International

Finance Minister Pranab Mukherjee has said that he is optimistic about India's long-run growth prospects and that it was entirely within the realm of the possible that the country would break into double-digit growth within the next five years.

Addressing the India-US CEO Forum in Washington on Tuesday, Mr Mukherjee said the recovery from the global economic crisis for India seemed to be on a surer footing.

"The Indian economy has done exceedingly well in these difficult times through a combination of careful policymaking, dynamic industrial leadership and luck. Last quarter our GDP grew at 8.6% and this year my Ministry has predicated a growth rate of 8.5%," he said.

"I notice that the IMF (International Monetary Fund) has recently challenged our prediction. For once, however, I am not going to argue with the IMF. The IMF believes that the Indian economy will grow by 8.8%!" he remarked.

The India-US CEO Forum was reconstituted last year with 12 CEOs from India and the United States nominated by Prime Minister Manmohan Singh and US President Barack Obama, repectively.

This was the second meeting of the Forum, the first having been held in November last year on the sidelines of Dr Singh's visit to Washington. It is co-chaired by Mr Ratan Tata, Chairman, Tata Sons and Dave Cote, CEO of Honeywell Corporation.

Yesterday's meeting was attended by eight CEOs from each side. There was very high level government participation from both sides reflecting the importance attached by both Governments.

Apart from Mr Mukherjee, those attending the meeting from India included Commerce and Industry Minister Anand Sharma and Planning Commission Deputy Chairman Montek Singh Ahluwalia. From the US side, there were six Secretary-level representatives, who included Secretary of State Hillary Clinton, Treasury Secretary Timothy Geithner, Commerce Secretary Gary Locke, US Trade Representative Ron Kirk, Director of the National Economic Council Larry Summers and Deputy Secretary of State Jim Steinberg.

Mr Mukherjee told the Forum that India today saved and invested around 34 per cent of its Gross Domestic Product (GDP) and this was still rising. He said India's growth was coming not just from Government action but from a variety of sectors and stakeholders from all over the economy, including the private corporate sector. "To me, this multiple source growth is a sign of robustness," he said.

He said a significant part of India’s growth impulse was from the rural sector which had been prioritized in the country's developmental plans for inclusive growth. He said the focus was on innovation with a broader outreach at the grassroots level and engaging medium-sized companies in the US and India in the development process.

The Finance Minister said India offered investment opportunities in excess of $ 850 billion over the next five years. In the infrastructure sector, it envisaged investment at $ 1 trillion between 2012-13 and 2016-17, with a potential funding gap of 25-30% bridged through innovative modes of financing, he said.

He said efforts were being made to make the Government more efficient, transparent, and in step with the modern world. He metioned the draft Direct Tax Code in this context. He said he was committed to bring down the public debt as a percentage of GDP from the current level of around 75% to below 68% in three years.

"India’s fiscal health is good now and this new target will make it even better. It will also make more room for private sector borrowing and investment. Our ultimate aim is to make India a vibrant economy that attracts global capital and trade," he said.

Mr Mukherjee said the relationship with the US was one of the most important bilateral relationships for India today.

"As India pursues its developmental goals, we would like to work with the US – especially where our priorities converge, to realize outcomes that are to the mutual benefit of our peoples. We have a unique advantage which is the existence of strongest possible people-to-people linkages that any bilateral strategic partnership could wish for. We have, in our Strategic Dialogue, innovation as the principle that should guide our work ahead," he said.

He said the CEOs Forum had established itself as a bridge between the private sectors and the Governments of India and the US.

"With your leadership and vision, you have created synergies that are invaluable. The initiative to take this strong economic partnership to a new level of innovation and sustained growth is indeed welcome," he said.

"I am sure that the dynamism and energy of our private sectors and the public-private partnerships that we envision will help to take our cooperation and achievement to unprecedented heights," he said.

Mr Mukherjee said the trust that India had built up through its 100% compliance record in the safeguarding of imported technology should help it to increase its bilateral high technology trade.

"I am aware that this is presently under discussion and I would only underline that India has a record of being a trusted a customer. I am sure that our Governments should be able to work together to create the conditions for a win-win situation in advance technology trade between our two countries," he sad.

He noted the two countries had launched the Financial and Economic Partnership when Secretary Geithner visited Delhi in April this year to strengthen engagement in economic, financial and investment related issues.

He said the two countries were currently negotiating a Bilateral Investment Treaty and were committed to take further initiatives that would contribute to creating a more conducive environment for investment flows. He said the economic Ministries of the two countries had taken steps to gradually liberalize policies.

"I am aware that as captains of industry you will have a major focus on profits. I am sure you are equally aware that, as a politician, I have to keep a watch on votes. But, at the same time, all of us must have ambitions that go beyond these. Our ultimate aim has to be the well-being of human beings. We have to strive for inclusiveness not only in our individual nations and corporations but in the world and across nations. We live today in a world where all our fates are tied together. For that reason, if for no other, we have to strive together to create a better world.

"Our ambitions must go beyond the economy. India’s founding fathers had a vision very similar to what the founding fathers of the United States had. India is today a secular, democratic nation and, as a political leader of India, I am proud of that.

"To hold on to these ideals and to run to a growing robust economy means having to face lots of challenges. We must collectively rise to those challenges.

"I know that this sounds as if I am trying to reach for the stars. I want to assure you that that is exactly what I am doing. Together we must try to reach for the stars," Mr Mukherjee added.

Ms Clinton said that, as both Mr Obama and Dr Singh had said numerous times in the last 16 months, the increased cooperation between the US and India was the cornerstone of the 21st century Strategic Partnership between the two countries.

She said Mr Obama and Dr Singh had reinvigorated the CEOs Forum last year based on the idea that Washington and Delhi needed to catch up to the business and innovation cooperation that is already happening in New York and Mumbai.

She quoted a recent report which said Indian investment in the US grew by an estimated 60 per cent in 2009, to over $7 billion. That same report indicated that trade in goods between the two countries tripled between 2004 and 2008, and that since 2004 Indian acquisitions in the United States had supported approximately 40,000 jobs in the US, with manufacturing exports to India linked to another 96,000 jobs. "That’s great progress and it’s a solid base on which to build," she said.

"But I think that we are just getting started in exploring all of the ways to improve opportunities for trade and investment and foster the kind of inclusive growth that lifts people out of poverty and strengthens our democracies. We want to turn recommendations for improving access to education into reality. We want to lay the groundwork for future cooperation to fight climate change, develop clean energy solutions, and so much more," she said.

Noting that President Obama was due to visit India in early November, she said a lot of hard work was needed to translate a lot of the ideas that had been discussed into accomplishments and realities for that visit.

An official press release said the CEOs had met in a smaller format before interacting with the Government representatives.

They presented recommendations to both Governments in four core areas - Infrastructure; Clean Energy; Education and Health/Biotechnology. The Forum also discussed impediments and some breakthrough long-term ideas, it said.

According to the release, the recommendations included some interesting and ambitious ideas such as creation of an Infrastructure Debt Fund of $10 billion for development of infrastructure in India, collaboration under the National Solar Mission of India, a long-term initiative on diabetes research and treatment, linkages between educational institutions and joint research in clean energy, including bio-fuels.

Mr Mukherjee announced that, to follow up on the ideas, a committee headed by the Deputy Chairman of the Planning Commission would be formed in India to carry forward the ideas with implementable action plans.

CEOs from both sides and representatives of the two Governments agreed that there was tremendous potential and synergy in the economic partnership between India and the US. The visit of President Obama to India later this year would provide an opportunity to intensify the economic engagement and translate some of these ideas into deliverables, they felt.

Mr Mukherjee also had a separate meeting with Mr Geithner when they discussed bilateral issues and the outlook for the global economy. They also discussed the euro-zone crisis and how this would impact on the global economy. They discussed issues relating to fiscal consolidation and Mr Mukherjee suggested that fiscal exits could be staggered and be country specific, depending on market conditions in each country.

Mr Sharma met Mr Kirk separately and discussed issues relating to India-US trade relations. Mr Ahluwalia had a meeting with US Agriculture Secretary Thomas Vilsack to discuss progress in India-US Agriculture cooperation, the release added.

Photos: Courtesy: Website of Embassy of India, Washington

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Prime Minister Manmohan Singh today said Pakistan must act decisively against terrorism to realise the vision of peace and prosperity in South Asia and offered to walk the extra mile to open a new chapter in bilateral relations if it cooperated with India.

"India wishes to live in peace and friendship with its neighbours. I believe that all countries of South Asia should work to realize a common vision of peace and inclusive development for the region," Dr Singh said in his address to the Majlis-al-Shura in Riyadh today.

Dr Singh, who was on a three-day visit to Saudi Arabia, said India sought cooperative relations with Pakistan.

"Our objective is a permanent peace because we recognise that we are bound together by a shared future. If there is cooperation between India and Pakistan, vast opportunities will open up for trade, travel and development that will create prosperity in both countries and in South Asia as a whole," he said.

"But to realise this vision, Pakistan must act decisively against terrorism. If Pakistan cooperates with India, there is no problem that we cannot solve and we can walk the extra mile to open a new chapter in relations between our two countries," he said.

Pointing out that the interests of peoples and countries in the world were intertwined, Dr Singh said that, as two countries representing old civilizations, India and Saudi Arabia should work together to promote dialogue and peaceful co-existence among nations, religions and societies.

"We should work together as partners in shaping the global discourse on issues such as energy security, food security, climate change and terrorism. We should cooperate to deal with regional challenges such as maritime security, piracy, narcotics, human trafficking and other non-traditional threats to security," he said.

"Our two peoples are desirous of peace and goodwill. Together, India and Saudi Arabia can become a potent moral force for a better world and for a more secure future for our children," he said.

The Prime Minister said both India and Saudi Arabia were today threatened by extremism and violence. He stressed that the pursuit of terror in the name of religion or any other cause or grievance could not be acceptable to civilised societies.

"It has no sanction in any religion. History teaches us that the scourge of terrorism must be confronted with determination and united effort," he said.

He said that nowhere was this challenge greater than in Afghanistan. "The people of Afghanistan have suffered for far too long. They deserve an atmosphere of peace and the opportunity to pursue a life of dignity and hope," he said.

Dr Singh said the government of Afghanistan needed the support of the international community in restoring peace and development in the country. He said the international community should support all sections of Afghan society who wish to work towards the emergence of Afghanistan as a modern, stable and sovereign nation. No sanctuary should be given to those who promote terror, violence or instability in the country, he said.

Describing Saudi Arabia as the cradle of Islam, he said he was carrying a message of peace, brotherhood and friendship as well as the fraternal greetings of the people of India.

He said India regarded Saudi Arabia as a pillar of stability in the Gulf region and noted that, under King Abdullah, the kingdom had taken rapid strides towards modernisation.

"As I stand before you, I am conscious of the wealth of history behind us, and the promise of a new partnership ahead of us," he remarked, as he traced the links between the two nations dating back to more than 5000 years ago, when ships made with teak from Kerala freely traversed the waters of the Indian Ocean and linked the people of Sindh, Gujarat and Malabar with the different ports of the Gulf and the Red Sea, going up to Basra and Alexandria.

He pointed out that, today, Islam was an integral part of India’s nationhood and ethos and of the rich tapestry of its culture.

"Our 160 million Muslims are contributing to our nation building efforts and have excelled in all walks of life. We are proud of our composite culture and of our tradition of different faiths and communities living together in harmony," he said.

Referring to King Saud's visit to India in 1955 and the visits by Prime Minister Jawaharlal Nehru to Saudi Arabia in 1956 and by Indira Gandhi in 1982, Dr Singh said the tone for bilateral realtions in the 21t century was set by the landmark visit of King Abdullah to India in January, 2006.

He said the Delhi Declaration that he signed with King Abdullah on that occasion enshrined the shared vision of the two countries for a new relationship, in which they pledged to work not just for the development and prosperity of their peoples but for the security and peace of the region as a whole.

He told the gathering that his dialogue with King Abdullah in Riyadh yesterday and his meetings with other Saudi leaders had led to the reaffirmation of the close bilateral ties and the common interests of the two countries.

"We have agreed to impart a strategic character to our relations, and have put in place a roadmap for bilateral economic, political and security related cooperation that will constitute the core of our relationship in the coming years," he said.

Dr Singh said India was in the midst of rapid socio-economic transformation, hoping to achieve a growth rate of about 7.5 per cent in the current financial year.

"In the next 25 years we aspire to growth rates of between 9 to 10 per cent annually. This will enable us to lift millions of our people out of poverty and to transform India into one of the largest economies of the world. India looks to the future with confidence and hope," he said.

Noting that Saudi Arabia itself was witnessing remarkable progress as it modernised and diversified its economy, he said there was vast potential for cooperation between the two countries based on their inherent strengths and complementarities.

He sought Saudi investment in a range of sectors from infrastructure and manufacturing to the services and hospitality sector. Equally, Indian industry is ready to take advantage of the many opportunities that are opening up in the IT, banking, telecommunications, pharmaceutical and hydrocarbon sectors in Saudi Arabia, he said.

The Prime Minister said the kingdom was one of India’s major trading partners, with bilateral trade touching $ 25 billion in 2008-09. He said the two countries were looking at ways and means of expanding their traditionally strong collaboration in the energy sector.

He also took note of the contribution of the 1.8 million strong Indian community in Saudi Arabia - the largest abroad. He also pointed out that as many as 165,000 Indian pilgrims perform the Haj annually, the second largest group from any single country, with a similar number performing the Umrah every year.

Dr Singh spoke of the need for more contacts among the parliamentarians, scholars, scientists and students of both countries to renew the intellectual bonds between India and West Asia.

He also felt there was scope for considerable expansion of bilateral interactions in the political, defence and security spheres.

"West Asia is a vital part of India’s extended neighbourhood. We have deep and intricate ties with the Gulf countries. We have a high stake in the peace and stability of the region. Neither the countries of the region nor the world can afford fresh turmoil. We sincerely hope that wisdom will prevail and that in the resolution of conflicts and differences, dialogue will triumph over confrontation," he said.

The Prime Minister said there was no issue more important for peace and stability in the region than the question of Palestine.

For far too long the brave people of Palestine have been denied their just, legitimate and inalienable rights, including most of all the establishment of a sovereign, independent and viable Palestinian state," he said.

He paid a special tribute to King Abdullah for the initiatives he has taken to bring about a just settlement. "We applaud and support the Arab Peace Initiative," he said.

"I take this opportunity of reiterating the principled, strong and consistent support of the government and people of India for the struggle of the Palestinian people. India has been making a contribution to the development of the Palestinian economy and its human resources and we will continue to do so," he added.

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Prime Minister Manmohan Singh has said that India is willing to sign on to an ambitious global target for emissions reductions or limiting temperature increase but made it clear that this must be accompanied by an equitable burden sharing paradigm.

"We acknowledge the imperative of science but science must not trump equity. Climate Change action based on the perpetuation of poverty will simply not be sustainable," he said in his intervention on Climate Change at the Commonwealth Heads of Government Meeting (CHOGM) - 2009 at Port of Spain, Trinidad and Tobago, on Friday.

Speaking at a special session devoted to Climate Change, Dr Singh said India had repeatedly emphasised the need for the outcome at the 15th Conference of Parties (COP) to the UN Framework Convention on Climate Change to be held in Copenhagen next month to be comprehensive, balanced and, above all, equitable.

He said it must be comprehensive in the sense that it must cover all the inter-related components of mitigation, adaptation, finance and technology.

He said this meant that a partial outcome must be resisted and that there must be balance and equal priority given to each of the four components.

"Mitigation is important but cannot take precedence over adaptation which, for many countries represented here, poses a greater challenge. And most important from our perspective, is the need to ensure an equitable outcome corresponding to the principle of common but differentiated responsibilities and respective capabilities," he said.

Referring to the view expressed in some quarters that, given the limited amount of time available, it would be better to aim for a political outcome rather than a legally binding outcome, Dr Singh said the Copenhagen negotiating process must not be pre-empted.

"Whatever time is still available to us before the High Level Segment meets from December 16, should be used to achieve as much convergence as possible. If the consensus is that only a political document is feasible then we must make certain that the post-Copenhagen process continues to work on the Bali mandate and the UNFCCC continues to be the international template for global climate action. We must avoid any lowering of sights," he stressed.

The Prime Minister said the special session would enable CHOGM to send a powerful political message to Copenhagen so as to ensure an ambitious, substantive and equitable outcome.

He welcomed the participation of the Danish Prime Minister Lars Løkke Rasmussen in the session, saying his perspective on the multi-lateral negotiations was particularly useful. He assured Mr Rasmussen that India would play a constructive and positive role and support all his efforts to secure a successful outcome at Copenhagen.

Similarly, he said French President Nicolas Sarkozy's presence at the deliberations added to their quality. "We have benefited from his insights and his wisdom and, in particular, his concern over the challenges posed to developing countries by Climate Change," he said.

He said UN Secretary General Bank Ki-moon had played a key role in raising awareness of the dangers posed by Climate Change to humanity and had repeatedly stressed the need for urgency in our actions. "We agree with his assessment that the time for action is now," he said.

Dr Singh expressed India's complete solidarity with the sentiments expressed by several leaders from Small Island Developing States and from Africa, who, he said, were the least responsible for climate change and yet were the most vulnerable to its impact.

"Their very survival is at stake. We appreciate their concern because India, too, has extensive island territories and low lying coastal plains, which are vulnerable to sea-level rise ad extreme climatic events," he said.

He said India had modest resources at its disposal but was willing to share whatever it had to build adaptive capacity among the least developed countries and the Small Island Developing States.

The Prime Minister said that if the outcome at Copenhagen diminished rather than enhanced the implementation of the UNFCCC in respect of the specific components of mitigation, adaptation, finance and technology, it would represent a serious setback, no matter how the result was characterised.

He emphasised that Climate Change was a challenge of global dimensions which deserved a global and a collaborative response. He said it was unfortunate that the global discourse on Climate Change had become enmeshed with arguments about maintaining economic competitiveness or level playing fields.

"Climate Change is becoming the pretext for pursuing protectionist policies under a green label. This would be contrary to the UNFCCC and a violation of the WTO as well. India and other developing countries will strongly resist this," he said.

He also said that the attempts by some countries to dispense with the Kyoto Protocol altogether had generated avoidable misgivings and had been strongly resisted by all developing countries without exception.

"We hope that a legally valid instrument to which we too are parties, will not be set aside in a cavalier manner. This will undermine credibility in any future legally binding instrument," he said.

Dr Singh told the meeting that India had adopted an ambitious National Action Plan on Climate Change with 8 National Mission covering both mitigation and adaptation. He said India had not made their implementation conditional upon obtaining international support, but it could certainly do more if there were a supportive global regime.

"Each of the National Missions, including those on renewable energy, enhancing energy efficiency and expanding forest cover, are platforms on which we would be happy to pursue cooperative partnership with sister Commonwealth countries," he said.

Dr Singh welcomed the proposal made by British Prime Minister Gordon Brown for the mobilisation of at least $ 100 billion by 2020 for supporting climate change action in developing countries. He also welcomed the priority he had given to the needs of Least Developed Countries and Small Island Developing States.

"However, much of this finance is market-based and hence subject to market volatility and unpredictability. We can hardly plan long-term action on this basis. Furthermore, adaptation requirements do not lend themselves to market based finance," he added.

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India and the United States have underscored the absolute imperative to bring to justice the perpetrators of the November 26, 2008 terrorist attack on Mumbai, which claimed more than 180 lives.

"On the eve of its first anniversary, President Obama reiterated the United States’s condemnation of the terrorist attack in Mumbai in November 2008," Mr Obama and Prime Minister Manmohan Singh said in a Joint Statement between them after their talks in the White House in Washington on Tuesday.

The two leaders recognised that the India-US partnership was indispensable for global peace and security and said that, in this context, the interests of both countries were best advanced through the values mirrored in their societies.

They acknowledged the common threat that international terrorism poses to regional and global security. They condemned terrorism in all its forms and manifestations and declared that there could be no justification for terrorism anywhere.

The two leaders expressed their grave concern about the threat posed by terrorism and violent extremists emanating from India's neighborhood, whose impact is felt beyond the region. The two leaders agreed that resolute and credible steps must be taken to eliminate safe havens and sanctuaries that provide shelter to terrorists and their activities. These undermine security and stability in the region and around the world.

The statement said the two leaders vowed to redouble their efforts to deal effectively with terrorism, while protecting their countries’ common ideals and shared values and committed themselves to strengthening global consensus and legal regimes against terrorism. They decided on a Counterterrorism Cooperation Initiative to expand collaboration on counterterrorism, information sharing, and capacity building.

The two leaders reiterated their shared interest in the stability, development and independence of Afghanistan and in the defeat of terrorist safe havens in Pakistan and Afghanistan.

According to the statement, President Obama appreciated India’s role in reconstruction and rebuilding efforts in Afghanistan. The two leaders agreed to enhance their respective efforts in this direction.

The two leaders committed to continue pursuing mutually beneficial defence cooperation through the existing security dialogue, service-level exchanges, defence exercises and trade and technology transfer and collaboration. They recognised the scope for cooperation in the areas of non-traditional threats to security, peacekeeping, humanitarian and disaster relief, and maritime security and protecting sea lanes of communication. They agreed to expedite necessary arrangements to facilitate these activities.

The two leaders agreed that strengthening high technology trade between their countries is in the spirit of their strategic dialogue and partnership. They reiterated their shared commitment to technology security and that it is in their mutual interest to invigorate this area of their partnership.

The statement said Dr Singh and Mr Obama had reaffirmed the global strategic partnership between their two countries and had launched a new phase in this partnership today.

They commended the deepening bilateral cooperation between the world's two largest democracies across a broad spectrum of human endeavours and recognised that the common ideals and complementary strengths of the two countries today provided a foundation for addressing the global challenges of the 21sr century.

Mr Obama stated that the US looked forward to a stable and prosperous India playing an increasingly important role in world affairs.

The joint statement also touched upon the cooperation between the two countries in areas such as energy security, food security, climate change, elimination of poverty, ensuring sustainable development and a clean energy future. They agreed to enter into a Green Partnership to address these global challenges.

The two leaders reaffirmed their intention to promote the full, effective and sustained implementation of the United Nations Framework Convention on Climate Change (UNFCCC) in accordance with the Bali Action Plan. Recognizing their special role in promoting a successful and substantive outcome at the UNFCCC 15th Conference of Parties at Copenhagen in December, 2009, they reaffirmed their intention to work together bilaterally and with all other countries for an agreed outcome at that meeting.

The two leaders also affirmed that the Copenhagen outcome must be comprehensive and cover mitigation, adaptation, finance and technology, and in accordance with the principle of common but differentiated responsibilities and respective capabilities, it should reflect emission reduction targets of developed countries and nationally appropriate mitigation actions of developing countries. There should be full transparency through appropriate processes as to the implementation of aforesaid mitigation actions. The outcome should further reflect the need for substantially scaled-up financial resources to support mitigation and adaptation in developing countries, in particular, for the poorest and most vulnerable. It should also include measures for promoting technology development, dissemination and transfer and capacity building, including consideration of a centre or a network of centres to support and stimulate climate innovation. India and the United States, consistent with their national circumstances, resolved to take significant national mitigation actions that will strengthen the world's ability to combat climate change. They resolved to stand by these commitments.

They agreed to collaborate in the application of their space technology and related scientific capabilities in outer space and for development purposes, including in the field of agriculture.

The two leaders reiterated their intention to realize the full potential of the India-U.S. Agreement for Cooperation concerning the Peaceful Uses of Nuclear Energy through the implementation of its provisions. They agreed to expedite U.S. firms' participation in the implementation of this agreement.

The Joint Statement also talked about stimulating the global economic revival, and announced their intention to develop a Framework for Cooperation on Trade and Investment. This Framework is expected to foster an environment conducive to technological innovation and collaboration, promote inclusive growth and job creation, and support opportunities for increased trade and investment - including for small and medium-sized enterprises. They agreed to launch the U.S.-India Financial and Economic Partnership to strengthen engagement on economic, financial, and investment-related issues.

The two leaders welcomed the progress achieved in the discussions on a Bilateral Investment Treaty and pledged to take further initiatives that would contribute to creating a more conducive environment for investment flows.

They recognized the contribution of the business and industrial sectors of both countries in this regard and called upon the India-U.S. CEOs Forum to identify new directions in the India-U.S. economic relationship.

Other areas covered by the statement included cooperation in the fields of education and health.

Overall, the two leaders recognised that the India-US relationship was important for managing the challenges the world will face in the 21st centry and underscored the compelling need to put in place global institutions which are both inclusive and effective to meet present and future challenges.

They welcomed the emergence of the G-20 as a premier forum to deal with international economic issues. The two leaders recognized the scope for their countries to increase cooperation in peacekeeping, development and the promotion of essential human freedoms. They committed themselves to achieving genuine reform of the United Nations including in its Security Council in a manner that reflects the contemporary realities of the 21st century and thereby enhances its ability to carry out its mandate as a representative, credible and effective forum for meeting the challenges of the new century.

Earlier, addressing a joint press conference at the White House after their talks, Mr Obama said Pakistan had an enormously important role in the security of South Asia region by making sure that the extremist organisations that often operate out of its territories are dealt with effectively.

"And we've seen some progress.  The work that the Pakistan military is doing in the Swat Valley in west -- in south Waziristan all indicates the degree to which they are beginning to recognize that extremism, even if initially directed to the outside, can ultimately also have an adverse impact on their security internally," Mr Obama said.

Dr Singh said he and President Obama had a very useful and productive exchange of views relating to security, peace and counter-terrorism. He said he was very satisfied with the outcome of their discussions.

He also said that, as far as the India-US civil nuclear cooperation agreement was concerned, Mr Obama had re-affirmed that it was the common resolve of the two governments to operationalise the deal as early as possible.

"There are a few 'i's' and 't's' which have to be crossed -- and I am confident and I have the assurance of the President that that process can be completed without much further loss of time," he said.

Mr Obama said that it was obvious that there were historic conflicts between India and Pakistan but it was not the place of the US to try to, from outside, resolve all those conflicts. On the other hand, the US wanted to be encouraging of ways in which both India and Pakistan could feel secure, and focus on the development of their own countries and their own people, he said.

"With respect to the relationship between the United States and Pakistan's military, I think that there have probably been times in the past in which we were so single-mindedly focused just on military assistance in Pakistan that we didn't think more broadly about how to encourage and develop the kinds of civil society in Pakistan that would make a difference in the lives of people day to day," he remarked.

He hoped that, over time, there would be further clarity and further cooperation between all the parties and all peoples of goodwill in the region to eradicate terrorist activity, to eradicate the kind of violent extremist activity that has been seen in Pakistan. "I think that will benefit the peoples of Pakistan and India and the world community as well," he said.

In his opening remarks at the joint press conference, Mr Obama said the fact that Dr Singh's was the first official state visit of his presidency reflected America's admiration for the Prime Minister's leadersip, the deep bonds between the peoples of the two countries and the historic opportunity they had to strengthen and broaden the partnership between the two nations.

"India today is a rising and responsible global power.  In Asia, Indian leadership is expanding prosperity and the security across the region.  And the United States welcomes and encourages India's leadership role in helping to shape the rise of a stable, peaceful, and prosperous Asia.

"Beyond Asia, as the world's largest multiethnic democracy, as one of the world's fastest-growing economies, and as a member of the G20, India will play a pivotal role in meeting the major challenges we face today.  And this includes my top economic priority, creating good jobs with good wages for the American people," he said.

Mr Obama said he believed the relationship between the US and India would be one of the defining partnerships of the 21st century and Dr Singh's visit underscored the strengthening of that partnership, which he hoped would continue throughout his presidency. "That's why I've made it a priority to broaden the cooperation between our nations," he remarked.

He said his administration's commitment to India could be seen in the new strategic dialogue between the two countries, which addresses the full range of challenges and opportunities before them.

"And our commitment to India can be seen in my personal partnership with Prime Minister Singh.  We've worked together on economic matters at our G20 summits in London and Pittsburgh, as well as L'Aquila.  I consider him a wise leader who has helped unleash India's extraordinary economic growth.  He is a man of honesty and integrity.  I respect him and I trust him, and I have happily accepted his gracious invitation to visit India next year," he said.

The US President said the two sides had agreed to strengthen the economic recovery and expand trade and investment so that they could create jobs for both their peoples.

He noted that Indian investment in America was creating and sustaining jobs across the US. The US is India's largest trading and investment partner and there is significant balance in their trading relationships, he said. He said that, to sustain this momentum, the two sides were creating new initiatives to promote trade, investment and technology cooperation, especially among their small and medium-sized businesses.

He said he had reaffirmed to Dr Singh his administration's commitment to fully implement the nuclear deal, which would increase American exports and create jobs in both countries.

They agreed to move forward with their commitments at the G20 summit in Pittsburgh to pursue balanced growth while ensuring that emerging economies like India have a greater voice in shaping the international financial architecture.

He said they had made progress in confronting climate change and commended the Prime Minister for India's leadership in areas like green buildings and energy efficiency. He said the two sides had , agreed to a series of important new efforts:  a clean energy initiative that will create jobs and improve people's access to cleaner, more affordable energy; a green partnership to reduce poverty through sustainable and equitable development; and an historic effort to phase out subsidies for fossil fuels.

"With just two weeks until the beginning of Copenhagen, it's also essential that all countries do what is necessary to reach a strong operational agreement that will confront the threat of climate change while serving as a stepping-stone to a legally binding treaty," he said.

Mr Obama said he and Dr Singh had reaffirmed that an agreement in Copenhagen should be comprehensive and cover all the issues under negotiation. 

"We resolved to take significant national mitigation actions that will strengthen the world's ability to combat climate change.  We agreed to stand by these commitments with full transparency through appropriate processes as to their implementation.  All this builds on the progress that we made in Beijing, and it takes us one step closer to a successful outcome in Copenhagen," he said.

The US President said he and Dr Singh had also agreed to deepen their cooperation against transnational threats. "The American people join our Indian friends in remembering the horrific attacks in Mumbai one year ago this week.  To prevent future attacks, we agreed that our law enforcement and intelligence agencies will work even closer, including sharing more information.  We discussed my review of our policy in Afghanistan, and I thanked Prime Minister Singh for India's substantial contributions to the Afghan people," he said.

Mr Obama welcomed Dr Singh's support for the non-proliferation agenda that he had laid out in Prague, and looked forward to India's participation in the nuclear security summit next year, as well as India's participation as a full partner in the shared vision of a world without nuclear weapons.

"Now, part of that vision is working together to ensure that all nations, including Iran and South -- North Korea, live up to their international obligations," he said.

Mr Obama said the two sides agreed to expand the educational exchanges that will fuel their knowledge-based economies. 

They decided to "dramatically" expand the Fulbright-Nehru program that brings students and scholars from both countries together, especially in science and technology. 

They also decided to increase ties and exchanges between their universities and community colleges as part of "a new Obama-Singh -- or Singh-Obama" -- 21st Century Knowledge Initiative.
"We think it's appropriately named," he quipped.

Mr Obama said that, to advance their historic food security initiative, American and Indian researches would collaborate to improve agricultural output and reduce hunger -- not only in India, where enormous strides have been made, but around the world. "India has much to teach the developing world in terms of achieving food sufficiency," he remarked.

He said American Centres for Disease Control and Prevention would partner with their Indian counterparts to create a new disease detection centre in India to combat infectious diseases and promote global health.

"This is the concrete progress made today across a whole range of issues to create jobs, opportunity and security for our people.  As a result, I believe the relationship between our two countries has never been stronger -- a reminder that it will be one of the defining partnerships of the 21st century," he said.

President and Ms Michelle Obama later hosted Dr Singh and Ms Gursharan Kaur at the first state dinner of his presidency. "It will be another opportunity to convey to the Prime Minister and the people of India, as India assumes its rightful place as a global leader in this century, that you will have no better friend and partner than the United States of America," he added.

Dr Singh said that when India and the US met, it was a moment to celebrate the values of democracy, pluralism, liberty and freedom. "Today we have done that and much more," he observed.

He said the two leaders had, in their discussions, reaffirmed the importance of the bilateral relationship between the two countries and decided on future steps to enhance their strategic partnership.

"We have agreed to further intensify our trade, investment, and economic cooperation in a way that creates jobs and prosperity in both our two countries and stimulates global economic recovery," he said.

Dr Singh expressed admiration for the leadership that President Obama had provided to stimulate and guide the G-20 process. He said they had decided to give a fresh impetus to collaboration in the fields of education, agriculture and health. He said the two countries would deepen their ongoing cooperation in frontier areas of science and technology, nuclear power and space. "This will open new opportunities for our universities and laboratories, and create human capital to meet the global needs of the future," he said.

The Prime Minister said he and Mr Obama had had a very constructive exchange of views on strategic issues. "Our defence cooperation is progressing well.  We agreed on the early and full implementation of our Civil Nuclear Cooperation Agreement.  Our strategic partnership should facilitate transfer of high technologies to India.  The lifting of U.S. export controls on high technology exports to India will open vast opportunities for giant research and development efforts.  It will enable U.S. industry to benefit from the rapid economic and technological transformation that is now underway in our country," he said.

Referring to the Copenhagen meeting on Climate Change in December, he said he and Mr Obama had agreed on the need for a substantive and comprehensive outcome, which would cover mitigation, adaptation, finance, and technology.  "We reaffirmed our intention to work to this end bilaterally and with all other countries," he said.

Dr Singh said India welcomed President Obama's commitment to a major programme for promotion of renewable energy. He drew Mr Obama's attention to India's own ambitious national action plan on climate change, which has eight national missions covering both mitigation and adaptation.

"Just as we partnered each other in the shaping of the knowledge economy, we have the opportunity today to become partners in developing the green economy of the future.  I underlined India's desire to benefit from clean and energy-efficient technologies from the United States.  Our partnership will contribute to global efforts to combat climate change and achieve energy security," he said.

Dr Singh said the two leaders had a detailed discussion on important regional and global issues. 
"We agreed that the Indo-U.S. partnership was important for addressing the challenges of an increasingly interdependent world that we live in.  The global economic crisis has brought home the fact that our prosperity is interlinked," he said.

"Our dialogue covered the need to have an open and inclusive architecture in the Asia Pacific regions.  It is important for the international community to sustain its engagement in Afghanistan, to help its emergence as a modern state," he said.

"The focus -- the forces of terrorism in our region pose a grave threat to the entire civilized world and have to be defeated.  President Obama and I have decided to strengthen our cooperation in the area of counterterrorism," he said.

Dr Singh said India welcomed the renewed international interest in nuclear disarmament and non-proliferation, pointing out that India had been a consistent advocate of a world free of nuclear weapons.  He said India would work with the United States and other countries for the success of the nuclear security summit, which President Obama is hosting next April.

"In our discussions today, there was a meeting of minds on the future direction of our relations.  I was deeply impressed by President Obama's strong commitment to the India-U.S. strategic partnership and by the breadth of his vision for global peace and prosperity," he said.

Dr Singh said he had invited President Obama to visit India. "A very warm welcome awaits him, his gracious wife and his two daughters," he added.

In reply to a question, Mr Obama said he thought the US and India were natural allies, not just around counter-terrorism issues but on a whole host of issues.

"As we discussed earlier, we're the world's two largest democracies.  We have a range of shared values and ideals.  We're both entrepreneurial societies.  We're both multiethnic societies.  We are societies that believe in human rights and core freedoms that are enshrined in our founding documents.

"And one of the things that I think makes us such strong allies is the people-to-people contact.  It's one thing for leaders to have exchanges like this one, and that's very important, obviously.  But the incredible contributions that Indian Americans have made to the growth of our country and the degree to which they are woven into the very fabric of our society, the fact that very few Indians don't have some family member somewhere who has a connection to the United States -- that kind of exchange strengthens and deepens the bonds between our two countries in a profound way.

"Now, with respect to security issues in the region, the Prime Minister and I -- Prime Minister Singh and I had extensive discussions about that.  I think we both recognize that our core goal is to achieve peace and security for all peoples in the region, not just one country or the other.  And one of the things I admire most about Prime Minister Singh is that I think at his core he is a man of peace," he added.

Photos: Courtesy: Press Information Bureau

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Finance Minister Pranab Mukherjee today said India was willing to provide even more assistance for the rehabilitation and resettlement of the Tamils in the north of Sri Lanka, over and above the assistance of Rs 500 crore announced by it earlier.

"India is doing and will continue to do whatever it can to assist Sri Lanka in this critical phase of its history," Mr Mukherjee said in the 4th Lakshman Kadirgamar Lecture in Colombo on the theme, "Economics as driving force of International Relations".

India is helping the Sri Lankan government in various ways in rehabilitation and resettlement of the Tamils after the Sri Lankan army decimated the separatist Liberation Tigers of Tamil Eelam (LTTE).

"The effective elimination of terrorism and secessionism from Sri Lanka offers you such an opportunity; an opportunity to shape history; an opportunity to permanently change the complexion of the relationship between the majority community and the minorities; an opportunity to address the legitimate grievances of all communities; and an opportunity to bring permanent peace and stability to this nation," he said.

"These are sine qua non for building the Sri Lanka of the future – a future in which all communities will live side by side and enjoy the same rights and privileges and get the same opportunities," he said.

Mr Mukherjee said that it was natural that, after freeing the Tamils from terrorist forces, it was natural that the first and primary focus of the Government of Sri Lanka had been to ensure the immediate welfare and safety of its citizens.

"Thousands of Tamils have come out of the conflict zone traumatized by the conflict and harbouring deep concern and fear of what the future holds for them. These citizens need reassurance. They yearn to return to their homes and resume their livelihood. Several thousand Internally Displaced Persons (IDPs) have indeed been resettled recently and we welcome this development. However, many more await their turn for resettlement in camps. We are confident that their speedy return is receiving the highest consideration of the Government," he said

"India has not hesitated to come to Sri Lanka’s assistance at this crucial juncture. This is only natural," he said.

The Finance Minister said India was moving from purely relief efforts to a broader rehabilitation and reconstruction phase. Its assistance had so far covered humanitarian supplies such as food, medicines and other essential supplies. It set up an emergency field hospital and four Indian de-mining teams are presently working in Northern Sri Lanka. Three more are on their way.

He said India was also sending additional shelter material and providing assistance to revive agriculture and livelihood in the North. He said both sides were also discussing assistance in reconstruction of critical civil infrastructure in Sri Lanka, including railways. They were now discussing larger projects for the population in key cities who were traumatised by the conflict.

Mr Mukherjee said they had, at the same time, not lost sight of the urgent requirements in the Eastern Province as well as of the Indian origin Tamils in up-country areas.

The lecture series is held in memory of former Sri Lankan Foreign Minister Lakshman Kadirgamar, who served under then President Chandrika Kumaratunga. Mr Kadirgamar was assassinated, allegedly by an LTTE sniper, in August, 2005.

Mr Mukherjee recalled the vision which Mr Kadirgamar had, both for close fraternal relations between India and Sri Lanka and for the future of Sri Lanka itself.

"It was he who dreamt of a world in which India and Sri Lanka would work together to build on our shared geography, history and culture in a relationship defined in his eloquent words by 'irreversible excellence'. It was also Lakshman who believed that Sri Lanka should remain united, and that its people should live together in an atmosphere of confidence and trust," he said.

He pointed out that Mr Kadirgamar believed that durable peace in Sri Lanka should be based on a constitutional arrangement acceptable to all communities in the nation based on democracy, human rights and the rule of law.

He recalled that the late Foreign Minister had said that it was important for all communities of Sri Lanka to realise that a political settlement was not a zero-sum game. It need not and should not come at the cost of another, he said.

He said Mr Kadirgamar's vision also drew upon the experience of the working of the Indian model. He believed that the Indian experiment with democracy was relevant in that India had chosen a democratic system which was designed to preserve the unity and integrity of the country without allowing for its disintegration.

The Finance Minister said there were many things in common between the two nations in terms of history, culture, philosophy and customs.

He said economics and international relations had a two-way relationship. "The economic strength of a country furthers international relations and vice-versa, creating a virtuous circle of growth and empowerment. The relationship has not changed though the (global economic and financial) crisis has brought in lessons that are likely to redefine the link in the interest of promoting global stability, he said.

According to him, the present crisis would be another watershed in the evolution of economics and is expected to bring about radical retooling of the theory.

He said there was a need for "visible hand" of oversight and regulation, without compromising market efficiency. Macro-prudential norms that aim at avoiding systemic risk through a watchful eye on asset price bubbles and imbalances, together with early warning indicators would be the key to this effort, he said.

Mr Mukherjee said developing countries are more vulnerable to crisis, as they have fewer cushions against shocks.

According to him, to resuscitate growth in the developing countries, the lost export demand had to be replaced by expanding other components of domestic demand.

"The best option is to expand investment. An obvious area where additional investment is required is infrastructure, including energy, transport and other public services. These investments can be made ahead of requirements and therefore are an ideal form of countercyclical activity," he observed.

He listed the various steps the Indian government had taken to cope with the crisis. He said the Indian economy had shown remarkable resilience to the crisis because the financial system had no exposure to the toxic assets.

He said the Indian growth was largely domestic economy driven, with merchandise exports accounting for only about 15 per cent of GDP.

"The extent of globalization however has increased over the years, which has been responsible for the setback that the economy received due to external shocks. The crisis hit the Indian economy initially through slowdown and reversal of capital flows, which impacted the stock market and the exchange rates. Thereafter, especially after the Lehman crisis, the real economy was affected through slowdown in exports, reduced investment activity and general risk aversion," he said.

He said that economic growth was expected to be in the range of 6-7 per cent in 2009-10, despite the setback due to the poor monsoon. The effort now was to bring the economy back on the growth path of 9 per cent per annum.

Mr Mukherjee expressed satisfaction that the Sri Lankan economy had also exhibited considerable resilience in the first few months of 2009 despite shocks from the global recession and the resultant slowdown in domestic economic activity.

He said the world economy was showing signs of recovery and global output was expected to expand by 3.1 per cent in 2010.

"The risks however, remain and the recovery would be razor edge walk, especially because signs of asset price bubble and heightened carry trade activity are re-emerging," he said.

"Against this backdrop of our shared inheritance lie the sobering realities of the current economic crisis. Global economic and financial slowdown has put the spotlight squarely on Asia as a region which can lead the global economic revival. Developing countries were in no way responsible for the crisis but have been the hardest hit. India has also been affected but fortunately not as bad as some others," he said.

The Finance Minister said India and Sri Lanka could show the way for Asia by cooperating even more with each other, building on the success of their Free Trade Agreement (FTA). He noted that the two sides had already initialed a Comprehensive Economic Partnership Agreement (CEPA) last year.

"I can assure you one thing – at a time when global players are investing in India to leverage their synergies with us, including in services, CEPA can only be a win-win situation for both India and Sri Lanka," he stressed.

"There are, however, hopeful signs that the future is closer to us than we think," he remarked, pointing to the fact that one of Sri Lanka’s largest companies, Brandix, has started a fully integrated textile city in Vishakapatnam.

He said Sri Lankan Airlines is already the largest foreign airline in India. Colombo Port and Colombo Dockyard feed on substantial Indian business. Many other Sri Lankan companies have realized the potential India offers. Many Indian corporations are also investing in Sri Lanka, the most prominent being Tata, Ceat, Indian Oil, Airtel, Ultratech and NTPC. Indian banks and an insurance company operate in Sri Lanka as well, he said.

He also said the two countries were looking at power-grid interconnectivity. There are more than 100 flights a week between the two countries. India already accounts for the largest number of tourist arrivals into Sri Lanka.

"Our development partnership has expanded to include several projects which India is taking up in Southern Sri Lanka including the Southern Railway corridor. Trade, connectivity, tourism and exchange of information and ideas are the key to greater economic engagement, he said.

"The future of peace, security and development of our region has to be fortified through common economic prosperity. We are already engaged in this process through SAARC, which has moved from a declaratory to an implementation stage. The challenge today is to build inter-dependencies which not only integrate our region but also create a strong interest in each other’s stability and prosperity. Critical to this is connectivity of goods, people and ideas. India and Sri Lanka have the will and determination to take a leadership role in this quest," he added.

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Prime Minister Manmohan Singh will pay an official state visit to the United States on November 24, the first state visit to be hosted by President Barack Obama, the White House announced here on Friday.

"This visit will be the first state visit of the administration and will highlight the strong and growing strategic partnership between the United States and India, and the friendship between the American and Indian people," White House Press Secretary Robert Gibb said.

Mr Gibb said the two leaders were expcted to discuss a range of global, regional, and bilateral issues of shared interest and common concern.

"The two leaders will also likely discuss the strategic dialogue that was launched in July and review progress made in the dialogue," the statement said.

President Obama and Mrs Michelle Obama will also host Dr Singh and Mrs Gursharan Kaur for an official state dinner on the night of November 24.

"President Obama looks forward to welcoming Prime Minister Singh to Washington and working with him to strengthen and enhance their partnership for the benefit of the people of both nations, and the world," Mr Gibb added.

The invitation from Mr Obama to visit the United States was hand-delivered to Dr Singh by US Secretary of State Hillary Clinton during her visit to Delhi in July.

The United States and India have come closer to each other in recent years and the two countries signed a landmark civil nuclear cooperation agreement in July, 2005 during the tenure of President George W Bush.

Since then, the relationship has strengthened further and Mr Obama has said that India was a "major foreign policy priority" for the United States. He has promised to take the nuclear deal forward and said that he sees India as a "critical partner" on issues from climate change to combating terrorism.

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US President Barack Obama today unveiled his much-awaited new strategy for Afghanistan and Pakistan with the "clear and focused goal" of destroying the terrorist group Al Qaeda in both countries and prevent their return to either country in the near future.

In a sombre speech at the White House, Mr Obama said the "comprehensive and new strategy" marked the conclusion of a careful policy review that he had ordered as soon as he took office in January this year.

He spoke about the perilous position faced by the US in Afghanistan and the threat that would arise should safe havens for the al Qaeda in Pakistan go unchallenged or should the Kabul government fall to the Taliban again. He also stressed that 2008 was the deadliest year so far in the war against terror.

"The situation is increasingly perilous," Mr Obama said. "The world cannot afford the price that will come due if Afghanistan slides back into chaos or al Qaeda operates unchecked."

The US President said intelligence reports had warned that the al Qaeda, said to be responsible for the 9/11 attacks, was planning more attacks on the US from safe havens in the mountainous border regions of Pakistan.

"For the American people, this border region has become the most dangerous place in the world. But this is not simply an American problem. The safety of the world is at stake," he said.

"Many people in the United States -- and many in partner countries that have sacrificed so much -- have a simple question: What is our purpose in Afghanistan? After so many years, they ask, why do our men and women still fight and die there? And they deserve a straightforward answer," Mr Obama said.

"So I want the American people to understand that we have a clear and focused goal: to disrupt, dismantle and defeat al Qaeda in Pakistan and Afghanistan, and to prevent their return to either country in the future. That's the goal that must be achieved. That is a cause that could not be more just," he explained.

The President there was a need for a comprehensive strategy in the two countries, including a "standing, trilateral dialogue among the United States, Afghanistan and Pakistan."

Expressing his profound respect for the Pakistani people and their history, Mr Obama pledged that the US would do all it could to help Pakistan fight against the terrorists who have so often attempted to destablilise the country, and had killed so many people, including former Prime Minister Benazir Bhutto.

Similarly, he expressed his admiration for the people of Afghanistan and went on to describe the shift coming on the ground in that country.

"Our troops have fought bravely against a ruthless enemy. Our civilians have made great sacrifices. Our allies have borne a heavy burden. Afghans have suffered and sacrificed for their future. But for six years, Afghanistan has been denied the resources that it demands because of the war in Iraq. Now, we must make a commitment that can accomplish our goals.

"I've already ordered the deployment of 17,000 troops that had been requested by General McKiernan for many months. These soldiers and Marines will take the fight to the Taliban in the south and the east, and give us a greater capacity to partner with Afghan security forces and to go after insurgents along the border. This push will also help provide security in advance of the important presidential elections in Afghanistan in August," he said.

Mr Obama said the US would simultaneously strengthen the civilian government of President Asif Ali Zardari in Pakistan where he said the al Qaeda and allied terrorist groups had become a "cancer that risks killing Pakistan from within."

He said Washington would step up military assistance to Islamabad to help it fight the al Qaeda and give it more economic assistance in coordination with the World Bank and the International Monetary Fund.

He said the assistance given to Pakistan for years had yielded only "mixed results."

"We will not provide a blank check. Pakistan must demonstrate its commitment to rooting out al Qaeda and other violent extremists within its borders," he said.

Mr Obama said the US would shift the emphasis of its mission in Afghanistan to training and increasing the size of the Afghan security forces so that they could eventually take the lead in securing their country.

"That's how we will prepare Afghans to take responsibility for their security, and how we will ultimately be able to bring our own troops home.

"For three years, our commanders have been clear about the resources they need for training. And those resources have been denied because of the war in Iraq. Now, that will change. The additional troops that we deployed have already increased our training capacity. And later this spring we will deploy approximately 4,000 U.S. troops to train Afghan security forces. For the first time, this will truly resource our effort to train and support the Afghan army and police. Every American unit in Afghanistan will be partnered with an Afghan unit, and we will seek additional trainers from our NATO allies to ensure that every Afghan unit has a coalition partner. We will accelerate our efforts to build an Afghan army of 134,000 and a police force of 82,000 so that we can meet these goals by 2011 -- and increases in Afghan forces may very well be needed as our plans to turn over security responsibility to the Afghans go forward," he said.

Mr Obama said this push must be combined with a dramatic increase in America's civilian effort.

"Afghanistan has an elected government, but it is undermined by corruption and has difficulty delivering basic services to its people. The economy is undercut by a booming narcotics trade that encourages criminality and funds the insurgency. The people of Afghanistan seek the promise of a better future. Yet once again, we've seen the hope of a new day darkened by violence and uncertainty.

"So to advance security, opportunity and justice -- not just in Kabul, but from the bottom up in the provinces -- we need agricultural specialists and educators, engineers and lawyers. That's how we can help the Afghan government serve its people and develop an economy that isn't dominated by illicit drugs. And that's why I'm ordering a substantial increase in our civilians on the ground. That's also why we must seek civilian support from our partners and allies, from the United Nations and international aid organizations -- an effort that Secretary Clinton will carry forward next week in The Hague," he said.

Pointing out that at a time of a global economic crisis, the President said it was tempting to believe that the US could shortchange this civilian effort. But he The President emphasised that US efforts in Afghanistan and Pakistan would fail if it did not invest in the future of the two countries.

He said there would be a new regime of accountability in the execution of this war, beginning with contractors, and stretching to demanding clearly understood goals:

"There is an uncompromising core of the Taliban. They must be met with force, and they must be defeated. But there are also those who've taken up arms because of coercion, or simply for a price. These Afghans must have the option to choose a different course. And that's why we will work with local leaders, the Afghan government, and international partners to have a reconciliation process in every province. As their ranks dwindle, an enemy that has nothing to offer the Afghan people but terror and repression must be further isolated. And we will continue to support the basic human rights of all Afghans -- including women and girls.

"Going forward, we will not blindly stay the course. Instead, we will set clear metrics to measure progress and hold ourselves accountable. We’ll consistently assess our efforts to train Afghan security forces and our progress in combating insurgents. We will measure the growth of Afghanistan’s economy, and its illicit narcotics production. And we will review whether we are using the right tools and tactics to make progress towards accomplishing our goals," he said.

Mr Obama said that the US would form a contact group on Afghanistan, involving countries that had a stake in the security of the region, including Iran, Russia, India and China.

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