[Disinvestment Minister Arun Shourie's Cariappa Memorial Lecture 2002, delivered in New Delhi on Saturday, argues for smart governance to secure strategic interests. A country that has ''atomic weapons'' but can't manage its finances will only be ''squeezed into submission'', he says. Exclusive extracts, in two parts.]

You couldn't have asked me to deliver this lecture because of my experience in Disinvestment! And I have no access to classified information on security affairs. Therefore, for myself alone, and based solely on my own study-much of it of the writings of experts like you!

And I do hope that what I say will not now trigger some more "Diary Items" -- that it is because the Defence Minister is speaking on Disinvestment that the Disinvestment Minister has chosen to speak on Defence!

A manuscript-already around 175 pages. By the time I revise it to shorten it-at least 250 pages! Today, I can list just a few conclusions -- I do regret having to excise the evidence that has led me to the conclusions: in part because the conclusions are the obvious ones, in part because the evidence is in many instances as delectable as it is telling. But such is the discipline of the Army that I must stick to the time limit.

A moment of substantial achievements, and several favourable turns-from the victory in Kargil to the turn of events after 9/11. But foreboding.

We often say, ''Anything is possible. What one needs is political will.'' In saying that we use the word ''will'' as if what matters is that the person at the top have the will to carry through a venture. That is of course true in a sense: at times an individual makes all the difference -- Gandhiji during the Independence Struggle, Sardar Patel in the integration of princely states. But the more enduring significance of the expression ''political will'' is not as the will of an individual. It is as the ability of a political system to deliver. That is what is being put in question every other day.

Defence forces are to a country what an iron railing put around it is to a tree: in the end, howsoever strong the railing, howsoever sturdy and well-polished it looks, it cannot protect a tree that has been hollowed by termites from within: the storm shall fell it. What is it that the Soviet armed forces could do which would make up for the sclerosis that the communist regime had imposed on the country? Could the missiles, the atomic arsenal compensate for the stagnation?

Correspondingly, think of Bihar. A population of 83 million, that is a population 30% larger than that of Britain, of Italy, a population equal to that of Germany, and an area 40% as extensive as Britain. In this vast area, over this huge population, governance has evaporated. If I were running the ISI, I wouldn't waste lives in Kashmir. I would just smuggle 20,000-30,000 AK-47s through Nepal into the state. The caste-riven people would begin killing each other, and all the forces the country could muster would get bogged down in restoring order.

Or take Pakistan and China. Only a policy conceived with the perspective of 20-30 years, only strategies actually implemented and that without wavering for 20-30 years can counter what is afoot. But if the horizon of the political class is the hulla of the day in the legislature, or the debating point that can be extracted from the headlines of the day, or the next bout of elections, how can any policy be sustained for 20-30 years?

For the same reasons, will the growing economic strength of China not get translated into military strength? And, will the growing economic distance between China and India not get translated into a greater distance between their capabilities at force projection and ours at warding off such projection?

Salvaging the system of governance is the imperative that all of us -- those in the defence forces, ex-servicemen, ordinary citizens-must attend to today. The armed forces are in fine fettle. We must get general governance up to their standards!

The Enemy Within

An implacable foe. No other identity other than ''not India'', the one whose destiny, whose religious mandate is to break India. True, there are many divisions in Pakistani society-even in regard to what is true Islam; but there is unanimity on two things-that Kashmir must be wrested, and on what must be done to India.

There is progressive Talibanisation of Pakistani society. The only recourse for Pakistan is to direct this explosive force on to external targets. It has waged a very successful strategy: over 61,000 have been killed, and yet the strategy has not provoked a retaliatory war. Quite the contrary, the strategy has worked wonders for the agencies and individuals who have directed it -- it has multiplied their importance, influence, personal wealth.

True, Pakistan has been isolated after 9/11: but it has also been able to extract postponement of dues totalling $ 12 billion, and additional aid, grants and write-offs of another $ 8 billion. But because opinion has turned against cross-border terrorism, will concentrate on fomenting internal fissures, taking advantage of internal mal- or non-governance. And it has been able to build the infrastructure for such disruption. That our agencies have been able to detect and smother 161 modules of the ISI etc. is a real achievement. But the number also indicates that ISI etc. have been able to set up these modules in the first place. Furthermore, 161 are reported to have been uncovered but some of the ones exist. Interrogations reveal that in ever so many instances, the agents were able to obtain ration cards and other papers to establish themselves as Indians-often by just paying paltry bribes of Rs. 2,000-4,000 .

Terrorism is everywhere: cells have been discovered in India, Southeast Asia, Europe. Sometimes it seems some believe that Al-Qaida is the only problem, that if it is dealt with, the problem is licked. But nomenclatures mean nothing: recall the ease with which groups that were outlawed in Pakistan just changed their names and have continued their operations. Al-Qaida is but one of the limbs of this octopus.

There are already sanctuaries for terrorists targeting India in Bangladesh, Bhutan, Nepal, Arakan in Myanmar and within India. ISI moving systematically to use vacuums of this kind: madrasas along our borders. Just one example: in the district in Nepal that borders the Siliguri corridor there are 33 madrasas; 25 of these 33 have been established since 1980.

This is compounded by the rapid Islamisation of Bangladesh: a symptom is the ever-swelling Bishwa Ijtema at Tongi each year: this year about 40 lakh attended. After 1971, the Jamaat-e-Islami had lost practically all influence. As the years went by both the national parties began courting it, specially at election time. Now it is a part of the Government.

Chinese Whispers

China itself does not regard India as a rival, it benchmarks itself against the US. But it regards India as a potential nuisance in part because of India's size, and potential; even more so because of what it considers is th likelihood that India will become an instrument of the US for containing China. Hence the lemma that India is to be kept tied down in South Asia. A representative passage from a Chinese strategist: ''In the next century, to split China's western part, or more specifically, to split China's Tibetan region.... is probably the target of the Western world's geopolitical strategy. Having pushed Russia northward, creating a political barrier like Tibet or Xinjiang between China and the oil-producing countries in Central Asia conforms to the strategic interests of the West to control permanently the world's geographic and energy centre. This dovetails with India's political plot to create a Tibetan buffer zone between China and India. Currently, India is pulling out all the stops to convince the West that it is willing to play the vanguard for the West's effort to achieve this goal, under the prerequisite that the West will adopt an appeasement policy towards its nuclear option.''

For this purpose, ''murder with a borrowed knife'': arms aid to Pakistan, Chinese advances in Myanmar, the reorientation of Chinese strategic doctrine, and the consequent overhauling of the PLA. This has crystallised around three propositions: To ensure that in whatever they do, others -- in particular countries neighbouring China -- always bear in mind China's interests, and her likely reaction; to ensure that if a war is to be fought for defending China, it is not fought on China's soil; to acquire overwhelming capacity for ''local wars under high-technology conditions.''

This in turn requires that China build the capabilities to inflict on the adversary, at the very outset, such terrific losses-for instance, by crippling vital nodes of the victim -- at such lightning speed that the objective is achieved, the adversary is "taught a lesson", and allies are scared away from standing by the victim.

To implement this strategy:

• Develop "magic weapons"-from those that will blind satellites to ones that will disorient the guidance systems of missiles; from ones that will disrupt power grids, civil aviation control systems, telecommunication and broadcasting networks; to chemical or gaseous agents that can disorient entire populations in an area.
  
• Identify the "particular vulnerabilities", the "acupuncture points" of the victim.

Chinese strategic literature devotes much space and analysis to identifying such points for the US. It would be hazardous for us to assume that they would not be conducting similar analyses for India. And always remember the admonition to the Chinese of the Vice Commandant of the Academy of Military Sciences, Beijing, General Mi Zhenyu: ''For a relatively long time, it will be absolutely necessary that we quietly nurse our sense of vengeance. We must conceal our abilities and bide our time.'' Finally, of course, there is physical positioning: the acquisition in the South China Sea of Paracel Islands in 1974, Spratly Islands in 1988, Mischief Reef in 1995. Leasing of Coco Island in the Bay of Bengal... The bases in Tibet...

It is often said that the era when large armies would march across international borders is over. The proposition is true only where the armies are evenly matched. The Gulf War, the war in Afghanistan are recent reminders that if one side is manifestly the weaker one, forces will be hurled across borders also. To ensure that forces do not march across our borders, we must be adequately prepared to crush them if they do. But we also have to contend with what will arise from the preceding propositions: Local war under high technology conditions, using magic weapons "to win without fighting". The best way for doing so-watch as the enemy, through internecine quarrels and mis- or non-governance weakens himself; if necessary, give him a helping hand -- is by exacerbating these internal ruptures.

And, once in a while, "kill a chicken to frighten the monkey" -- not so much to acquire territory, but to break the morale of the adversary, ensure he stays out of your way. It does not take much imagination to infer the types of assaults on India that an enemy would find the least costly, the most effective, and therefore the most tempting:

We thus have to be prepared for more than large forces crossing international boundaries. That will cost a lot. But that cost is the price of living in our times, in this neighbourhood.