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

  • China-led RCEP takes off without India

    The Regional Comprehensive Economic Partnership (RCEP), a mega trade bloc comprising 15 countries led by China has come into existence.

    Try answering this:

    Q.Signing the Regional Comprehensive Economic Partnership (RCEP) agreement would have given more substance to India’s Act East policy. Analyse.

    About RCEP

    • Regional Comprehensive Economic Partnership (RCEP) is a free trade agreement (FTA) between –
    1. The 10 members of ASEAN
    2. Additional members of ASEAN +3 = China, Japan, South Korea
    3. Members with which ASEAN countries have FTA = Australia, New Zealand
    • The group is expected to represent at least 30% of the global GDP and will emerge as the largest free trade agreement in the world.
    • It includes more than 3 billion people, has a combined GDP of about $17 trillion, and accounts for about 40 per cent of world trade.

    India’s reluctance

    • India’s ties with China in recent months have been disturbed by the military tension in eastern Ladakh along the LAC.
    • In the meantime, India has also held a maritime exercise with Japan, Australia, and the United States for the “Quad” that was interpreted as an anti-China move.
    • However, these moves did not influence Japanese and Australian plans regarding RCEP.

     Leverage for China

    • Despite the pandemic, the RCEP is certainly leverage for China and shows the idea of decoupling from China is not a substantive issue in a regional sense.
    • The agreement means a lot for China, as it will give it access to Japanese and South Korean markets in a big way, as the three countries have not yet agreed on their FTA.

  • Shanghai Cooperation Organisation (SCO)

    In an indirect reference to the Chinese infrastructure projects in PoK, our PM has urged members of the Shanghai Cooperation Organisation (SCO) to respect “territorial integrity” and “sovereignty”.

    What is SCO?

    • After the collapse of the Soviet Union in 1991, the then security and economic architecture in the Eurasian region dissolved and new structures had to come up.
    • The original Shanghai Five were China, Kazakhstan, Kyrgyzstan, Russia and Tajikistan.
    • The SCO was formed in 2001, with Uzbekistan included. It expanded in 2017 to include India and Pakistan.
    • Since its formation, the SCO has focused on regional non-traditional security, with counter-terrorism as a priority.
    • The fight against the “three evils” of terrorism, separatism and extremism has become its mantra. Today, areas of cooperation include themes such as economics and culture.

    Try this PYQ now:

    Q. In the context of the affairs of which of the following is the phrase “Special Safeguard Mechanisms” mentioned in the news frequently?

    (a) United Nations Environment Programme

    (b) World Trade Organization

    (c) ASEAN- India Free Trade Agreement

    (d) G-20 Summits

    India’s entry to the SCO

    • India and Pakistan both were observer countries.
    • While Central Asian countries and China were not in favour of expansion initially, the main supporter — of India’s entry in particular — was Russia.
    • A widely held view is that Russia’s growing unease about an increasingly powerful China prompted it to push for its expansion.
    • From 2009 onwards, Russia officially supported India’s ambition to join the SCO. China then asked for its all-weather friend Pakistan’s entry.

    Tap to read more about SCO

  • What is OPEC+?

    Oil prices jumped by close to 10% for its biggest daily gain in almost six months after news of a highly effective vaccine against COVID-19 and Saudi Arabia’s assurance that an OPEC+ oil output deal could be adjusted to balance the market.

    About OPEC

    • OPEC stands for Organization of the Petroleum Exporting Countries.
    • It is a permanent, intergovernmental organization, created at the Baghdad Conference in 1960, by Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela.
    • It aims to manage the supply of oil in an effort to set the price of oil in the world market, in order to avoid fluctuations that might affect the economies of both producing and purchasing countries.
    • It is headquartered in Vienna, Austria.
    • OPEC membership is open to any country that is a substantial exporter of oil and which shares the ideals of the organization.
    • Today OPEC is a cartel that includes 14 nations, predominantly from the middle east whose sole responsibility is to control prices and moderate supply.

    What is OPEC+?

    • The non-OPEC countries which export crude oil along with the 14 OPECs are termed as OPEC plus countries.
    • OPEC plus countries include Azerbaijan, Bahrain, Brunei, Kazakhstan, Malaysia, Mexico, Oman, Russia, South Sudan and Sudan.
    • Saudi and Russia, both have been at the heart of a three-year alliance of oil producers known as OPEC Plus — which now includes 11 OPEC members and 10 non-OPEC nations — that aims to shore up oil prices with production cuts.

    Why OPEC plus came into existence?

    • When Russia concluded the Vienna Agreement in 2016, the Russian leadership believed that it would help prepare the country for the Russian presidential elections in March 2018.
    • Higher oil prices ensured the Kremlin’s financial capacity to lead a successful electoral campaign.
    • This changed the regime’s priorities – from satisfying the needs of the general population to ensuring the sustainability of the Kremlin’s alliance with powerful tycoons, including that controlling oil production.
    • For Saudi Arabia, turning what had been an ad hoc coalition into a formal group provides a hedge (protection) against future oil-market turbulence.
    • For Russia, the formalization of the group helps expand Putin’s influence in the Middle East
    • However, both reportedly aimed at causing a drop in oil prices in order to hit US shale producers, who have continued to benefit from OPEC production cuts by expanding their market share.

  • Unfurling India’s foreign policy concerns

    The article analyses two major concerns of India which would be influenced by the policies adopted by the next U.S. President. 

    Concern for India

    • What policy President-elect Joe Biden will adopt in its foreign policy will has bearing on India.
    • There are two foreign policy issues which are of great concern and interest — China and Iran in that order.
    • For the world, the equation between the United States and China may be the relationship of the greatest consequence.
    • For India, the most consequential relationship is not with the U.S. — as is sometimes claimed — but one with China.
    • What happens in greater West Asia will always remain of concern, but those interests will not be affected one way or the other by who is the President of the U.S.

    Quad dynamics and China

    • In the Trump years, India signed all the ‘foundational’ agreements with America.
    • India also bought billions of dollars worth of military hardware from them.
    • India resisted converting the Quad into a primarily military or strategic grouping, and is in fact aimed solely at containing China.
    • The Quad is an anti-China coalition.
    • How far it can be successful in containing the Dragon remains to be seen.
    • India’s External Affairs Minister has stated, India will not join any military alliance.
    • However, given the fact that all the other three, and perhaps five or six in future, are already in strategic alliance with one another and with the U.S., it is highly likely that India too will be forced to agree to some form of military alliance at a future date.
    • But no external power would want to get involved on our side in case of major hostilities with China.
    • On the other hand, if there is a major skirmish or worse in the South China Sea, the other members of the Quad will expect us to join them in fighting China, in an area far removed from our shores.

    Approach towards China

    • If Mr. Biden adopts a more conciliatory approach towards China, India may find ourselves in a difficult situation.
    • We do not want China to be permanently hostile to us; it will absorb huge resources, human and material.
    • The strong rhetoric employed in relation to China will need to be tempered.
    • Public opinion which has been worked up against China may make it difficult to do so immediately but the government is efficient in managing and moulding public opinion.

    Approach toward Iran

    • It may be difficult for Mr. Biden to quickly reverse Mr. Trump’s adventurist policy towards Iran.
    • It may not be possible for him given the domestic compulsions, to readopt JCPOA in its original form.
    • But he will surely, if slowly, engage Tehran in talks and negotiations through Oman or some other intermediary, to reduce tensions in the region.
    • India may be able to buy Iranian oil, and sell our pharma and other goods to that country.
    • The government may also feel less constrained in investing openly in oil and other infra projects in Iran, including the rail project in which Indian Railways Construction Ltd has been interested.

    Conclusion

    While India can’t expect the reversal of all Trump era policies, there will be certain changes in the stance adopted by the new U.S. President and India should be prepared to deal with it.

  • How a Biden’s Presidency may affect India?

    Donald Trump’s rise to the White House as well as his exit has led to a wide reactionary response in India.

    Also read:

    [Burning Issue] India US relations in the backdrop of recent hiccups

    (1) Economic Impact

    Trade

    • There are several ways in which the US economy, its health and the policy choices of its government affect India.
    • For one, the US is one of those rare big countries with which India enjoys a trade surplus. In other words, we export more goods to the US than what we import from it.
    • The trade surplus has widened from $5.2 billion in 2001-02 to $17.3 billion in 2019-20.
    • Under a Biden administration, India’s trade with the US could recover from the dip since 2017-18.

    FDI and FPI

    • The US is the fifth-biggest source for Foreign Direct Investment (FDI) into India. Of the total $476 billion FDI that has come in since April 2000, the US accounted for $30.4 billion — roughly 6.5 per cent — directly.
    • Only Mauritius, Singapore, Netherlands, and Japan have invested more FDI since 2000.
    • Apart from FDI the US also accounts for one-third of all Foreign Portfolio Investments (that is, investment in financial assets) into India.

    Ending protectionism

    • A Biden presidency may also see a renewed push towards a rules-based trading system across the world.
    • Instead of outright ad-hocism as was the case under Trump — as well as a move away from the protectionist approach that has been getting strong across the world.

    (2) Visa

    • For instance, how a US President looks at the H1-B visa issue, affects the prospects of Indian youth far more than the youth of any other country.
    • Under Trump, who severely curtailed the visa regime, thanks to his policy of “America First”, India had suffered the most.
    • That could change under Biden, who is unlikely to view immigrants and workers from India with Trump-like suspicion.

    (3) Technology

    • Other points of contention between India and the US are the tricky issue of data localisation or capping prices of medicines and medical devices.
    • These have a better chance of getting towards a resolution as we move away from the radical approach of President Trump to the pragmatism of a Biden presidency.

    (4) Diplomacy

    • Further, under the Trump administration, the US sanctions on Iran severely limited India’s sourcing of cheap crude oil.
    • For an economy such as India, which needs a regular supply of cheap oil to grow fast, a normalization of US-Iran relationship (and lifting of sanctions) would be more than useful.
    • On China, too, while the US apprehensions are unlikely to be fewer. It is more likely that a Biden administration will help India against China, instead of clubbing the two together.

    (5) Climate Action

    • Biden has promised to rejoin the Paris Climate Accord, and this may help countries such as India in dealing with the massive challenges — both technical and financial — on this front.

  • India-Maldives relations

    The Soleh government’s ‘India First Policy’ provides respite to India when contrasted with the approach of the predecessors.

    India-Maldives relations

    • India and the Maldives have had bilateral relations for centuries.
    • Maldivian students attend educational institutions in India.
    • Patients from the Maldives come here for super speciality healthcare.
    •  A liberal visa-free regime extended by India has aided the patients.
    • The Maldives is now a major tourist destination for some Indians and a job destination for others.
    • Given the geographical limitations imposed on the Maldives, India has exempted the nation from export curbs on essential commodities.

    Assistance to the Maldives

    • In 1988, under Operation Cactus when a coup was attempted against President, India sent paratroopers and Navy vessels and restored the legitimate leadership.
    • The 2004 tsunami and the drinking water crisis in Male a decade later were other occasions when India rushed assistance.
    • In COVID-19 disruption, India rushed $250 million aid in quick time and also rushed medical supplies to the Maldives, started a new cargo ferry and also opened an air travel bubble, the first such in South Asia.

    Strategic comfort to India

    • Abdulla Yameen was President when the water crisis occurred.
    • Now, the Yameen camp has launched an ‘India Out’ campaign against New Delhi’s massive developmental funding.
    • Maldivian protesters recently demanded the Solih administration to ‘stop selling national assets to foreigners’, implying India.
    • Mr. Yameen’s tilt towards China and bias against India when in power was evident.
    • It is against this background that the Solih administration’s no-nonsense approach towards trilateral equations provide ‘strategic comfort’ to India.

    Concerns for India

    • India should be concerned about the protests as well as the occasional protest within the ruling Maldivian Democratic Party (MDP) of Mr. Solih.
    • There are apparent strains between Mohamed Nasheed, who was the nation’s first President elected under a multiparty democracy and Mr. Yameen.
    • This strain could affect the MDP during the run-up to the 2023 presidential polls.
    • Also, Mr. Nasheed’s on-again-off-again call for a changeover to a ‘parliamentary form of government’ can polarise the overpoliticised nation even more.

    Conclusion

    Given this background and India’s increasing geostrategic concerns in the shared seas, taking forward the multifaceted cooperation to the next stage quickly could also be at the focus of relations of the two countries.

  • Chabahar Rail Project

    An Iranian diplomat in an interview has said that Tehran now hopes that New Delhi will help facilitate equipment for the Chabahar-Zahedan railway line under a line of credit promised to it in 2018.

    Try this question

    Q. Discuss the strategic and economic significance of Chabahar Port and Rail Project for India.

    Recent controversy

    • The Iranian government in July had decided to proceed with the construction of this project on its own, citing delays from the Indian side in funding and starting the project.

    The Chabahar Rail Project

    • It is a 628 km Chabahar-Zahedan line, which will be extended to Zaranj across the border in Afghanistan.
    • The entire project would be completed by March 2022.
    • It was meant to be part of India’s commitment to the trilateral agreement between India, Iran and Afghanistan to build an alternate trade route to Afghanistan and Central Asia.

    Why did Iran omit India from the project?

    • Despite several site visits by engineers, and preparations by Iranian railways, India never began the work, ostensibly due to worries that these could attract U.S. sanctions.
    • The U.S. had provided a sanctions waiver for the Chabahar port and the rail line to Zahedan, but it has been difficult to find equipment suppliers and partners due to worries they could be targeted by the U.S.
    • India has already “zeroed out” its oil imports from Iran due to U.S. sanctions.

    India’s reluctance with Iran

    • Looking at the whole aspects of relations, when it comes to politics, there has been a great common understanding and shared interests.
    • But when it comes to economic and trade relations, it has been subject to some limits and restrictions, which are hampered by the various sanctions imposed.
    • The US had put pressure directly or indirectly on the relations, although that has not been the will of both sides.

    The contentious partnership with China

    • Iran and China are close to finalising a 25-year Strategic Partnership which will include Chinese involvement in Chabahar’s duty-free zone, an oil refinery nearby, and possibly a larger role in Chabahar port as well.
    • The cooperation will extend from investments in infrastructure, manufacturing and upgrading energy and transport facilities, to refurbishing ports, refineries and other installations.
    • It is also rumoured that the Chabahar port will be leased to China surpassing India.
    • Iran had proposed a tie-up between the port at Gwadar and Chabahar last year and has offered interests to China in the Bandar-e-Jask port 350km away from Chabahar, as well as in the Chabahar duty-free zone.

    Back2Basics: India-Iran Partnership over Chabahar Port

    • In 2016, India signed a deal with Iran entailing $8 billion investment in Chabahar port and industries in Chabahar Special Economic Zone.
    • The port is being developed as a transit route to Afghanistan and Central Asia.
    • India has already built a 240-km road connecting Afghanistan with Iran.
    • All this were expected to bring cargo to Bandar Abbas port and Chabahar port, and free Kabul from its dependence on Pakistan to reach the outer world.
    • Completion of this project would give India access to Afghanistan and beyond to Turkmenistan, Uzbekistan, Tajikistan, Kyrgyzstan, Kazakhstan, Russia and Europe via 7,200-km-long multi-modal North-South Transport Corridor (INSTC).

  • Sharing Indo-Pacific vision in the region

     Where do we geographically place the Indo-Pacific?

    • Term “Indo-Pacific” has come into prominence in the past decade.
    • India has used it in joint statements with a series of partner countries, including but not limited to the United States, Australia, France, Indonesia, Japan, and of course the United Kingdom.
    • It figures in meetings with our ASEAN and has helped advance the Quad consultations.
    • Indian Foreign Ministry has recently set up an Indo-Pacific Division as well as an Oceania Division a sign of India’s commitment to this critical geography.
    • This has encouraged other countries to perceive and define the region in its full extent.
    • For India, the Indo-Pacific is that vast maritime space stretching from the western coast of North America to the eastern shores of Africa.
    • Today, more and more countries are aligning their definition of the Indo-Pacific with Indias.

    Historical background

    • During the Cold War, the Indo-Pacific was divided into different spheres of influence and military theatres.
    • Whether it was the monsoon winds– or our maritime and trading history, we found it impossible to see the Horn of Africa and the Straits of Malacca on the other as disconnected.
    • The first for this is that the Indian peninsula, which thrusts into the Indian Ocean and gives us two magnificent coasts and near limitless maritime horizons to both our east and our west.
    • Monks and merchants, culture and cargo have travelled from India on those waters, to our east, west and south.
    • India’s great religious traditions, such as Buddhism, spread far and wide in the Indo-Pacific.
    • These experiences are our past and are our future; these experiences determine our concept of the Indo-Pacific.

    Why is the Indo-Pacific crucial?

    • The interconnectedness of the Indo-Pacific is finally coming into full play.
    • A motivating factor is the region’s emergence as a driver of international trade and well-being.
    • The Indo-Pacific ocean system carries an estimated 65 per cent of world trade and contributes 60 per cent of global GDP.
    • Ninety per cent of India’s international trade travels on its waters.
    • For us, and for many others, the shift in the economic trajectory from the Atlantic to the Indo-Pacific has been hugely consequential.
    • The rise of China and the imperative for a global rebalancing have added to the mix.
    • A rules-based international order is achievable only with a rules-based Indo-Pacific.

    India’s Indo-Pacific strategy

    • India’s Indo-Pacific strategy was enunciated in 2018 as the SAGAR doctrine.
    •  SAGAR is an acronym for “Security and Growth for All in the Region”.
    • This aspiration depends on securing end-to-end supply chains in the region; no disproportionate dependence on a single country; and ensuring prosperity for all stakeholder nations.
    • An Indo-Pacific guided by norms and governed by rules, with freedom of navigation, open connectivity, and respect for the territorial integrity and sovereignty of all states, is an article of faith for India.
    • Using this Initiative, India plans to support the building of a rules-based regional architecture resting on seven pillars. These are:1) Maritime security
      2) Maritime ecology
      3) Maritime resources
      4) Capacity building and resource sharing
      5) Disaster risk reduction and management
      6) Science, technology and academic cooperation
      7) Trade connectivity and maritime transport
    • We have sought to strengthen security and freedom of navigation in the Indo-Pacific by becoming a net security provider – in the Gulf of Aden.
    • Sharing what we can, in equipment, training and exercises, we have built relationships with partner countries across the region.
    • In the past six years, India has provided coastal surveillance radar systems to half a dozen nations – Mauritius, Seychelles, Sri Lanka, Maldives, Myanmar and Bangladesh.
    • All of these countries also use Indian patrol boats, as do Mozambique and Tanzania.
    •  Mobile training teams have been deputed to 11 countries.
    • Located just outside New Delhi, the Indian Navy’s Information Fusion Centre for the Indian Ocean Region has enhanced maritime domain awareness among partner countries.
    • India has also promoted and contributed to infrastructure, connectivity, economic projects and supply chains in the region.

    Humanitarian assistance and disaster relief

    • Notable humanitarian assistance and disaster relief (HADR) missions in the Indo-Pacific in recent years have included Operation Rahat in Yemen in 2015.
    • Whether it was the cyclone in Sri Lanka in 2016 or deaths and large-scale displacement of people that occurred in Madagascar in January this year, Indian assistance and an Indian ship have never been far away.
    • The Coalition for Disaster Resilient Infrastructure (CDRI)is intrinsic to India’s regional and global commitment to taking on climate change.

    Conclusion

    Whatever the navigation map, the fact that the Indo-Pacific is the 21st century’s locus of political and security concerns and competition, of growth and development, and of technology incubation and innovation is indisputable.

  • Back in news: Kartarpur Corridor

    Pakistan has decided to transfer the management of the Kartarpur Sahib Gurudwara from a Sikh body to a separate trust, saying it runs against the religious sentiments of the Sikh community.

    Try this PYQ:

    Consider the following Bhakti Saints:

    1. Dadu Dayal
    2. Guru Nanak
    3. Tyagaraja

    Who among the above was/were preaching when the Lodi dynasty fell and Babur took over?

    (a) 1 and 3

    (b) 2 only

    (c) 2 and 3

    (d) 1 and 2

    Kartarpur Corridor

    • The Kartarpur corridor connects the Darbar Sahib Gurdwara in Narowal district of Pakistan with the Dera Baba Nanak shrine in Gurdaspur district in India’s Punjab province.
    • The first guru of Sikhism, Guru Nanak, founded Kartarpur in 1504 AD on the right bank of the Ravi River. The name Kartarpur means “Place of God”.
    • The corridor is being built to commemorate 550th birth anniversary celebrations of Guru Nanak Dev, founder of Sikhism on 12th November 2019.

    About Guru Nanak

    • Guru Nanak Dev (1469-1539) also referred to as Baba Nanak was the founder of Sikhism and is the first of the ten Sikh Gurus.
    • He advocated the ‘Nirguna’ form of Bhakti. He rejected sacrifices, ritual baths, image worship, austerities and the scriptures of both Hindus and Muslims.
    • He appointed one of his disciples, Angad, to succeed him as the preceptor (guru), and this practice was followed for nearly 200 years.
    • The fifth preceptor, Guru Arjan, compiled his hymns along with those of his four successors and also other religious poets, like Baba Farid, Ravidas and Kabir, in the Adi Granth Sahib.

  • The next administration will also pursue ‘America First’

    The voting trend in the U.S. presidential election indicates significant support for the policies pursued by President Trump. This could impact the policies the next administration pursues.

    Why U.S. election matters for the world

    • The world still has need for American leadership.
    • It remains the world’s largest net provider of global public goods.
    • It is the lynchpin of the global multilateral system.
    • If Joe Biden wins, it is possible that America will re-engage with dignity and restore mutual respect in its relations with allies and partners, beginning with the trans-Atlantic alliance.
    • However, the Trump Americans, who are the new political base, will still shape American policy irrespective of who the president is.

    ‘America first’ is here to stay

    • The American people believe that their education, employment and retirement have been impacted by the immigration, outsourcing and liberal trade policies of past administrations.
    • Trump America does not want more migrants, it will not support the outsourcing of jobs at the cost of their own.
    • It wants a fair deal on trade that does not allow cheaper imports to put small American businesses out of business.
    • Even a Biden administration cannot return America back to the days of open borders and free trade.
    • It might relax some categories of work-visas, but it cannot return to the time when outsourcing was the preferred option for American companies.
    • It might re-engage with the World Trade Organisation but it cannot tear down the trade barriers that Trump has erected in the name of Make in America.

    Foreign policy of next administration

    • The Trump Americans do not wish to spend any more taxpayer dollars on foreign wars and they want their boys and girls to come home.
    • They think America’s allies are not carrying their weight and are unfairly living off American contributions.
    • They want their allies and partners to take greater responsibility for peace and security.
    • Biden’s supporters hope that he can reverse the abdication of American global leadership and renew alliances, but as president he may find it difficult to go against the Trump Americans on issues like China, Iran and climate change, without endangering the Democratic Party’s long-term interests.
    • And if Trump is re-elected as the president, it will only be because of his core voter base and it will strengthen his resolve.

    Implications for the world

    • Whether or not America withdraws from the world, American leadership, as we know it, might be over.
    • America will become more transactional and less generous.
    • Common values like democracy or multipolarity may be of lesser importance in America’s scheme of things.
    • Whether it is Trump or Biden, the Sino-US relationship will remain complicated and rivalrous.
    • Whether it is Trump or Biden, the Obama-era nuclear deal with Iran cannot be restored.
    • Whether it is Trump or Biden, American troops will soon be gone from Afghanistan.
    • There will be less willingness to consider emerging economies as deserving beneficiaries of concessional arrangements.
    • A Biden presidency might also mean a more critical look at the record of not just authoritarian states but also democracies on issues like labour, environment and non-proliferation.

    Implications for India

    • President Trump has been good for India in terms of foreign policy, less so in terms of economic policy.
    • But Delhi should equally be prepared for the Trump administration to ratchet up pressure on trade and to tighten rules on immigration.
    • With Biden, India and the US might return to a more balanced re-engagement on trade and immigration, but should be prepared for a more accommodative policy on both Pakistan and China than Trump’s.

    Conclusion

    Whoever is the next occupant of the White House, the way Americans voted on November 3 will shape American policy and politics for years to come.