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Subject: Bilateral Relations

1. Major World Events
2. India’s Interests in neighbourhood
3. Effects of our Policies

  • What West Seti Power Project can mean for India-Nepal ties?

    India will be taking over an ambitious hydropower project in Nepal — West Seti — nearly four years after China withdrew from it, ending a six-year engagement between 2012 and 2018.

    What is West Seti Hydel Project?

    • The West Seti Dam is a proposed 750-megawatt (MW) hydroelectric dam on the Seti River in the Far-Western Development Region of Nepal.
    • Particularly, it is a storage scheme designed to generate and export large quantities of electrical energy to India.
    • The project is envisaged to provide Nepal 31.9% electricity free.
    • Besides, locals affected by the project are being given a share of Nepali Rs 10 million plus 30 units of electricity per month free.

    Why in news now?

    • The project was earlier accorded to a Chinese company.
    • But Nepal feared that India won’t buy power from China-executed projects.

    Significance: India -Nepal Power Relations

    • Nepal is rich in power sources with around 6,000 rivers and an estimated potential for 83,000 MW.
    • India has formally approached Nepal on many occasions, seeking preferential rights over Nepali waters should it match offers coming from elsewhere.
    • India is viewed as a feasible power market for Nepal.
    • India has undertaken to harness or expressed intent to harness major rivers in the north.

    Issues in project execution

    • There has been some uncertainty in Nepal over India’s inability to deliver projects on time.
    • An ambitious Mahakali treaty was signed back in 1996, to produce 6,480 MW, but India has still not been able to come out with the Detailed project Report.
    • The Upper Karnali project, for which the multinational GMR signed the contract, has made no headway for years.
    • Major reasons for stalling of these projects was a lack of consensus over power purchase agreement with India.
    • Also, seismic sensitivity of the Himalayan Region is the prime consideration.

    What has helped build faith recently?

    • India under PM Modi has been successful in executing the 900-MW Arun Three Project in eastern Nepal’s Sankhuwa Sabha.
    • After a standoff between Nepal and India led to the economic blockade of 2015, equations changed after Deuba took over last July, replacing Oli.

    Benefits for Nepal

    • Nepal has a massive power shortfall as it generates only around 900 MW against an installed capacity of nearly 2,000 MW.
    • Although it is currently selling 364 MW power to India, it has over the years importing from India.

    Hurdles from Nepal’s internal crisis

    • Nepal’s Constitution has a provision under which any treaty or agreement with another country on natural resources will require Parliament’s ratification by at least a two-thirds majority.
    • That will also mean homework will be required before any hydro project is signed and given for execution.

    Way forward

    • Until India agrees to value Nepal’s water and the existing focus on power is not reviewed, mutual distrust may continue.
    • India must start executing its projects timely.
    • And its success is expected to restore India’s image in Nepal and give it weightage in future considerations for hydropower projects, when competition is bound to be tough.
    • West Seti, therefore, has the potential to be a defining model for Nepal India’s power relations in future.

     

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  • India-Iran Relations

    Context

    Iran’s Foreign Minister Hossein Amir-Abdollahian’s three-day visit to India, last week, was the first ministerial-level visit from Iran since Ebrahim Raisi assumed the Iranian presidency in August last year.

    Chabahar Port - A Rethink is Needed | Vivekananda International Foundation

    Background

    • Bilateral relations between India and Iran span millennia marked by meaningful interactions.
    • Both countries shared borders until 1947 and share several common features in their language, culture and traditions.
    • The diplomatic links were established on 15th March 1950, when both countries signed a Treaty of Friendship and Perpetual Peace.
    • However, Iran’s joining of Baghdad pact in 1954 and the Cold War politics prevented both countries from having closer relations until the 1990s.
    • Islamic Revolution of 1979, hostage of US diplomats, Iran-Iraq War and Tehran’s support for Hezbollah and Hamas among others resulted in a range of political and economic sanctions, leading to Iran being isolated at a global level
    • In the 1990s, both countries’ interests converged around energy, Central Asia and security, mostly around the Pakistan-Afghan region.
    • This resulted in the signing of ‘The Delhi Declaration’, which provided the vision of the countries’ defence and strategic partnership and “Tehran Declaration”, which set forth the areas of possible cooperation

    India-Iran relations: A shared vision for equitable, pluralistic and co-operative international order

    • The “Tehran Declaration” signed during former Prime Minister Atal Bihari Vajpayee’s visit to Iran affirmed the shared vision of the two countries for an “equitable, pluralistic and co-operative international order”.
    • It recognised then Iranian President Mohammad Khatami’s vision of a “dialogue among civilisations” as a paradigm of international relations based on principles of tolerance, pluralism and respect for diversity.
    • Advancing the standing in global order: Two decades later, as India strengthens new partnerships within its regional vision centred on the Indo-Pacific, both countries remain driven by the goals of advancing their standing at the regional and global level.
    • Both are keen to project themselves as independent strategic actors determined to play a role in shaping a new multipolar order in their shared Eurasian neighbourhood and also at the global level.

    Why does India need Iran?

    • Energy security: Conventionally, for energy security
    • Iran is amongst India’s top oil suppliers
    • Strategic importance: Since the 1990s, Iran’s importance has become ‘strategic’
    • Security reasons: Iran’s cooperation is critical for India’s security given that
    • Pak supports terrorism in India
    • Influence in Afghanistan: India’s influence in Afghanistan is marginal.
    • Countering Pakistan: India needs Iran to moderate Pak’s influence in West Asia
    • Iran is a leader in the Muslim world.
    • Access to Afghanistan and Central Asia

    Significance of Iran for India

    • Geopolitical logic in relations: The sanctions imposed by the US on Iran after it withdrew from the nuclear deal in 2018 may have virtually destroyed India-Iran trade, especially India’s energy imports from Iran, but the geopolitical logic underpinning relations between the two countries remains firm.
    • Land bridge to Central Asia and Eurasia: Iran has sought to leverage its crossroad geographical location straddling the Persian Gulf and the Caspian Sea, India has come to see it as its land bridge to Central Asia and Eurasia.
    • INSTC: Despite the difficulties posed by decades of American sanctions, Iran has, along with India, Russia and a few other countries in the Eurasian region, continued to work on the multi-modal International North-South Transport Corridor (INSTC).
    • During Raisi’s visit to Moscow, the two sides had pledged to redouble their efforts to build the railway line between Iran’s Caspian port of Rasht and Astara on the Iran-Azerbaijan border.
    • Alternative Caspian Sea Route: The activation of an alternative Caspian Sea route speaks volumes about the positive outlook of Iran, India and Russia on this corridor despite a variety of geopolitical challenges.
    • Iran’s Chabahar port, where India is developing two berths that it will lease for commercial operations for 10 years, is also a story of perseverance in the ties between the two countries.

    Irritants in Indo-Iran ties

    • India’s relations with Saudi Arabia, US and Israel:  Growing Saudi-India-US-Israel relations have irked Iran.
    • In retaliation, Iran, for the first time, has linked the plight of Muslims in Gaza, Yemen, and Bahrain, with those in Kashmir
    • Iran-Pak-China ties: Warming Iran-Pak-China ties have annoyed India.
    • Sluggish Chabahar port development: Slow Chabahar port development has annoyed Iran.
    • China-Iran strategic partnership:
      • An economic and security partnership deal between Iran and China was recently made public, creating a global alarm, especially for India and the US.
      • The foundation for this deal was laid during Chinese President Xi Jinping’s visit to Iran in 2016
      • The draft agreement involves Chinese investments worth $400 billion into the Iranian economy over 25 years.
      • Of this, $280 billion will be allocated for the oil and gas sector and the remaining funding will be for other core sectors like banking, telecommunications, ports and railways.
      • In return, China would get a steady supply of Iranian oil at a heavily discounted rate during the same period.
      • This deal creates a win-win situation for both countries.
      • It lifts Iran’s sanction-hit economy and helps China set a firm foothold in the Middle East.

    US sanctions:

    • Iran’s aim to develop nuclear weapons has come under strong criticism from Trump Administration since the beginning.
    • Thus, the US has withdrawn from the Iran nuclear deal in 2018 after it was signed in 2015 and imposed unilateral sanctions on Iran.
    • The US’ sanctions and aggressive policies have created a situation of economic and geostrategic uncertainty.
    • Indian investors are wary of having businesses in Iran for the fear of the US.
    • Also, India deviated from the policy of not abiding by unilateral sanctions by ceasing to purchase Iranian oil.
    • Due to this, Iran did not back India’s bid to mobilise international support against Beijing’s aggression in the Ladakh.

    Other issues:

    • Iran is against India’s decision to abrogate Article 370 and 35A.
    • It has called on India and Pakistan to show restraint and prevent the killing of innocent Kashmiris, revealing possible close ties between Pakistan and Iran.
    • Iran also voiced against “extremist Hindus and their parties” during the 2020 Delhi riots.
    • Apart from these issues, Iran also sidelined India’s ONGC from exploration rights at its Farzad B Gas field, stating that it will engage the company at a later date.

    Way forward

    • As India is treading a fine line in balancing relations with the US, China and Iran while striving to augment its political influence in West Asia, embracing one country over the other is not an option for India.
    • Therefore, a multilateral foreign policy is a way forward.
    • India must retain its involvement in the Chabahar port development because of the geostrategic significance.
    • In the immediate term, India should improve its multi-alignment credentials to absorb investments into the port projects from the public and private sector, boost maritime cooperation among littoral countries to enhance the transit of goods, and foster regional partnership for the Chabahar port development.
    • Based on the mutual geostrategic and energy interests, India could collaborate with Japan under the Asia-Africa Growth Corridor.
    • Japan’s participation would enhance the multilateral characteristics of the transit hub in the region, unlike the China-owned Gwadar port. This will further enhance multilateral investments to solidify regional economic partnerships that enable the sustainability of the port.
    • Also, India needs to evolve a better strategy on Iran beyond waiting to see how the US may react, beyond having to issue a clarification in response to Iran’s sudden provocations and beyond allowing voids of partnerships that China may fill.
    • In order to do so, India must create a new alliance of countries having similar geostrategic interests, which are also facing issues with US’ unrealistic and aggressive foreign policy strategy and China’s expansionistic policies.

    Conclusion

    While the revival of the nuclear deal could give a fillip to India’s economic ties with Iran, India’s interests in continental Asia will be served well by heeding to the calls for developing a long-term roadmap for bilateral relations.

     

  • Back in news: India- ASEAN Relations

    The Foreign Minister of Myanmar is unlikely to be part of the 24th ASEAN-India Ministerial summit.

    What is the news?

    • Myanmar’s absence is the souring ASEAN-Myanmar.
    • This is after the coup that overthrew the Aung San Suu Kyi government in Myanmar.
    • This shows India’s concern over the junta in Myanmar which has refused to enter into a negotiation

    What is ASEAN?

    • ASEAN is a political and economic union of 10 member states in Southeast Asia.
    • It brings together ten Southeast Asian states – Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam – into one organisation.
    • It was established on 8th August 1967 in Bangkok, Thailand with the signing of the Bangkok Declaration by the founding fathers of the countries of Indonesia, Malaysia, Thailand, Singapore, and the Philippines.
    • The preceding organisation was the Association of Southeast Asia (ASA) comprising of Thailand, the Philippines, and Malaysia.
    • Five other nations joined the ASEAN in subsequent years making the current membership to ten countries.

    India-ASEAN Relations: A Backgrounder

    • Look-East Policy in 1992 gave an upthrust to India -ASEAN relation and helped India in capitalizing its historical, cultural and civilizational linkages with the region.
    • India entered into a Free Trade Agreement (FTA) in goods with the region in 2003 which has facilitated the bilateral trade which now stands at approximately USD 76 Billion.
    • Further, the launch of Act East Policy in 2014 has added a new vigour to India-ASEAN relations.

    Significance of ASEAN to India

    • ASEAN’s centrality in India’s foreign policy – A cohesive, responsive, and prosperous ASEAN is central to India’s Indo-Pacific Vision and India’s Act East Policy and contributes to Security and Growth for All in the Region (SAGAR).
    • Economic – ASEAN is the one of the largest market in the world comparative to the EU and North American markets.
      • It’s also the 4th most popular investment destination globally.
    • Investment opportunities for Indian businesses – Cost of production is lower in Laos, Cambodia, and Myanmar, which means that Indian firms can gain significantly by investing in these countries.
    • Countering China – Cooperation between India and ASEAN is crucial to counter China’s power projection in the region. Both have territorial and border issues with China, disputes over the South China Islands and waters for ASEAN and over land boundaries for India.
    • Integration with regional and global supply chains – Increasing engagement with ASEAN is pivotal to facilitate India’s integration with regional and global supply chain movements.
    • North-East development – Connectivity projects with the ASEAN nations keeping Northeast India at the centre can ensure the economic growth of the land-locked north-eastern states.
      • Collaboration with the ASEAN nations is necessary to counter insurgency in the Northeast, combat terrorism, etc.
    • Maritime security – The Indian Ocean carries 90% of India’s trade and its energy sources. Presence of choke points such as the Malacca strait makes the South-East Asian region significant for countering traditional and non-traditional maritime threats like piracy and terrorism.
    • Indian Diaspora – About 9-8% of the population in Malaysia and Singapore is of Indian origin, in Myanmar-4% and Indonesia about 0.5%.

    Areas of Cooperation

    • Economic Cooperation – ASEAN is India’s 4th largest trading partner.
      • India signed FTA in goods in 2009 and an FTA in services and investments in 2014 with ASEAN.
      • India has a Comprehensive Economic Cooperation Agreement (CECA) with various countries of the ASEAN region which has resulted in concessional trade and a rise in investments.
    • Political Cooperation – ASEAN-India Centre (AIC) was established to undertake policy research, advocacy and networking activities with organizations and think-tanks in India and ASEAN.
      • Delhi Dialogue – Annual Track 1.5 event for discussing politico-security and economic issues between ASEAN and India.
    • Financial Assistance – India provides financial assistance to the ASEAN nations through various mechanism like ASEAN-India Cooperation Fund, ASEAN-India S&T Development Fund and ASEAN-India Green Fund.
    • Connectivity – India has been undertaking several connectivity projects like India-Myanmar-Thailand Trilateral (IMT) Highway and the Kaladan Multimodal Project.
      • India is also trying to establish a Maritime Transportation Agreementwith ASEAN and also Plans for a Railway link between New Delhi in India to Hanoi in Vietnam.
    • Socio-Cultural Cooperation – Programmes to boost People-to-People Interaction with ASEAN are organized, such as inviting ASEAN students to India, Special Training Course for ASEAN diplomats, Exchange of Parliamentarians, etc.
    • Defence Cooperation – Joint Naval and Military exercises are conducted between India and most ASEAN countries.
      • Vietnam has traditionally been a close friend on defense issues, Singapore is also an equally important partner.
    • Maritime Cooperation – adopted Delhi Declaration and decided to identify Cooperation in the Maritime Domain as the key area of cooperation under the ASEAN-India strategic partnership.
      • India is developing its maiden deep-sea port in a strategically located Sabang port in Indonesia.

    REGIONAL COMPREHENSIVE ECONOMIC PARTNERSHIP (RCEP) AGREEMENT

    • RCEP is a Free Trade Agreement (FTA) that has been signed between 15 countries including the 10 ASEAN members, China, Japan, South Korea, Australia, and New Zealand.
      • RCEP was first proposed in 2011 with an aim to create a consolidated market for the ASEAN countries and their trade partners.
      • RCEP now forms the world’s largest trade bloc, covering over 2.2 billion people and accounting for 30% of the world’s economy.
    • Though India was a part of the RCEP’s negotiations, it dropped out in November 2019, citing significant outstanding issues that remain unresolved.

    Reasons behind India pulling out of RCEP

    • Trade imbalance with RCEP members – India’s trade deficit with RCEP countries has almost doubled in the last five-six years.
    • Chinese Angle – From a geopolitical perspective, RCEP is China-led or is intended to expand China’s influence in Asia. India has already signed FTA with all the countries of RCEP except China.
    • Signing of RCEP can lead to cheaper products from China flooding the Indian market.
    • Lack of adequate protection for domestic industries – India’s proposals for strict Rules of Origin (to prevent routing of products from non-RCEP countries) and an Auto-trigger mechanism to impose tariffs when imports crossed a certain threshold which were not accepted.
    • Lack of Service component – Most developed RCEP countries where India can export services, have been unwilling to negotiate wide-ranging disciplines in services that can create new market access for trade in services in this region.
    • Concerns by local industries – A large number of sectors including dairy, agriculture, steel, automobiles, etc had expressed serious apprehensions on RCEP citing dominance of cheap foreign goods would dampen its business.
    • India’s FTA experience – India’s FTAs has generally led to greater imports than exports, giving rise to high trade deficits with FTA partners like South Korea, Japan, and ASEAN.

    Possible Implications of India not joining RCEP

    Protectionist image – Withdrawal from RCEP along with other recent measures like call for self-reliance under Atmanirbhar Abhiyan, etc can be perceived as India taking a protectionist stance in terms of trade policy.

    Lost opportunity for India’s export sector – RCEP was envisaged to strengthen Asian supply chains, bring in investments and boost the member countries’ competitiveness in global markets.

    Effect on bilateral ties with RCEP countries – There are concerns that the decision will hamper India’s bilateral trade with RCEP member countries as they would be inclined to bolster trade within the bloc.

    Lost opportunity in securing a position in the post COVID world: RCEP is expected to help member countries emerge from the economic devastation caused by the pandemic through access to regional supply chains.

    Arguments for reviewing India’s decision

    • Global Economic Stagnation due to Covid-19 pandemic – RCEP can serve as a bulwark in containing the free fall of the global economy and re-energising economic activity.
      • RCEP presents a unique opportunity to support India’s economic recovery, inclusive development, and job creation even as it helps strengthen regional supply chains.
    • Economic Realism – India should deter seeing RCEP only from the Chinese perspective.
      • India can draw inspiration from Japan & Australia, as they chose to bury their geopolitical differences with China to prioritise what they collectively see as a mutually beneficial trading compact.
    • Strategic Need – RCEP’s membership is a prerequisite to having a say in shaping RCEP’s rules, which is necessary to safeguard India’s interests and the interests of several countries that are too small to stand up to the largest member, China.
    • As the summary of the final agreement shows, the pact does cover and attempt to address some issues that India had flagged, including rules of origin, trade in services, movement of persons. Therefore, this makes the case of India to review its decision and look RCEP through the lens of economic realism.

    Challenges in India-ASEAN Relations

    • China factor – India’s effort in this regard is meagre when compared to China’s dominance in the region
      • China’s assertive military, political and economic rise, as well as the South China Sea disputes have divided ASEAN without unanimity amongst them.
    • Economic challenges – India has an unfavourable balance of trade with the ASEAN nations.
    • RCEP deal – India walking out of RCEP can become a sticking point between India and ASEAN, since India’s domestic market was considered a key element in the RCEP negotiations.
      • India has not signed RCEP for various reasons like non-transparency in RCEP, RCEP’s non-accounting of India’s service sector relaxations, etc.
      • By not signing the RCEP India also lose access to new market opportunities created in East Asia.
    • Slow development in Bilateral relations – Many bilateral deals with these nations are yet to be finalised, leading to the halting of various aspects of diplomatic ties.
    • Delayed projects – Though India has committed to many connectivity projects, they have not been completed at the rate on par with China
      • China, on the other hand, through its BRI, is able to gain the trust of these countries.

    India’s pulling out of the RCEP deal shows the limitations of the ties with the ASEAN nations. Maintaining cordial ties, both bilaterally and multilaterally with these nations is essential for both India’s economic and security interests.

    South-East Asian nations are looking at India to take on a greater role for the economic integration of the region and for ensuring an open and inclusive Indo-Pacific. Many of the members of the ASEAN perceive India as a much-needed counterbalance to China.

    Way Forward

    • An alternative economic corridor based multimodal connectivity such as Mekong-India Economic Corridor may be promoted, which will connect Indian coast with unexplored Southeast Asian coast and beyond.
      • Strengthening land, air, and sea linkages will enhance people-to-people flows, as well as boost business, investment, and tourism.
      • With China having three times more commercial flights than India to Southeast Asia, improving air connectivity between India and ASEAN countries should also be high on the agenda.
    • India has proposed setting up of an ASEAN-India Network of Universities (AINU) to enhance our educational ties.
    • India can become the military partner after the Atma Nirbar Bharat, Make in India projects are successfully implemented.
      • No ASEAN country has close military ties with China as they never trusted China for military alliance.
    • Concept of QUAD must be expanded to include the ASEAN countries and become a QUAD+ arrangement.
      • Vietnam and Indonesia have expressed a positive note on QUAD in the region.
    • Digital technologies – Given the reluctance of ASEAN states to take help from Chinese giants in the field (due to concerns regarding China’s ability to own data), Indian IT sector may take some advantage.
    • Strengthening cultural connect – Tourism can be further encouraged between India and the ASEAN with some creative branding by the two sides.

    Failure of South Asian Association for Regional Cooperation (SAARC) has made India look outside South Asia towards countries of Southeast Asia for economic and political cooperation.

    The ASEAN region has become strategically important for India due to its growing importance in the world politics. And for India to be a regional power as it claims to be, continuing to enhance its relations with ASEAN in all spheres must be a priority.

  • Lessons from the Ukraine crisis price shock

    Context

    The Russia-Ukraine conflict, now more than three months old, will cause major, long-term shifts in the global energy and commodity trade.

    Factors responsible for high prices

    • Ukraine war: Western sanctions on Russia and efforts of European nations to diversify their energy supplies are already causing market distortions and high prices.
    • Crude oil prices are at their highest level since 2014; the price of LNG is at its highest ever, fertiliser and food are up and markets for several other commodities such as nickel have been disrupted.
    • Expensive commodities are already causing distress in India’s neighbourhood, for example, in Sri Lanka and Pakistan.
    • Insufficient investment: Insufficient investment in oil and gas production in preceding years resulted in high prices, and shortages were being felt.
    • A number of European investors, such as Norway’s sovereign wealth fund, announced they would no longer invest in traditional fuels — oil, gas, coal.
    • Natural gas is used as a feedstock for fertiliser.
    • An energy shock is then inevitably followed by a food price shock.

    Future trends

    1] Strained EU-Russia relations will distort prices

    • In the immediate term, the EU is trying to source its raw materials — most critically oil and natural gas, but also fertiliser, agricultural goods and metals — from non-Russian sources.
    • This will cause distortions and price spikes for those commodities in the global market, as can already be seen in the natural gas market, up 300 per cent in the last year.

    2] Sanctions are unlikely to achieve the desired political outcome

    • The US and its allies are quick to impose sanctions — and these are rarely withdrawn, if ever.
    • Iran has been under US sanctions since 1979, and the same with Venezuela for over a decade.
    • In both cases, sanctions have failed to achieve the desired political outcome.
    • As Russia is much better placed than either of those two countries to weather sanctions, the restrictions are likely to remain for a long while.

    3] Emerging world unwilling to align with West on sanctions

    • The high price of energy and the resulting inflation shows why much of the emerging world is unwilling and unable to align with the West on the current sanctions.
    • Russia is 11 per cent of the global landmass and among the world’s top five producers and exporters of oil, gas, fertiliser and other critical commodities like nickel.
    • It is too big to be replaced as a supplier.
    • In emerging economies, it can fan public anger and political unrest, as was seen in Tunisia and other Arab countries from 2010 on.

    4] Larger emerging economies will disregard sanction

    • Larger emerging economies such as China, India and Brazil will disregard sanctions on their key economic interests, particularly food, fertilisers and energy.
    • Specifically for India, its dependence on these essentials is unlikely to reduce meaningfully over the next 15-20 years.

    Way forward for India

    • Collaborate with other economies: In the immediate future, the India should collaborate with other similar economies to ensure that Russia doesn’t get locked out of global commodity markets.
    • Work on insulating the supply chains: For the long term, it must work on insulating its supply chains from global political crises.

    Conclusion

    India needs to brace for the price shock emanating from the distortion caused by the shift in the energy policies of Europe. At the same time, India needs to collaborate with other similar economies to ensure that Russia doesn’t get locked out of global commodity markets.

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  • What India must do to protect its ties with the Islamic world

    Context

    A controversial remark by the ruling party spokesperson against the Prophet has snowballed into a diplomatic row. Against this backdrop, New Delhi should not stop engaging the Gulf countries and strive to move beyond damage control.

    International reaction against the remarks

    • The United Arab Emirates, Oman, Indonesia, Iraq, the Maldives, Jordan, Libya and Bahrain have joined the growing list of countries in the Islamic world that have condemned the remarks.
    • Earlier, Kuwait, Iran and Qatar had called Indian ambassadors to register their protest, and Saudi Arabia had issued a strongly-worded statement.
    • Campaigners (including a few GCC regimes) demand that Prime Minister of India should tender an apology for all that happened.
    • But New Delhi’s stance is categorial and legitimate insofar as the Union government has nothing to do with such unsolicited comments.

    Why WANA is important for India

    • Engagement with WANA: Countries in West Asia and North Africa (WANA) region do not have a fixed position vis-à-vis India.
    • Delhi has vibrant economic and strategic ties with almost all regimes in the region.
    • That’s precisely the reason these countries are unwilling to join the Islamabad-led chorus or go beyond passing resolutions.
    • India’s signing of a free trade agreement (FTA) with the UAE and the ongoing negotiations for a wider FTA with the GCC could be an eye-opener for the country’s detractors.
    • India’s energy needs: As much as 40 per cent of oil and an equal share of gas requirements are met through India’s strategic cooperation with the Gulf regimes.
    • Mutuality of interests: India and the WANA regimes know that there is a mutuality of interests in these transactions which cannot be substituted by any other segments of the world system.
    • Indian diaspora: Equally important is the role of the more than eight million-strong Indian diaspora in the WANA region.
    • The “Gulf remittance” is an important part of the Indian economy, as important as the Indian investment in the GCC and GCC investment in India.

    Way forward

    • India’s foreign policy strategy — which includes strategic bargaining with regional and international actors — would fetch reasonable dividends.
    • The response to its Ukraine war strategy has convinced South Block that it has adequate manoeuvrability in global affairs.

    Conclusion

    New Delhi should not stop engaging the countries, especially the ones in the WANA region, as both have shared interests. Therefore, South Block must go beyond a mere damage-control exercise.

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  • Indus Waters Treaty (IWT): An enduring agreement bridging India-Pakistan ties

    Context

    The 118th meeting of the Permanent Indus Commission (PIC) comprising the Indus Commissioners of India and Pakistan held on May 30-31, 2022 in New Delhi.

    Indus Waters Treaty, 1960: A background

    • After years of arduous negotiations, the Indus Waters Treaty was signed in Karachi on September 19, 1960, by then Indian Prime Minister Jawaharlal Nehru and then Pakistani President Ayub Khan, negotiated by the World Bank.
    • 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
    • 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. while laying down precise regulations for India to build projects
    • India has also been given the right to generate hydroelectricity through the run of the river (RoR) projects on the Western Rivers which, subject to specific criteria for design and operation is unrestricted.
    • The Permanent Indus Commission, which has a commissioner from each country, oversees the cooperative mechanism and ensures that the two countries meet annually (alternately in India and Pakistan).
    • This year, the commission met twice, in March in Islamabad, Pakistan, and then in New Delhi, in May.
    • It is a rare feat that despite the many lows in India-Pakistan relations, talks under the treaty have been held on a regular basis.

    Some disagreements

    • Throughout its existence, there have been many occasions during which differences between the two countries were discernible.
    • Both countries held different positions when Pakistan raised objections regarding the technical design features of the Kishanganga and Ratle hydroelectric power plants.
    • Differences were also discernible when Pakistan approached the World Bank to facilitate the setting up of a court of arbitration to address the concerns related to these two projects referred to in Article IX Clause 5 of the treaty, and when India requested the appointment of a Neutral Expert referent to Clause 2.1 of Article IX .
    • Eventually, on March 31, 2022, the World Bank, decided to resume two separate processes by appointing a neutral expert and a chairman for the court of arbitration.
    • The appointment of a neutral expert will find precedence to address the differences since under Article IX Clause 6 of the treaty provisions, Arbitration ‘shall not apply to any difference while it is being dealt with by a Neutral Expert’.
    • Pakistan, invoking Article VII Clause 2 on future cooperation, raised objections on the construction and technical designs of the Pakal Dul and Lower Kalnai hydropower plants.
    • Similarly, India has raised concerns on issues such as Pakistan’s blockade of the Fazilka drain.

    Lessons from the treaty

    • Engagement between conflicting nations: The treaty is an illustration of a long-standing engagement between the conflicting nations that has stood the vagaries of time.
    • Water management cooperation: The treaty is considered one of the oldest and the most effective examples of water management cooperation in the region and the world.
    • Avoiding conflict: With the exception of differences on a few pending issues, both countries have avoided any actions resulting in the aggravation of the conflict or acted in a manner causing conflict to resurface.

    Potential for cooperation

    • Joint research: Recognising common interests and mutual benefits, India and Pakistan can undertake joint research on the rivers to study the impact of climate change for ‘future cooperation’ (underlined in Article VII).
    • Potential for cooperation and development: The Indus Waters Treaty also offers great potential for cooperation and development in the subcontinent which can go a long way in ensuring peace and stability.

    Conclusion

    Given that both India and Pakistan have been committed to manage the rivers in a responsible manner, the Treaty can be a reference point to resolve other water-related issues in the region through regular dialogue and interaction.

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  • India and Vietnam sign Mutual Logistics Agreement

    India and Vietnam signed a MoU on mutual logistics support.

    India and other such Logistics Agreements

    • Logistics agreements are administrative arrangements facilitating access to military facilities for exchange of fuel.
    • It provides for logistical support and increasing operational turnaround of the military when operating away from India.
    • India has signed several logistics agreements including with all Quad countries, France, Singapore and South Korea beginning with the Logistics Exchange Memorandum of Agreement (LEMOA) with the U.S. in 2016.

    What makes this newer agreement special?

    • The MoU is the first such major agreement which Vietnam has signed with any country.
    • Both nations signed key pacts including a rare 10-year vision document.
    • Both have similar territorial challenges from China.

    Why Vietnam is at the centre of India’s policy to counter China?

    • India entered the contested region of the South China Sea via Vietnam.
    • India signed an agreement with Vietnam in October 2011 to expand and promote oil exploration in the South China Sea.
    • It stood by its decision despite China’s challenge to the legality of Indian presence.
    • Hanoi has been publicly sparring with Beijing over its claims to the South China Sea for some years now.
    • India and Vietnam share a Comprehensive Strategic Partnership since 2016 and defence cooperation is a key pillar of this partnership.
    • Vietnam is an important partner in India’s Act East policy.

    Significance of such ties

    • If China wants to expand its presence in South Asia and the Indian Ocean region, the thinking in New Delhi goes, India can do the same thing in East Asia.
    • India can develop robust ties with states on China’s periphery such as Vietnam without giving China a veto on such relationships.

    Contributing factor: India’s Necklace of Diamonds Strategy

    • Over the past few years, China is expanding its footprint in the Indian Ocean through its ‘Debt Trap Diplomacy’ and ‘String of Pearls Strategy’.
    • Through its String of Pearls strategy, China is expanding its footprints to contain Indian hold in the Indian Ocean.
    • It is creating a ring around India through strategically placed nations such as at Chittagong (Bangladesh), at Karachi, Gwadar port (Pakistan) and at Colombo, Hambantota (both in Sri Lanka) and other facilities.

    What is Necklace of Diamonds Strategy?

    • It strategy aims at garlanding China or in simple words, the counter encirclement strategy.
    • India is expanding its naval bases and is also improving relations with strategically placed countries to counter China’s strategies.
    • Under this strategy, India’s strategic bases include-
    1. Changi Naval Base, Singapore
    2. Sabang Port, Indonesia
    3. Duqm Port, Oman
    4. Assumption Island, Seychelles
    5. Chabahar Port, Iran
    • Apart from getting direct access to the strategically placed naval bases, India is also developing new naval bases, developing the old bases to garland China.

    Conclusion

    • India has a perfect antidote for Chinese expansion.
    • It has been successful in establishing healthy relations with all the nations on China’s periphery.

     

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  • Challenges in dealing with Indo-Pacific

    Context

    The Indo-Pacific region has been under pressure and East Asia, in particular, has had to weather repeated storms.

    Background

    • Recently, U.S. President Joseph Biden was on his five-day visit to Asia.
    • During this visit, the new conservative South Korean government showed a willingness to expand the presence of a U.S. missile defence system in the country, which had earlier angered China.
    • In Japan, the administration promised him that it was ready to do away with its long-standing 1% GDP ceiling for annual defence spending.
    • Mr. Biden said at a press conference that the U.S. would intervene militarily to defend Taiwan if it came under attack from China.
    • The President and members of his delegation later clarified that there is no change in the substance of American foreign policy, which is still governed by the Taiwan Relations Act.
    • As per the 1979 Congressional law, the U.S. “shall provide Taiwan with arms of a defensive character” so that the region can defend itself.
    • The law says nothing about the U.S. being required to step in militarily to defend Taiwan in the event of an invasion by China.

    China-challenge in Indo-Pacific

    • South Korea and Japan face regular nuclear and missile threats from North Korea.
    • Challenge to international maritime law: China not only challenges international maritime laws in the South China Sea, but also confronts Japan over the Senkaku Islands.
    • Spratly Islands dispute: Six nations, including China and Taiwan, are involved in the dispute over the Spratly Islands, which are supposedly sitting on vast reserves of oil and natural gas.
    • Militarisation of disputed isles: China has vigorously militarised some portions of the disputed isles, islets and coral reefs; and countries like Vietnam and the Philippines are anxious not to be left behind.

    Will IPEF framework help in tackling challenges from China?

    • The US has sought to deal with China by establishing an Indo-Pacific Economic Framework (IPEF) with Australia, Brunei, India, Indonesia, Japan, South Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand, and Vietnam.
    • Four pillars of IPEF: The IPEF will work on fine-tuning four major pillars: standards and rules for digital trade; resilient supply chains; green energy commitments; and fair trade.
    • Issues of trade and tariffs: However, there is discontent that the framework does not address issues of trade and tariffs. 
    • Lack of trade component: Asian partners really want is trade, they want market access.
    • And the trade component of the IPEF is really lacking.

    Two facets of Indo-Pacific

    • 1] Balance relations with US and China: One is that China’s neighbours would rather balance relations between Washington and Beijing.
    • 2] Extent of resistance: Second is the extent to which countries in the region will want to get on the anti-China bandwagon, economic or strategic.
    • Whether it is in East, Southeast or South Asia, every country has its own unique relationship with Beijing.
    • India may be a part of the Quad, but is quite mindful that it is the only country in the group that shares a land border with China.
    • South Korea and Japan are part of a strong American security/strategic partnership but will be keen on maintaining their economic status with China.
    • This is also true for the Association of South East Asian Nations.

    Conclusion

    Given the complex nature of the threats and the challenges the Indo-Pacific faces, drawing up any strategy remains to be an uphill task.

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  • India needs a forward-looking strategy on Pakistan

    Context

    India’s approach in dealing with Pakistan today is very different from the framework that emerged at the dawn of the 1990s.

    Terms of engagement with Pakistan

    • From the 1990s, for nearly three decades, it was Pakistan that had the political initiative.
    • The turmoil in Kashmir, the international focus on nuclear proliferation, and the relentless external pressure for a sustained dialogue with Pakistan put Delhi in a difficult situation.
    • If Pakistan was on the political offensive, a series of weak coalition governments in Delhi were forced onto the back foot.
    • At the heart of Pakistan’s ambition was to change the status quo in Jammu and Kashmir.
    • Islamabad also played up to the concerns in Western chancelleries that the conflict in Kashmir might escalate to the nuclear level.
    • The new international consensus that Kashmir is the “world’s most dangerous nuclear flashpoint” aligned well with Pakistan’s strategy.
    • Delhi had no option but to respond, but any move to counter Pakistan would make the situation worse.
    • Under Prime Minister Narendra Modi, India has begun to reset the terms of the engagement agenda.
    • Change in regional and international context: Meanwhile, the regional and international context has also altered in many ways since the early 1990s essentially in India’s favour.

    Reset in engagement

    • India’s transformed relations with the US, the resolution of Delhi’s dispute with the global nuclear order, and getting the West to discard its temptation to mediate on Kashmir enormously improved India’s diplomatic position.
    • But the most consequential change has been in the economic domain.
    • The persistent neglect of economic challenges left Pakistan in an increasingly weaker position in relation to India.
    • If India has inched its way into the top six global economies, Pakistan today is broke.
    • Modi had the opportunity to build on these shifting fortunes of Delhi and Islamabad and develop a three-pronged strategy of his own.
    • 1] India bet that the heavens won’t fall if Delhi stops talking to Islamabad or negotiating with Pakistan-backed militant groups in Kashmir.
    • 2] Delhi has been unafraid of staring at nuclear escalation in responding to Pakistan’s cross-border terrorism.
    • 3] By changing the constitutional status of Kashmir in 2019, India has reduced the scope of India’s future negotiations with Pakistan on Kashmir.

    Way forward

    • Pakistan’s hand today is much weaker than in the 1990s and Delhi’s room for manoeuvring has grown, notwithstanding the challenges it confronts on the China border.
    • That opens some room for new Indian initiatives toward Pakistan.
    • Getting Pakistan’s army and its political class to be more practical in engaging India is certainly a tall order; but Delhi can afford to make a move.

    Conclusion

    While there can be much disagreement on Pakistan’s capacity to respond, Delhi’s new initiatives can reinforce the positive evolution of Indian foreign policy, and expand the space for Indian diplomacy in the region and beyond.

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  • BIMSTEC

    Context

    After 25 years, BIMSTEC can do much better as a grouping, addressing shortcomings in trade and connectivity.

    About BIMSTEC

    • BIST-EC in 1997: The 1997 Bangkok Declaration led to creation of the grouping of Bangladesh, India, Sri Lanka and Thailand with the acronym, BIST-EC.
    • BIMSTEC: Three countries-Nepal, Bhutan and Myanmar joined BIST-EC later to make it the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC).
    • At the grouping’s birth, the world was different; it was stamped by America’s ‘unipolar moment’.
    • India and Thailand joined hands to start an experiment of infusing a part of South Asia with the economic and institutional dynamism that defined the Association of Southeast Asian Nations (ASEAN).
    • But BIMSTEC found the burdens of South Asia too heavy to carry, and so it grew slowly.
    • The grouping has succeeded in rejuvenating itself.
    • Instrument of regional cooperation and integration: Since its Kathmandu summit in 2018, it is viewed as an instrument of regional cooperation and integration, not just of sub-regional cooperation.

    New opportunities in the changed geopolitical context

    • In the third decade of the 21st century, the strategic contestation between the United States and China defines the region’s geopolitics and geo-economics, creating new tensions and opportunities.
    • Deepening linkage between South Asia and Southeast Asia: In this Indo-Pacific century, the Bay of Bengal Community (BOBC) has the potential to play a pivotal role, deepening linkages between South Asia and Southeast Asia.
    • Collaboration with IPEF: It should accelerate the region’s economic development by collaborating with the newly minted Indo-Pacific Economic Framework for Prosperity (IPEF).
    • New synergy should be created between BIMSTEC and the IPEF.
    • While all member-states are equal, three have a special responsibility: Bangladesh as the host of the BIMSTEC Secretariat; Thailand as the representative of Southeast Asia; and India as the largest state in South Asia.

    Key achievements of BIMSTEC

    • Charter: It has crafted a new Charter for itself, spelling out the grouping’s vision, functions of its constituent parts, and has secured a legal personality.
    • Sectors of cooperation reduced to 7:  It has prioritised the sectors of cooperation, reducing them from the unwieldy 14 to the more manageable seven, with each member-state serving as the lead country for the assigned sector.
    • Strengthened Secretariat: It has, finally, taken measures to strengthen the Secretariat.
    • Combating terrorism: The grouping has also registered progress in combating terrorism, forging security cooperation, and creating mechanisms and practices for the better management of humanitarian assistance and disaster relief.
    • Held regular summits: Unlike the South Asian Association for Regional Cooperation, post-2014, BIMSTEC has continued to hold its summits and meetings of Foreign Ministers.
    • Unlike the Indian Ocean Rim Association (IORA) which held only one summit since its establishment in 1997, BIMSTEC has succeeded in holding five summits so far; it has now resolved to hold regular summits once in two years.
    • Sectoral cooperation: Institutions such as an Energy Centre and the Centre on Weather and Climate are in place to push sectoral cooperation forward.

    Challenges

    • No progress on FTA yet: A major failure relates to the continuing inability to produce a comprehensive Free Trade Agreement (FTA) 18 years after the signing of the Framework Agreement.
    • Lack of connectivity: The other disappointment is connectivity — in infrastructure (roads, railways, air, river, and coastal shipping links), energy, the digital and financial domain, and institutions that bring people closer together for trade, tourism and cultural exchanges.
    • Only limited progress has been achieved so far, despite the adoption of the Master Plan for Connectivity supported by the Asian Development Bank (ADB).
    • Much of the connectivity established recently is the outcome of bilateral initiatives taken by India, Bangladesh, Nepal and Bhutan to strengthen transport links.
    • No progress on Blue Economy: The grouping has talked about the Blue Economy but is yet to begin any work on it.
    • Business chambers and corporate leaders are yet to be engaged fully with the activities of BIMSTEC.

    Conclusion

    If BIMSTEC is truly committed to its stated goals, it must recreate the spirit of working in unison.

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