The Einstellung Effect: Yet another enemy of progress and innovation

I recently came across a very interesting term – the Einstellung effect. (Thanks to a great book ‘Think Like an Engineer’ by Guru Madhavan).

The Einstellung (German for ‘attitude’) effect refers to a bias that exists in problem solving that prevents the adoption of a new or innovative approach in favour of tried and tested solutions, which may not necessarily be the best solutions.

The Einstellung effect leads to organisations or individuals adhering rigidly to ways and knowledge that are familiar and favoured even if a better way to getting things done exists.

Organisations and people will stick to a familiar frame of reference when attempting to deal with problems. The Einstellung effect hypothesises that they will naturally gravitate towards a solution which they have used for a similar problem in the past, even if better and more optimal solutions exist.

Abraham Luchins first demonstrate the Einstellung effect in the water jar test in 1942. To try the test yourself and to see how anyone can easily fall into the clutches of the Einstellung Effect, click here (credit to DePaul University).

The Einstellung effect has been a dangerous nemesis to many companies who failed to adopt appropriate strategies and solutions in the wake of what they thought was the status quo.

The Einstellung effect has led to the demise of firms, from Kodak (who first failed to overcome the advent of digital photography (despite creating a digital camera way back in 1977!)  and subsequently acquired a photo sharing site called Ofoto in 2001 and instead of getting people to share photos socially – a concept which led to Instagram – chose to use the platform to get people to print digital image); to DEC or Digital Equipment Corporation (once a major player in the world of computing but whose founder, Ken Olsen, declared, “There is no reason why anyone would want a computer in their home.”); to Blockbuster declining to buy Netflix in 2000 for $50m (because Blockbuster CEO John Antioco at the time did not think people would want on-demand and that their needs would be met by better DVD mailing service!)

None of us are necessarily immune to the Einstellung effect but always keeping an eye on all of the potential solutions to a problem that may seem like it has an obvious resolution and prioritising the solutions in a dispassionate way will be one way.

There is something to be said in adopting a mindset of someone fresh to any problems. There is a concept in Zen Buddhism known as shoshin, which means ‘beginner’s mind’ in Japanese. In the words of the Zen monk, Shunryu Suzuki, “In the beginner’s mind there are many possibilities, in the expert’s mind there are few.”


The Wheels Are Off – the Italian Referendum Results

The majority of Italians have voted against the constitutional reforms proposed in a national referendum and Italian Premier Matteo Renzi’s “experience of government” is now over as he steps down.

The Italian economy has been like a Ferrari with its wheels slashed – its economic performance has been the worst amongst any of the Eurozone country with the exception of Greece; it’s government loans sit at 130% of GDP and unemployment exceeds 11%.

This failure of the referendum is now akin to the Ferrari with its wheels completely off the axle – and the casualties won’t just be the Italians in the Ferrari but indeed the whole of the Eurozone.

Early indicators are that the Euro has fallen sharply against the Dollar and the Asian markets are spooked by what is to come from Europe.

What does this result mean for Italy, Europe and the world?

1. Brace for a hard landing of the banking sector.

We could see the demise of a few banks in Italy, starting with the Monte dei Paschi di Siena (MPS) – the world’s oldest bank – which has already lost almost 90% of its value this year. MPS is already one of Europe’s weakest banks and they are subject to a bailout plan which may now not come to fruition.

Italian banks are struggling with about €360 billion of bad loans and are significantly undercapitalised. There will be a huge sell-off of Italian and European banking stock once the markets open.

The problem is that the scale of interconnectedness means that a hit to the Italian banking system will leave a trail of destruction across the rest of the European and global banking sector starting with the largest European lenders such as Deutsche Bank.

2. The EU and Euro are both going to go through an existentialist phase

Brexit dealt a big blow to the EU project. The rise of the Five Star Movement, a Eurosceptic opposition which has already claimed ‘victory’ in this referendum means that over time their views on EU and the Euro are going to gain even further traction. Even if the Five Star Movement do not win in any early elections called as a result of this referendum (they have a campaign promise to hold another referendum on Italy’s membership within the EU), their views are going to be, over time, become mainstream.

3. Imposition of capital controls?

In 2015 we saw capital controls applied in Greece to stop a run on the banking system and see a flood of capital out of the country. A run on the Italian banking sector will have a colossal impact and a pre-emptive series of capital controls, though damaging from a reputational perspective, may be required for reasons of survival.

4. An Italian sneeze will cause an European contagion.

This result will no doubt cause another slump in the Eurozone economy and will cause a negative investment sentiment. Unemployment will continue rising and living standards will fall, not just in Italy but across Europe.

The people have spoken and have demonstrated a willingness to face a hard landing. Whether they are prepared for a hard reset is another matter altogether and this is going to be the start of a period of extreme uncertainty, economic uncertainty and hardship.

What Italy needs now is an expert driver who is going to be able to manouvere the Ferrari with no wheels skillfully so that it causes the least damage both to the Ferrari’s passengers and other Eurozone travellers.




What Scottish independence could mean for the world.


With the referendum on Scottish independence upon us imminently (taking place this coming Thursday on the 18th of September 2014), the results, either way, will have profound implications for the UK, for Scotland, and indeed, for the world.

Numerous analysts have written excellent in-depth assessments considering the economic, political, social and legal impacts of Scotland’s independence from the UK should it actually take place.

However there is another dimension to consider, the impact this has for Europe and the world. A Scottish seat in the UN may provide dreams and visions for other nationalists in other regions who have always sought independence.

An independent Scotland, oil rich and fiercely socialist, (not very dissimilar to Norway), may join the EU and not necessarily the Euro. I suspect that despite the rhetoric from the “No” team, an independent Scotland will retain the Pound Sterling in a currency union similar to that of Singapore and Brunei (which share a common currency).

Across Europe, I suspect we will see rejuvenated pro-independence/secessionist groups clamouring for their independence as well. We are already witnessing the Catalans protesting for independence from the rest of Spain as they have done for over three centuries. Basque also seeks independence from Spain – and the peaceful manner in which Scotland is pursuing the case – may form a template for the Basque nationalists to seek a similar approach.

In nearby Belgium, Flemish nationalists are also watching the Scottish independence referendum with interest. They have been seeking an independent Flanders/Flemish republic. In elections held earlier this year, the Flemish nationalist party, the New Flemish Alliance (N-VA) emerged as the party with the most votes. However, it must be noted that the majority of those living in Flanders have little appetite for full independence, yet, but are keen on greater autonomy.

Going a little further eastwards, we see that independence sentiments have also been very strong in Venice. In a poll conducted earlier this year, 2.36 million Venetians (63.2% of all eligible voters) participated in an online referendum. Almost 90% of those polled indicated that the region of Veneto (where Venice is) should be independent. Veneto’s President Luca Zaia said the region is tired of the lack of respect from Rome and seeks independence as a path towards greater freedoms and opportunity for Veneto.

The implications of what transpires from the Scottish independence vote may also potentially galvanise pro-independence movements from Quebec to Kurdistan to Kashmir. It may even inspire long dormant independence movements such as the Dravida Nadu movement (which seeks an autonomous or independent Southern India which is culturally, linguistically and historically distinct from the rest of India).

However, the manner in which the Scottish debate has been had is something other independent movements can learn from. Despite heated debates and sometimes a bit of mud-slinging by both sides, for the most part, the deliberations and remonstrations have been largely civil. Perhaps, the most important thing to come out from this referendum is that it is possible for independence and freedom to come from means other than at the end of a rifle.

Tsubotei – the greatest Mongol general

Tsubotei – the greatest Mongol general

Following my recent trip to the beautiful steppes of Mongolia where I had the opportunity to experience the warmth of the people and the beauty of the land, I felt moved to write about Tsubotei, a legendary Mongol general leading the armies of Genghis Khan (who was first known to all as Temujin) but who is not as familiar outside of Asia.

I must also state from the outset that the most comprehensive account of Tsubotei’s life (and indeed the basis of most of the rest of this article) comes from Richard A. Gabriel’s excellent book, “Genghis Khan’s greatest general – Subotai the Valiant”.  (Link to Amazon). I must also highlight, the Secret History of the Mongols, as another great source of information on Mongol history (which R. Gabriel draws from significantly as well).


“I’ll be like a rat and gather up others I’ll be like a black crow and gather great flocks. Like the felt blanket the covers the horse, I’ll gather up soldiers to cover you. Like the felt blanket that guards the tent from the wind, I’ll assemble great armies to shelter your tent.”

Tsubotei’s oath to Temujin (Genghis Khan) as a boy

A brief introduction to the man
Humble beginnings
Early promise of military genius and development
The conquest of China and Korea
Unfolding events in Central Asia, Russia and Europe
The end of a fearsome era

A brief introduction to the man

Tsubotei Baghatur (Tsubotei the Valiant) was one of Genghis Khan’s greatest generals. He, along with Khalid ibn Waleed a Muslim general of the 7th century, is considered to be one of the finest, most astute strategists known in ancient military history.

This is a man who was called one of Genghis Khan’s four dogs of war (the others were Jelme, Jebe and Kublai). He was Genghis’ Orloock (or eagle) who defended the Great Khan’s lands and struck fear into the hearts of enemies.

He started off as a mere attendant of Genghis Khan’s tents and rose to become one of Mongolia’s most brilliant generals with a flair for the genius and remarkable. Tsubotei, along with Jebe, became the first equivalents of modern day Field Marshals in Genghis’ new military structure.

He lived till seventy three and when he died, both his Chinese and Muslim enemies erected monuments in his honour. In his lifetime, he conquered thirty two nations and won sixty five battles. He was also responsible for the conquest of lands to the east and west of Mongolia – from China and Korea to Persia to Russia and Hungary.

Tsubotei’s conquest of Hungary decimated every major army between Mongolia and the threshold of modern-day Western Europe. It is often said that history makes monumental shifts on the slender wisps of fate. In this instance, it was the death of the Great Khan (Ogedai – the third son of Genghis and his successor), which saved Western Europe from a Mongolian conquest. At the time of Ogedai’s death, Tsubotei’s armies controlled everything from the Baltic Sea to the Danube River.

They had overcome European armies five times the Mongol army’s size. As Tsubotei’s army was conducting a reconnaissance of Vienna (and as the populace of the rest of Europe trembled in fear), Tsubotei received word that the Great Khan had died. Mongolian custom had it that all Mongolian royal princes had to return for the election of the new Khan. As Tsubotei’s army had three royal princes, he had little choice but to return to the Mongolian capital.

The history of the world as we know it now could have been altered remarkably had Tsubotei continued heading West.

However Tsubotei’s legacy continues in much of modern military operations and theory. A focus on speed, manoeuvre, surprise, concealment, rear guard battle, concentration of firepower and the doctrine of deep battle were ingrained into Tsubotei’s armies and they have continued into modern day military application. Tsubotei was also unique amongst his Mongolian peers in that he preferred to observe the battles from a vantage point and strategising rather than charging at the head of the army and lose the opportunity to watch the flow and ebb of battle and to strike at pivotal moments.

Humble beginnings

As R. Gabriel writes, one of the most interesting paradoxes of military history is that one of the greatest Mongol generals ever was, strictly speaking, not actually ethnically a Mongol. The term Mongol came about after Genghis Khan unified the various tribes of Mongolia, from the Kerits, to the Merkits, the Naimans and the Tartars.

Tsubotei was technically, an Uriangkhai. They were a forest tribe whom the chroniclers of ancient history referred to as the Reindeer people who lived near the western edge of the Lake Baikal. They were a very different people to the Mongols of the steppe. They were neither nomadic nor pastoral and were hunters, fisherman and traders who lived in permanent log huts. They also maintained domesticated herds of reindeer (or reem as they called it).

Tsubotei was the son of a blacksmith called Jachigudai and whose mother died in childbirth. He was also the younger brother of Jelme (another great Mongol general who was offered when he was still a boy to Genghis’ father, Yeseguei, to serve Genghis when he grew up).

Tsubotei was supposed to have taken over his father’s trade, however, the allure of the Mongol steppe proved too strong for him and he left the comfort of his Uriangkhai people and went on to join the army of Temujin at the age of fourteen. It is also critical to bear in mind that it is very likely that Tsubotei would not have ridden horses till this point at a time when Mongol children would have mastered the age of riding by the ages of six onwards. Tsubotei also would not have had the experience of eating uncooked food, or riding on horses for long distances and surviving on the blood and milk of mares as longer distances were covered. These are all skills Tsubotei would have learnt from scratch at the age of fourteen (in an era where boys joined the army from the age of thirteen onwards) which makes Tsubotei’s progress even more remarkable.

This also demonstrates Tsubotei’s tenacious and determined spirit. He knew his limitations and knew that his experience in Mongol warfare was non-existent at the start.

Tsubotei was initially given the role of Temujin’s keeper of the tent door where he learnt the skills of a Mongol warrior such as riding of horses and shooting bows whilst riding at full pelt along with basic Mongol military manoeuvres.

As a boy, Tsubotei pledged an oath to his master, Genghis Khan: “I’ll be like a rat and gather up others I’ll be like a black crow and gather great flocks. Like the felt blanket the covers the horse, I’ll gather up soldiers to cover you. Like the felt blanket that guards the tent from the wind, I’ll assemble great armies to shelter your tent.”

Whilst others compared themselves to bears and wolves, Tsubotei had no illusions about his lack of military knowledge but only served to seek Genghis any way he can and went as far as to compare himself to a rat or crow in his eagerness to serve his master.


Early promise of military genius and development

As Genghis Khan’s doorkeeper, Tsubotei would have been privy to the machinations to the Mongol planning and war councils. This was a fantastic military education at the feet of the Mongol generals of the time as Genghis Khan sought to consolidate and united the different tribes under one banner.

As a result, Tsubotei would have learned to think beyond individual units and tactics and think about how the various tactical operations fit under a wider strategic campaign towards a singular vision. As R. Gabriel writes, “Most new acquire this ability (the ability to conceptualise war plans and implement them on a grand scale), something that may explain why warfare has, over the long centuries of its practice, produced only a few truly great generals.”

Tsubotei’s first taste in leading a battalion was during Genghis’ campaign against the Merkits. He volunteered to lead an attack which led to a Mongol victory. Although a junior officer, he was considered to be a hugely valuable strategic asset by Genghis.

Whilst others offered their technical and physical abilities to their Khan, Tsubotei offered something more crucial – a mind that was strategic and brimming with military genius.

R. Gabriel further writes that although Tsubotei was known for his detailed planning and attention to intelligence report, Tsubotei at his core possessed the soul of a gambler, which Napoleon remarked, was the most important trait of a great general. “These traits of character, when joined with a first-rate intellect, made Tsubotei an extraordinarily innovative and imaginative commander,” explains R. Gabriel.

In the early periods of Temujin military expeditions to unite the different Mongol tribes, there was a point in 1203 where Temujin’s army was almost destroyed at the Battle of the Red Willows. Only a few of Temujin’s officers remained with him on the day, when the lake Baljuna was dry and the soldiers and officers of Temujin were dying of thirst.

Tsubotei was one of a handful of Temujin’s few loyal officers at the Baljuna lake when he and his army were almost wiped out by his one-time blood brother and then sworn enemy Jamuga and swore his oath to Temujin and remained true to the oath he made as a young boy to Temujin.                          

Temujin soon rebuilt his forces and continued to march towards his vision of unification of the Mongol tribes under one banner. As he battled the tribe of Naiman, which was the one last remaining tribe still resisting Temujin, Jamuga (who was previously Temujin’s anda or blood brother but had turned against him subsequently) is reported in the Secret History of the Mongols to have described Temujin’s generals as follows: “These are the Four Dogs of my anda Temujin. They feed on human flesh and are tethered with an iron chain. They have foreheads of brass, their jaws are like scissors, their tongues like piercing awls, their heads are iron, their whipping tails, and swords. They feed on dew. Running, they hide on the back of the wind. In the day of battle, they devour enemy flesh. Behold, they are now unleashed, and they slobber at the mouth with glee. These four dogs of war are Jebe, and Kublai, Jelme and Tsubotei.”

Subsequently, Genghis appointed Tsubotei and Jebe as the first orloocks of the new Mongol military structure. From that point one, there was never a major military campaign that was undertaken by Genghis or his successor, Ogedai, in which Tsubotei did not contribute to.

The ability to spot talent and character is one of the key traits and pillars leading to Genghis’ genius and accomplishments. Genghis was also not concerned with the ethnicity and background of his key generals. Of his Four Dogs, none were of the Borjigin Mongols which Genghis belonged to. Jelme and Tsubotei were both Uriangkhais, Khubilai was of another tribe, and Jebe was a Tayichigud. In later times, there were even Muslims and Chinese who held important positions in the Mongol army.

Tsubotei had the military genius, the discipline and the brilliance to lead the Mongol army to victories. As R. Gabriel explains, “Courage and warrior spirit were qualities not in short supply among steppe warriors. Competent field commanders were easily available, but an officer who could plan and coordinate large-scale military operations across thousands of miles was a rarity.” Therein lay the principal reasons for Tsubotei’s ascendency in the Mongol army.

The conquest of China and Korea.

Chinese chroniclers write of the brilliance of Tsubotei in planning numerous battles against the Chin states. Tsubotei was instrumental in the Mongol war against the Chin Empire and led the assault on the Great Wall. Following the major victories in Shaanxi, Tsubotei and his men rode across Manchuria to subdue the Mongol enemies there.

Tsubotei soon arrived at the outskirts of Pyongyang, the capital then and the Korean kingdom submitted peacefully. A few decades later, Korea was incorporated into the Mongol empire as a tribute state.

Following Genghis’ death and the succession of Ogedai, there were those who insisted that there was no need for further Mongol conquests. However, Tsubotei, one of the original orloocks, argued that the Chin empire was still intact and capable of resisting the Mongol kingdom and that there were still lands in the west belong to Russian and European princes all awaiting conquest. Tsubotei belonged to an old school of Mongol warriors for whom governing empires meant little. For him, only the conquering of nations mattered. The old Mongol belief was the between the mother Earth and Tengi (the Sky father), life was only about struggle – about riding, roaming and conquering.

Tsubotei convinced Ogedai Khan that time was right to continue with the conquests and Ogedai was convinced by the Mongol army’s greatest general.

Tsubotei’s genius, cunning and adaptable nature soon led to a total and complete victory by the Mongol army over the Chin empire. It is also said that Tsubotei initially wanted to destroy every single aspect of the Chin Empire and turn the plains into fine horse breeding country. Thankfully, Ogedai’s trust Chinese advisors pointed out that it was in nobody’s interests to pursue such a scorched earth policy and Ogedai spared the Chin Empire from a very terminal fate.

Unfolding events in Central Asia, Russia and Europe

Genghis, upon his return to Mongolia, in 1217, decided that he wanted to pacify the Kara Khitai, a mostly Turkic populated region. At the time the Kara Khitai was being ruled by Kuchlug (a Naiman Mongol who fled to Kara Khitai when Genghis undertook campaigns against his father. Kuchlug also instituted a campaign of forced conversion for a mostly Muslim population living in the Kara Khitai. Strangely enough, Kuchlug had an alliance with the Muslim Shah of Khwarizm.

Genghis despatched Jebe and Tsubotei to kill or capture Kuchlug who posed threats to his dominion over the lands. Jebe’s troops were the central flank leading into the Kara Khitai region whilst Tsubotei provided the support on the flanks and to ensure that Kuchlug’s ally, the Shah of Khwarizm did not threaten the main body of Jebe’s troops.

As Jebe proceeded through Kara Khitai, he proclaimed that all Muslims would have the freedom of religion and that none of the holy places would be harmed. Jebe opened up mosques and no plundering or atrocities were committed by his army. They eventually captured Kuchlug and executed him and exerted their influence over the Kira Khatai region as well.

In 1218, Genghis decided to send a trade caravan, comprising mostly of Muslim Mongols to Khwarizm to establish trading relations with the Khwarizm and Muslim empire. The governor of Otrar then set in motion a series of events that had impacts that reverberated across the Muslim and Western world. In a moment of lunacy, he decided to execute every single member of the Mongolian trade delegation. One of the camel drivers escaped and managed to inform Genghis what had happened.

Genghis decided that perhaps the Shah was unaware of his governor’s actions and decided to send another delegation to explain to the shah that he wanted the death of the governor who had trespassed diplomatic protocol. It is at this point that the Shah killed even more Muslim members of the Mongolian delegation and shaved the beards of the Mongols. Genghis took this latest outrage very personally and declared war against Mohammad Shah, the leader of the empire of Khwarizm.

As R. Gabriel writes, “The actions of an obscure government official set in motion a chain of events that changed the world. Until this incident, there was no evidence that Genghis Khan was dissatisfied with the borders of the great empire he had established for the Mongols. Now, the events of Otrar forced him to move against the Shah, with the result that all of Persia eventually came under Mongol rule. This, in turn, led to Tsubotei’s reconnaissance into the Russian steppes, which provided intelligence for the Mongol attach and occupation of Russian, an occupation that lasted for three centuries! And the success of the Russian campaign led inevitably to Tsubotei’s assault against Eastern Europe. No one foresaw it at the time, but the murder of the Mongol caravan at Otrar changed the entire history of Central Asia, Russia, and the West.”

As Tsubotei, Jebe and Jochi (Genghis’ eldest son) pursued the Shah, Tsubotei was presented with a warrant marked with the red seal of the Great Khan in which he promised that all those who did not resist were to be spared. Anyone who resisted was to be eliminated. Genghis was a man of his word, so much so that his own son-in-law, Toguchar was asked to stand down and transfer his troops to Tsubotei when he defied the Khan’s orders and sacked a town that had already surrendered.

Tsubotei pursued the Shah until the Shah crossed the Caspian Sea and found refuge in a small island but died in poverty and despair. Thus ended the mighty kingdom of Shah Mohammed II which was then captured piecemeal by the Mongols (and sometimes in horrific and tragic ways).

Following this though, there was still a huge issue which Genghis grappled with. There was concern that the Western armies (in Arab or European lands) may raise an army to fight the Mongol army. In the East, there was intelligence that Jalal al-Din, the faithful and able son of the Shah was raising an army to avenge the loss of the Shah’s dominion. The only commander who had any knowledge of the Western front was Tsubotei and he received very clear instructions when he was camped on the Caspian to return to Samarkand, Uzbekistan where Genghis was waiting. Tsubotei, a man who lived to serve his Khan, left the Caspian and undertook a 2,000 kilometre journey in just over seven days.

Here Tsubotei assured Genghis that given the terrain and conditions, it was unlikely that any army from the West will link up with Jalal al-Din’s army in the East. He also further proposed to Genghis that he and his men be permitted to ride on further West where there was a land with “narrow-faced men with light hair and blue eyes.”

R. Gabriel describes the subsequent events as follows, “In the late autumn of 1220, Tsubotei and his troop of Mongol cavalry men began what was to become the most remarkable cavalry raid in military history.”

Tsubotei undertook this very difficult campaign armed with the tenacity of his men along with the deep intelligence gathered by his staff officers who included Chinese scholars as well as Muslim scholars. They helped him compile the maps of Hungary, Poland, Silesia and Bohemia. A majority of this information was provided through interactions with Venetian traders whom Tsubotei’s men had come in contact with.

The Venetian traders had signed a secret treaty with the Mongols that they would send me back detailed reports and intelligence from the countries they visited. In exchange, the Mongols promised to destroy all other trading stations in the lands they rode on leaving the Venetians with a monopoly.

The Russians fearing the threats posed by the Mongols joined forces and converged upon Tsubotei. He was surrounded on all sides by various Russian troops and their allies. Tsubotei tried to use diplomacy to break off possible military engagements. In an interesting anecdote, Tsubotei sent an ambassador to the Prince of Kiev trying to convince the Prince that his intentions were not on conquering Russian fiefdoms.

However the Prince of Kiev executed the ambassador. In response, Tsubotei surprised the Prince of Kiev with another ambassador, this time carrying a formal declaration of war. Mongol military etiquette required that, whenever possible, a declaration of war be issued before the commencement of hostilities.

To avoid being entrapped by the Russian armies, Tsubotei and Jebe continued to move east, away from Russia. They left a rear guard platoon to report on enemy movements and to also delay the Russians as they advanced upon the Mongols. For over a week, the Russians pursued Tsubotei and Jebe after overcoming the rearguard Mongol troops.

Finally Tsubotei camped near the Kalka River, a terrain he had been over before. He decided that he would launch his counter attack of the Russian troops here. Tsubotei lit huge Mongol fire pots that created plenty of smoke that disoriented the advancing Russian troops and the Mongol light cavalry rode forward and backward in the path of the Russian troops concentrating their arrow fire to a deadly effect. The net result of this was that a Mongol army of 18,000 overcame a Russian alliance far larger and killed over 40,000 Russian troops along with six princes and seventy nobles.

Soon thereafter, the Mongols overcame the Prince of Kiev (who was suffocated in a box – as Mongol tradition forbade the shedding of royal blood except in battle).

Tsubotei then joined Jochi’s troops and defeated the Volga Bulgars. Thereafter, Tsubotei and Jebe headed back to the Mongol capital to meet with their Great Khan. Jebe passed away and never made it. Tsubotei also left behind a sophisticated intelligence network that allowed for the gathering of information and insight that was instrumental when Tsubotei headed back West. Tsubotei’s initial venture out into the West was with a very small army and was a cavalry raid. The next time he returned, he would do in a large force.

In 1227, Ogedai had taken over Genghis as the Great Khan following Genghis’ passing. At this point, the Mongol empire was engaged in four separate engagements: one against the Chinese empire; second against Korea to suppress a widespread revolt that had broken out in the Korean peninsula; the third against kingdoms around the Caucasus and Persia; and the fourth into Russia and then Central Europe.

Tsubotei was placed in charge of the fourth engagement towards the West. Tsubotei’s key idea was to conquer Russian piecemeal so that they did not have enough time to form mighty coalitions. Another key strategy was to attack them in winter when the Russians and European armies were ill-equipped to conduct battle.

In a short four years, Tsubotei had managed to capture almost all of Russia. He then turned his sights towards Eastern Europe. At this time, Europe remained a deeply feudal society with internecine warfare and campaigns against one another. Tsubotei decided to invade Hungary but simultaneously sent a force under Kaidu Khan, grandson of Ogedai to strike at Poland, Bohemia and Silesia and distract Tsubotei’s main aims of an attack against Hungary.

The Mongols destroyed all opposition to their plans of conquest at the battle of Liegnitz in 1241 where the Silesians were routed. Following this, the Grand Master of the Templars wrote to King Louis IX of France that there was no army of significance between France and a powerful Mongol army that aimed straight for the heart of Western Europe.

“The Mongol army was truly the most organised and combat efficient army that the world had seen in almost a thousand years,” writes R. Gabriel.

Whilst Kaidu Khan was destroying the armies of Poland and Silesia, Tsubotei was waging war against Hungary. Tsubotei broke the spine of the Hungarian army led by the Hungarian king, Bela decisively at the Battle of the Sajo River. Again, Tsubotei used his cunning to create openings and gaps that lured the Hungarian troops into the space which he then closed up with his archers and infantry troops. Over two days, the Mongol war machine killed between 50,000 and 70,000 Hungarian soldiers including the entire royal army of Hungary.

As Tsubotei’s troops encircled Vienna and poised to strike into the rest of Western Europe, the Mongol army heard the news that Ogedai Khan wad dead and they had to return to the Mongol capital. As the powerful Mongol machinery made its way back to the capital, they disappeared, never again returning to Europe.


The end of a fearsome era

R. Gabriel writes that when the Franciscan monk Giovanni di Plano Carpini visited the Mongol court, he reported that Tsubotei was alive and in his early seventies. He was the most famous and admired of all Mongol general.

It was rumoured that Tsubotei had removed his badges of rank and lived in his ger (a Mongolian tent) tending his herds and watching his grandchildren grow.

The Mongols referred to Tsubotei as the Unfailing. Carpini described him as a soldier without weakness. The Muslims described him as “silent, insatiable, and remorseless.”

The Russians thought of his as “extremely disciplined.”

The Chinese held Tsubotei in very high esteem as a great warrior upon his death, bestowed upon him the title of King of Hunan because he had captured the province. They also called him, “the faithful and steady.”

When Tsubotei died, Muslim chroniclers noted that he “had conquered thirty two nations and won sixty-five pitched battles.”

In the end, Tsubotei became a man whom even his enemies respected for his military genius, brilliance in planning and strategy. Tsubotei Baghatur or Tsubotei the Valiant truly was amongst the greatest generals in military history.

Vietnam Economic Briefing (Dec 2011)

Vietnam’s GDP growth is expected to be about 6% for 2011, despite the various pressures of inflation, economic slowdown and falling sentiments amongst the business community.

With a new Cabinet in place, the country is embarking on a series of reforms which could be as instrumental as the “Doi Moi” (or “renewal”) exactly 25 years ago which set Vietnam on the path towards becoming a vibrant economic powerhouse within the region.

Some blame the poorly performing state owned enterprises (SOEs) for some of the country’s economic woes. Significant investment and capital were allocated to SOEs with poor returns on investment. Gross inefficiencies in operations and ill-advised diversifications into areas where they have little expertise or experience (such as stock markets and property investments) are two of the reasons why the SOEs have performed poorly.

I’ve outlined below the background to the current Vietnamese economy, responses by various stakeholders and my own personal comments and suggestions.

The scenario now

Vietnam’s economic challenges now include:

  • High inflation rate (currently at close to 20%);
  • A slowdown in economic growth and output;
  • Rising external debt;
  • FDI pledges have dropped by about a fifth – compared to 2010;
  • Further devaluation of the Dong vis-à-vis the US Dollar, further exacerbating inflationary pressures;
  • Increased incidences of bad-debt and non-performing loans – creating a greater pressure on the banking sector.

The government’s efforts

Prime Minister Nguyen’s key considerations for Vietnam include:

  • To ensure that Vietnam meets it’s socio-economic developmental objectives;
  • Ensure that the State Bank of Vietnam work closely with relevant stakeholders and achieve a targeted, flexible and corrective monetary policy so as to maintain growth and curb inflation;
  • To have a re-active approach to issues that arise from wider implementation of monetary policy and ensure social cohesion and harmony;
  • Control market prices and reduce trade deficit;
  • Be better prepared for natural disasters and ensure better disaster management (eg. floods, storms, etc);
  • Improve public sector and administrative reforms.

Macroeconomic stabilisation and inflation control are key pillars to achieving economic growth. The Vietnam Cabinet is also committed to improving efficiency and competitiveness (particularly amongst State Owned Enterprises (SOEs)).

There are three economic restructuring initiatives proposed:

  • Streamlining the public investment mechanism to ensure greater timeliness and efficiency;
  • Improving the productivity of SOEs;
  • Restructuring the commercial banking system.

The Prime Minister has also indicated that there will soon be separation of ownership and management of the largest SOEs (including the likes of PetroVietnam and Vinashin) which will force SOEs to adopt OECD levels of corporate governance. There will also likely be privatisations of SOEs which are better suited to the private sector (such as coffee, textiles and seafood) whilst nationally important industries such as power, oil and gas will be retained by the government.

The government will also continue to ensure that the agricultural sector is supported and grows sustainably; implement social welfare policies to achieve lower unemployment and poverty; and press on with economic restructuring reforms required for growth.

World Bank support

A Consultative Group (CG) meeting of donors will take place in Hanoi, Vietnam on the 6th of December to focus on restructuring the economy and poverty reduction in Vietnam.

Of concern to the World Bank is how restructuring efforts by the government in the public investment and banking sector will support social welfare and poverty reduction initiatives.

Suggestions for Vietnam

The Vietnam government should stick closely with its plans to reform public investment, improve SOEs and restructure the commercial banking system.

However the government will still face significant resistance from various interest groups including SOEs and large private conglomerates who may not benefit directly from the economic restructuring activities. The government must press on with reforms in the interest of the country. Failure to resolve the risks posed by debt-ridden state owned banks and enterprises will have the potential consequence of sinking the country in deeper economic malaise.

However, one must not lose sight of the fact that despite the obvious economic difficulties, the country still has a large population base, with a growing middle-class population; there is on-going commitment to education and development; and it has a large Asian economic hinterland.

My suggestions for Vietnam will be:

  • Stay firm on the path towards SOE reforms – an improved efficiency of the SOEs will enable them to become engines of growth for the country
  • Focus on dealing with corruption – failure to do so will erode public sentiment and also depress economic activity and dampen FDI into the country;
  • Maintain emphasis on raising education levels to international best practices and work to building capacity in the areas of people skills development to ensure a higher trained and educated workforce which will force Vietnam to move up the value chain in terms of services offered;
  • The country should continue supporting small and medium sized enterprises as they tend to be another major engine of growth for nations – support the small to see big benefits;
  • Provide easier access to finance – but ensure there are safeguards to prevent excessive and unprotected money lending which may cause a credit bubble;
  • Vietnam must also protect its rice paddy fields (enough golf courses – no more!!) and continue support to its agricultural sector;
  • There must also be a commitment to protect its natural resources (no point selling everything away and not having anything left to enjoy because all the natural beauty of the country is sold down the river in exchange for foreign currency which you cannot really spend anymore);
  • Continue commitment to ensuring good corporate governance in the country – and adopt best practices – starting with SOEs and listed firms. This will be important in building consumer and investor confidence in the market.
  • The government should also foster innovation and nurture and reward innovation at all levels. Vietnam has the human capacity to be one of the most innovative countrie in Asia, if not the world and the government should play this very important strength of the Vietnamese people to the country’s benefit.
  • A radical solution to tackle inflation: Vietnam goes through the inflation cycle every few years. What Vietnam should consider is to have only ONE primary currency, the dong. Under the dual currency system – with both dong/dollar being interchangeable in the market will erode the Vietnam economy over the longer term. This is because Vietnam loses control of monetary policy when the dollarization of the economy is widespread. What Vietnam should do is to peg its dong against a basket of major currencies including the US Dollar, Euros, Yuans, Singapore Dollars, Malaysian Rinngit. They should stamp out the dollarization in the economy by making sure that all goods and services in the country are only provided in dongs – create a wider demand for the dong. Start trading the dong in foreign capital markets. It will hurt initially (for up to 3 years) but once normal situation prevails, Vietnam will have greater control of its monetary policy and the Dong will become an international currency in its own right. Vietnam has sufficient critical mass of almost 90 million people to make this work.

India’s retail reforms – a boon or bane?


India is looking to reform foreign direct investment in the retail sector. The major liberalisation changes announced last week could see the arrival of large, multi-brand international supermarkets like US’ Walmart, Britain’s Tesco and France’s Carrefour, in India. This potentially opens up India’s estimated US$500 billion retail market to international chains and allows easier access to India’s growing affluent middle class.

However, lawmakers, interestingly from both the ruling AND opposition parties, have strongly resisted the plans for reform and liberalization. Regional leaders of some of India’s most populous states – Uttar Pradesh, Bihar, West Bengal and Tamil Nadu – have said they oppose any plan to allow in supermarket giants. As foreign retailers each have to obtain a license from individual states to operate there, resistance by state governments means that the reforms may potentially be scuppered in major parts of the country.

The proponents of this reform, including Kaushik Basu, one of Prime Minister Manmohan Singh’s advisers have decided to intimidate the people through scaremongering and claiming that that hundreds of millions of the poorest people in India will have to pay more for staple foods like rice and vegetables if foreign supermarkets are refused permission to open. It is claimed that foreign supermarkets will help India deal with food inflation (which is in its double digits). The proponents of this reform (particularly from the government) also correctly argue that India currently lacks infrastructure, logistics know-how, good roads and transportation and lack of wholesale refrigeration and this means that there exists within the system plenty of wastage and inefficiencies. It is felt that foreign investment in the retail sector will serve to mitigate these issues and help keep food prices down and support economic activity.

The vociferous opponents to proposed reforms, which include trade unions, local government, small traders and enterprises, small farmers, argue that if the reforms were to go ahead, small businesses will be hit hard and it will also have a strong impact of small farmers who will lose even further bargaining rights subsequently. They argue that small farmers will be forced to sell out their land holdings to large corporate as they will be unable to compete with the financial might of the retail megastores.

The Indian government’s concessions

The government has faced significant opposition to their plans and has outlined a series of measures to ensure that the potential negative consequences of the reforms are mitigated. They include:

  • The Commerce Minister, Anand Sharma claims that there is a provision for procurement of 30 per cent goods from small and medium enterprises required under the new policy allowing FDI in the Indian retail sector. The ministry’s statement reads: “sourcing of a minimum of 30 per cent from Indian micro and small industry having capital investment of not more than $ 1 million has been made mandatory.” The statement goes on to add that, “This will provide the scales to encourage domestic value addition and manufacturing, thereby creating a multiplier effect for employment, technology upgradation and income generation.”
  • The policy mandates a minimum investment $100 million with at least half the amount to be invested in infrastructure developments such as cold storage and packaging, which is expected to reduce the post-harvest losses (estimated to be about 40% of total harvest annually).
  • Sharma also argues that the FDI will create up to 10 million jobs for Indians over a three year period, particularly in the supply chain management space.

My views and concerns

I agree that India needs to overhaul its infrastructure, improve roads and transportation links, increase cold warehousing facilities across the country and reduce wastage of agricultural produce in particular. These have been deep seated problems but widespread liberalization in itself is not a panacea to these deeper issues.

India cannot turn away the expertise, skills and know-how that the foreign retailing giants like Walmart, Tesco, Carrefour can bring into the country. India does not have these skill sets, we need the expertise in supply chain management and we need the investment and professionalism that these firms can bring.

However, I do have some concerns:

  • How will the interests of small retailers, businessmen and farmers be protected?
  • What guarantee do we have that these supermarket giants will simply be conduits for low-cost Chinese goods into India, further exacerbating India’s trade deficit with China (which currently stands at over US$18 billion).
  • How effective will the technical know-how, expertise and infrastructure transfer be from the international supermarkets to India?
  • There’s been an in-depth study into benefits (including increased employment, improved efficiency, lower wastage, etc) – but has there been a study into the costs of this reform (including social – labour welfare; economic – particularly from the perspectives of small enterprises and farmers; political – potential worsening of trade deficits, etc)?

My proposal is as follows:

  • India needs the Walmarts and Tescos of the world – we need the know, expertise and knowledge – and India needs to embrace globalization. But there are a few caveats:
  • Part of the investments made by the international retailers must go towards university tie-ups in the areas of global retailing, supply chain management, infrastructure, etc. This will help in the transfer of knowledge to Indians.
  • The government also needs to, alongside with the reforms, address the concerns of small retailers and include provisions within the reforms or separately a series of measures designed to support small retailers – including ensuring that a minimum percentage of supplies to the international supermarkets must come from Indian SMEs and this percentage should increase over the years and this should be mandated.
  • There needs to be better protection of small farmers – and there should be further investment towards protecting their rights and interests. A panel to support small farmers at regional levels should be set up to avoid price fixing and collusion by the larger supermarkets (a charge that’s been leveled against Walmart and Carrefour in China in the past).
  • The Indian government must make commitment to also support small enterprises by improving the infrastructure and overall supply chain logistics in India.
  • There should also be a venture capital fund (with seed funding provided by the government?) to support aspiring entrepreneurs in India to also establish their own retailing businesses. India needs its own Walmart, its own Tesco.
  • The government can also consider the possibility of a higher, graduated tax/duty regime for the larger supermarkets that are looking to access the market. Some may argue that this will deter FDI – but in a world of depleting new markets and consumers (particularly affluent middle class ones) – the international supermarkets will take this to be the cost of doing business in India. Even if nobody comes into the market as a result of this – will it make India worse off? I doubt it. So it’s a chance the country should take.