This from Indian newsletter Straight from the Hip:

As an ad line for a tobacco company once said, when such ads were permitted, ‘you’ve come a long way, baby!

The takeover of Fannie and Freddie, which, between them have outstanding mortgages of over $ 5 trillion, was necessary because a further fall in house prices would jeopardise them, as well as, given their size, the US financial system. It seems that Freddie and Fannie were adept at misreporting the true picture, and aided in so doing by all the regulatory agencies They had claimed to have enough regulatory capital, but didn’t, by hiding losses on mortgage related securities simply by claiming them to be temporary!

Now, the US is a consumer economy, with consumption accounting for some 70% of its GDP. US consumers borrow for overconsumption, and were comforted by the fact that the value of their assets, chiefly stocks and properties, were rising fast enough to enable them to borrow for consumption. With stockmarkets having fallen and property prices falling too, that comfort has disappeared. The Government tried to inject money through tax refunds, but those have been used. So, a further fall in property prices is likely to send the US economy into a deeper recession which would, of course, have its negative impact on global stock markets.

In India our political leaders are on a governance sabbatical and are ruining anything they touch, for no good reason. In West Bengal, political rhetoric has made the State lose the last hope of an industrial resurgence; negotiations between the Government and Mamta are over and Tata Motors would pull out. If a group such as the Tatas cannot succeed in as prestigious a project as the Nano, one doubts if others would be brave enough to venture. Orissa, Maharashtra, J&K are also having their own sets of problems. With general elections due before May 09, one can expect the governance and common sense sabbatical to continue.

Poor governance obviously tells on the economy. The market got elated because inflation for the week ended Aug 30 came down moderately, to 12.1% and because industrial production for July was higher than expected at 7.1%. But have a look at the indirect tax collections for the first 5 months of the year Apr-Aug. Whilst growth in indirect taxes has been 12.6% for this period, growth in excise duties has been only 3.7%. This suggests an anamoly with the better July IIP figure, for excise collections ought to move more or less in tandem with growth.

Poor governance and planning is, for example, set to derail increase in power generation capacity. Of the approximately 100,000 MW of power generation about two thirds is coal based. Well, since coal mines are managed by the Government, guess what? Coal supply has not been organised for all new projects, hence the power generating capacity would not be enough to power the forecast GDP growth! Some 68,000 MW of new capacity is doubtful because of poor coal linkages. In any case, there is a global movement to curtail the use of coal for its effect on emissions.

Oil prices have fallen to $ 100 providing some relief in our import bill. But OPEC is not likely to allow oil prices to fall further.

Our Government is doing nothing to curtail consumption of petro products; on the contrary, it encourages its overuse by subsidising petrol and diesel, for which there can be no justification on grounds of social equity. Running into a fiscal problem, it is now thinking of silly ways to have dual pricing of diesel involving a higher than subsidised price for industry, SEZs and defence. Given the fact that poor supervision only spurs greater corruption, is this not a bad idea?

In fact, the Government has a huge fiscal vested interest in encouraging the auto industry, for the various taxes it collects from it. But reality bites, and car sales are down 2.4% in August, and commercial vehicle sales down 6.3% thanks to both higher interest rates and higher fuel rates. The only viable option is efficient and affordable public transport, but the movement towards that is pathetically slow.

Because our political leaders are busier thinking of ways to embarrass the other than of thinking of ways to improve the economy, India has slipped two ranks, to # 122 (out of 181) in a World Bank list of ease of doing business. Even Pakistan and Bangladesh have higher ranks, for chrissake! Perhaps, after the Singur experience the rank next year would be even lower.

In corporate news, Tata Motors is reportedly planning a $ 500-600 m. overseas issue with differential voting rights, the first such. Tata Tele is likely to sell a 12% stake, for about Rs 5000 crores to companies like DeCoMo and France Telecom.

The sensex closed last week with a loss of 483 points, at 14,000, and the NIFTY dropped 123 to end at 4228. The increases, with arrears, permitted in the Sixth Pay commission is expected to be released soon and can be expected to lead to a splurge in Divali spending. The market may briefly rally then, providing an opportunity to exit.

Source: Henry Paulson Is Home Loan

They, therefore, maintain a majority stake in 18 public sector banks, which have 70% of the business, and have kept a cap of 74% foreign holding in the telecom sector. This hurts economic growth.

At a recent analyst meet, the CMD of Punjab National Bank, was asked by this columnist why it was that, given their pedigree (it is 113 years, SBI is over 200 years old) and their finances (both have produced excellent results), their market caps are, respectively, $4 and $ 23 b., far lower than the $450 b. commanded by ICBC of China, which is far younger and doesn’t produce such impressive results. Although, given China’s earlier start down the path of economic liberalisation, ICBC has a balance sheet more than 7 times larger than SBI.

Perhaps one of the reasons could be the reluctance of Government to bring down its ownership below 51%. In a globalised world this is stupid, because you Lilliputianise your large players (if I may coin a term). Look at the top Fortune 500 list and see how many are family owned. To grow to a global size, firms have to give up stakes and it will be institutional investors who would buy them. Bill Gates would not be the richest man in the world if he had held on to his 78% stake when he first listed; it is now down in the early teens. ICICI Bank is no less Indian even though more than 70% is held by foreign investors.

Dr Chakrabarty, PNB’s ebullient and frank CMD, made a good observation. If, he said, India is to become the third largest economy in the world by 2050, as everyone now believes, there must be financial institutions from India that have become global and will be able to serve the needs of Indian companies that would also have grown. PNB is taking steps to move in that direction.

It will not, however, happen, unless Government lets go of the fear of financial Armageddon if foreigners control the financial sector in India. One should think a majority stake in SBI plus one or two other large banks would be enough; the others must be allowed to grow through organic and inorganic growth.

In telecom the cap is at 74% for foreign holding. This is making it difficult first for Bharti Airtel and now for Reliance Communications, to make a sensible merger/acquisition of MTN of South Africa. Since foreign investors already hold 13% of R Com, Anil Ambani can offer a maximum of 61% (swapping it with a 33% stake in MTN to emerge as the largest holder of the combined entity); besides MTN has to make an open offer for 20% from minority shareholders.

The reason the Government retains majority control has less, however, to do with the wolf at the door syndrome, and more to do with controlling and appropriating the profits. That is why oil and gas companies are being looted. Indian Oil Corporation, a Fortune 500 company, has reported a loss for Q4 ended Mar 08. Prices of petrol, diesel and other petro products are kept artificially subsidised and the oil marketing companies like IOCL have to bear a part of this subsidy. They have run out of money to buy petro products and there is a looming rationing of petrol and diesel. Moreover, because they are partly compensated via issuance of non marketable petro bonds, they have had to borrow heavily from SBI which, in turn, has made its largest repo borrowing of Rs 13000 crores and has had to hike deposit rates.

There was even an asinine suggestion that in order to make up for loss of revenue if excise duties are reduced (the oil sector contributes some Rs 70000 crores, the highest, to tax revenue) the Finance Ministry was thinking of levying a cess on all taxpayers. Look at the ridiculousness of this! It means that for car owners to get cheaper petrol, all tax payers must pay! And this has got support of the Left parties!?!

Look further at the insane consequences of this. Facing a liquidity crunch for no fault of its, IOCL is thinking of selling its 7.7% stake in ONGC and 2.4% stake in GAIL!

All this to save car and truck owners the pain of paying market related prices for petrol and diesel! This reduces demand elasticity which is 16% in America and so leads to artificially high demand for them, and hence for oil, pushing up its price. Is this a responsible Government?

Under insistence from its Left coalition partners, the Government is following a policy of not selling profit making PSUs. Now that IOCL, BPCL and HPCL are hurtling towards becoming loss making PSUs one supposes they will be sold at bargain basement prices. Does no one in Government see that this is sheer idiocy?

The Government has to take several steps to make India a more energy efficient nation. One of these is to improve public transportation systems and to discourage private transport. During the past few years it has had hugely buoyant tax resources to allow it to do so. These, sadly, have been frittered away, a lot in subsidies which do not serve their intended purpose. Because of poor ports and roads, it is felt that power generation target of 70,000 MW would fall short by 20%, as the equipment would not be able to reach the work sites on time.

Look at the Government’s appetite for tax in the case of a tobacco company, for instance. Granted, tobacco is harmful to health and must be taxed. In the case of ITC, for the year ended Mar 08, the Government collected Rs 15,398 crores through excise and corporate tax, leaving a profit of Rs 3120 for shareholders. The ratio of Government share to shareholders’ share is 5:1. None of this has, however, been used for providing tobacco farmers an alternative livelihood to wean them away from tobacco.

In corporate news, Tata Motors is coming out with a rights issue of Rs 7200 crores to part fund its acquisition of Jaguar Land Rover.

Last week the sensex fell 234 points to close at 16415 and the NIFTY fell 76 to close at 4870. The fiscal deficit is hugely understated by all the off balance sheet bonds given to oil and fertiliser companies; the RBI Governor has quietly stated as much. Interest rates would have to be raised as inflation is not under control, partly due to Governments fiscal incontinence and largely due to its thoughtless policies of state control over important sectors (banking, oil & gas, coal). The US is also likely to end its interest rate cut cycle and start to raise them. Rising interest rates makes debt markets relatively more attractive. So it is unlikely that the sensex would do anything dramatic this calendar year.

Source:  Who’s afraid of East India Co Wolf?

Before you try to profit from high oil prices, you need to know if high prices are here to stay.

Alex Green at InvestmentU.com is not so sure. “A lot of smart people are beginning to believe this bull market will die hard,” says Alex, in his article “Is Oil Becoming the ‘Mother of All Bubbles?’“

Alex quotes Michael Lynch, the president of Strategic Energy & Economic Research, who says oil has now become “the mother of all bubbles,” and says that Lynch “has a few pertinent facts on his side.”

Keith-Fitzgerald at Money Morning says the secret to oil prices is understanding the oil prices primary drivers: supply, demand, and interruption. And Keith sees huge demand in China and India.

“Here in China, they’re using fuel at an accelerating rate. Part of that is the increasing reliance on fuel oil, but an even bigger catalyst is simply because companies like Chery Automobile, Geely Automobile (0175: Hong Kong), and Chongqing Changan Automobile Co. Ltd., are producing inexpensive, gas-powered cars for the masses.

“The same is true in India where Tata Motors (TTM: NYSE) $2,500 car is opening up driving and vehicle ownership to millions of consumers who otherwise would never have also become motorists.” Read on to learn how to profit from China and India’s gas guzzling.

Profit Hunter editor Manraaj Singh has another spin on how to profit from high oil prices in his article Arab Oil Wealth to Dwarf US Economy.

Manraaj says the best way to profit from what he calls the “petrodollar bandwagon” is to look at where the world’s sovereign wealth funds (SWFs) are investing. SWFs already control $3.5 trillion in assets — more than the UK, French or German economies are worth — and the fastest growing funds are based in oil producing countries that don’t figure on most investor’s maps.

“Now you can’t invest directly in a SWF,” says Manraaj, “but they’re an excellent way of keeping track of where the money is going today and where the biggest economic booms are happening right now.”

Manraaj doesn’t advise directly investing in oil, as there are too many unknowns that go into its price. Instead, he focused on uncovering the investment opportunities being opened up by this dramatic shift in economic power.” Read on to learn more about following the oil money.

Peak Oil guru Byron King and editor of Outstanding Investments puts high oil prices in a different light. “High crude oil prices have a lot do with the decline in value of the dollar,” says Byron in his article Scarcity Is Expensive.

What should you do as an investor to protect yourself from a declining dollar?

Here is Byron’s abbreviated list of recommendations:

1. Buy gold and silver
2. Own mining shares
3. Own energy plays. What forms of energy? All of them — oil, gas, coal, nuclear, wind, solar, geothermal, biofuels
4. Own energy service plays
5. Own infrastructure plays
6. Buy soft commodities, but only if you really understand how to do this

Read on at Outstanding Investments about how to protect your wealth from the dollar’s demise.

Oil prices today hit an intraday high of $118.99 a barrel, the highest level since April 28, when the price of oil per barrel reached an intraday record of $119.93.

“A lot of smart people are beginning to believe this bull market in oil will die hard,” says Alexander Green over at InvestmentU.com.

“According to Michael Lynch, President of Strategic Energy & Economic Research, oil has now become ‘the mother of all bubbles.’ He has a few pertinent facts on his side.

“The U.S. is the world’s largest oil consumer. Yet our economy is in a slump. Despite the sharp rise in oil prices this year, oil demand in the U.S. is actually down 2% so far.”

“Higher crude oil prices are reducing demand in so-called first-tier countries,” says Money Morning’s Keith Fitz-Gerald. “But when it comes to the rest of the planet, all bets are off.”

“Here in China, they’re using fuel at an accelerating rate. Part of that is the increasing reliance on fuel oil, but an even bigger catalyst is simply because companies like Chery Automobile, Geely Automobile (0175: Hong Kong), and Chongqing Changan Automobile Co. Ltd., are producing inexpensive, gas-powered cars for the masses.

“The same is true in India where Tata Motors (TTM: NYSE) $2,500 car is opening up driving and vehicle ownership to millions of consumers who otherwise would never have also become motorists.

Read on to learn how to profit from China and India’s gas guzzling.

The first is obvious – even though most folks still don’t want to believe it. Data suggests we’re burning through the world’s petroleum reserves four times faster than we’re finding new ones. We haven’t had a major new discovery of significance in 30 years. And, adding insult to injury, we still don’t have workable substitutes in place (alternative energy technologies such as fuel cells, for instance), even though we’ve had decades of warning to get our act together.

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The second, demand, is tougher to call. On one hand, higher prices are reducing demand in so-called first-tier countries. But when it comes to the rest of the planet, all bets are off.

Here in China, they’re using fuel at an accelerating rate. Part of that is the increasing reliance on fuel oil, but an even bigger catalyst is simply because companies like Chery Automobile, Geely Automobile (0175: Hong Kong), and Chongqing Changan Automobile Co. Ltd., are producing inexpensive, gas-powered cars for the masses.

The same is true in India where Tata Motors (TTM: NYSE) $2,500 car is opening up driving and vehicle ownership to millions of consumers who otherwise would never have also become motorists.

And they’re gearing up for more. Read on to learn how to profit from China and India’s gas guzzling.

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The first is obvious – even though most folks still don’t want to believe it. Data suggests we’re burning through the world’s petroleum reserves four times faster than we’re finding new ones. We haven’t had a major new discovery of significance in 30 years. And, adding insult to injury, we still don’t have workable substitutes in place (alternative energy technologies such as fuel cells, for instance), even though we’ve had decades of warning to get our act together.

The second, demand, is tougher to call. On one hand, higher prices are reducing demand in so-called first-tier countries. But when it comes to the rest of the planet, all bets are off.

Here in China, for example, they’re using fuel at an accelerating rate. Part of that is the increasing reliance on fuel oil, but an even bigger catalyst is simply because companies like Chery Automobile Co. Ltd., Geely Automobile Holding Ltd., and Chongqing Changan Automobile Co. Ltd., are producing inexpensive, gas-powered cars for the masses.

The same is true in India where Tata Motors Ltd. (TTM) $2,500 car is opening up driving and vehicle ownership to millions of consumers who otherwise would never have also become motorists.

And they’re gearing up for more. China Petrochemical Development Corp., Sinopec Shanghai Petrochemical Co. Ltd.,  and China National Petroleum Corp. are adding as much as 24% to their crude oil refining capacity in the next three years. Much of that is simply to cope with an economy that’s risen at 10.6% the first three months of 2008 – the ninth-straight quarter of double-digit expansion.

China, which is already the world’s second-biggest energy user, will need to import as much as 60% of its oil by 2020, according to Wang Jiacheng, deputy director of the research unit at the National Development and Reform Commission.

Combine that with terrorism, and we have a trifecta of reasons why oil will go far higher.

And there’s nothing in the near term that can prevent it.

Naysayers counter my thesis by arguing that high prices will lead to conservation as the economics of driving become unfavorable. We agree – but even that will take time to happen.

The problem is that China and India, in particular, are getting into the game at a time when they have no experience with low prices. So the “higher” prices that are causing the rest of the world fits are largely irrelevant to those two newcomers.

What’s more, in very practical terms, the only time you really have a real drop in consumption and an increase in efficiency is when consumers buy new cars … and airplanes … and machinery.

But here again the avenues to change are limited.

Not only are Americans tapped out and unable to buy new cars, but their credit is as wrecked as are the financial markets that would otherwise accelerate this process of change.

Here in China, it’s a different ball game. The savings rate is 40% or more, and consumers are so flush with cash that they’re buying new cars and trucks at a breathtaking rate.

That helps explain why the automotive industry here grew 22% last year, putting nearly 9 million new vehicles on the road and substantially boosting the demand for gasoline and diesel fuels.

In recent months, there’s been another argument advanced and the talking heads are trying to blame much of what’s happening with higher prices on speculators.

That’s the financial equivalent of “the dog ate my homework.”

What’s really driving oil prices is the combination of supply and demand imbalances that I’ve sketched out here, and a “fear of interruption” prompted by terrorism.

Global traders are doing nothing more than ensuring that they have access to oil no matter how high prices run. Absent an alternative, the reality is that no country on earth can afford to be without oil and the energy that it provides. This means that traders, whose job it is to procure supplies in the open markets, are simply doing what they are paid to do…make sure their clients can get it when they want it.

It’s like going to the super market. If there are 1,000 eggs and only 100 buyers, the price of an egg will be lower. But reverse the situation with a single egg and 1,000 buyers and you can bet dimes to dollars the price will sky rocket dramatically as buyers bid against each other to get that single – suddenly precious – off-white orb.

It really is that simple.

At some level, this stinks and I’ll be the first to admit that I hate feeling like I’ve been mugged every time I fill up.

But, as an investor, there are plenty of ways to take the sting we feel out of our wallets as a result of all this.

The simplest is to invest in commodities of all types. Not only are commodities a direct beneficiary of higher oil prices, they also demonstrate a remarkable resilience in the face of inflationary pressures like those we face now. Call it a “value meal” if you will.

It’s also a good bet to concentrate on alternative energy. The “tree huggers” who were long maligned as fringe members of our society actually have been right all along, and many will be vindicated in the next few years – especially when it comes to developing the so-called “green technologies.”

Personally, I’m glad to see this take place, since it means there is nothing alternative about alternatives any longer.

And we can profit along the way.

["The View From China" is an investing travelogue chronicling Money Morning Investment Director Keith Fitz-Gerald’s current journey through Mainland China. Fitz-Gerald last wrote about China’s auto industry. Next up: A look at how China and the United States must work closer together to achieve common goals. For more insight on China investments, click here to find out how you can obtain a copy of investing guru Jim Roger’s new best-seller, "A Bull in China," free of charge.]

Analysts had forecast a loss, as Ford posted a $282 million loss a year earlier and a $2.7 billion net loss for full-year 2007.

Chief Executive Officer Alan Mulally aggressively cut costs by $1.7 billion, including $1.2 billion in North America.

Ford further cemented its earnings with impressive international sales numbers and news, including:

• Pre-tax profits soared 237% in Europe (from $219 million to $739 million)
• Pre-tax profits went up 127% in South America (from $113 million to $257 million).
• Pre-tax profit in the Asia/Pacific region was $1 million pre-tax profit in the Asia/Pacific region compared to a $26 million loss last year.
• Ford introduced the Ford Fiesta, an all-new global small car, at the Geneva Motor Show. It’ll be “sold in virtually all of our major worldwide markets by 2010.”

While Ford lost $45 million in pre-tax profits, that number is a significant improvement from last year’s $613 million loss.

“Particularly impressive was the continued strength in Europe,” Calyon Securities analyst Mark Warnsman said in a research note, Reuters reported. “The outstanding result in Europe would have meant little, however, if North America had not pulled itself back to close to breakeven.”

The Dearborn, MI-based company, posted negative revenue gains in North America and Asia – two key markets where it cannot afford to lose market share.

However, Mulally trumpeted Ford’s international sales, which he sees as an indication of future profits. “We remain committed to our key business objectives, including our goal of reaching North America and overall automotive profitability in 2009 despite the challenging economic conditions,” he said.

The company could make even more progress in the second quarter, because it won’t have to worry about a one-time $416 million charge that reflected money Ford spent just to reduce expenses. Also the company expects to close its $2.3 billion sale of the Jaguar and Land Rover brands to Tata Motors Ltd. (TTM) in the next three months.

All totaled, Ford has cut 46,300 jobs in North America in the past two years, Reuters reported. And last year, it negotiated a new contract the United Auto Workers union.

“In the face of strong headwinds, it looks like the turnaround is taking hold,” said Mirko Mikelic, senior portfolio manager at Fifth Third Asset Management, told Bloomberg.

Africa is malnourished, politically impotent, overrun with disease, and teeming with warlords, so it’s no surprise the typical life expectancy is 20%-30% below the global average.

Despite such a daunting outlook, Africa will be the most hotly contested battleground for the two of the world’s most influential powers over the next 50-100 years.

That’s because Africa has become a key economic priority for both India and China – the two Asian powerhouses in the midst of major financial and industrial reformations.

China and India have been home to two of the world’s fastest-growing economies over the past several years, and that momentum is expected to carry through the rest of this year, as well. India’s economy is expected to expand by as much as 9.5% in the current (2008/2009) fiscal year. And China’s economy already has expanded by 10.6% in the first quarter of 2008, despite complications stemming from the U.S. credit crunch, the Chinese New Year, and the worst ice storm the country had seen in decades.

In addition to booming economies, China and India have the world’s two largest populations. The combined population of China and India (Chindia) is approximately 2.4 billion people. And it won’t be long before those 2.4 billion people evolve into the largest consumer class the world has ever known, making Africa – with its vast resources and close proximity – an ideal trading partner.

As a leading exporter of gold, silver, cotton, cocoa, copper and aluminum ore, and oil, Africa is an invaluable ally to emerging economies that will require vast amounts of raw material to sustain growth.

The bottom line: China and India will be vying for Africa’s favor in the years ahead.

Of course, China already has a head start.

“The Chinese Are Everywhere”

In 2006, Beijing hosted the China-Africa Cooperation Forum – an event attended by more than 40 African heads of state. At the forum, China unveiled $9 billion in preferential loans, export credits, and trade incentives – all part of a strategic plan to achieve a preferential status with key African nations.

The meeting was more than a mere publicity stunt to play up Beijing’s humanitarian efforts. It was a symbolic acknowledgment of growing cooperation between the regions.

Trade between Africa and China has grown 40% a year since 2001. In just seven years, trade volume grew from $4.5 billion to as much as $55 billion, meaning that China has emerged as Africa’s third-largest trading partner after the United States and France.

China also has invested tens of billions of dollars directly into African-infrastructure and social-development projects. Some examples:

• In Freetown, the capital of Sierra Leone, office blocks, military headquarters and a refurbished stadium are all the work of planners from Beijing.
• In Uganda, the new State House was built with Chinese money.
• In the city of Rwanda, Chinese companies built 80% of all new roads.
• And in Nigeria, China’s Civil Engineering Construction Corp. is building an $8.3 billion railroad linking Lagos and Kano.

While in Zambia, an “economic partnership zone” that will attract $800 million in investment was promised by the Chinese president on a recent state visit. Even Zimbabwe’s international pariah, Robert Mugabe, has declared: “We have turned East, where the sun rises, and given our backs to the West” – perhaps grateful for Chinese assistance in cultivating crops on land seized from white farmers.

In short, as Granta magazine put it, “the Chinese are everywhere.”

Chinese involvement also has received a slightly warmer welcome than efforts by Western nations. Where western powers have attempted to use aid and investment as bargaining chips to achieve certain political or social reforms, China employs a less-conditional “no-strings-attached” attitude that many African leaders find appealing.

“With the Chinese, we don’t feel any interference in our traditions or politics or beliefs,” said Awad al-Jaz, Sudan’s energy minister.

Most recently, China agreed to take on large-scale infrastructure projects in the Democratic Republic of Congo, in exchange for copper and cobalt reserves. To facilitate the exchange, Congolese and Chinese state-owned enterprises (SOEs) set up a joint venture known as Socomin. The mining company will invest $3 billion, mostly in new mining projects. The profits of Socomin will then be used to repay these mining investments, and also to find Chinese investment in other big infrastructure projects.

Under the agreement, Socomin will raise about ten million metric tons of copper to pay off $12 billion in total investments over a 15-year period.
And last year, the state-owned Industrial and Commercial Bank of China Ltd. took a 20% stake in South Africa’s Standard Bank Group Ltd. for $5.4 billion. Standard Bank is Africa’s largest lender, servicing 18 sub-Saharan countries. And now, China’s government will get a piece of every new loan, every ATM fee, every credit card taken from Standard Bank.

India Follows China’s Path Into Africa

With all China has achieved in the past few years, India is beginning to wake up to the potential benefits of a strong relationship with African nations, many of which are enjoying their fastest growth rates in 30 years.

The first-ever India-Africa summit concluded last week, having laid the groundwork for future cooperation between the regions. The two-day summit – attended by eight heads of African states and delegations from 14 African countries – culminated with the signing of the Delhi Declaration and the Africa-India Framework for Cooperation, two documents designed to build political and financial synergy. The accords stressed cooperation in agriculture, food security, technology, trade, energy and education.

At the summit, Indian Prime Minister Manmohan Singh announced duty-free access to Indian markets for the world’s 50 least-developed countries, 34 of which are located in Africa. Singh also said his nation would more than double India’s credit line to Africa, from $2.15 billion in 2003-2004 to $5.4 billion in 2008-2009, and boost grants and aid to the continent to $500 million in the next five to six years.

“It sounds like something Beijing did a few years ago,” Philip Aves, an economist at South Africa’s Institute of International Affairs, told the Financial Times. “It’s a mini-China approach to dealing with Africa. It has all the same elements, except on a much smaller scale.”

But Prime Minister Singh was careful to point out that, while China has clearly established economic and political inroads in the region, this is not a competition.