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    South Asia
     Aug 9, 2006
Hidden civil war drains India's energy
By Jeremy Carl

Indian Prime Minister Manmohan Singh, an Oxford- and Cambridge-trained economist not given to careless exaggeration, recently referred to a domestic political crisis as "the single biggest internal-security challenge ever faced by our country".

Yet despite the longtime prominence of this problem within India and its potentially catastrophic effects on its energy sector, many energy analysts outside the country are unaware of its existence. The security challenge in question is posed by the Naxalites, a loosely organized group of Maoists who now have an estimated 20,000 soldiers and are waging a war against the Indian state, terrorizing and destabilizing much of the countryside.

The success or failure of their campaign against the government will have profound consequences for India's stability and, most

particularly, its energy security. The Naxalite insurgency is strongest precisely in the areas with the richest natural resources, especially the coal that powers the Indian economy.

Manmohan's blunt statement brought rare foreign coverage (including a New York Times article, which described the struggle as "looking increasingly like a civil war") to the Naxalite rebellion, which has festered for more than three decades in India's countryside. While the struggle is taking place far from Delhi's glitzy new suburbs or Bangalore's booming technology hub, its effects are increasingly being felt across India.

The motivations behind the Naxalite rebellion are complicated and are influenced by many local factors - and many "Naxalites" are merely criminals and mercenaries who have adopted a revolutionary pose for strategic reasons.

But in essence, the core of the Naxalite rebellion can be seen as a response by many of India's poor against a perceived expropriation of their natural resources by the state. India's "coal mafias" largely control the industry, notorious for its poor infrastructure and corruption, while union leaders, mine managers and politicians routinely skim substantial profits from the state-owned coal companies. Meanwhile, the poor, largely tribal communities that make up much of the heart of India's coal country, see precious little of the profits while suffering substantial environmental destruction and feeling the effects of public corruption.

The Naxalites have at least some presence in almost half of India's 28 states, and in some of the poorer and most heavily tribal states, particularly Chhattisgarh, Andhra Pradesh, Orissa, Jharkand and West Bengal, they are a major political force. These five states account for about 85% of India's coal resources, and continued disruption and deterioration of the political environment could have profound consequences for both India and its neighbors.

Coal constitutes about 55% of India's current primary energy supply and some 75% of its electricity generation, and a prolonged or excessively costly resource war in these states could cripple the economy and alter the global import balance if India has to look elsewhere for energy resources.

In other words, while the United States worries about imported oil, which makes up roughly a quarter of its primary energy supply, Naxalism puts almost half of India's total energy supply at serious political risk. Much of the problem lies with the fact the federal government owns the sub-surface rights to all minerals, including coal, which infuriates the destitute tribal communities. Organizations such as the South Asian Intelligence Review have noted a high correlation between those districts with high natural resources, particularly coal and iron, and those districts facing Naxalite violence.

In recent months and years, there have been an increasing number of direct attacks by Naxalite rebels on the energy industry. Naxalites recently killed coal-mine security officers in Chhattisgarh and in December burned vehicles from a coal-survey team, the Mineral Exploration Corp of India. In the coal-rich region of Andhra Pradesh, Naxalites destroyed vast quantities of mining equipment. In February, an explosive depot (used for mining) in Chhattisgarh, run by the National Mineral Development Corp, was attacked by rebels, who killed eight members of the security force while making off with tons of ammunition.

And the Naxalite energy-related violence is expanding. India's Oil and Natural Gas Co has dramatically beefed up security at its facilities in Jharkand and Eastern Coalfields Ltd, Central Coalfields Ltd, Singareni Coalfields Ltd and Neyveli Lignite Corp in response to recent warnings from government officials about Naxalite attacks.

Meanwhile, Chhattisgarh's government last year signed almost US$3 billion in agreements to build power plants and other energy-related infrastructure. But such agreements will surely be at risk (particularly those involving multinationals) if the violence does not cease. Naxalites frequently levy their own "taxes" on resource extraction on districts they control, and many more ideological Naxalites are opposed to the development of additional coal mines and power plants at any price.

I recently spent a week in India's remote Chhattisgarh state, described by the New York Times as "the deadliest theater of the war", and while I attempted to see coal-mining operations, my guide refused to take me because of extreme danger in coal-mining and production areas. While our surroundings were outwardly placid, we could not travel at night, and our overall itinerary and visit were dramatically truncated because of the danger of armed attacks.

It was clear that rebel groups controlled much of the countryside, where according to numerous accounts, they in essence run a parallel government and administration. The local newspapers were filled daily with accounts of fatal battles between Naxalites and government forces. In parts of many districts, government officials have not visited for years, for fear of their lives.

The intensifying civil war in parts of India's countryside will have profound effects not just for India's energy security, but for the global economy as well. The growing Naxalite insurgency will bear close scrutiny over the coming months - and continued deterioration of security in India's coal heartland could have a significant impact on energy security in India and beyond.

Jeremy Carl, a former resident of New Delhi whose research focuses on energy in India and China, is a PhD candidate in the interdisciplinary program in environment and resources, Stanford University.

(Copyright 2006 Institute for the Analysis of Global Security - IAGS.)

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