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Subject: Bilateral Relations

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

  • Russia-China Relations and its effects on India-Russia Relations

    The article highlights Russia’s increasing inclinations towards China and its implications for India.

    Context

    Russian President Vladimir Putin has recently asserted that both the Indian Prime Minister, Narendra Modi, and the Chinese President, Xi Jinping, are “responsible” enough to solve issues between their countries, while underlining the need to debar any “extra-regional power” to interfere in the process.

    Implications for India-Russia ties

    • By this remark, Russia expects India to give up all efforts to reverse Beijing’s encroachment strategies.
    • The remarks can only be seen as reinforcing China’s claim that the Quadrilateral or Quad is aimed at containing China’s influence in the Indo-Pacific region.
    • Russia’s continued criticism of the Indo-Pacific and the Quad suggests the divergent perspectives of India and Russia on how to deal with China’s rise to global prominence.
    • While India needs Russia’s partnership for its defence needs, India cannot endorse the Russian perspective on the Indo-Pacific and the Quad
    • The Russian attitude toward China’s growing power and influence will be the touchstone of Russia’s relations with India.
    • Russia has rejected the Indo-Pacific construct in favour of the Asia-Pacific on the ground that the first is primarily an American initiative designed to contain both China and Russia.
    • With the rise of populist nationalism amidst the decline of globalisation, the resolution of the Sino-Indian boundary dispute appears a difficult task.

    Background of India’s balancing strategies

    • Following the disintegration of the Union of Soviet Socialist Republics (USSR), India soon realised Russia was much weaker than the erstwhile USSR and incapable of helping India balance potential threats from Beijing. 
    • On the other hand, Russia began to cast Moscow as the leader of a supposed trilateral grouping of Russia-India-China against a U.S.-led unipolar world.
    • Russia became an early proponent of the ‘strategic triangle’ to bring together the three major powers.
    • India’s fear of the unipolar moment too made it easier for India to become part of this initiative.
    • But China’s dismissive attitude toward Indian capabilities, coupled with an emerging China-Pakistan nexus, prevented the success of this trilateral.
    • India, instead, invested its diplomatic energies in rapprochement with the United States.
    • Thus, India decided to get integrated in the economic order it once denounced.
    • Economic liberalisation also allowed India to buy sophisticated weapons from a wider global market that included suppliers such as Israel and France.
    • As the logic of intensive engagement with the West was effectively established, strategic partnership with the U.S. was a logical corollary.
    • India has been searching for other major powers to balance against China as it does not have the sufficient means for hard balancing.
    • India has deepened its ties with Japan and Australia in a way that is close to soft balancing. 
    •  among all of India’s balancing efforts, the stupendous growth in ties with the U.S. has been the greatest source of concern for China which views the India-U.S. rapprochement as containment.

    Way forward for India-Russia ties

    • While other powers such as France, Australia, Japan and Russia will have an impact on the emerging maritime structures of the Indo-Pacific region, it is the triangular dynamic between India, China and the U.S. that is going to be the most consequential.
    • Russia is yet to realise that it will gain immensely from the multilateralism that the Indo-Pacific seeks to promote.
    • Being China’s junior partner only undermines Moscow’s great-power ambitions.
    • Given Russia’s preoccupation with ‘status’ rivalry with the U.S., Russia’s view of India-China relations seems understandable.
    • But there is a danger in permitting it to harden into a permanent attitude as an increasingly pro-Beijing Russia might adopt more aggressive blocking of India’s policy agendas.
    • That is why India is particularly interested in a normalisation of relations between Washington and Moscow.
    • The normalisation of relations between the U.S. and Russia will help India steer ties among the great powers.

    India-China ties

    • Non-alignment, painful memories of colonial subjugation, opposition to great-power hegemony, and strong beliefs in sovereignty and strategic autonomy have been the key influencers in shaping India’s and China’s engagement with each other as well as the western world.
    •  But this has begun to change as Beijing is asserting its hegemony over Asia.
    • In such circumstances, multilateral forums such as the Russia-India-China (RIC) grouping and BRICS (Brazil, Russia, India, China and South Africa) have little practical value for Indian diplomacy.
    • Without China’s reciprocity, options before India are limited.
    • The response cannot be just symbolic or rhetorical. The absence of any material evidence of reciprocity is bound to doom an attempt at Sino-Indian rapprochement.

    Conclusion

    China is undoubtedly the most powerful actor in its neighbourhood but it cannot simply have its way in shaping Asia’s new geopolitics.

  • A new era of partnership in social innovations that can benefit all South Asians

    Pandemic know no borders. So, dealing with it has necessited global cooperation. The article introduce us to some of the cross-country collaborations in dealing with the pandemic, igniting the hope for new era social partnership to the advantage of South Asia.

    Regionally-coordinated strategy against pandemic

    • Containing Covid pandemic has necessitated global cooperation.
    • The deadly pandemic surge in 2021 makes a regionally coordinated, evidence-driven strategy critical.
    • It is necessary to construct multi-stakeholder regional coalitions to devise new solutions and frugal innovations that can be applied across South Asia.
    • Given our shared and mostly similar social, economic and cultural contexts, local successes must be amplified across South Asia.
    • Despite wide variation in how nations have responded to the pandemic, the most successful strategies find commonality in their adherence to science and attention to local context.

    How successful interventions could be applied across the subcontinent

    • Beliefs, priorities, traditions and aversions to behavioural change are more similar across South Asia.
    • This means that interventions that are successful in changing behaviour in one place are highly likely applicable in other parts of the subcontinent.
    • For example, Community-Led Total Sanitation (CLTS) campaigns to solve the problem of open defecation, developed by Bangladeshi NGOs in partnership with an Indian consultant is now broadly applied across South Asia and beyond.
    • The Grameen Bank microcredit model was an indigenous South Asian innovation that spread rapidly.
    • India’s digitised social protection ecosystem with Aadhaar ids and Jan Dhan accounts serves as a model for the region.

    Changing social norm around mask-wearing

    • The new pan-South Asian consortium in response to Covid-19 evolved out of an experiment conducted in Bangladesh around mask-wearing in rural communities termed as NORM.
    • It was observed that a combination of no-cost distribution, information, reinforcing the message, modeling and endorsement by community leaders (NORM) leads to large, sustained increases in mask usage.
    • NORM implementation teams based in Lahore, Ahmedabad, Peshawar, Hyderabad, Dhaka, Kathmandu and Delhi are learning from each other’s successes and failures.
    • The Self-Employed Women’s Association (SEWA) quickly implemented the model to reach over one million members in Gujarat.
    •  Additional 1.5 million masks were shipped from Bangladesh to support SEWA’s outreach to other states.
    • Lahore’s commissioner worked with the research team to adapt the NORM model to an urban setting.
    • To manage mild and moderate cases of Covid-19 in rural India, where institutional health care access is limited a host of physicians, scientists and community-based organisations created the Swasth Community Science Alliance.
    • The Masking-Treatment-Vaccine Preparation (MTV) approach offers a sensible strategy to mitigate the pandemic until universal vaccination is achieved.

    Conclusion

    We need to come together to solve problems that affect us all. Let the lasting legacy of this pandemic be a new era of partnership in social innovations that can benefit all South Asians.

  • The road from Galwan, a year later

    What happened in Galwan?

    • The Indian and Chinese armies are engaged in the standoff in Pangong Tso, Galwan Valley, Demchok and Daulat Beg Oldie in eastern Ladakh.
      • A sizable number of Chinese Army personnel even transgressed into the Indian side of the de-facto border in several areas including Pangong Tso.
      • The actions on the northern bank of Pangong Tso are not just for territorial gains on land, but enhanced domination of the resource-rich lake.
    • The stand-off at Ladakh’s Galwan Valley has escalated in June 2020 due to the infrastructure projects that India has undertaken in the recent years. India is building a strategic road through the Galwan Valley – close to China – connecting the region to an airstrip.
      • China is opposed to any Indian construction in the area. In 1962, a stand-off in the Galwan area was one of the biggest flashpoints of the 1962 war.
    • The border, or Line of Actual Control, is not demarcated, and China and India have differing ideas of where it should be located, leading to regular border “transgressions.” Often these don’t escalate tensions; a serious border standoff like the current one is less frequent, though this is the fourth since 2013.
      • Both countries’ troops have patrolled this region for decades, as the contested 2,200-mile border is a long-standing subject of competing claims and tensions, including a brief war in 1962.
    • Reasons: The violent clash happened when the Chinese side departed from the consensus to respect the LAC and attempted to unilaterally change the status quo.
      • It is part of China’s ‘nibble and negotiate policy’. Their aim is to ensure that India does not build infrastructure along the LAC. It is their way of attaining a political goal with military might, while gaining more territory in the process.

    The current situation in Ladakh

    •  With a continued deployment of 50,000-60,000 soldiers, the Indian Army has been able to hold the line to prevent any further ingress by the PLA.
    • There has been no progress in talks after the disengagement at Pangong lake and Kailash range in February.
    • Outside of Ladakh, the Indian Army remains in an alert mode all along the LAC to prevent any Chinese misadventure but the bigger change has been its reorientation of certain forces from Pakistan border towards the China border.
    • The Ladakh crisis has also exposed India’s military weakness to tackle a collusive threat from China and Pakistan.

    External balancing

    • To deal with the threat of combined China and Pakistan, the Government opened backchannel talks with Pakistan which led to the reiteration of the ceasefire on the Line of Control.
    • The Ladakh crisis has also led the Government to relook external partnerships, particularly with the United States.
    • The U.S. military officials have earlier spoken of the intelligence and logistics support provided to the Indian forces in Ladakh.
    • The military importance of the Quad remains moot, with India reportedly refusing to do joint naval patrolling with the U.S. in the South China Sea, the two treaty allies of the U.S., Japan and Australia, also refused.

    Challenges for India

    • India attempts to counter the growing Chinese influence in the neighbourhood have faltered, exacerbated by the mishandling of the second wave of the novel coronavirus pandemic.
    • With the widening power gap between New Delhi and Beijing, the challenge is as much economic as it is geopolitical.
    • Despite the border crisis and the Indian restrictions on Chinese technology companies, China displaced the U.S. to be India’s biggest trade partner in 2020-21, up to nearly 13% of India’s total trade compared to 10.4% a year ago.
    • For the past few decades, Indian planners operated on the premise that their diplomats will be able to manage the Chinese problem without it developing into a full-blown military crisis.
    • Militarily, Chinese incursions in Ladakh have shown that the idea of deterrence has failed.
    • India has learnt that it can no longer have simultaneous competition and cooperation with China.
    • A new reset in bilateral ties, àla the early 1990s, is difficult because China is now in a different league, competing with the U.S.

    Conclusion

    The events of the past one year have significantly altered India’s thinking towards China. The relationship is at the crossroads now. The choices made will have a significant impact on the future of global geopolitics.

    B2BASICS

    Line of Actual Control

    • Demarcation Line: The Line of Actual Control (LAC) is the demarcation that separates Indian-controlled territory from Chinese-controlled territory.
    • LAC is different from the Line of Control (LoC) with Pakistan:
      • The LoC emerged from the 1948 ceasefire line negotiated by the United Nations (UN) after the Kashmir War.
      • It was designated as the LoC in 1972, following the Shimla Agreement between the two countries. It is delineated on a map signed by the Director General of Military Operations (DGMO) of both armies and has the international sanctity of a legal agreement.
      • The LAC, in contrast, is only a concept – it is not agreed upon by the two countries, neither delineated on a map or demarcated on the ground.
    • Length of the LAC: India considers the LAC to be 3,488 km long, while the Chinese consider it to be only around 2,000 km.

  • India-Bangladesh Relations

    The article highlights the need for Indian leaders to respect the sentiments of Bangladesh by avoiding adverse comments during elections and recognition of Bangladesh’s importance for India.

     Diplomacy with Bangladesh

    • Long-standing bilateral problems: As a neighbour nearly surrounded on all territorial sides by India, there are the inevitable bilateral problems of long duration.
    • Such problems include a perennially favourable balance of trade for India, drought and flood in the 54 transboundary rivers flowing from India to Bangladesh, and the smuggling of goods and vulnerable human beings across the approximately 4,100 kilometre land border.
    • Cultural ties with India: There are several sections who regard their Bengali roots and traditions as being of equal validity as their religious affiliation, and treasure the linguistic and cultural ties with adjacent India.
    • India’s expectations: For India’s attentions and support, India’s expectations are that a neighbour will keep India’s concerns in mind when devising and pursuing its policies.

    Steps taken to consolidate the bilateral ties

    • Bangladesh has successfully dealt with Muslim fundamentalist terrorists.
    • Bangladesh has also controlled the Northeast militant movements sheltering in Bangladesh.
    • This has facilitated the pacification of India’s Northeast.
    • Bangladesh facilitated a considerable degree of connectivity between India and its Northeast by land, river and the use of Bangladeshi ports.
    • Indian investments in Bangladesh have been encouraged.
    • There are at least 100,000 Indian nationals now living and working in that country.
    • For economic integration along with free movement of commerce and capital, the movement of persons on the lines of Nepal and Bhutan will have to be considered.

    Consider the question “To a certain degree both India and Bangladesh depend on each other for security and stability. In light of this, take an overview of the consolidation of the bilateral ties between the two countries and discuss the issues that need to be addressed between the two countries.”

    Conclusion

    Responsible individuals on both sides of the border, whether in government or the Opposition, must be actively discouraged from words and actions detrimental to the consolidation of the existing cordiality.

  • US investigation into India’s Digital Services Tax (DST)

    The US government has announced the further suspension of punitive tariffs for six months on India, Austria, Italy, Spain, Turkey, and the UK while it continues to resolve the DST investigation amid the ongoing multilateral negotiations at the OECD and the G20.

    Do you remember?

    GAFA tax—named after Google, Apple, Facebook, Amazon—is a proposed digital tax to be levied on large technology and internet companies.

    What are the Digital Services Taxes in India?

    • The NDA government had moved an amendment in the Finance Bill 2020-21 imposing a 2 percent digital service tax on trade and services by non-resident e-commerce operators with a turnover of over Rs 2 crore.
    • The new levy has expanded the ambit of the equalization levy for non-resident e-commerce operators involved in the supply of services, including the online sale of goods and provision of services.
    • E-commerce operators are obligated to pay the tax at the end of each quarter.
    • Estimates by the USTR indicate that the value of the DST payable by US-based company groups to India will be up to approximately $55 million per year.

    Also read:

    What are Digital Services Taxes?

    What is the story?

    • The US is focused on finding a multilateral solution to a range of key issues related to international taxation, including our concerns with digital services taxes.
    • It is trying to reaching a consensus on international tax issues through the OECD and G20 processes.

    Investigation regarding DST

    • The US has conducted a year-long investigation into digital services taxes imposed by countries, stating that they are against tech companies like Apple, Amazon, Google, and Facebook.
    • It had determined that the digital services taxes adopted by Austria, India, Italy, Spain, Turkey, and the UK has discriminated against US digital companies and were inconsistent with principles of international taxation, and burdened US companies.

    What’s the case against India?

    • In the case of India, the USTR’s proposed course of action includes additional tariffs of up to 25 percent ad valorem on an aggregate level of trade.
    • Around 26 categories of goods are in the preliminary list of products that would be subject to the additional tariffs.
    • This includes shrimps, basmati rice, cigarette paper, cultured pearls, semi-precious stones, silver powder and silver articles of jewelry, gold mixed link necklaces, and neck chains, and certain furniture of bentwood.

    Why does India need DST?

    • The agenda to reform international tax law so that digital companies are taxed where economic activities are carried is still a work in progress.
    • Due to this, countries are worried that they might cede their right to tax incomes. Therefore, many countries have either proposed or implemented a digital services tax.
    • The proliferation of digital service taxes (DSTs) is a symptom of the changing international economic order.
    • Countries such as India which provides large markets for digital corporations seek a greater right to tax incomes.
    • The taxation of the digitalized economy turned out to be a relatively contentious issue because there is a huge asymmetry in digital service providers and consumers.

  • COVID diplomacy 2.0, a different order of tasks

    The article highlights the contrast in India’s diplomacy during the first wave of the pandemic and the second wave. It also discusses the challenges ahead for India.

    India’s diplomatic structure in two Covid waves

    •  In the past month, the focus for the Ministry of External Affairs (MEA) and Missions abroad has shifted.
    • During the first wave of the pandemic, focus was on coordinating exports of COVID-19 medicines, flights to repatriate Indians abroad through the ‘Vande Bharat Mission’ after the lockdown, and then exporting vaccines worldwide- ‘Vaccine Maitri’.
    • After the second wave, Covid Diplomacy 2.0 has a different order of tasks, both in the immediate and the long term.
    • The immediate imperative was to deal with oxygen and medicine shortages that claimed the lives of thousands.
    • The Ministry of External Affairs has had to deal with internal health concerns while galvanising help from abroad for others.
    • Despite difficulties, the Ministry of External Affairs has completed the task of bringing in supplies in a timely manner, and with success.

    Dealing with vaccine shortage

    • Companies manufacturing AstraZeneca and Sputnik-V are stretched as far as future production is concerned.
    • The Chinese vaccines are out of consideration given bilateral tensions.
    • So, it is clear that India is looking to the U.S. to make up the shortfall.
    • This could be done in the following ways:
    • 1) Requesting the U.S. to share a substantial portion of its stockpile of AstraZeneca.
    • The U.S. government is holding up its AstraZeneca exports until its own United States Food and Drug Administration approves them.
    • 2) Asking the US to release more vaccine ingredients which are restricted for exports.
    • 3) To buy more stock outright from the three U.S. manufacturers, Pfizer, Moderna and Johnson & Johnson, and to encourage production in India of these vaccines.
    • Production of Johnson & Johnson single-dose vaccines in India, as had been announced during the Quad summit, will take some time.
    • The U.S. companies seem set on getting both an indemnity waiver from India as well as Emergency Use Authorisation prior to supplying them.
    • The Government may also need to make a change to its publicly announced policy that States in India will need to negotiate purchases directly, as the U.S. manufacturers want centralised orders, with payments up-front.

    2) Patent waiver

    • The promise of patent waivers, from India’s joint proposal at the World Trade Organization (WTO) will not reap early benefits.
    • Even though it has received support from world leaders such as the U.S., Russia and China.
    • Many countries including Japan, Australia, Brazil and EU are still holding out on the idea of freeing up intellectual property rights on vaccines for three years.
    • That could ultimately hold up proceedings at the WTO, as it works by consensus.

    3) Diplomatic fallout of vaccine collapse

    • The Government has defended its decision to export more than 66 million vaccines doses to 95 countries between January and April this year.
    • All exports were stopped as soon as cases in India began to soar.
    • Both India’s neighbours and partners in Africa as well as global agencies depending on India for vaccines have been left in the lurch by the Government’s failure to balance its vaccine budget.
    • For example, once India completed delivery of the first batch, of 550,000 Covishield doses, Bhutan completed the administration of the first dose to 93% of its population in a record 16 days.
    • Two months later, Bhutan does not have any vaccines to complete the second dose and has been left requesting other countries for vaccines.
    • It is no surprise that each of India’s neighbours has now sought help from China and the U.S. to complete their vaccination drives.

    4) Tracing virus pathways

    • India, as one of the worst pandemic-hit countries, must be at the forefront of demanding accountability on the origin of the virus.
    • The World Health Organisation (WHO) which studied “pathways of emergence” of SARS-CoV2 in Wuhan, listed four possibilities:
    • 1) Direct zoonotic transmission.
    • 2) An intermediate host.
    • 3) Cold chain or transmission through food.
    • 4) A laboratory incident.
    • China appears adamant on blocking these studies.
    • Even the U.S. appears to have dragged its feet on a conclusive finding, possibly because the U.S. National Institutes of Health had funded some of the Wuhan Institute’s research.

    Way forward on virus pathways

    • India must call for a more definitive answer and also raise its voice for a stronger convention to regulate any research that could lead, by accident or design, to something as the current pandemic.
    •  It is necessary to revamp the 1972 Biological Weapons Convention to institute an implementation body to assess treaty compliance, and build safer standards for the future.

    Consider the question “How different was the impact of two Covid-19 waves on India’s diplomacy? What are the challenges India faces in the near future in dealing with the fallout of the pandemic?”

    Conclusion

    With its seat at the UN Security Council as non-permanent member and its position on WHO’s Executive Board, India could seek to regain the footing it has lost over the past few months of COVID-19 mismanagement, by taking a lead role in ensuring the world is protected from the next such pandemic.

  • How Pakistan Plays the world

    The article explains evolution of Pakistan’s approach towards forming alliances and maintaining strategic autonomy against the backdrop of U.S. withdrawal from Afghanistan.

    New dynamic Pakistan has to face

    • As the US withdraws its troops from Afghanistan, Pakistan is eager to build a relationship with Washington that is not tied to US stakes in Afghanistan.
    • Pakistan does not want to be totally alienated from U.S. in the new geopolitical jousting between the US and China.
    • How Pakistan copes with the new dynamic between the US and China as well as manages the deepening crisis in Afghanistan would be of great interest to India.

    Striking the balance between autonomy and alliance

    • Autonomy is about the basic impulse for enhancing the degree of one’s freedom.
    • Alliances are about coping with real or perceived threats to one’s security.
    • Both are natural trends in international politics.
    • Joining an alliance does not mean ceding one’s sovereignty.
    • Within every alliance, there is a perennial tension between seeking more commitments from the partner in return for limiting one’s own.

    Explaining Pakistan’s approach to alliances

    • Pakistan’s insecurities in relation to India meant it was eager for alliances.
    •  And as the Anglo-Americans scouted for partners in the crusade against global communism, Pakistan signed a bilateral security treaty with the US and joined the South East Asia Treaty Organisation and Central Treaty Organisation in the mid-1950s.
    • Rather than target Pakistan’s alliance with a West that was intensely hostile to Beijing in the 1950s, Chinese premier Zhou Enlai saw room to exploit Pakistan’s insecurities on India.
    • While Pakistan’s ties with the US went up and down, its relationship with China has seen steady expansion.
    • Pakistan’s relations with the US flourished  after the Soviet Union sent its troops into Afghanistan at the end of 1979.
    • The US and Pakistan reconnected in 2001 as Washington sought physical access and intelligence support to sustain its intervention in Afghanistan following the attacks on September 11.
    • Now the US wants Pakistan to persuade the Taliban to accept a peaceful transition to a new political order in Afghanistan.

    Pakistan’s ability to adapt to shifting geopolitical trends

    • Pakistan worries that its leverage in U.S. will diminish once the US turns its back on Afghanistan and towards the Indo-Pacific.
    • Pakistan does not want to get in the Indo-Pacific crossfire between the US and China.
    • It would also like to dent India’s growing importance in America’s Indo-Pacific strategy.
    • India should not underestimate Pakistan’s agency in adapting to the shifting global currents.
    • Pakistan has been good at using its great power alliances to its own benefit.

    Three problems that complicates Pakistan’s strategic autonomy

    • 1) Relative economic decline: Pakistan’s expected aggregate GDP at around $300 billion in 2021 is 10 times smaller than India’s.
    • 2) Obsession with Kashmir: Pakistan’s enduring obsessions with separating Kashmir from India, and extending its political sway over Afghanistan; both look elusive despite massive political investments by the Pakistan army.
    • Unsurprisingly, there is a recognition that Pakistan needs reorientation — from geopolitics to geoeconomics and permanent war with neighbours to peace of some sorts.
    • 3) Using religion as political instrument: Turning Islam into a political instrument and empowering religious extremism seemed clever a few decades ago.
    • However, today those forces have acquired a life of their own and severely constrain the capacity of the Pakistani state to build internal coherence and widen international options.

    Conclusion

    It will be unwise to rule out Pakistan’s positive reinvention; no country has a bigger stake in it than India. For now, though, Pakistan offers a cautionary tale on the dangers of squandering a nation’s strategic advantages — including a critical geopolitical location that it had inherited and the powerful partnerships that came its way.

  • India must engage with Nepal-without intervening

    The article suggests recalibration of India’s approach towards political turmoil in Nepal.

    Nepal in political crisis

    • For the second time in weeks, Prime Minister K P Oli has persuaded President Bidya Devi Bhandari to dissolve parliament and call for fresh elections.
    • That is, unless the Supreme Court decides to declare the dissolution of parliament as unconstitutional, as it had done in the recent past.
    • The current dissolution has been challenged in the court by five political parties.

    Medhesi demand fulfilled

    • Prime Minister Oli has also delivered on the longstanding Madhesi demand to reverse a constitutional provision which denied citizenship to children born of Nepali mothers who had foreign husbands.
    • The widespread unrest in the Terai adjoining India in 2015 was triggered by this attempt to deny equal rights to the Madhesi population.
    • This provision had directly targeted the Madhesi population, which has close kinship and marital ties across the border with India.
    • While this provision has now been removed through a presidential ordinance, it could well be reversed in future by Nepali political parties dominated by the higher caste.

    Steps India needs to take

    • Political uncertainty in a neighbouring country is never good news for India, particularly in Nepal with whom we share a long and open border.
    • The Indian government has maintained a studied silence on the current political developments in Nepal and this may be the right thing to do.
    • But this silence should not imply the lack of a proper assessment of the political situation in Nepal and what would serve the interests of India best.
    • Following are the steps India need to take:

    1) India should declare it does not support the revival of monarchy

    •  The abolition of the monarchy is a net gain for India and the government must firmly and unambiguously declare that it does not support the revival of the monarchy, which has already been rejected by its people.
    • India should declare its unconditional support to Nepal’s republican democracy.

    2) Remain engaged with Nepal

    • India should remain fully engaged with Nepal at all levels and across the political spectrum.
    • The safeguarding of India’s vital interests demands such sustained engagement.
    • A hands-off policy will only create space for other external influences, some of which, like China, may prove to be hostile.
    • However, engagement must dispense with the recurrent tendency to label Nepali political leaders as friends or enemies.
    • India should advocate policies rather than persons.

    3) Recognise the role of Madhesi population

    • In India’s engagement with Nepal, the Terai belt and its large Madhesi population plays a critical and indispensable role.
    • In an effort to win over the Kathmandu political and social elite, one should be careful not to neglect citizens living in the plains.
    • Our engagement with Nepal must find an important place for Nepali citizens who are our immediate neighbours and act as a kinship, cultural and religious bridge between our two countries.

    4) Appreciate people-to-people link

    • India needs to appreciate that the people-to-people links between our two countries have an unmatched density and no other country, including China, enjoys this asset.
    • The challenge to our Nepal policy lies in leveraging this precious asset to ensure a stable and mutually-productive state-to-state relationship.
    • India has every reason to approach its relations with Nepal with confidence and assurance.

    Consider the question “What are the factors that make India-Nepal relationship special? What are the recent challenges impacting this special relationship? ” 

    Conclusion

    The safeguarding of India’s vital interests demands India’s engagement with Nepal without intervening in its politics. A hands-off policy will only create space for other external influences.

  • Currency swap between Bangladesh and Sri Lanka

    Bangladesh’s central bank has approved a $200 million currency swap facility to Sri Lanka.

    Practice question for mains:

    Q. What are Currency Swaps? Discuss the efficacy of Currency Swap Agreements for liberalizing bilateral trade.

    What is a Currency Swap?

    • In this context, a currency swap is effectively a loan that Bangladesh will give to Sri Lanka in dollars, with an agreement that the debt will be repaid with interest in Sri Lankan rupees.
    • For Sri Lanka, this is cheaper than borrowing from the market, and a lifeline as is it struggles to maintain adequate forex reserves even as repayment of its external debts looms.
    • The period of the currency swap will be specified in the agreement.

    A helping hand for SL

    • Bangladesh Bank, the central bank, has in principle approved a $200 million currency swap agreement with Sri Lanka.
    • Dhaka decided to extend the facility after a request by Sri Lankan PM Mahinda Rajapaksa to Bangladesh’s PM Sheikh Hasina.
    • It will help Colombo tide over its foreign exchange crisis, according to media reports from Bangladesh, quoting the bank’s spokesman.
    • Sri Lanka, staring at an external debt repayment schedule of $4.05 million this year, is in urgent need of foreign exchange.

    An unusual move

    • Bangladesh has not been viewed so far as a provider of financial assistance to other countries.
    • It has been among the most impoverished countries of the world, and still receives billions of dollars in financial aid.
    • But over the last two decades, its economy has pulled itself up literally by the bootstraps, and in 2020, was the fastest growing in South Asia.
    • Bangladesh’s economy grew by 5.2 percent in 2020 and is expected to grow by 6.8 percent in 2021.
    • The country has managed to pull millions out of poverty. Its per capita income just overtook India’s.

    A break in monopoly

    • This may be the first time that Bangladesh is extending a helping hand to another country, so this is a landmark of sorts.
    • It is also the first time that Sri Lanka is borrowing from a SAARC country other than India.
    • The presumption was that only India, as the regional group’s largest economy, could do this.
    • The Bangladesh-Sri Lanka arrangement shows that is no longer valid.

    Why didn’t SL approach India?

    • Last year, it requested for a $1 billion credit swap, and separately, a moratorium on debts that the country has to repay to India.
    • But India-Sri Lanka relations have been tense over Colombo’s decision to cancel a valued container terminal project at Colombo Port.
    • India put off the decision, but Colombo no longer has the luxury of time.

    Is SL in a crisis?

    • With the tourism industry destroyed since the 2019 Easter attacks, Sri Lanka had lost one of its top foreign exchange pullers even before the pandemic.
    • The tea and garment industries have also been hit by the pandemic affecting exports.
    • Remittances increased in 2020, but are not sufficient to pull Sri Lanka out of its crisis.
    • The country is already deep in debt to China. According to media reports, Sri Lanka owes China up to $5 billion.

    What about the previous swap facility that India gave Sri Lanka?

    • Last July, the RBI did extend a $400 million credit swap facility to Sri Lanka, which the Central Bank of Sri Lanka settled in February. The arrangement was not extended.
    • RBI has a framework under which it can offer credit swap facilities to SAARC countries within an overall corpus of $2 billion.
    • According to RBI, the SAARC currency swap facility came into operation in November 2012 with the aim of providing to smaller countries in the region.

  • One-state solution, the way forward in Palestine

    The article highlights the challenges in the success of a two-state solution to the Israel-Palestine conflict and suggests the one-state solution instead.

    Background of the two-state solution

    • It involves dividing Palestine between the state of Israel and the indigenous population of Palestine.
    • It was first offered by the British in 1937 and rejected by the Palestinians already then.
    •  In 1947 the United Nations insisted that the Palestinians should give half of their homeland to the settler movement of Zionism.
    • The two-state solution, offered for the first time by liberal Zionists and the United States in the 1980s, is seen by some Palestinians as the best way of ending of the occupation of the West Bank .
    • It will also lead to the partial fulfilment of the Palestinian right for self-determination and independence.

    Interpretation of two-state solution

    • The Israeli interpretation, until 2009, was that the two-state solution is another means of having the territories, the West Bank and the Gaza Strip, without incorporating most of the people living there.
    • In order to ensure it, Israel partitioned the West Bank which is 20% of historical Palestine into a Jewish and an Arab part.
    • This was in the second phase of the Oslo Accords, known as the Oslo II agreement of 1995.
    • One area, called area C, which consists of 60% of the West Bank was directly ruled from 1995 until today by Israel.
    • Now, Israel is in the process of officially annexing this area.
    • 40% of the West Bank, areas A and B under Oslo II, were put under the Palestinian Authority.
    • Palestinian Authority calls itself the state of Palestine, but in essence has no power whatsoever, unless the one given to it, and withdrawn from it, by Israel.
    • In 2018 a citizenship law was passed known as the nationality law.
    • As per the citizenship law, the Palestinian citizens who live in Israel proper which is Israel prior to the 1967 occupation of the West Bank and the Gaza Strip and who are supposedly equal citizens of the Jewish state, will in essence become the Africans of a new Israeli Jewish apartheid state.

    Issues with two-state solution

    • The endless negotiation on the two-state solution was based on the formula that once the two states become a reality, Israel will stop these severe violations of the Palestinian civil and human rights.
    • But while the wait continued, more Palestinians were expelled and the Jewish settler community in the West Bank grew in size.
    • The two-state solution is not going to stop the ethnic cleansing; instead, talking about it provides Israel international immunity to continue it.

    Way forward

    • The only alternative is to decolonise historical Palestine.
    • New state should a state for all its citizens all over the country, based on the dismantlement of colonialist institutions, fair redistribution of the country’s natural resources, compensation of the victims of the ethnic cleansing and allowing their repatriation.
    •  Settlers and natives should together build a new state that is democratic, part of the Arab world and not against it, and an inspiration for the rest of the region.

    Conclusion

    The one-state solution is the way forward in Palestine and that should be the state for all citizens.