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Subject: Bilateral Relations

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

  • On South Asia, US must reorient itself

    Context

    On the external front, Russia’s Ukraine war and the Sino-Russian alliance are setting the stage for a reordering of South Asia’s great power relations.

    Opportunity for the US in South Asia

    • If it looks beyond the region’s immediate response to the war in Ukraine, Washington can seize the current opportunity to elevate the US’s salience for the Subcontinent in partnership with India.
    • The Indo-Pacific strategy offers new pathways for the US to limit the traditional economic and military weight of China and Russia in the Subcontinent.

    Three regional trends in South Asia

    1] Decline of Pakistan’s influence

    • In the wake of the missile accident, Islamabad moved to seek international intervention, including from the UN Secretary-General.
    • But there were few takers for this old South Asian formula, except in Beijing.
    • Underlining the peremptory dismissal of Islamabad’s concerns is a deeper trend — the relative decline of Pakistan’s international standing.
    • Since his election, US President Joe Biden has refused to call Imran Khan, who runs a “major non-NATO ally”; high-level visitors from Washington now skip Pakistan during South Asia visits.
    • Chinese and Russian official visitors are among the few to combine trips to Delhi and Islamabad.
    • Islamabad’s decline after the US withdrawal from Afghanistan is likely to accelerate amidst Pakistan’s deepening domestic political chaos.
    • With an economy that is smaller than that of Bangladesh and limited prospects for rapid growth in the coming years, Pakistan will find it hard to match its traditional claim for “strategic parity” with India.

    2] Declining interest in China’s Belt and Road Initiative in South Asia

    •  Just a couple of years ago, China’s commercial march into South Asia seemed unstoppable. Not any longer.
    • Troubles in Pakistan and Sri Lanka: Pakistan and Sri Lanka, which embraced the BRI with great gusto, are South Asia’s two worst-performing economies.
    • The deepening economic crises are compelling the elites of Pakistan and Sri Lanka to focus on non-Chinese financial sources to stabilise their economies.
    • Sri Lanka, which ostentatiously refused to accept $480 million developmental assistance from the US in 2020, is now desperately looking for hard currency support for its sinking economic fortunes.
    •  In Nepal, the dominant communists had made political opposition to US infrastructure assistance of $500 million as a life and death issue for a decade.
    • At the end of last month, Nepal’s parliament ratified the US loan that will facilitate Nepal’s infrastructure development and its economic integration with the Subcontinent.

    3] The growing possibilities for US security cooperation with the Subcontinent

    • During the Cold War, the US military engagement was limited to Pakistan.
    • In the 21st century, there has been a steady expansion of US defence cooperation with India.
    • The current focus on the Indo-Pacific is getting Washington to modernise the defence partnerships with the smaller countries of the region.
    • The Trump Administration discarded the traditional obsession with Pakistan and began to recognise the strategic significance of the smaller South Asian states for its Indo-Pacific strategy.
    • The visit of US Undersecretary of State to Bangladesh over the weekend saw progress towards signing the so-called GSOMIA (General Security of Military Information Agreement) that codifies the commitment to protect classified military information.

    Conclusion

    Reversing that must necessarily involve deeper security cooperation with the region and developing alternatives to military dependence on Beijing and Moscow. This is best done in partnership with Delhi.

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  • Sri Lanka’s aggravating Economic Crisis

    Sri Lanka’s economic crisis is aggravating rapidly, putting citizens through enormous hardship.

    Reasons for the Crisis

    The first wave of the pandemic in 2020 offered early and sure signs of distress.

    • In-migration: Thousands of Sri Lankan labourers in West Asian countries were left stranded and returned jobless.
    • Shut-down: Garment factories and tea estates could not function, as infections raged in clusters. Tourism sector to saw a big dip.
    • Domestic job losses: Thousands of youth lost their jobs in cities as establishments abruptly sacked them or shut down.
    • Forex decline: It meant that all key foreign exchange earning sectors, such as exports and remittances, along with tourism, were brutally hit.

    Policy failures of Lankan govt

    • No strategy: The lack of a comprehensive strategy to respond to the crisis then was coupled with certain policy decisions last year.
    • Ill-advised policies: It included the government’s abrupt switch to organic farming —widely deemed “ill-advised”, further aggravated the problem.
    • Food hoarding: The government declared emergency regulations for the distribution of essential food items. It put wide import restrictions to save dollars which in turn led to consequent market irregularities and reported hoarding.
    • Continuous borrowing: Fears of a sovereign default rose by the end of 2021, with the country’s foreign reserves plummeting to $1.6 billion, and deadlines for repaying external loans looming.

    What is happening on the ground?

    • At the macro-economic level, all indicators are worrisome.
    • The Sri Lankan rupee, which authorities floated this month, has fallen to nearly 265 against the U.S. dollar. Consumer Price inflation is at 16.8% and foreign reserves stood at $2.31 billion at the end of February.
    • Sri Lanka must repay foreign debt totalling nearly $7 billion this year and continue importing essentials from its dwindling dollar account.
    • Sri Lanka will incur an import bill of $22 billion this year, resulting in a trade deficit of $10 billion.

    Implications on Public

    • For citizens, this means long waits in queues for fuel, a shortage of cooking gas, contending with prolonged power cuts in many localities and struggles to find medicines for patients.
    • In families of working people, the crisis is translating to cutting down on milk for children, eating fewer meals, or going to bed hungry.

    How is India helping?

    • Acting in the Neighbourhood’s first policy, India stands with Sri Lanka.
    • $1 billion credit line signed for supply of essential commodities. Key element of the package of support extended by India.
    • Beginning January 2022, India has extended assistance totalling $ 2.4 billion — including an $400 million RBI currency swap and a $500 million loan deferment.

    Chinese lure of aid

    • China is considering Sri Lanka’s recent request for further $2.5 billion assistance, in addition to the $2.8 billion Beijing has extended since the outbreak of the pandemic.

    How is India’s assistance being viewed in Sri Lanka?

    • Sacking key infra projects: The leadership has thanked India for the timely assistance, but there is growing scepticism in Sri Lankan media and some sections, over Indian assistance “being tied” to New Delhi inking key infrastructure projects.
    • Deep incursion: They mainly include the strategic Trincomalee Oil Tank Farm project; the National Thermal Power Corporation’s recent agreement with Ceylon Electricity Board to set up a solar power plant in Sampur, with investment from India’s Adani Group.
    • Diplomatic blackmail: SL media accuses New Delhi was resorting to “diplomatic blackmail”. The political opposition has accused the Adani Group of entering Sri Lanka through the “back door”, avoiding competitive bids and due process.

    Options available for SL

    • Sri Lanka is hoping for a Rapid Finance Instrument (RFI) facility as well as a larger Extended Fund Facility (EFF) from the IMF to deal with its foreign currency shortages.
    • IMF had assured to help the country with an amount of $300 million to $600 million.

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  • What Quad can learn from NATO’s blunders

    Context

    The Russian invasion of Ukraine offers several lessons to the Quad countries.

    Negligence on part of NATO

    • This article is admittedly written in hindsight, but there is a continuing thread to the western blunders in the approach to dealing with Moscow, particularly concerning Putin.
    • He has had a dramatic rise in the political hierarchy of Moscow, with many of his successes unexplained but for the strong behind-the-scenes backing of the FSB.
    •  Unfortunately, it was ignored in the West, and particularly in Europe, which was busy with civilianising and militarily downgrading NATO.
    • The western leaders were overcome with hubris and dismantled the military intellectual content of NATO headquarters, reducing NATO forces to a rapid reaction force under the political control of a civilian secretary-general.
    • The West, therefore, failed to connect Putin’s invasion of Georgia with his continuing vision to fight the regime change in Ukraine in 2015.

    What can Quad learn?

    • War in Indo-Pacific will be maritime war:  War in the Indo-Pacific will be a maritime war fought in accordance with maritime strategy and space assets.
    • The greatest difference is that peaceful maritime reconnaissance is a legitimate activity with the help of which situational awareness can be built up, enabling the delivery of a crippling conventional first strike in the first stages of a possible conflict.
    • Avoid making Quad a diplomatic grouping: To call the Quad a “diplomatic grouping” is a catastrophic error.
    • Implication of calling Quad a diplomatic grouping: In actual fact, the Quad, is all about maritime domain awareness, underwater domain awareness, and information sharing — all of them purely naval activities, which need continuous communication (that is catered for), a command organisation and a secretariat, neither of which we have because Quad is a diplomatic grouping.
    • The military is trained to think structurally, cast future scenarios, do contingent planning, find alternatives and plan for victory. Diplomats have no such background.
    • Confusing Beijing by calling it a diplomatic grouping will certainly lead to a misunderstanding of the Quad nations’ resolve and possible Chinese adventurism.

    Way forward

    • The Quad needs to be represented by the owners of the maritime assets used to obtain domain awareness and a staff with command communications and a depth of intellectual planning.
    • The great maritime strength of the Quad is its force of Maritime Patrol Aircraft.
    • Japan and the US are particularly rich in those resources.
    • India’s force of P-81s is substantial and with the help of Australia, a maritime domain awareness can be built up that denies the PLA navy the chance to hide in the vastness of the ocean.
    • The Indo-US communication agreement was presumably established to keep the four-nation search group on a common grid.
    • Quad meetings should be headed by naval officers, with diplomatic support.

    Conclusion

    West failed to read Putin’s ambitions and downgraded NATO. The same mistakes should not be repeated in Indo-Pacific by the Quad.

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  • India and Japan: A special partnership

    Context

    Seventy years after diplomatic relations were established, here in India today, a metro system built with the support of Japanese official development assistance (ODA) is in operation, cars built by Japanese companies run on the streets, and a high-speed rail will make its debut in the future.

    The realisation of new form of capitalism

    • Japan has been concentrating on measures to overcome Covid-19, and working towards the realisation of a “new form of capitalism” that will revive the economy through a virtuous cycle of growth and distribution.
    • As part of such measures, it is focusing on finding solutions to various social challenges, including digital, climate change and economic security in the growth strategy. 
    • For Japan, India is certainly the best partner to have when seeking to realise a “new form of capitalism,” as showcased in India’s contribution in response to the global health crisis as a major manufacturing base, leadership in decarbonisation efforts, including through the International Solar Alliance, engagement in advanced digital society initiatives such as Aadhaar, and the promotion of economic security initiatives, including measures for supply chain resilience.

    Challenges to the global order

    •  Russia’s invasion of Ukraine is a clear violation of international law as well as an attempt to unilaterally change the status quo by force.
    •  Upholding the core principles of the international order is indispensable from the perspective of diplomacy and security in the Indo-Pacific, where the situation has been rapidly worsening.
    •  In the recent Japan-Australia-India-US (Quad) Leaders’ Video Conference, leaders concurred that any attempt to unilaterally change the status quo by force, such as this time, must not be tolerated in the Indo-Pacific region.
    • There is a challenge of protecting the rules-based international order, building resilient supply chains and reinvigorating the economy.
    • We need strategies to respond to new international challenges like cybersecurity and climate change.
    • Both Japan and India are committed to taking bold measures to tackle such challenges.

    Way forward for India-Japan relations

    • People to people contact: Although the Covid-19 situation remains challenging, people-to-people exchanges between two countries are also being advanced.
    • Cooperation in security: Cooperation has also taken great strides in the area of security, including joint exercises between the Japan Self-Defense Forces and the Indian Armed Forces.
    • Quad: Cooperation is also rapidly developing between Japan, Australia, India and the United States, four countries that share fundamental values, and the next leaders’ summit is under coordination.
    • Cultural bond: As the name “Special Strategic and Global Partnership” suggests, Japan-India relations have evolved into an inclusive and multi-layered relationship based on cultural bonds, firm friendship, and common universal values.

    Conclusion

    As Japan’s prime minister comes on visit to India, his visit to India will open a new chapter in bilateral relations that will deepen the “Japan-India Special Strategic, and Global Partnership” even further.

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  • A missile misfiring and its trail of poor strategic stability

    Context

    The accidental firing of an Indian missile into Pakistan highlights the sorry state of bilateral mechanisms for crisis management between the two nuclear adversaries where there is a missile flight time of barely a few minutes.

    Balance response from both side

    • The Pakistani response to the accidental firing of the missile was a balanced one.
    • While New Delhi maintained a silence over the issue until it was brought up on March 11, the Indian response was also far from denial.
    • In that sense then, the Indian and Pakistani responses to the missile (mis)firing were the best possible outcome under the circumstances given that there is little bilateral mechanism for crisis management.
    • The two sides do not have high commissioners on the other side, there is no structured bilateral dialogue, and, most importantly, the two sides have not held ‘Expert Level Talks on Nuclear Confidence Building Measures’ or ‘Expert Level Talks on Conventional Confidence Building Measures’ for several years now.

    Lack of strategic stability regime

    Following are the reasons why the strategic stability regime in South Asia is hardly prepared for dealing with accidents such as the one that just happened, or enhancing effective crisis management and deterrence stability.

    1] Pre-notification agreement does not include cruise missiles

    • For one, although India and Pakistan signed a ‘Pre-Notification of Flight Testing of Ballistic Missiles’ agreement in October 2005, it does not include cruise missiles.
    • Notably, the missile that was misfired by the Indian side earlier this month, suspected to be the BrahMos, was a cruise missile (even though it was a misfire, and not a flight test).
    • Way forward: Given the many sophisticated cruise missiles that are now a part of each side’s arsenal, it is important to include them in the pre-notification regime.

    2] No structured meetings on nuclear confidence-building measures (CBMs)

    • The two sides have not held their structured meetings on nuclear confidence building measures (CBMs) and conventional CBMs for several years now.
    • Given the nature of the India-Pakistan relationship — adversarial, nuclear-armed, crisis prone, and suffering from trust deficit — there is an urgent need, especially in the wake of the recent incident, to revive these two dialogue mechanisms.

    3] China has so far refused to engage in strategic stability discussions with India

    • The third state with nuclear weapons in the region, China, has so far refused to engage in strategic stability discussions with India even though China today is involved in the India-Pakistan conflict more than ever before, apart from being in a military standoff with India.

    Way forward: Mechanisms for communicating sensitive information during crisis periods

    • India and Pakistan should consider setting up mechanisms such as nuclear risk reduction centres (NRRCs), established between the U.S. and the Soviet Union during the Cold War.
    • The primary objective of NRRCs, or similar structures that can be set up on either side, is risk reduction by providing a structured mechanism for timely communication of messages and proper implementation of already agreed-upon confidence-building measures.
    • Such a body could routinely exchange messages, provide timely clarifications, and review compliance to agreements, among others.

    Consider the question “The incident of the accidental firing of a missile by India highlights the issues with the strategic stability regime in South Asia. Discuss the issues and suggest the measures needed? 

    Conclusion

    New Delhi should provide assurances to Pakistan that efforts will be made to avoid such mistakes in the future. And both sides should use risk reduction mechanisms.

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  • Fragmenting world order, untied nations

    Context

    The outcome that should worry us apart from the devastating consequences for the Ukrainian nation, is the impact the Ukraine crisis is having on the global world order, which is fragmenting in every respect of global interconnectedness — in terms of international cooperation, security, military use, economic order, and even cultural ties.

    Implications of war for global order

    1] Question mark on the relevance of the UN and Security Council

    • Russia’s actions in Ukraine may, in terms of refusing to seek an international mandate, seem no different from the war by the United States in Iraq in 2003, Israel’s bombing of Lebanon in 2006 and the Saudi-coalition’s attacks of Yemen in 2015.
    • But Ukraine is in fact a bigger blow to the post-World War order than any other.
    • It run counter to the UN Charter preamble, i.e. “to save succeeding generations from the scourge of war…”, “to practice tolerance and live together in peace with one another as good neighbours”, as well as Articles 1 and 2 of the ‘Purposes and Principles’ of the United Nations (Chapter 1).
    • Meanwhile, in their responses, other P-5 members such as the United States, the United Kingdom and France did not seek to strengthen the global order either, imposing sanctions unilaterally rather than attempting to bring them to the UN.

    2] Declining nuclear safeguards

    • Russian military’s moves to target areas near Chernobyl and shell buildings near the Zaporizhzhia nuclear power plant show an alarming nonchalance towards safeguards in place over several decades.
    • The world must also consider the cost to the nuclear non-proliferation regime’s credibility: Ukraine and Libya that willingly gave up nuclear programmes have been invaded, while regimes such as Iran and North Korea can defy the global order because they have held on to their nuclear deterrents.

    3] Use of non-state actors

    • There are also the covenants agreed upon during the global war on terrorism, which have been degraded, with the use of non-state actors in the Ukraine crisis.
    • For years, pro-Russia armed militia operated in the Donbas regions, challenging the writ of the government in Kyiv.
    • With the arrival of Russian troops, the Ukrainian President, Volodymyr Zelensky, has invited all foreign fighters to support his forces to the country.

    4] Fragmentation of global financial order

    • While analysts have pointed out that the sanctions announced so far do not include some of Russia’s biggest banks in order to avoid the disruption of oil and gas from Russia, the intent to cut Russia out of all monetary and financial systems remains.
    • The arbitrary and unilateral nature of western sanctions rub against the international financial order set up under the World Trade Organization (that replaced the General Agreement on Tariffs and Trade, or GATT).
    • The obvious fallout of this “economic cancel culture” will, without doubt, be a reaction — a pushback from Russia and an exploration of alternative trading arrangements with countries such as China, India and much of the Eastern Hemisphere which continue to trade with Moscow.
    • For the S-400 missile defence deal, for example, New Delhi used a rupee-rouble mechanism and banks that were immunised from the U.S.’s CAATSA sanctions (or Countering America’s Adversaries Through Sanctions Act) for advance payments.

    5] Isolation of Russia

    • While several governments including the U.S., the U.K. and Germany have persistently said that their quarrel is not with Russian citizens but with their leadership, it is clear that most of their actions will hurt the average Russian citizen.
    • Some of this isolation of its citizens will work to the favour of an increasingly authoritarian Kremlin.
    • Mr. Putin’s response to the banning of Russian channels in Europe and its allies has been to use the western media ban as a pretext to ban opposition-friendly Russian channels as well.

    Takeaways for India

    • India’s abstentionist responses and its desire not to be critical of any of the actions taken by the big powers might keep Indians safe in the short term.
    • But in the long term, it is only those nations that move proactively to uphold, strengthen and reinvent the global order that will make the world a safer place.

    Conclusion

    The events over the past two weeks, set in motion by Russia’s declaration of war on Ukraine, have no doubt reversed many of the ideas of 1945 and 1990, fragmenting the international order established with the UN, ushering in an era of deglobalisation and bringing down another Iron Curtain.

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  • Ukraine invasion and the great geopolitical reset

    Context

    Major wars have significant consequences for the internal and international politics of the combatant nations. Wars between great powers are far more consequential.

    Geopolitical changes triggered by Russia’s invasion of Ukraine

    1] New dynamism in great power triangle

    •  Biden hoped to distance Russia from China and focus all of America’s energies on the Indo-Pacific.
    • But Putin chose to align with China and confront the US and Europe with an impossible set of demands including a sphere of influence in Central Europe and turning Ukraine into Moscow’s protectorate.
    • China’s public articulation has underlined “rock-solid” support for Moscow but it is under some pressure to balance between its Russian alliance “without limits” and its deep economic interdependence with the US and Europe.
    • Whichever way this plays out, the current crisis has revealed America’s pole position in the great strategic triangle.

    2] Reinforced US primacy amongst the great powers

    • The US primacy amongst the great powers has been reinforced by the restoration of strategic unity within the West.
    • While many trans-Atlantic differences remain on the nature and extent of sanctions against Russia, the crisis has revealed the enduring sources of Western unity.

    3] Disciplining of Europe

    • Third is the American disciplining of Europe, especially Germany, where illusions of normative soft power and the faith in mercantilism had blinded the continent to geopolitical challenges presented by Russia and China.
    • Europe’s belief that it can enrich itself in the Russian and Chinese markets while expecting Washington to do all the heavy lifting on security is no longer sustainable.
    • The German decision on rearmament announced in the wake of the Russian aggression marks a definitive geopolitical turn in Europe.

    4] EU’s dilemma in energy domain

    • Nowhere is the EU’s Russian dilemma more visible than in the energy domain where Europe is deeply tied to Russian imports of oil, natural gas, and coal.
    • The EU pays $110 billion a year to Moscow for these imports.
    • While stepping up pressure on Europe to drastically reduce energy imports from Russia, Washington is reaching out to Venezuela, Saudi Arabia, and Iran to fill the gap created by the planned blockade of Russian energy supplies.

    5] Asia is adapting to the change

    • Sensing the dangers from a Sino-Russian axis and fearing that Europe could distract America, Japan is rethinking its nuclear abstinence.
    • South Korea’s president-elect, Yoon Suk-Yeol wants to strengthen ties with the US, and explore potential cooperation with the Quad.
    •  While the ASEAN remains torn between the US and China, many in the region are waking up to the dangers of betting that Beijing’s rise is irreversible, and that the Western decline is terminal.

    Lessons for India

    • The first major conflict amongst the great powers in the 21st century has presented India with multiple challenges, including its long-standing reliance on Russian military supplies.
    •  More immediately, the crisis in Ukraine demands that Delhi move on a war-footing towards a rapid modernisation and expansion of its domestic defence industrial base that is so critical for sustaining India’s strategic autonomy.

    Conclusion

    Unless there is an early diplomatic breakthrough, the conflict between Russia and the West is likely to sharpen in the coming days. But this hinge moment in world politics is also an opportunity for Delhi to increase its heft in the changing global balance.

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  • Decay in the international rules-based order

    Context

    The unexpected Russian military intervention in Ukraine is merely the latest symptom of an underlying cause of decay in the international ‘rules-based’ order.

    Background of the idea of international rules-based order and sovereignty

    • It was the Diet of Westphalia (in the then Holy Roman Empire) in 1648 that first set out what our post-World War II global institutional framework established as the principle of ‘sovereignty’.
    • Sovereignty was for a long time the singular bedrock, the very founding principle that the UN Charter sought to firmly establish, in order to make wars of aggression (as opposed to self-defense) illegal under international law, and liable to be punished by the international community via the UN Security Council and its right to use coercive force.

    What is a state?

    • State is a community that feels as one, accepts a set of common guiding principles and is constituted by member states who are willing to operate according to rules / norms of behaviour.
    • There has always been a theoretical debate in the discipline, drawing on elements of philosophy, psychology and even economics, on whether or not we actually live in an international society of states or whether it is still merely a system of states.
    • System of states: A system of states is a very complex landscape consisting of individual actors who possess coercive power to varying degrees, have zero-sum ambitions to varying degrees, adhere to global ‘rules’ to the extent that they are convenient or exigent at a moment, while being willing to covertly and overtly bend and even break those rules, when core national interests are involved.
    • In the second interpretation, states are engaged in game-theoretic, rational-utilitarian cooperation, competition and even conflict, depending on the specificities of each situation.
    • In a nutshell, it is a highly complicated theoretical and practical situation wherein simplistic, moralising explanations and narratives about events are typically wrong and often misleading or counterproductive.

    UN and the issue of enforcement

    • Forces like the internet and social media, combined with the cultural dominance of the West, portended a gradual spread of democratic values.
    • The biggest challenge to this kind of perspective usually came from the ‘realist’ camp of International Relations researchers who argue that argue that in the absence of effective enforcement of rules, the notion of such rules was an empty idea.
    • Enforcement was theoretically meant to happen by way of the Security Council.
    • However, this plan was stillborn due to the fundamental unwillingness of the five permanent members to countenance a possibility of global action against themselves and the consequent injection of the notion of a ‘veto’ in the world’s highest security-focused body.
    • This has meant that for the entirety of the UN’s existence, true Security Council intervention in an international crisis has only been possible in the rarest of rare exceptions when all five permanent members happened to agree.

    Threat to rule-based order

    • The foregoing analysis allows us to conclude that far from being an isolated incident that for the first time since the UN Charter was drafted has violated our rules-based order, the Russian intervention in Ukraine is a significant further erosion in the believability of anyone’s claims that such a thing actually exists.
    • All states have shown their willingness to conduct foreign policy at the cost of others.
    • Most states in the last few decades have provided international rules with a lot of ‘lip-service’ while using clandestine methods to achieve their aims.

    Nuclear weapons as a source of stability

    • The notion of ‘mutually assured destruction’ created a tension that seemed to preclude even conventional warfare between two nuclear-armed rivals.
    •  Most interestingly, with the separation of seven decades between Hiroshima / Nagasaki and the present, a gradual shift in the calculus of defence planners seems to have occurred.
    •  From the sense that a mere conventional conflict would be sufficient trigger for a power to exercise a nuclear option, planners seem to have gained a new comfort with nuclear weapons in existence.
    • They no longer seem to believe they will be used short of an existential threat.
    • Russia equally feels confident that merely asserting its core security interests in Ukraine will not draw a nuclear response from NATO.
    • Waning American dominance combined with a retreat of global norms and a lessening nuclear deterrent to armed conflict and the rise of new power centres in Asia are a potent mix of new dynamics in our world.

    Conclusion

    Never since the establishment of our post-war global system has it been under such significant threat. India must take stock and with extreme vigilance approach its entire gamut of cooperative, competitive and adversarial options while navigating this wholly new world out there.

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  • Doubts over Defence Supplies to India

    With tensions escalating between Russia and the West over the Ukraine crisis, India, which has major defence cooperation with Moscow and Kyiv, faces uncertainty over timely deliveries of the S-400.

    About S-400

    • The S-400 is known as Russia’s most advanced long-range surface-to-air missile defence system, capable of destroying hostile strategic bombers, jets, missiles and drones at a range of 380-km.

    US reservations against S-400 purchase

    • The US has made it clear that the delivery of the five S-400 systems is considered a “significant transaction”.
    • Such deals are considered under its Countering America’s Adversaries Through Sanctions Act (CAATSA) of 2017.
    • It could trigger sanctions against Indian officials and the Government.

    About CAATSA

    • The CAATSA is designed to ensure that no country is able to increase military engagement with Iran, North Korea and Russia without facing deterrent punitive action from the US.
    • The sanctions are unilateral, and not part of any United Nations decision, and therefore no country is bound to accept them.
    • Section 231 says the President shall impose no fewer than five different sanctions on any Government that enters into a significant defence or intelligence deal with Russia.
    • Section 235 lists 12 options, including stopping credit lines from US and international banks such as the IMF, blocking sales of licensed goods and technology, banning banks, manufacturers and suppliers, property transactions and even financial and visa sanctions on specific officials.
    • However, the law also empowers the President to waiver sanctions or delay them if the waiver is in the US’s “vital national security interests”.

    Has the US used CAATSA before for S-400 sales?

    • The US has already placed sanctions on China and Turkey for purchase of the S-400.
    • The sanctions included denial of export licences, ban on foreign exchange transactions, blocking of all property and interests in property within the US jurisdiction and a visa ban.

    Types of sanctions laid

    • In 2020, the US sanctioned its NATO partner Turkey, which it had warned about CAATSA sanctions for years, besides cancelling a deal to sell Ankara F-35 jets.
    • The sanctions on Turkey’s main defence procurement agency, also included a ban on licences and loans, and blocking of credit and visas to related officials.

    Likely impacts after India’s purchase

    • The Biden administration has no firm indication on where it leans on India’s case.
    • However, several senators (US parliamentarians) have called upon the Biden administration to consider a special waiver for India.
    • This is on account of India’s importance as a defence partner, and as a strategic partner on US concerns over China and in the Quad.
    • Other US leaders thinks that giving a waiver to India would be the wrong signal for others seeking to go ahead with similar deals.

    India’s dependence on Russia

    • While Russia has been a traditional military supplier sharing platforms and technologies that others would not, the cooperation has further deepened in recent years.
    • The defence trade between the two countries has crossed $15 billion since 2018.
    • Even today, over 60% of Indian military inventory is of Russian origin, especially with respect to fighter jets, tanks, helicopters and submarines among others, while several deals are in the pipeline.

    Why is the S-400 deal so important to India?

    • Security paradigm: S-400 is very important for India’s national security considerations due to the threats from China, Pakistan and now Afghanistan.
    • Air defence capability: The system will also offset the air defence capability gaps due to the IAF’s dwindling fighter squadron strength.
    • Russian legacy: Integrating the S-400 will be much easier as India has a large number of legacy Russian air defence systems.
    • Strategic autonomy: For both political as well as operational reasons, the deal is at a point of no return.

    Conclusion

    • The deal is a way for the Government to assert its strategic autonomy.
    • India had earlier agreed to stop buying Iranian oil over the threat of sanctions in 2019, a move that caused India both financial and reputational damage.
    • Not giving in to the US’s unilateral sanctions would be one way to restore some of that.

     

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  • Controversy around the $500 million MCC grant to Nepal

    Nepal’s House of Representatives has ratified 500 million US Dollar grant assistance-Millennium Challenge Corporation (MCC) pact along with the “interpretative declaration”.

    What is Millenium Challenge Corporation?

    • The MCC was founded in 2004 as a US foreign aid agency that acts in accordance with governments that have demonstrated a commitment to good governance, economic freedom, and citizen investment.
    • It was envisioned as an organisation that would follow the Paris Declaration on Aid Effectiveness’ key principles.
    • MCC works with countries that have been identified as being eligible for assistance to develop programmes that are based on MCC’s purpose of decreasing poverty via economic growth.
    • MCC’s results framework, which is based on the fourth and fifth principles of the Paris Declaration, Results and Mutual Accountability.
    • It provides a framework for applying the agency’s rigorous methods for projecting, tracking, and evaluating the effects of its programmes.
    • MCC uses this framework to address basic questions about aid effectiveness.

    Investments made by MCC

    • Compact and threshold programmes are the two types of programmes in which MCC invests.
    • Compacts are large, five-year grants implemented by an accountable entity established by each partner nation.
    • Thresholds are smaller funds focusing on policy and institutional transformation in selected countries implemented by MCC.

    The background of the project

    • MCC’s partnership with Nepal began in 2011, when the country requested assistance.
    • MCC first chose Nepal for a smaller threshold grant, and subsequently in December 2014, for a larger compact.
    • Three years later, in September 2017, the MCC-Nepal compact was signed, with the US committing $500 million and Nepal committing $130 million.
    • Nepal is expected to generate an electricity infrastructure with 400kVA transmission lines through the MCC project, which will be used to distribute power both domestically and to India.
    • Furthermore, the MCC’s implementation could boost the Nepalese economy by increasing employment possibilities and increasing per capita income.

    Issues with the project

    • It is estimated that if the agreement is not passed by Parliament, the power producers in the country are likely to lose a staggering Rs. 142 billion every year.
    • As a result, PM Sher Bahadur Deuba is striving to get the MCC passed in Parliament as soon as possible, even if it means splitting the coalition government.
    • In addition, if he fails to get it through Parliament, there is a possible risk of losing his international credibility.

    America vs China: Objections around MCC

    • The MCC agreement has created a political divide in Nepal.
    • The compact has been criticised in Nepal as endangering the country’s sovereignty, integrity, and constitutional autonomy.
    • The claim that the MCC agreement supersedes the national charter and shall prevail over Nepal’s domestic laws.
    • Many have interpreted this to suggest that the compact replaces the constitution, compromising Nepal’s sovereignty.
    • The MCC’s inclusion in the Indo-Pacific Strategy (IPS) is considered problematic for Nepal, as the majority of the country’s political class views the US strategy as anti-China.

    India’s role in the ongoing political crisis in Nepal

    • Few claim that the electricity generated by MCC will be only for export to India and will not be for the local public.
    • As a result, it will not benefit the local economy directly.
    • Nepal’s hydroelectric generation potential is huge, with over 6,000 large and small rivers.
    • However, through a series of barrages and dams, India has control over the majority of Nepal’s major rivers.
    • Nationalists in the Himalayan country have strongly objected to this.
    • In Nepal, where India is still perceived as a meddling big brother, its goal of strengthening India’s military capabilities through this agreement to counter China’s was questioned.

     

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