks on Indian strategic targets immediately after the Mumbai attack, but Kasab's arrest prevented this through his revelations of his LET background.

Washington appears to accept that the Mumbai attack was not carried out at the behest of Islamabad or the Pakistan army, or even by the ISI's high command. But there is now proof of the involvement of the LET and of some junior ISI officials. It is on this point that the US will apply pressure on Islamabad: it must curtail such militants.

But there is a problem.

The situation in NWFP is spiraling out of control, with militancy spilling over from the tribal areas into this province.

In the past four days, militants have abducted a record 60 people from the provincial capital Peshawar, most of them retired army officers and members or relatives of the Awami National Party (ANP), which rules in the province. The Taliban have butchered many people with affiliations to the ANP or those with relatives in the security apparatus.

Meanwhile, North Atlantic Treaty Organization supply convoys passing through Khyber Agency en route to Afghanistan have come under increasing attacks. In the most recent incident, militants destroyed 40 containers in supposedly secure terminals in the middle of Peshawar.

In this anarchic situation, the Jamaatut Dawa (LET), with its well-defined vertical command structure under the single command of Saeed, could commit its several thousand members, virtually a para-military force, to the cause of the anti-state al-Qaeda-linked Pakistani militants.

What has stopped the anti-India orientated group from doing this is its under-riding loyalty to and support from Pakistan. If the authorities start to mess with the LET, beyond the routine rhetoric, all hell could break loose inside the country.

Similarly, if pressure is placed on the ISI, there could be a severe reaction from the more hardline elements in that organization, as well as in the military.

To date, the authorities have not given any indication of their plans. If they do indeed resist the overtures of Mullen and Rice, it is most likely that the Pakistani armed forces will withdraw from the Swat Valley and Bajaur Agency, leaving that area open for the Taliban-led insurgency n Afghanistan. Militants can also be expected to launch further attacks on India, with dire consequences for whole South Asia region.

Yet the alternative of cracking down on the LET is equally unappealing, and potentially as disastrous.

EXCLUSIVE: Al-Qaeda 'hijack' led to Mumbai attack

By Syed Saleem Shezad & M H Ahssan

A plan by Pakistan's Inter-Services Intelligence (ISI) that had been in the pipelines for several months - even though official policy was to ditch it - saw what was to be a low-profile attack in Kashmir turn into the massive attacks on Mumbai last week.

The original plan was highjacked by the Laskar-e-Taiba (LET), a Pakistani militant group that generally focussed on the Kashmir struggle, and al-Qaeda, resulting in the deaths of nearly 200 people in Mumbai as groups of militants sprayed bullets and hand grenades at hotels, restaurants and train stations, as well as a Jewish community center.

The attack has sent shock waves across India and threatens to revive the intense periods of hostility the two countries have endured since their independence from British India in 1947.

There is now the possibility that Pakistan will undergo another about-turn and rethink its support of the "war in terror"; until the end of 2001, it supported the Taliban administration in Afghanistan. It could now back off from its restive tribal areas, leaving the Taliban a free hand to consolidate their Afghan insurgency.

A US State Department official categorically mentioned that Pakistan's "smoking gun" could turn the US's relations with Pakistan sour. The one militant captured - several were killed - is reported to have been a Pakistani trained by the LET.

HNN investigations reveal that several things went wrong within the ISI, which resulted in the Mumbai attacks.

Before the September 11, 2001, attacks on the United States, the ISI had several operations areas as far as India was concerned. The major forward sections were in Muzzafarabad, the capital of Pakistan-administered Kashmir, which were used to launch proxy operations through Kashmir separatist groups in Indian-administered Kashmir.

The next major areas were Nepal and Bangladesh, where both countries were used for smuggling arms and ammunition into India and for launching militants to carry out high-level guerrilla operations in Indian territory other than Kashmir.

After 9/11, when Islamabad sided with the United States in the "war on terror" and the invasion of Afghanistan was launched to catch al-Qaeda members and militants, Pakistan was forced to abandon its Muzzafarabad operations under American pressure. The major recent turn in the political situation in Nepal with the victory of Maoists and the abolishment of the monarchy has reduced the ISI's operations. An identical situation has happened in Bangladesh, where governments have changed.

The only active forward sections were left in the southern port city of Karachi, and the former Muzzafarabad sections were sent there. The PNS Iqbal (a naval commando unit) was the main outlet for militants to be given training and through deserted points they were launched into the Arabian sea and on into the Indian region of Gujarat.

At the same time, Washington mediated a dialogue process between India and Pakistan, which resulted in some calm. Militants were advised by the ISI to sit tight at their homes to await orders.

However, that never happened. The most important asset of the ISI, the Laskhar-e-Taiba (LET), was split after 9/11. Several of its top-ranking commanders and office bearers joined hands with al-Qaeda militants. A millionaire Karachi-based businessman, Arif Qasmani, who was a major donor for ISI-sponsored LET operations in India, was arrested for playing a double game - he was accused of working with the ISI while also sending money to Pakistan's South Waziristan tribal area for the purchase of arms and ammunition for al-Qaeda militants.

The network of the Harkat-ul-Jihad-al-Islami, which was a major supporter of the ISI in the whole region, especially in Bangladesh, was shattered and fell into the hands of al-Qaeda when Maulana Ilyas Kashmiri, chief of Harkat, a hero of the armed struggle in Kashmir who had spent two years in an Indian jail, was arrested by Pakistani security forces in January 2004. He was suspected of having links to suicide bombers who rammed their vehicles into then-president General Pervez Musharraf's convoy on December 25, 2003.

He was released after 30 days and cleared of all suspicion, but he was profoundly affected by the experience and abandoned his struggle for Kashmir's independence and moved to the North Waziristan tribal area with his family. His switch from the Kashmiri struggle to the Afghan resistance was an authentic religious instruction to those in the camps in Kashmir to move to support Afghanistan's armed struggle against foreign forces. Hundreds of Pakistani jihadis established a small training camp in the area.

Almost simultaneously, Harkat's Bangladesh network disconnected itself from the ISI and moved closer to al-Qaeda. That was the beginning of the problem which makes the Mumbai attack a very complex story.

India has never been a direct al-Qaeda target. This has been due in part to Delhi's traditionally impartial policy of strategic non-alignment and in part to al-Qaeda using India as a safe route from the Arabian Sea into Gujrat and then on to Mumbai and then either by air or overland to the United Arab Emirates. Al-Qaeda did not want to disrupt this arrangement by stirring up attacks in India.

Nevertheless, growing voices from the North Atlantic Treaty Organization (NATO) and from within India for the country to be a strategic partner of NATO and the US in Afghanistan compelled al-Qaeda, a year ago, to consider a plan to utilize Islamic militancy structures should this occur.

Several low-profile attacks were carried out in various parts of India as a rehearsal and Indian security agencies still have no idea who was behind them. Nevertheless, al-Qaeda was not yet prepared for any bigger moves, like the Mumbai attacks.

Under directives from Pakistan's army chief, General Ashfaq Kiani, who was then director general (DG) of the ISI, a low-profile plan was prepared to support Kashmiri militancy. That was normal, even in light of the peace process with India. Although Pakistan had closed down its major operations, it still provided some support to the militants so that the Kashmiri movement would not die down completely.

After Kiani was promoted to chief of army staff, Lieutenant General Nadeem Taj was placed as DG of the ISI. The external section under him routinely executed the plan of Kiani and trained a few dozen LET militants near Mangla Dam (near the capital Islamabad). They were sent by sea to Gujrat, from where they had to travel to Kashmir to carry out operations.

Meanwhile, a major reshuffle in the ISI two months ago officially shelved this low-key plan as the country's whole focus had shifted towards Pakistan's tribal areas. The director of the external wing was also changed, placing the "game" in the hands of a low-level ISI forward section head (a major) and the LET's commander-in-chief, Zakiur Rahman.

Zakiur was in Karachi for two months to personally oversee the plan. However, the militant networks in India and Bangladesh comprising the Harkat, which were now in al-Qaeda's hands, tailored some changes. Instead of Kashmir, they planned to attack Mumbai, using their existent local networks, with Westerners and the Jewish community center as targets.

Zakiur and the ISI's forward section in Karachi, completely disconnected from the top brass, approved the plan under which more than 10 men took Mumbai hostage for nearly three days and successfully established a reign of terror.

The attack, started from ISI headquarters and fined-tuned by al-Qaeda, has obviously caused outrage across India. The next issue is whether it has the potential to change the course of India's regional strategy and deter it from participating in NATO plans in Afghanistan.

Daniel Pipes, considered a leading member of Washington's neo-conservatives, told HNN, "It could be the other way around, like always happens with al-Qaeda. Nine-eleven was aimed to create a reign of terror in Washington, but only caused a very furious reaction from the United States of America. The 07/07 bombing [in London] was another move to force the UK to pull out of Iraq, but it further reinforced the UK's policies in the 'war on terror'. The Madrid bombing was just an isolated incident which caused Spain's pullout from Iraq."

Pipes continued, "They [militants] are the believers of conspiracy theories and therefore they would have seen the Jewish center [attacked in Mumbai] as some sort of influence in the region and that's why they chose to target it, but on the other hand they got immense international attention which they could not have acquired if they would have just attacked local targets."

Israeli politician and a former interim president, Abraham Burg, told HNN, "It was not only Jewish but American and other foreigners [who were targeted]. The main purpose may have been to keep foreigners away from India. Nevertheless, there is something deeper. This attack on a Jewish target becomes symbolic.

"I remember when al-Qaeda carried out the attack on the USS Cole in Yemen [in 2000] and then they carried out attacks on American embassies in Africa, they mentioned several reasons. The Palestinian issue was number four or five, but later when they found that it had become the most popular one, it suddenly climbed up to number one position on their priority list. Since the attack on the Jewish institution drew so much attention, God forbid, it could be their strategy all over the world," Burg said.

Al-Qaeda stoked this particular fire that could spark new hostilities in South Asia. What steps India takes on the military front against Pakistan will become clearer in the coming days, but already in Karachi there has been trouble.

Two well-known Indophile political parties, the Muttahida Qaumi Movement, a coalition partner in the government comprising people who migrated to Pakistan after the partition of British India in 1947, and the Awami National Party, another coalition partner in the government and a Pashtun sub-nationalist political party, clashed within 24 hours of the Mumbai attacks. Fifteen people have been killed to date and the city is closed, like Mumbai was after the November 26 attacks.

EXCLUSIVE: Al-Qaeda 'hijack' led to Mumbai attack

By Syed Saleem Shezad & M H Ahssan

A plan by Pakistan's Inter-Services Intelligence (ISI) that had been in the pipelines for several months - even though official policy was to ditch it - saw what was to be a low-profile attack in Kashmir turn into the massive attacks on Mumbai last week.

The original plan was highjacked by the Laskar-e-Taiba (LET), a Pakistani militant group that generally focussed on the Kashmir struggle, and al-Qaeda, resulting in the deaths of nearly 200 people in Mumbai as groups of militants sprayed bullets and hand grenades at hotels, restaurants and train stations, as well as a Jewish community center.

The attack has sent shock waves across India and threatens to revive the intense periods of hostility the two countries have endured since their independence from British India in 1947.

There is now the possibility that Pakistan will undergo another about-turn and rethink its support of the "war in terror"; until the end of 2001, it supported the Taliban administration in Afghanistan. It could now back off from its restive tribal areas, leaving the Taliban a free hand to consolidate their Afghan insurgency.

A US State Department official categorically mentioned that Pakistan's "smoking gun" could turn the US's relations with Pakistan sour. The one militant captured - several were killed - is reported to have been a Pakistani trained by the LET.

HNN investigations reveal that several things went wrong within the ISI, which resulted in the Mumbai attacks.

Before the September 11, 2001, attacks on the United States, the ISI had several operations areas as far as India was concerned. The major forward sections were in Muzzafarabad, the capital of Pakistan-administered Kashmir, which were used to launch proxy operations through Kashmir separatist groups in Indian-administered Kashmir.

The next major areas were Nepal and Bangladesh, where both countries were used for smuggling arms and ammunition into India and for launching militants to carry out high-level guerrilla operations in Indian territory other than Kashmir.

After 9/11, when Islamabad sided with the United States in the "war on terror" and the invasion of Afghanistan was launched to catch al-Qaeda members and militants, Pakistan was forced to abandon its Muzzafarabad operations under American pressure. The major recent turn in the political situation in Nepal with the victory of Maoists and the abolishment of the monarchy has reduced the ISI's operations. An identical situation has happened in Bangladesh, where governments have changed.

The only active forward sections were left in the southern port city of Karachi, and the former Muzzafarabad sections were sent there. The PNS Iqbal (a naval commando unit) was the main outlet for militants to be given training and through deserted points they were launched into the Arabian sea and on into the Indian region of Gujarat.

At the same time, Washington mediated a dialogue process between India and Pakistan, which resulted in some calm. Militants were advised by the ISI to sit tight at their homes to await orders.

However, that never happened. The most important asset of the ISI, the Laskhar-e-Taiba (LET), was split after 9/11. Several of its top-ranking commanders and office bearers joined hands with al-Qaeda militants. A millionaire Karachi-based businessman, Arif Qasmani, who was a major donor for ISI-sponsored LET operations in India, was arrested for playing a double game - he was accused of working with the ISI while also sending money to Pakistan's South Waziristan tribal area for the purchase of arms and ammunition for al-Qaeda militants.

The network of the Harkat-ul-Jihad-al-Islami, which was a major supporter of the ISI in the whole region, especially in Bangladesh, was shattered and fell into the hands of al-Qaeda when Maulana Ilyas Kashmiri, chief of Harkat, a hero of the armed struggle in Kashmir who had spent two years in an Indian jail, was arrested by Pakistani security forces in January 2004. He was suspected of having links to suicide bombers who rammed their vehicles into then-president General Pervez Musharraf's convoy on December 25, 2003.

He was released after 30 days and cleared of all suspicion, but he was profoundly affected by the experience and abandoned his struggle for Kashmir's independence and moved to the North Waziristan tribal area with his family. His switch from the Kashmiri struggle to the Afghan resistance was an authentic religious instruction to those in the camps in Kashmir to move to support Afghanistan's armed struggle against foreign forces. Hundreds of Pakistani jihadis established a small training camp in the area.

Almost simultaneously, Harkat's Bangladesh network disconnected itself from the ISI and moved closer to al-Qaeda. That was the beginning of the problem which makes the Mumbai attack a very complex story.

India has never been a direct al-Qaeda target. This has been due in part to Delhi's traditionally impartial policy of strategic non-alignment and in part to al-Qaeda using India as a safe route from the Arabian Sea into Gujrat and then on to Mumbai and then either by air or overland to the United Arab Emirates. Al-Qaeda did not want to disrupt this arrangement by stirring up attacks in India.

Nevertheless, growing voices from the North Atlantic Treaty Organization (NATO) and from within India for the country to be a strategic partner of NATO and the US in Afghanistan compelled al-Qaeda, a year ago, to consider a plan to utilize Islamic militancy structures should this occur.

Several low-profile attacks were carried out in various parts of India as a rehearsal and Indian security agencies still have no idea who was behind them. Nevertheless, al-Qaeda was not yet prepared for any bigger moves, like the Mumbai attacks.

Under directives from Pakistan's army chief, General Ashfaq Kiani, who was then director general (DG) of the ISI, a low-profile plan was prepared to support Kashmiri militancy. That was normal, even in light of the peace process with India. Although Pakistan had closed down its major operations, it still provided some support to the militants so that the Kashmiri movement would not die down completely.

After Kiani was promoted to chief of army staff, Lieutenant General Nadeem Taj was placed as DG of the ISI. The external section under him routinely executed the plan of Kiani and trained a few dozen LET militants near Mangla Dam (near the capital Islamabad). They were sent by sea to Gujrat, from where they had to travel to Kashmir to carry out operations.

Meanwhile, a major reshuffle in the ISI two months ago officially shelved this low-key plan as the country's whole focus had shifted towards Pakistan's tribal areas. The director of the external wing was also changed, placing the "game" in the hands of a low-level ISI forward section head (a major) and the LET's commander-in-chief, Zakiur Rahman.

Zakiur was in Karachi for two months to personally oversee the plan. However, the militant networks in India and Bangladesh comprising the Harkat, which were now in al-Qaeda's hands, tailored some changes. Instead of Kashmir, they planned to attack Mumbai, using their existent local networks, with Westerners and the Jewish community center as targets.

Zakiur and the ISI's forward section in Karachi, completely disconnected from the top brass, approved the plan under which more than 10 men took Mumbai hostage for nearly three days and successfully established a reign of terror.

The attack, started from ISI headquarters and fined-tuned by al-Qaeda, has obviously caused outrage across India. The next issue is whether it has the potential to change the course of India's regional strategy and deter it from participating in NATO plans in Afghanistan.

Daniel Pipes, considered a leading member of Washington's neo-conservatives, told HNN, "It could be the other way around, like always happens with al-Qaeda. Nine-eleven was aimed to create a reign of terror in Washington, but only caused a very furious reaction from the United States of America. The 07/07 bombing [in London] was another move to force the UK to pull out of Iraq, but it further reinforced the UK's policies in the 'war on terror'. The Madrid bombing was just an isolated incident which caused Spain's pullout from Iraq."

Pipes continued, "They [militants] are the believers of conspiracy theories and therefore they would have seen the Jewish center [attacked in Mumbai] as some sort of influence in the region and that's why they chose to target it, but on the other hand they got immense international attention which they could not have acquired if they would have just attacked local targets."

Israeli politician and a former interim president, Abraham Burg, told HNN, "It was not only Jewish but American and other foreigners [who were targeted]. The main purpose may have been to keep foreigners away from India. Nevertheless, there is something deeper. This attack on a Jewish target becomes symbolic.

"I remember when al-Qaeda carried out the attack on the USS Cole in Yemen [in 2000] and then they carried out attacks on American embassies in Africa, they mentioned several reasons. The Palestinian issue was number four or five, but later when they found that it had become the most popular one, it suddenly climbed up to number one position on their priority list. Since the attack on the Jewish institution drew so much attention, God forbid, it could be their strategy all over the world," Burg said.

Al-Qaeda stoked this particular fire that could spark new hostilities in South Asia. What steps India takes on the military front against Pakistan will become clearer in the coming days, but already in Karachi there has been trouble.

Two well-known Indophile political parties, the Muttahida Qaumi Movement, a coalition partner in the government comprising people who migrated to Pakistan after the partition of British India in 1947, and the Awami National Party, another coalition partner in the government and a Pashtun sub-nationalist political party, clashed within 24 hours of the Mumbai attacks. Fifteen people have been killed to date and the city is closed, like Mumbai was after the November 26 attacks.

EXCLUSIVE: Al-Qaeda 'hijack' led to Mumbai attack

By Syed Saleem Shezad & M H Ahssan

A plan by Pakistan's Inter-Services Intelligence (ISI) that had been in the pipelines for several months - even though official policy was to ditch it - saw what was to be a low-profile attack in Kashmir turn into the massive attacks on Mumbai last week.

The original plan was highjacked by the Laskar-e-Taiba (LET), a Pakistani militant group that generally focussed on the Kashmir struggle, and al-Qaeda, resulting in the deaths of nearly 200 people in Mumbai as groups of militants sprayed bullets and hand grenades at hotels, restaurants and train stations, as well as a Jewish community center.

The attack has sent shock waves across India and threatens to revive the intense periods of hostility the two countries have endured since their independence from British India in 1947.

There is now the possibility that Pakistan will undergo another about-turn and rethink its support of the "war in terror"; until the end of 2001, it supported the Taliban administration in Afghanistan. It could now back off from its restive tribal areas, leaving the Taliban a free hand to consolidate their Afghan insurgency.

A US State Department official categorically mentioned that Pakistan's "smoking gun" could turn the US's relations with Pakistan sour. The one militant captured - several were killed - is reported to have been a Pakistani trained by the LET.

HNN investigations reveal that several things went wrong within the ISI, which resulted in the Mumbai attacks.

Before the September 11, 2001, attacks on the United States, the ISI had several operations areas as far as India was concerned. The major forward sections were in Muzzafarabad, the capital of Pakistan-administered Kashmir, which were used to launch proxy operations through Kashmir separatist groups in Indian-administered Kashmir.

The next major areas were Nepal and Bangladesh, where both countries were used for smuggling arms and ammunition into India and for launching militants to carry out high-level guerrilla operations in Indian territory other than Kashmir.

After 9/11, when Islamabad sided with the United States in the "war on terror" and the invasion of Afghanistan was launched to catch al-Qaeda members and militants, Pakistan was forced to abandon its Muzzafarabad operations under American pressure. The major recent turn in the political situation in Nepal with the victory of Maoists and the abolishment of the monarchy has reduced the ISI's operations. An identical situation has happened in Bangladesh, where governments have changed.

The only active forward sections were left in the southern port city of Karachi, and the former Muzzafarabad sections were sent there. The PNS Iqbal (a naval commando unit) was the main outlet for militants to be given training and through deserted points they were launched into the Arabian sea and on into the Indian region of Gujarat.

At the same time, Washington mediated a dialogue process between India and Pakistan, which resulted in some calm. Militants were advised by the ISI to sit tight at their homes to await orders.

However, that never happened. The most important asset of the ISI, the Laskhar-e-Taiba (LET), was split after 9/11. Several of its top-ranking commanders and office bearers joined hands with al-Qaeda militants. A millionaire Karachi-based businessman, Arif Qasmani, who was a major donor for ISI-sponsored LET operations in India, was arrested for playing a double game - he was accused of working with the ISI while also sending money to Pakistan's South Waziristan tribal area for the purchase of arms and ammunition for al-Qaeda militants.

The network of the Harkat-ul-Jihad-al-Islami, which was a major supporter of the ISI in the whole region, especially in Bangladesh, was shattered and fell into the hands of al-Qaeda when Maulana Ilyas Kashmiri, chief of Harkat, a hero of the armed struggle in Kashmir who had spent two years in an Indian jail, was arrested by Pakistani security forces in January 2004. He was suspected of having links to suicide bombers who rammed their vehicles into then-president General Pervez Musharraf's convoy on December 25, 2003.

He was released after 30 days and cleared of all suspicion, but he was profoundly affected by the experience and abandoned his struggle for Kashmir's independence and moved to the North Waziristan tribal area with his family. His switch from the Kashmiri struggle to the Afghan resistance was an authentic religious instruction to those in the camps in Kashmir to move to support Afghanistan's armed struggle against foreign forces. Hundreds of Pakistani jihadis established a small training camp in the area.

Almost simultaneously, Harkat's Bangladesh network disconnected itself from the ISI and moved closer to al-Qaeda. That was the beginning of the problem which makes the Mumbai attack a very complex story.

India has never been a direct al-Qaeda target. This has been due in part to Delhi's traditionally impartial policy of strategic non-alignment and in part to al-Qaeda using India as a safe route from the Arabian Sea into Gujrat and then on to Mumbai and then either by air or overland to the United Arab Emirates. Al-Qaeda did not want to disrupt this arrangement by stirring up attacks in India.

Nevertheless, growing voices from the North Atlantic Treaty Organization (NATO) and from within India for the country to be a strategic partner of NATO and the US in Afghanistan compelled al-Qaeda, a year ago, to consider a plan to utilize Islamic militancy structures should this occur.

Several low-profile attacks were carried out in various parts of India as a rehearsal and Indian security agencies still have no idea who was behind them. Nevertheless, al-Qaeda was not yet prepared for any bigger moves, like the Mumbai attacks.

Under directives from Pakistan's army chief, General Ashfaq Kiani, who was then director general (DG) of the ISI, a low-profile plan was prepared to support Kashmiri militancy. That was normal, even in light of the peace process with India. Although Pakistan had closed down its major operations, it still provided some support to the militants so that the Kashmiri movement would not die down completely.

After Kiani was promoted to chief of army staff, Lieutenant General Nadeem Taj was placed as DG of the ISI. The external section under him routinely executed the plan of Kiani and trained a few dozen LET militants near Mangla Dam (near the capital Islamabad). They were sent by sea to Gujrat, from where they had to travel to Kashmir to carry out operations.

Meanwhile, a major reshuffle in the ISI two months ago officially shelved this low-key plan as the country's whole focus had shifted towards Pakistan's tribal areas. The director of the external wing was also changed, placing the "game" in the hands of a low-level ISI forward section head (a major) and the LET's commander-in-chief, Zakiur Rahman.

Zakiur was in Karachi for two months to personally oversee the plan. However, the militant networks in India and Bangladesh comprising the Harkat, which were now in al-Qaeda's hands, tailored some changes. Instead of Kashmir, they planned to attack Mumbai, using their existent local networks, with Westerners and the Jewish community center as targets.

Zakiur and the ISI's forward section in Karachi, completely disconnected from the top brass, approved the plan under which more than 10 men took Mumbai hostage for nearly three days and successfully established a reign of terror.

The attack, started from ISI headquarters and fined-tuned by al-Qaeda, has obviously caused outrage across India. The next issue is whether it has the potential to change the course of India's regional strategy and deter it from participating in NATO plans in Afghanistan.

Daniel Pipes, considered a leading member of Washington's neo-conservatives, told HNN, "It could be the other way around, like always happens with al-Qaeda. Nine-eleven was aimed to create a reign of terror in Washington, but only caused a very furious reaction from the United States of America. The 07/07 bombing [in London] was another move to force the UK to pull out of Iraq, but it further reinforced the UK's policies in the 'war on terror'. The Madrid bombing was just an isolated incident which caused Spain's pullout from Iraq."

Pipes continued, "They [militants] are the believers of conspiracy theories and therefore they would have seen the Jewish center [attacked in Mumbai] as some sort of influence in the region and that's why they chose to target it, but on the other hand they got immense international attention which they could not have acquired if they would have just attacked local targets."

Israeli politician and a former interim president, Abraham Burg, told HNN, "It was not only Jewish but American and other foreigners [who were targeted]. The main purpose may have been to keep foreigners away from India. Nevertheless, there is something deeper. This attack on a Jewish target becomes symbolic.

"I remember when al-Qaeda carried out the attack on the USS Cole in Yemen [in 2000] and then they carried out attacks on American embassies in Africa, they mentioned several reasons. The Palestinian issue was number four or five, but later when they found that it had become the most popular one, it suddenly climbed up to number one position on their priority list. Since the attack on the Jewish institution drew so much attention, God forbid, it could be their strategy all over the world," Burg said.

Al-Qaeda stoked this particular fire that could spark new hostilities in South Asia. What steps India takes on the military front against Pakistan will become clearer in the coming days, but already in Karachi there has been trouble.

Two well-known Indophile political parties, the Muttahida Qaumi Movement, a coalition partner in the government comprising people who migrated to Pakistan after the partition of British India in 1947, and the Awami National Party, another coalition partner in the government and a Pashtun sub-nationalist political party, clashed within 24 hours of the Mumbai attacks. Fifteen people have been killed to date and the city is closed, like Mumbai was after the November 26 attacks.

India counts the cost of global terrorism

By Ruhena Bahar

The attacks on Mumbai are a new blow to an economy already suffering from internal problems and could spell disaster for tourism

Flanked by the luxurious Taj Mahal Palace, the Gateway is a potent symbol of old and new India. But last week these icons of the Mumbai cityscape earned a new horrific significance as terrorists used them to strike a blow at the heart of India's financial capital.

While visceral footage of what local news networks described as 'Mumbai's 9/11' was beamed around the world, India was forced to confront a new terrorism paradigm, after extremists followed al-Qaeda's example by singling out foreign nationals for attack.

The burnt-out Taj Mahal and Trident-Oberoi hotels will provide a daily reminder of the devastation for those who walk by on their way to work in the nearby financial district, where multinational giants Merrill Lynch, Morgan Stanley and HSBC all have offices.

Analysts are worried that the constant reminder of the attacks will heighten investors' concerns at a time when the Indian economy is slowing and foreign capital is being repatriated. The UK is one of the top three investors in India but in 2008 international funds have been flowing the other way as overseas investors have pulled a record $13.5bn out of Indian stocks, contributing to the 56 per cent fall in the main Bombay Stock Exchange index.

'This is the last thing India needs,' said businessman Sir Gulam Noon. The British-based multimillionaire, who made his fortune in ready meals, escaped unhurt from the Taj Mahal after spending a frightening night holed up in his suite on the third floor. 'The attacks will temporarily have an impact. It's clearly not good for the economy at a time when the world is in financial crisis.'

That the Taj Mahal and Oberoi play host to the cream of the international business elite is clear given the high-profile executives caught up in the tragedy. Along with Noon, Unilever chief executive Patrick Cescau and his successor, Paul Polman, escaped the Taj Mahal. The hotel's apparent vulnerability is worrying - Gordon Brown and a delegation of 100 British business leaders, including Sir Richard Branson stayed there earlier this year.

The head of Mumbai's anti-terrorist squad, Hemant Karkare, was also among those killed. 'The security landscape has changed overnight,' said Jake Stratton of investment risk consultancy Control Risks. 'This will have a serious effect on how foreign companies perceive India as a business destination.'

In the three decades following independence in 1947, India's GDP growth averaged around 1 per cent, but international links have helped its economy to grow by at least 9 per cent for the last three years. This new success transformed Indian companies into powerbrokers on the main stage; notable deals have included Tata's move on British steelmaker Corus and United Breweries' acquisition of Whyte and Mackay.

Last month Indian finance minister Palaniappan Chidambaram insisted economic growth would 'bounce back' to 9 per cent in 2009. But the International Monetary Fund is more cautious, predicting the figure will be closer to 6 per cent.

Capital Economics analyst Tehmina Khan goes further in interpreting last week's GDP figures, which showed India's economy grew 7.6 per cent in the third quarter, its slowest pace since 2004, as the start of a 'potentially severe' downturn.

The figures revealed an economy slowing across the board, with manufacturing growth at its lowest level since 2002 and service sector gains dipping below 10 per cent for the first time in three years. Consumer spending was up 5 per cent year on year, but that was 3 percentage points lower than in the second quarter - also the lowest since 2002. 'With banks also becoming more cautious about lending, India's growth prospects look increasingly poor,' said Kahn, who expects growth to slow to 5 per cent next year. 'Both investor and consumer confidence will have been dented by the terrorist attack on Mumbai, with overseas investors unlikely to rush back in.'

In the heat of last week's crisis, the stock, bond and foreign-exchange markets were all closed, although the central bank continued to pump cash into the interbank lending markets. The last time the stock exchange was shut as a result of a terrorist attack was in 1993, when at least 70 people were killed in a series of explosions.

Raj Nambisan, business editor of Mumbai newspaper DNA, said closing the exchanges was the wrong thing to do as it 'sent out the wrong message to investors. I don't think this incident will affect business sentiment in the long-term. Mumbai is the financial centre, it is not India. There are not many economies growing at 7 per cent'.

Mohan Kaul, director-general of the Commonwealth Business Council agrees: 'Fear will not drive business away from India, if anything it will create a bond between the big financial cities who have all had their confidence shaken. The tube in London and the Twin Towers in New York are just as iconic as the Taj hotel. The bond between British and Indian business leaders will be stronger as they sit down to discuss deals.'

However, the timing of the attack, just as the holiday season gets under way, is expected to hurt India's important tourism economy as countries tighten travel policies. Around the country, hotels increased security controls last week. At the Taj Mahal's sister hotel in New Delhi, all visitors had to pass through a perimeter security checkpoint. Anxious staff, many of whom had friends among those hurt in Mumbai, manned metal detectors and searched bags as they sought to restore faith in their ability to protect those within its marbled walls.

Members of India's growing business elite smiled kindly at Westerners as they huddled nervously in the lobby. 'I worked in New York during 9/11 and that didn't stop me going back,' said Nils Thil, who is determined to continue his holiday in India with his wife, Maggie. 'It doesn't matter where you are, terrorism is international now.'

Earlier that day, few holidaymakers had ventured to the capital's tourist sites with chattering local schoolchildren outnumbering foreign visitors at the atmospheric Qutb Minar, the world's tallest brick minaret.

However, London-based Alpesh Patel, of UK investment fund Praefinium, argues India has more to fear from the credit crunch than extremists: 'Nothing has changed. London, New York and Madrid have all suffered major terrorist attacks, Mumbai is no different. The attacks don't affect whether a real estate project gets built or not.'

It is the global crunch and India's home-grown liquidity constraints that have put the brakes on many of the infrastructure projects which are desperately required.

Although a fifth of India's 1.1 billion population is estimated to be living in poverty, the country's rapid economic growth has swelled the ranks of the middle class to an estimated 50 million, providing consumer goods companies with a sea of demand. Each month 10 million people sign up for a mobile phone. Consultancy McKinsey predicts the middle class will grow to 583 million by 2025, comfortably outnumbering the entire US population of around 350 million. 'Nothing will stop smart global businesses pounding on India's door,' added Kaul. 'The truth is India is not opening up as fast as businesses want.'

Brewer SABMiller is looking to convert a nation of tea drinkers, taking on United Breweries' Kingfisher beer with brands such as Indus Pride and Foster's. The beer market is growing at around 15 per cent per year, the fastest rate in Asia, as young 'metros' in cities such as Mumbai and New Delhi use what is an expensive drink as a symbol of their new buying prowess.

Jean-Marc Delpon de Vaux, managing director of SABMiller India, claims the monsoon rains have had a greater impact on business than the global financial crisis. 'Credit-dependent sectors such as cars and property are suffering. But India is less dependent on exports - the potential of the internal market is huge. Also the savings ratio is the highest in the world at 40 per cent.'

But last Thursday morning the vast Ambience mall on the outskirts of Delhi was quiet, with assistants idling on their mobile phones. Dust hung in the air at the half-finished centre, which promises 'room for a million smiles'. Jumbo Electronics was offering large discounts with 19in plasma TVs starting at R17,500 (£230). British import Marks & Spencer was also emphasising value in its windows with mannequins showcasing complete men's and women's outfits at R2,090 (£27) and R1,290 (£17).

Like in Britain, Indians' real income growth has been eroded by inflation - food price inflation is at 9 per cent - while confidence has also been dented by rising jobs losses. Tata Motors is reportedly cutting up to 6,000 jobs as, faced by a collapse in demand, it scales back production. 'There has been a sobering of consumption,' said Nambisan. 'The biggest problem is a lack of confidence, as it means people will not spend, which is the engine that has been firing India.'

Broker Investec argues the uncertain economic outlook could hasten necessary reforms, saying: 'The reforms of the early 1990s were triggered by a balance of payments crisis and deteriorating government finances. Perhaps with liquidity tight and the international economy facing intense dislocation, it will be poor economic conditions that push through much needed reform.'

'We will fight back,' added Noon. 'Tough times do not last long but tough people do. Mumbai will come back from this.'