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GS Paper: GS2-18.Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests.

  • Society for Worldwide Interbank Financial Telecommunication (SWIFT)

    The U.S., Europe and several other western nations are moving to exclude Russia from SWIFT, an international network for banks worldwide to facilitate smooth money transactions globally.

    What is SWIFT?

    • SWIFT is an international network for banks worldwide to facilitate smooth money transactions globally.
    • It is basically a messaging network used by banks and financial institutions globally for quick and faultless exchange of information pertaining to financial transactions.
    • The Belgium-headquartered SWIFT connects more than 11,000 banking and securities organizations in over 200 countries and territories.
    • First used in 1973, it went live in 1977 with 518 institutions from 22 countries, its website states.

    What exactly is it?

    • SWIFT is merely a platform that sends messages and does not hold any securities or money.
    • It facilitates standardized and reliable communication to facilitate the transaction.

    How does it facilitate banking?

    • Each participant on the platform is assigned a unique eight-digit SWIFT code or a bank identification code (BIC).
    • If a person, say, in New York with a Citibank account, wants to send money to someone with an HSBC account in London, the payee would have to submit to his bank the London-based beneficiary’s account number along with the eight-digit SWIFT code of the latter’s bank.
    • Citibank would then send a SWIFT message to HSBC. Once that is received and approved, the money would be credited to the required account.

    How is the organization governed?

    • SWIFT claims to be neutral. Its shareholders, consisting of 3,500 firms across the globe, elect the 25-member board, which is responsible for oversight and management of the company.
    • It is regulated by G-10 central banks from Belgium, Canada, France, Germany, Italy, Japan, The Netherlands, the UK, the US, Switzerland, and Sweden, alongside the European Central Bank.
    • Its lead overseer is the National Bank of Belgium.
    • The SWIFT oversight forum was established in 2012.
    • The G-10 participants were joined by the central banks of India, Australia, Russia, South Korea, Saudi Arabia, Singapore, South Africa, the Republic of Turkey, and the People’s Republic of China.
    • Europe, Middle East, and Africa are highest contributors to SWIFT.

    What happens if one is excluded from SWIFT?

    • US excluding Russia from SWIFT could have serious repercussions on how Russian banks carry out international financial transactions.
    • If a country is excluded from the most participatory financial facilitating platform, its foreign funding would take a hit, making it entirely reliant on domestic investors.
    • This is particularly troublesome when institutional investors are constantly seeking new markets in newer territories.
    • An alternative system would be cumbersome to build and even more difficult to integrate with an already expansive system.

    Are any countries excluded from SWIFT?

    • Iranian banks were ousted from the system in 2018 despite resistance from several countries in Europe.
    • This step, while regrettable, was taken in the interest of the stability and integrity of the wider global financial system, and based on an assessment of the economic situation.

     

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  • What is the Munich Security Conference (MSC)?

    The latest edition of MSC a week ago assumed significance as it was here that the Ukrainian President appealed for help ahead of the Russian invasion.

    Munich Security Conference

    • The Munich Security Conference is an annual conference on international security policy that has been held in Munich, Bavaria, Germany since 1963.
    • It brings together heads of state, diplomats and business leaders from the world’s leading democracies for three days of meetings and presentations.
    • It is the world’s largest gathering of its kind.
    • Over the past four decades the MSC has become the most important independent forum for the exchange of views by international security policy decision-makers.

    How did it begin?

    • When the MSC was founded in 1963, it was envisioned as a way for leaders, mostly from the West, to discuss threats and dangers in an informal setting.
    • Most of the concerns at the time stemmed from the Cold War, which had dominated world politics for nearly a half-century.
    • Over time, the conference evolved into a platform for airing grievances and workshopping political agreements, some of them outside the realm of East-West relations.
    • In recent years, the conference has often invited leaders from authoritarian countries, and even adversaries, to speak.

     

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  • Russian actions in Ukraine hardly pass the test for strategic victory

    Context

    On February 24, Russian President Vladimir Putin launched “special military operations” with the objective of “demilitarising Ukraine” but not “occupying” it.

    Why it was a crisis in the making?

    • Redrawing national boundaries by force: After 1945, this is the second time that national boundaries are being redrawn by force; the first was the 1999 North Atlantic Treaty Organization (NATO) air strikes on Serbian forces that led to the creation of Kosovo.
    • Russian and Chinese protests about NATO undertaking “out of area operations” without United Nations Security Council approval carried little weight.
    • After the fall of the Berlin Wall in late-1989, then U.S. Secretary Of State had assured the Soviet President that “there would be no extension of NATO’s jurisdiction one inch to the east”.
    • Rather than look for a new European security framework, the newly independent Baltic and central European states sought security in a U.S.-led NATO.
    • Beginning in 1999, NATO has added 14 new members in stages.
    • At the NATO summit in 2008, at U.S. President George Bush’s urging, an in-principle opening for Ukraine and Georgia was announced, though France and Germany, conscious of Russian concerns, successfully opposed defining a time frame.
    • Later that year, Russia intervened in Georgia on the grounds of protecting the Russian minorities and took over the northern provinces of Abkhazia and South Ossetia.
    • Annexation of Crimea:  In 2014 Mr. Putin annexed Crimea.
    • For Russia, Crimea is vital as the peninsula hosts Russia’s Black Sea fleet, providing it access to the Mediterranean and its bases at Latakia and Tartus in Syria.
    • Despite no timeline for membership, Ukraine was made a NATO Enhanced Opportunity Partner in 2020.
    • The presence of British and U.S. warships in the Black Sea began to increase.
    • In 2019, the U.K. entered into a cooperation agreement with Ukraine to develop two new naval ports, Ochakiv on the Black Sea and Berdyansk on the Sea of Azov, a move that Russia saw as potentially threatening.
    • Beginning with NATO’s bombing of Serbia in 1999, interventions in Afghanistan, Iraq and Libya and colour revolutions to engineer regime changes, the U.S.’ unilateral withdrawal from the Anti-Ballistic Missile (ABM) Treaty in 2002 coupled with missile defence deployments in Poland and Romania, Russia’s grievances were accumulating.

    Faltering diplomacy

    • France and Germany initiated talks between Ukraine and Russia under the Normandy format leading to the Minsk agreements, in 2014 and 2015.
    • The first was for a ceasefire between Ukraine and the Russian-backed separatists and the second was between Ukraine, Russia, the two separatist regions of Luhansk and Donetsk and the Organization for Security and Co-operation in Europe (OSCE).
    • Supportive declarations by France and Germany were intended to address Russian security concerns.
    • Ukraine undertook to introduce certain constitutional amendments to provide a degree of autonomy to the two provinces and Russia was to assist in withdrawal of all foreign forces.
    • However, neither side implemented and positions have only hardened since.
    • Russia’s threatening moves made NATO members, especially the Baltic states (Estonia, Latvia and Lithuania) and the central Europeans like Poland and Romania, especially nervous.
    • Finally, NATO remained united but unable to provide an off-ramps solution.

    Implications for Russia

    • NATO has been rejuvenated, the trans-Atlantic unity strengthened and Russia’s economic ties with Europe have been adversely impacted.
    • Given Russia’s considerable foreign exchange reserves, of nearly $640 billion, sanctions imposed by the U.S. and EU may not hurt immediately but eventually will begin to bite both the oligarchs and the common people.
    • Worse, Russia will become more dependent on China — for political support as well as a market for its energy exports. 
    • This will eventually weaken its hand in central Asia.

    Conclusion

    For Mr Putin challenge is to constrain the adversary’s options while increasing one’s own options and space for manoeuvre. His actions this week may yield tactical gains but hardly pass the test for strategic victory.

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  • Places in news: Chernobyl

     

    Ukrainian authorities said that radiation levels had increased in the Chernobyl exclusion zone after the Russian Invasion.

    What is Chernobyl Disaster?

    • The Chernobyl disaster was a nuclear accident that occurred on 26 April 1986 at the No. 4 reactor in the Chernobyl Nuclear Power Plant, near the city of Pripyat in the north of Ukraine (formerly USSR).
    • It is considered the worst nuclear disaster in history both in cost and casualties.
    • It is one of only two nuclear energy accidents rated at seven—the maximum severity—on the International Nuclear Event Scale.
    • The other such incident was the 2011 Fukushima Daiichi nuclear disaster in Japan.

    Destruction caused

    • Some sources state that two people were killed in the initial explosions, whereas others report that the figure was closer to 50.
    • Dozens more people contracted serious radiation sickness; some of them later died.
    • Between 50 and 185 million curies of radionuclides (radioactive forms of chemical elements) escaped into the atmosphere.
    • This is several times more radioactivity than that created by the atomic bombs dropped on Hiroshima and Nagasaki, Japan.
    • This radioactivity was spread by the wind over Belarus, Russia, and Ukraine and soon reached as far west as France and Italy.

     

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  • Russian Aggression on Ukraine and International Law

    The Russian annexation of Russia has been condemned widely and raised several questions concerning violation of international law.

    How is Russia violating the UN Charter?

    (1) Principle of Non-Intervention

    • The Russian attack on Ukraine is violative of the non-intervention principle, and amounts to aggression under international law.
    • The principle of non-intervention in domestic affairs is the foundational principle on which existing international order is based.
    • The principle is enshrined in article 2(4) of the UN Charter requiring states to refrain from using force or threat of using force against the territorial integrity or political independence of any state.
    • It prohibits any kind of forcible trespassing in the territory of another state, even if it is for temporary or limited operations such as an ‘in and out’ operation.

    (2) Principle of Non-Aggression

    • The UN General Assembly Resolution 3314 (1974) defines aggression as the use of armed force by a state against the sovereignty, territorial integrity or political independence of another state.
    • Additionally, allowing one’s territory to be used by another state for aggression against a third state, also qualifies as an act of aggression.
    • Accordingly, Belarus can also be held responsible for aggression as it has allowed its territory to be used by Russia for attacking Ukraine.
    • Aggression is also considered an international crime under customary international law and the Rome statute establishing the International Criminal Court.

    (3) Principle of Political Independence

    • Russia’s desire to keep Ukraine out of NATO is a prime reason for its use of force against Ukraine.
    • This is violative of Ukraine’s political independence under article 2(4) as Ukraine being a sovereign state is free to decide which organizations it wants to join.
    • Also, by resorting to use of force, Russia has violated article 2(3) which requires the states to settle their dispute by peaceful means in order to preserve international peace and security.

    (4) Principle of Self-Defence

    • In face of the use of force by Russia, Ukraine has the right to self-defence under international law.
    • The UN Charter under article 51 authorizes a state to resort to an individual or collective self-defense until the Security Council take steps to ensure international peace and security.
    • In this case, it seems implausible for the UNSC to arrive at a decision as Russia is a permanent member and has veto power.

    Russia’s hype:

    (1) Nuclear escalation

    • It has been claimed by Russia that Ukraine may acquire nuclear weapons with the help of western allies.
    • However, the International Court of Justice (ICJ) in the Legality of Threat of Nuclear Weapons case held that mere possession of nuclear weapons does not necessarily constitute a threat.
    • Thus, even if Ukraine has, or were to acquire nuclear weapons in the future, it does not become a ground for invoking self-defence by Russia.

    (2) Aggression against Russia

    • Further, mere membership in a defence alliance such as NATO cannot necessarily be considered as a threat of aggression against Russia.
    • Thus, here too Russia cannot invoke self-defence.

    (3) Act in self-defence

    • Russia can also not invoke anticipatory self-defence.
    • Such invocation according to the Caroline test would require that the necessity of self-defence was instant, overwhelming, leaving no choice of means, and no moment for deliberation.
    • However, this is not the case with Russia.

    What options is Ukraine left with?

    • Ukraine has a right under international law to request assistance from other states in form of military assistance, supply of weapons etc.
    • On the other hand, Russia has also claimed that it is acting in self-defence.
    • This claim is questionable, as there has been no use of force, or such threats against Russia by Ukraine.

     

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  • India’s Ukraine dilemma

    Context

    As diplomatic efforts to de-escalate the crisis in Ukraine continue, the time has come for Delhi to devote greater attention to Central Europe, which is at the heart of the contestation between Russia and the West.

    Recognising the role of Central Europe in shaping the geopolitics of Europe

    • Central Europe today has an identity of its own and the political agency to reshape European geopolitics.
    • It is important to remember that Central Europe is no longer just a piece of territory that Russia and the Western powers can divide into “spheres of influence”.
    • A grand bargain between Russia and the West will work only if it is acceptable to Central Europe.

    Need for diplomatic balancing on Ukraine by India

    • As war clouds gather over Ukraine, there is much focus on India’s diplomatic balancing act, its unwillingness to publicly caution Russia against invading Ukraine, and above all its reluctance to defend Ukraine’s sovereignty.
    • This is not the first time that Russia’s approach to Central Europe has put Delhi in a tight corner.
    • The Soviet invasion of Hungary in 1956, and Czechoslovakia in 1968, exposed an important tension in Indian diplomacy.
    • In Central Europe, India’s pragmatism in not offending Moscow (an important partner) runs against the utter unacceptability of Putin’s doctrine of “limited sovereignty”, a continuation of the Soviet era policy of saying that the socialist states must subordinate their sovereignty for the sake of the “collective interests of the socialist bloc”.

    Factors shaping India’s stand

    • Tension with China: The prospective Russian invasion of Ukraine comes amidst India’s military tensions with China and Delhi’s continued dependence on Moscow’s military supplies.
    •  It also comes at a time when Delhi is trying to build an international coalition against China’s brazen attacks on the territorial sovereignty of its Asian neighbours.
    • For the moment, Delhi is in a safe corner by calling for diplomacy in resolving the Ukraine crisis.
    • But if Russia does invade Ukraine, the pressure on India to rethink its position will mount.
    • Any such review must eventually lead to an independent appreciation of the geopolitics of Central Europe.

    Five factors that must shape India’s perspective on the geopolitics of Central Europe

    • 1] No taker for sphere of influence: Russia’s claim for a broad sphere of influence in the region has no takers in Central Europe.
    • 2]Need for political accommodation: While Russia has legitimate security interests in Central  Europe, they can only be realised through political accommodation.
    • Moscow cannot enforce a sphere of influence against the will of its prospective members.
    • 3] NATO as better option: few Central Europeans buy into the French vision for “European sovereignty” and “strategic autonomy”. 
    • They bet that NATO, led by the US, is a better option than a Europe that is independent of Washington.
    • They view with even greater distaste the prospects for Russo-German condominium over Central Europe.
    • 4] Resentment against imposition of political value:While they are eager to be part of the Western institutions, Central Europeans resent any attempt by the US and EU to impose political values that run against their traditional cultures.
    • 5] Sub regional institution: Central Europeans are eager to develop sub-regional institutions that can enhance their identity.
    • The Visegrad Four — Poland, Hungary, Czech Republic, and Slovakia — is one of them.
    • The so-called “Three Seas Initiative” brings together 12 European states running in a vertical axis from the Baltic Sea in the north to the Adriatic and Black Sea in the south.

    Conclusion

    Delhi can’t forever view this critical region through the prism of Russia’s conflict with the West. It must come to terms with its growing strategic significance.

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  • What is Permanent Indus Commission?

    A 10-member Indian delegation will visit Pakistan for the annual meeting of the Permanent Indus Commission (PIC) from March 1-3.

    Agenda this year

    • Pakistan has some objections on Indian hydroelectric projects namely Pakal Dul (1,000 MW), Lower Kalnai (48 MW) and Kiru (624 MW) in Chenab basin in Jammu and Kashmir.
    • Pakistan has raised objections on the design of these projects.
    • India, however, asserts that the design of the project is fully compliant with the provisions of the Indus Waters Treaty (IWT).

    Permanent Indus Commission

    • The PIC is a bilateral commission consisting of officials from India and Pakistan, created to implement and manage the goals and objectives, and outlines of the IWT.

    Indus Waters Treaty, 1960

    • The Indus Waters Treaty is a water-distribution treaty between India and Pakistan, brokered by the World Bank signed in Karachi in 1960.
    • According to this agreement, control over the water flowing in three “eastern” rivers of India — the Beas, the Ravi and the Sutlej was given to India
    • The control over the water flowing in three “western” rivers of India — the Indus, the Chenab and the Jhelum was given to Pakistan.

    Rights accorded to India

    • The treaty allowed India to use western rivers water for limited irrigation use and unrestricted use for power generation, domestic industrial and non-consumptive uses such as navigation, floating of property, fish culture, etc.
    • It lays down precise regulations to build any water or hydel projects.
    • India has been given the right to generate hydroelectricity through run-of-the-river projects on the western rivers subject to specific criteria for design and operation.
    • The pact also gives the right to Pakistan to raise objections to designs of Indian hydroelectric projects on the western rivers.

    Based on equitable water-sharing

    • Back in time, partitioning the Indus rivers system was inevitable after the Partition of India in 1947.
    • The sharing formula devised after prolonged negotiations sliced the Indus system into two halves.
    • Equitable it may have seemed, but the fact remained that India conceded 80.52 percent of the aggregate water flows in the Indus system to Pakistan.
    • It also gave Rs 83 crore in pounds sterling to Pakistan to help build replacement canals from the western rivers. Such generosity is unusual of an upper riparian.
    • India conceded its upper riparian position on the western rivers for the complete rights on the eastern rivers.
    • Water was critical for India’s development plans.

    Significance of the treaty

    • It is a treaty that is often cited as an example of the possibilities of peaceful coexistence that exist despite the troubled relationship.
    • Well-wishers of the treaty often dub it “uninterrupted and uninterruptible”.
    • The World Bank, which, as the third party, played a pivotal role in crafting the IWT, continues to take particular pride that the treaty functions.

    Need for a rethink

    • The role of India, as a responsible upper riparian abiding by the provisions of the treaty, has been remarkable.
    • However, of late, India is under pressure to rethink the extent to which it can remain committed to the provisions, as its overall political relations with Pakistan becomes intractable.

     

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  • India-UAE free trade agreement

    Context

    India has embarked on a new journey — a new free trade agreement (FTA) journey to be precise — with renewed zeal and vigor.

    India’s revamped FTA strategy

    • Gaining meaningful market access: India’s approach towards FTAs is now focusing more on gaining meaningful market access and facilitating the Indian industry’s integration into global value chains.
    • Under the revamped FTA strategy, the Government of India has prioritized at least six countries or regions to deal with, in which the United Arab Emirates (UAE) figures at the top of the list for an early harvest deal.
    • The others are the United Kingdom, the European Union, Australia, Canada, Israel, and a group of countries in the Gulf Cooperation Council (GCC).
    • The early harvest deal is to be enlarged into a comprehensive FTA in due course of time.

    Why does the FTA with UAE matter?

    • Important economic hub: The UAE has emerged as an important economic hub not just within the context of the Middle East/West Asia, but also globally.
    • Strategic location: The UAE, due to its strategic location, has emerged as an important economic centre in the world.
    • Although the UAE has diversified its economy, ‘the hydrocarbon sector remains very important followed by services and manufacturing.
    • Within services, financial services, wholesale and retail trade, and real estate and business services are the main contributors.
    • As part of the GCC, the UAE has strong economic ties with Saudi Arabia, Kuwait, Bahrain, and Oman, meaning the UAE shares a common market and a customs union with these nations.
    • Under the Greater Arab Free Trade Area (GAFTA) Agreement, the UAE has free trade access to Saudi Arabia, Kuwait, Bahrain, Qatar, Oman, Jordan, Egypt, Iraq, Lebanon, Morocco, Tunisia, Palestine, Syria, Libya, and Yemen.

    India-UAE trade and investment ties

    • India and the UAE established diplomatic relations in 1972.
    • The India-UAE total trade merchandise has been valued at U.S.$52.76 billion for the first nine months of the fiscal year 2021-22, making the UAE India’s third-largest trading partner.
    • As India and the UAE strive to further deepen trade and investment ties, the soon-to-be-announced early harvest agreement comes at the most opportune time.
    • The aim is to boost bilateral merchandise trade to above U.S.$100 billion and services trade to U.S.$15 billion in five years.
    • Attractive export market: As we are witnessing a big turnaround in manufacturing, the UAE would be an attractive export market for Indian electronics, automobiles, and other engineering products.
    • Ninth biggest investor: The UAE’s investment in India is estimated to be around U.S.$11.67 billion, which makes it the ninth biggest investor in India.
    • On the other hand, many Indian companies have set up manufacturing units either as joint ventures or in Special Economic Zones for cement, building materials, textiles, engineering products, consumer electronics, etc.

    Challenges

    • The UAE tariff structure is bound with the GCC, and the applied average tariff rate is 5%. Therefore, the scope of addressing Non-Tariff Barriers (NTBs) becomes very important.
    • The reflection of NTBs can be seen through Non-Tariff Measures (NTMs) which have mostly been covered by Sanitary and Phytosanitary (SPS) and Technical Barriers to Trade (TBT). The UAE has 451 SPS notifications.
    • Most of the notifications are related to consumer information, labelling, licensing or permit requirements and import monitoring and surveillance requirements.
    • These compliances pose a challenge for Indian exporters.

    Conclusion

    This FTA with the UAE will pave the way for India to enter the UAE’s strategic location, and have relatively easy access to the Africa market and its various trade partners which can help India to become a part of that supply chain, especially in handlooms, handicrafts, textiles and pharma.

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  • India must prioritise stability in Myanmar

    Context

    One year ago, the military in Myanmar attempted to grab power from the elected civilian government in a dramatic coup. Meanwhile, the deposed civilian lawmakers who were elected in free-and-fair elections in November 2020 put together their own government known as the National Unity Government (NUG).

    The current situation in Myanmar

    • The coup faced popular resistance from the first day, with mass protests bringing the country to a halt.
    • According to the Assistance Association for Political Prisoners, as of January 28, 1,499 civilians have been killed in Myanmar since the coup.
    • Dozens of civilian militias, called People’s Defence Forces (PDF), now armed with more sophisticated weapons, mushroomed in nearly every region and state.
    • Today, the military is having to fight on multiple fronts, as even powerful ethnic armed groups in the north, northwest, and east have joined forces with the PDFs.

    India’s approach towards situation in Myanmar

    • Balanced approach: Since the coup, India has taken a balanced diplomatic approach on Myanmar, calling for restraint, restoration of democracy, and release of political prisoners, but also maintaining its lines of communication with the military.
    • Avoiding sanctions: India has also firmly stayed away from imposing sanctions on the junta.

    Why does India need to recalibrate its approach?

    • The last 12 months have made it clear that the military is incapable of providing the kind of political, economic, and social stability that India needs in Myanmar to advance its interests, including development projects.
    • Public faith in the military as a state institution is at its lowest.
    • Northeastern border issue: For New Delhi, India’s Northeastern border with Myanmar remains on top of the bilateral agenda.
    • However, even on this, the military has damaged whatever semblance of stability was left.
    • Sagaing region, which borders three Northeast Indian states, has seen the highest number of clashes so far.
    • Chin state, bordering Mizoram and Manipur, has seen dramatic military offensives in civilian areas, which have forced thousands to flee into India.
    • The Myanmar military has roped in Manipuri insurgents as mercenaries to attack anti-junta forces, in exchange for safe haven.

    Way forward

    • New Delhi must reconsider its partnerships in Myanmar and invest in those entities that can not only provide a stable political environment overall but also effectively secure its security interests along the border.
    • The NUG enjoys much more mass popularity than the military, which means it is in a position to restore calm.
    • China has strong links with ethnic armed groups in northern Myanmar, but not with the new PDFs.
    • So, if India really wants to offset Chinese influence in Myanmar, it needs to take this opportunity to forge new friendships.

    Conclusion

    It is time India rapidly expanded its links with these entities, instead of playing by the old rules.

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  • World Food Programme (WFP)

    India signed an agreement with the United Nation’s World Food Programme (WFP) for the distribution of 50,000 tonnes of wheat that it has committed to sending Afghanistan as part of humanitarian assistance.

    What is WFP?

    • The WFP is the food-assistance branch of the United Nations (UN).
    • It is the world’s largest humanitarian organization focused on hunger and food security, and the largest provider of school meals.
    • Founded in 1961, it is headquartered in Rome and has offices in 80 countries.
    • In addition to emergency food relief, WFP offers technical assistance and development aid, such as building capacity for emergency preparedness and response, managing supply chains and logistics, etc.
    • The agency is also a major provider of direct cash assistance and medical supplies and provides passenger services for humanitarian workers.

    Feats achieved

    • As of 2020, it served 115.5 million people in 80-plus countries, the largest since 2012.
    • The WFP was awarded the Nobel Peace Prize in 2020 for its efforts to provide food assistance in areas of conflict and to prevent the use of food as a weapon of war and conflict.

    WFP in Afghanistan

    • The wheat will be taken through Pakistan to the Afghan border crossing and handed over to WFP officials in Kandahar.
    • The WFP runs its own logistics network inside Afghanistan, partnering with civil society groups.

     

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