💥Join UPSC 2027,2028 Mentorship (July Batch) + XFactor Notes & Microthemes PDF
Talk to Mentor

Civilsdaily

Login

Subject: Bilateral Relations

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

  • The goal of an energy-secure South Asia

    Context

    Given that a 0.46% increase in energy consumption leads to a 1% increase in GDP per capita, electrification not only helps in improving lifestyle but also adds to the aggregate economy by improving the nation’s GDP.

    Widening electricity coverage in South Asian nations

    • The electricity policies of South Asian countries aim at providing electricity to every household.
    • The issues these policies address include generation, transmission, distribution, rural electrification, research and development, environmental issues, energy conservation and human resource training.
    • Bangladesh has achieved 100% electrification recently while Bhutan, the Maldives, and Sri Lanka accomplished this in 2019.
    • For India and Afghanistan, the figures are 94.4% and 97.7%, respectively, while for Pakistan it is 73.91%.
    • Bhutan has the cheapest electricity price in South Asia (U.S.$0.036 per kilowatt hour, or kWh) while India has the highest (U.S.$0.08 per kWh.) 
    • South Asia is reinforcing its transmission and distribution frameworks to cater to growing energy demand not only through the expansion of power grids but also by boosting green energy such as solar power or hydroelectricity.

    Adapting to renewable

    • Geographical differences between these countries call for a different approach depending on resources.
    •  India leads South Asia in adapting to renewable power, with its annual demand for power increasing by 6%.
    • India’s pledge to move 40% of total energy produced to renewable energy is also a big step.
    • Prime Minister Narendra Modi in his ‘net-zero by 2070’ pledge at COP26 in Glasgow asserted India’s target to increase the capacity of renewable energy from 450GW to 500GW by 2030.
    • The region is moving towards green growth and energy as India hosts the International Solar Alliance.
    • South Asia has vast renewable energy resources — hydropower, solar, wind, geothermal and biomass — which can be harnessed for domestic use as well as regional power trade.

    Steps toward SDGs

    • Solar power-driven electrification in rural Bangladesh is a huge step towards Sustainable Development Goal 7.
    • Access to electricity improves infrastructure i.e., SDG 9 (which is “build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation”).
    • Energy access helps online education through affordable Internet (SDG 4, or “ensure inclusive and equitable quality education and promote lifelong learning opportunities for all”), more people are employed (SDG 1: “no poverty”), and are able to access tech-based health solutions (SDG 3, or “ensure healthy lives and promote well-being for all at all ages”).

    Regional energy trade

    • The South Asian Association for Regional Cooperation (SAARC) prepared the regional energy cooperation framework in 2014, but its implementation is questionable.
    • Energy trade agreements: There are a number of bilateral and multilateral energy trade agreements such as the India-Nepal petroleum pipeline deal, the India-Bhutan hydroelectric joint venture, the Myanmar-Bangladesh-India gas pipeline, the Bangladesh-Bhutan-India-Nepal (BBIN) sub-regional framework for energy cooperation, and the Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline, rumoured to be extended to Bangladesh.
    • Challenges: ‘South Asia’s regional geopolitics is determined by the conflation of identity, politics, and international borders.
    • The current participation in cross-border projects has been restricted to respective tasks, among Bhutan and India or Nepal and India.
    • It is only now that power-sharing projects among the three nations, Nepal, India, and Bangladesh, have been deemed conceivable.

    Way forward

    • Energy framework: Going forward, resilient energy frameworks are what are needed such as better building-design practices, climate-proof infrastructure, a flexible monitory framework, and an integrated resource plan that supports renewable energy innovation.
    • Public-Private Partnership: Government alone cannot be the provider of reliable and secure energy frameworks, and private sector investment is crucial.

    Conclusion

    While universal coverage can catalyse the region’s economic growth, energy trade must be linked to peace building.

    UPSC 2023 countdown has begun! Get your personal guidance plan now! (Click here)

  • India, Europe and the Russian complication

    Context

    The re-election of Emmanuel Macron as the president of France on Sunday has sent a sigh of relief across Europe and North America. Delhi too is pleased with the return of Macron, who laid a strong foundation for India’s strategic partnership with France.

    Why France election matters to the regional and domestic order in Europe

    • Unlike the Soviet Union, which sought to shape European politics though left-wing parties, Russia today influences European politics through right-wing parties.
    • Victory for Marine Le Pen, Macron’s opponent, would have dramatically complicated the geopolitics of Europe.
    • Le Pen, like so many other right-wing leaders in Europe, has close ties to Vladimir Putin.
    • Le Pen’s victory would have not only altered France’s international trajectory, but also shaken the EU to its political core.

    Three factors shaping the transformation of India’s ties with Europe

    • Russia’s threat to the regional and domestic order in Europe is among multiple factors shaping Delhi’s intensifying engagement with Brussels.
    • Three major external factors are facilitating the transformation of India’s ties with Europe.

    1] Russian Question

    • For India, a normal relationship between Russia and the West would have been ideal.
    • But Russia’s confrontation with the West comes during India’s rapidly expanding economic and political ties to Europe and America.
    • Delhi might be sentimental about India’s historic Russian connection but it is not going to sacrifice its growing ties to the West on that altar.
    • Russia’s declining economic weight and growing international isolation begins to simplify India’s choices.
    • During the last few weeks, Delhi has insisted that its silence is not an endorsement of Russian aggression.
    • India’s position has continued to evolve.
    • Delhi’s repeated emphasis on respecting the territorial integrity of states is a repudiation of Russia’s unacceptable aggression.
    • Meanwhile, geographic proximity and economic complementarity have tied Europe even more deeply to Russia.
    • The EU’s annual trade with Russia at around $260 billion is massive in comparison to India’s $10 billion.
    • Putin’s reckless invasion of Ukraine has compelled Europe to embark on a costly effort to disconnect from Russia.
    • The war in Ukraine has certainly presented a major near-term problem that needs to be managed by Delhi and Brussels.

    2] China Question

    •  Moscow has been deepening ties with Beijing for more than two decades triggering many anxieties in Delhi.
    •  In February, Putin travelled to Beijing to announce a partnership “without limits”.
    • India has no option but to manage the consequences of the Russian decision.
    • In the last two decades, China has emerged as a great power and now presents a generational challenge for Indian policymakers.
    • That challenge has been made harder by Putin’s alliance with Xi Jinping.
    • As Delhi strives to retain a reasonable relationship with Moscow, Europe emerges as an important partner in letting India cope with the China challenge.
    •  Thanks to the growing problems of doing business with Xi’s China, Beijing’s geopolitical alliance with Moscow, and the rapid deterioration of Sino-US relations, Brussels is ready to invest serious political capital in building purposeful strategic ties with India.

    3] American Question

    • Until recently it appeared that Europe’s calls for “strategic autonomy” from the US were in sync with India’s own worldview.
    • But the Ukraine crisis has underlined the US’s centrality in securing Europe against Russia.
    • In Asia, Chinese assertiveness has brought back the US as a critical factor in shaping peace and security.
    • Washington wants a strong Europe taking greater responsibility for its own security; it would like Delhi to play a larger role in Asia and become a credible provider of regional security.
    • Above all, America wants India and Europe to build stronger ties with each other.

    Conclusion

    For the first time since independence, India’s interests are now aligning with those of Europe. Together, Delhi and Brussels can help reshape Eurasia as well as the Indo-Pacific.

    UPSC 2022 countdown has begun! Get your personal guidance plan now! (Click here)

  • Finding workable solutions to India-Sri Lanka fisheries issue

    Context

    After a gap of 15 months, the India-Sri Lanka Joint Working Group (JWG) on fisheries held its much-awaited deliberations (in virtual format) on March 25.

    Background of the issue

    • As sections of fishermen from the Palk Bay bordering districts of Tamil Nadu continue to transgress the International Maritime Boundary Line (IMBL), cases of many of them getting arrested and their boats being impounded by the Sri Lankan authorities continue.
    • Apart from poaching in the territorial waters of Sri Lanka, the use of mechanised bottom trawlers is another issue that has become a bone of contention between the fishermen of the two countries; the dispute is not just between the two states.
    • Use of mechanised bottom trawlers: This method of fishing, which was once promoted by the authorities in India, is now seen as being extremely adverse to the marine ecology, and has been acknowledged so by India.
    • The actions of the Tamil Nadu fishermen adversely affect their counterparts in the Northern Province.
    • Reason for transgression: The fishermen of Tamil Nadu experience a genuine problem — the lack of fishing areas consequent to the demarcation of the IMBL in June 1974.
    • If they confine themselves to Indian waters, they find the area available for fishing full of rocks and coral reefs besides being shallow.
    • Under the Tamil Nadu Marine Fishing Regulation Act 1983, mechanised fishing boats can fish only beyond 3 NM from the coast.
    • This explains the trend of the fishermen having to cross the IMBL frequently.

    Way forward

    • Transition to deep-sea fishing: While Indian fishermen can present a road map for their transition to deep sea fishing or alternative methods of fishing, the Sri Lankan side has to take a pragmatic view that the transition cannot happen abruptly.
    • In the meantime, India will have to modify its scheme on deep-sea fishing to accommodate the concerns of its fishermen, especially those from Ramanathapuram district, so that they take to deep-sea fishing without any reservation.
    • Alternative livelihood measures: There is a compelling need for the Central and State governments to implement in Tamil Nadu the Pradhan Mantri Matsya Sampada Yojana in a proactive manner.
    • The scheme, which was flagged off two years ago, covers alternative livelihood measures too including seaweed cultivation, open sea cage cultivation, and sea/ocean ranching.
    • During Mr. Jaishankar’s visit, India had signed a memorandum of understanding with Sri Lanka for the development of fisheries harbours.
    • This can be modified to include a scheme for deep-sea fishing to the fishermen of the North.
    • Joint research on fisheries: . It is a welcome development that the JWG has agreed to have joint research on fisheries, which should be commissioned at the earliest.
    • Institutional mechanism: Simultaneously, the two countries should explore the possibility of establishing a permanent multi-stakeholder institutional mechanism to regulate fishing activity in the region.
    • Using common thread of culture, language and religion: The people of the two countries in general and fisherfolk in particular have common threads of language, culture and religion, all of which can be used purposefully to resolve any dispute.

    Conclusion

    What everyone needs to remember is that the fisheries dispute is not an insurmountable problem. A number of options are available to make the Palk Bay not only free of troubles but also a model for collaborative endeavours in fishing.

    UPSC 2022 countdown has begun! Get your personal guidance plan now! (Click here)

  • India extends duration of $400 mn Currency Swap to SL

    India has extended the duration of a $400 million currency swap facility with Sri Lanka which it had concluded with the island nation in January this year.

    What are Currency Swaps?

    • A currency swap, also known as a cross-currency swap, is an off-balance sheet transaction in which two parties exchange principal and interest in different currencies.
    • Currency swaps are used to obtain foreign currency loans at a better interest rate than could be got by borrowing directly in a foreign market.

    Practice question for mains:

    Q. What are Currency Swaps? Discuss the efficacy of Currency Swap Agreements for enhancing bilateral cooperation in Indian context.

    How does it work?

    • In a swap arrangement, RBI would provide dollars to a Lankan central bank, which, at the same time, provides the equivalent funds in its currency to the RBI, based on the market exchange rate at the time of the transaction.
    • The parties agree to swap back these quantities of their two currencies at a specified date in the future, which could be the next day or even three months later, using the same exchange rate as in the first transaction.
    • These swap operations carry no exchange rate or other market risks, as transaction terms are set in advance.

    Why does one need dollars?

    • FPIs investors look for safer investments but the current global uncertainty over COVID outbreak has led to a shortfall everywhere in the global markets.
    • This has pulled down foreign exchange reserves of many small and developing countries.
    • This means that the government and the RBI cannot lower their guard on the management of the economy and the external account.

    Benefits of currency swap

    • The absence of an exchange rate risk is the major benefit of such a facility.
    • This facility provides the flexibility to use these reserves at any time in order to maintain an appropriate level of balance of payments or short-term liquidity.
    • Swaps agreements between governments also have supplementary objectives like the promotion of bilateral trade, maintaining the value of foreign exchange reserves with the central bank and ensuring financial stability (protecting the health of the banking system).

     

    UPSC 2022 countdown has begun! Get your personal guidance plan now! (Click here)

  • Maldives bans ‘India Out’ Campaign

    Maldivian President Ibrahim Mohamed Solih issued a decree banning the ‘India Out’ campaign, now led by former President Abdulla Yameen, terming it a “threat to national security”.

    The India-Out Campaign

    • Maldivian protesters recently demanded the Solih administration to ‘stop selling national assets to foreigners’, implying India.
    • ‘India Out’ campaign in Maldives had started sometime last year as on-ground protests in the Maldives and later widely spread across social media platforms under the same hashtag.
    • It is not related to people-to-people conflict (Indian diaspora) but is discontent on close relationship between Maldivian government & India.

    Causes for the anti-India sentiments

    • Political instability: The anti-India sentiment is nearly a decade old and can be traced back to when Abdulla Yameen Abdul Gayoom became president in 2013. He used anti-India sentiments for his political mobilization and started tilting China.
    • Controversy over helicopter gift: Two Dhruv Advanced Light Helicopters (ALF) that were given by India to the Maldives for ocean search-and-rescue operations. Opposition tried to portray this as military presence in the country.
    • Confidential agreements: Most agreements being signed between the Ibrahim Solih government and India are backdoor and has not been publicly discussed in the Maldives Parliament.
    • Alleged interference in domestic politics: India being a big neighbour, there are unsubstantiated perceptions & allegations on Indian Diplomats stationed in Maldives interfering in Domestic affairs.

    Restoration of ties

    • Ibrahim Mohamed Solih who became President in 2018 has restored Maldives close ties with India.

    India-Maldives Relations: A backgrounder

    • India and Maldives are neighbors sharing a maritime border.
    • Both nations established diplomatic relations after the independence of Maldives from British rule in 1966.
    • India was one of the first nations to recognize Maldives’ independence.
    • Since then, India and Maldives have developed close strategic, military, economic and cultural relations.
    • Maldivians generally regard Indians and India as a friend and trusted neighbor in the field economic, social and political.

    Major irritants in ties

    • Political Instability: India’s major concern has been the impact of political instability in the neighborhood on its security and development.
    • Increasing radicalization: In the past decade or so, the number of Maldivians drawn towards terrorist groups like the Islamic State (IS) and Pakistan-based jihadist groups has been increasing.
    • Inclination towards terror: Radicalism in the island nation has increased the possibility of Pakistan-based terror groups using remote Maldivian islands as a launch pad for terror attacks against India and Indian interests.
    • Chinese affinity: China’s strategic footprint in India’s neighborhood has increased. The Maldives has emerged as an important ‘pearl’ in China’s “String of Pearls” construct in South Asia.

    Recent gestures by India

    [1] 2014 Malé drinking-water crisis

    • In the wake of a drinking water crisis in Malé in December 2014, following collapse of the island’s only water treatment plant, Maldives urged India for immediate help.
    • India came to rescue by sending its heavy lift transporters like C-17 Globemaster III, Il-76 carrying bottled water.

    [2] 2020 Covid-19 crisis

    • During the COVID-19 crisis of 2020, India extended help to Maldives in the form of financial, material and logistical support.
    • Also, the IAF airlifted 6.2 tonnes of essential medicines and hospital consumables to Maldives, as part of ‘Operation Sanjeevani’.

    [3] Greater Male Connectivity Project

    • India has recently announced the signing of a $500-million infrastructure project for the construction of the Greater Malé Connectivity Project (GMCP).
    • This infrastructure project, the largest-ever by India in the Maldives, involves the construction of a 6.74-km-long bridge and causeway link.

    Why is Maldives significant for India?

    • Increasing maritime cooperation: As maritime economic activity in the Indian Ocean has risen dramatically in recent decades, the geopolitical competition too in the Indian Ocean has intensified.
    • Toll Gate in Indian Ocean: It is situated at the hub of commercial sea-lanes running through the Indian Ocean. More than 97% of India’s international trade by volume and 75% by value passes through the region.
    • Naval cooperation: Maldives is an important partner in India’s role as the net security provider in the Indian Ocean Region.
    • Important SAARC member: Besides, Maldives is a member of the South Asian Association for Regional Cooperation (SAARC) and the South Asia Subregional Economic Cooperation (SASEC).
    • People To People Contact: There is a significant population of Maldivian students in India. They are aided by a liberal visa-free regime extended by India. There is also medical tourism.
    • Major destination for Tourists: Tourism is the mainstay of the Maldivian economy. The country is now a major tourist destination for some Indians and a job destination for others.

    Conclusion

    • There is a significant Indian diaspora in the Maldives. Innumerable Indians work across the hospitality, education, and health-care sectors of the Maldives economy.
    • India must use its Diaspora more extensively for strengthening its relations.

     

    UPSC 2022 countdown has begun! Get your personal guidance plan now! (Click here)

  • India-UK relations: A new shine to old ties

    Context

    As Prime Minister Narendra Modi hosts British premier Boris Johnson this week in India, the moment is ripe to turn the expansive new possibilities — in trade, investment, high technology, defence, and regional cooperation— into concrete outcomes.

    Background of the India-UK ties and  paradoxes

    • Legacies of colonialism: The bitter legacies of colonialism had made it impossible for the two sides to pursue a sensible relationship in the past.
    • India’s post-colonial engagement with Britain has been riddled with multiple paradoxes.
    • 1] India’s post-post colonial resentment and UK’s claim for special role: Delhi’s lingering post-colonial resentments and London’s unacceptable claim for a special role in the Subcontinent generated unending friction.
    • The consequences of Partition and the Cold War made it harder for Delhi and London to construct a sustainable partnership.
    • The important role played by the US: It was the US that first recognised India’s rapidly-growing relative weight in the international system.
    • At the turn of the millennium, Washington unveiled a policy of assisting India’s rise.
    • This was based on a bipartisan American consensus that a stronger India will serve US interests in Asia and the world.
    • Over the last two decades, it has led to a quick transformation of US relations with India.
    • 2] Washington is setting the pace for Delhi’s relationship with London:  At the dawn of Independence, India saw London as the natural interlocutor with an unfamiliar Washington.
    • Today it is Washington that is setting the pace for Delhi’s relationship with London.
    •  3] China’s role in shaping India’s relations with the West: For Washington, the strategic commitment to assist India’s rise was rooted in the recognition of the dangers of a China-dominated Asia.
    • London in the last two decades was moving in the other direction — a full embrace of Beijing.
    • Once the American deep state decided to confront Chinese power in the late 2010s, London had to extricate itself from the Chinese Communist Party’s powerful spell.
    • As the US unveiled a new Asian strategy, Britain followed with its own “Indo-Pacific tilt” that helped secure the region against China’s muscular policies.
    • 4] Historic tilt towards Pakistan: Unlike the US and France, which are committed to an “India first” strategy in South Asia, Britain remains torn between its new enthusiasm for India and the inertia of its historic tilt towards Pakistan.
    • But India is confident that Pakistan’s relative decline in the region is bound to make it a less weighty factor in India’s bilateral relations with Britain.
    • The question of Pakistan brings us to the fourth paradox—the domestic dynamics of Britain that have tended to sour ties with India.
    • Delhi has figured out that the interconnected politics of India and Britain — shaped by the large South Asian diaspora of nearly four million — can be cut both ways.
    • 5] Making best of historic ties:  If the Tories are romantic about the Raj, nationalists in India bristle at the British imperial connection.
    • Yet, together they are constructing a new relationship between India and Britain.

    Better outlook for bilateral ties

    • As the two sides make a determined effort to transcend the paradoxes, the regional and international circumstances provide a new basis for mutually beneficial engagement.
    • Over the last couple of years, Delhi and London have begun a promising and pragmatic engagement devoid of sentiment and resentment.
    • Having walked out of Europe, Britain needs all the partners it can find and a rising India is naturally among the top political and economic priorities.
    • Delhi meanwhile has become supremely self-assured in dealing with London.
    • With the Indian economy set to become larger than Britain’s in the next couple of years, Delhi is no longer defensive about engaging Britain.
    • Even more important, Delhi recognises the value of a deep strategic partnership with London.

    Conclusion

    The UK has a significant international military presence and wide-ranging political influence. Realists in Delhi are trying to leverage these British strengths for India’s strategic benefit.

    UPSC 2022 countdown has begun! Get your personal guidance plan now! (Click here)

  • Nepal’s dwindling Forex Reserves

    In an unusual development, the Nepali PM sacked the head of its central bank accusing him of leaking sensitive information and for failing to perform his duties.

    What is the news?

    • Nepal’s forex reserves have plummeted by 18.5% to $9.58 billion in March from $11.75 billion in July 2021.
    • The current forex reserves are not enough to pay the government’s import bills beyond the next seven months or so.
    • Nepal’s central bank recently announced a ban on the import of vehicles and other luxury items, citing liquidity crunch and declining foreign exchange reserves.
    • It is rumoured that the Nepali economy will go into a crisis like Sri Lanka.

    Why have Nepal’s forex reserves fallen?

    • Nepal’s forex reserves situation appears healthy as of now as the country, unlike Sri Lanka, is not burdened by external debt.
    • There are, however, concerns that the lower middle-income economy is being battered repeatedly by external factors and that may precipitate a crisis sometime soon.
    • Nepal which is blessed with one of the finest tourism sectors in South Asia, because of the Himalayan mountain range, suffered during the COVID-19 pandemic as global tourist flow fell.
    • This is followed by the global energy crisis caused by Russia’s invasion of Ukraine.
    • This has put extraordinary inflationary pressure on the economy.

    How bad is the situation?

    • Nepal’s economy is highly dependent on imports as the country buys a range of merchandise goods apart from fuel.
    • The prevailing weak economic indicators mean that Nepal is spending from its forex reserves faster than it can save.
    • Economists contend that Nepal will soon have double-digit inflation. All economic indicators are declining.
    • The real shortfall in forex reserves is because of the decline in foreign remittances which suffered during the pandemic when the Nepalese workforce abroad suffered job losses.

    Can the energy scene in Nepal escalate economic woes?

    • Nepal’s history shows that any uncertainty regarding fuel can trigger serious internal problems as was visible during the 2015-16 blockade when disruption of fuel supply from India.
    • Nepal’s primary supplier of energy is Indian Oil Corporation (IOC).
    • Nepal Oil Corporation (NOC) pays IOC in two installments every month, on the 8th and the 23rd.
    • The NOC has been in crisis for months as high global prices depleted the company’s savings, prompting it to approach the government for a lifeline.
    • The Government of Nepal has agreed to provide NOC the necessary amount to continue supplies from IOC.
    • NOC’s financial status makes it unattractive for banks and as a result the public sector company does not enjoy confidence in the market.

    Paradoxical situation

    • The government is in a paradoxical situation: It has to control imports of products from which it earns the highest amount of tax revenue.
    • Luxury items are the country’s major source of revenue.
    • If revenue shrinks, an economic crisis could be imminent.

    Impact on elections

    • Nepal will hold local level polls next month which will be followed by general elections towards the end of the year.
    • The election process requires considerable financial allocation and Nepal has received support in the past for elections from international donors like the USAID.
    • These donors help in carrying out pre-election staff training and logistics that are part of any democratic process.
    • But there are uncertainties considering the bleak financial situation.
    • It will require at least 10 billion Nepali rupees for the election process and that will mean diversion of a large amount of resources for the democratic process.

    Quick recap: Sri Lankan Crisis

    • Like Nepal, Sri Lanka is a country with a small economy. The Sri Lankan economy is around 1.5 times bigger than Nepal’s.
    • Sri Lanka’s economic crisis was in the making since it suffered a terrorist attack in 2019 which hit its tourism industry, a major contributor to the GDP.
    • Then came the pandemic, which further wiped out tourism incomes. Then there were debt burdens in dollars.
    • The political leadership failed to act to address the looming crisis.
    • The Rajapaksha dynasty made some wrong moves—it cut taxes and started printing money, hugely devaluing the currency.
    • In what looked like a well-intentioned move towards organic farming, the county banned imports of chemical fertilisers. Paddy production failed. The country ran out of money to pay its bills.

    Is Nepal really going the way of Sri Lanka?

    • In Nepal, the situation is not as bleak.
    • Nepal’s current forex reserves are enough to pay for imports of goods and services for about seven and a half months.
    • Tourism, one of the major foreign currency earners, was hit hard by the pandemic, but its gradual revival has given a glimmer of hope.
    • Since Nepal’s currency is pegged to the Indian rupee, a massive devaluation shock is unlikely. Tourism is also rebounding, giving a fillip to foreign currency reserves.

    Back2Basics: Foreign Exchange Reserves

    • Foreign exchange reserves are important assets held by the central bank in foreign currencies as reserves.
    • They are commonly used to support the exchange rate and set monetary policy.
    • In India’s case, foreign reserves include Gold, Dollars, and the IMF’s quota for Special Drawing Rights.
    • Most of the reserves are usually held in US dollars, given the currency’s importance in the international financial and trading system.
    • Some central banks keep reserves in Euros, British pounds, Japanese yen, or Chinese yuan, in addition to their US dollar reserves.

     

    UPSC 2022 countdown has begun! Get your personal guidance plan now! (Click here)

  • What is the ‘2+2’ format of dialogue between India and the US?

    The fourth ‘2+2’ dialogue between India and the United States is underway in Washington DC.

    2+2 talks between India and allies

    • The 2+2 dialogue is a format of meeting of the foreign and defence ministers of India and its allies on strategic and security issues.
    • A 2+2 ministerial dialogue enables the partners to better understand and appreciate each other’s strategic concerns and sensitivities taking into account political factors on both sides.
    • This helps to build a stronger, more integrated strategic relationship in a rapidly changing global environment.
    • India has 2+2 dialogues with four key strategic partners: US, Australia, Japan, and RUSSIA.

    Inception of the idea

    • The inaugural 2+2 dialogue with Australia was held in September 2021 when Jaishankar and Singh met with their counterparts Marise Payne and Peter Dutton in New Delhi.
    • India held its first 2+2 dialogue with Russia in December last year, when Russian Foreign Minister Sergey Lavrov and Defence Minister Sergei Shoigu visited India.
    • The first India-Japan talks in the 2+2 format were held on November 30, 2019 in New Delhi.

    Dialogue with the US

    • The US is India’s oldest and most important 2+2 talks partner.
    • The first 2+2 dialogue between the two countries was held during the Trump Administration.
    • It hosted then-Secretary of State Michael Pompeo and then-Secretary of Defence James Mattis and the late Sushma Swaraj and then Defence Minister Nirmala Sitharaman in New Delhi in September 2018.
    • The second and third editions of the 2+2 dialogues were held in Washington DC and New Delhi in 2019 and 2020 respectively.

    Defence and strategic agreements

    • Over the years, the strategic bilateral relationship with its partners, including the dialogues held in the 2+2 format, have produced tangible and far-reaching results for India.
    • India and the US have signed a troika of “foundational pacts” for deep military cooperation, beginning with the:
    1. Logistics Exchange Memorandum of Agreement (LEMOA) in 2016
    2. Communications Compatibility and Security Agreement (COMCASA) after the first 2+2 dialogue in 2018, and
    3. Basic Exchange and Cooperation Agreement (BECA) in 2020

    Deterrents in ties ahead of the meet

    • There is little doubt as to how beneficial this mechanism has been.
    • On one side, the ‘two plus dialogue’ is expected to abate, if not resolve, highly problematic issues such as Chinese aggression.
    • Even though there is a tonne of expectations from this mutual dialogue between the two countries, the dialogue is also the source of some worry.
    • This time, the US is sceptical of India’s mammoth oil import from Russia.
    • Another problematic pointer is India’s voluminous weaponry sanctions from Russia.

    Why a 2+2 with Russia?

    • Russia is one of those countries with which a 2+2 format talk “fits perfectly” in India’s foreign policy.
    • India and Russia have shared a strategic relationship since October 2000, which later got upgraded to ‘Special and Privileged Strategic Partnership’ in December 2010.
    • To be sure, the India-Russia 2+2 does have a particularly strong signalling component when seen against the backdrop of the S400 controversy.
    • Holding the 2+2 talks with Russia is much needed. This gives out a strong message to the world that India sees everyone to be on the same level.
    • This is visible messaging that India cannot be compelled to choose partners. India pursues an independent foreign policy serving its national and non-allied interests.
    • Having a 2+2 with Russia also means that India is “not in anyone’s camp” and that bilateral ties between Moscow and New Delhi are “traditional and comprehensive”.

    Way forward

    • India and the US don’t set ‘red lines’ and are pushing for “an honest dialogue”, the ongoing 2+2 dialogue is an opportunity for both India and the US.
    • The US also understands that India is one of the few countries that could leverage its relationship with Russia to bring the two warring parties to the negotiating table through a ceasefire and diplomatic resolution.
    • For Delhi, it is a season for careful and adroit diplomacy.

     

    UPSC 2022 countdown has begun! Get your personal guidance plan now! (Click here)

  • The wider impact of Pakistan’s internal crisis

    Context

    As Pakistan goes through a major political convulsion, India must resist the temptation to see the changes across our western frontiers through the narrow prism of bilateral relations.

    Why Pakistan matters

    • Pakistan is an important regional piece in the power play between the US, China and Russia.
    • Given its location at the crossroads of the Subcontinent, Middle East, Eurasia, and China, Pakistan has always been a vital piece of real estate that was actively sought by contending geopolitical blocs.
    • The internal and external have always been tightly linked in Pakistan.
    • Today, Pakistan’s internal battles are tied to external geopolitical rivalry.

    Two important factors in the political trajectory of Pakistan

    • Any Indian strategy in dealing with the new government in Islamabad would depend on an assessment of Pakistan’s post-Imran political trajectory.
    • Two important factors stand out.
    • 1] First is the changing nature of civil military relations in Pakistan.
    • It is part of a serious intra-elite struggle that transcends the well-known military dominance over Pakistan’s polity.
    • One of the more interesting questions to come out of the current episode is whether the army’s famed internal coherence and unity of command might endure the crisis.
    • 2] Second is the growing fragility of Pakistan’s polity triggered by the deepening economic crisis and sharpening social contradictions.
    • There is no guarantee that the army’s ties with new civilian rulers will be smooth nor can we assume that the civilian coalition against Imran Khan will survive the many challenges ahead as it confronts difficult policy challenges on multiple fronts.

    Geopolitical challenges of Pakistan

    • Engaging India is unlikely to be a high priority for the new government in Islamabad.
    • Today, Pakistan has many other things to worry about — reviving its flagging economic fortunes, stabilising the Durand Line with Afghanistan, and rebalancing its ties with the major actors in the Middle East, including Iran, UAE, Saudi Arabia and Turkey.
    • Pakistan, which traditionally enjoyed good relations with the West as well as China, is finding it hard to maintain a balance in its great power relations.
    • While the army and the new government are eager to restore ties with the US, Imran Khan has made it hard for them.
    • Imran Khan’s repeated praise for India’s independent foreign policy was in essence a critique of the Pakistan army that has long steered Islamabad’s international relations.

    Way forward

    •  Delhi should focus on the potential shifts in Pakistan’s strategic orientation triggered by the current crisis.
    • The good news from Pakistan is that India is not part of the argument between the political classes or between Imran Khan and the “deep state” represented by the army.

    Conclusion

    An India that gets an accurate sense of Pakistan’s changing geopolitics will be able to better deal with Islamabad.

    UPSC 2022 countdown has begun! Get your personal guidance plan now! (Click here)

  • What caused Sri Lanka’s worst economic crisis?

    Context

    Sri Lanka’s ruling Rajapaksa family is facing mounting public anger, calls for resignations and political defections amidst the island’s worst economic crisis in its post-independence history.

    Reasons for the crisis

    • 1] Overnight switch to organic farming and import ban on fertiliser: There was the decision to ban fertiliser imports and switch overnight to organic farming.
    • The decision was reversed after sustained farmer protests but not before damage had already been done to crop yields.
    • 2] Then, precious foreign exchange was wasted in propping up the rupee while imposing controls on key imports that led to shortages and price rise.
    • 3] For several months, as the crisis deepened with rolling power-cuts and shortages of essentials, the government refused to seek IMF assistance.
    • It has now relented on the IMF, but Sri Lanka’s economic distress has been prolonged and deepened by this indecision.

    Contradictions in the Sri Lanka’s politics

    • While the immediate causes of popular anger are explicable, the crisis also reveals a more enduring contradiction at the foundation of Sri Lanka’s politics.
    • Sinhala nationalist-inspired policies: What this crisis shows is that Sinhala nationalist-inspired policies are no longer financially or politically viable.
    • Hardline approach toward Tamils: The Rajapaksas first rode to power in September 2005 on the wave of Sinhala nationalist antipathy against the then-ongoing Norwegian-mediated peace process with the LTTE.
    • Upon his election as president, Mahinda expanded the military and launched a full-frontal military offensive that ended with the LTTE’s total defeat and destruction in May 2009.
    • After the war, instead of seeking a political settlement with the Tamils, Mahinda Rajapaksa unrolled a de-facto militarised siege of the Tamil-speaking areas and population.
    • Assertive foreign policy: The hardline approach to the Tamils and their demands was also linked to a new, more assertive foreign policy.
    •  The government turned away the long-established pattern of alignments with Western states and India.
    • Mistrust of India: There is a long-standing mistrust of India amongst Sinhala Buddhist nationalists who see it as the source of historic Tamil invasions.
    •  The Rajapaksas translated this sentiment into policy, pushing back against Indian attempts to forge closer economic ties and a constitutional settlement of the Tamil question.
    • Ties with China: In place of these ties, the Rajapaksas ostentatiously set out to forge new alliances, principally with China.
    • The Rajapaksas also bet on a new geo-political optimism.
    • They believed that with China’s rise, Sri Lanka’s location on east-west trade lanes would become a prized asset.
    • They were confident that in the global competition for power triggered by China’s rise, international actors would be compelled to seek Sri Lanka’s favour for fear of “losing” it to the other side.
    • With this geo-political calculus in mind, they assuredly rebuffed Western and Indian demands.
    • None of the great powers who were supposed to be competing for Sri Lanka’s favour have stepped up to offer a bailout, although the sums are quite small by global standards.
    • The bid for total sovereign autonomy has crash-landed and yet the alternatives are also politically difficult.

    More leverage to international actors

    • The irony of Sri Lanka’s push for total sovereign autonomy is that it has given international actors more leverage than they had before.
    • Going to the IMF will require concessions on human rights and good governance to secure preferential access to European markets.
    • At the same time, Indian bilateral assistance has conditionalities on clearing controversial investments.

    Way forward

    • Push non-reversible changes: International actors who really want to help Sri Lanka should use this leverage to push for tangible and non-reversible changes in the treatment of Tamils and Muslims whatever leadership emerges in Colombo.
    • Eemilitarisation and normalisation of relations with the Tamils and Muslims: The crisis can serve as a reality check for the Sinhala nationalist leadership and electorate. The model of economic and political governance they have pursued is unsustainable, and the alternatives must be faced.
    • The most pressing of these is the demilitarisation and normalisation of relations with the Tamils and Muslims.
    • Sinhala political attention can perhaps then be turned to the other pressing failures of governance that have brought Sri Lanka to this state.

    Conclusion

    The Rajapaksas may be the principal protagonists of this crisis but the underlying script they have followed is a Sinhala Buddhist one and until Sri Lanka finds a new script it cannot find peace or stability.

    UPSC 2022 countdown has begun! Get your personal guidance plan now! (Click here)