Taiwan is a part of the geographical area of operation of India’s Look East Policy (LEP). Although India does not recognize Taiwan as a sovereign state, its functional and people-to- people contacts with Taiwan are explainable under the LEP. Besides, India’s economic activities are on the rise in the vicinity of Taiwan. Though commercial in nature, India’s presence in the South China Sea, along with improvement in its bilateral relations with Asia-Pacific countries especially in the realm of politics and defense cooperation is of strategic significance. In the overall strategic context of the region, increasing functional ties with Taiwan without undermining the support to the one China Policy would be a stiff challenge requiring clarity of vision and skilled diplomacy. Thus, it is imperative for India to have a much better understanding of Taiwan, and the Asia-Pacific region.
In the author’s view, functional ties/cooperation and people-to-people relations could make a separate category without attaching any diplomatic, political or strategic meanings. The main attributes of this category can be listed as below:
Engagement with Taiwan would lead India to have a more informed Taiwan policy. Its unique geographical location and political situation would also con- tribute to India’s understanding of the Asia-Pacific region. Taiwan is situated in the middle of the disputed waters of the South and the East China Seas. Considering the continued threat from the People Republic of China (PRC) to its national security, Taiwan not only has a natural interest in the modernization of the People’s Liberation Army (PLA), China-Japan tensions, and the dynamic of Sino-US relations, but also a natural expertise on them. Taiwan and China have historical and cultural affinity, but political and strategic distance. Strategically, Taiwan is close to the US and figures in Japan’s security considerations. It is obliquely mentioned in the US-Japan Defense Guidelines, 1997. But the US and Japan’s support for PRC’s One China Policy has set a limit on their relations with Taiwan. Thus, Taiwan is not fully open to either of the major regional players. This situation leaves it marginalized and dissatisfied with every major power in the region and makes it a neutral interpreter of the region’s politics. India could tap into this consultative potential of Taiwan.
Functional cooperation with Taiwan is even more valuable. Taiwan is a thriving and industrialized economy that is closely integrated with the international economy. It is amongst the world’s leading exporting and importing countries. It is the leading producer and manufacturer in the world in foundries, IC packages, blank optical discs, mask ROMs, mobility scooters/powered wheelchairs and chlorella. If the products made by Taiwanese companies outside Taiwan are also taken into account, the list of products commanding a high share in the world is even longer. Notebooks, Tablets, LCD monitors, IC packages, motherboards (System & Pure MB), WLAN CPEs, cable modems, and digital blood-pressure monitors are a few examples. Apart from electronics, Taiwan’s agro industries, particularly food-processing, maintain international standards. It also holds high rank in the international rating by agencies like the Institute for Management Development (IMD), Business Environment Risk Intelligence (BERI), the World Economic Forum (WEF), and the Heritage Foundation. Its business environment, research and development, and innovation are recognized worldwide. (Data relating to all these is available in the tables at the end of this monograph). Further, Taiwan’s education system ranks quite high. For instance, fourteen Taiwanese universities in 30 disciplines are on the list-compiled by the QS World University of the UK of the top 200 universities in the world.1 India could become an important destination for Taiwan’s new Go South policy for diversifying Taiwan’s trade and investment basket. India could also become an alternative to China for many Taiwanese companies in view of rising wages and costs in that country.
In fact, a regulated flow of skilled labour from India can help overcome the problem of high costs in Taiwan itself. Taiwanese FDI can contribute to India’s manufacturing, infrastructure and other sectors. India and Taiwan make a case for mutual benefit by being substantial complementary economies, as India’s computer software industry complements Taiwan’s computer hardware capability. India’s demography, with a more than 300 million strong middle class, offers an economic opportunity for Taiwanese entrepreneurs. India is also one of the leading suppliers of natural resources. It can be a gateway to South Asia, and even West Asia, for Taiwanese companies. Further, like Taiwan, India too has a reasonably impressive record of achievements in science and technology. For instance, India has gained inter- national recognition in the automobile, electronics and space science sectors. In education, India has internationally recognised institutes- like the Indian Institutes of Technology (IITs) and Indian Institutes of Management (IIMs). Besides, there is sufficient space for cooperation between the two countries in the spheres of culture and tourism. This monograph deals with Taiwanas it exists in the world today.
It does not deal with the legal question, whether Taiwan is an independent state or a Chinese province. Despite its ambiguous diplomatic status, Taiwan remains an important factor in the East Asian security scenario. In spite of the Cross-Strait relations in their best phase, the solution to the Cross-Strait conundrum remains elusive. Taiwan and the People’s Republic of China (PRC) have signed 19 agreements related to functional areas since 2008. However, a formal political dialogue or a peace agreement that the PRC is pushing hard for, is not in sight. Taiwan does not appear inclined to yield on the question of sovereignty. Any formula that would downgrade Taiwan’s international standing is unacceptable to both Taiwan’s political class and the common Taiwanese.
Contrary to Chinese expectations, the prospects of economic cooperation and integration have not made the Taiwanese amenable to Chinese claims over Taiwan. Similarly, on the other side of the Taiwan Strait, Taiwan’s unification with China continues to be a powerful reference point for Chinese nationalism. China still has its missiles deployed against Taiwan. Moreover, it is yet to renounce the use of force as an option to resolve the Cross-Strait problem. This reinforces Taiwan’s perception of China as a threat to its security. Finally, the US, the security guarantor of Taiwan under the Taiwan Relations Act (TRA) 1979, continues to maintain diplomatic ambiguity over the Cross-Strait issue. Therefore, any conflagration in the volatile waters of Taiwan Strait could result in a US- China face off.
Taiwan is also a part of problematic territorial claims in the East China Sea and the South China Sea. Its claims overlap with those of China and are ignored by the other concerned parties. Taiwanese claims mostly address domestic constituency. It appears con- tent with the practical arrangements for resource-sharing. A good example is its fishery pact with Japan in 2013. However, since these claims stoke popular sentiment in Taiwan, it is difficult for the Taiwanese government to ignore the public opinion on these issues. Therefore, overlooking Taiwan in the regional security map would bring pres- sure on the US alliance in the region, of which Taiwan is a part. Taiwan success- fully drove this point during the stand- offs between Japan and China in the East China Sea over the Senkaku/Diao Yu islands in 2012-13 by its diplomatic manoeuvrings. In fact, the Japan- Taiwan fishery pact has effectively made the dispute tripartite, and implies that Taiwan is a player in the dispute. In May 2013, the government of Taiwan conveyed that diplomatic recognition or not, it is capable of taking care of its citizens when it flexed its economic muscle against the Philippines over the killing of a Taiwanese farmer-fisherman by the Philippines coastguard.
Finally, accelerated interaction and cooperation in functional areas between India and Taiwan would, in the long-term, also contribute to increased mutual awareness. The Cross-Strait unification would not be the only eventuality in the dialectics of Cross-Strait relations. Whether Taiwan would eventually unify with China, or the status quo would persist, or some other form of Cross-Strait relations would emerge, is difficult to predict. To study and engage Taiwan is important irrespective of the scenarios, because each scenario will shape the regional security dynamics in its own way.
– Prashant Kumar Singh
Finally, the much anticipated elections for the National Assembly along with four Provincial Assemblies got over last week. While the results are clear in terms of who won and how many seats, it would take few weeks to identify the major trends in 2013 elections. This commentary focuses on eight major trends/out comes that could be identified, as a preliminary analysis.
First and foremost, the election process and the polling, was by and large free and fair, especially in a South Asian, and in particular Pakistani context. Though there was violence, it did not totally disrupt the election process. And more importantly, there are no reasons to believe that either the military or the intelligence agencies tried to change the outcome of the results. Invariably, every political party, perhaps except the ANP (Awami National Party) had a level playing field in terms of freeness and fairness of the election process and polling.
Zardari deserves a big applause for not only his deft handling of internal political issues and external issues in such a manner that there was no dissolution of the elected assemblies, but also for conducting elections as per the schedule. And perhaps it deserves special applause for the smooth transition, through the appointment of caretaker governments both at the national and provincial levels. It is unfortunate, that the PPP lost badly, despite its success in completing the term, amongst threats from the TTP, failing economy and huge foreign policy and security challenges.
Second major outcome that could be identified is the rationalization of all national political parties in Pakistan. Though it is generally being voiced both inside and outside the region, that Pakistan has voted Nawaz Sharif to power, an analysis of the seats that the PML-N has won, clearly projects that the seats for the National Assembly has been primarily from the constituencies in Punjab. Of the 123 seats that the PML-N has won, except for a few seats from KP, the rest had come primarily from Punjab. For the PPP, almost all its seats that it has won for the National Assembly have come from Sindh. Similarly, for the PTI of Imran Khan, majority of the seats it has won for the National Assembly has come from Khyber Pakutunkhwa.
Third major outcome, which could be easily identified, is the failure of religious political parties to make any significant impact. Though the last two general elections witnessed a decent growth in their contribution to the National Assembly, 2013 elections should have been a disappointment for the religious political parties. While the JUI (Fazlur Rahman) and Jamaat-e- Islami (JI) could manage to win ten and three seats respectively, rest of the religious parties could not capture a single seat. Perhaps, this election has cremat- ed whatever was left of the MMA.
Those who have been following the performance of the religious political parties in Pakistan would agree that in any free and fair elections, the Right did not have much of a success. They may have a strong street power, but it never materialised into seats, if the elections remained free and fair.
If the religious political parties did not perform well in the elections, nor did the liberal and secular parties, such as the PPP, ANP and MQM, which could be identified as the fourth major outcome of this election. For the PPP, it was almost a complete disaster. From being the ruling party for the last five years, all that the PPP could manage was 31 seats, that too only from Sindh. The implications of this election for the PPP should be a larger discussion; with no Benazir Bhutto and with a corrupt image for Zardari, the PPP will need nothing short of a miracle to bounce back, first within Sindh and second at the national level. Bilawal Bhutto is too far physically and emotionally from Pakistan, and especially from the PPP supporters.
The ANP, PPP’s partner performed worse. The party has been completely wiped off and decimated both at the national level, and in the KP province, which is its stronghold. Undoubtedly, the ANP was the primary target of the TTP and took most of the violence perpetrated by the Taliban before and during the elections. As a result, when compared to the other political parties, the ANP could not campaign that effectively. Though the TTP led violence could be considered as a reason for the ANP’s bad performance, the fact is, it could not project a coherent road map or win the support of people from its performance. All it could manage was a single seat for the National Assembly!
Though the MQM could manage 13 seats, mainly from Sindh, more data is needed to find out in which regions it has performed well and whether it has been able to retain the vote bank. PML- Q, the other liberal party could manage only two seats.
Fifth major outcome, when compared to above liberal political parties, is the substantial performance of Imran Khan and his PTI. His party has won 26 seats, few short of the PPP, but way ahead of the rest of other established political parties. Though he has secured most of seats from KP, he did manage to win a few from other provinces as well.
However, for someone who has been touted as the next Prime Minister, and an alternative for the PML-N in Punjab, Imran Khan and his PTI was a bubble that had burst. All he and his party could manage is a collation government in KP province.
Despite the above drawback, undoubtedly the PTI was a success story; along with the PML-N, both the political parties could be seen as right of the center in terms of ideology. Both are not exactly liberal political parties, and that could be the sixth major outcome of this election.
Seventh major outcome could be the relative stability in provincial assemblies. The biggest province Punjab will be ruled by the PML-N, with much ease, and Sindh by the PPP. There seems to be an understanding already in KP in letting Imran Khan’s PTI to form the government. Balochistan may remain the only province in terms of political stability within the Assembly.
Finally, the biggest outcome of the election was the general participation and the rejection of TTP’s threats. The violence has neither affected the outcome, nor the process; the people took part with enthusiasm and in big numbers. Perhaps, this could be a new beginning that Pakistan has been looking forward. Much will depend on how the process is taken forward by Nawaz Sharif and the provinces.
Courtesy : Institute of Peace and Conflict Studies (http://www.ipcs.org)
China and economic stagnation in Europe and America is making the West increasingly uncomfortable. While China is not taking over the world militarily, it seems to be steadily taking it over commercially. In just the past week, Chinese companies and investors have sought to buy two iconic Western companies, Smith field Foods, the American pork producer, and Club Med, the French resort company.
Europeans and Americans tend to fret over Beijing’s assertiveness in the South China Sea, its territorial disputes with Japan, and cyber attacks on Western firms, but all of this is much less important than a phenomenon that is less visible but more disturbing: the aggressive worldwide push of Chinese state capitalism. By buying companies, exploiting natural resources, building infrastructure and giving loans all over the world, China is pursuing a soft but unstoppable form of economic domination. Beijing’s essentially unlimited financial resources allow the country to be a game-changing force in both the developed and developing world, one that threatens to obliterate the competitive edge of Western firms, kill jobs in Europe and America and blunt criticism of human rights abuses in China.
Ultimately, thanks to the deposits of over a billion Chinese savers, China Inc. has been able to acquire strategic assets worldwide. This is possible because those deposits are financially repressed savers receive negative returns because of interest rates below the inflation rate and strict capital controls that prevent savers from investing their money in more profitable investments abroad. Consequently, the Chinese government now controls oil and gas pipelines from Turkmenistan to China and from South Sudan to the Red Sea.
Another pipeline, from the Indian Ocean to the Chinese city of Kunming, running through Myanmar, is scheduled to be completed soon, and yet another, from Siberia to northern China, has already been built. China has also invested heavily in building infrastructure, undertaking huge hydroelectric projects like the Merowe Dam on the Nile in Sudan — the biggest Chinese engineering project in Africa and Ecuador’s $2.3 billion Coca Codo Sinclair Dam. And China is currently involved in the building of more than 200 other dams across the planet, according to International Rivers, a nonprofit environmental organization.
China has become the world’s leading exporter; it also surpassed the United States as the world’s biggest trading nation in 2012. In the span of just a few years, China has become the leading trading partner of countries like Australia, Brazil and Chile as it seeks resources like iron ore, soybeans and copper. Lower tariffs and China’s booming economy explain this exponential growth. By buying mainly natural resources and food, China is ensuring that two of the country’s economic engines urbanization and the export sector are securely supplied with the needed resources.
In Europe and North America, China’s arrival on the scene has been more recent but the figures clearly show a growing trend: annual investment from China to the European Union grew from less than $1 billion annually before 2008 to more than $10 billion in the past two years. And in the United States, investment surged from less than $1 billion in 2008 to a record high of $6.7 billion in 2012, according to the Rhodium Group, an economic research firm. Last year, Europe was the destination for 33 percent of China’s foreign direct investment.
Government support, through hidden subsidies and cheap financing, gives Chinese state owned firms a major advantage over competitors. Since 2008, the West’s economic downturn has allowed them to gain broad access to Western markets to hunt for technology, know how and deals that weren’t previously available to them. Western assets that weren’t on sale in the past now are, and Chinese investments have provided desperately needed liquidity.
This trend will only increase in the future, as China’s foreign direct investment skyrockets in the coming years. It is projected to reach as much as $1 trillion to $2 trillion by 2020, according to the Rhodium Group. This means that Chinese state-owned companies that enjoy a monopolistic position at home can now pursue ambitious international expansions and compete with global corporate giants. The unfairness of this situation is clearest in the steel and solar- panel industries, where China has gone from a net importer to the world’s largest producer and exporter in only a few years. It has been able to flood the market with products well below market price and consequently destroy industries and employment in the West and elsewhere.
THIS is the real threat to the United States and other countries. However, most Western governments don’t seem to be addressing China’s state driven expansionism as an immediate priority. On the contrary, European governments dealing with their own economic crises see China as a country that can help, either by buying sovereign debt or going ahead with investments in their countries that will create jobs.
The Chinese state-owned company Cosco currently manages the main cargo terminal in the biggest Greek port, Piraeus, near Athens a 35-year concession deal. And China’s sovereign wealth fund, C.I.C., took a 10 percent stake in London’s Heathrow Airport in 2012, as well as a nearly 9 percent stake in the British utility company Thames Water. The state-owned firms Three Gorges Corporation and State Grid are the main foreign investors in Portugal’s power-generation sector, and C.I.C. also bought a 7 percent stake in France’s Eutelsat Communications.
In the Greek port the Chinese have been able to triple capacity, amid local unions’ criticism of worsening labor conditions. It’s too early to measure China’s impact in the other investments, but the fact that Chinese companies are able to invest in sectors that are closed or restricted for European firms in China says a lot about how minimal Europe’s leverage with China is.
Take Germany, which accounts for nearly half of the European Union’s exports to China. It’s highly unlikely that Berlin would make unfair competition the cornerstone of its China policy. Moreover, the lack of leverage and leadership in Brussels means that the union is unable to take firm action to force China into adopting measures that would level the playing field or guarantee reciprocity in its domestic market. The only exception is the United States, which seems to be addressing the issue by pushing forward the Trans Pacific Partnership, a regional trade association that is seen by critics in Beijing and elsewhere as an American led policy to contain China. The club is thought to be restricted to countries that meet high American standards on issues like free competition, labor and local regulations would allow the arrival of thousands of low wage Chinese workers.
The Arctic territory didn’t have too many alternatives. No other country is in a position to become Greenland’s strategic partner for its future development, given the business risks involved in the Arctic region and the scale of the investment needed in a territory bigger than Mexico but without a single highway. An American oil company couldn’t have handled the task alone. The Chinese state capitalist system, by contrast, allows multiple state owned companies to work together, making it possible for the China National Petroleum Corporation, for instance, to extract oil while China Railway builds basic infrastructure.
Greenland’s leaders accepted China’s terms because they likely believed these costly projects might never go ahead if the Chinese didn’t get involved; only China has the money, the demand, the experience and the political will to proceed. Moreover, there are not enough skilled workers in Greenland for such projects, so the Greenlandic government made an exception to the law, allowing Chinese laborers to earn less than minimum wage figuring that local residents would benefit from new infrastructure and royalties.
China’s deep pockets, as well as its extensive labor force and unlimited demand for natural resources, made all the difference, and accordingly Greenland was prepared to pass tailor made legislation to meet Chinese needs. Even Denmark, which holds authority in Greenland in areas like migration and foreign policy, decided not to interfere.
IT is even happening in progressive bastions like Canada. President Obama’s refusal thus far to approve the Keystone pipeline project has made Prime Minister Stephen Harper’s conservative government turn to China to secure an export market for Canadian crude oil reserves. The Calgary based oil industry has lobbied Mr. Harper to adopt a new diversification strategy that includes the construction of a controversial pipeline to western British Columbia, despite strong opposition from environmental groups, the First Nations aboriginal communities and the public. In the meantime, Canada also signed a Foreign Investment Promotion and Protection Agreement with China, which gives remarkably generous investment protection to the Chinese.
With China in the center of debates over FIPA and the west coast pipeline, Canada’s government then approved the takeover of the Canadian energy giant Nexen by the Chinese state owned oil firm Cnooc. The $15.1 billion transaction was China’s largest foreign takeover.
Closer economic ties have had political side effects; the Harper administration now seems much more cautious in criticizing China’s human rights record. Given that Canada was until very recently one of the fiercest voices on China’s handling of dissidents, this is not only a remarkable 180-degree turn, but also a clear indication of how China’s economic influence can push the political agenda to the sidelines, even in the West.
In Australia, Chinese accumulated investment inflows at the end of 2012 surpassed $50 billion. The trend is striking: Chinese direct investment in Australia in 2012 increased 21 percent from 2011 levels to reach $11.4 billion, making it an important player in Australia’s mining industry. Australia’s trade portfolio remains highly diversified, but the Chinese share is growing rapidly.
China has also become the biggest investor in Germany (in terms of the number of deals), surpassing the United States. Chinese companies are looking for companies that, like Putzmeister, have a technological edge and have become world leaders in niche markets. Those takeovers also allow them to absorb Western know how on branding, marketing, distribution and customer relations. Others are more opportunistic. Faced with recession, struggling European firms like Volvo quickly welcomed Chinese partners who were ready to inject capital and take full control.
The loans that Beijing is giving worldwide are even more significant, in dollar terms, than direct foreign investment. These loans include $40 billion to Venezuela and more than $8 billion to Turkmenistan in recent years. China’s policy banks (China Development Bank and Export Import Bank of China) are the key institutions supporting China’s “Go global” strategy, as they provide billions of dollars in loans to foreign countries to acquire Chinese goods; finance Chinese-built infrastructure; and start projects in the extractive and other industries.
This is clearest in countries where the West claims to link its aid to human rights and good business practices. Chinese loans have been crucial in countries like Angola that have faced threats of a cutoff in financing from Western creditors, the World Bank and the International Monetary Fund. Ecuador, Venezuela, Turkmenistan, Sudan and Iran have all faced such difficulties, and China has stepped in without political or ethical strings attached. Chinese statistics reveal little about these loans, but a study by The Financial Times showed that, between 2009 and 2010, China was the world’s largest lender, doling out $110 billion, more than the World Bank.
It is important to remember what is really behind China’s global economic expansion: the state. China may be moving in the right direction on a number of issues, but when Chinese state owned companies go abroad and seek to play by rules that emanate from an authoritarian regime, there is grave danger that Western countries will, out of economic need, end up playing by Beijing’s rules.
As China becomes a global player and a fierce competitor in American and European markets, its political system and state capitalist ideology pose a threat. It is therefore essential that Western governments stick to what has been the core of Western prosperity: the rule of law, political freedom and fair competition.
They must not think shortsightedly. Giving up on our commitment to human rights, or being compliant in the face of rapacious state capitalism, will hurt Western countries in the long term. It is China that needs to adapt to the world, not the other way
Courtesy New York Times
Army confirms Chinese buildup along India border
LADAKH: The Indian army has long voiced concern over the depth and pace of China's military modernisation, especially in its infrastructure bordering India. On the Line of Actual Control at Demchok in South-East Ladakh, signs of that modernisation on the China side were visible.
Lt General Ravi Dastane, Army Commander, Leh said, "We are watching it closely, it's a capability they are building, it also has a military implication." Colonel SK Sheoran said, "Before 2008 they were 35km behind Demchok, now a platoon strong is deployed in the Zorawar Hill."
In contrast, infrastructure in Ladakh is non-existent. All military and civil vehicles move along dirt trails similar to the mule tracks of the 1962 war. Commander, Fuk-Che Anil Chaudhary said, "Whatever roads are there, gravel surface or natural surface are adequate for moving of military vehicles however better developed roads would add impetus to our own preparation."
Add to that the constant surveillance from Chinese observation posts. New roads are now being laid behind hills that block China's view but progress is slow. In many cases environmental clearances have delayed road building. Air support is hampered by the lack of airfields. The army admits that advanced landing grounds in Fuk-Che and further north in Chushul are too close to the Line of Actual Control to be of use in a conflict. The Air force is trying to get the NYOMA airfield operational but it will take time.
The army does not expect conflict with China in the near term. But power struggles in Beijing within a leadership in transition could have echoes in distant Demchok.
China and India at War: Study
Contemplates Conflict Between Asian Giants
There are plenty of reasons why China and India won't go to war. The two Asian giants hope to reach $100 billion in annual bilateral trade by 2015. Peace and stability are watchwords for both nations' rise on the world stage. Yet tensions between the neighbors seem inescapable: they face each other across a heavily militarized nearly 4,000km-long border and are increasingly competing against each other in a scramble for natural resources around the world. Indian fears over Chinese projects along the Indian Ocean rim were matched recently by Beijing's ire over growing Indian interests in the South China Sea, a body of water China controversially claims as its exclusive territorial sphere of influence. Despite the sense of optimism and ambition that drives these two states, which comprise between them nearly a third of humanity, the legacy of the brief 1962 Sino-Indian war (a humiliating blow for India) still smolders nearly five decades later.
And it's alive on the pages of a new policy report issued by the Institute for Defence Studies and Analyses in New Delhi, an independent think tank that is affiliated with India's Ministry of Defense. "A Consideration of Sino-Indian Conflict" is hardly a hawkish tract-it advocates "war avoidance" - but, by spelling out a few concrete scenarios of how conflict may look between the two countries, it reveals the palpable lack of trust on the part of strategists both in New Delhi and Beijing. The report applauds long term Indian efforts underway to beef up defenses along the Chinese border, but warns that Beijing may still take action:
In future, India could be subject to China's hegemonic attention. Since India would be better prepared by then, China may instead wish to set India back now by a preventive war. This means current day preparedness is as essential as preparation for the future. A [defeat] now will have as severe political costs, internally and externally, as it had back in 1962; for, as then, India is yet again contemplating a global role.
While a lot of recent media attention has focused on the likelihood of Sino-Indian clashes at sea, the IDSA report keeps its scope trained along the traditional, glacial Himalayan land boundary, referred to in wonkish parlance as the LAC, the Line of Actual Control.
Since the 1962 war, China and India have yet to formally resolve longstanding disputes over vast stretches of territory along this line. Those disputes have resurfaced noticeably in recent years, with China making unprecedented noises, much to the alarm of New Delhi, over its historical claims to the entirety of the northeastern Indian state of Arunachal Pradesh - what the Chinese deem "Southern Tibet." The Chinese even rebuked Indian Prime Minister Manmohan Singh for having the audacity of visiting the Indian state during local elections in 2009.
Not surprisingly, it's in this remote corner of the world that many suspect a war could kick-off, particularly around the historic Tibetan monastery town of Tawang. India has reinforced its position in Arunachal with more boots on the ground, new missile defenses and some of the Indian air force's best strike craft, new Russian-made Su-30 fighters. After decades of focusing its army west against perennial threat Pakistan, India is tacitly realigning its military east to face the long-term challenge of China.
The report speculates that China could make a targeted territorial grab, "for example, a bid to take Tawang." Further west along the LAC, another flashpoint lies in Kashmir. China controls a piece of largely uninhabited territory known as Aksai Chin that it captured during the 1962 war. Indian press frequently publish alarmist stories about Chinese incursions from Aksai Chin and elsewhere, playing up the scale of Chinese investment in strategic infrastructure on its side of the border in stark contrast to the seeming lethargy of Indian planners. Part of what fuels the anxiety in New Delhi, as the report notes, is the threat of coordinated action between China and Pakistan – an alliance built largely out of years of mutual antipathy toward India. In one mooted scenario, Pakistan, either with its own forces or terrorist, insurgent proxies, would "make diversionary moves" across the blood-stained Siachen glacier or Kargil, site of the last Indo-Pakistani war in 1999, while a Chinese offensive strikes further east along the border.
Of course, such table-top board game maneuvers have little purchase in present geo-politics. Direct, provocative action suits no player in the region, particularly when there's the specter of American power - a curious absence in the IDSA report - hovering on the side-lines.
Intriguingly, the report seems to dismiss the notion that China and India would clash in what others would consider obvious hotspots for rivalry; it says the landlocked Himalayan kingdom of Bhutan would likely be treated as a neutral "Switzerland", while Nepal, a country of 40 million that entertains both Beijing and New Delhi's patronage, is more or less assured that neither of its big neighbors would risk violating its sovereignty in the event of war.
Moreover, the IDSA seems to rule out either side encouraging or deploying proxies in more clandestine struggles against the other. The restive border regions on both sides of the LAC are home to resentful minority populations and more than a few insurgent factions. India and China - unlike Pakistan - have little precedent in abet-ting militant groups and strategists on both sides would be wary of fanning flames of rebellion that no one can put out.
Yet what seems to stoke Sino-Indian military tensions - and grim prophecies of conflict - are precisely these feelings of vulnerability. The uncertainties posed by both countries' astonishing economic growth, the lack of clear communication and trust between Beijing and New Delhi and the strong nationalism underlying both Indian and Chinese public opinion could unsettle the uneasy status quo that now exists. Managing all this is a task for wooly-heads in New Delhi and Beijing. But don't be surprised if more reports like this one come out, drawing lines on the battlefield.
Courtesy Ishaan Tharoor via TIME
US President Barack Obama's budget aimed at rebuilding the country's economy, emerging 'from the worst recession in generations', looks at India as 'one of the most important and promising emerging markets in the world'. Obama's proposed $3.7 trillion spending plan for 2011 hopes to 'win the future by out-innovating, out-educating, and out-build- ing our global competitors and creating the jobs and industries of tomorrow', according to the White House.
'India is one of the most important and promising emerging markets in the world, and represents a tremendous opportunity for US firms to expand their output of goods and services,' the budget proposal presented Monday said. 'On the margins of the president's trip to India in November, trade transactions were announced or showcased exceeding $14.9 billion in total value with $9.5 billion in US export content and that would support an estimated 53,670 jobs,' the White House noted.
These cross border collaborations, both public and private, un- derpin the expanding US-India strategic partnership, contributing to economic growth and development in both countries, it said. Notable examples include the sale of commercial and military air- craft, gas and steam turbines and precision measurements instrumentation. The budget proposals said the emergence of a global market place that includes the growing economies of China, India and other developing counties creates an opportunity for America to export US goods and services to new customers.
'With 95 percent of the world's customers as well as the globe's fastest growing markets beyond our borders, we must compete ag- gressively to spur economic growth and job creation,' the budget said.Obama's third annual budget says that it can reduce project- ed deficits by $1.1 trillion over the next decade, enough to sta- bilise the nation's fiscal health and buy time to address its longer- term problems, the New York Times said citing a senior adminis- tration official.
Two-thirds of the reductions that Obama claims are from cuts in spending, including in many domestic programmes that he sup- ports.Among the reductions for just the next fiscal year, 2012, which starts Oct 1, are more than $1 billion from airport grants and nearly $1 billion from grants to states for water treatment plants and similar projects. Public health and forestry pro- grammes would also be cut. With Republicans in charge of the House, Obama's budget is more a statement of his priorities and philosophy than an actual template for federal spending and tax policy, the Times noted.
(Arun Kumar can be contacted at arun.kumar@ians.in)
US President Barack Obama's budget aimed at rebuilding the country's economy, emerging 'from the worst recession in generations', looks at India as 'one of the most important and promising emerging markets in the world'. Obama's proposed $3.7 trillion spending plan for 2011 hopes to 'win the future by out-innovating, out-educating, and outbuilding our global competitors and creating the jobs and industries of tomorrow', according to the White House.
'India is one of the most important and promising emerging markets in the world, and represents a tremendous opportunity for US firms to expand their output of goods and services,' the budget proposal presented Monday said. 'On the margins of the president's trip to India in November, trade transactions were announced or showcased exceeding $14.9 billion in total value with $9.5 billion in US export content and that would support an estimated 53,670 jobs,' the White House noted.
These cross border collaborations, both public and private, underpin the expanding US-India strategic partnership, contributing to economic growth and development in both countries, it said. Notable examples include the sale of commercial and military air- craft, gas and steam turbines and precision measurements instrumentation. The budget proposals said the emergence of a global market place that includes the growing economies of China, India and other developing counties creates an opportunity for America to export US goods and services to new customers.
'With 95 percent of the world's customers as well as the globe's fastest growing markets beyond our borders, we must compete aggressively to spur economic growth and job creation,' the budget said. Obama's third annual budget says that it can reduce projected deficits by $1.1 trillion over the next decade, enough to stabilise the nation's fiscal health and buy time to address its longer- term problems, the New York Times said citing a senior administration official.
Two-thirds of the reductions that Obama claims are from cuts in spending, including in many domestic programmes that he supports. Among the reductions for just the next fiscal year, 2012 which starts Oct 1, are more than $1 billion from airport grants and nearly $1 billion from grants to states for water treatment plants and similar projects. Public health and forestry programmes would also be cut. With Republicans in charge of the House, Obama's budget is more a statement of his priorities and philosophy than an actual template for federal spending and tax policy, the Times noted.
(Arun Kumar can be contacted at arun.kumar@ians.in)
Osama bin Laden, the world's most wanted terrorist, was killed early today by US special forces in a helicopter-borne operation at Abbottabad near the Pakistani capital, climaxing a over 10-year long massive manhunt. The special forces personnel swooped down on the compound where bin Laden was holed up guarded by his ultra-loyal Arab bodyguards in a pre-dawn operation killing the dreaded terrorist, US officials said. The news of the slaying of the world's most prominent terror mastermind was broken to the world by US President Barack Obama, who made the announcement live from White House."Bin Laden, 54, is dead and his body is in US custody," President Obama said at half-past 11 mid-night US time after initial story had been broken by news channels.
Though it was dark, crowds massed outside White House chanted 'USA, USA'. Besides the al-Qaeda chief who carried a bounty of USD 25 million, two couriers one of whom was his son and the other a woman, reportedly used as a human shield, were killed in the operation, unnamed American officials were quoted as saying by ABC News. First reports said that it was through these couriers that bin Laden had been traced. Other women and children present in the compound were not harmed, according to Pakistani officials.
An American helicopter was destroyed by US Navy Seals after it was damaged and crashed during the operation that targeted a large compound in Bilal Town area near Abbottabad, 120 km from Islamabad. There was no word from the Pakistani government or military on the operation. Two US helicopters swept into the compound at 1:30 am and 2 am and 20 to 25 Navy Seals under the command of the Joint Special Operations Command stormed the compound in cooperation with the CIA and engaged bin Laden and his men in a firefight, US officials told ABC News.
Bin Laden fired his weapon during the fight, the US officials said. The Americans took bin Laden's body into custody after the firefight and confirmed his identity. One of the US helicopters was damaged during the operation and the troops decided to destroy it themselves with explosives.
Several Pakistani news channels beamed grainy footage of a burning helicopter on the empty lawn of the compound. They also beamed footage of the compound surrounded by Pakistani troops this morning.
(OECEL News Services)
WASHINGTON: American officials who have assessed the likely Iranian responses to any attack by Israel on its nuclear program believe that Iran would retaliate by launching missiles on Israel and terrorist-style attacks on United States civilian and military personnel overseas.
While a missile retaliation against Israel would be virtually certain, according to these assessments, Iran would also be likely to try to calibrate its response against American targets so as not to give the United States a ration- ale for taking military action that could permanently cripple Tehran’s nuclear program. “The Iranians have been pretty good masters of escalation control,” said Gen. James E. Cartwright, now retired, who as the top officer at Strategic Command and as vice chair- man of the Joint Chiefs of Staff participated in war games involving both deterrence and retaliation on potential adversaries like Iran.
The Iranian targets, General Cartwright and other American analysts believe, would include petroleum infra- structure in the Persian Gulf, and American troops in Afghanistan, where Iran has been accused of shipping explosives to local insurgent forces.
Both American and Israeli officials who discussed current thinking on the potential ramifications of an Israeli attack believe that the last thing Iran would want is a full-scale war on its territory. Their analysis, however, also includes the broad caveat that it is impossible to know the internal thinking of the senior leadership in Tehran, and is informed by the awareness that even the most detailed war games cannot predict how nations and their leaders will react in the heat of conflict. Yet such assessments are not just intellectual exercises. Any conclusions on how the Iranians will react to an attack will help determine whether the Israelis launch a strike – and what the American position will be if they do.
While evidence suggests that Iran continues to make progress toward a nuclear weapons program, American intelligence officials believe that there is no hard evidence that Iran has decided to build a nuclear bomb. But the possibility that Israel will launch a preemptive strike has become a focus of American policy makers and is expected to be a primary topic when Prime Minister Benjamin Netanyahu of Israel meets with President Obama at the White House on Monday.
In November, Israel’s defense minister, Ehud Barak, said any Iranian retaliation for an Israeli attack would be “bearable,” and his government’s estimate that Iran is engaging in a bluff has been a key element in the heightened expectations that Israel is considering a strike. But Iran’s highly compartmentalized security services, analysts caution, may operate in semi-rogue fashion, fol- lowing goals that seem irrational to planners in Washington. American experts, for example, are still puzzled by a suspected Iranian plot last year to assassinate the Saudi ambassador in Washington.
“Once military strikes and counter strikes begin, you are on the tiger’s back,” said Ray Takeyh, a former Obama administration national security official who is now at the Council on Foreign Relations. “And when on the tiger’s back, you cannot always pick the place to dismount.” If Israel did attack, officials said, Iran would be foolhardy, even suicidal, to invite an overpowering retaliation by directly attacking United States military targets by, for example, unleashing its missiles at American bases on the territory of Persian Gulf allies. “The balance the Iranians will try to strike is doing damage that is sufficiently significant, but just short of what it would take for America to invade,” said General Cartwright, now at the Center for Strategic and International Studies.
A former Israeli official said the best way to think about retaliation against Israel was through a formula he called “1991 plus 2006 plus Buenos Aires times 3 or 5.” The reference was to three instances in the last two decades when Israel came under attack: the Scud missiles sent by Saddam Hussein into Israel in 1991 during the first gulf war; the 3,000 rockets fired at Israel by Hezbollah during their 2006 war; and the attacks on the Israeli Embassy and a Jewish center in Argentina in the early 1990s. Those attacks each killed 100 to 200 people, wounded scores more and caused several billion dollars of property damage. Hundreds of thou- sands of Israelis in the north had to be evacuated from their homes to bomb shelters or further south during the 2006 war.
But there is a broad Israeli assessment that Iran’s response to an attack would be limited. “If Iran is struck surgically, it will react – no doubt,” said the former Israeli official, echoing Mr. Barak’s comments last year. “But that reaction will be calculated and in proportion to its capabilities. Iran will not set the Middle East on fire.”
“Is 40 missiles on Tel Aviv nice?” the official asked, summing up the Israeli calculus. “No. But it’s better than a nuclear Iran.”
By contrast, administration, military and intelligence officials say Iran would most likely choose anonymous, indirect attacks against nations it views as supporting Israeli policy, in the hope of offering Tehran at least public deniability. Iran also might try to block, even temporarily, the Strait of Hormuz to further unsettle oil markets.
An increase in car bombs set off against civilian targets in world capitals would also be possible. And Iran would almost certainly smuggle high powered explosives across its border into Afghanistan, where they could be plant- ed along roadways and set off by surrogate forces to kill and maim American and NATO troops much as it did in Iraq during the peak of violence there. But Iran’s primary goal would be quickly rebuilding – and probably accelerating its nuclear program, and thus, according to these assessments, it would be likely to try to avoid inviting a punishing second wave of attacks by the United States.
Vali Nasr, a professor of international politics at the Fletcher School of Law and Diplomacy at Tufts University, said Iran would “have to retaliate visibly against Israel to protect its image at home and in the region.” Along a second line of reprisals, Iran also “would try and keep the United States busy by escalating tensions in Lebanon, Syria, Egypt, Iraq and Afghanistan,” he said.
In 2009, the Brookings Institution held a simulation to assess Day 2 of an Israeli attack on Iran, casting former government officials, diplomats and regional experts in the roles of American, Israeli and Iranian officials. Karim Sadjadpour, of the Carnegie Endowment for International Peace, played Iran’s supreme leader, Ayatollah Ali Khamenei. The faux Iranian leader- ship had to “calibrate their response with great precision,” he said. “If they respond too little, they could lose face, and if they respond too much, they could lose their heads.”
During the simulation, Iran also fired missiles at Israeli military and nuclear targets, and unleashed Hezbollah, Hamas and Islamic Jihad militants to fire rockets at population centers in Israel, with a goal to create an atmosphere of terror among Israelis. In the simulation, Iran also activated terrorist cells in Europe, which bombed public transportation and killed civilians.
Mr. Sadjadpour said that one thing the exercise demonstrated was how quickly things would deteriorate, adding that “as for long-term consequences, it’s way too murky to say anything but this: It will be ugly.”
Thom Shanker and Helene Cooper reported from Washington, and Ethan Bronner from Jerusalem. Eric Schmitt contributed reporting from Washington.
– OE News Bureau
Hosni Mubarak military council, leading to widespread celebrations in the streets of the country on Friday.
“The people have toppled the regime,” chanted protesters, whose 18 days of swelling protests forced the 30-year-long autocratic government to quit.At the presidential palace in Cairo, where demonstrators had gathered in the thousands, people flashed the V-for-victory sign and shouted, “Be happy, Egyptians, today is a feast” and “He stepped down.”
They handed out candy. Many prayed and declared: “God is great.” Crowds packed Tahrir (Liberation) Square, the scene of massive protests against Mubarak that began on January 25. The celebrations continued early Saturday, with throngs of people milling around in downtown Cairo.”Egypt is free. We are a great people and we did something great. This is the expected end for every dictator,” said one demonstrator.Others warned that Egypt still faces many challenges, including how to go about ensuring a peaceful transition to free elections and a full democracy. Some soldiers joined the crowd in the square to celebrate. Protesters lifted them onto their shoulders. Other troops stayed Some soldiers joined the crowd in the square to celebrate. Protesters lifted them onto their shoulders. Other troops stayed at their posts, watching the scene in awe. People posed with them for photo- graphs in front of tanks. Flag-waving children climbed onto the vehicles.
The protesters’ barricades that had controlled entry to the square were dismantled, and security checkpoints at which demonstrators showed identification and had their bags searched were also gone. Several hundred thousand protesters cheered outside the presidential palace of Rasel-Tin in coastal Alexandria.They also waved flags, whistled and danced.
People in the southern city of Assiut fired guns in the air as they roamed the streets on motorcycles or pickup trucks. Coffee houses distributed free sweet drinks to anyone who walked by.
Mubarak resignation creates political vacuum for US in Middle East
President Hosni Mubarak’s decision to step down after three decades in power presents the Obama administration with a political vacuum in the Middle East.According to the Washington Post, the Obama administration will be compelled to shift roles from managing a volatile political standoff that paralyzed a regional ally to ensuring that Egypt’s commanding generals, many of them trained in the United States, carry out the political and legal changes necessary to guarantee fair elections later this year.
According to the paper, Washington is now looking beyond on the ground situations in Cairo, Tunis and Amman.It is looking at how to encourage the election of governments that are responsive to their electorates and to U.S. interests.Ben Rhodes, the deputy national security adviser for strategic communication, said the administration had reached out by phone to officials across the Arab world in recent days to assure them that the United States intends “to keep its commitments.”But a senior Republican member of Congress who has access to intelligence reports said U.S. spy agencies have seen recent indications that other Middle East leaders were dismayed by the United States’ treatment of Mubarak. An expert on terrorism, Middle East politics and Homeland Security issues has said Egyptian President Hosni Mubarak’s exit will usher a new political process in Egypt.Institute for Advanced Computer Studies Researcher Aaron Mannes of the University of Maryland said it could be the beginning of an Egyptian renaissance, or even an era of far greater tyranny and in stability in the region.He also said the Egyptian leadership military or civilian, would be ” hard- pressed” to tackle the country’s innumerable social, economic, and political problems.”There are no instant solutions to these problems. So far, the Egyptian protesters have appeared moderate in tone and action. But a new government that has difficulty coping with its challenges may turn to radicalism or repression,” Mannes added.Turning the economy around would be the primary concern of Egypt.”Although Egypt was liberalizing its economy and the overall macro-economic numbers were strong, most Egyptians were not benefiting. Unfortunately two of Egypt’s leading sources of income, tourism and tolls on the Suez Canal, will be adversely affected by ongoing turmoil, reducing the Egyptian government’s options for addressing the national challenges,” Manas said.
Israel has reacted with quiet and deep concern over the exit of long-term ally Hosni Mubarak as the president of Egypt.The government of Prime Minister Benjamin Netanyahu maintained the same studied silence on the assumption that nothing it said could serve its interests.
Israeli officials, speaking on condition of anonymity, said they were worried that a post Mubarak regime could be less friendly to Israel.”We don’t know who will be running things in the coming months in Egypt, but we have to keep two things in mind.
The first is that the only example we have of this kind of thing in the region is Iran in 1979. You can’t take that out of your mind. The second is that if Egypt pulls back in any way from its peace with Israel, it will discourage anyone else in the region, including the Palestinians, from stepping forward. So the regional implications for us are significant,” the New York Times quoted one official, as saying.
The official said it was more likely than not that Egypt would maintain its peace treaty with Israel and added that, in any case, relations with Israel would probably not be among the first concerns of the incoming Egyptian authorities.
Prime Minister Netanyahu laid out three possible situations after Mubarak resigned. He said: “First, Egyptians may choose to embrace the model of a secular reformist state with a prominent role for the military.
There is a second possibility that the Islamists exploit the influence to gradually take the country into a reverse direction – not towards modernity and reform but backward.”And there’s still a third possibility that Egypt would go the way of Iran, where calls for progress would be silenced by a dark and violent despotism that subjugates its own people and threatens everyone else.”Mubarak is reported to have told close friend and former Israeli defense minister Benjamin Ben-Eliezer that he saw great peril ahead for Egypt.”He spoke about a snowball that was starting to roll, which would not leave a single Arab state untouched in either the Middle East or North Africa,” the NYT quoted Ben-Eliezer, as saying.”He spoke of his disappointment with the Americans,” he added.Across the border, in Palestine, marches were held in the Gaza Strip on Friday. The marchers chanted against Mubarak and also against President Mahmoud Abbas of the Palestinian Authority, whom they consider a traitor.Hamas officials are calling on Egypt to open its border with Gaza completely.
– OE News Bureau
Cappt Vinay Goyal report for OEMCL from New Delhi
French President Nicolas Sarkozy expressed his country’s full support to development of India’s civil nuclear programme but felt access to this industry was “restricted”. Sarkozy backed India’s entry into Nuclear Suppliers Group (NSG) and its case for a permanent membership of the expanded United Nations Security Council, saying it was “unthinkable” to keep a country of over one billion out. French President visit may not have created buzz that US President Obama visit impacted India but in terms of pure government prospective, it was a great success.
“France is a friend of India. It will stand with it in its efforts in developing non polluting energy and nuclear industry,” the French President said addressing scientists at the Indian Space Research Organisation (ISRO). “We need to put an end to nuclear isolation of India. It was injustice done to India challenging your right to access to civil nuclear energy,” India is now going to be a full fledged member of the multilateral groups over seeing non proliferation regimes, he said adding France would support India’s application for candidacy of NSG. Sarkozy noted with “delight” that a French company Areva would be setting up nuclear plant at Jaitapur in Maharashtra that would go on to produce 10,000 MWE of “non-polluting” energy.
He, however, noted there was certain “inconsistency” in India’s approach as while it wanted development of clean energy on one hand, at the same time “restricting access”. “We cannot force upon India obligations without giving it the means to meet the obligations,” he said. Speaking of France’s relationship with India, Sarkozy said that his country has been a good friend of India. “We don’t speak in two languages. We mean what we say.” Condemning the 26/11 attacks, he said any such strike on India was an attack on democracy and all democracies stand by India. “When India is attacked, it is democracy attacked,” he said.
He observed that terrorism emanating from Pakistan and Afghanistan is a “major source of instability” in the world. Talking about Afghanistan, he praised India’s role and said the world cannot afford to lose the war against Taliban.
“We cannot afford to allow Taliban to comeback. No one stand benefited if civil war raises its ugly head…we must succeed,” he said. Noting that one cannot stand still if India wants to move ahead in 21st century, he said, “India, Brazil, Germany, Japan, some representatives of Africa and Arab world must be in UN Security Council.”
Sarkozy showered praise on Prime Minister Manmohan Singh saying the Indian leader was obsessed with peace through development and eradication of poverty. “I have great admiration for Prime Minister Singh. I value his friendship. He is right in believing in peace and stability. India’s challenge is that if you succeed through peace, it will have a huge knock-out effect on the world,” he said.
India and France are united by common values and believe that international relations should not be governed by brutality or force and it should be based on dialogue and rule of law, Sarkozy said adding the relationship between the two countries should go much further.
Appreciating India’s growth, he said its voice has to be heard in the global level. “We need India to regulate the world monetary order. I believe Indian currency will be counted as one of major currencies,” he said.
On education sector, Sarkozy said he expected a three fold growth in the number of Indian students going to France. “We want to train young Indians in our universities and open our research facilities for them. I very much hope that the reverse will also be true,” he said.
The Indian diplomatic establishment has ample reasons to feel happy and satisfied with French President Nicolas Sarkozy’s just concluded visit to India this week.
Sarkozy deftly used diplomatic symbolism by choosing India as his first foreign destination after France recently assumed the rotational Presidency of the G20 for one year. After a long hiatus, India is starting on January 1, 2011 a two year tenure as one of the 12 non permanent members of the United
Sarkozy said what the Indians wanted to hear by reiterating his support to India’s candidacy for permanent seat of the to be reformed UNSC something that Obama also did during his India visit last month. Sarkozy posed a rhetorical question: “It is not just an important matter for India but for the equilibrium of the world that after its two year term, are we going to ask India to simply stand down?”
Nations Security Council. This means that India can now expect to wield better clout at the G20 as well as the UNSC. France has been one of the staunchest India supporters in the world for quite some time as the two countries have entered into the 12th year of their strategic partnership.
Sarkozy said what the Indians wanted to hear by reiterating his support to India’s candidacy for permanent seat of the to be reformed UNSC something that Obama also did during his India visit last month. Sarkozy posed a rhetorical question: “It is not just an important matter for India but for the equilibrium of the world that after its two-year term, are we going to ask India to simply stand down?”
Sarkozy also enthralled the Indians by taking Pakistan to task on the terror front. He slammed Pakistan for allowing safe havens to terrorists in its tribal border areas. He reserved his fierce attack on Pakistan for the last leg of his trip in Mumbai on December 7, some three hours before the terror attack in Varanasi. He was unsparing, unambiguous and unrelenting when he remarked: “It is unacceptable for the world that terrorist acts should be masterminded and carried out by terrorist groups in Pakistan.” His advice to Pakistani authorities was to “step up their efforts and show that they are resolute in combating these criminals.” As for India, he pledged unlimited counter terrorist cooperation. Significantly, like Obama, Sarkozy did not visit Pakistan.
Though Sarkozy’s India visit was not historic, just as Obama’s trip wasn’t, such visits are essential for taking bilateral ties from strength to strength. Seven agreements were signed during Sarkozy’s visit, the most important of these a “general framework agreement” for constructing two nuclear reactors in Jaitapur (Maharashtra). Jaitapur is an ambitious project that will have six reactors which together will generate 10,000 MW power after completion in 2018. Generation of 10,000 MW from one single plant is indeed impressive considering that India currently produces just about 4000 MW, or less than three percent of total power generation.
India will have to tread carefully on the Jaitapur plant and will have to ensure that the cost of power per unit is not too high or else India will be breeding another Enron, this time again in Maharashtra. For the state of Maharashtra, Jaitapur means happy tidings as it will generate substantial employment for the locals. But it is the long-term risk that has to be guarded against because the Government of India will be spending a hefty $9.3 billion on the Jaitapur plant. Another important area of concern in context of the Jaitapur plant is that it is going to have European Pressurized Reactors (EPRs), the first of which is yet to be built, and therefore, the technology remains untested. The twin risks pricing of power produced which is yet to be worked out and the very high capital investment makes Jaitapur a high stakes gamble for the government.
Sarkozy pledged a more robust, intense and wide ranging cooperation with India, especially in such key areas as defense, space, nuclear energy, education and trade. It is a happy development for India, especially as it comes from a P5 power and the world’s fifth largest economy that is a powerhouse of advanced technology. The seven agreements that were signed during Sarkozy’s visit and the coming together of France and India in as diverse fields as satellite launches and construction of two nuclear reactors in Jaitapur signify that the Indo French strategic partnership is ready for the next phase of growth.
Another rosy picture for Indo French bilateral relations is the French announcement that its companies will invest $12 billion in India by 2012. Paris has dangled a carrot before New Delhi saying that the French FDI investments in India could be even dramatically higher if India opened up sectors like insurance and retail, particularly multi-brand retail. This is a contentious and sensitive political issue in India, considering the Left parties’ strident opposition.
India for its part has been treading cautiously on this issue. India maintains that the liberalization of insurance and retail sectors is “very much” on the government’s agenda but the policy has to be calibrated. “…(Relaxation of) FDI cap on insurance and multi-brand retail is very much on the agenda,” Planning Commission Deputy Chairman Montek Singh Ahluwalia said in the presence of French Minister of Economy and Finance Christine Lagarde who was part of the delegation accompanying Sarkozy.
Sarkozy’s visit is a demonstration of India’s growing influence, which is projected to be the world’s third largest economy by 2030 after the U.S. and China. Sarkozy is the third P5 leader to have visited India this year after British Prime Minister David Cameron in July and U.S. President Barack Obama in November. Chinese Premier Wen Jiabao and Russian President Dmitry Medvedev are scheduled to visit later this month, the former from December 15 to 17, and the latter a week later. This means that before 2010 rings out India would have received all five heads of the permanent members of the UNSC.
Courtesy Diplomatic Courier Inputs and written by Rajeev Sharma
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