Oil Magic

 

Many say that it is not Modi magic which has saved the Indian economy from going Europe’s way but rather oil magic. Prices of India’s biggest import item – crude oil – fell by some 46 per cent from a peak of $ 107 in June to less than $ 57 a barrel by last week of December.

India's oil import bill for the last financial year stood at $150 billion. A $ 30-40 billion cut in that huge bill translates into that large a stimulus for the Indian economy. A rough back of the envelope calculation says that every $ 25 cut in crude prices translates into a $ 10 billion stimulus for the Indian economy.

The impact is visible -  the rupee value is far more stable, the fiscal deficit despite being worrying is more manageable because the Government spends that much less on fuel subsidies and has more money to spend on infrastructure. Finance Ministry economists estimate that instead of last year’s Rs 140,000 crore oil subsidy bill, the actual bill this year is likely to be nearer Rs 80,000 crore.

Banks have more money to lend as Government borrows less to pay for its oil bill (estimates are that the Government borrowed $ 39.25 billion less in the first half of this year than what it had planned to), which translates into more lending and more consumer demand.

Indian consumers too benefit, as prices linked to fuel – energy, food and vegetables – either fall or at least remain stable. Less spending on petrol  and diesel to run busses, trucks, cars or two wheelers also means that much more money in hand with ordinary citizens for other necessities.

Of course, the full impact of the drop in crude prices has not been passed on by the Government. A two-step rise in excise duty has ensured that the Government will mop up an extra Rs 40,000 crore in taxes and deny consumers that much money in hand. However, the Government has been beset by falling revenue collections and its excuse that this was the only way it could balance its books, seems to have been accepted by a wary citizenry.

This move to `balance books' of course is a leaf taken out of the thinking from the old `Command and Control’ economy which the Narendra Modi Government says it intends to do away with. True adherence to market economics would have meant passing on the drop in oil prices in full, to consumers and giving them the right to give the market a stimulus through increased consumer spending. But then, like all other things Indian, to expect us to make the leap from a `planned economy’ to a market economy with one change in Government is to expect too much. Change here really means change with  continuity ! 

The obvious question rising from all this is how did this change in our fortunes  happen? Crude prices are really down because of discoveries of shale oil in the US and Canada. There has been an increase of 1 million barrels per day of oil available in the market for each of the last three years because of the US shale revolution. Not only has more oil has come into the market, but the US, traditionally the largest importer of crude, no longer needs Saudi oil to fuel its engines !

The Saudi Arabia-led OPEC (Organisation of the Petroleum Exporting Countries) has traditionally tried to hold prices by cutting supplies. However, this time around, fears that US and Canada, will not cut oil supplies to the global market and muscle into their traditional markets stayed their hand. Possibly the fact that the oil countries which have traditionally used their oil wealth to build infrastructure and subsidise citizens’ lives are under greater pressure to continue to do so to keep them loyal in the face of a fundamentalist Islamic  revival in Arab lands which threatens the oil monarchies.

In fact conspiracy theorists claim that the US is intentionally driving down prices to beggar enemies and frenemies (friends who are really its rivals) ! Kuwait, Qatar and the United Arab Emirates can break-even on their budgets with oil priced at about $70 a barrel. Whereas, Iran needs a price of $136, Venezuela and Nigeria - $120 and Russia - a price of  $101 – making these economies vulnerable whenever the crude price plunges.

Postscript: Is oil below $ 60 the end of the story? Experts expect the fall to continue to sub-$50 levels and that to help economies like India and the US become productive and healthier. `Maybe `acche din’ may not be too far now !

Mumbai Home For `A Girls Best Friend'

Diamonds - they say - is a Girl's best friend

Egged on by a Russia smarting under European sanctions, India wants to leverage long term buys of rough diamonds worth billions of dollars from the world’s biggest diamond miners -  Alrosa of Russia – to help turn Mumbai into a rival diamond trading hub to Belgium’s Antwerp.
Prime Minister Narendra Modi has announced that his government has decided to create a special notified zone, to which mining companies can import rough diamonds on a consignment basis and re-export unsold ones. The move, Indian diamtaires said could help turn India's financial capital into Asia's diamond trading bourse.
The Modi announcement came at a joint innauguration of a world diamond conference here with Russian president Vladimir Putin, whose Government owns 44 per cent stake in Alrosa, the mining giant which accounts for 30 per cent of the world’s annual yield of rough diamonds. About half  of its output is now sold to India through diamond bourses in Antwerp and Dubai, a fact which both Russia and India want to change by doing business directly.
“We get better margins and have stabler production regimes  if we can get into long term purchase agreements with Indian diamantaires… we used to have three such deals 4 years back, now this year we are increasing it to 12,” said Andrey Polyakov, vice president of the $ 5 billion mining giant which has since long overshadowed the more famous DeBeers in the diamond market.


Rough Diamonds - India Processes 70 % of Global Production

"We (Indian firms) will be buying diamonds worth $2.1 billion from Alrosa in the next three years," Gems and Jewellery Export Promotion Council Chairman Vipul Shah confirmed.
India sees this as a big opportunity to be grabbed to turn Mumbai into a rival to Antwerp and Dubai. “We are talking to the Government to give us a tax regime for diamond traders similar to Antwerp which has a small presumptive tax on trading profits and allows miners to bring sparklers here, sell whatever they can and take back unsold stones without taxes and hassles,” said Pankaj Parekh, vice chairman of the Gems & Jewelery Export promotion Council.
Russia is not averse to this as US and European sanctions means that it may not be able to sell directly in Antwerp, the largest market for diamonds in the world, and may have to resort to the Cold War period subterfuge of selling its diamonds through DeBeers or some other diamond miner.


The Modi-Putin Diplomatic Tango

At the `World Diamond Conference' here, the `Big Boys’ of the global diamond market – Alrosa, DeBeers, Rio Tinto came to mingle with India’s diamantaires. India already processes some 70 per cent of the world’s diamond roughs into polished diamonds or sets them into jewellery to be sold all over the world.
Forecasts by diamond miners’ associations say that the market for retail or finished diamonds in India and China is rising and taken together could equal that of the US, currently the world’s largest market within the next 6-7 years.
Alrosa’s interest in striking direct deals with Indian firms is but natural says Parekh. Polyakov avers : “We follow the trade.”
Parekh and other GJEPC office bearers have been doing the rounds of North Block and global mining capitals to try get their dreams of Mumbai rivalling Antwerp as a trading centre off the grounds. “Does Mumbai have the potential to be a diamond hub?,” asks Polyakov rhetorically. “I think the answer is – yes – you just need to follow rules  that other hubs do.”
There is of course more than `following the trade’ or `potential’ involved here. Russia is perhaps trying to make a statement to both India and the West. Russian analysts in recent weeks have been at pains to stress that sales of helicopters to Pakistan does not mean that the `special relations’ with India are to be endangered and the high profile visit along with help in transforming Mumbai into a diamond trading hub along with key defence, gas and nuclear deals are expected to be part of that statement.


Mumbai- the New Diamond Capital?

Thumbing Russia's nose at western sanctions is of course something which Putin has been working at for quite some time with gas deals with China and East European nations.  A diamond deal with India could well help him teach the European Union with which Russia is locked in a conflict over Ukraine, that in the resources market, it still counts.
 

Slain Soldiers and the Afghan-end Game

Four inter-related incidents happened in the course of this eventful week. First, a Pakistan army border commando force ambushed an Indian Army patrol on Indian soil, very near the border in Kashmir  and killed 5 soldiers. Then the government did a flip-flop over pinning responsibility on who exactly did the slayings – the Pakistan Army or irregulars dressed in Pakistan Army uniforms.  A first day statement by defence minister A.K.Antony drafted by the National Security Advisor suggested it was by unknown assailants dressed in Pak Army fatigues. The uproar  that followed forced the government to eat its own words and go back to the original press release issued by the Army which blamed the Pakistan Army’s border action team.

4 Bihar regiment martyrs being brought back

Then came two contrary messages from across the border – terror group Lashkar e Toiba chief Hafeez Saeed in a pre-Eid rally at Karachi threatened more attacks on India and followed it up by tweeting on Eid day : “time is near when those oppressed in Kashmir, Palestine and Burma will celebrate Eid in the air of freedom”. On the other hand, the Pakistan Prime Minister’s special envoy to India, Shahryar Khan in an interview in London blamed Pakistani extremists for the Kashmir killings and said Saeed needs to be checked.

Before Saeed unleashed his terror threat,  India’s hawkish television anchors and former generals had of course unleashed their own verbal `jihad’ demanding a fitting response to Pakistan’s perfidy. While India’s peaceniks launched a counter `love jhad’ going blue in the face reminding everyone of Gandhi’s famous line : `an eye for an eye would  make this world  blind’.  The hawks who were joined by the opposition BJP had a point – Pakistani soldiers had beheaded an Indian soldier ambushed on patrol earlier this year and prime minister Manmohan Singh had then promised a `robust’ response  – no one could see that response on the ground. And then came this killing followed by  a flip-flop.

The argument which came from many in the defence community was - An armyman is mentally readied to die defending his country in war. However, is he expected to become a martyr even when the country is ostensibly at peace? In that case should we accept this `phony’ peace?

In the din of this televised battle no one sought to probe the whys of the story – why did the Pakistan Army chose to do what it did at this stage? Why did the Manmohan Singh government act as it did in the face of strong provocation in an election year, knowing fully well that such a stance could boomerang on its face?

Despite misgivings on our peaceniks part and denials by the Pakistan government who would like to blame `non-state actors’ for the mischief, it should not be doubted that what happened at the border was the doing of the Pakistan Army. For there is no way anything like this can happen without the Pakistan Army sanctioning it. The Kashmir border is one of the most heavily fortified and militarized borders in the world, with concrete bunkers and artillery  batteries abounding. Nearly a lakh Pakistani troop – regular 10 corps as well as the paramilitary Northern Light Infantry are stationed along it or behind it.

Line of Control on the Kashmir front
 

The `Kashmiri militants’/`terrorists’ (mostly recruited from the Punjab and Multan  by organisations like the Lashkar-e-Toiba) who are regularly pushed through that border, crawl across thickly forested `No-man’s land’ while regular Pakistani troops give them covering fire.  They are never allowed to wear Pakistani Army fatigues as that would defeat the denials Pakistan always trots out when challenged on this unique `cold war’.

Why then did the Pakistan Army which really runs the country’s foreign and defence policy regardless of whoever is the civilian prime minister, do this at this time of the year? Especially when Pakistan’s economy is nearly crippled, it desperately needs electricity and gas from India and is under intense international pressure to be friendlier towards its larger neighbour.

The answer perhaps  lies in the Afghan end-game.  The US, with whom the Pakistanis have reluctantly and unwillingly agreed to be partners in the fight against terror, wants Pakistan to keep its troops focused on the Afghan border and its own tribal areas in the North-West, giving protection to the American lines of communications as they pull out. But if  Pakistan guards these lines, it is also expected to see to it that the Taliban which it has been sponsoring does not snipe at the retreating Yanks and/or walk into the spaces vacated by the Americans in Afghanistan.

It pays Pakistani interests if its’ Army can excuse itself from the second part of the task allotted to it, by being `forced’ to withdraw part of the troops posted on its western border on to the Indian border.  The Taliban can then either battle its way to Kabul or threaten the Karzai regime sufficiently to agree to share effective power with it. Talks being held with Taliban to share power, have as yet from the Taliban point of view, yielded nothing much more than just the respectability which comes when an insurgent group is invited for talks by any ruling power.

If the Americans can be `stampeded’, that is forced to quicken their pull-out from Afghanistan and persuaded by mounting casualties not to leave any forces behind to support the Karzai regime, so much better for Pakistan, which wants to use Afghanistan as its strategic backyard. If in the process of `quicker’ withdrawl, the US forces leave behind heavy artillery and equipment, it could prove a boon for the resource starved Pakistani Army.

India which is USA’s unmentioned `other’ ally in the war against terror,  of course does not want to give Pakistan any excuse to pull troops away from the Afghan border and is also under considerable pressure from its new-found Super-power ally to keep the peace with Pakistan, so that the pull-out goes on undisturbed.

This would explain Dr Singh silence on the issue and the flip-flop by his defence minister, who many have sarcastically dubbed `St Antony'. There was perhaps a conscious attempt to give Pakistan a way out from the embarrassment  and uproar caused by the sneak attack.

However all this leads on to another set of questions  – does helping out USA pull out quietly from Afghanistan help India? What will Pakistan do once the Americans have pulled out, leaving  it in the undisputed position of being the strongest military force in all Pashtun speaking lands (which includes  most of Afghanistan and Pashtun speaking provinces and tribal territories in Pakistan)? Will India’s huge investments in Afghanistan remain safe after the Americans pull-out ? (attacks have been mounting on Indian diplomatic posts in Afghanistan as well on Indian built roadways and other ventures by Pakistani supported terror networks) How will all this impact India’s Kashmir region? Or for that matter the terror attacks that India regularly faces from across the border? Can it really count on the Nawaz Sharief government to have the strength or the real desire to reign in Pakistan’s hawks who demand that it feeds terrorists into Kashmir and even to attack targets in Indian cities using `non state actors’ ?

To be concluded

Kasab and The Terror Trail

Mumbai's Taj Hotel Under Attack  26/11

India has hung the infamous Kasab, sole survivor of a terrorist guerrilla team which attacked and held to ransom two 5-star hotels and a Jewish centre at Mumbai on 26^th November 2008, slaughtering more than 150 Indians and foreigners. Will that act of capital punishment, end terror strikes against India?

Even when the news that Kasab, the symbol of the dastardly attack on one of India’s most lived  and loved mega-cities, was being hung  flashed on television screens, I doubted we would have any  such luck in resolving the terror threat from across the border.

Sure enough, soon afterwards, the Pakistani Taliban and Lashkar-e-Toiba, the terror organisation to which Ajmal Kasab owed  his indoctrination and training vowed to hit India and Indians back.

Pakistan Taliban has spun out of the control of its creator – the Pakistani spy agency – ISI. However, Lashkar and its new avatar Jamat ud Dawa remain tied to the spymasters who see them as valuable assets to be used against India and Afghanistan, two nations, Pakistan has traditionally considered its enemies.   

Though a few liberal newspapers in Pakistan have called out for action against the masterminds behind 26/11, the threats made this week by Pakistani terror groups have not been condoned by the Pakistani state. Which seems to indicate that the threats may have the tacit support of sections of the Pakistani establishment, if not the blessings of the state machinery as a whole.  The logic for this is convulated and hard to understand, but it exists. More on that later.

India’s borders with Pakistan, despite fencing off of large chunks remain porous; Its coasts, vulnerable to landings on lonely beaches by small craft piloted by teams of the kind which attacked Mumbai.

The country’s borders with Nepal are totally open and those with neighbouring Bangladesh far less secure than the western one. The trails which terror sellers could take are many.  Indians could also be targeted abroad or on the high seas. At particular risk, would be Indian investments in Afghanistan, which Pakistan resents intensely as it considers this mountainous highland to be its strategic backyard where it hopes to impose its will in the future.   

Indian strategic thinker and former additional secretary in the cabinet secretariat, B Raman in a clinically analytical blog, too seems to feel that the threat would be highest for Indian establishments in Afghanistan and lists LeT, the Haqqani network, the Taliban and the Hizbe Islami as groups whch have the ground capability to launch those attacks.




US leadership watch live footage from the Osama raid

To deal with such probabilities, the Indian state needs to think out responses which will stifle terror. The American, Israeli and Russian state responses to terror perhaps hold lessons from which could learn.

The policy paradigm for these responses are the same, though the exact modus operandi differs. That policy, simply stated, is to attack and diminish the capability of groups which can threaten the countries concerned. The methods differ –  covert operations in some cases, huge state led responses across borders in others.  

With Pakistan shielding its terror groups by using nuclear blackmail – threatening nuclear strikes if India attacks terror camps in Pakistan, there are just two options. The best option remains covert, deniable attacks to finish off these camps. The other, albeit risky option, is to ignore the nuclear bluff, for it is a bluff, and to go in for limited military operations.

The second kind of operation,  will have to be met by Pakistan with some kind of official retaliation, which could escalate and is hence one which should be taken as a last resort. The first, will be grudged, but can hardly be met by official, overt military retaliation. Pakistan understands this kind of covert response, for it has come up with its own covert war against India and Afghanistan, using home grown terror groups, to avoid direct confrontation by denying all that happened.




Indian soldiers celebrate taking back a hill in Kargil ranges

When Pakistani Frontier corps soldiers dug into India’s then unguarded Kargil hills in 1999 and built bunkers from where they lobbed artillery fire onto a main arterial road connecting Ladakh with the rest of India, Pakistan simply denied they were its men. Indian soldiers eventually stormed those bunkers and killed the Gilgit tribal soldiers manning the `nests’. The bodies with their identity cards were offered to Pakistan, which  refused them, denying responsibility ! Though later, Pakistani leaders and generals gloated on their success in launching the sneak attack. 
   
When Kasab and his mates attacked Mumbai, again Pakistan denied they were Pakistanis. When confronted by telephone taps which showed they were being controlled out of Pakistan by men like LeT chief Hafiz Saeed and ISI officers, Pakistan officially claimed these were non-state actors who acted without the knowledge of the Pakistani state! The logic for such attacks is however, more difficult to understand.

Former Pakistani dictator Gen. Pervez Musharaf was recently in India, to address a gathering organised by a Delhi-based media group. He remained unfazed by questions on Pakistan’s attack on Kargil peaks in Kashmir and seemed to indicate that it was merely a tit for tat response for India’s involvement in the independence of Bangladesh!

What that comment revealed, was the mindset of the Pakistani establishment. It is still seeking revenge against India for perceived insults without either (i) introspection into either their role in Bangladesh or (ii) realisation of the high price being paid for the hatred of India which the Pakistani ruling elite nurses.


Indian troops being welcomed by Bangladeshis

Pakistan as a nation, especially its leadership, suffers from amnesia when it comes to Bangladesh. It forgets that Indian troops were forced to intervene in a messy civil war because Pakistani soldiers carried out one of the biggest genocides in the history of mankind – killing some 2 million of their own citizens and raping 200,000 helpless civilian women. The reign of terror which the army, to which Gen Musharaf belonged,  let loose on the civilian population of what was then East Pakistan, forced some 10 million Pakistani citizens to seek refuge in India. If India had not intervened, more millions would have perished. More millions would have been pushed into India to live as penniless refugees.

Yet, the Pakistani leadership instead of introspecting on its crimes, blames India for its “loss” and still demands revenge. Kargil and Mumbai 26/11 are seen as “revenge”.

Hans Kiessling, German researcher working for the Munich based Hanns-Seidel-Foundation estimates that ISI has an annual budget of about $ 300-400 million. The budget for the entire state of Pakistan is $ 39 billion, nearly $ 6 billion or a sixth of that budget is spent on its armed forces.

This extraordinarily high proportion of budget spent on defence is because Pakistan keeps needling India and Afghanistan with sneak attacks and consequently fears retaliation.
 
Pakistan has since the 1950s also tried to fund and arm small rebel groups such as the Naga within India, at great cost to itself.  Pakistan’s spy agency also spend huge sums to try undermine the Indian economy by pushing narcotics and spurious India currency. This massive spending on trying to undermine the Indian state translates into that much less left for Pakistan to spend on its own citizens.

The costs are obvious – deteriorating law and order has already turned Pakistan’s largest city,  Karachi, once touted along with Beirut as the `Paris of the East’, into being one of the world’s most dangerous cities; lack of investment has made Pakistan the slowest growing nation in South Asia; lack of spending on healthcare, education, sanitation and other civic amenities has meant Pakistan has kept slipping every year on the human development index. With little money to spend on the mainstream regions of Pakistan, marginal areas on the border – Balochistan, Gilgit have received even less funds, leading to a sense of deprivation which has fuelled separatism there.   
    
This brings one to consider whether India’s reaction, covert or overt, will actually bring some kind of closure to Pakistan’s export of terror. It may not, till Pakistan changes fundamentally and starts believing as does a section of its intellectual elite, that peace and friendship with its neighbours is the only way forward.

But in the interim, covert action designed to diminish the capability of Pakistani groups to launch against Indian interests, should deter the Pakistani ruling elite and the terror groups it has spawned. In this world of outsourcing, even covert wars can be outsourced. There are quite a few   groups within Pakistan who are struggling against that nation. India's work could be easily outsourced to them in return for training, arms and funding.

The lesson that has to be driven across is that even covert actions begets retaliatory actions and those with more money and men, which India does have, usually win in the end.   

Why is the West Giving India a bad report card?

The India Report Card!

Suddenly there is a rash of stories saying the Indian growth story has run out of steam. India is a laggard among BRICS. It’s under rating Watch. Standard & Poor slashes its India Outlook.

Compare that to reports emanating from the same Western media a few months back: India to overtake China by 2030. India - the next El Dorado. India Story intact amidst global slowdown.

What went wrong in just a few months?

The whole world is reeling from the European crisis. Growth has slowed down everywhere including in China. So has it in India. But India still remains the second fastest growing major economy posting growth rates of near 7 per cent annually. It’s where jobs and money are still being made and it remains a stable democracy. India’s debt compared to most countries is still more than manageable.

Though the rupee touched an all time low of nearly 55 to the dollar, pushed by stock market sales by FIIs panicking about a Greek default, officials pointed out that India received record FDI inflows of $ 50 billion in 2011-12, nearly 55 per cent more than the previous year besides $ 9 billion in net inflows from FIIs.

India is again projected to grow by a tad over 7 per cent in the current financial year. In comparision, the Euro zone grew 1.4 per cent in 2011 while US grew by 1.7 per cent through calendar 2011.

But India still has the lowest rating for any of the BRICS emerging economies - Brazil, Russia, India, China and South Africa. China's growth rate is undoubatbly higher as is its infrastructure, but Russia grew by about 4.2 per cent and is expected to grow by less than that this year. While Brazil grew by just 2.75 per cent and South Africa by a little better at 3.5 per cent.  

The fall in rupee’s value against the US greenback, was similar to what others experienced. Both the Rupee and Brazilian Real fell 21 per cent in the last year while the South African Rand followed closely posting losses of 18 per cent.

A Reserve Bank of India report issued earlier this month, says corporate India has shown a 34 per cent increase in their order book position for the quarter April-June 2012. A situation, any economy would give its right eye to be able to boast of.

Then what could be the real reason?

Many allege India’s plan to float a BRICS development bank on the lines of World Bank and ADB which will be controlled by the now emerging economic powers and its stone walling of opening up its markets to Western banks, insurance companies and retailers could be the cause of  a spate of negative reports by rating agencies and others.

Large global development banks and funds like the World Bank, IMF and ADB control the levers of high finance. These banks in turn are controlled by those who paid to set them up in the first place - Read US, UK, France, Germany, Japan etc. Whoever has more votes has more say in who manages the vast funds these banks have and who can get loans and at what terms. This in turn forces Presidents and prime ministers to line up in the corridors of power in capitals who control votes in these banks. A new global scale development bank not controlled by the US or Europe threatens this power structure.

With European and US economies in a tailspin, banks and retailers there are more than keen in trying to prise open the fast growing Indian market. A succession of Western leaders including the US and French presidents and the British Premier have flown down to New Delhi to lobby for opening up the financial and retail markets, but without much success as yet. 

“Soon after India said it did not have a political consensus on opening up the market to western retail giants, things started to stack up against us,” say officials in India’s Finance Ministry. 

Last month a Standard and Poor's team invited for a presentation on why India should be given a rating upgrade actually gave a negative outlook to the country!

Funnily India’s rating is the same as Tunisia! “We had actually invited the S&P team to India to explain why we should be rated higher than Tunisia and then they downgraded their outlook … this was a shocker,” officials said. Tunisia’s economy was recently ravaged by a civil war and is expected to grow by just over 2 per cent in 2012, according to the IMF after having shrunk by 2 per cent last year, with unemployment soaring to 19 per cent of the population.

Will India give in to Western Pressures?

One doubts it. India wants to open up retail markets, though it’s perhaps not so sure of the benefits of opening up the banking sector to failed Wall Street and City of London banks. But to do either it needs a political consensus. It’s after all not a dictatorship like China.

Either of two things could happen – India could show some flexibility and deftly negotiate Western greed as it did in the case of anti-black money rules which hit portfolio investments Or it could harden its stance as it did on the Vodafone case.

In the case of General Anti Avoidance Rules which threatened foreign institutional investors pouring in dollars into Indian bourses through tax havens, the government put the legislation on the backburner, without renouncing it and indicated it would come out with a softer version later.

But in the case of Vodafone – where the British telecom major refused to pay over $ 2 billion in taxes it was supposed to deduct at source before paying Hutch for its acquisition of its Indian telecom operation – the government decided to bring in legislation which specifically allows it to tax the deal.

Hutch and Vodafone used a number of shell companies and routed the sale through tax havens which they believed would let them turn into a tax free deal. Indian taxmen thought otherwise and the government, despite high profile lobbying by British Chancellor for the Exchequer Osborne and protests by chambers representing multinationals, decided to back up their taxmen’s claims.