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Subject: International Relations

  • Caution in buying Russian cruide

    Context

    This week the Wall Street Journal and the New York Times both reported on India emerging as a major buyer of Russian oil.

    Background of rising fuel prices due to Ukraine crisis

    • A significant fallout of Russia’s invasion of Ukraine has been the rising cost of petroleum.
    • In response to the invasion, Western countries, including the United States and Europe, have imposed an array of sanctions against Russia.
    • Reduced purchases from Russia: Europe and the United States have seen the price of oil steadily rise after they reduced their purchases from Russia.
    • For now, Russia has been able to mitigate the impact of sanctions by selling crude, oil and coal at reasonable prices in greater volumes to newer bulk buyers like India, to combat Europe trying to wean itself off Russian crude.

    Why India increased purchase of Russian oil

    • India has chosen a different route.
    • Cope with rising fuel prices: We are the third-largest importer and consumer of oil in the world and have increased our purchase of Russian oil to cope with rising oil prices elsewhere.
    • We are also refining crude oil or turning it into products like jet fuel and diesel and selling it to Europe and other nations.
    • Curb inflation: Importing Russian crude also helps us curb inflation that has been made worse by rising fuel prices.
    • Halting the fall of the rupee: Procuring discounted Russian oil is an effort by the government to bring down prices and halt the decline in the value of the Indian rupee.
    • India’s behaviour is governed by our best interest, which is the most important element of any astute foreign and economic policy.

    Issues with purchasing oil from Russia

    • The European Union has announced a ban against insuring ships carrying Russian oil, to commence this December.
    • Insurance ban: Countries like India, China and Turkey that are increasing their oil purchases from Russia have six months to find a work-around to the insurance ban by using non-European insurance companies.
    • European companies own most of the ships carrying Russian oil to India.
    • These insurance sanctions will impact the companies that own these ships as well.
    • Dependence for batteries: Apart from geopolitical changes in the world indicating the rise of China, there is a major change: Electric vehicles and electric batteries substituting for non-renewable resources like petroleum and diesel.
    • India cannot afford to be dependent on an unhindered supply of electric batteries from China, given geopolitical considerations and border disputes between the two nations.

    Way forward

    • To weather the new electric era that will no doubt be dotted with territorial wars and national security concerns, India would do well to preempt shortages in the arena – by putting in place factories which will build the electric batteries that will power our futures.
    • What the invasion of Ukraine has taught us is that we need to be more self-reliant and have in-house energy sources.

    Conclusion

    India needs to factor in the implications of comprehensive western sanctions as it increases its purchase of discounted Russian oil.

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  • US Supreme Court overturns Abortion Right

    In a significant curtailment of women’s rights, the US Supreme Court overturned Roe v. Wade, a 1973 landmark decision giving women in America the right to have an abortion before the foetus is viable outside the womb — before the 24-28 week mark.

    What is Roe vs. Wade Case: Upholding the Right to Abortion

    • Roe, short for Jane Roe, is the pseudonym for a Texas woman who in 1970 sought to have an abortion when she was five months pregnant.
    • Texas then had ban on abortions except to save a mother’s life. The case then went to the US Supreme Court (SCOTUS).
    • The 7-2 majority opinion of the SCOTUS written in 1973, paved the way for the recognition of abortion as a constitutional right in the US considering foetal viability.

    [Foetal viability is the point at which a foetus can survive outside the womb, at the time considered to be around 28 weeks, but today is closer to 23 or 24 weeks owing to advances in medicine and technology.]

    Right to Abortion Judgment: Key takeaways

    Based on the Roe vs Wade case, the framework of regulations that applied towards the right to abortion:

    1. Almost no limitations could be placed on that right;
    2. Only limitations to abortion rights that were aimed at protecting a woman’s health were permitted; and in the third trimester,
    3. State governments had greater leeway to limit the right to abortion except for cases in which the life and health of the mother were endangered.

    What is the debate?

    The abortion debate is the ongoing controversy surrounding the moral, legal, and religious status of induced abortion.

    The sides involved in the debate are the self-described “pro-choice” and “pro-life” movements.

    1. Pro-choice emphasizes the woman’s choice whether to terminate a pregnancy.
    2. Pro-life position stresses the humanity of both the mother and foetus, arguing that a fetus is a human person deserving of legal protection.

    Why is the judgement overturned?

    • Foetuses feel the pain: If the foetus is beyond 20 weeks of gestation, gynaecs assume that there will be pain caused to the foetus.
    • Biblical gospel: The Bible does not draw a distinction between foetuses and babies. By the time a baby is conceived, he or she is recognized by God.
    • Abortions cause psychological damage: Young adult women who undergo abortion may be at increased risk for subsequent depression.
    • Abortions reduce the number of adoptable babies: Instead of having the option to abort, women should give their unwanted babies to people who cannot conceive. Single parenthood is also gaining popularity in the US.
    • Cases of selective abortion: Such cases based on physical and genetic abnormalities (eugenic termination) is overt discrimination.
    • Abortion as a form of contraception: It is immoral to kill an unborn child for convenience. Many women are using abortion as a contraceptive method.
    • Morality put to question: If women become pregnant, they should accept the responsibility that comes with producing a child. People need to take responsibility for their actions and accept the consequences.
    • Abortion promotes throwaway culture: The legalization of abortion sends a message that human life has little value and promotes the throwaway culture.
    • Racial afflictions: Abortion disproportionately affects African American babies. In the US, black women are 3.3 times as likely as white women to have an abortion.

    Arguments in favour for Abortion Rights

    • Upholding individual conscience and decision-making:  The US Supreme Court has declared abortion to be a fundamental right guaranteed by the US Constitution.
    • Reproductive choice empowers women: The choice over when and whether to have children is central to a woman’s independence and ability to determine her future.
    • Foetal viability occurs post-birth:  Personhood begins after a foetus becomes “viable” (able to survive outside the womb) or after birth, not at conception. Abortion is the termination of a pregnancy, not a baby.
    • No proof of foetal pain: Most neuroscientists believe that the cortex is necessary for pain perception. The cortex does not become functional until at least the 26th week of a foetus’ development.
    • Preventing illegal abortions: Access to legal, professionally-performed abortions reduces maternal injury and death caused by unsafe, illegal abortions.
    • Mother’s health: Modern abortion procedures are safe and do not cause lasting health issues such as cancer and infertility.
    • Child’s health: Abortion gives pregnant women the option to choose not to bring fetuses with profound abnormalities to full term.
    • Prevents women’s exclusion: Women who are denied abortions are more likely to become unemployed, to be on public welfare, to be below the poverty line, and to become victims of domestic violence.
    • Reproductive choice protects women from financial disadvantage: Many women who choose abortion don’t have the financial resources to support a child.
    • Justified means of population control: Many defends abortion as a way to curb overpopulation. Malnutrition, starvation, poverty, lack of medical and educational services, pollution, underdevelopment, and conflict over resources are all consequences of overpopulation.

    Way forward

    • A search for the middle path perhaps the right of a woman to choose what to do with the foetus has to be balanced with the right of the foetus to survive.
    • It is only that a foetus does not have the ability to exercise an option while the person who carries it does.
    • Rather than banning abortion, lawmakers must focus on counselling, employment security, social welfare, and financial support to persuade pregnant women to give birth to their children.
    • We must achieve some degree of protection for the unborn by obtaining voluntary recognition of personal responsibility and respect for the personhood of the unborn.

    Back2Basics: Medical Termination of Pregnancy (MTP) Act

    • Abortion in India has been a legal right under various circumstances for the last 50 years with the introduction of Medical Termination of Pregnancy (MTP) Act in 1971.
    • The Act was amended in 2003 to enable women’s accessibility to safe and legal abortion services.
    • Abortion is covered 100% by the government’s public national health insurance funds, Ayushman Bharat and Employees’ State Insurance with the package rate for surgical abortion.

    The idea of terminating your pregnancy cannot originate by choice and is purely circumstantial. There are four situations under which a legal abortion is performed:

    1. If continuation of the pregnancy poses any risks to the life of the mother or mental health
    2. If the foetus has any severe abnormalities
    3. If pregnancy occurred as a result of failure of contraception (but this is only applicable to married women)
    4. If pregnancy is a result of sexual assault or rape

    These are the key changes that the Medical Termination of Pregnancy (Amendment) Act, 2021, has brought in:

    1. The gestation limit for abortions has been raised from the earlier ceiling of 20 weeks to 24 weeks, but only for special categories of pregnant women such as rape or incest survivors. But this termination would need the approval of two registered doctors.
    2. All pregnancies up to 20 weeks require one doctor’s approval. The earlier law, the MTP Act 1971, required one doctor’s approval for pregnancies upto 12 weeks and two doctors’ for pregnancies between 12 and 20 weeks.
    3. Women can now terminate unwanted pregnancies caused by contraceptive failure, regardless of their marital status. Earlier the law specified that only a “married woman and her husband” could do this.
    4. There is also no upper gestation limit for abortion in case of foetal disability if so decided by a medical board of specialist doctors, which state governments and union territories’ administrations would set up.

     

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  • Pakistan’s Economic Crisis and the IMF Challenge

    Pakistan’s foreign exchange reserves have been depleting during the last one year and is heading towards a default risk as Sri Lanka did.

    Pakistani economy is said to have been crippling since the discontinuance of US ‘military’ aid which it had used

    What is the news?

    • The Pakistani rupee has been on free fall; from 150 in April 2021 to 213 against the dollar on 21 June, an all-time low.
    • This would mean high oil and electricity prices, to outrage the people who are already to the streets due to ousted PM Imran Khan.
    • The government-International Monetary Fund (IMF) talks have remained complicated.

    Options available for Pakistan

    • Pakistan is under deep Balance of Payment (BoP) crisis (as was India in 1991).
    • Pakistan has exhausted all credit options as SL did.
    • Even the China Pakistan Economic Corridor (CPEC) is at standstill.
    • Even the Saudi’s and so called ‘caliphate’ of Turkey has not come to Pakistan’s rescue.

    Only option left: IMF bail out

    • The immediate future of Pakistan’s economy would depend on IMF resuming its support.
    • Despite an intense discussion between the two, there has not been a consensus until now.

    What is IMF bail-out?

    • Bailout is a general term for extending financial support to a company or a country facing a potential bankruptcy threat.
    • When a country asks the IMF for a loan, the country is facing a major economic crisis.
    • In particular, it does not have enough foreign currency (‘dollars’) to pay for imports and the repayments on its loans. In short, the country cannot pay its international bills. So, it need a bailout.
    • The IMF will give the country an aid, which is ‘cash’ in the sense that it does not have to be spent on a particular project. This money can be used to pay its bills.
    • But, the IMF will impose certain conditions. The basic condition is to spend less – both domestically and internationally.
    • This belt-tightening is not easy – people lose jobs, prices rise, etc. And, one has to repay the loan.
    • These conditions are necessary to ensure that the money is being spent where it is supposed to.

    Pakistan and IMF: A track record

    • Pakistan’s relationship with the IMF has remained complicated. It sees conditions laid as a breach of sovereignty.
    • Though Islamabad has been negotiating with the IMF repeatedly, there has been an economic nationalism, mostly jingoistic, against approaching the IMF in recent years.
    • Imran Khan, the former PM made statements and fuelled the sentiments against the IMF.
    • After becoming the PM in 2018, he preferred approaching friendly countries (China and Saudi Arabia) and avoiding the IMF.
    • The new government is now back to the IMF; it expects the IMF to release the payments, expand the support programme, and give a longer rope to repay.

    Conditions laid out by IMF for recent bail-out

    • The IMF is willing to support Pakistan but has some conditions regarding macroeconomic reforms.
    • It wants Pakistan to be transparent about its debt situation, including what Islamabad owes to China, as a part of the CPEC.
    • Terror-financing in Pakistan is the most favored type of investment!
    • The IMF may agree to support after a few more promises by the government.
    • But the relief may be less than what Pakistan would hope for.

    A vicious cycle

    • Since its inception, Pakistan has spent more years inside an IMF programme than outside of it.
    • Every leader took the money, imposed massive hardships on the population through austerity and demand suppression and then reneges on its commitment through a patchy implementation.
    • Radical fanaticism and anti-India sentiments are successful tools of public appeasement.

    Will Pakistan pursue macroeconomic reforms?

    • In Pakistan, budgets have remained populist.
    • The economic governance declined due to corruption, lack of financial institutions’ independence, and the export decline.
    • The subsidies in the energy sector — fuel, oil and electricity — remain high to appease the public.
    • With the present coalition government facing elections, they are less likely to take any further bold decisions.

    Will “friendly countries” support Pakistan without preconditions?

    • Saudi Arabia and China have been supporting Pakistan. MBS has already pulled his hands.
    • Riyadh’s support is not unconditional.
    • It can ask Pakistan “to return the money at any time if the two countries have divergent views regarding their relationship or ties with a third country, or some other issue.”
    • China has been another significant source for Pakistan. Islamabad has been regularly seeking loans from China within and outside the CPEC projects.
    • However, since the attack on Chinese citizens by Baloch Fighters, China appears to have been disgusted with Pakistan.
    • CPEC is also at a standstill.

    FATF clearance is no panacea

    • During the latest Financial Action Task Force (FATF) meeting, there was an understanding that Pakistan has met its requirement.
    • The FATF has agreed to explore the possibilities of removing Pakistan from the grey list.
    • However, even when Pakistan was on the grey list, the IMF had been holding talks with Islamabad.
    • The big two — China and Saudi Arabia — were not constrained by Pakistan’s listing in the FATF.
    • So, the relaxation is less likely to open gates for big investments.

    Will Pakistan go the Sri Lankan way?

    • The situation was similar in Sri Lanka — the falling value of rupee, declining foreign exchange reserves, differences with the IMF, and rising fuel prices.
    • All of them led to public protests in Sri Lanka against the government.
    • The economic and energy crises in Pakistan have not snowballed into a political storm as it had happened in Sri Lanka.
    • The dope of “threats to Religion” works effectively there.

    Conclusion

    • The experiment of Pakistan (as a separate nation) has failed on various fronts.
    • To conclude, Pakistan’s economic and energy situation is serious and demands bold decisions.
    • The situation will worsen in the short term before it gets better, but this has been Pakistan’s history in the last 75 years.
    • With a relief from the IMF, after a protracted negotiation, a few band-aids, and the US intervention, Islamabad may muddle through this time as well, until the next crisis.

     

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  • Places in news: Snake Island

    Ukraine has said it has caused “significant losses” to the Russian military in airstrikes on Zmiinyi Island, also known as Snake Island, in the Black Sea.

    Snake Island

    • Zmiinyi Island, also known as Snake or Serpent Island, is a small piece of rock less than 700 metres from end to end, that has been described as being “X-shaped”.
    • It is located 35 km from the coast in the Black Sea, to the east of the mouth of the Danube and roughly southwest of the port city of Odessa.
    • The island, which has been known since ancient times and is marked on the map by the tiny village of Bile that is located on it, belongs to Ukraine.

    Why does Russia seek to control the Black Sea?

    • Domination of the Black Sea region is a geostrategic imperative for Moscow.
    • 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 Bosporus and then to the Aegean through the Dardanelles.
    • It has traditionally been Russia’s warm water gateway to Europe.
    • For Russia, the Black Sea is both a stepping stone to the Mediterranean as well as a strategic buffer between NATO and itself.
    • Cutting Ukrainian access to the Black Sea will reduce it to a landlocked country and deal a crippling blow to its trade logistics.

     

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  • BRICS

    Context

    China is hosting the 14th BRICS summit in virtual mode. The focus of the summit will be centred on the conflict and the association’s future.

    About BRICS

    • BRICS is an acronym for the grouping of the world’s leading emerging economies, namely Brazil, Russia, India, China and South Africa.
    • The BRICS Leaders’ Summit is convened annually.
    • It does not exist in form of an organization, but it is an annual summit between the supreme leaders of five nations.
    • The grouping was formalized during the first meeting of BRIC Foreign Ministers on the margins of the UNGA in New York in September 2006.
    • The first BRIC Summit took place in 2009 in the Russian Federation and focused on issues such as reform of the global financial architecture.
    • South Africa was invited to join BRIC in December 2010, after which the group adopted the acronym BRICS.
    • South Africa subsequently attended the Third BRICS Summit in Sanya, China, in March 2011.
    • The Chairmanship of the forum is rotated annually among the members, in accordance with the acronym B-R-I-C-S.

    Significance of BRICS

    • Economically, militarily, technologically, socially and culturally, BRICS nations represent a powerful bloc.
    • 40 per cent of the world’s population: They have an estimated combined population of 3.23 billion people, which is over 40 per cent of the world’s population.
    • 25 per cent of global GDP: They account for over more than a quarter of the world’s land area over three continents, and for more than 25 per cent of the global GDP.
    • Two fastest growing large economies: The grouping comprises two of the fastest-growing nations, India and China.
    •  It has proved its mettle to an extent by establishing the BRICS New Development Bank (NDB) and the Contingency Reserve Arrangement (CRA).

    How the Ukraine crisis creates challenges for the BRICS

    • The leaders of BRICS countries — Brazil, Russia, India, China and South Africa — will navigate the crucial dilemma of evolving a common stance on the Russian-Ukraine conflict.
    • The primary agenda of BRICS was rebalancing an international system dominated by the West.
    • However, the Ukraine crisis could act as a distraction from that primary agenda.
    • The geopolitical considerations of its members can come in the way of attaining the grouping’s original goal.
    • Target of economic warfare: Some of the BRICS members could be potential targets of the kind of economic warfare deployed by the West against Russia.
    •  The West has so far not expected the BRICS countries to stringently adhere to its sanctions against Russia.
    • But it will be naĂŻve to expect that they will persist with this attitude.

    Way forward

    1] Create institutional arrangement

    • Challenging the economic might of the West in the near future might be close to impossible.
    • Despite the group comprising China, India and Russia, intra-BRICS trade accounts for less than 20 per cent of global trade.
    • BRICS is far from having its own payment mechanisms, international messaging systems or cards.
    • The Ukraine crisis should drive home the need to create institutional arrangements that can cushion against similar financial turbulence in the future.

    2] Recalibrate structure and expand

    • BRICS requires a recalibration of its structure and agenda.
    • Creating financial mechanisms and technological institutions could turn BRICS into a G20 for developing nations.
    • It’s time to revisit the idea of expanding the grouping by inviting new members.
    • This could also impart new vigour to the BRICS’s developmental goals.

    3] Economic cooperation between India and China

    • Economic cooperation between India and China is vital for the success of any future BRICS endeavour.
    • The border conflict has created a mistrust of China in India.
    • In the current situation, New Delhi is unlikely to take an anti-West stance.
    • India, unlike China, is neither a UN Security Council member nor does it have major sticking points with the West.
    • At the same time, India is not a part of the Western camp.
    • That does open up the possibility of New Delhi taking a more proactive position in BRICS.
    • The two powers need to come together for the sake of global governance reform.

    Conclusion

    The Ukraine crisis could be an occasion for the leaders of BRICS nations to commit themselves to the original goal of the bloc. It’s an opportunity they shouldn’t let go of.

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  • PM to attend G-7 summit in Germany

    PM Modi will fly to the Germany as a special invitee to the meeting of G-7 countries.

    Group of 7

    • The G-7 or ‘Group of Seven’ includes Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States.
    • It is an intergovernmental organisation that was formed in 1975 by the top economies of the time as an informal forum to discuss pressing world issues.
    • Initially, it was formed as an effort by the US and its allies to discuss economic issues.
    • The G-7 forum now discusses several challenges such as oil prices and many pressing issues such as financial crises, terrorism, arms control, and drug trafficking.
    • It does not have a formal constitution or a fixed headquarters. The decisions taken by leaders during annual summits are non-binding.
    • Canada joined the group in 1976, and the European Union began attending in 1977.

    Evolution of the G-7

    • When it started in 1975—with six members, Canada joining a year later—it represented about 70% of the world economy.
    • And it was a cosy club for tackling issues such as the response to oil shocks.
    • Now it accounts for about 40% of global GDP.
    • Since the global financial crisis of 2007-09 it has sometimes been overshadowed by the broader G20.
    • The G-7 became the G-8 in 1997 when Russia was invited to join.

    Why was Russia expelled?

    • The G-7 was known as the ‘G-8’ for several years after the original seven were joined by Russia in 1997.
    • The Group returned to being called G-7 after Russia was expelled as a member in 2014 following the latter’s annexation of the Crimea region of Ukraine.
    • Since his election in 2016, President Trump has suggested on several occasions that Russia be added again, given what he described as Moscow’s global strategic importance.

    Why in news now?

    • New Delhi is preparing for more pressure from the G-7 countries.
    • These countries (Canada, France, Germany, Italy, Japan, the UK, the US and the EU) have unitedly imposed sanctions on Russia since it invaded Ukraine.
    • They want India to cooperate in restricting its purchase of Russian oil, not circumvent the sanctions by using a rupee-rouble mechanism.
    • It also wants India to lift the ban on the export of wheat.

    Relevance of G7 for India

    • India will get more voice, more influence and more power by entering the G7.
    • After UN Security Council (UNSC), this is the most influential grouping.
    • If the group is expanded it will collectively address certain humongous issues in the global order.
    • Diplomatically, a seat at the high table could help New Delhi further its security and foreign policy interests, especially at the nuclear club and UNSC reforms.
    • It will further protect its interests in the Indian Ocean.

    Challenges for India’s entry

    • The decision to expand the grouping cannot be taken by the US alone.
    • There needs to be a consensus.
    • However, a special invitation to India is no mean achievement.

     

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  • India and Australia

    Context

    India and Australia, which share common values and interests, must work together with resolve to shape the economic and strategic environment so that it continues to support collective security and prosperity.

    India-Australia ties: A background

    • The ties are a Comprehensive Strategic Partnership full of practical, tangible actions that strengthen ties and benefit the region.
    • India and Australia are a small group of countries to hold annual leaders’ summits and biennial 2+2 talks involving foreign and defence ministers.
    • The defence forces of both the countries are undertaking more complex activities together, such as in Exercise Malabar with the US and Japan.
    • We coordinate closely on maritime domain awareness.
    • This year both countries deployed P-8 surveillance aircraft to each other’s territories for joint patrols.
    • Australia has also committed to a package of partnership initiatives in our update to the India Economic Strategy.
    • Cooperation on climate and sustainability: India and Australia have great potential to cooperate on climate and sustainability.

    Why India matters to Australia

    • Securing supply chain: India’s economy, manufacturing capabilities and talent ensure it will play a key role in securing supply chains and restarting post-pandemic growth.
    • Balance of power: Its military has the capacity and capability to respond to natural disasters, help stabilise an uncertain region and contribute to an effective balance of power.
    • Technological and scientific capabilities: Its technological and scientific capabilities are gateways to a cleaner and more sustainable world.
    •  Commitment to democracy: Most of all, India’s people have the optimism, the commitment to democracy, the drive and the goodwill to make our region safer, freer and better.

    Vision for open, inclusive and resilient Indo-Pacific region

    • As the bilateral relationship deepens, both the countries must begin to work more together with others in the region.
    • Responding to humanitarian crises and natural disasters: There is enormous potential in the Indian and Pacific oceans, where we each have vital interests in combating climate change, illegal fishing and people smuggling and responding to humanitarian crises and natural disasters.
    •  Australia has a vision for an open, inclusive and resilient Indo-Pacific region.
    • It is a vision for a region that is more integrated rather than divided, where trade and investment flow freely based on agreed rules and treaty commitments, where disputes are resolved through dialogue in accordance with international law, and where a strategic culture that respects the rights of all states, big and small, prevails.
    • It is a vision that Australia share with partners like ASEAN, and partners like India.
    • Whether through joint activities with like-minded countries, or the support of regional and multilateral architecture, Australia is ensuring the region has options and balance.

    Conclusion

    India and Australia’s interests don’t just align, they are inextricably entwined. Expect this relationship to grow and prosper, our cooperation to deepen.

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  • Places in news: Strait of Hormuz

    A US Navy warship fired a warning flare to wave off an Iranian speedboat coming straight at it during a tense encounter in the strategic Strait of Hormuz.

    Why in news?

    • The Strait of Hormuz, a narrow waterway in the Middle East marks the most sensitive transportation choke point for global oil supplies.

    Strait of Hormuz

    • The Strait of Hormuz is a narrow channel, approximately 30 miles wide at the narrowest point, between the Omani Musandam Peninsula and Iran.
    • It connects the Persian Gulf to the Gulf of Oman.
    • The Strait is deep and relatively free of maritime hazards.
    • Its depth is greatest near the Musandam Peninsula and tapers as you move north toward the Iranian shore.

    Why is it important?

    • Oil tankers carrying crude from ports on the Persian Gulf must pass through the strait.
    • Around 21 million barrels of oil a day flowed through it in 2018, equivalent to roughly a third of global seaborne oil trade and about 21% of global petroleum liquids consumption.

     

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  • In Sri Lankan crisis, a window of economic opportunity

    Context

    The commonality between Sri Lanka and the southern parts of India remains a less-emphasised yet significant aspect of India-Sri Lanka relations.

    Crisis in Sri Lanka and relief provided by India

    • The present economic crisis in Sri Lanka has pushed it closer to India for immediate relief.
    • India, as part of its ‘Neighbourhood First’ policy, has extended support to the people of Sri Lanka in the form of aid (close to $3.5 billion) to help secure Sri Lanka’s food, health and energy security by supplying it essential items such as food, medicines, fuel and kerosene.
    • The latest in the series was the signing of an agreement on June 10 between the Government of Sri Lanka and the Export-Import Bank of India for a $55-million short term Line of Credit to facilitate the procurement of urea for paddy crop in the ongoing ‘Yala’ season.
    • On its part, Tamil Nadu decided to provide aid of â‚č123 crore, comprising 40,000 tonnes of rice, 137 types of life-saving drugs and 500 tonnes of milk powder.

    Sri Lanka-India sub-regional context

    • During his second term as Prime Minister, Mr. Wickremesinghe while delivering a lecture in Chennai, in August 2003, called for the development of the south India-Sri Lanka sub-region as a single market.
    • Such a market would provide more opportunities for the economic growth of both countries.
    • In 2016 he highlighted the fact that the five Indian southern States, with a total population of 250 million, had a combined gross state domestic product of nearly $450 billion; with the addition of Sri Lanka’s $80 billion GDP, the sub-region would have a $500 billion economy, having an aggregate population of around 270 million.

    Challenges

    • Possibility of greater economic collaboration: Whether this bonhomie can lead to greater economic collaboration between Sri Lanka and south India, not necessarily Tamil Nadu alone, given the historical baggage, is anybody’s guess.
    • Baggage of history: Some sections of the Sinhalese still hold the view that India had been a threat to Sri Lanka and it can still be a threat to them.
    • The manner in which the Rajapaksa regime unilaterally scrapped in February 2021 a tripartite agreement signed in 2019 with India and Japan for the development of Colombo’s East Container Terminal was a reflection of the historical baggage.
    • This perception can be traced to history when Sri Lanka was invaded by rulers of south India who humbled the Sinhala kings.
    • In the aftermath of the 1983 anti-Tamil pogrom, the support provided by the Indian government to Tamil rebels only strengthened this perception.
    • Modest investment in Sri Lanka’s development: Despite India’s open willingness to take part in the development of Sri Lanka after the civil war, the scale of its involvement has been modest.
    • Incomplete projects due to lack of political will: After the cancellation of the tripartite agreement, India was later provided with projects such as the West Container Terminal, the Trincomalee oil tank farm and a couple of renewable projects, there were several proposals that envisaged India’s participation but did not see the light of day.
    • Another project, a collaboration between NTPC Limited and the Ceylon Electricity Board, was cancelled.
    • Other projects too such as the development of the Kankesanthurai harbour and the expansion of the Palaly airport in Jaffna, both envisaging Indian participation, would have become a reality had there been show of political will from the other side.
    • The project of building a sea bridge and tunnel, connecting Rameshwaram to Talaimannar, remains on paper.

    Way forward

    • Infrastructure development: Even now, there is enormous scope for collaboration between the two countries in the area of infrastructure development.
    • Cross-border energy trade: The economic crisis has revived talk of linking Sri Lanka’s electricity grid with that of India.
    • If this project takes off, the first point of interconnectivity on the Indian side will most likely be in Tamil Nadu.
    • India has cross-border energy trade with Bangladesh, Nepal, Bhutan and Myanmar.
    • Facilitating people-to-people interaction: The apprehension in the minds of sections of the Sinhalese majority about India being a threat can be dispelled only by facilitating greater people-to-people interaction, including pilgrimages by monks and other sections of Sri Lankan society to places of Buddhist importance not only in north India but also in the south (Andhra Pradesh).

    Conclusion

    Much more will have to be done but the opportunity created by the current circumstances should be utilised to bring Indian and Sri Lankan societies closer — a prerequisite to achieving an economic union between Sri Lanka and the southern States of India.

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  • China to host BRICS Virtual Summit

    Chinese President Xi Jinping will host a virtual summit of the leaders of the BRICS countries. PM Modi is expected to join.

    Why in news?

    • China is keen for the grouping to explore expansion and include new developing country members.
    • Under the “BRICS Plus” format, the forthcoming summit is also expected to be attended by leaders of invited emerging countries.

    What is BRICS?

    • BRICS is an acronym for the grouping of the world’s leading emerging economies, namely Brazil, Russia, India, China and South Africa.
    • The BRICS Leaders’ Summit has convened annually. It does not exist in form of an organization, but it is an annual summit between the supreme leaders of five nations.

    Its inception

    • On November 30, 2001, Jim O’Neill, a British economist who was then chairman of Goldman Sachs Asset Management, coined the term ‘BRIC’ to describe the four emerging economies of Brazil, Russia, India, and China.
    • He made a case for BRIC on the basis of econometric analyses projecting that the four economies would individually and collectively occupy far greater economic space and become among the world’s largest economies in the next 50 years or so.

    How it has formed?

    • The grouping was formalized during the first meeting of BRIC Foreign Ministers on the margins of the UNGA in New York in September 2006.
    • The first BRIC Summit took place in 2009 in the Russian Federation and focused on issues such as reform of the global financial architecture.

    Who are the members?

    • South Africa was invited to join BRIC in December 2010, after which the group adopted the acronym BRICS. South Africa subsequently attended the Third BRICS Summit in Sanya, China, in March 2011.
    • The Chairmanship of the forum is rotated annually among the members, in accordance with the acronym B-R-I-C-S.
    • The importance of BRICS is self-evident: It represents 42% of the world’s population, 30% of the land area, 24% of global GDP and 16% of international trade.
    • The five BRICS countries are also members of G-20.

    Also read

    [Burning Issue] BRICS and its relevance in today’s world

    Back2Basics: BRICS Plus

    • The BRICS outreach to Africa began at the last summit hosted by South Africa, in 2013. It has picked up momentum now but African leaders want more.
    • They need big loans from the New Development Bank (NDB) for their infrastructure projects.
    • China introduced the “BRICS Plus” format at the Xiamen summit last year by inviting a few countries from different regions.
    • South Africa emulated it, arranging the attendance of top-level representation of five nations of its choice: Argentina, Jamaica, Turkey, Indonesia and Egypt.
    • The precise role of “BRICS Plus” countries will take time to evolve but an immediate benefit is the immense opportunities it provides for networking among leaders.

     

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