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Subject: International Relations

  • PM unveils G20 logo: Significance of the lotus on it

    g20

    PM unveiled the logo, theme and website of India’s G20 presidency.

    What is G20?

    • The G20 was formed in 1999 in the backdrop of the financial crisis of the late 1990s that hit East Asia and Southeast Asia in particular.
    • The first G20 Summit took place in 2008 in Washington DC, US.
    • Its aim was to secure global financial stability by involving middle-income countries.
    • Its prominent members are: Australia, Brazil, China, France, Germany, India, Japan, Republic of Korea, Russia, Saudi Arabia, South Africa, Turkey, the UK, the US, and the EU.
    • Spain is invited as a permanent guest.

    Presidency of G20

    • The presidency of the G20 rotates every year among members.
    • The country holding the presidency, together with the previous and next presidency-holder, forms the ‘Troika’ to ensure continuity of the G20 agenda.
    • During India’s presidency, India, Indonesia and Brazil will form the troika.
    • This would be the first time when the troika would consist of three developing countries and emerging economies.

    How does the G20 work?

    • The G20 has no permanent secretariat.
    • The agenda and work are coordinated by representatives of the G20 countries, known as ‘Sherpas’, who work together with the finance ministers and governors of the central banks.
    • On the advice of the G7 Finance Ministers, the G20 Finance Ministers and Central Bank Governors began holding meetings to discuss the response to the global financial crisis that occurred.
    • Since 1999, an annual meeting of finance ministers has taken place.

    Economic significance of G20

    • G20 is the premier forum for international economic cooperation representing around-
    1. 85 per cent of the global GDP,
    2. 75 per cent of the global trade, and
    3. Two-thirds of the world population

    Significance of the G20 logo

    • The logo bears a lotus and the message of ‘Vasudhaiva Kutumbakam — One Earth, One Family, One Future’.
    • The lotus flower symbolises our Puranic heritage, our aastha (belief) and boddhikta (intellectualism).

     

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  • India’s role in Russia-Ukraine war

    Ukraine war

    Context

    • As external affairs Minister Subrahmanyam Jaishankar arrives in Russia this week for a bilateral visit, there is growing international interest in the potential Indian diplomatic contribution to ending the tragic war in Ukraine which is now in the ninth month and has shaken the world to its core.

    The story of Ukraine’s war and India’s Strategy so far

    • India’s balanced approach: India has reasons to be satisfied that there is a better appreciation of its position on Ukraine in the Western public discourse. In the last few months, the Western media and think tanks had been relentless in their criticism of the Indian approach to the crisis as lacking moral and strategic clarity in the face of Russia’s unprovoked aggression.
    • India didn’t criticize Russian nor endorse Russian aggression: Through the last nine months, Delhi was reluctant to explicitly criticize Russian aggression against Ukraine and insisted on a dialogue between the warring parties. At the same time, India refused to endorse Russian aggression, underlined the importance of respecting the United Nations Charter, emphasized the inviolability of territorial sovereignty, warned against the use of nuclear weapons, and sought to draw at tension to the economic impact of the war on the “Global South”.
    • America showed sensitivity to India’s position: In the Biden administration there was a measure of understanding of where Delhi was coming from and India’s long-standing equities in the relationship with Russia and the constraints it imposed on India. Official Washington never let the heat of the Ukraine crisis in Europe undermine the longer-term American imperative of engaging India to stabilize the Indo-Pacific. The same can’t be said about Europe, but then the continent was right in the middle of the gravest conflict since the Second World War. The European trauma from a shattered peace is real.
    • India’s role in grain shipment and nuclear power station: Recent reports in the US media recount the Indian diplomatic contribution at a few critical moments in the nine-month-long war-in helping overcome issues over the grain shipment deal from Ukraine and in reducing the growing risks of the war targeting the nuclear power station at Zaporizhzhia in eastern Ukraine.

    Ukraine war

    Can India take on a larger diplomatic role?

    • India’s role is limited: Good relations with Moscow and Washington do put South Block in an interesting position. But India is not the only channel of communication between the US and Russia. Nor are Washington and Moscow totally reliant on third parties.

    Efforts to end war by west and Russia

    • Communications between the defence ministers: The defence ministers of the two countries have frequently talked to each other reminding each other of their redlines in the war. Meanwhile, the onset of winter will increasingly limit the possibilities for military operations in Ukraine and would give a chance to both sides to pause, regroup and rethink their strategy and tactics.
    • Putin’s strategy: Putin’s current focus on destroying the Ukrainian cities and the occasional threat to use nuclear weapons underline Russia’s weakness in the Ukraine war rather than strength. From a military perspective, there is no easy way for Russia to secure a “victory” in this war.
    • Limitations of Putin: Putin might have no option but to consider an honorable draw that will save his political face and secure some territorial gains in Ukraine. Can the same be said about the other Vladimir? (The Russians and Ukrainians both claim Vladimir or Volodymyr the Great of the 10th century as the founder of their nations).
    • Ukraine’s strategy: Ukraine’s president Volodymyr Zelenskyy has led the country’s fight against Russian aggression with impressive determination. Unlike the Russian troops, the Ukrainian forces are trying to save their nation against aggression and have inflicted significant military defeats on the Russians.
    • Limitations of Ukraine: There is a question, can Zelenskyy succeed in liberating all territories occupied by Russia, including Crimea which Russia took by force in 2014? Zelenskyy might like to fight on until he realizes that goal, but there are second thoughts in the Western coalition that is backing him.
    • Western effort of sanctions on Russia: The West had bet that the massive sanctions it imposed after Moscow launched its war against Ukraine would bring the Russian economy to its knees. But Russia is still standing and the costs of the sanctions are beginning to have major effects on Western societies.
    • Rising energy cost and Ineffectiveness of sanctions: As the economic and energy costs of the war mount, there is growing political support in Europe for a quick resolution of the conflict. In the US, which has emerged as the main supporter of Ukraine, there are both Republicans and Democrats who are questioning the current American “blank cheque” for Ukraine. If the Republicans do well as they are expected to in this week’s midterm elections to the US Congress, the internal polarization could sharpen and cast a shadow over American foreign policy, including the Ukraine strategy.
    • USA is repairing its strategy: Although these developments need not be fatal to US strategy, Washington is beginning to recalibrate. In important private advice to Kyiv last week, Washington called for greater flexibility in Zelenskyy’s approach to negotiations with Putin.

    Ukraine war

    Conclusion

    • Ending the war in Ukraine is very crucial as global economy especially western, facing energy and inflation crisis. India has a limited impact as mediator in ending the war in Ukraine. West and Russia need to realise their futile pursuit of complete victory is hurting them more. Sooner the war ends better for world.

    Mains Question

    Q. What role India can play as mediator in Ukraine war? What are efforts by Russia and Western nations to end the war?

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  • India’s Troubled Neighborhood, Myanmar

    India-myanmar

    Context

    • Twenty-one months after a military coup, which derailed a decade old experiment with limited democracy, Myanmar is struggling to cope with the consequences. People are suffering, authorities and opposition forces are locked in a cycle of violent clashes, the economy is deteriorating, and ASEAN’s mission to produce a solution has failed.

    Background of Present situation in Myanmar

    • Violation of constitution by Military: When the Tatmadaw (military), unhappy with the victory of the Aung San Suu Kyi led National League for Democracy in the November 2020 elections, chose to violate the constitution, it acted in the belief that the people would accept its diktat, as they had done in previous decades.
    • Civilian opposition continues: Clearly, military junta underestimated public anger and their commitment to freedom and democracy. Even after killing over 2,300 people and imprisoning thousands, including Ms. Suu Kyi, the military still faces a rebellion. Its plan to hold an election next year stands jeopardized.
    • Imprisonment of Suu Kyi: Suu Kyi, 77, the most popular leader, has been sentenced to 26 years of imprisonment in multiple cases on apparently trumped-up charges. Besides, 1.1 million Rohingya, driven by military oppression to seek shelter in Bangladesh in 2017, continue to languish there. Dhaka’s efforts to arrange their safe return have failed.
    • Migration crisis in India and Bangladesh: Armed clashes between the military and their ethnic opponents in the border region are having a spill-over effect in Bangladesh. Dhaka continues to show restraint and a preference for diplomacy to manage the situation.

    India-Myanmar

    How is the response of civilian opposition against military?

    • National unity Government: The parallel National Unity Government (NUG) may not be recognized by any state, but it continues to receive political and financial support from abroad. It has effectively channelled popular indignation against military rule, while still being vulnerable due to the paucity of resources and the absence of a visible leader.
    • Support of ethnic groups to NUG: About 20 ethnic armed organizations (EAOs), located in the east, north and west of Myanmar’s periphery, have divergent approaches towards the postcoup conflict. Many view it as an intra Bamar contestation, an issue of limited concern to them. Some like the Karens and Kachin’s support the NUG, while others, especially those controlled or supported by China, remain aloof.
    • Strong military but disunity among groups: Those operating in the Chin and Rakhine states are engaged in a fierce armed conflict with the military and have enfeebled it. But overall, due to their divergences and relative weaknesses, the EAOs are unlikely to defeat the military.
    • No nationwide opposition: While the opposition has performed well, it is unable to turn the tide in its favour, without a nationwide front against the Tatmadaw. National reconciliation between the military and civilian forces, and ethnic reconciliation between the majority Bamars and ethnic minorities, have been put on hold.

    India-Myanmar

    UN and International criticism

    • Criticism of coup: The UN has been forthright in criticizing the coup. It has expressed concern over continuing violence, support for a ‘democratic transition’, a release of all political prisoners and dialogue among the parties concerned.
    • Division among international community: However, the UN Secretary General’s special envoy has had little success in promoting peace. The UN’s failure lies in the sharp divisions within the international community on how to deal with this vexed issue.
    • Sanction on military: The western powers have been severely critical of the military. They have put in place several restrictive measures and imposed more sanctions. They have extended support to the NUG.
    • Russian support to military: On the other hand, Russia has given considerable backing to the military regime, seeing in its own isolation an opportunity to strengthen bilateral cooperation in defence and energy supplies.
    • China’s exploiting the opportunity: China is keeping a door open to democratic forces even while doing business with the regime and exploiting every opportunity to ensure progress on the China-Myanmar Economic Corridor.
    • ASEAN’s divided response: ASEAN is divided in three ways: Indonesia, Malaysia, and Singapore are prodemocracy; Thailand and Laos are promilitary; and Vietnam and the Philippines are ambivalent. This disunity and the Tatmadaw’s refusal to cooperate with ASEAN have led to the non-implementation of the Five Point Consensus. The upcoming ASEAN summit may provide clues on whether the grouping can forge a united stand and devise something that works better.

    India-Myanmar

    India’s reaction to Myanmar situation

    • Refugee crisis in India: India is concerned as the postcoup conditions have adversely impacted its interests and hampered bilateral cooperation. Mega projects stand delayed. Some 50,000 refugees, as per unofficial estimates, have been camping in Mizoram.
    • Advocating the democracy: Meanwhile, there is an erroneous perception that India has abandoned the Myanmar people. The reality is that India proactively advocates an early restoration of democracy, the release of prisoners, and internal dialogue.
    • Myanmar under the shadow of India-China relations: Can India do more? It can explore the possibility of a combined mediatory role with ASEAN and likeminded neighbors. Will China have a role in such a group? India-China relations preclude that possibility.
    • Brokering the political settlement: Through greater unity, external players can help Myanmar in creating a suitable environment for dialogue on a political settlement. Distant countries such as Norway and Japan can play a helpful role as catalysts. But the principal responsibility to construct a solution must rest with the Myanmar elite and leadership of both camps. Through resilience and pragmatism, they crafted a way out in 2011-21. They must recreate that spirit.

    Conclusion

    • India has been walking on tight rope on balancing national interest and restoration of democracy in Myanmar. Sooner the civil war in Myanmar ends better for India and especially for Mizoram. ‘The Golden Land’, where Lord Buddha is revered, needs to be reinspired by his teachings. Else, a prolonged, contested military rule or a failed state seems a distinct possibility.

    Mains Question

    Q. How situation in Myanmar is affecting the national interest of India? What is the India’s response to the military coup in Myanmar?

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  • Black Sea Grain Initiative

    black sea

    The UN Secretary-General Antonio Guterres has called for the renewal of the Black Sea Grain Initiative as Russia has agreed to resume its participation.

    Black Sea Grain Initiative

    • The Initiative eased Russia’s naval blockade and saw the reopening of three key Ukrainian ports.
    • The agreement to create the sea corridor was negotiated by representatives from Ukraine, Russia, the UN and Turkey in July this year.
    • The agreement created procedures to safely export grain from certain ports to attempt to address the 2022 food crisis.
    • It provides a safe maritime humanitarian corridor for Ukrainian exports (particularly for food grains) from three of its key ports, namely, Chornomorsk, Odesa and Yuzhny/Pivdennyi in the Black Sea.

    Outcomes of this deal

    • Approximately 9.8 million tonnes of grains have been shipped so far since the deal was brokered.
    • People hoarding the grain in the hope of selling it for a sizable profit owing to the supply crunch were now obligated to sell.
    • The initiative has also been credited for having made a huge difference to the global cost of living crisis.

    What would suspension of the deal mean?

    • In a nutshell, the deal’s suspension was expected to re-introduce the price pressures on grain prices, especially that of wheat, with inventory being at historical lows.
    • It could particularly impact countries in the Middle East and Africa such as Egypt, Turkey, Lebanon, Sudan and Yemen which have benefitted from the resumption and are particularly dependent on Russian and Ukrainian exports

    About Black Sea

    black sea

    • The famed water body is bound by Ukraine to the north and northwest, Russia and Georgia to the east, Turkey to the south, and Bulgaria and Romania to the west.
    • It links to the Sea of Marmara through the Bosphorus and then to the Aegean through the Dardanelles.

    Significance of Black Sea for Russia

    • Domination of the Black Sea region is a geostrategic imperative for Moscow.
    • Black Sea has traditionally been Russia’s warm water gateway to Europe.
    • For Russia, the Black Sea is both a stepping stone to the Mediterranean.
    • It acts as a strategic buffer between NATO and itself.
    • It showcases the Russian power in the Mediterranean and to secure the economic gateway to key markets in southern Europe.
    • Russia has been making efforts to gain complete control over the Black Sea since the Crimean crisis of 2014.

     

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  • Assertive China, Implication for world and India

    China

    Context

    • China’s 20th Party Congress concluded with hardly any surprises, and a predetermined script was implemented without any hitch. Xi Jinping was anointed President for an unprecedented third term, and all six of his acolytes made it to the powerful Politburo Standing Committee.

    Why China’s 20th Party Congress is important?

    • Extension of tenure of Xi Jinping: Xi’s ‘core’ status has been further reinforced, and he is now set to eclipse Deng Xiaoping and Jiang Zemin, placing him next only to Mao. Mr. Xi’s Thought on ‘Socialism with Chinese Characteristics for a New Era’ will be the Chinese Communist Party/Communist Party of China (CCP)’s guiding philosophy for the future.
    • Xi’s control over party: It was also evident that Mr. Xi enjoys wide, if not overwhelming, support within the Party elite, enabling him to infuse a renewed sense of purpose alongside tightening of controls over it.
    • High focus on national security: National security would be the key factor dictating all aspects of governance. A common theme that permeated the proceedings was affirmation of the CCP’s historical mission.
    • Emphasized ideological coherence: There was only a single narrative, crafted in a manner that extolled Mr. Xi’s role in revitalization of the CCP, further enhancing his cult status. Unequivocally rejected was an earlier Xi thesis of a ‘Community of Common Destiny’ which has been replaced by the belief that international public opinion was currently anti-China and also included an incitement to overthrow the existing Communist regime. To counter such disruptive philosophies, it had become necessary for the CCP to emphasize ideological coherence and internal discipline.
    • Avoiding the soviet style collapse: This would help to avoid the danger of a ‘Soviet style collapse’ caused by ideological laxity, corruption, divisions within the party and attempts by outsiders to foment unrest.

    China

    What are the problematic declarations at 20th party congress?

    • Undermining the USA: In the realm of geopolitics, the Congress declared that the objective is to effectively reduce the authority and the power of the United States.
    • Rejecting the Indo-pacific: This was especially true of China’s neighborhood, essentially the Indo-Pacific.
    • Achieving the lost glory: Also, to be eschewed by China were the vague and contradictory goals of the past, made at a time when China sought to make rapid progress in several directions.
    • Theory of victimhood of international conspiracy: Implicit in the proceedings was the belief that China was being deliberately denied access, and the ability, to import certain vital technological items, and in this regard, of being a victim of major international conspiracies. Earlier pragmatism was replaced by concerns about western pressures to derail China’s progress.
    • Possible lifelong tenure to Xi: The Party Congress is indicative of the fact that Mr. Xi is much more than a mere party ‘restorer’, and that he adheres to the belief that the CCP’s role is central to Chinese society and critical to determining China’s role in world affairs.
    • Raising the national strength and international influence: In terms of China’s world view, the Party Congress reiterated that the goal is to make China a modern socialist power by 2035, boost per capita income to middle income levels, and modernise the armed forces. By 2049, the 100th anniversary of the Peoples’ Republic of China, China is determined to lead the world in terms of composite national strength and international influence.

    China

    What are the implications for the world?

    • Premature takeover of Taiwan: one can expect that notwithstanding the level of rhetoric and assertions that this is a dangerous phase, China is unlikely to take any premature step to take over Taiwan, and thereby risk a wider conflict with the U.S. and the rest of the world at this point. Mr. Xi is far more likely to devote attention to internal matters within China, since unity within the Communist Party remains ephemeral; while dissent has been stamped out for the present, more consolidation would be necessary.
    • Short term conciliation with world: Consequently, one might well see China stepping back from its present confrontational posture with the U.S. and several other countries, and adopting a more conciliatory approach in the near future.
    • Conflicts are likely to happen: There are, of course, certain red lines any attempt at provocation within the ‘First Island Chain’, or encouraging Taiwan to seek independence or break away from China are certain to lead to a conflict, irrespective of how it would adversely affect China’s 2049 plans and objectives.

    China

    Implications for India

    • Border incursion will rise: In India’s case, further skirmishes between the two countries along the several thousand kilometres of the undefined land border is to be expected.
    • Conflicts in Indian ocean: China is unlikely to embark on an open conflict with it anywhere else in the Indian Ocean region. This could alter, if India were to pursue a more aggressive policy in support of the West’s ‘open seas policy’ in waters in China’s vicinity.
    • Prime target in west vs China battle: India is, however, likely to be a principal target of Chinese wrath in the next few years. As India’s economic fortunes steadily improve even as China’s declines, the perception conflict will become more intense.
    • China’s progress at the cost of India: Moreover, if India is seen as a major recipient of western technology, the kind being denied to China, China would make it a point to use its economic, rather than military muscle, to deter India’s progress. For China to achieve greatness by 2049, subduing India economically, and reducing its image in the eyes of the world would be critically important.

    Conclusion

    • China’s middle kingdom complex, unjustified assertion, paranoic claims on borders and seas and wolf warrior diplomacy is against the international rules and order. China has challenged the USA’s hegemony and entire international system without any tangible punishment. India has to choose its options carefully without compromising national security and ambitions.

  • AIIB set to lend Pakistan $500 million

    The Asian Infrastructure Investment Bank (AIIB) is scheduled to lend $500 million to Pakistan in this month.

    Asian Infrastructure Investment Bank (AIIB)

    • The Asian Infrastructure Investment Bank (AIIB) is a multilateral development bank with a mission to improve social and economic outcomes in Asia, began operations in January 2016.
    • It aims to stimulate growth and improve access to basic services by furthering interconnectivity and economic development in the region through advancements in infrastructure.
    • AIIB has now grown to 102 approved members worldwide.
    • The US & Japan are not its members.
    • It is a brainchild of China. It has invested in 13 member regions.

    Capital and shareholding of AIIB

    • It has authorized capital of US 100 billion dollars and subscribed capital of USD 50 billion.
    • It offers sovereign and non-sovereign finance for projects in various sectors with an interest rate of London Interbank Offered Rate (LIBOR) plus 1.15 % and a repayment period of 25 years with 5 years in grace period.
    • China is the largest shareholder in AIIB with a 26.06% voting power, followed by India with 7.62% and Russia with 5.92% voting power.

    Try this question from CSP 2019

    Q.With reference to Asian Infrastructure Investment Bank (AIIB), consider the following statements

    1. AIIB has more than 80 member nations.
    2. India is the largest shareholder in AIIB.
    3. AIIB does not have any members from outside Asia.

    Which of the statements given above is/are correct?

    (a) 1 only

    (b) 2 and 3 only

    (c) 1 and 3 only

    (d) 1, 2 and 3

     

    [wpdiscuz-feedback id=”7t4xlmyyu4″ question=”Please leave a feedback on this” opened=”1″]Post your answers here.[/wpdiscuz-feedback]

     

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  • Why is ASEAN holding a special meeting on Myanmar?

    asean

    Foreign ministers from member countries of the Association of Southeast Asian Nations (ASEAN) are meeting to discuss an intensifying crisis in Myanmar, 18 months after agreeing a peace plan with its military rulers.

    What is ASEAN?

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

    Why is the meeting happening?

    • ASEAN’s peace effort is the only official diplomatic process in play.
    • There has been a failure with the junta unwilling to implement a so-called “five-point consensus” that it agreed to with ASEAN in April 2021.
    • The United Nations has backed the ASEAN plan, but with suspicion the generals are paying lip service and buying time to consolidate power and crush opponents before a 2023 election.
    • For ASEAN to remain credible as a mediator, it may need to present a new strategy before the summit.

    What is the consensus?

    • The agreement includes-
    1. Immediate end of hostilities
    2. All parties engaging in constructive dialogue
    3. Allowing an ASEAN envoy to mediate and meet all stakeholders, and
    4. ASEAN to provide humanitarian assistance.
    • So far, the only success cited by ASEAN chair Cambodia has been allowing some humanitarian access, but that has been limited and conditional.

    How has the Junta (Military govt. in Myanmar) responded?

    • The military government has accused critical ASEAN members of meddling and warned them not to engage.
    • It has accused its opponents of trying to sabotage the ASEAN plan and has justified military offensives as necessary to secure the country and enable political talks.
    • Instead of advocating for the five-point ASEAN plan, the generals have instead been pushing a five-step roadmap of their own towards a new election, with few similarities.

     

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  • Pakistan is out of FATF ‘Grey List’ on terror funding

    Global terror-financing watchdog FATF has announced Pakistan‘s removal from its grey list, saying the country has largely completed its action plans on anti-money laundering and financing of terrorism.

    What is the FATF?

    • FATF is an intergovernmental organization founded in 1989 on the initiative of the G7 to develop policies to combat money laundering.
    • The FATF Secretariat is housed at the OECD headquarters in Paris.
    • It holds three Plenary meetings in the course of each of its 12-month rotating presidencies.
    • As of 2019, FATF consisted of 37 member jurisdictions.

    India’s say in FATF

    • India became an Observer at FATF in 2006. Since then, it had been working towards full-fledged membership.
    • On June 25, 2010, India was taken in as the 34th country member of FATF.

    EAG of FATF

    • The EAG is a regional body comprising nine countries: India, Russia, China, Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, Uzbekistan and Belarus.
    • It is an associate member of the FATF.

    What is the role of FATF?

    • The rise of the global economy and international trade has given rise to financial crimes such as money laundering.
    • The FATF makes recommendations for combating financial crime, reviews members’ policies and procedures, and seeks to increase the acceptance of anti-money laundering regulations across the globe.
    • Because money launderers and others alter their techniques to avoid apprehension, the FATF updates its recommendations every few years.

    What is the Black List and the Grey List?

    • Black List: The blacklist, now called the “Call for action” was the common shorthand description for the FATF list of “Non-Cooperative Countries or Territories” (NCCTs).
    • Grey List: Countries that are considered safe haven for supporting terror funding and money laundering are put in the FATF grey list. This inclusion serves as a warning to the country that it may enter the blacklist.

    Consequences of being in the FATF grey list:

    • Economic sanctions from IMF, World Bank, ADB
    • Problem in getting loans from IMF, World Bank, ADB and other countries
    • Reduction in international trade
    • International boycott

    How had it impacted Pakistan economically?

    • A country on the ‘grey list’ is not subject to sanctions.
    • However, the ‘grey list’ signals to the international banking system that there could be enhanced transaction risks from doing business with the said country.
    • In 2018, the Economist noted that there had been no direct economic implications when Pakistan was on the grey list from 2012 to 2015.
    • Instead, Pakistan managed to obtain a $6 billion bailout package from IMF in 2013 and raise additional funding in global debt markets in 2015.

    Pakistan claimed the politicization of FATF. Is that true?

    • In the run-up to the February 2018 decision, the US had weaned Saudi Arabia away, leaving only China and Turkey supporting Pakistan.
    • China eventually withdrew its objection.
    • A few days later, India publicly congratulated China for its election as vice president of FATF, lending credence to the speculation that a deal had been reached behind closed doors.

    How Pakistan managed to get out of the ‘inglorious’ list?

    fatf

    • Removal from the list mark the culmination of a four-year reform process that has required far-reaching changes to Pakistan’s financial system.
    • It appears that, Pakistan has performed well in particular to laws governing money laundering and terrorism financing.
    • Pakistan was given an action plan by FATF in 2018 to address strategic counter-terrorist financing-related deficiencies.

    Conclusion

    • This is not the first time for Pakistan to exit Grey List. It has been swinging on its position on terror financing.
    • Pakistan first figured in a FATF statement after the plenary of February 2008.

     

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  • Fateful Triangle China,USA and India and Changing World Order

    China

    Context

    • America’s national security strategy issued by the Joe Biden Administration last week and the Chinese Communist Party’s 20th Congress this week promise to reshape the geopolitics of Asia and the Indo-Pacific.

    Historical background of USA-CHINA

    • Context of World War II: Asia has seen multiple phases in the US-China relationship. In the second half of the 19th century, American missionaries began to arrive in China and began to generate empathy for the nation. During World War II, Washington backed Chinese nationalists in their fight against Japanese occupation.
    • US efforts to isolation China: The US tried to isolate China from 1949 when the communists prevailed over the nationalists.
    • Cooperation to counter Soviet: The 1970’s saw the US and communist China come together to counter the Soviet Union.
    • Multiple Economic engagement: The 1980s saw the beginning of an economic engagement that turned into a huge commercial and technological partnership from the 1990s.

    China

    What is the USA’s assumption and China’s ambition?

    • China as responsible stakeholder: The US establishment dismissed the idea of China as potential threat and bet that Beijing could become a “responsible stakeholder” in the world order.
    • Democratization of Chinese society is inevitable: America also believed that China’s growing economic prosperity would inevitably lead to greater democratisation of its society.
    • Visible decline of west: China, however, has steadily moved in the other direction, especially under Xi, who has convinced himself that the West is in terminal decline.
    • China’s ambition to change the world order: Xi is determined to seize this moment to reshape the Asian as well as the global order to suit Chinese interests. At the same time, China has become increasingly repressive at home.
    • Explicit expression of ambition: Xi made no effort to hide China’s new geopolitical ambition nor has he been defensive about his authoritarian rule. This, in turn, bestirred the US into rethinking its China policy in the second decade of the 21st century.

    China

    How China is asserting itself?

    • Asserting own version of Global order: Beijing, argues that recent history points to the superiority of the Chinese system over the Western one. And it offers its own versions of a global order – economic, political and social. Since the end of the Cold War, ideological arguments had receded into the background but are now back in significant play.
    • China offering model Economic Globalization: China continues to sing praises of the model of economic globalisation that has facilitated Beijing’s rise over the last four decades. But under Xi, China has emphasised the importance of self-reliance in the name of a “dual circulation strategy”.
    • Leveraging world’s dependence for strategic gain: At the same time, Beijing has sought to enhance the world’s dependence on its economy and leverage it for strategic benefit. The profound political backlash against trade and economic cooperation with China in the US led to the questioning of economic globalisation in the Trump years.
    • China building the powerful military: As China became a richer country, it also focused on building a powerful army. Using both the instruments of hard power, China under Xi has actively sought to undermine US alliances in Asia and mount pressure on American forward military presence in Asia.

    China

    How USA’s policy is changing towards China?

    • Structured policy of rivalry: The traditional soft attitude to China yielded to a more confrontational approach during the Donald Trump presidency. Joe Biden has developed that into a more structured policy of competing with China.
    • Combine challenge of China and Russia: The National Security Strategy of the Trump administration postulated the return of great power rivalry and the need to respond to the challenges presented by Russia and China. Biden’s NATIONAL SECURITY STRATEGY builds on that proposition and identifies China as the more demanding challenge than Russia, despite Moscow’s aggression against Ukraine.
    • China is more capable than Russia: In his foreword to the National security strategy, Biden says “Russia poses an immediate threat to the free and open international system, recklessly flouting the basic laws of the international order today, as its brutal war of aggression against Ukraine has shown.” He names China, on the other hand, as “the only country with both the intent to reshape the international order and, increasingly, the economic, diplomatic, military and technological power to advance that objective”. While the European challenge is real, the Biden Administration now sees the Indo-Pacific as the principal strategic theatre.
    • Projecting China as autocracy against the democracy: The US has sought to locate the conflict with China (and Russia) as a fundamental struggle between “democracies and autocracies”. Recognising the limited enthusiasm for the framing in Asia, the National security strategy now talks of broadening the coalition to include countries that may not be democratic. Beijing, on the other hand, argues that recent history points to the superiority of the Chinese system over the Western one.
    • Building the bilateral alliances: The US is now pushing back. The principal instrument in the US response has been rebuilding the traditional bilateral alliances with Japan and Australia as well as constructing new partnerships with countries like India and developing new regional coalitions.

    India’s role in shaping the world order

    • Convergence of National interest wit USA: Today, Indian and American policies are converging. For both Delhi and Washington, Beijing presents the main national challenges.
    • Reducing economic dependence on China: On the economic and technological front, both India and the US are trying to reduce their exposure to China.
    • Keeping independent foreign policy: On the geopolitical front, a US plan to look beyond formal alliances suits Delhi, which is wedded to an independent foreign policy.
    • Opportunity for cooperation: It is never easy to translate abstract convergence into concrete policies. The current churn in Asia provides Delhi and Washington with a historic opportunity to build on the new convergences in the areas of trade, technology, and geopolitics.

     Conclusion

    • changing world order will have short term repercussion on economic front for developing country like India. India has a great opportunity to be the rule maker of new global order rather than just a rule follower. World order of 21st century will revolve around the fateful triangle of India, China and USA.

    Mains Question

    Q.Why the present world order is challenged by China? What role India can play as rule maker of new World order?

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  • International Solar Alliance approves funding mechanism

    To bolster investments in solar power projects, the International Solar Alliance (ISA), in its General Assembly approved the ‘Solar Facility’, a payment guarantee mechanism.

    What is Solar Facility?

    • It is expected to stimulate investments into solar projects through two financial components:
    1. Solar Payment Guarantee Fund and
    2. Solar Insurance Fund
    • The thrust of the facility is to attract private capital to flow into “underserved markets” in Africa.
    • The ISA would aim to crowdsource investments from various donors across the globe and proposed projects in Africa would be able to purchase payment guarantees or partial insurance premium from these funds.

    Why such move?

    • ISA’s mission is to unlock US $1 trillion (₹80 lakh crore) of investments in solar power by 2030 while reducing cost of the technology and its financing.

    What is International Solar Alliance (ISA)?

    • The ISA is an alliance of more than 121 countries, most of them being sunshine countries, which lie either completely or partly between the Tropic of Cancer and the Tropic of Capricorn.
    • It is headquartered in Gurugram, India.
    • The primary objective of the alliance is to work for efficient exploitation of solar energy to reduce dependence on fossil fuels.
    • The alliance is a treaty-based inter-governmental organization.
    • The initiative was launched by PM Modi at the India Africa Summit and a meeting of member countries ahead of the 2015 United Nations Climate Change Conference in Paris in November 2015.

    Objectives of the ISA

    • To mobilize investments of more than USD 1000 billion by 2030
    • To take coordinated action for better harmonization, aggregation of demand, risk and resources, for promoting solar finance, solar technologies, innovation, R&D, capacity building etc.
    • Reduce the cost of finance to increase investments in solar energy in member countries
    • Scale up applications of solar technologies in member countries
    • Facilitate collaborative research and development (R&D) activities in solar energy technologies among member countries
    • Promote a common cyber platform for networking, cooperation and exchange of ideas among member countries

    What does ISA formation signify?

    • Climate action commitment: It symbolizes about the sincerity of the developing nations towards their concern about climate change and to switch to a low-carbon growth path.
    • Clean energy: India’s pledge to the Paris summit offered to bring 40% of its electricity generation capacity from non-fossil sources (renewable, large hydro, and nuclear) by 2030.
    • Global electrification: India has pledged to let solar energy reach to the most unconnected villages and communities and also towards creating a clean planet.
    • Global cooperation: It is based on world cooperation irrespective of global boundaries.
    • India’s Soft power: For India, possible additional benefits from the alliance can be a strengthening of ties with the major African countries and increasing goodwill for India among them.

    Key initiatives

    [A] Global Solar Atlas

    • ISA alliance has partnered with World Bank to launch Global Solar Atlas at an ISA event at the World Future Energy Summit in Abu Dhabi.
    • Global Solar Atlas is a free online tool that displays annual average solar power potential at any location in the world and thus identify potential sites for solar power generation.

    [B] OSOWOG Initiative

    • Under the ISA project, India envisaged having an interconnected power transmission grid across nations for the supply of clean energy.
    • The vision behind the OSOWOG mantra is ‘The Sun Never Sets’ and is a constant at some geographical location, globally, at any given point of time.
    • With India at the fulcrum, the solar spectrum can easily be divided into two broad zones viz. far East which would include countries like Myanmar, Vietnam, Thailand, Lao, Cambodia etc. and far West which would cover the Middle East and the Africa Region.

    Implementation

    • The OSOWOG would have three phases.
    1. Phase I: Middle East, South Asia and South-East Asia would be interconnected
    2. Phase II: Solar and other renewable energy resources rich regions would be interconnected
    3. Phase III: Global interconnection of the power transmission grid to achieve the One Sun One World One Grid vision

    Benefits of the project

    • Attracting investment: An interconnected grid would help all the participating entities in attracting investments in renewable energy sources as well as utilizing skills, technology and finances.
    • Poverty alleviation: Resulting economic benefits would positively impact poverty alleviation and support in mitigating water, sanitation, food and other socio-economic challenges.
    • Reduced project cost: The proposed integration would lead to reduced project costs, higher efficiencies and increased asset utilization for all the participating entities.

    Various challenges

    • Lack of Funding: Providing the money for promoting solar electricity among the members is a challenge. The Alliance has very little money of its own.
    • Expensive implementation: The cost of power has two components. The variable cost is the payment made for the numbers of units of electricity purchased. In addition, the buyer is required to pay a certain amount towards the fixed cost of solar supply.
    • Battery-based Storage: Solar electricity is available only during the day when the sun shines. Thus, the storage of electricity is a difficult task.
    • Cross-border transmission: Solar electricity has to overcome the roadblocks of transmission.  Cross-border transmission of electricity requires the establishment of transmission lines from the producer to the consumer country.
    • Peak hour load:  The demand for electricity, however, is more during the morning and evening which are called “peak hours”. But it can be produced when the sun is shining.
    • Climate change: Sudden overcast and rainfall in many parts of the tropics has been a major issues these days. Such weather hampers solar energy production
    • Desired global consensus: It is hindered with the issues of intricate geopolitics, unfavourable economics, unwarranted globalisation and undue centralization that act against the concept.
    • Highly ambitious: In a nation like India, it took us this long to connect all the regions of the country through a national grid and we are talking about ‘one world, one grid’.

    Way forward

    • ISA should focus on its core goals such as- aggregating demand, tariff, technical collaborations, and financial assistance for achieving its target.
    • It further needs to ensure that solar benefits are clear and tangible to users beyond its cost ambitions.
    • ISA should demonstrate business models that are viable for users, suppliers and financiers.
    • Further, the alliance should support member countries in implementing policies to expedite these business models.
    • Geo-politically, this is being touted as a clever strategy however financially and technology-wise, this has to make sense.

     

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