Pakistan said two Indian Air Force planes violated Pakistani airspace on Saturday, one along the Line of Control in  Kashmir and the other near Lahore  in Pakistan proper. Pakistani officials said Pakistani jets on patrol chased the Indians away and that the Indian Air Force, upon being contacted later, told them it had happened accidentally.

  The Indian Air Force, though, has told the media that none of its planes had violated Pakistani airspace.  There has been no official response from the Indian government.

What is really going on here? Is it a case of nerves jangling, or perhaps the Pakistani establishment is  building up war hysteria against a foe they know all too well the country will unite against?
 
Or, on the flip side, the Pakistanis are right and the intrusions by the Indian jets did take place? Was New Delhi making an aggressive display, part of the "controlled escalation" that some people have talked about to force Pakistan to act for the Mumbai attacks?

[Indian Su-30 fighter jets.Reuters pic}]

These are dangerous times to be making "inadvertent" violations into each other's territory.  You would  think if you were flying close to the Line of Control in Kashmir or near the international border in Punjab at this time of heightened tensions, you would be even more careful.

But two violations on the same day, both as some in the Pakistan press have pointed out near camps of  the Lashkar-e-Taiba and you begin to think this has to be taken seriously and not dismissed outright.

Stratfor said given the tensions between the two nuclear neighbors after the Mumbai attack, and the details of the intrusions, it is unlikely that these incidents were accidental.

Rather, it said, New Delhi was increasing pressure on Islamabad to take concrete action not just against militants, but more  importantly their sympathizers within the Pakistani military-intelligence establishment.

Pakistan has acted by banning the Jammat-ud-Dawah (JuD), a charity linked to the Lashkar-e-Taiba, which India accuses of masterminding the Mumbai attack, and arresting its leaders. But Delhi says Islamabad has banned groups in the past, only to ease the pressure on them later, and that, it says, is now unacceptable.

 [A view of a madrasa near Muzaffarabad, capital of Pakistan-administered Kashmir]

So are the foes on a steady escalation path? And can you really control this from start to finish? 

Pakistan is already chafing at the U.S. raids and missile attacks on its western border, the latest one only this week. Does it now face Indian pressure on its eastern flank?

German Chancellor Angela Merkel sent a clear “I told you so!” to the United States and Britain at the weekend, criticising them in unusually frank terms for resisting measures that might have contained the current financial crisis. The conservative leader of Europe’s largest economy reminded her partners that she had pushed for steps to boost the transparency of hedge funds during Germany’s presidency of the Group of Eight last year. ”We got things moving, but we didn’t get enough support, especially in the United States and Britain,” she told the Muenchner Merkur newspaper. Merkel expanded on her point in a speech in Austria, suggesting that both Washington and London were only now coming around to her view.

“It was said for a long time ‘Let the markets take care of themselves’ and that there is ‘no need for more transparency’…Today we are a step further because even America and Britain are saying ‘Yes, we need more transparency, we need better standards for the ratings agencies’.

Germany had made greater transparency a key theme of its rotating presidency of the G8, which includes the United States, Japan, Germany, Britain, France, Italy, Canada and Russia. Berlin had expressed fears that hedge funds could threaten the stability of the financial system through their heavy reliance on borrowing to finance risky trading strategies. But it ran into resistance from the United States and Britain, achieving little.

Whether Merkel’s G8 initiative could have averted or limited the current financial market crisis if it had been successful is certainly debatable. But reminding voters that she had sought to address the problem as early as last year could help Merkel score points on the domestic front ahead of a general election next year. Merkel’s Christian Democrats (CDU) rule in an uneasy grand coalition with the Social Democrats (SPD), and both sides have been trying to play up their own role as crisis manager in the current financial market turmoil.

Both Merkel and her SPD finance minister, Peer Steinbrueck, have tried to take credit for Germany’s efforts last year to agree better transparency rules for financial markets. SPD budget expert Carsten Schneider praised Steinbrueck’s efforts during Germany’s G8 presidency in a newspaper interview on Monday, adding: “At the time, the United States and Britain demonised every effort to agree more transparency and rules.”

As Germany’s election approaches, the “I told you so!” Berlin seemed to send to Washington and London on the weekend could turn into an “I told you so first!”-competition between Merkel’s CDU and her SPD rivals.

“Sir, I’m going to have to ask you to leave that bottle of water in the vehicle,” Captain Adam Canon told me as I got out of the Humvee. We were about to meet some Iraqi army officers in the northern city of Mosul, one of Iraq’s insurgent hotspots. “It’s because it’s Ramadan. The men we’re about to meet haven’t had anything to drink in this heat the whole day and there’s still three hours to go.”

I was embarrassed not to have thought of it myself, but I was also encouraged: U.S. troops have often been accused of failing to understand Iraq’s cultural landscape.

Canon then managed a short chat with the Iraqi soldiers we met in their native Kurdish (later, in Arabic, he exchanged pleasantries with an Arab policeman). He engaged in small-talk with every Iraqi we came across on our tour, despite a packed schedule, before getting down to business (it’s rude not too). He embraced them on leaving. It was all common courtesy, but it bucked a common perception of U.S. troops as culturally insensitive.

In his book about Baghdad’s fortified Green Zone compound in the year after the 2003 invasion, “Imperial Life in the Emerald City”, former Washington Post Baghdad bureau chief Rajiv Chandrasekaran writes: “At the cafeteria at the Republican Palace … a buffet featured … a bottomless barrel of pork: sausage for breakfast, hot dogs for lunch, pork chops for dinner. Hundreds of Iraqi secretaries … were Muslims and were offended by the presence of pork. But the American contractors kept serving it.”

Iraqis have other complaints. They say U.S. troops often shouted or hurled abuse at tribal leaders when patrolling neighbourhoods: a grave insult to a dignitary. In raids, they have kicked down doors to houses and hauled everyone out, including women — a big taboo. “They would frisk women, enter the bedroom, rumble through the wardrobe where the women keeps bedclothes. This enrages the Iraqi man,” said Basim al-Azzawi, a Sunni Arab tribal leader in northeast Baghdad.

Some Iraqis say they noticed a change after General David Petreaus took over as U.S. commander in February 2007. (Petraeus handed over command last week to General Ray Odierno.)  A counterinsurgency expert, Petraeus had won plaudits for working closely with local leaders in Mosul in 2003. Instead of barking orders at local dignitaries, U.S. troops have been taking a more measured approach, the tribal sheikhs say.

Recently, when U.S. troops wanted to take a woman in for questioning in his district, Azzawi says, they asked a tribal leader to approach a male in the house first. While this is hardly proof of a big cultural shift, it’s hard to imagine such care being taken in the heady days of 2003.

And U.S. military officials point out they haven’t been the only parties to make cultural blunders. “People say we’re culturally stupid and we are. But not as culturally stupid as al Qaeda,” said Major John Oliver in Mosul.

Sunni Islamist al Qaeda tried to supplant the centuries-old Sunni Arab tribal structure in parts of Iraq and enforced a puritanical brand of Islam alien to Iraqis. They also bombed barber shops and cut smokers’ fingers off. The result: Sunni Arabs sheikhs joined forces with the U.S. military to deal a major blow to the militant group.

But not all American soldiers have taken the message to heart. In May, a U.S. sniper enraged Iraqis when he used a Koran for target practice at a firing range near Baghdad. President George W. Bush had to apologise.

Once called the “mad dog of the Middle East” by President Ronald Reagan, Libya’s leader Muammar Gaddafi will meet U.S. Secretary of State Condoleezza Rice this week.

Senior State Department official David Welch told reporters he had met Gaddafi — “a person of personality and experience” — several times. 

“We don’t refer to Colonel Gaddafi in those terms today,” said Welch when asked about Reagan’s derogatory reference. 

He anticipated Rice, America’s most senior diplomat, was “quite capable” of meeting with Gaddafi and looking after U.S. interests. 

“She is anticipating this one with great interest,” he said of the upcoming Tripoli encounter. 

No word on whether the meeting — the first between Libya and a U.S. secretary of state since 1953 — will take place in one of Gaddafi’s tents.

Russia’s bear-paw swipe at Georgia has got many people drawing comparisons with the Cold War, but personally I like to look for parallels in the 19th century.

At the time the faultlines between Russian and British imperial interests ran from the Balkans through the Crimea and the Caucasus to Central Asia and Afghanistan. That is remarkably similar to some of the faultlines creating upheavals today.  

Angered by western support for the independence of Kosovo in the Balkans, Russia is at loggerheads with NATO over Georgia in the Caucasus.  The row over Georgia has raised fears Russia may halt vital transit of NATO cargoes to Afghanistan – though this has been denied by Moscow – threatening the U.S.-led campaign against al Qaeda and the Taliban. Such is the geographical sweep of the world’s problems, that British commentator Simon Jenkins even suggested we may be drifting towards a new global war.

So what are the lessons of history? And what can we learn about what Russia’s motives really are in the current crisis?

According to Lawrence James’s history of the British Raj, the Russians in the 19th century were experts at applying in war and diplomacy a technique adapted from a chess manoeuvre known as a “Maskirovka”. This aims to deceive your opponent into expecting an attack in one place in order to gain strategic advantage elsewhere. In particular, he says, they tried to trick the British into fearing a Russian invasion of India to divert their attention so that Russia itself could focus on securing its European flank.

The Russians considered this gambit during the Crimean war when Britain and its allies fought Russia for control of the Black Sea (the scene of tensions today between U.S. and Russian ships off the Georgian coast) — eventually driving the Russians out of the port of Sebastopol in 1855 (now known as Sevastopol in Ukraine and leased to Moscow as the base of its Black Sea fleet).  It seems history has a way of repeating itself when it comes to choosing its faultlines. 

They tried it 20 years later, prompting Britain to invade Afghanistan in 1878 to secure a buffer state between Russia and India. It was Britain’s second attempt to take over Afghanistan and like its earlier invasion from British India ended in humiliation and defeat. But then history has repeated itself so often when it comes to unsuccessful invasions of Afghanistan that it’s a wonder that any foreign army would choose to set foot in the country ever again.

Reading between the lines of James’s account, it’s easy to reach the conclusion that western powers — from the old British empire to the United States of today – have so consistently underestimated Russia’s sense of vulnerability on its European flank that they have misread the signals on other fronts to the point of making foolish counter-moves of their own. Indeed James says one of the few rulers of British India not to have fallen for Maskirovka adopted a policy of “masterly inactivity”.

Perhaps time to take a long hard look at what matters to Russia, and to work out what it is trying to achieve, rather than interpreting its every move as a potential step towards a new Cold War?

Hezbollah literally rolled out the red carpet to welcome home five prisoners released by Israel in a U.N.-mediated exchange deal. Securing the release of the last five Lebanese held by Israel was a major triumph for the group, which in turn handed over the bodies of two Israeli soldiers captured in a 2006 raid into Israel.

Having achieved a long-held goal, Hezbollah is holding up the exchange as further evidence that its uncompromising, armed approach to dealing with Israel brings results, directly challenging the policies of Arab leaders who have engaged in negotiations or signed peace treaties with the Jewish state. The New York Times called the prisoners’ homecoming a triumph.

Hezbollah leader Sayyed Hassan Nasrallah, visibly delighted by the prisoner release, addressed the issue during a rare public appearance. He saluted “the true identity of the peoples of our region … the identity of resistance”.

Broadcast into homes across the Arab world by satellite stations, Nasrallah’s rhetoric resonates with viewers who have seen few results from years of talks over the establishment of a Palestinian state.

Spoken by a man widely recognised as the Arab world’s most effective orator, the rhetoric is a challenge to states such as Jordan and Egypt. Both are ruled by U.S.-allied governments that have made peace with Israel and are concerned by the rising
influence of Iran, Hezbollah’s main sponsor.

But while Hezbollah’s charismatic leader still wins admiration across the Arab world, his Shi’ite group no longer enjoys the broad respect it once did in fractious Lebanon.

Nearly two years of political conflict with other Lebanese, including the country’s main Sunni leader, have opened deep sectarian wounds. Hezbollah’s brief takeover of Beirut in May increased the concerns of Lebanese critics who were already suspicious of the group’s vast arsenal.

Hezbollah is riding high in its conflict with Israel. It is now seeking reconciliation with Lebanese adversaries to avoid more conflict at home.

Russia’s angry response to an accord between Washington and Prague on building part of a U.S. missile defence shield in the Czech Republic is reminiscent of the rhetoric of the Cold War. Although Russian President Dmitry Medvedev says Moscow still wants talks on the missile shield, his Foreign Ministry has threatened a “military-technical” response if the shield is deployed.

That phrase could have come straight out of the Soviet lexicon and seems more at home in the second half of the last century than now. Russian military analyst Pavel Felgenhauer called it psychological pressure to try to encourage opposition to the missile system among Europeans, and described it as “the same sort that was used in the 1980s by the Soviet Union when the United States deployed cruise missiles in Europe.”

We are, of course, a long way from the tensions of the Cold War. But the dispute is reminiscent of the war of words between the Soviet Union and the United States in the 1980s over another missile defence system — the Strategic Defence Initiative proposed by Ronald Reagan. His dream of a partly space-based missile system, otherwise known as Star Wars after George Lucas’ 1977 film, never became a reality but the row over it plagued Soviet-U.S. relations for years.

The disagreement over the missile defence system that George W. Bush now wants to be partly based in Europe risks having a similar impact on U.S.-Russian relations. Perhaps fittingly, it has been referred to as Son of Star Wars.

I was a correspondent in Moscow in the 1980s when the dispute over Star Wars was at its height. The disagreements were clear. Reagan wanted to deploy a multi-billion-dollar land- and space-based shield to shoot down incoming missiles. Soviet leader Mikhail Gorbachev said the programme would disrupt the nuclear balance and fuel an arms race in space, and expressed  hope that Europe would not become “a testing-ground for the Pentagon’s doctrines of a limited nuclear war”. 

The disagreement led to the collapse of a 1986 superpower summit in Iceland.

When I was back in Moscow in the 1990s, Bill Clinton and Boris Yeltsin were at loggerheads over U.S. plans for a Star Wars-style missile defence umbrella, even though Clinton had pulled the plug on Star Wars in 1993. Moscow said plans to develop the new missile defence system would violate the 1972 Anti-Ballistic Missile Treaty, an agreement Moscow saw as a cornerstone of global security.

Similar issues hung over Vladimir Putin’s presidency and now threaten to strike a severe blow to hopes of an improvement in U.S.-Russian ties at the very start of Medvedev’s presidency.

Washington says it needs a missile defence system based partly in Europe to provide protection against any attack on  European or U.S. targets by rogue states such as Iran, which tested new long- and medium-range missiles on Wednesday. Russia says the missiles could threaten its own defences and might become a bigger threat over time it if the system expanded.

In the 1980s, Moscow was worried about a project that would have based missiles outside the former Soviet-led Warsaw Pact. It is now concerned about a system that would be even closer to home. A radar tracker is to be placed on Czech soil and, if a deal is reached with Warsaw, 10 interceptor missiles could be installed in Poland. Both Poland and what was then Czechoslovakia were members of the Warsaw Pact.

If Poland does not reach an agreement with the United States, Lithuania has been suggested an alternative site for the interceptors. That would be an even less welcome prospect for Moscow because the Baltic state was part of the Soviet Union. Little surprise, then, that Medvedev took a firm line on the issue in comments he made at the group of Eight summit in Japan.

But Moscow could risk shooting itself in the foot by reverting to rhetoric that harks back to the Cold War. Michal Kaminski, an aide to Polish President Lech Kaczynski said on Wednesday Russia’s reaction was unacceptable. He said it showed Poland should “strengthen our alliance with the United States because beyond our eastern border there are politicians who use a language we thought had vanished many years ago, the language of might and imperial ambitions.”
 
   

The ferocity of the reaction in the German media to the fortress-like new U.S. embassy in Berlin, which former U.S. President George Bush will inaugurate on Friday, strikes me as a reflection of the strains in German-U.S. relations since 2003’s Iraq conflict.

It underlines just how long gone the days of the Cold War really are. Then, when Berlin was the front line in the Cold War, America was West Germany’s best friend and U.S. soldiers were welcome across the country.

Architectural crticis in Germany have slammed the boxy building with narrow windows as being reminiscent of Baghdad’s Green Zone.

The embassy is a picture of a country traumatised by 9/11 and by the consequences of globalisation, of a nation with such heavy armour that it can no longer see the world,” wrote conservative Frankfurter Allgemeine Zeitung earlier this year.

Other critics have been just as hostile, deriding it as a discount supermarket, a prison, a bunker and like Fort Knox.

Admittedly, the beige building — in the heart of the city next to the Brandenburg Gate and just metres from where the Berlin Wall used to stand — looks rather bland and the metal bollards emphasise the barrier between the embassy and Berlin’s residents and tourists. But it isn’t so different from U.S. embassies in other European capitals which have boosted security.

Germans who fondly remember former U.S. President John F. Kennedy declaring “Ich bin ein Berliner” in 1963 and former President Ronald Reagan calling on the Soviet Union’s Mikhail Gorbachev to “tear down this wall” in 1987 long for an improvement in trans-Atlantic relations.

U.S. officials hope the new building will show America’s “warmer, fuzzier” side, although whether either the embassy building or November’s U.S. election will herald a significant improvement in ties is another matter.

And as if the embassy, which cost about 80 million euros and only went ahead after a protracted and ugly public dispute with Berlin officials about how to make the embassy secure without moving two busy nearby streets 30 metres away, hasn’t courted enough controversy, Michael Reagan, son of the former president, was this week reported as saying Berlin should commemorate his father’s contribution to bringing down the Soviet Union and the Berlin Wall. Here’s the piece from Der Tagesspiegel.

The Cold War is over. There is a chill in German-U.S. relations.

Five years after the U.S.-led invasion to topple Saddam Hussein, Iraq is throwing open its oil sector to foreign oil firms  in a way Saudi Arabia, Kuwait and others in the region are reluctant to. Oil Minister Hussain al-Shahristani says no company will have any special privilege.

Some  analysts take a different view. They reckon U.S. and British oil majors are in a strong position to help develop the world’s third-largest oil reserves. Exxon Mobil, Chevron, Royal Dutch Shell and BP head the queue. They have already built up a relationship with Iraq’s oil officials by negotiating short-term technical deals.

Now Iraq is inviting bids for long-term development contracts at its biggest fields, the “backbone of its industry” in the words of Shahristani. He believes Iraq could become the world’s second- or third-biggest oil producing country, rivalling Saudi Arabia and Russia.

Are U.S. and British firms obvious choices as partners because of their expertise? After all, before the U.S.-led invasion Iraq often preferred Russian firms. Or are U.S. and British firms reaping the benefit of their governments’ policies?

Soaring energy and food prices are the top concern at the Group of Eight finance ministers meeting in Japan this weekend, while central banks are keeping their fingers crossed that they can find a solution without killing off shaky economic growth.

U.S. consumers’ mood plunged to a 28-year low in June as soaring inflation pinched at their purse strings.

High petrol prices pushed U.S. inflation up to a six-month high of 4.2 percent in May, a trend seen even more starkly across the Atlantic, where inflation is at a record high of 3.6 percent in the euro zone and a near six-year high of 3 percent in the UK.

But some economists warn that blanket media coverage is only making the matter worse and feeding a vicious circle.

Every news story makes shoppers and investors feel more pessimistic about their loss of spending power, pushing up inflation expectations and ultimately maybe making central banks more likely to take action by raising interest rates. 

“It’s not exactly chicken and egg but you can’t help feeling it creates a kind of hype, and people often believe the hype,” Dresdner Kleinwort analyst Rainer Guntermann said.