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Subject: International Relations

  • What West Seti Power Project can mean for India-Nepal ties?

    India will be taking over an ambitious hydropower project in Nepal — West Seti — nearly four years after China withdrew from it, ending a six-year engagement between 2012 and 2018.

    What is West Seti Hydel Project?

    • The West Seti Dam is a proposed 750-megawatt (MW) hydroelectric dam on the Seti River in the Far-Western Development Region of Nepal.
    • Particularly, it is a storage scheme designed to generate and export large quantities of electrical energy to India.
    • The project is envisaged to provide Nepal 31.9% electricity free.
    • Besides, locals affected by the project are being given a share of Nepali Rs 10 million plus 30 units of electricity per month free.

    Why in news now?

    • The project was earlier accorded to a Chinese company.
    • But Nepal feared that India won’t buy power from China-executed projects.

    Significance: India -Nepal Power Relations

    • Nepal is rich in power sources with around 6,000 rivers and an estimated potential for 83,000 MW.
    • India has formally approached Nepal on many occasions, seeking preferential rights over Nepali waters should it match offers coming from elsewhere.
    • India is viewed as a feasible power market for Nepal.
    • India has undertaken to harness or expressed intent to harness major rivers in the north.

    Issues in project execution

    • There has been some uncertainty in Nepal over India’s inability to deliver projects on time.
    • An ambitious Mahakali treaty was signed back in 1996, to produce 6,480 MW, but India has still not been able to come out with the Detailed project Report.
    • The Upper Karnali project, for which the multinational GMR signed the contract, has made no headway for years.
    • Major reasons for stalling of these projects was a lack of consensus over power purchase agreement with India.
    • Also, seismic sensitivity of the Himalayan Region is the prime consideration.

    What has helped build faith recently?

    • India under PM Modi has been successful in executing the 900-MW Arun Three Project in eastern Nepal’s Sankhuwa Sabha.
    • After a standoff between Nepal and India led to the economic blockade of 2015, equations changed after Deuba took over last July, replacing Oli.

    Benefits for Nepal

    • Nepal has a massive power shortfall as it generates only around 900 MW against an installed capacity of nearly 2,000 MW.
    • Although it is currently selling 364 MW power to India, it has over the years importing from India.

    Hurdles from Nepal’s internal crisis

    • Nepal’s Constitution has a provision under which any treaty or agreement with another country on natural resources will require Parliament’s ratification by at least a two-thirds majority.
    • That will also mean homework will be required before any hydro project is signed and given for execution.

    Way forward

    • Until India agrees to value Nepal’s water and the existing focus on power is not reviewed, mutual distrust may continue.
    • India must start executing its projects timely.
    • And its success is expected to restore India’s image in Nepal and give it weightage in future considerations for hydropower projects, when competition is bound to be tough.
    • West Seti, therefore, has the potential to be a defining model for Nepal India’s power relations in future.

     

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  • Outcomes of the WTO Ministerial Conference

    Recently, member countries of the World Trade Organization (WTO) wrapped up the Ministerial Conference’s twelfth outing (MC12).

    Key outcomes: “Geneva Package”

    • The conference has secured key agreements on
    1. Relaxing patent regulations to achieve global vaccine equity
    2. Ensuring food security
    3. According subsidies to the fisheries sector
    4. Continuing moratoriums relevant to e-commerce
    • Together they constitute what WTO Director-General is referred to as the “Geneva Package.”
    • India saw some successes at the MC12 with respect to the above mentioned sectors.

    What is the WTO’s Ministerial Conference?

    • The MC is at the very top of WTO’s organisational chart.
    • It meets once every two years and can take decisions on all matters under any multilateral trade agreement.
    • Unlike other organisations, such as the International Monetary Fund or World Bank, WTO does not delegate power to a board of directors or an organisational chief.
    • All decisions at the WTO are made collectively and through consensus among member countries at varied councils and committees.
    • This year’s conference took place in Geneva, Switzerland.

    Major debates at the MC12

    (1) Agriculture

    • India is a significant contributor to the World Food Programme (WFP).
    • India had earlier stated that it had never imposed export restrictions for procurement under the programme.
    • It put forth that a blanket exemption could constrain its work in ensuring food security back home.
    • In such a situation, it would have to keep its WFP commitments irrespective of its domestic needs.
    • Negotiators could not reach agreements on issues such as permissible public stockholding threshold for domestic food security, domestic support to agriculture, cotton, and market access.

    (2) Fisheries

    • India successfully managed to carve out an agreement on ELIMINATING subsidies to those engaged in illegal, unreported and unregulated fishing.
    • The only exception for continuing subsidies for overfished stock is when they are deemed essential to rebuild them to a biologically sustainable level.
    • Overfishing refers to exploiting fishes at a pace faster than they could replenish themselves — currently standing at 34% as per the UN Food and Agriculture Organization (FAO).
    • Declining fish stocks threaten to worsen poverty and endanger communities that rely on aquatic creatures for their livelihood and food security.
    • Further, the agreements hold that there would be no limitation on subsidies by developing or least-developed countries for fishing within their exclusive economic zones (EEZ).

    (3) Patent relaxations

    • Member countries agreed on authorising the use of a patent for producing COVID-19 vaccines by a member country, without the consent of the rights holder.
    • Further, it asks member countries to waive requirements, including export restrictions, set forth by WTO regulations to supply domestic markets and member countries with any number of vaccines.
    • The agreement, however, comes too little, too late for economically poorer countries.

     

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  • What is the I2U2 Initiative?

    The US administration has named the new grouping as “I2U2” — “I” for India and Israel and “U” for the US and UAE. This was earlier referred as West Asian Quad.

    What is the news?

    • US President Joe Biden will host a virtual summit with PM Modi, Israel PM Naftali Bennett and UAE President Mohammed bin Zayed Al Nahyan during his visit to West Asia from July 13 to 16.

    I2U2 Initiative

    • Following the Abraham Accords between Israel and the UAE, I2U2 was founded in October 2021 to address marine security, infrastructure, and transportation challenges in the region.
    • It was known as the ‘International Forum for Economic Cooperation’at the time.
    • At that time, UAE had referred to the new grouping as the ‘West Asian Quad’.

    What makes this deal outstanding?

    • UAE forming sharing desk with Israel is no easy deal. Arab sentiments against Israel and their proposition for Anti-Semitism are well known.

    Significance of the initiative

    • I2U2 seeks to empower the partners and encourages them to collaborate more closely, resulting in a more stable region.
    • India is seen as a large consumer market as well as a large producer of high-tech and highly sought-after items in the United States.
    • This has led India to enhance its relationship with Israel without jeopardising its ties with the UAE and other Arab states.

    Back2Basics: Abraham Accords

    • The Israel–UAE normalization agreement is officially called the Abraham Accords Peace Agreement.
    • It was initially agreed to in a joint statement by the United States, Israel and the United Arab Emirates (UAE) on August 13, 2020.
    • The UAE thus became the third Arab country, after Egypt in 1979 and Jordan in 1994, to agree to formally normalize its relationship with Israel as well as the first Persian Gulf country to do so.
    • Concurrently, Israel agreed to suspend plans for annexing parts of the West Bank. The agreement normalized what had long been informal but robust foreign relations between the two countries.

     

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  • India-Iran Relations

    Context

    Iran’s Foreign Minister Hossein Amir-Abdollahian’s three-day visit to India, last week, was the first ministerial-level visit from Iran since Ebrahim Raisi assumed the Iranian presidency in August last year.

    Chabahar Port - A Rethink is Needed | Vivekananda International Foundation

    Background

    • Bilateral relations between India and Iran span millennia marked by meaningful interactions.
    • Both countries shared borders until 1947 and share several common features in their language, culture and traditions.
    • The diplomatic links were established on 15th March 1950, when both countries signed a Treaty of Friendship and Perpetual Peace.
    • However, Iran’s joining of Baghdad pact in 1954 and the Cold War politics prevented both countries from having closer relations until the 1990s.
    • Islamic Revolution of 1979, hostage of US diplomats, Iran-Iraq War and Tehran’s support for Hezbollah and Hamas among others resulted in a range of political and economic sanctions, leading to Iran being isolated at a global level
    • In the 1990s, both countries’ interests converged around energy, Central Asia and security, mostly around the Pakistan-Afghan region.
    • This resulted in the signing of ‘The Delhi Declaration’, which provided the vision of the countries’ defence and strategic partnership and “Tehran Declaration”, which set forth the areas of possible cooperation

    India-Iran relations: A shared vision for equitable, pluralistic and co-operative international order

    • The “Tehran Declaration” signed during former Prime Minister Atal Bihari Vajpayee’s visit to Iran affirmed the shared vision of the two countries for an “equitable, pluralistic and co-operative international order”.
    • It recognised then Iranian President Mohammad Khatami’s vision of a “dialogue among civilisations” as a paradigm of international relations based on principles of tolerance, pluralism and respect for diversity.
    • Advancing the standing in global order: Two decades later, as India strengthens new partnerships within its regional vision centred on the Indo-Pacific, both countries remain driven by the goals of advancing their standing at the regional and global level.
    • Both are keen to project themselves as independent strategic actors determined to play a role in shaping a new multipolar order in their shared Eurasian neighbourhood and also at the global level.

    Why does India need Iran?

    • Energy security: Conventionally, for energy security
    • Iran is amongst India’s top oil suppliers
    • Strategic importance: Since the 1990s, Iran’s importance has become ‘strategic’
    • Security reasons: Iran’s cooperation is critical for India’s security given that
    • Pak supports terrorism in India
    • Influence in Afghanistan: India’s influence in Afghanistan is marginal.
    • Countering Pakistan: India needs Iran to moderate Pak’s influence in West Asia
    • Iran is a leader in the Muslim world.
    • Access to Afghanistan and Central Asia

    Significance of Iran for India

    • Geopolitical logic in relations: The sanctions imposed by the US on Iran after it withdrew from the nuclear deal in 2018 may have virtually destroyed India-Iran trade, especially India’s energy imports from Iran, but the geopolitical logic underpinning relations between the two countries remains firm.
    • Land bridge to Central Asia and Eurasia: Iran has sought to leverage its crossroad geographical location straddling the Persian Gulf and the Caspian Sea, India has come to see it as its land bridge to Central Asia and Eurasia.
    • INSTC: Despite the difficulties posed by decades of American sanctions, Iran has, along with India, Russia and a few other countries in the Eurasian region, continued to work on the multi-modal International North-South Transport Corridor (INSTC).
    • During Raisi’s visit to Moscow, the two sides had pledged to redouble their efforts to build the railway line between Iran’s Caspian port of Rasht and Astara on the Iran-Azerbaijan border.
    • Alternative Caspian Sea Route: The activation of an alternative Caspian Sea route speaks volumes about the positive outlook of Iran, India and Russia on this corridor despite a variety of geopolitical challenges.
    • Iran’s Chabahar port, where India is developing two berths that it will lease for commercial operations for 10 years, is also a story of perseverance in the ties between the two countries.

    Irritants in Indo-Iran ties

    • India’s relations with Saudi Arabia, US and Israel:  Growing Saudi-India-US-Israel relations have irked Iran.
    • In retaliation, Iran, for the first time, has linked the plight of Muslims in Gaza, Yemen, and Bahrain, with those in Kashmir
    • Iran-Pak-China ties: Warming Iran-Pak-China ties have annoyed India.
    • Sluggish Chabahar port development: Slow Chabahar port development has annoyed Iran.
    • China-Iran strategic partnership:
      • An economic and security partnership deal between Iran and China was recently made public, creating a global alarm, especially for India and the US.
      • The foundation for this deal was laid during Chinese President Xi Jinping’s visit to Iran in 2016
      • The draft agreement involves Chinese investments worth $400 billion into the Iranian economy over 25 years.
      • Of this, $280 billion will be allocated for the oil and gas sector and the remaining funding will be for other core sectors like banking, telecommunications, ports and railways.
      • In return, China would get a steady supply of Iranian oil at a heavily discounted rate during the same period.
      • This deal creates a win-win situation for both countries.
      • It lifts Iran’s sanction-hit economy and helps China set a firm foothold in the Middle East.

    US sanctions:

    • Iran’s aim to develop nuclear weapons has come under strong criticism from Trump Administration since the beginning.
    • Thus, the US has withdrawn from the Iran nuclear deal in 2018 after it was signed in 2015 and imposed unilateral sanctions on Iran.
    • The US’ sanctions and aggressive policies have created a situation of economic and geostrategic uncertainty.
    • Indian investors are wary of having businesses in Iran for the fear of the US.
    • Also, India deviated from the policy of not abiding by unilateral sanctions by ceasing to purchase Iranian oil.
    • Due to this, Iran did not back India’s bid to mobilise international support against Beijing’s aggression in the Ladakh.

    Other issues:

    • Iran is against India’s decision to abrogate Article 370 and 35A.
    • It has called on India and Pakistan to show restraint and prevent the killing of innocent Kashmiris, revealing possible close ties between Pakistan and Iran.
    • Iran also voiced against “extremist Hindus and their parties” during the 2020 Delhi riots.
    • Apart from these issues, Iran also sidelined India’s ONGC from exploration rights at its Farzad B Gas field, stating that it will engage the company at a later date.

    Way forward

    • As India is treading a fine line in balancing relations with the US, China and Iran while striving to augment its political influence in West Asia, embracing one country over the other is not an option for India.
    • Therefore, a multilateral foreign policy is a way forward.
    • India must retain its involvement in the Chabahar port development because of the geostrategic significance.
    • In the immediate term, India should improve its multi-alignment credentials to absorb investments into the port projects from the public and private sector, boost maritime cooperation among littoral countries to enhance the transit of goods, and foster regional partnership for the Chabahar port development.
    • Based on the mutual geostrategic and energy interests, India could collaborate with Japan under the Asia-Africa Growth Corridor.
    • Japan’s participation would enhance the multilateral characteristics of the transit hub in the region, unlike the China-owned Gwadar port. This will further enhance multilateral investments to solidify regional economic partnerships that enable the sustainability of the port.
    • Also, India needs to evolve a better strategy on Iran beyond waiting to see how the US may react, beyond having to issue a clarification in response to Iran’s sudden provocations and beyond allowing voids of partnerships that China may fill.
    • In order to do so, India must create a new alliance of countries having similar geostrategic interests, which are also facing issues with US’ unrealistic and aggressive foreign policy strategy and China’s expansionistic policies.

    Conclusion

    While the revival of the nuclear deal could give a fillip to India’s economic ties with Iran, India’s interests in continental Asia will be served well by heeding to the calls for developing a long-term roadmap for bilateral relations.

     

  • Back in news: India- ASEAN Relations

    The Foreign Minister of Myanmar is unlikely to be part of the 24th ASEAN-India Ministerial summit.

    What is the news?

    • Myanmar’s absence is the souring ASEAN-Myanmar.
    • This is after the coup that overthrew the Aung San Suu Kyi government in Myanmar.
    • This shows India’s concern over the junta in Myanmar which has refused to enter into a negotiation

    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.

    India-ASEAN Relations: A Backgrounder

    • Look-East Policy in 1992 gave an upthrust to India -ASEAN relation and helped India in capitalizing its historical, cultural and civilizational linkages with the region.
    • India entered into a Free Trade Agreement (FTA) in goods with the region in 2003 which has facilitated the bilateral trade which now stands at approximately USD 76 Billion.
    • Further, the launch of Act East Policy in 2014 has added a new vigour to India-ASEAN relations.

    Significance of ASEAN to India

    • ASEAN’s centrality in India’s foreign policy – A cohesive, responsive, and prosperous ASEAN is central to India’s Indo-Pacific Vision and India’s Act East Policy and contributes to Security and Growth for All in the Region (SAGAR).
    • Economic – ASEAN is the one of the largest market in the world comparative to the EU and North American markets.
      • It’s also the 4th most popular investment destination globally.
    • Investment opportunities for Indian businesses – Cost of production is lower in Laos, Cambodia, and Myanmar, which means that Indian firms can gain significantly by investing in these countries.
    • Countering China – Cooperation between India and ASEAN is crucial to counter China’s power projection in the region. Both have territorial and border issues with China, disputes over the South China Islands and waters for ASEAN and over land boundaries for India.
    • Integration with regional and global supply chains – Increasing engagement with ASEAN is pivotal to facilitate India’s integration with regional and global supply chain movements.
    • North-East development – Connectivity projects with the ASEAN nations keeping Northeast India at the centre can ensure the economic growth of the land-locked north-eastern states.
      • Collaboration with the ASEAN nations is necessary to counter insurgency in the Northeast, combat terrorism, etc.
    • Maritime security – The Indian Ocean carries 90% of India’s trade and its energy sources. Presence of choke points such as the Malacca strait makes the South-East Asian region significant for countering traditional and non-traditional maritime threats like piracy and terrorism.
    • Indian Diaspora – About 9-8% of the population in Malaysia and Singapore is of Indian origin, in Myanmar-4% and Indonesia about 0.5%.

    Areas of Cooperation

    • Economic Cooperation – ASEAN is India’s 4th largest trading partner.
      • India signed FTA in goods in 2009 and an FTA in services and investments in 2014 with ASEAN.
      • India has a Comprehensive Economic Cooperation Agreement (CECA) with various countries of the ASEAN region which has resulted in concessional trade and a rise in investments.
    • Political Cooperation – ASEAN-India Centre (AIC) was established to undertake policy research, advocacy and networking activities with organizations and think-tanks in India and ASEAN.
      • Delhi Dialogue – Annual Track 1.5 event for discussing politico-security and economic issues between ASEAN and India.
    • Financial Assistance – India provides financial assistance to the ASEAN nations through various mechanism like ASEAN-India Cooperation Fund, ASEAN-India S&T Development Fund and ASEAN-India Green Fund.
    • Connectivity – India has been undertaking several connectivity projects like India-Myanmar-Thailand Trilateral (IMT) Highway and the Kaladan Multimodal Project.
      • India is also trying to establish a Maritime Transportation Agreementwith ASEAN and also Plans for a Railway link between New Delhi in India to Hanoi in Vietnam.
    • Socio-Cultural Cooperation – Programmes to boost People-to-People Interaction with ASEAN are organized, such as inviting ASEAN students to India, Special Training Course for ASEAN diplomats, Exchange of Parliamentarians, etc.
    • Defence Cooperation – Joint Naval and Military exercises are conducted between India and most ASEAN countries.
      • Vietnam has traditionally been a close friend on defense issues, Singapore is also an equally important partner.
    • Maritime Cooperation – adopted Delhi Declaration and decided to identify Cooperation in the Maritime Domain as the key area of cooperation under the ASEAN-India strategic partnership.
      • India is developing its maiden deep-sea port in a strategically located Sabang port in Indonesia.

    REGIONAL COMPREHENSIVE ECONOMIC PARTNERSHIP (RCEP) AGREEMENT

    • RCEP is a Free Trade Agreement (FTA) that has been signed between 15 countries including the 10 ASEAN members, China, Japan, South Korea, Australia, and New Zealand.
      • RCEP was first proposed in 2011 with an aim to create a consolidated market for the ASEAN countries and their trade partners.
      • RCEP now forms the world’s largest trade bloc, covering over 2.2 billion people and accounting for 30% of the world’s economy.
    • Though India was a part of the RCEP’s negotiations, it dropped out in November 2019, citing significant outstanding issues that remain unresolved.

    Reasons behind India pulling out of RCEP

    • Trade imbalance with RCEP members – India’s trade deficit with RCEP countries has almost doubled in the last five-six years.
    • Chinese Angle – From a geopolitical perspective, RCEP is China-led or is intended to expand China’s influence in Asia. India has already signed FTA with all the countries of RCEP except China.
    • Signing of RCEP can lead to cheaper products from China flooding the Indian market.
    • Lack of adequate protection for domestic industries – India’s proposals for strict Rules of Origin (to prevent routing of products from non-RCEP countries) and an Auto-trigger mechanism to impose tariffs when imports crossed a certain threshold which were not accepted.
    • Lack of Service component – Most developed RCEP countries where India can export services, have been unwilling to negotiate wide-ranging disciplines in services that can create new market access for trade in services in this region.
    • Concerns by local industries – A large number of sectors including dairy, agriculture, steel, automobiles, etc had expressed serious apprehensions on RCEP citing dominance of cheap foreign goods would dampen its business.
    • India’s FTA experience – India’s FTAs has generally led to greater imports than exports, giving rise to high trade deficits with FTA partners like South Korea, Japan, and ASEAN.

    Possible Implications of India not joining RCEP

    Protectionist image – Withdrawal from RCEP along with other recent measures like call for self-reliance under Atmanirbhar Abhiyan, etc can be perceived as India taking a protectionist stance in terms of trade policy.

    Lost opportunity for India’s export sector – RCEP was envisaged to strengthen Asian supply chains, bring in investments and boost the member countries’ competitiveness in global markets.

    Effect on bilateral ties with RCEP countries – There are concerns that the decision will hamper India’s bilateral trade with RCEP member countries as they would be inclined to bolster trade within the bloc.

    Lost opportunity in securing a position in the post COVID world: RCEP is expected to help member countries emerge from the economic devastation caused by the pandemic through access to regional supply chains.

    Arguments for reviewing India’s decision

    • Global Economic Stagnation due to Covid-19 pandemic – RCEP can serve as a bulwark in containing the free fall of the global economy and re-energising economic activity.
      • RCEP presents a unique opportunity to support India’s economic recovery, inclusive development, and job creation even as it helps strengthen regional supply chains.
    • Economic Realism – India should deter seeing RCEP only from the Chinese perspective.
      • India can draw inspiration from Japan & Australia, as they chose to bury their geopolitical differences with China to prioritise what they collectively see as a mutually beneficial trading compact.
    • Strategic Need – RCEP’s membership is a prerequisite to having a say in shaping RCEP’s rules, which is necessary to safeguard India’s interests and the interests of several countries that are too small to stand up to the largest member, China.
    • As the summary of the final agreement shows, the pact does cover and attempt to address some issues that India had flagged, including rules of origin, trade in services, movement of persons. Therefore, this makes the case of India to review its decision and look RCEP through the lens of economic realism.

    Challenges in India-ASEAN Relations

    • China factor – India’s effort in this regard is meagre when compared to China’s dominance in the region
      • China’s assertive military, political and economic rise, as well as the South China Sea disputes have divided ASEAN without unanimity amongst them.
    • Economic challenges – India has an unfavourable balance of trade with the ASEAN nations.
    • RCEP deal – India walking out of RCEP can become a sticking point between India and ASEAN, since India’s domestic market was considered a key element in the RCEP negotiations.
      • India has not signed RCEP for various reasons like non-transparency in RCEP, RCEP’s non-accounting of India’s service sector relaxations, etc.
      • By not signing the RCEP India also lose access to new market opportunities created in East Asia.
    • Slow development in Bilateral relations – Many bilateral deals with these nations are yet to be finalised, leading to the halting of various aspects of diplomatic ties.
    • Delayed projects – Though India has committed to many connectivity projects, they have not been completed at the rate on par with China
      • China, on the other hand, through its BRI, is able to gain the trust of these countries.

    India’s pulling out of the RCEP deal shows the limitations of the ties with the ASEAN nations. Maintaining cordial ties, both bilaterally and multilaterally with these nations is essential for both India’s economic and security interests.

    South-East Asian nations are looking at India to take on a greater role for the economic integration of the region and for ensuring an open and inclusive Indo-Pacific. Many of the members of the ASEAN perceive India as a much-needed counterbalance to China.

    Way Forward

    • An alternative economic corridor based multimodal connectivity such as Mekong-India Economic Corridor may be promoted, which will connect Indian coast with unexplored Southeast Asian coast and beyond.
      • Strengthening land, air, and sea linkages will enhance people-to-people flows, as well as boost business, investment, and tourism.
      • With China having three times more commercial flights than India to Southeast Asia, improving air connectivity between India and ASEAN countries should also be high on the agenda.
    • India has proposed setting up of an ASEAN-India Network of Universities (AINU) to enhance our educational ties.
    • India can become the military partner after the Atma Nirbar Bharat, Make in India projects are successfully implemented.
      • No ASEAN country has close military ties with China as they never trusted China for military alliance.
    • Concept of QUAD must be expanded to include the ASEAN countries and become a QUAD+ arrangement.
      • Vietnam and Indonesia have expressed a positive note on QUAD in the region.
    • Digital technologies – Given the reluctance of ASEAN states to take help from Chinese giants in the field (due to concerns regarding China’s ability to own data), Indian IT sector may take some advantage.
    • Strengthening cultural connect – Tourism can be further encouraged between India and the ASEAN with some creative branding by the two sides.

    Failure of South Asian Association for Regional Cooperation (SAARC) has made India look outside South Asia towards countries of Southeast Asia for economic and political cooperation.

    The ASEAN region has become strategically important for India due to its growing importance in the world politics. And for India to be a regional power as it claims to be, continuing to enhance its relations with ASEAN in all spheres must be a priority.

  • [pib] BIMSTEC Technology Transfer Facility (TTF)

    The Union Cabinet chaired by the PM has approved a Memorandum of Association (MoA) by India for the establishment of the BIMSTEC Technology Transfer Facility (TTF).

    What is BIMSTEC?

    • The BIMSTEC formed in 1997 is an international organisation of seven South Asian and Southeast Asian nations, housing 1.73 billion people and having a combined gross domestic product of $3.8 trillion (2021).
    • The BIMSTEC member states – Bangladesh, Bhutan, India, Myanmar, Nepal, Sri Lanka, and Thailand – are among the countries dependent on the Bay of Bengal.
    • Leadership is rotated in alphabetical order of country names. The permanent secretariat is in Dhaka, Bangladesh.
    • A BIMSTEC free trade agreement is under negotiation (c. 2018), also referred to as the mini SAARC.

    What is BIMSTEC TTF?

    • The agreement was signed by the BIMSTEC member countries at the 5th BIMSTEC Summit held at Colombo, Sri Lanka on 30th March, 2022.
    • The main objectives of the BIMSTEC TTF are to coordinate, facilitate and strengthen cooperation in technology transfer among the BIMSTEC Member States.
    • It aims to promote the transfer of technologies, sharing of experiences and capacity building.
    • The TTF shall have a Governing Board and the overall control of activities of the TTF shall be vested in the Governing Board.
    • The Governing Board shall consist of one nominee from each Member State.

    Expected outcomes

    The expected outcomes of the BIMSTEC TTF are:

    • Databank of technologies available in BIMSTEC Countries,
    • Repository of information on good practices in the areas of technology transfer management, standards, accreditation, metrology, testing and calibration facilities,
    • Capacity building, sharing of experiences and good practices in development, and
    • Transfer and use of technologies among BIMSTEC countries.

     

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  • China wants a larger BRICS to challenge the existing international order

    Context

    A virtual meeting of BRICS+ foreign ministers was held on May 20 in which the ministers of Brazil, Russia, India, China, and South Africa (BRICS) were joined by representatives from Argentina, Egypt, Indonesia, Kazakhstan, Nigeria, the UAE, Saudi Arabia, Senegal, and Thailand.

    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 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.

    What are the factors leading to the expansion of BRICS?

    • Ukraine war and hardened Western positions: The disruption in the international order, heightened by Russia’s invasion of Ukraine and the hardening of Western positions, are leading to the making of competitive plurilateral fora.
    • Russia and China have decided that this is an opportune time to expand BRICS and challenge the domain of the G7 by including members from the G20. 
    • China is challenging Western influence over countries and wants to use BRICS to that end.
    • China is taking the lead and setting the agenda for BRICS expansion.
    • The New Development Bank associated with BRICS, expanded membership in 2021, admitting Bangladesh, the UAE, Uruguay and Egypt
    •  This shows the Chinese determination for an expansion process on its watch.

    Criteria and the process of inducting new members into BRICS and challenges

    • Prioritise G20 members: The first likely criteria will be to prioritise G20 members.
    • Among the recent guests of the BRICS+ virtual meeting, Argentina, Indonesia and Saudi Arabia would qualify for this category.
    • From among Mexico, Indonesia, Korea, Turkey and Australia (MIKTA), only Indonesia was invited.
    • Thus, China, backed by Russia, is creating cleavages to choose its friends from among the G20 and beyond
    • Emerging economy: Another criteria which could come up would be an emerging economy status and adherence to BRICS objectives.
    • The push for setting criteria is actually a battle to choose partners who are more amenable to the individual members of the current BRICs.
    • Russia and China would prefer to have Indonesia, Kazakhstan, Saudi Arabia, UAE and Argentina excluding Egypt since it is a close ally of the US.
    • Brazil would have a say on including Argentina – the two countries have a longstanding rivalry in Latin America.
    • If Argentina is excluded, it may unravel the G20 membership criteria for inclusion in the BRICS.
    • South Africa has views on Nigeria and, particularly, Egypt. Being a member of G20 gives it leadership in Africa.
    • Being in the BRICS gave it heft as the African representative.
    • If Nigeria and Egypt are admitted, South Africa would no more be the African representative in the BRICS.
    • New Development Bank membership: The UAE and Egypt could utilise their membership of NDB as a qualifier.
    • There could be an easier consensus on Indonesia because India is unlikely to oppose it as its relationship has been improving politically, even if not economically.
    • On Kazakhstan, the decision would be that of Russia and China and how they deal with the other Central Asian countries.
    • China may also back Iran and Malaysia but then Indonesia may feel a loss of uniqueness.
    • A consensus with Brazil and South Africa for members from their regions will be critical.

    Way forward for India

    • Membership of the UAE and Saudi Arabia: The UAE and Saudi Arabia are two countries with whom India has rapidly enhanced its engagement and are good contributors to development.
    • Having them in the BRICS could be of advantage to India.
    • Both countries have a longstanding relationship with the US, but seek to diversify and would not be averse to joining BRICS.
    • Avoid BRICS expansion on Chinese terms: China, backed by Russia, is hastening the process of expansion of BRICS as part of its strategic challenge to the international order and to collect middle powers around them.
    • India needs to ensure that expansion is not on Chinese terms and that the countries admitted are equally receptive to India.
    • Bilateral engagement with them should see this perception built up.
    • Consultations on criteria and members must be strong.
    • Leverage ISBA: IBSA may act as a phalanx within BRICS to prevent China from running away with the expansion agenda over the views of other members.

    Conclusion

    Since Russia is simply with Chinese priorities, it’s time for the IBSA trilateral of democracies within BRICS to assert itself.

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    Back2Basics: What is the fundamental difference between ISBA, BRICS and BASIC?

    • IBSA is between three democracies – India, Brazil and South Africa wanting to engage in deeper economic aspects and discuss security related issues.
    •  BASIC includes Brazil, South Africa, India and China.
    • These three expressions of multilateralism steer clear from articulating the softer aspects of foreign policy like refugee rights or human rights invoking the ‘sovereignty’ clause with domestic political sanctity paramount.
    • BRICS comprises Brazil, Russia, India, China and South Africa.
    • Russia is a democracy with its political spectrum anchoring around an individual.
    • China is a socialist country, successful by implementing economic reforms that do not agree with the basic tenets of socialism/communism.

  • Lessons from the Ukraine crisis price shock

    Context

    The Russia-Ukraine conflict, now more than three months old, will cause major, long-term shifts in the global energy and commodity trade.

    Factors responsible for high prices

    • Ukraine war: Western sanctions on Russia and efforts of European nations to diversify their energy supplies are already causing market distortions and high prices.
    • Crude oil prices are at their highest level since 2014; the price of LNG is at its highest ever, fertiliser and food are up and markets for several other commodities such as nickel have been disrupted.
    • Expensive commodities are already causing distress in India’s neighbourhood, for example, in Sri Lanka and Pakistan.
    • Insufficient investment: Insufficient investment in oil and gas production in preceding years resulted in high prices, and shortages were being felt.
    • A number of European investors, such as Norway’s sovereign wealth fund, announced they would no longer invest in traditional fuels — oil, gas, coal.
    • Natural gas is used as a feedstock for fertiliser.
    • An energy shock is then inevitably followed by a food price shock.

    Future trends

    1] Strained EU-Russia relations will distort prices

    • In the immediate term, the EU is trying to source its raw materials — most critically oil and natural gas, but also fertiliser, agricultural goods and metals — from non-Russian sources.
    • This will cause distortions and price spikes for those commodities in the global market, as can already be seen in the natural gas market, up 300 per cent in the last year.

    2] Sanctions are unlikely to achieve the desired political outcome

    • The US and its allies are quick to impose sanctions — and these are rarely withdrawn, if ever.
    • Iran has been under US sanctions since 1979, and the same with Venezuela for over a decade.
    • In both cases, sanctions have failed to achieve the desired political outcome.
    • As Russia is much better placed than either of those two countries to weather sanctions, the restrictions are likely to remain for a long while.

    3] Emerging world unwilling to align with West on sanctions

    • The high price of energy and the resulting inflation shows why much of the emerging world is unwilling and unable to align with the West on the current sanctions.
    • Russia is 11 per cent of the global landmass and among the world’s top five producers and exporters of oil, gas, fertiliser and other critical commodities like nickel.
    • It is too big to be replaced as a supplier.
    • In emerging economies, it can fan public anger and political unrest, as was seen in Tunisia and other Arab countries from 2010 on.

    4] Larger emerging economies will disregard sanction

    • Larger emerging economies such as China, India and Brazil will disregard sanctions on their key economic interests, particularly food, fertilisers and energy.
    • Specifically for India, its dependence on these essentials is unlikely to reduce meaningfully over the next 15-20 years.

    Way forward for India

    • Collaborate with other economies: In the immediate future, the India should collaborate with other similar economies to ensure that Russia doesn’t get locked out of global commodity markets.
    • Work on insulating the supply chains: For the long term, it must work on insulating its supply chains from global political crises.

    Conclusion

    India needs to brace for the price shock emanating from the distortion caused by the shift in the energy policies of Europe. At the same time, India needs to collaborate with other similar economies to ensure that Russia doesn’t get locked out of global commodity markets.

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  • India is expanding its nuclear arsenal: SIPRI

    India had 160 nuclear warheads as on January 2022 and it appears to be expanding its nuclear arsenal, said the Stockholm International Peace Research Institute (SIPRI), a defense think tank.

    What is the news?

    • India’s nuclear stockpile increased from 156 in January 2021 to 160 in January 2022.

    Nukes in thy neighbour

    • Pakistan’s nuclear stockpile has remained at 165, SIPRI claimed.
    • China is in the middle of a substantial expansion of its nuclear weapon arsenal, which satellite images indicate includes the construction of over 300 new missile silos.
    • China had 350 nuclear warheads in January 2021 and 2022.

    Why do countries proliferate nuclear weapons?

    • Proliferation models centered on security concerns or dilemmas dominate nuclear literature.
    • Nuclear weapons provide an overwhelmingly destructive force that increases a state’s relative power in comparison to its neighbors.
    • It provides a powerful tool in an anarchic system where superpowers dominate other nation-states sovereignty.
    • Hence weaponizing helps establish a deterrence to prevent war.

    What is the Deterrence Theory?

    • Deterrence is widely defined as any use of threats (implicit or explicit) or limited force intended to dissuade an actor from taking an action (i.e. maintain the status quo).
    • The topic gained increased prominence as a military strategy during the Cold War with regard to the use of nuclear weapons.
    • It is related to but distinct from the concept of mutual assured destruction, which models the preventative nature of full-scale nuclear attack that would devastate both parties in a nuclear war.
    • The central problem of deterrence revolves around how to credibly threaten military action or nuclear punishment on the adversary despite its costs to the deterrer.

    Issues in Nuclear Disarmament

    • Notion of Nuclear ‘Haves’ and ‘Have-Nots’: The proponents of disarmaments are themselves nuclear armed countries thus creating a nuclear monopoly.
    • Concept of Peaceful Nuclear Explosion (PNE): conducted for non-military purposes such as mining.

    India’s commitment for de-nuclearization

    India has always batted for a universal commitment and an agreed global and non-discriminatory multilateral framework.

    • It has outlined a working paper on Nuclear Disarmament submitted to the UN General Assembly in 2006.
    • India participated in the Nuclear Security Summit process and has regularly participated in the International Conferences on Nuclear Security organised by the International Atomic Energy Agency (IAEA).
    • India is also a member of the Nuclear Security Contact Group (but has signed off the Nuclear Non-Proliferation Treaty (NPT)).
    • India has expressed its readiness to support the commencement of negotiations on a Fissile Material Cut-off Treaty (FMCT).
    • India couldn’t join the Comprehensive Nuclear-Test-Ban Treaty (CTBT) due to several concerns raised by India.
    • India has piloted an annual UNGA Resolution on “Measures to Prevent Terrorists from Acquiring Weapons of Mass Destruction” since 2002, which is adopted by consensus.

    Back2Basics: India’s Nuclear Doctrine

    • This was first articulated by Prime Minister Atal Bihari Vajpayee on May 27, 1998, days after India had undertaken a series of nuclear tests in Pokhran.
    • It outlined various principles:
    1. Building and maintaining a Credible Minimum Deterrence
    2. Posture of ‘No First Use’– nuclear weapons will only be used in retaliation against a nuclear attack on Indian Territory or on Indian forces anywhere
    3. Massive Nuclear retaliation to a first strike will be designed to inflict unacceptable damage
    4. Non-use against non-nuclear states
    5. In response to biological or chemical weapons, India will retain the option of retaliating with nuclear weapons

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  • FATF and Pakistan’s position on its ‘Grey List’

    Pakistan which continues to face an economic crunch from the Financial Action Task Force (FATF), is hoping for some respite in the form of its removal from the FATF’s ‘grey list’.

    What is the FATF?

    • The FATF is an international watchdog for financial crimes such as money laundering and terror financing.
    • It was established at the G7 Summit of 1989 in Paris to address loopholes in the global financial system after member countries raised concerns about growing money laundering activities.
    • In the aftermath of the 9/11 terror attack on the US, FATF also added terror financing as a main focus area.
    • This was later broadened to include restricting the funding of weapons of mass destruction.
    • The FATF currently has 39 members.

    Working of FATF

    • The decision-making body of the FATF, known as its plenary, meets thrice a year.
    • Its meetings are attended by 206 countries of the global network.
    • It includes members, and observer organisations, such as the World Bank, some offices of the UN, and regional development banks.

    Functions of FATF

    • The FATF sets standards or recommendations for countries to achieve in order to plug the holes in their financial systems and make them less vulnerable to illegal financial activities.
    • It conducts regular peer-reviewed evaluations called Mutual Evaluations (ME) of countries to check their performance on standards prescribed by it.
    • The reviews are carried out by FATF and FATF-Style Regional Bodies (FSRBs), which then release Mutual Evaluation Reports (MERs).
    • For the countries that don’t perform well on certain standards, time-bound action plans are drawn up.
    • Recommendations for countries range from assessing risks of crimes to setting up legislative, investigative and judicial mechanisms to pursue cases of money laundering and terror funding.

    What are the Black List and the Grey List?

    • The words ‘grey’ and ‘black’ list do not exist in the official FATF lexicon.
    • They however designate countries that need to work on complying with FATF directives and those who are non-compliant.
    1. 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).
    2. 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:

    (1) In the 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

    (2) In the black list:

    • High-risk jurisdictions subject to call for action
    • Countries have considerable deficiencies in their AML/CFT (anti-money laundering and counter terrorist financing) regimens
    • Enhanced due diligence
    • Members are told to apply counter-measures such as sanctions on the listed countries

    Note: Currently, North Korea and Iran are on the black list.

    Pakistan and FATF

    • Pakistan, which continues to remain on the “grey list” of FATF, had earlier been given the deadline till the June to ensure compliance with the 27-point action plan against terror funding networks.
    • It has been under the FATF’s scanner since June 2018, when it was put on the Grey List for terror financing and money laundering risks.
    • FATF and its partners such as the Asia Pacific Group (APG) are reviewing Pakistan’s processes, systems, and weaknesses on the basis of a standard matrix for anti-money laundering (AML) and combating the financing of terrorism (CFT) regime.

    Why is Pakistan on the grey list?

    • Pakistan has found itself on the grey list frequently since 2008, for weaknesses in fighting terror financing and money laundering.
    • It never addressed concerns on the front of terror financing investigations and prosecutions targeting senior leaders and commanders of UN-designated terrorist groups.
    • However, now steps had been taken in this direction such as the sentencing of terror outfit chief Hafiz Saeed, prosecution of Masood Azhar and seizure of their properties.
    • India meanwhile, a member of FATF, suspects the efficacy and permanence of Pakistani actions.

    Steps taken by Pakistan

    • Pakistan is currently banking on its potential exclusion from the grey list to help improve the status of tough negotiations with the International Monetary Fund to get bailout money.
    • Pakistan is now making a high-level political commitment to the FATF and APG to address its strategic AML/CFT deficiencies.

     

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