Insights June Digital

Dear Friends:

Greetings from the Synergia Foundation!

Prime Minister Narendra Modi’s state visit to Washington is being called a watershed moment for Indo-US strategic partnership. We have taken up this as our lead story and have analysed the visit’s potential, including the gains and losses it entails for both parties.

In this endeavour, we have dipped into our vast reservoir of expertise in India and abroad, both in the military and diplomatic arenas.

We would like to get the views of our readers on this issue which may be the lynchpin in the global security ecosystem in times to come, provided India lives up to its potential and the United States can arrest its decline from global primacy.

Another global geopolitical spotlight is on the flurry of visits to Beijing by American officialdom and luminaries. Is a détente in the making, and should India be worried or pleased with the prospect of the Eagle and the Dragon drawing in their respective claws?

From this issue, we have started a segment that looks at India’s immediate neighbourhood in a fair

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amount of detail. This time we look at Bangladesh, a country that India had a stellar role in creating and which is thriving in its own rights. But have we fully leveraged the ground-level goodwill and cultural affinity that we enjoy with this neighbour?

Other issues covered are equally topical, relevant, and insightful, tapping the wealth of expertise that resides in our panel of experts and our in-house research team.

These range from the economy (especially the global labour market and the clearly visible economic slide in richer countries), the elections in Greece that are taking the country to the right and an objective analysis of the ‘Wagner Mutiny’ with credible views of both sides.

We have started a series in which we shall closely look at lesser-known nations of the globe from an Indian perspective. The first of the series is on Namibia.

We hope our esteemed readers will continue supporting us as we strive to further evidence-based research on strategic issues with global resonance.

Maj. Gen. Ajay Sah Chief Information Officer

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EXCLUSIVES

COURTING AN ALLIANCE

Indian PM’s high-profile visit surfing the popularity wave of the Indian diaspora hints at a new era of Indo-U.S. partnership even as a Cold War looms.

PAGE 03

BUILDING BRIDGES THROUGH DEFENCE

The US-India defence partnership is expected to deepen the strategic ties between the two countries.

INDIA-US ENTENTE: A RUSSIAN PERSPECTIVE PRIME MINISTER’S STATE VISIT: ITS IMPLICATIONS

“Many Moscow- based analysts maintain that any progress in these relations can be achieved only at the expense of the traditional Indian-Russia friendship.”

The visit showcased the deepening strategic convergence, highlighted by key decisions in critical and emerging technologies, defence cooperation, and space exploration.

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GEO - POLITICS

US-CHINA: MENDING TIES

The sudden visit of the U.S. Secretary of State to Beijing with unprecedented access to President Xi Jinping has caused a great deal of speculation.

INDIA’S NEIGHBOURHOOD

ANALYSING INDIA’S NEIGHBOURHOOD

India’s bilateral relations with neighbours are neither transactional nor a zero-sum game.

PAGE 19

INDIA – BANGLADESH: AN OPTIMISTIC FUTURE?

Despite sharing a bond forged in blood, has the India-Bangladesh relationship matured to its potential?

SECURITY

THE WAGNER REVOLT

A TIGER BY THE TAIL

The recent chain of events in Rostov on the Don leading to the ‘march on Moscow’ is a lesson for those who rely on private entities to fight their wars.

POST WAGNER RUSSIA

A Russian prognosis of the Wagner Group’s future post their revolt.

ASPARTAME: THE CANCER SCARE!

A popular non-nutritive sweetener is under medical scanner for being potentially carcinogenic.

PAGE 34

HEALTH CARE TECHNOLOGY

INDIA’S SPACE REFORMS: THE FINAL FRONTIER AWAITS

India’s Space Sector can become its crown jewel, adding value to its growth rate.

ECONOMY

POST-PANDEMIC MARKET SWINGS

As economic indices appear shaky, labour markets act as barometers of economies.

ARE THE RICH FALLING BEHIND?

The advanced economies appear to be dragging down global growth, leaving the task of recovery to Asia.

ENVIRONMENT

SAYING GOODBYE TO COAL?

Despite its universal condemnation as the ‘dirty fuel,’ coal thrives. What will it take to stamp it out?

GLOBAL SCAN

GREECE ON THE MEND?

A handsome victory for the centre-right is the obvious reward for putting the sick economy back on the rails.

NAMIBIA: EMERGING FROM SHADOWS

A thinly populated peaceful country in Southern Africa has remained in the shadows since its independence. It’s time for it to emerge into the sunlight.

SPOTLIGHT STORY : INDO - US RELATIONS

COURTING AN ALLIANCE

Indian PM’s high-profile visit surfing the popularity wave of the Indian diaspora hints at a new era of Indo-U.S. partnership even as a Cold War looms.

Suchitra Padmanabhan is the Policy Research Associate at Synergia Foundation and has Post Graduate Degree in Social Policy & Planning from the London School of Economics

Under an invigorating leadership and a conducive geopolitical environment, India’s stock was never higher in the U.S. This was amply in display during the recent visit of Mr Modi’s first state visit to Washington, where he was honoured with unprecedented state protocols and warmth. It is indicative of how important India has become in the U.S. scheme of things despite the consumption of Russian oil and refusal to publicly condemn Moscow for its aggression.

While most of India basked in the afterglow of the visit, many a cautious voices advised a more toneddown approach to calm nerves at Kremlin, our historical friend and well-wisher. A week after the visit, Mr Modi “briefed” Russian President Vladimir Putin about his recent tour to Washington DC – a visit that saw the United States easing restrictions to share advanced military and civilian technologies with India, apparently to help it lessen its dependence on Russia, as per the Indian newspaper The Deccan Herald.

While Moscow maintained a studious silence on the visit, an editorial on RT.com by Gleb Makarevich, Deputy Head of Centre for the Indian Ocean Region Studies, made the dry observations that “Moscow must realise that New Delhi is developing relations with Washing-

The litmus test lies in where the growing relationship between New Delhi and Washington will lead to in the next few years. Can both parties effectively reap the economic and security advantages of collaboration, despite their divergent principles, which they may be hesitant to acknowledge openly?

ton for its own benefit. But India has to accept the same when it comes to Russia and China.” Was this a muted warning?

A MUTUAL ATTRACTION OR SHARED INTERESTS?

India’s economic growth has contributed to its soft power, making it an attractive partner for the U.S. A sizeable Indian diaspora, perhaps one of the most prosperous and qualified amongst all non-Caucasian immigrant groups, acted as a powerful influencer. Quietly, behind the scenes, this grouping has helped its parent country chart a favourable course through the complex maze of domestic American politics. Notably, leaders of tech giants like Alphabet, IBM, and Microsoft trace their roots back to India, as do the heads of three of America’s top five business schools.

The U.S. would like to project its relationship with India as a test case for intricate alliances between like-minded democracies evolving in an increasing-

ly fractured multipolar world. Of course, detractors like Pakistan and China call it the “propping up” of a mid-level power to counter the rise of China in Asia-Pacific, a comparison that they call, is far from reality.

The litmus test lies in where the growing relationship between New Delhi and Washington will lead to in the next few years. Can both parties effectively reap the economic and security advantages of collaboration, despite their divergent principles, which they may be hesitant to acknowledge openly?

The development has not taken place overnight, but since the tenancy of President Clinton’s first term in office, both India and the U.S. have been diligently working at undoing the damage of the past half a century. India’s inclusion in the Quad was a turning point. To bolster India’s military capabilities, the United States slowly opened sales of high-tech equipment like attack helicopters, military transport planes and maritime surveillance platforms, which were the first in the long history of their relationship. It was a long journey from the receipt of PL-480 wheat shipments to India paying hard cash for buying top-of-the-line American military aircraft through the faster Foreign Military Sales route. Mr Modi’s visit promises to raise this cooperation in military technology to an entirely new level.

LINGERING IRRITANTS

This is not to say that the relationship is without friction. As a first, India’s stance towards the West and its overall foreign policy are increasingly turning towards pragmatism. While India maintains a sceptical stance towards Western countries and firmly rejects their claims to global leadership, it has historically been suspicious of the post-war international order, viewing it as a form of dominance by other nations. This blend of contradictory attitudes creates a complex situation. On the one hand, India is a strategic partner of the United States, yet it remains cautious of Western intentions. It is improbable that India will ever enter a formal secu-

rity alliance with America and maintains a relationship with Russia, from which it procures arms. Consequently, the extent of support America could count on from India in critical situations remains uncertain.

The second major concern is based on what Western critics perceive as Prime Minister Modi’s illiberalism which does not resonate well with the liberal constituency in America and is being heavily exploited by the pro-China/ Pakistan lobbyists active in the country.

Even more extreme voices have gone on record arguing that America risks repeating its history with China, granting economic advantages to a rival that may eventually turn against it. However, this scenario is being diluted by the mutual suspicion of China, which serves as a driving force advocating closer ties with India, cutting across party lines.

Based on recent events, it is likely that the U.S. will adopt a prudent approach based on shared initiatives that can strengthen the relationship. The Biden administration’s efforts to expedite technology transfer to India present a promising example. By bolstering India’s defence industry, America aims to wean it away from the struggling Russian defence sector, thus further weakening its influence. Collaborating in areas such as clean energy and technology, where both nations seek to reduce dependence on China, can further strengthen their alliance.

ADVANTAGE INDIA

There has been considerable analysis, both in India and in the U.S., of how the Indo-US relationship transformed so rapidly under the current dispensation in New Delhi. The answer consistently revolves around geopolitics: From America’s perspective, India, with its burgeoning population and strong economy, stands as the only credible counterbalance to China in Asia. Managing Beijing necessitates cultivating a friendship with New Delhi.

Source :The Print

U.S. President Joe Biden’s firm stance against the Chinese regime, openly referring to it as a dictatorship, demonstrates the deepening alliance between India and the U.S. This growing strategic engagement between the two countries reflects a shared objective to curtail China’s influence in the region and establish a dominant presence in the Indian Ocean. By working together, India and the U.S. aspire to promote peace, stability, and prosperity in the Indo-Pacific region, positioning India as a pivotal player in shaping the region’s future trajectory. This strengthened Indo-U.S. partnership underscores the commitment to a collaborative approach that safeguards the interests and values shared by both nations.

Another aspect to consider is the Russia factor. With an increasing urgency to resolve the conflict in Ukraine and diminish Russia’s ability to engage in future transgressions, Washington requires India to adopt a more critical stance towards Moscow, despite their close historical ties. Due to its strategic location and the steady growth of its economic and military capabilities, India has emerged as an attractive partner for the United States in upholding a free and open Indo-Pacific region. The shared emphasis on regional cooperation and security closely aligns with India’s “Act East” policy.

This policy underscores India’s commitment to actively engage with countries in the East and Southeast Asian regions to foster mutually beneficial relationships and promote peace, stability, and prosperity. By recognising India’s significance and working together to enhance regional cooperation, the U.S. acknowledges the instrumental role India can potentially play in advancing their shared objectives in the Indo-Pacific.

Beyond geopolitics, India offers Washington attractive options such as semiconductor assembly and other manufacturing capabilities, access to critical minerals, opportunities for climate finance, and an ambitious space program. In recognition of India’s potential to diversify global supply chains away from China and support the global transition to sustainable practices, the country is attracting significant inward investments. This involves substantial sums of money directed towards manufacturing facilities and includes agreements to train 60,000 Indian engineers to bolster the nation’s semiconductor development capabilities. The recent visit saw both sides announce extensive agreements spanning defence, critical and emerging technology, healthcare, energy, and transportation. President Biden referred to this as a “next-generation partnership.”

TECH-BASED PARTNERSHIP

The main essence of the emerging partnership is a technologically driven collaboration wherein both sides innovate critical technologies. The General Electric (G.E.) and Hindustan Aeronautics Limited (HAL) Memorandum of Understanding (MoU) for the collaborative production of GE 414 Jet Engines in India is the blueprint for the future when Indian industry will be catapulted in the design and manufacture of the future generation of power plants for its combat and commer-

cial air crafts. The Defence Ministries of both nations have inaugurated the first session of an innovation platform called ‘INDUS-X.’ Hosted by the U.S.-India Business Council (USIBC), this platform aims to promote collaboration in the defence industry. Alongside this, several significant announcements emerged from the private sector. Micron Technology, Inc., a leading U.S. semiconductor technology and chip manufacturer, revealed its plans to invest approximately $825 million in a new chip assembly and test facility in Gujarat.

Moreover, the semiconductor production agreements highlight India’s ambitions to emerge as a prominent global manufacturing hub for advanced technologies. By attracting investments and establishing semiconductor manufacturing facilities, India seeks to diminish its reliance on imports and actively contribute to the global supply chain.

In the realm of space cooperation, India has become a signatory to the Artemis Accords, an agreement currently endorsed by 25 countries for collaborative space exploration. Furthermore, the two nations have established a framework for human spaceflight this year and have solidified plans for a joint mission to the International Space Station in 2024.

The icing on the cake came in the form of a pilot programme aimed at streamlining the visa renewal process for select categories of petition-based temporary workers. This programme eliminates the need for applicants to travel abroad to obtain their visa renewal stamp, allowing them to undergo the process domestically. Initially, the programme will cover certain skilled workers’ visas, such as H1B and L visas, with the potential to expand its scope to include other visa categories by 2024.

Assessment

Adaptation and pragmatism are key for fostering a resilient partnership between America and India in this multipolar world ahead. Technology has provided a strategic angle to pursue this partnership. From semiconductors to space programs to defence projects, the partnership seems to be based on a fairly deep and diverse array of projects which could sustain.

The Indian diaspora and industry are positioned to be the defining characteristics of India – U.S. ties in the coming years. The renewal of visas domestically for certain petition-based temporary workers and potentially for H1b and L skilled visas by 2024 is a sign of the power of this community.

However, it is a tough road ahead for the Indian tech industry as with such immense faith reposed on them by the American government and investors, they have to really strive to come up to these expectations and not allow this once-in-lifetime opportunity to slip away due to lethargy, petty politics and misplaced idealism.

BUILDING BRIDGES THROUGH DEFENCE

“We were strangers in defence cooperation at the turn of the century, but now the United States has become one of our most important defence partners.”

-Prime Minister Narendra Modi

“Two great nations, two great friends, and two great powers”

SYNERGIA FOUNDATION

The emphasis on the defence sector underpinned the visit. Both sides have established mechanisms for developing and sustaining dialogue between their respective industries through the medium of the defence and technology deals signed. In principle, a roadmap for defence industry cooperation has been crafted, which is expected to bolster India’s defence manufacturing ambitions.

This would be in addition to other aspects of their defence partnership already in vogue, like joint military exercises, the annual 2+2 Ministerial Dialogue and other consultative mechanisms.

DEFENCE “INNOVATION BRIDGE”

The India-U.S. Defence Acceleration Ecosystem (INDUS-X) — a network of university, incubator, corporate, think tank, and private investment stakeholders —will facilitate joint innovation on defence technologies and accelerate the integration of India’s private sector defence industry with the U.S. defence sector.

INDUS-X will also create jobs in both countries and has the potential to be a catalyst for India to achieve its target of $5 billion in defence exports by 2025.

-President Joe Biden

The US-India defence partnership is expected to deepen the strategic ties between the two countries. This partnership will enable the two countries to work together on a range of issues including defence, security, trade and technology.

The other components of the defence partnerships are as follows: -

• Defence Trade: The United States has become a significant supplier of defence equipment to India over the last two decades. This includes the sale of state-ofthe-art defence acquisitions such as strategic lift capabilities and advanced maritime patrol aircraft.

• Military Exercises: The United States and India have conducted regular military exercises to improve their capabilities and interoperability. The U.S. has become India’s largest military exercise partner.

• Intelligence-sharing and Assessment: The two countries have built intelligence-sharing channels and assessment capabilities to better identify and prepare for threats.

• Access to Military Logistics: India and the United States have developed access agreements for military

logistics to support each other’s reach.

• Support in Border crises: The United States has backed India in its recent border crises with China and Pakistan, which is a very positive development

• Strategic Partnership: The United States and India are committed to a long-term strategic partnership in defence cooperation. This partnership aims to strength en bilateral and multilateral defence

NEXT-GENERATION DE FENCE PARTNERSHIP

GE and Hindustan Aeronau tics Limited (HAL) have signed an MoU, and a manufacturing licence agreement has been submitted for Congressional Notification.

The first-of-its-kind initiative to manufacture F414 engines in India will enable greater U.S. jet engine tech nology transfer than ever before.

India intends to procure armed MQ-9B Sea Guardian UAVs. These drones will increase India’s intelligence, surveillance, and reconnaissance capabilities.

Service and repair of U.S. Navy ships by concluding a Master Ship Repair Agreement (MSRA) with Larsen and Toubro Shipyard in Kattupalli (Chennai) and is finalizing agreements with Mazagon Dock Limited (Mumbai) and Goa Shipyard (Goa).

These agreements will allow mid-voyage U.S. Navy ships to undergo service and repair at Indian shipyards.

The two countries advanced steps to operationalize tools to increase defence cooperation. They have resolved to strengthen undersea domain awareness cooperation and agreed to place three Indian liaison officers in U.S. commands for the first time.

The U.S. and India have also begun negotiations for a Security of Supply Arrangement and Reciprocal Defence Procurement Arrangement that will enable the supply of defence goods in the event of unanticipated supply chain disruptions.

ATMANIRBHAR BHARAT

The new defence cooperation initiatives are expected to significantly impact India’s indigenous defence modernization plans.

• Access to Cutting-Edge Technologies: The specific proposals included in the defence cooperation initiatives aim to provide India access to cutting-edge technologies.

This will support India’s defence modernization plans by enhancing its capabilities and enabling the of-the-art defence

• Defence Industrial Cooperation: The initiatives include the establishment of a Defence Industrial Cooperation Roadmap, providrection enabling ment. It will facilitate collaboration between Indian and U.S. defence industries, leading to the transfer of technology, knowledge sharing, and developing indigenous defence manufacturing capabilities.

• Strengthening Defence Manufacturing: The defence cooperation initiatives will bolster India’s defence manufacturing ambitions contributing to India’s efforts to reduce dependence on foreign defence suppliers and enhance self-reliance in defence production.

• Enhanced Military Capabilities: Cooperation in areas such as air combat, land mobility systems, intelligence, surveillance, reconnaissance, and munitions will contribute to the enhancement of India’s military capabilities.

• Counterbalancing China: The stronger military-to-military ties with U.S. is a key counterweight to China’s dominance in the region. The defence cooperation initiatives aim to strengthen the strategic partnership between the United States and India, which will affect regional security dynamics.

STUMBLING BLOCKS?

Indian defence modernization will encounter sig nificant obstacles in the next five to ten years due to budgetary constraints.

The Indian government may not have sufficient funds to in vest in developing indigenous defence manufacturing capabili ties or procure advanced defence

LT GEN G A V REDDY AVSM, SC, VSM (Retd) is the former Deputy Chief of Integrated Defense Staff , DG-DIA and Strategic Advisor at Synergia Foundation.

GSOMIA General Security of Militiary Information Agreements

Logistics Exchange memorandum of Agreements

Communications Compatibility and Security Agreements

technologies. The Indian armed forces have drawn up elaborate plans for modernizing and qualitatively upgrading their capabilities for future combat, but the slow pace of modernization has delayed decision-making and a low-tech defence industrial base.

India has traditionally been dependent on Russia for defence supplies. Weaning India away from Russia for defence supplies may challenge the United States.

The transfer of technology from the United States to India may be challenging due to IPRs and technology protection concerns. The United States may be reluctant to transfer advanced defence technologies to India, which may limit India’s access to cutting-edge technologies.

GEOPOLITICAL IMPACT

The US-India defence partnership has significant geopolitical implications for the region and beyond.

• Counterbalancing China: The U.S. sees stronger military-to-military and technology ties with India as a key counterweight to China’s dominance in the region. The partnership aims to strengthen the strategic partnership, which will have implications for regional security dynamics.

• Weaning India Away from Russia: The United States seeks to wean India from its traditional dependence on Russia for defence supplies. The US-India defence partnership aims to provide India with access to advanced technologies and support its defence modernization plans.

• Deepening Strategic Partnership: The US-India defence partnership is expected to deepen the strategic partnership between the two countries. The partner-

Basic Exchange and Cooperation Agreements

ship will enable the two countries to work together on a range of issues, including defence, security, trade, and technology.

USA’S INTERESTS

The Indo-US defence cooperation agreements of June 2023 are expected to bring several benefits to the United States. The U.S. and India will expand their military cooperation, including the sale of weapons and sharing of sensitive military technology. This will help the U.S. deepen its ties with India and counter China’s ambitions in Asia.

The agreements aim to diversify supply chains to reduce dependence on China. For example, the U.S. and India will work together on semiconductors and critical minerals, which will help make supply chains more diverse, resilient, and reliable.

The agreements will provide U.S. companies with access to new markets in India. For example, General Electric will produce jet engines in India to power Indian military aircraft, and Micron Technology will build a $2.7 billion semiconductor testing and packaging unit in India. The agreements will strengthen and expand the two countries’ strategic technological coordination and defence-industrial cooperation. This will provide an opportunity for the US to secure a more predictable and economically advantageous relationship with India.

CHINA FACTOR

The U.S.-India defence partnership is expected to have significant implications in the context of China’s growing influence in the region. It may lead to heightened tensions between India and China. China may perceive the partnership as a threat to its regional dominance and respond with aggressive posturing and, in

response, may increase its military spending. It could also take its military ties, already very strong, to an even higher plain to counterbalance the US-India defence partnership. This could further complicate regional security dynamics.

China may exert diplomatic pressure on India to limit its defence ties with the United States, and could lead to a deterioration of bilateral ties. Within the Asia Pacific region, India’s growing strategic partnership with India may lead to a strategic realignment with Japan and Australia, close allies of the U.S., also seeking to deepen their defence ties with India. This could lead to a more assertive China – seeking dominance in regional security architecture.

THE RUSSIAN DILEMMA

India may increasingly shift towards collaboration with other nations that can help assure a free and open Pacific and India’s connectivity to the rest of the world, such as Israel, the Gulf states, Turkey, Europe, Australia, the Philippines, Taiwan, Japan, South Korea, apart from the U.S.

This could mean that Russian-Indian cooperation will be less of a factor in the future. However, India is unlikely to deepen its relationship with the U.S. at the expense of its ties with Russia, which extend beyond arms trade to a larger, multifaceted relationship.

India will most likely be determined to preserve its relationship with Russia, and Russia will remain in good standing with India’s national security apparatus. India has long seen Russia as a reliable partner that has supported it at the United Nations and played an integral

role in building up Indian military capabilities across domains.

CONCLUSION

The two countries are not allies, but their relationship is different from what other countries in the region have with Washington. The U.S. pursues “friend-shoring” — a strategy in which it diversifies away from China and taps into the potential of other countries in the region. India has never wanted to become a U.S. ally and has always prioritized foreign policy independence as a central feature of its approach to the world. However, the U.S. is critical for Indian growth, security and technology, and the recent announcement of defence and technology deals could generate even more deals in the future.

Assessment

Increased military agreements, including technology transfer, will help India secure its borders with China and Pakistan and reduce the country’s heavy reliance on Russia for military supplies.

Enhanced commercial collaboration between the U.S. and Indian private sectors in space exploration could lead to increased investment and innovation in the space sector in India

INDUS-X will aim to integrate India’s growing private sector defence industry with the U.S. defence sector, reducing the country’s reliance on foreign military equipment.

Source :Mint

EXCLUSIVE CONVERSATIONS

The recent meeting between Prime Minister Modi and President Biden was a great boon for US-India relations. Even though recent U.S. administrations have been warm with India, the Biden administration took a more ambivalent approach in the first two years. Issues like the pull-out in Afghanistan, the lack of a U.S. ambassador in Delhi, and problems with visa processing slowed momentum.

The visit should be seen as something of a reset. Several factors are propelling the U.S. and India relationship. Security and geostrategic calculations vis-a-vis the Indo-Pacific tend to get the most attention, but the U.S. and India share a growing economic relationship, and powerful diasporas have emerged in both countries. This economic relationship and these new people-to-people ties are also important anchors in the relationship.

The big concern for leaders on both sides is whether the amity is robust. It’s no secret that the U.S. and India have been fair-weather friends for much of their histories. However, this is because the relationship previously centred on geostrategic agendas when the U.S. and India pursued differing goals.

These days, the U.S. and India have a clear strategic interest in cooperating in the Indo-Pacific and enjoy a far more dynamic relationship that extends beyond strategic compulsions. I expect that over the long term, these

aspects of the relationship will keep the two countries close, regardless of more macro changes.As regards a perceived ‘democratic and human rights deficit’ in India, it would be hard to say, after what we have seen in so many other parts of the world--and even in the U.S. and India historically. I don’t think either country should take democracy or human rights for granted.

Both the U.S. and India have inherited incredible legacies regarding democracy and human rights, but freedom is a choice we must make every day.

Both countries must continue to protect their institutions and civil societies, or they will be lost. This applies to the U.S. as much as it does to India.

Regarding the U.S.-India relationship, we know that countries facing democratic and human rights deficits underperform in the long term. They tend to be less stable; they tend to reject the rules-based work against the international system, and they tend to be less prosperous.

These are fundamental aspects of what is bringing the U.S. and India closer together, precisely what Mr Modi and Mr Biden rightly emphasized in Washing ton, D.C., a few weeks ago.

DINSHA MISTREE, Research Fellow, Hoover Institution

EXCLUSIVE CONVERSATIONS

American motivations for strengthening bilateral relations with India have two major components. The first is strategic, and the second is what we might call structural, the shared bonds of two great and big countries, each of which are multi-party, multi-ethnic, multi-religious democracies.

The strategic pull relates to a shifting geopolitical situation, primarily but not exclusively linked to China’s power. Despite strong impulses to “securitize” the Indo-American relationship, the U.S. is taking the longer view, and structures like the Quad are not becoming the primarily security-focused entities that might otherwise be America’s preference.

The structural driver is self-evident – despite many differences, the countries’ systems have common touchpoints that provide an easily under-

standable frame of reference to the other. However, this approach does risk downplaying significant developments in each country’s domestic polity. To be sure, many in the U.S. worry about Hindu nationalist impulses in India – I would imagine observers in India might be similarly concerned about troubling developments in America’s own domestic politics over the last two decades.

The judgment overall seems to be that an India which leans to the U.S. is much preferable to an indifferent or non-aligned India.

If this is true as I see it, such an approach helps to explain American acceptance of India’s unwillingness to condemn Russia’s invasion of Ukraine and the very easy treatment the Biden Admin (and the president himself) gave to PM Modi over a perceived rightward lurch in Indian domestic politics.

ROY D. KAMPHAUSEN, President, The National Bureau of Asian Research,

INDIA-US ENTENTE: A RUSSIAN PERSPECTIVE

“Many Moscow- based analysts maintain that any progress in these relations can be achieved only at the expense of the traditional Indian-Russia friendship.”

Recently there have been many speculations about the likely future of India-US relations and their impact on the Indian posture within the emerging new world order. Indeed, the India-U.S. interaction represents one of the most important bilateral relationships in the modern international system.

Not surprisingly, its current vibrant dynamics generate a lot of expectations, hopes, concerns and even outright fears in various parts of the world. The recent trip of Prime Minister Narendra Modi to the United States added more fuel to these very active, sometimes quite emotional, and politically loaded discussions.

Naturally, Russia is not an idle bystander in the ongoing debates; in Moscow, they follow developments in India-US relations with an understandable interest and sometimes also with outright discontent and jealousy.

Many Moscow- based analysts maintain that any progress in these relations can be achieved only at the expense of the traditional Indian-Russia friendship and that the United States is gradually succeeding in ‘high jacking’ India from Russia.

Moreover, it is often stated that the U.S. strategy toward India is aimed at depriving this country of an

One should not forget the significant cooperation momentum accumulated over seven decades of a successful partnership between Moscow and New Delhi. Moscow has several visible advantages ranging from long-term institutional and even personal ties with Indian partners to prices, which are usually significantly lower than those of American or European suppliers.

opportunity to fully integrate into the broader community of Eurasian nations, to which India naturally belongs due to the Indian geography, history and culture. How grounded are these alarming conclusions? Do we see a real strategic shift in Indian foreign policy, or the above-mentioned concerns and fears are blown out of any reasonable proportion?

Let us try to present a brief inventory of what we should and what we should not expect from the growing India-US cooperation. Of course, the suggested time horizon is very important in any such projections.

The author would like to limit himself to the trends that are likely to take place over the next five to seven years; therefore, his projections might not necessarily be relevant in a more distant future, when the current international trends may change in the most radical way.

Dr Andrey Kortunov is the Academic Director, Russian International Affairs Council. He shares his perspective with Synergia on the status and trajectory of India -US relations.

WHAT IS LIKELY TO HAPPEN?

The US-India military cooperation is going to expand further. India remains the largest global importer of military hardware; according to SIPRI, it accounts for 11 per cent of the world’s imports. Though Russia remains the main Indian partner in the defence sector, New Delhi is actively trying to diversify the sources of its imports. Naturally, U.S. defence corporations will continue to actively compete for lucrative Indian markets. The defence partnership with Washington should help India not only to contain Beijing but also to upgrade Delhi’s power projection capabilities in the Indian Ocean and beyond. With India’s ambitions to become a truly global power and with the rapid diversification of Indian foreign trade and investments overseas, New Delhi considers these capabilities an essential component of its future national foreign policy instruments.

Aside from diversification, India is interested in using its military ties with the United States to gain access to some of the most sophisticated American technologies India badly needs- AI, 5G, quantum computing, aerospace, and so on. The United States might become an important source of economic modernization, including key civilian sectors – transportation, IT, pharma, robotics, and many others. In sum, the US-India defence-related cooperation is likely to grow and deepen over years.

The bilateral trade and U.S. direct investment in India will increase. Though today the United States is already one of the leading Indian trading partners, the potential for growth in bilateral trade is by no means reached its culmination point. This includes both the Indian exports to U.S. and the Indian imports from U.S. and extends to a large spectrum of sectors – from agricultural products to machine building to electronics to a broad range of services. A large Indian diaspora in U.S. is likely to serve as an important facilitator serving this growing trade.

On top of that, many American corporations operating in Asia are likely to relocate their production sites from China to India, which fits New Delhi’s “Made in India” strategy and will undoubtedly increase the overall numbers of U.S. direct investment in India. The ongoing rapid growth of the Indian middle class generates new opportunities for all foreign partners, and the U.S. is not an exception. India might become the prime Asian economic hub for the United States, serving U.S. businesses in adjacent counties of South Asia and the Middle East. It is also highly likely that India will significantly increase the scale of its direct and portfolio investment in U.S. One could imagine further diversification of India-U.S. economic ties’ formats, including building joint production and R&D chains and other advanced forms of industrial cooperation.

Geopolitically, the Indo-Pacific partnership will go ahead. India has already developed strong political bonds with the United States through an intense bilateral political dialogue at various levels and through several multilateral arrangements. This process will

undoubtedly continue. In particular, one can envisage further institutionalization of Quad leading to a more diverse multifaceted collaboration between India, Japan, Australia and Japan. A broader agenda for “the four” would ensure greater stability for the multilateral cooperation, fostering it through involving the nations of Southeast Asia (the so-called Quad+) interested in engaging the Quad but reluctant to jeopardize their current relations with Beijing.

Apparently, India’s leadership will adopt a similar stance on Quad-2, the emerging multilateral collaboration in West Asia featuring the U.S., India, Israel and the UAE. The United States will encourage India to strengthen its ties to the leading Arab states of the Gulf, as well as to Israel. Over time India might build stronger ties to NATO through some customized “NATO+” format and to AUKUS, especially if the tensions in India-China relations get stronger. The United States will encourage India to deepen its relations with other U.S. partners and allies in the Indo-Pacific region, including Japan, ROK, Australia and New Zealand. India might also work closer with the key U.S. European partners –particularly with France and the United Kingdom – in pursuing common security goals in the waters of the Indian and Pacific Oceans.

India and U.S. will continue to promote liberal democratic values together. It is common in the U.S. to label India as the “largest democracy in the world”. Indian leaders are invited to the “summits for democracy” staged by the Joe Biden Administration. Moreover, in Washington, India is often perceived as a natural interface between the West and the Global South, expecting India to advance liberal values among developing nations and assist the United States in opposing the growing Chinese influence in various parts of the planet. The importance of India for the United States is likely to increase, given the ongoing rise of illiberal and authoritarian political regimes in the world that one is witnessing today. The example of India is one of the most convincing confirmations that the validity of the liberal political model is not limited to the Western world only.

This trend will likely continue, especially if Democrats stay in the White House after 2024 and the Indian political system demonstrates its ability to successfully handle many modernization challenges that the country confronts today. The liberal political system in India also creates plenty of additional opportunities for more bilateral cooperation with U.S. at the non-state level involving political parties, universities, independent think tanks, media and civil society institutions – something that the United States could hardly achieve with more politically centralized systems, like the one in China. Finally, as an English-speaking country, India can claim a comparative advantage in building diverse relations with U.S.

WHAT IS NOT LIKELY TO HAPPEN?

U.S. is not going to replace Russia as the main supplier of military hardware. Many in Moscow are deeply concerned about the future of Russia’s position in the

Indian defence markets. Indeed, the Russian share in these markets is gradually going down: over the last ten years, it fell from 64 per cent to 45 per cent, while the combined share of France and U.S. rose to 40 per cent. It is also argued that the Russian special military operation in Ukraine might impose additional limitations on Russia’s arms supplies to India because the Russian defence sector will prioritise the needs of its army above the needs of Moscow’s foreign partners. Pessimists also argue that the India-Russia defence cooperation might be further constrained by the U.S. pressure on India and the Chinese pressure on Russia, respectively.

However, most defence-related contracts have powerful inertia and are not likely to be terminated overnight. One should not forget the significant cooperation momentum accumulated over seven decades of a successful partnership between Moscow and New Delhi. Moscow has several visible advantages ranging from long-term institutional and even personal ties with Indian partners to prices, which are usually significantly lower than those of American or European suppliers. Of course, a lot depends on the ability of Russia to meet rapidly growing Indian demands regarding offsets, quality control, post-production maintenance, and so on. In short, though the quest for diversification within the Indian defence markets will continue, Russia will likely remain India’s principal defence partner for many years. Besides, in the Indian defence markets, the U.S. will likely face strong competition from other suppliers, including France, the UK, Germany, Israel, South Korea, etc.

Nothing like a free trade zone between U.S. and India is likely to emerge. Though India has various preferential access, economic cooperation and free trade agreements with more than fifty countries, it remains a relatively protectionist nation. For instance, New Delhi stayed away from the Regional Comprehensive Economic Partnership that united almost all the other Asian-Pacific economies. Protectionism will likely limit India’s openness to U.S. investments and trade. Today, India is negotiating free trade agreements with two major Western economies (UK and Canada), but the outcomes of these negotiations are still unclear. One should also note that the Indian trade with U.S. is highly unbalanced in India’s favour.

This is likely to fuel continuous U.S. discontent and might trigger further Washington’s attempts to get unilateral trade concessions and benefits from New Delhi in exchange for stronger bilateral ties in the security domain. India has its grievances in trade and investment vis-a-vis the U.S., with New Delhi often preferring to seek arrangements with the EU rather than the U.S. Many Indian authors note that the current U.S. strategy regarding India entails no significant programmes for the U.S. to assist in modernizing India’s economy. During Donald Trump’s presidency, U.S.–India relations were supposed to serve narrowly defined U.S. business interests rather than strategic goals of Indian modernization, and this approach has not changed in any radical way under Joe Biden.

There will be no political or defence US-Indian alliance. There are two reasons for such a prediction. On the U.S. side, there is no tradition of joining political and/or military alliances with equal foreign partners. Despite their formal multilateral nature, Washington has always had leadership positions in any of the alliances it has entered after WW2 (such as NATO or AUKUS).

India is clearly not ready and will not be ready anytime soon to become a junior partner to U.S. Second, a fundamental feature of the Indian foreign policy is a commitment to carefully balancing its ‘Indo-Pacific’ aspirations and its ‘Eurasian’ priorities. India might have reservations about BRICS or SCO, but these two organizations are essential to balance Quad and other formats of growing cooperation with the West. Furthermore, a deeper engagement with Washington will not likely prevent New Delhi from maintaining its traditional friendships in Eurasia and exploring new opportunities with Russia or Iran. Evidently, India will not wish to stand together with the U.S. in its approach to Tehran or Moscow and will avoid complying with U.S. sanctions whenever possible.

Recently, especially in the wake of the U.S. withdrawal from Afghanistan, there have been growing doubts in Asia, let alone in India, over how reliable the security guarantees Washington offers to its allies and partners are. There are reasons to believe that the U.S. will not be ready to come to the aid of its friends amid a major crisis, particularly if this entails significant risks and potential costs for the U.S. Even if U.S.–India relations were upgraded to the level of an allied partnership, it is far from apparent that Washington would be ready to extend direct military support to New Delhi in the event of another escalation of the India–China border conflict.

An even less likely scenario is that the U.S. would decisively endorse India should a military confrontation with Pakistan play out. As an example of America’s “low profile” in such matters, we could cite its extremely cautious reaction to the acute crisis between Russia and Turkey in November 2015 after the Turkish Air Forces downed a Russian ground attack aircraft over the Syrian-Turkish border. This uncertainty about the U.S. security guarantees credibility makes the prospects of a US-India defence alliance even less plausible.

U.S. will not regard India as a mature democracy. Many in U.S. have serious reservations about the overall evolution of the Indian political system – they claim that the system is moving away from liberal democracy to a more authoritarian model. U.S. politicians and experts raise concerns about the rights of religious minorities in India, the new media regulations, the shifting role of civil society institutions, and the recently changed status of Kashmir.

The leadership of India, in its turn, is hesitant to replicate the Western liberal political model without adjusting it to Indian realities. On top of that, India and the United States have different positions on a

number of important global problems, such as climate change. Washington is prompting New Delhi to commit to achieving carbon neutrality by 2050, while India is calling upon the developed nations to curb their emissions ever more radically to redistribute the structure of global emissions to benefit the developing economies. Since, in the near future, India will continue to ramp up carbon emissions, it appears virtually unavoidable that India–U.S. tensions on the issue will subsist.

The Indian society retains certain mistrust towards the U.S. that stems from the complicated history of bilateral relations. This mistrust is fuelled by the U.S. policies in the region, which are not always discreet and sensitive to India’s interests – such as manoeuvres of U.S. warships in close proximity to the Indian coast, sometimes without preliminary coordination of their activities with India. One should not underestimate the influence of the large and successful Indian diaspora in U.S. on the relations between the two countries, but a large part of this diaspora remains quite critical of Prime Minister Narendra Modi’s domestic policies.

WHY CHINA MATTERS?

In sum, it would be wrong to underestimate the untapped potential of the India-US cooperation that is not limited to the containment of China but has its own powerful dynamics. The India-U.S. partnership serves some fundamental interests of both sides and is likely to continue in future irrespectively of possible political changes on both sides. At the same time, it would be an oversimplification to argue that India will take unambiguously pro-U.S. or pro-Western positions in the new emerging global order.

Like Russia, India is likely to resist the evolution of the international system towards a rigid U.S.-China bipolarity since such an evolution would inevitably de-

prive New Delhi of the freedom of manoeuvring that it enjoys now. Therefore, India will fight hard to get a permanent seat in the UN Security Council, it will aspire to have more influence in such institutions as IMF, IBRD or WTO, but it is highly unlikely to see New Delhi formally joining not only any U.S.-led political or military alliance but also G7 or another exclusively Western club of nations. The Indian foreign policies will be neither pro-U.S. nor pro-Russian; they will rather reflect the changing views of the Indian political class on the desirable new role of the country in the rapidly changing international environment.

The role of the “China factor” in the India-US entente should not be underestimated. Half a century ago, New Delhi might have had hopes that India could contain Beijing without outside assistance. This is no longer the case; the continuous economic, technological and military rise of China has increased the capability gap between the two great Asian nations to such an extent that only powerful outside support could help India to pursue an efficient containment policy towards its mighty adversary.

For apparent reasons, Russia is not in a position to render such support to its Indian strategic partner. In Moscow, they are trying hard to ensure that Russian-Chinese cooperation does not completely overshadow the traditional Russian-Indian friendship. Still, the scale of the Moscow-Beijing ties ranging from the number of summit meetings to the volumes of bilateral trade so far, significantly exceeds the scale of Moscow-New Delhi ties.

Since the European Union is not and will hardly become a great military actor with significant power projection capabilities, U.S. remains an indispensable source of external support to India for maintaining the geopolitical balance between the two leading Asian nations.

Source : South China Morning Post

Still, in some areas critical for India, Beijing appears to be more important for New Delhi than Washington. Trade turnover between India and China is growing rapidly, as are China’s investments in India. For sure, India limits the access that Chinese companies may have to sensitive sectors of India’s economy (for instance, to the new generation of telecommunication networks). On the whole, though, the volume of economic ties between China and India is comparable to that between India and U.S.

In many aspects, India’s and China’s economies organically complement each other, which means that economic rapprochement between the two great Asian powers will subsist, even if political tensions between New Delhi and Beijing are still there.

The odds are that the future growth of Indian trade and India’s foreign economic activities, in general, will involve China and other Asian neighbours more than overseas partners, U.S. including. In any case, to fully integrate into the global economy, India needs to address a number of fundamental problems – such as inadequate infrastructure, red tape, major regional discrepancies, obsolete labour training practices, and so on. As is the case with many other countries, most of the India’s foreign policy successes or failures will depend primarily on the ability or inability of the Indian leadership to properly address its domestic development agenda.

India has to interact with China in the “shared neighbourhood” countries in one way or another. Although these interactions are primarily those of rivalry, they also have pockets of cooperation. India’s leadership cannot but be apprehensive about China’s largescale military aid programmes to neighbouring Myanmar and Bangladesh and about China’s increasingly visible presence in the Maldives, Sri Lanka and Nepal. However, this is exactly the Eurasian reality that must be reckoned with.

The U.S. can no longer replace China as the principal economic actor in South and Southeast Asia, nor can Washington reverse China’s expanding military-technical cooperation with many countries in the region. Therefore, India will inevitably have to account for China’s presence in subregions crucial to New Delhi. A settlement of India–China border disputes in the foreseeable future appears quite unlikely. We cannot, however, rule out the possibility of a stabilized situation and eased tensions with a range

of confidence-building measures implemented in the military area. If this happens, the current incentives to reinforce India–U.S. military cooperation will inevitably lose momentum. A broader détente or a reset in India–China relations cannot entirely be left out of account, and these developments would launch a de-fragmentation of the Eurasian continent that would be bound to end up with constraining the U.S. role as the ultimate arbiter and the strategic balancer in Eurasian affairs.

WHAT DOES THIS MEAN FOR RUSSIA?

Most importantly, Russia does not have to panic as the India–U.S. cooperation is expanding in a number of areas. So far, this has not posed immediate threats to Moscow as it is largely a challenge for Beijing. The U.S. has been rather understanding in its attitude to Russia–India military-technical collaboration, believing it to be a form of balancing China’s dominance in Asia. Naturally, competition will further intensify in the markets that Russia prioritizes in India, with this competition not limited to military equipment, which Russia should be prepared for.

The changing rules of the global geopolitical game and the current diversification of New Delhi’s foreign policy priorities make it all the more urgent to explore new avenues in Russia–India partnership. Experts have long stressed that the current foundation for these relations is too narrow to create a solid fabric of social collaboration between the two nations. Biotechnologies, new energy, digital economy, higher education, transport logistics and tourism are but a partial list of the new opportunities that need to be carefully considered.

Geopolitically, Russia tends to associate the notion of “the Indo-Pacific” with U.S. endeavours to preserve its strategic hegemony in the Pacific and Indian oceans in the face of China’s growing power. However, India has a somewhat different perspective on this, believing “the Indo-Pacific” to be an opportunity to expand its political and economic presence east of the Strait of Malacca. As far as this standpoint goes, the central place in the emergent mega-region is assigned to the ASEAN nations rather than the U.S.

Obviously, India will not give up on fostering closer ties with its numerous partners in the Asia-Pacific, ranging from Japan and South Korea in the north up to Australia and New Zealand to the south, and this will be the case regardless of developments and the final outcome of the U.S.–China confrontation. This cooperation follows its own logic and has its own dynamics, which are independent of external factors. Therefore, Russia should consider a more open and more empathetic approach to the New Delhi “Indo-Pacific” narrative than the one that Moscow articulates now.

ANDREY KORTUNOV Academic Director, Russian International Affairs Council

PRIME MINISTER’S STATE VISIT: ITS IMPLICATIONS

The recent state visit of the Indian Prime Minister to the United States has marked a significant milestone in the bilateral relationship between the two nations. The visit, characterised by various notable developments and decisions, has implications for both the optics and substance of the India-US partnership.

BIPARTISAN SUPPORT

The visit signifies a deepening of the relationship and highlights the importance both countries attach to bilateral cooperation. It is worth noting that state visits by foreign leaders to the U.S are rare, further emphasising the significance of this occasion. President Joe Biden’s invitation to Prime Minister Modi reflects the growing importance of India as a strategic partner in the region and beyond.

The invitation extended to Prime Minister Modi to address a joint session of the U.S. Congress for the second time underscores the bipartisan support for the India-US relationship. This honour, historically reserved for few global leaders, demonstrates the acknowledgement of India’s growing stature on the global stage.

However, it is important to note that certain opposition and concerns were raised by some members of the U.S. Congress, highlighting the divisions within the Indian-origin diaspora community in the U.S.

Some voices in India suspect the U.S.’s reliability as a strategic defence partner. The U.S. narrative on the reliability issue is that while this may have happened in the 1960s and 1970s, things are different now.

INDIAN ORIGIN DIASPORA

The state visit also brings attention to the mainstreaming of the Indian-origin diaspora in the United States. Over time, various ethnic groups that have immigrated to the U.S. have initially faced marginalisation but eventually integrated into mainstream society. The Indian American community has now achieved prominence in U.S. politics, the economy, and society, with individuals of Indian origin holding key positions in the U.S. administration and major corporations. This mainstreaming presents both challenges and opportunities for the community and the India-U.S. relationship.

FOCUS ON CRITICAL AND EMERGING TECHNOLOGIES

A significant outcome of the summit was the decision to advance the Partnership on critical and emerging technologies. This groundbreaking agreement encompasses cooperation in areas such as artificial intelligence, quantum computing, cybersecurity, biotechnology, space, and semiconductors. In contrast to its approach towards China, it is noteworthy that the U.S. administration expressed its willingness to part-

The visit showcased the deepening strategic convergence, highlighted by key decisions in critical and emerging technologies, defence cooperation, and space exploration.

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ner with India on advanced technologies. The bilateral mechanisms established between the two countries have been actively working since January, paving the way for enhanced cooperation.

DEFENCE AND SPACE COOPERATION

The state visit also witnessed progress in defence and space cooperation between India, and the U.S. Clear signals were sent regarding the willingness to facilitate the transfer of defence technologies and increase cooperation in defence production. Discussions on a defence industrial cooperation roadmap and security of the supply chain further strengthen defence ties. Notably, the joint mission to the International Space Station in 2024 and India’s participation in the Artemis accord opens avenues for collaboration in the space sector with France, Israel, and Japan.

Some voices in India suspect the U.S.’s reliability as a strategic defence partner. The U.S. narrative on the reliability issue is that while this may have happened in the 1960s and 1970s, things are different now. The U.S. took a position to support India during the Kargil conflict. The U.S. was instrumental in getting India an exemption from the IAEA Nuclear Suppliers Group the Civil Nuclear Cooperation Agreement, enabling India to buy nuclear reactors from France and the Russians.

Even during the 2020 Galwan crisis with China, U.S. shared intelligence and authorised the lease of predator drones. More importantly, the top Indian lead-

ership is far more willing to move in a certain direction sensing the global play. In an interview with the Wall Street Journal before the visit, Prime Minister Modi remarked that there was “an unprecedented level of trust between the leaders of the two countries.”

THE ROLE OF THE INDIAN PRIVATE SECTOR

In light of the strategic convergence and focus on technology, the Indian private sector now has an opportune moment to step forward and actively engage in the India-U.S. partnership. Technology partnerships, production sharing, and the creation of supply chains are crucial components of the emerging relationship. The strategic trade dialogue, led by the foreign secretary on the Indian side and jointly headed by the undersecretaries of state and commerce on the U.S. side, emphasises the involvement of government, industry, and academia in advancing cooperation.

CONCLUSION

The state visit of the Indian Prime Minister to the U.S. has brought the India-US relationship to a new level. The visit showcased the deepening strategic convergence, highlighted by key decisions in critical and emerging technologies, defence cooperation, and space exploration. The mainstreaming of the Indian-origin diaspora in the U.S. adds another dimension to the relationship. Moving forward, it is imperative for governments, industry leaders, and academia to collaborate closely, identify opportunities, and address obstacles to leverage the full potential of the India-US partnership in technology and beyond.

ARUN KUMAR SINGH

Former Ambassador of India to the United States

Source : Scroll.in

US-CHINA: MENDING TIES

The sudden visit of the U.S. Secretary of State to Beijing with unprecedented access to President Xi Jinping has caused a great deal of speculation.

Aflurry of visits of top U.S. officials to Beijing is indicative of efforts on part of the Biden Administration to calm down the anti-China rhetoric and gain a measure of tranquillity as America gears up for next years Presidential elections.

What is being called the first high-level meeting between U.S. officials and their Chinese counterparts since 2018, the recent U.S. Secretary of State visit attracted great attention. Clearly, it was not a routine visit of a minister to another country- both superpowers are obviously taking a step back from their rapidly escalating war of words to try to cool down tempers and restore the geopolitical equilibrium to the extent possible.

Nothing much was expected from such a short trip as the post-meeting statements did not hint at any breakthrough during Secretary Blinken’s discussion in Beijing. Yes, the welcome accorded to him by President Xi Jinping at the Great Hall of the People, normally extended to heads of state, made for a good photo opportunity to convey the value the Chinese extended to this extension of the olive branch by Washington.

One positive fallout was an agreement between the two rivals to rein in and stabilise the intense contestation threatening to go out of control, whether over technology issues or Taiwan. Both sides, and the rest of

This is not a sustainable situation. The dangers of misunderstandings are extremely high. Both powers are nuclear. Any such miscommunications could have dangerous consequences in this regard. Other than this, being the two largest economies in the world closely intertwined, they have to live with each other.

the globe, can ill afford a military contest between these superpowers.

Treasury Secretary Janet Yellen followed to put the relationship on a ‘surer footing’ and re-establish communications between the top bureaucracy of the two superpowers. Striking a conciliatory note, Ms Yellen said that the world was ‘big enough for both countries to thrive.’

A four-day visit of President Biden’s special climate envoy John Kerry followed but it failed to reach new climate agreements. Some progress was expected from this meeting between the two top global carbon emitters but nothing significant materialised.

In a surprise move, the centenarian Henry Kissinger, a Nobel Laureate who was central to the US-China rapprochement of the 1970s and has remained in contact with the Chinese leadership, visited Beijing. He was able to use his influence to get a one-to-one meeting

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with President Xi Jinping trying to calm the stormy waters. Reportedly, Mr Kissinger has made a fortune as a consultant for Chinese businesses and has been against the hawkish turn in the U.S. policy towards China.

A SHAKY FOUNDATION?

China-U.S. equation was based on both sides seeking advantages from their narrow perspectives, and hence the relationship was not destined to last. The U.S. believed that the incorporation of the massive manufacturing potential of China into the global economy would eventually make Beijing a reformed and peaceful nation with no ambitions for global primacy and, even worse, not a challenger to American hegemony. As things turned out, the U.S. was proved wrong on both accounts. As regards China, it bid its time as it gained national power and built up momentum towards its historical dream of becoming the Middle Empire or the centre of this world. To be fair to the Chinese, while under Deng’s “Hide your strength, bide your time” policy China tried to keep a low profile, its ambitions for global primacy was well known. If this trajectory of China was overlooked, advertently or inadvertently, by the West, the fault is not that of China.

Both sides ultimately benefitted from this arrangement. The Chinese received Western know-how and assistance at all kinds of levels. They were finally able to give up on sclerotic socialist doctrines, which had come to a dead end. The West was no longer the imperialist enemy but the entrepreneurial ally. Capitalism ceased to be seen as suspicious. Instead, it was regarded as necessary for China’s future. Western businesses also accessed the huge unexploited Chinese market.

This mutually beneficial relationship continued for some time. One of the first steps taken to cement this new relationship was the establishment of official relations between Western countries led by the United States and the People’s Republic of China. There was, of course, one party that lost out in this equation. This was the tiny island of Taiwan ruled by forces opposing the Chinese Communists. They were not consulted in this radical change.

The new status quo just had to be accepted by them. Previously they held the official position as the diplomatic representatives of China in the United Nations. Now this position was taken over by Beijing. A new policy of the One China Principle was established. Under this policy, as the rulers of the real China, the Communist Party had a natural claim over Taiwan. This was despite the fact that the Communists had never actually ruled this island before.

As the Chinese economy began to open up more and more, it began to develop further. The self-confidence of China slowly began to increase. It gradually started to understand the nuances of the international economic system. The Chinese wholly embraced Western business practices and culture. With the collapse of the Soviet Union, left-wing ideology officially lost its resonance. Something had to replace this ideology.

This increasingly came in the form of Chinese nationalism. This “peaceful rise of China” continued throughout the 1990s and the first decade of the 21st century. Things began to change when Xi Jinping took power in 2013. A new, more assertive China emerged under Xi Jinping, China’s first paramount leader in decades and accelerated its efforts at challenging American hegemony, on both economic and military fronts. Even its routine foreign ministry briefings took a markedly belligerent tone, earning the nick name of ‘wolf diplomacy’ a takeaway from a hit Chinese film of the Rambo genre.

Then came the COVID catastrophe which struck the U.S. the hardest, prompting President Trump to famously label it as the ‘Kung Flu!’ We could call this the tipping point in US-China relations.

NO WINNERS!

This visits were necessary for several reasons. First, open hostility between Beijing and Washington has been steadily rising recently. Hard-liners on both sides view the other as an existential evil. Subtlety and nuance have gone out of the window. The West is increasingly trying to encircle China in more ways than one. The Chinese are trying to portray themselves as the new leaders of the non-Western world.

This is not a sustainable situation. The dangers of misunderstandings are extremely high. Both powers are nuclear. Any such miscommunications could have dangerous consequences in this regard. Other than this, being the two largest economies in the world closely intertwined, they have to live with each other.

This is not Cold War 2.0. The Chinese are not spreading some new ideology though some in the West think so. Convergences remain in some areas. But the question remains whether either side is willing to compromise. Compromise is being seen as capitulation by both sides.

International relations theory has a clear explanation for this. This is the inevitable conflict between a rising power and a status quo power. This happened during the Second World War. Germany was the rising power, as was Imperial Japan. The other Western European colonial empires were the declining powers. It did not end well for the rising powers in this case. This is what both the U.S. and China have to keep in mind. There will be no winners if an all-out conflict breaks out; both parties stand to lose.

THE WAY FORWARD

What is required is a system of managed competition. There need not be agreement on everything. But work can still be carried out on common interests. It does not have to be a zero-sum game. There is enough room in the world for two large powers. A rising power does not necessarily have to displace its predecessor. There is scope for compromise. The optics of this visit has become hugely significant. The U.S. Secretary of State has come calling to Beijing, not the other way

round. The Chinese wanted the commerce and treasury secretaries to come first. However, the United States put its foot down on this. The commerce and treasury secretaries would come later.

No matter what the optics, the fact remains that the Chinese economy is in dire straits. They need the United States more than ever before. Sensitive technologies like semiconductors are the key to the future. Here the U.S. is playing hardball. But the Chinese require this technology and many other similar things. And they are desperate.

Not much was expected from this visit. Still, there were some major developments. Secretary Blinken officially stated during the visit that “We do not support Taiwan’s independence. We remain opposed to any unilateral changes to the status quo by either side” This was expected.

With an ongoing unresolved crisis in Ukraine, the U.S. does not want to open up a second front in Asia. The visit failed to re-open military communication between Beijing and Washington. Again, there is a reason behind this. The Americans continue to sanction Li

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There is no chance that China would divert from its relationship with its closest partners, DPR Korea or Pakistan. Unlike America’s propensity, China’s ties are longterm and, therefore, durable. It is also true that the U.S. has more options in its relationships compared to other countries, having a global reach.

Shangfu, the Chinese defence minister. So, despite the long discussions that have taken place during this visit, the net result has not been substantial.

Assessment

This visit is only the first step in a long process. A basic level of mutual trust has to be established for both sides to work together.

Common challenges like climate change remain where the U.S. and China face similar threats. China is not a totally revisionist power like Russia. It knows its limits. So a degree of compromise is possible between the two powers despite the shrill rhetoric being pandered by their respective nationalistic media.

The rest of the world has to be cautious about aligning with either the U.S. or China in their competition, lest they, too, get pulled into a competition that no nation can afford at this juncture.

It is necessary in this context to consider that DPRK might look forward to another Trump presidency, recalling the steps taken last time to normalise U.S.-DPRK relations, which did not, in the end, reach anywhere.

KRISHNAN SRINIVASAN Former Foreign Secretary of India

Source : Global Times

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Blinken’s visit and that of Treasury Secretary Yellen presently are of considerable significance, though it is a bit premature to speak of “detente”. The last experience of superpower detente was in the 1970s when the U.S. and Soviet Union concluded arms control agreements and began a process of security dialogue and cooperation across Cold War frontiers in Europe.

However, the lesson of history is clear. The U.S. and China are in a phase of strategic competition though not a cold war. There are countervailing forces in Wall Street and Big Business who want good, collaborative relations with China, but the political and strategic consensus appears to lead in the direction of serious competition. The Chinese, too, are wary of U.S. overtures and preparing for greater difficulties in ties with the U.S.

In this scenario, for the U.S., the most significant relationship - whether hostile, tepid, or friendly- will remain with China. As in the Cold War earlier, the U.S. will act over the heads of allies whenever its vital interest in stabilizing relations with China requires. It may or may not even consult them.

For India, the most important issue is to make the best use of the opportunity being presented -of upgraded technological, economic and strategic cooperation with the U.S.- to drive our economic transformation and enhance our global role.

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US-CHINA: ADVANTAGE NORTH KOREA

Ever since the Korean imbroglio of the 1950s, North Korea has held many of the aces in the on-again and offagain relationship between the U.S. and China.

If anything, the loser has been the U.S., which has been unable to rein in North Korea from pursuing its hostile intentions towards South Korea – a treaty ally of the U.S. - or moderate Pyongyang’s ambitions of becoming a nuclear weapon power.

North Korea has flourished whenever U.S.-China relations are adverse, and hence, seeks every opportunity to thwart any kind of a détente between the latter two. It uses South Korea as a ‘proxy’ to muddy the waters while persisting with its efforts towards becoming a major nuclear power.

The Blinken visit to China – though it did not produce anything worthwhile in terms of results – was something that North Korea feared could possibly become the thin end of the wedge for a lessening of tensions between the U.S. and China, a situation that is anathema not only to North Korea’s

K NARAYANAN

nuclear ambitions but also to its ultimate aim of dominating the Northeast Asian landscape. On the other hand, anything that could provoke a wider conflict between the U.S. and China is perceived by North Korea to be to its advantage.

In many ways, North Korea today is the most dangerous place in the world, the Ukraine conflict notwithstanding. It is controlled by a leader who borders on megalomania and is essentially friendless in the world.

It seeks to thrive by enlarging tensions between China and the U.S. Notwithstanding an impression, as also the rhetoric, China is not Pyongyang’s keeper and can, at best moderate Pyongyang’s nuclear and other ambitions by employing economic and related instruments.

The real danger that Pyongyang poses is that it is one nation that is most keen to provoke a serious global conflict, essentially between the U.S. and China, and can, hence, be expected to feed the embers of any conflict between China and the West over Taiwan.

The other overriding threat that North Korea poses is that it has a leadership that has few moral compunctions about triggering a Third World War – using nuclear weapons - totally ignoring the consequences of its actions and the threat it poses to the world.

RANJAN MATHAI Former Foreign Secretary of India

M

Former National Security Advisor of India

ANALYSING INDIA’S NEIGHBOURHOOD

India’s ‘Neighbourhood First’ policy has renewed impetus on strengthening relations with its immediate neighbours. The policy aims to ensure peace, prosperity and tranquillity in the sub-region.

India struggles to forge sustained relations with neighbours despite numerous advantages of geo-proximity and historical cultural and religious bondages. India is yet to shape the enduring, long-term strategic convergence on mutually benefiting relationships. However, recent initiatives towards strengthening bilateral ties are steps in the right direction in the era of interdependence.

HOW INDIA IS PERCEIVED

India’s neighbours view India as a strong regional power enjoying a geopolitical sweet spot, a peer competitor to China in the Indo-Pacific region, and successfully nurturing close relations with both the USA and Russia while retaining strategic autonomy. India is seen as a stable political entity with strong democratic institutions and an aspiring tech-savvy youth dividend. India’s sustained economic growth with rapid capability building towards becoming a self-reliant nation is also a source of admiration (and envy).

There are also some misgivings; fear of Indian dominance and subsuming economic and cultural activities.

There are certain irritants in the bilateral relationship of India with her neighbours. The foremost is the regional security framework. The region is seen as the least integrated, having complex security challenges. The regional geopolitical situation is uncertain owing to external players such as China, USA, Turkey and Saudi Arabia.

This is essentially fuelled by the huge differential between the Indian economy, military and technical domains and that of its neighbours. When India raises bilateral issues, this is more often seen as a ‘big brotherly’ attitude or even plain meddling in their internal affairs. Another nagging issue is accusations that while the Indian government makes big promises in bilateral and multilateral intercourses, the delivery remains suspect.

CHALLENGES TO COOPERATION

There are certain irritants in the bilateral relationship of India with her neighbours. The foremost is the regional security framework. The region is seen as the least integrated, having complex security challenges. The regional geopolitical situation is uncertain owing to external players such as China, USA, Turkey and Saudi Arabia. India’s historical rivals, China and Pakistan, also lose no opportunity to fuel anti -India sentiments amidst India’s neighbours. The traditional security issues have broadened to non-military issues of

India’s bilateral relations with neighbours are neither transactional nor a zero-sum game.

Lt Gen G A V Reddy AVSM, SC, VSM (Retd) is the former Deputy Chief of Integrated Defense Staff , DG-DIA and Strategic Advisor at Synergia Foundation.

human security concerns, including water, food, energy and refugees. South Asia is potentially one of the worst impacted by the climate crisis, and there is little being done jointly by the countries to stem the tide. Smaller nations expect India to take the lead, but India, too, is hamstrung by resource limitations.

Growing Chinese influence in the region, including a Blitzkrieg infrastructure development in the Indian neighbourhood through CPEC / BRI with large-scale construction of roads, railway lines, habitation camps, energy pipelines etc., worries India. This invariably brings a large presence of Chinese engineers and workers and increasingly Chinese private security contractors closer to the border region, presenting fresh challenges of hegemonism and power politics. The curse of political instability resulting from convoluted political perspectives has plagued the region for last so many decades. This has led to frequent regime changes, many through violent means. India suspects the Chinese hand in the festering internal politics of many of its neighbours that tend to assume a distinct anti-India flavour.

It is clear that the South Asian region is important for Beijing, both militarily and economically, and the latter has been steadily expanding its influence to encourage pro-China leanings amidst India’s neighbours. With Pakistan, its ‘Iron Brother with a friendship higher than the Himalayas, deeper than the ocean, sweeter than honey, and stronger than steel,’ China has succeeded in boxing India from both its flanks. If other neighbours, especially Sri Lanka and Nepal, also toe the Chinese line, then India would be truly encircled. Therefore, India is justifiably suspicious of Chinese attempts to woo these countries.

The region is susceptible to economic turbulence and faces numerous hurdles in economic integration owing to a lack of free trade and transit agreements, levying of import taxes, persistent trade imbalance and non-tariff barriers. Huge Chinese loans for BRI projects are turning into debt traps, a situation that economically stressed countries like Pakistan and Sri Lanka refuse to acknowledge to their people.

Radicalisation and Social Dissonance are yet another fault line inflicting almost all South Asian countries. Be it religious and ethnic/ social fissures or an externally supported terror campaign, or social upheavals due to a failing economy and social and financial equalities in a collapsing social structure, all of India’s neighbours barring none suffer from few or all of these malaises, including India. Consequently, governments lay the blame on their neighbour(s) for these real or perceived interferences, adding fuel to the existing disharmony between countries within South Asia.

Common sense dictates that a region that was once a single entity under the British Raj should have inherited the advantage of common road, rail, inland water and air connectivity, like modern Europe. However, except for a few strictly regulated border crossings, connectivity within the South Asian region remains pathetic and even worse than during British rule. Mutual suspicions and narrow political compulsions have ensured access denial and refusal of transit rights, keeping the entire region locked into individual silos with little commercial flow of goods and services between them. As a result of this access denial to India (and by India), the enormous potential for regional trade is sub-optimally utilised.

ExternalPlayers

ComplexSecurity

LeastIntegrated

HOPES FOR THE FUTURE?

While as a grouping, the South Asian Association for Regional Cooperation (SAARC) has failed miserably, largely due to the obstructions of its two biggest members-India and Pakistan- bilateral agreements are breaking new ground almost daily. Some encouraging initiatives are listed below.

Sub-Regional Cooperation Framework. The logic of geo-location is unrelenting to have a stable, peaceful neighbourhood to reduce political, economic and military burdens. Thus, India intends to build political consensus on regional security and resurrect her credibility and image in the region as a Net Security Provider. India’s ability to alter the geopolitical landscape of South Asia could be leveraged for the benefit of the neighbourhood.

Connectivity. India’s neighbouring countries, either landlocked or Island nations, need multiple connectivity options to facilitate smooth economic integration, trade, investments, logistics movement and exploit tourism potential in the sub-region. The impetus to projects such as BBIN, Trilateral highway, Kaladan multi-modal project, trans-border rail links, ports construction and air connectivity will tremendously boost the region’s prosperity.

Economic Integration. India’s vast domain expertise in banking, insurance, telecom, digitised services, and joint ventures /start-ups will help neighbours enhance bilateral trade and sustained economic growth. Increased Indian FDI in the neighbourhood can assist its neighbours to enhance their export base and bring about a commonality of goods and services. Optimising trade through MFN status, SAFTA, and CEPA will reduce the non-tariff barriers and open opportunities and do away with huge trade imbalances in the long term.

Regional Diplomacy. The Gujral Doctrine assuring unilateral concessions to neighbours without seeking reciprocity, could be the guiding neighbourhood policy of India. Indian diplomacy, if non-intrusive, could inspire confidence in its neighbours. This could be achieved by focusing on bilateral priorities, concerns and aspirations, creating a balance in the power differentials. The diplomatic engagements between SAARC members must be revisited and made innovative if they have to sustain.

Cultural Exchanges. The entire region is blessed with a plural culture that, in many cases, transcends national boundaries. These strong historical linkages offer opportunities for enhanced people-to-people contact and exchange of ideas. Tourists from South Asia throng the SE Asian and European tourist spots in massive numbers, whereas intra-region tourism is dismal. The cheap mode of transport available (road, rail, riverine) can ensure that even a common man can travel to a neighbouring country. In fact, religious tourism has immense potential. The tourism sector generates employment, inspires local artisans, and supports the services and transport sector by opening a gateway.

The pool of language experts from neighbouring countries will facilitate better people-to-people contact, education, and trade and create long friendship bridges.

Military Diplomacy. India should strengthen strategic military relations with neighbours as a net security provider of the sub-region capable of tackling growing security threats. Indian engagements with neighbours in the military domain should focus on helping their capacity building, joint training including anti-terror training, sharing technology in guarding their land borders and coasts, joint border patrolling, supply of military weapons, equipment, ammunition, sharing intelligence on drug trafficking, piracy, smuggling to increase interoperability in the region. The Indian expertise in Disaster management will be of great help to neighbours.

Energy Cooperation. The initiative taken recently by allowing Indian Public Sector as well as private participation in energy export to Bangladesh can be replicated, including the Indian power grid utilised by others. The ever-increasing energy needs of neighbours for manufacturing industries necessitate sharing of resources for mutual benefit and economic prosperity.

Capacity Building. Indian development assistance to neighbours for capacity building, including community development projects, skilling the youth/women to get jobs and providing basic civic amenities in border areas will be highly rewarding.

The necessity of provisioning of higher education institutes viz; IITs, IIMs, and initial faculty staff to establish and stabilise the facilities is a dire need. In the health sector, too Indian government and private corporates establishing speciality medical facilities akin to AIIMS in at least each national capital will reduce medico tourism of neighbours. The language training of employable youth will provide abundant opportunities to seek jobs.

Assessment

India should focus on convergence and defer contentious issues for now with the neighbours and strive to meet demand-driven, people- friendly and mutually beneficial aspirations.

One way forward for India is to bridge the trust deficit with political hierarchy without being seen as the dominant power, investing in long-term enduring relationships.

However, in the ultimate analysis, India cannot go the full distance alone. Its neighbours have to come forward and pitch in with a strong political will to benefit the teeming millions of the sub-region.

INDIA – BANGLADESH: AN OPTIMISTIC FUTURE?

Despite sharing a bond forged in blood, has the India-Bangladesh relationship matured to its potential? RESEARCH TEAM

The foundation stone of India- Bangladesh relationship was eloquently defined by the Indian External Affairs Minister (EAM) S Jaishankar last year during an event organised by Bangladesh to honour the children of Indian Armed Forces personnel with the Mujib Scholarship. Mr Jaishankar called it a “continuation of the bonds that were forged in blood 50 years ago.”

While both India and Bangladesh have publicly stressed the positives of their evolving relationship, especially since Prime Minister Sheikh Hasina came to power for the second time in 2009, much remains to be achieved.

Undoubtedly, Bangladesh is a valuable neighbour and an important strategic partner of India. Indian efforts to build greater trust by projecting and utilising commonality are enhancing integration in multiple sectors, and significant progress has been achieved in three thematic areas - dispute resolution, cooperation and connectivity. But, India’s sheer size has always awed its neighbours, especially the smaller ones, who have harboured a genuine concern about being submerged by the Indian economy and culture.

The 1971 Indo – Pak war, also called the War of Liberation in Bangladesh, is both a cause of bonhomie as also angst. Today, Bangladesh wholeheartedly and pub-

Bangladesh may be a small nation in physical terms, but its value lies in the regional geostrategic space for India. In the new strategic milieu where China has upturned existing global power structures, its geostrategic location and economic and political strength make consistency in Indo-Bangladesh relations important, irrespective of which regime is in power in Delhi and Dhaka.

licly recognises India’s contribution during the Liberation War of 1971, both publicly and privately, which has greatly brought the two nations closer. But this was not always so, especially during President Zia-ur-Rahman (1977-1981), the founder of Bangladesh Nationalist Party, the main opposition party today and during the military rule of Lt Gen HM Ershad (1983-90).

THE COMPULSIONS OF GEOGRAPHY AND CULTURE

Geographically, Bangladesh occupies a very strategic location vis a vis India, especially concerning the vulnerable Siliguri Corridor, India’s vital gateway to its North-eastern States and the domination Bangladesh enjoys over the Bay of Bengal.

Both share an international border that is almost 4000 km long, with pockets of disputes interspersed.

India aspires to a greater role in Southeast Asia, so Bangladesh can be the ideal partner. The latter can facilitate greater integration of the Indian mainland and the Northeast region by providing access to road, rail and waterways, including the movement of military vehicles and aircraft over her airspace. Culturally both nations have a lot in common apart from a shared fascination with the poetry of Rabindranath Tagore, especially Rabindra Sangeet. The fact that as the Eastern arm of a pre-1971 Pakistan, it refused to shed its Bangla culture and linguistic bonds to a united Bengal was one of the factors that made its people suspect in the eyes of their compatriots from the Western wing. Seventy years after the partition of British-ruled India, these cultural bonds remain as strong as ever, despite the rise of Islamic radicalisation in Bangladesh.

WHY BANGLADESH?

Bangladesh may be a small nation in physical terms, but its value lies in the regional geostrategic space for India. In the new strategic milieu where China has upturned existing global power structures, its geostrategic location and economic and political strength make consistency in Indo-Bangladesh relations important, irrespective of which regime is in power in Delhi and Dhaka. Without a doubt, Bangladesh is an important component of India’s extended neighbourhood security calculus. Under Prime Minister Sheikh Hasina’s watch, now in her fourth term ending next year, India and Bangladesh have been deeply engaged in Regional Cooperation through multilateral forums such as SAARC, BIMSTEC and IORARC.

More importantly, its location on the flank of our Northeast makes it an ideal corridor for greater integration of the Indian mainland and the North East region by providing air, road, rail, and waterway access to commercial and military traffic. Economically, Bangladesh has been enjoying a healthy growth rate for over a decade. For the future, there is very good potential for even greater growth with its large and diligent human resources. Even during the difficult pandemic period followed by the Ukraine war, Bangladesh has maintained its economic equilibrium, unlike Sri Lanka and Pakistan. As per Dacca, the growth has been pegged at a healthy 6.03 per cent this year.

Therefore, if Indian investments and technological expertise are shared with its Eastern Neighbour, both sides stand to gain considerably. Take, for example, the energy sector, where India and Bangladesh have a vast unmet demand to fuel growth. Mutually beneficial joint investments in projects like the India-Bangladesh Friendship Pipeline and recognition of the Indian Oil Corporation Limited as a registered government-to-government supplier of refined petroleum products are examples of cooperation in energy security.

ROAD BUMPS

Despite the network of rivers crisscrossing Bangla Desh, every drop of the outflow is precious for its econ-

omy and the quality of life of its people. Therefore, for decades, there have been several disputes on sharing of river waters. The most publicised one is the Teesta River dispute, where Bangladesh seeks 50 per cent of water between the dry months of Dec to May. India claims 55 per cent of the water as the river flows for about 151 km through Sikkim, nearly 142 km through West Bengal, and only the final 121 km through Bangladesh.

Of the 4096.7 km long Indo-Bangladesh, 180 km is along the Teesta River. However, the 6.5 km stretch of the boundary near Comilla on the Tripura border is yet to be delimited, leading to often border killings. The land border between endpoints was only resolved after the UN Tribunal award.

Fortunately, the dispute over various tidal islands in the Ganga Delta was amicably resolved through the Permanent Court of Arbitration, whose decision has been accepted by India and Bangladesh. In addition, the smuggling of drugs and fake currency through the Bangladesh border is another serious concern for the Indian government despite the effort of India to fence the entire stretch as it has done with the Indo-Pak border. Bangladesh has a significant footprint of radical Islamist groups fermenting trouble within the country and exporting it to India. Many terrorist acts in India could be traced back to Bangladesh. Allegedly, the Pakistani ISI has a strong presence in the country, abetting and supporting a host of anti-India Islamic groups. Prominent amongst these is JMB (Jamaat-ul-Mujahideen). The increased radicalisation in Bangladesh, coupled with violent extremism, has Pakistan’s backing and is spreading across the border into West Bengal, Assam and Tripura.

China’s expanding presence and influence along India’s periphery is a rising concern. Bangladesh has also been attracted to Chinese investments like India’s other neighbours. The Defence Cooperation Agreement that supplies Chinese submarines, fighter jets, tanks, missile boats and equipment to the Bangladesh armed forces is of greater concern. The agreement also involves joint training between the two militaries. Turkey is also supplying military equipment to Bangladesh.

Bangladesh is key to India’s overland connection with its Northeast region, which is linked by the tenuous 21 km wide Siliguri corridor [chicken neck]. Access to the sea for Indian north-east states is easier through Bangladesh. However, operationalising and stabilising these links is still pending. Like other smaller neighbours, Bangladesh also harbours apprehensions of being swamped by an unequal trade balance with India. A trade deficit of $ 14 bn for 2021 -22 exists, with Indian exports growing at a healthy 11 per cent per annum. Bangladesh levies a 25 per cent peak import tariff to safeguard its own industry, which is to India’s disadvantage. There are ongoing discussions to resolve this issue.

THE WAY AHEAD

For India, connectivity with its North Eastern states remains the top priority. The Bangladesh, Bhutan, India

and Nepal [BBIN] Motor Vehicle Agreement-2015 must be expedited by finalising the protocols, including insurance, banking guarantees, and freight carrier’s size and frequency into each country. The Trilateral Highway between India, Myanmar and Thailand is an excellent opportunity for Bangladesh to join the mega project. As regards railway corridors, the Rs. 862.58 Cr AgartalaAkhaura link is yet to be commissioned, with 85 per cent of work on the Indian side and 73 per cent of work in Bangladesh already completed. It will reduce the travel time between Kolkata and Agartala to only 10 hours. It is a pity that the full potential of the riverine transport system is not being exploited despite an existing Protocol on Inland Water Transit & Trade (PIWTT). The delay is due to the non-finalisation of the protocol routes.

Energy Security for its growing manufacturing sector is a prime concern for Bangladesh, for which it needs Indian assistance on priority. Adani Power in Jharkhand has agreed to supply power to Bangladesh. Bangladesh’s additional requirement of power necessitates the early signing of a tripartite power trade agreement enabling Bangladesh to import power from Nepal through India’s grid. This will boost reshaping sub-regional cooperation between all three nations.

Connectivity and energy issues are but subsets of the larger issue of economic integration between the two neighbours. This can be achieved only if, stable economic policies are enacted by both sides on a long-term basis to make progress in SAFTA & CEPA. India should further reduce non-tariff barriers to boost trade.

The trade imbalance needs to be corrected, with India’s West Bengal, North East states and Bangladesh acting as a Compact Hub in boosting trade with Southeast Asia by utilising both nations’ ports, road and rail links. The Indian FDI in Bangladesh is only $ 310 Mn compared to the Chinese $ 940 Mn. Water sharing has historically been the biggest irritant in the relationship, with Teesta River being the most prominent. New Delhi is handicapped by the fact that this is a state subject, even though the current friendly regime in Dacca would gain immensely if an agreement is signed before the

parliamentary elections scheduled in January next year. In addition, there is a need to resolve the water sharing of six other rivers (Manu, Muhuri, Khowai, Gumti, Dharla and Dudh Kumar). China has been quick to step into this issue by offering dredging and construction of embankments of the Teesta on the Bangladesh side to improve the outflow. India’s concern is the presence of a large number of Chinese workers so close to the sensitive Siliguri Corridor.

As Bangladesh grows in the manufacturing and services sectors, it looks towards India to help upskill its youth for greater employability and entrepreneurship. Initiatives such as medical courses in the Bangla language, collaboration in Therapeutics, and setting up orphanages, educational as Institutes and cultural centres, besides signing MOUs for disaster management cooperation, will meet the current aspirations of Bangladesh.

Gradually, the realisation has dawned on most of our neighbours, including Bangladesh, that India holds no conceivable security threat to them. However, many continue to have a robust defence relationship with Beijing. India would expect, at the least, greater transparency in this relationship with China so that Indian security concerns are laid to rest. India already has a healthy military-to-military partnership with the Bangladesh defence forces that must be sustained to enhance the trust between the two militaries.

CONCLUSION

Pertinent challenges need to be carefully addressed to ensure sustainable relationships. Positive development in recent initiatives in political, economic and security domains must be progressed in time bond manner - before the polls in Bangladesh.

In the growing interdependence and sharing era, there is no alternative but to further strengthen bilateral relations between India and Bangladesh by exploring all possible opportunities. The bond forged in blood must endure and prosper.

Source : The Economic Times

THE WAGNER REVOLT: A TIGER BY THE TAIL

The recent chain of events in Rostov on the Don leading to the ‘march on Moscow’ is a lesson for those who rely on private entities to fight their wars.

Maj. Gen. Ajay. Sah SM, VSM (Retd), is the CIO at Synergia Foundation, with experience in conflict resolution, peacekeeping and counterterrorism.

Carl Von Clausewitz aptly defined the nature of war as the “continuation of politics by other means.” Thus, by any definition, it is serious business in which sovereign states are involved and conduct it through state organs-organised, controlled and financed by the state. The moment the state relinquishes this control to non-state entities, now called “private military contractors (PMCs)”, it runs the considerable risk of jeopardising the writ of the state on the turn of events.

Nothing could have described the potential of such an enterprise getting out of control and striking the hand that feeds it more than the socalled Wagner mutiny we recently witnessed on global television.

Now many Russian security experts ruefully rub their hands and ask themselves, “How did this come to pass?”

THE GENESIS

Not so long back, Prigozin, also called “Putin’s Chef” by the Western media, was a national hero in the Russian Federation, felicitated by the rich and powerful with almost unrestricted access to the sanctum sanctorum of the Kremlin. Now overnight, the situation has turned on its head as an embarrassed and disconcerted

Not so long back, Prigozin, also called “Putin’s Chef” by the Western media, was a national hero in the Russian Federation, felicitated by the rich and powerful with almost unrestricted access to the sanctum sanctorum of the Kremlin.

Kremlin tries very hard to put the genie back into the bottle.

The shadow of ‘Wagner” has hung over many war zones in Africa and the Middle East in the past few years but reached its high-water mark (and subsequently its nadir!) in Russia’s special military operation in Ukraine.

Mr Prigozin dominated the news, both on mainstream and social media, as the troubleshooter on the battlefield, claiming victories in strategic strongholds like Bahumuk. However, the situation has turned around so swiftly that it left even Kremlin gasping, although the West now claims that its intelligence agencies had seen the breakup coming.

Contrary to common perception, Wagner is no single entity but a network of companies and private military contractors linked by overlapping ownerships and logistic networks, all controlled by Moscow. Mr Putin publicly acknowledged in an address to his people that billions had been spent on the PMC from state funds.

It is emerging from media reports that Mr Prigozhin had the support of some high-ranking military officers within the Russian Army. As per the Guardian Newspa-

per, Sergei Surovikin, a top general, disappeared from public view and was officially reported to be “resting.” Surovikin is known to be close to Prigozhin. Another General, Ivan Popov, was sacked for publicly criticising the head of the Army and the defence minister. A purge of pro-Prigozhin elements is likely to continue. Wagner can justifiably claim some remarkable success. It spearheaded the Russian deployment in Syria and was in the thick of the offensive backing the Assad regime that subdued the civil conflict.

They drove the insurgents back in the Central African Republic alongside government forces. Due to this, numerous other African nations, like Mali, where French troops just withdrew after a decade of futilely battling terrorists, turned to Russia for assistance, regaining some of the lost Cold War influence in the continent. However, not all Wagner’s endeavours were fruitful. After suffering significant setbacks in the battle against jihadists, they withdrew from Mozambique in 2019. Wagner lost the civil war in Libya, where they fought alongside the rebel General Khalifa Haftar.

A BLEAK FUTURE

Now banished to Belarus and placed under the direct supervision of its autocratic ruler Alexander Grigoryevich Lukashenko (in power since 1994, making him the longest-serving European strongman), the future of Wagner Group appears uncertain. While publicly, Kremlin is adopting no legal recourse against its operatives and Mr Prigozin, who have been offered service in the regular Russian Army by signing a contract, Mr Putin is known to nurture grudges and never allow a political opponent to escape unscathed. So, more drama could be in store for those who closely follow the fortunes of the Wagner group and its high-profile and mercurial leader.

Many in Russia and abroad were surprised and perplexed at the tolerance displayed by Mr Putin, who is not known for harbouring such sentiments for enemies of the state. But if it was a tactical move to diffuse a difficult confrontation, then it worked brilliantly. The real tough decisions will now follow, and these will be most-

ly in camera. For a moment, there were speculations (and hopes) of a palace coup in the Kremlin, but these were quickly scorched as the entire Russian security apparatus queued behind Mr Putin to demonstrate their support. There is little political opposition surviving in Russia today that could have exploited the situation, and the Russian streets remained peaceful, albeit with a marked degree of unease. Yes, the aura of invincibility that Mr Putin enjoyed has received a dent or two, but there is no immediate threat to his continuation in power.

As regards the future of Mr Prgozhin, it is unlikely that there will be many who will bet on him regaining his earlier position in the power dynamics of Russia. If he escapes with his life to some lonely yet comfortable exile, it would be a win-win for him. At the height of the crisis, commentators hinted at his contacts within the Russian Federal Security establishment, especially the Federal Protective Service that guards Mr Putin, but these failed to materialise.

Like any other crisis, it comes with opportunities for some. The Chechen strongman Ramzan Kadyrov (blacklisted from multiple countries and sanctioned by the U.S. State Department for violations of human rights, as well as by the European Union, the United Kingdom and several other countries) promptly volunteered to fill in the defences vacated by Wagner troops in Bakhmut, Donetsk Oblast. Russia needs to study the experience of the Americans with their PMSc, especially the notorious Blackwater.

The Nisour Square massacre by Blackwater operatives finally exposed the group’s widespread culture of impunity under American overwatch to international scrutiny. Under public pressure, the U.S. government distanced itself from Blackwater and the group ultimately morphed into a much lower profile defensive entity ‘Academi’

Assessment

Western adversaries of Russia were quick to claim that the ‘mutiny’ showed the widening ‘cracks’ in the edifice of the Kremlin power structure propping up Mr Putin. However, these cracks have failed to materialise credibly.

By all accounts, it seems Mr Putin has overcome the crisis and may have learnt a lesson or two in dealing with armed groups outside state control.

The West smugly gloated on the discomfort of the Kremlin’s top hierarchy as their vaunted PMC disintegrated, sinking billions of dollars worth of investment, and placing their foreign military expeditions at risk. However, the West too need to revisit their dependency on PMCs, which grew to a significant size and importance during the American military adventurers in Iraq and Afghanistan.

Source : Cartoon Movement

POST WAGNER RUSSIA

Russia’s ‘special military operation has turned the security paradigm of Europe on its head. There are several nagging questions as to what direction the security structure in Europe will take as and when the fighting in Ukraine grinds to a halt and the role of various stakeholders, especially Russia. The Russian perspective is especially important in light of the recent Wagner ‘mutiny’, which caught the whole world, and perhaps even Russia, by surprise. The views expressed below are based on a discussion between Synergia Foundation and Mr Vasily.

UKRAINE CONFLICT: AN OVERVIEW

The Ukrainian conflict is unique. It is the biggest conventional armed conflict in the world since the Iran-Iraq War. But in many aspects, this conflict exceeds even the Iran-Iraq War. In some ways, it could qualify as the biggest and the bloodiest conflict since Korean War. In brief, it is a major high-intensity conventional war.

Ukraine war brings us back to the basics of warfare and military economy, as they used to be understood in the first half of the 20th Century. The intensity is comparable to World War II in terms of the type and scale of artillery systems and ammunition of calibre, such as 122 mm and above expended. In the first year of the war in Ukraine, the artillery ammunition was comparable to

Now it is clear that it will no longer play any major role in the fighting. Wagner operatives will either be included in the regular Russian forces or used for Russia’s overseas commitments, like in Central Africa, where they have proved to be a very effective and valuable asset.

the use of similar ammunition by the Soviet forces in World War II, even though the numbers of combatants involved were much smaller. Basically, it is a very traditional high-intensity conflict, a product of the new global situation where great powers are willing to take risks and dedicate significant resources when they deem fit. Concurrently, several new and disruptive technologies are introduced in warfare, like space-based intelligence, which provides rapid and real-time targeting information, widespread use of small unmanned aerial vehicles (UAVs) and loitering ammunitions. In particular, longrange artillery plays a key role, especially when firing precision-guided ammunition.

This has changed the dynamics of war. We are looking at a situation akin to the beginning of World War I when the combatant nations had to deal with the reality of technology outpacing conventional military tactics. This has led to a situation where both sides are experiencing major difficulties in the conduct of manoeuvre warfare, so essential to break any stalemate on the battlefield. This aspect is clearly visible from the stalled Ukrainian counter-offensive, which appears to be failing. However, in the future, like World War I and II in

A Russian prognosis of the Wagner Group’s future post their revolt.

This article is based on the exclusive conversation Synergia had with Vasily Kashin , Senior Research Fellow, Director:Faculty of World Economy and International Affairs.

their later stages, the outcome of the war in Ukraine, too, would largely depend upon the ability of one side or the other to innovate warfighting methods to revert to manoeuvre warfare. This intensive fighting will continue until the Ukrainians run out of resources and both sides revert to a defensive posture. This will probably take place around the end of August. Beyond that, how the stalemate will be resolved remains unclear.

WAGNER ‘MUTINY’ & ITS AFTER EFFECTS

Fortunately for the Russian side, the ‘situation with the Wagner group’ was quickly resolved. The Wagner group was expanded rather quickly during the difficult period of intense fighting in the summer and autumn of 2022 to compensate for the ‘temporary difficulties’ arising from mobilisation in Russia. Later when the Russian Army had managed to stabilise the military situation and increase its manpower, it was felt that the Wagner Group was no longer needed. Some of the Wagner commanders were too ambitious and made this ‘armed demonstration’, which was swiftly suppressed.

The Wagner group was basically a paramilitary organisation connected to the Russian Ministry of Defence. Initially, it was a compact organisation (around 3000-4000 operatives before they expanded for the war in Ukraine) designed to operate strictly abroad in places like Syria and Africa. They were quickly expanded to meet the dire situation in Ukraine to boost the regular Russian forces, rising to their current strength of close to 20,000. However, over a period of time, nearly 50,000 operatives have served in the Wagner Group since its inception.

The recruitment into the Wagner Group was done in haste without the existing military regulations and bureaucratic norms, as a result, many criminals serving prison sentences were granted pardons and inducted on the condition of serving for at least six months on the front lines. For some time, Wagner’s forces were the most effective combat elements on the front lines, although, in retrospect, it may appear that the impression was probably exaggerated. As they grew in importance, the leadership tried to portray themselves as more effective than the regular military and started com - peting for the resources of the Min-

Wagner Group was no longer felt. When the Russian government tried to cut their resources, the differences were exacerbated. Mr Prigozin, Wagner Chief, then launched into a propaganda campaign against the defence minister to pressurise the political leadership, including President Putin, to release more resources to further expand the Group and create for himself and the Group a greater role within the framework of the Ukrainian war. However, just about 1/3rd of the Group participated in the mutiny.

Now it is clear that it will no longer play any major role in the fighting. Wagner operatives will either be included in the regular Russian forces or used for Russia’s overseas commitments, like in Central Africa, where they have proved to be a very effective and valuable asset. The majority of the personnel will be retained.

However, the Group will be restructured to ensure a tighter command and control within the overarching organisation of the Russian military operating in Ukraine. Mr Prigozin, along with his close coterie and some units, have moved to Belarus, where they will train with the Belarusian military, which has no combat experience since the collapse of the Soviet Union. The Wagner operatives are all combat veterans and perhaps amongst the best infantry soldiers in the world, and they can assist in turning the Belarusian Army into an effective fighting force.

There is little danger in the Wagner Group being enticed by forces inimical to Russia for the lure of money, as was done with mercenary forces between the 14th to 16th Centuries in Europe, who frequently changed sides to the highest bidder. For one, 21st Century Europe vastly differs from the 16th Century, and the Wagner Group has always demonstrated a strong ideological component. A great deal of effort was devoted to the ideological indoctrination of every recruit. Also, the organisation developed a very strong subculture (as happens when military units undergo combat hardships together), and as an organisation, they are very attached to the Russian state.

As the regular Russian Army grew in size and equipment (at the start of the war, it had a very small ground component numbering around 280,000 troops), the need for the

They generally have very hard-line nationalist views, and it is hard to imagine them switching sides for any reason. A typical Wagner operative is someone who used to work in the military or police but was fired for insubordination or some other misdemeanour. The organisation and its subculture are very appealing to some segments of Russian society. This is why, despite the mutiny, the Russian government has blamed the leadership and not the rank and file. Even President Putin has consistently underlined the heroic nature of the Wagner operatives deserving of respect. The Wagner group is a valuable organisation with some special people who think-out-of-the-box who have proved in-

VASILY KASHIN Senior Research Fellow, Director:Faculty of World Economy and International Affairs.

valuable in a war-like situation. However, they are very difficult to control.

THREAT TO POLITICAL STABILITY?

While in the Western media, an impression was being generated that the political hierarchy in Russia has been weakened, the fact is that the Wagner operatives have never questioned the authority of the President. The grievances were only directed at the Minister of Defence. Of course, one could imagine they would develop some kind of political ambition, but the Wagner Group and its leaders have a very limited support base. Now they have been crushed as an organisation that will operate under the Russian military and Russian security services. Perhaps, if the Wagner Group had been allowed to grow, one could imagine such a situation in the distant future. Of course, the Group will continue to exist; it will attract a specific kind of people who will be very closely watched and controlled.

The Wagner ‘mutiny’ did not impact the situation on the front line because the Russian leadership did not divert any major forces from the frontlines to suppress the revolt. Of course, it was a significant political shock for the Russian public. Basically, the Russian public was quite frightened for a while. And, of course, it made quite a strong impression on the Russian political leadership. some decisions were made to increase oversight, increase security, and stop relying on paramilitary forces while fighting in Ukraine.

The Russian political system demonstrated significant resilience, with all its components immediately expressing support to the President. There was no support for the mutineers except by a few bloggers. But of course, the lesson is learned, and it will affect Russian policies in the future as it was a significant shock.

THE TRAJECTORY OF THE WAR IN UKRAINE

Russia is steadily improving its position. This is visible from the growing number of new weapons systems which are being introduced on the front line for the

first time, including a new generation of glide bombs, new types of loitering munition and increased number of precision artillery. Russians have clearly managed to inflict very severe losses on the Ukrainians. And the recruitment campaign is going on rather fast. The Russian economy is stable. In the first half of this year, had a modest GDP growth while the Ukrainian economy was destroyed. A closer is possible around the end of this year, with some negotiations on a ceasefire agreement. But the ceasefire will only be possible if Russia achieves a few minimal goals. Otherwise, technically, Russia is capable of fighting a war like this for another two to three years by investing only limited resources in warfighting.

The war of attrition is being won by Russia simply because of the distraction of the Ukrainian economy and the depletion of Ukrainian manpower resources. The Ukrainian manpower losses are significantly more severe than the Russian losses. And Ukrainian resources of manpower are much more limited. So what Russia is doing is gradually killing out the Ukrainian military while the Ukrainian military is trying to attack and achieve some results as quickly as possible. So, the best-case scenario is some kind of ceasefire agreement closer to the end of this year. If not, there is a danger of protracted war for another couple of years.

THE NUCLEAR OVERHANG

All the discussions about Russia using nuclear bombs in Ukraine are a product of Western military propaganda. Russia did threaten the use of nuclear weapons, not against Ukraine, but against NATO in case NATO gets involved in the Ukrainian conflict. This was in response to statements made by some NATO leaders about the involvement of NATO forces in Ukraine. With this scenario in mind, Russian nuclear forces were placed on alert early in the war. There were also threats by NATO to create no-fly zones in Ukraine, but they did not dare to do so. Now the conventional field is improving for the Russian Army, and nuclear weapons will only be a diplomatic disaster. In contrast, the military effectiveness of the nuclear option in Ukraine would be highly questionable.

Source : The Hindu

ASPARTAME: THE CANCER SCARE!

The growing tribe of diabetics across the globe are in for a major disappointment. Aspartame, one of the most widely used artificial sweeteners worldwide and popular amongst those with a sweet tooth, could soon figure on the list of ‘forbidden fruits.’

This non-nutritive sweetener, founded by an American chemist James Schalatter in 1965 (and approved by the US FDA in 1974), has since been an ingredient of American essentials like chewing gum and breakfast cereal. Possessing a sweetness potency 200 times that of traditional sugar, it enables consumers to relish the sugary taste they desire without the associated calorie count. It can be found in thousands of products, from diet sodas to low-calorie desserts, and is marketed as a healthier substitute for those aiming to cut down on sugar intake.

However, despite the numerous benefits it brings, the debate about aspartame’s safety has long been contentious. Since its approval by the FDA, there have been ongoing concerns about potential health effects. Now, this contention looks set to reach new heights with the impending decision to label it as a potential carcinogen to humans.

HOW REAL IS THE DANGER?

The International Agency for Research on Cancer

The actual risk level associated with a substance depends on numerous factors, including the amount of the substance consumed, the duration of exposure, and individual health conditions.

(IARC), a specialised cancer research division of the World Health Organization (WHO), has purportedly been analysing around 1,300 studies exploring the link between aspartame and cancer. The “possibly carcinogenic” classification that the agency employs is based on evidence that is considered “limited,” sourced from human or animal data.

This category also houses a variety of other substances, including diesel fuel, aloe vera, Asian pickled vegetables, and a collection of diverse chemical substances. While seeming damning at first glance, this classification is nuanced and often misunderstood. As Professor Kevin McConway of the Open University elucidates, the IARC’s categorisations speak to the strength of the available evidence, not the actual risk a substance poses to your health.

This clarification is crucial for understanding the classification process and mitigating potential alarms. The science behind the alleged aspartame-cancer link is complex. A study in the early 2000s provided preliminary evidence of a connection, noting a potential link between aspartame and cancer in rat and mouse models. However, this study’s conclusions were met with criticism, and subsequent animal studies have not consistently replicated these findings.

A popular non-nutritive sweetener is under medical scanner for being potentially carcinogenic.

Sambratha Shetty is the COO at Synergia Foundation and holds a Masters’ in Science from the University of Greenwich, UK.

The second assessment was released on July 13th by the Joint Expert Committee on Food Additives (JECFA), a collaboration between the World Health Organization and the Food and Agriculture Organization.

This evaluation considered all possible health hazards associated with aspartame consumption as a food and drink additive, not solely its potential to cause cancer.

The committee reaffirmed the pre-existing ‘acceptable daily intake’ limits ranging from zero to 40 milligrams of aspartame per kilogram of body weight. Therefore, an individual weighing 154 pounds, or 70 kilograms, would have a daily limit of 2,800 milligrams of this sweetener.

Given that a can of diet soda sweetened with aspartame contains about 200 to 300 milligrams of the substance, most people could safely consume nine to 14 cans per day, staying within the recommended intake.

A CONTRARY VIEW

Research endeavours have expanded in recent years, with larger population studies being carried out. For instance, a study conducted last year involving 105,000 participants found a correlation between the consumption of high levels of sweeteners, including aspartame, and increased cancer risk. However, this data should be interpreted with caution, as many differences exist in the health behaviours and lifestyles between the groups under comparison, possibly influencing the results.

Amidst this controversy, it’s vital to remember that aspartame has received approval from over 90 food safety agencies across the globe, signalling its overall safety for the general population. These affirmations are built on an extensive body of research into aspartame and its health impacts. However, a universally accepted caveat is that people with a rare inherited condition known as phenylketonuria (PKU) should avoid aspartame, as they cannot metabolise one of its components.

SO, WHAT IS THE PROGNOSIS?

In anticipation of the IARC’s forthcoming declaration, several public health authorities and scientific committees are expected to evaluate and present their assessments of aspartame’s safety. The beverage industry has expressed concerns about this new classification, worrying that it could lead to a misunderstanding among consumers and a subsequent increase in sugar consumption as they shun low and no-sugar alternatives.

As the dialogue surrounding aspartame’s safety and its potential carcinogenic properties continues to evolve, it is imperative that consumers understand what these classifications actually mean. Being categorised as “possibly carcinogenic” doesn’t equate to a substantial health risk.

The actual risk level associated with a substance depends on numerous factors, including the amount of the substance consumed, the duration of exposure, and individual health conditions. Until further evidence is available, consumers should rely on personalised dietary advice from healthcare professionals to inform their decisions about aspartame consumption.

“Aspartame is one of the most studied food additives in the human food supply. FDA scientists do not have safety concerns when aspartame is used under the approved conditions.”

Public health authorities should be “deeply concerned” by the “leaked opinion” and also warned it “could needlessly mislead consumers into consuming more sugar, rather than choosing safe no-and low-sugar options”.

The body would “closely study” the reports, but “our view is that the safety of this sweetener has been evaluated by various scientific committees, and it is considered safe at currently permitted use levels”.

Rum Mumford, Deputy Chief Scientific Adviser, UK’s Food Standards Agency

Kate Loatman, Executive Director, the International Council of Beverages Association

INDIA’S SPACE REFORMS: THE FINAL FRONTIER AWAITS

In the past three years, all those associated with the Indian space industry ecosystem have celebrated the Indian government’s space sector reforms. The reason for celebrating it has been three-fold.

• The private ecosystem likes that the current Indian government has faith in their abilities and is confident that the ecosystem if equipped well, can deliver, which was not the case earlier.

• ISRO is no longer multitasking, and many tasks have been delegated to newer entities with whom the private sector can iron out policy-level creases, which ISRO couldn’t do before the reforms.

• Not everyone who wishes to make a career in the space sector in India need to be an employee of ISRO; the career opportunities are well-spread across industries, MSMEs, startups, academia, as well as with the defence sector.

Now with the reforms settling in and things moving in the right direction, it is time that the Indian government looks at the next steps, and one of them is to enable India’s space industry to go global.

A NEW DIRECTION

The Indian space programme is no more ISRO-centric. In the government’s mandate, there are three space programme verticals in the country today: -

The Indian space programme is no more ISRO-centric. In the government’s mandate, there are three space programme verticals in the country today

• Led by the defence- and intelligence-gathering mandate.

• Another exploratory research and development mandate led by ISRO.

• The space commerce mandate that includes the private and public space sector.

In the more significant interest, these three need not work in silos or compete with each other. Gladly, that has begun to happen. For instance, the 75 Defence Space Challenges, initiated by the Ministry of Defence (MoD), supports startups and small companies that can innovate by providing a comprehensive and holistic view of space, software and ground systems, payloads and communication systems, satellite and buses, and launch systems.

Various arms of MoD will exclusively procure these innovations for national security requirements, and a substantial sum is being offered under the Make-1 category, where the government will fund 90 per cent of the ‘challenge’ project in a phase-wise manner.

The other Make-2 category aims for the import substitution of certain space technologies, where the technology prototype needs to be financed by the government and where no funding would be provided. In both cases, there is no option for companies apart from

India’s Space Sector can become its crown jewel, adding value to its growth rate.

RESEARCH TEAM

SYNERGIA FOUNDATION

going global; only then would they be able to achieve business sustenance and continuity.

A UNIVERSAL USE CASE

Likewise, outside the ambits of the enumerated challenges catering to mission-critical requirements both of MoD and the Department of Space (DoS), there are many requirements that the companies might be able to deliver but are only waiting for the government to enumerate them. Secondly, many ministries within the Indian government - road and highways, shipping, civil aviation, agriculture, coal, mining, oil and natural gas - would have numerous use cases where satellite-based communication and remote sensing solu tions will be crucial. However, none of these ministries or their agencies have ever used a satellite or deployed a payload until recently.

first satellite built in partnership with the Ministry of Earth Sciences and ISRO. The satellite has payloads monitoring ocean colour, sea-surface temperature, and wind modelling - all of exclusive end-use to the Ministry of Earth Sciences. Similar satellites could be built by India’s private sector for other minis tries to serve fundamental operational needs. For example, the Minis of Home Affairs, the parent of the National Disaster Management Authority - could have a satellite exclusive for itself with payloads spe cifically catering to disaster moni toring, preparedness, and recovery. So be it Himalayas, cyclones along the Bay of Bengal and the Arabian Sea, or HADR support to distant countries as we did in Madagascar or Turkey, such a satellite would serve a great purpose.

Every ministry should contemplate operating a satellite of its own apart from serving a national cause. The government could be well-equipped to use these satellites to assist countries in distress. This is how we create global use cases for the Indian space sector. At this point in time, Indian space companies can well build satellites, and soon private industry will be able to operate launch vehicles. We must innovate with use cases so the Indian commercial space sector flourishes and serves the nation’s civilian and non-civilian needs.

POST REFORMS ECOSPHERE

The space reforms and the subsequent narrative around it have established the government’s perception as that of a ‘sector-liberator’ and ‘hand-holder’. INSPACe was raised exactly for ‘hand-holding’ the private companies in these early and unsure years. Unsure because, unlike the U.S., another large-economy democracy like us, the Indian commercial space sector does not have solid backing by national legislation. The draft

Space Activities Bill is currently in the works, and it may appear on the table of the new parliament building in the subsequent few sessions. However, would one Bill suffice? No.

At this point in time, when most of us are enamoured by technology and entrepreneurs who pursue them, we must realise that the real heft that India’s commercial space sector would require to go global would be strong legislation. India needs strong national legislation for orbital slots, space debris, satellite communications interference, space situational awareness, cislunar operations, extra-terrestrial resource utilisation, biological planetary protection, planetary defence

There is a high probability that Indian space companies could migrate to countries with voluminous business opportunities, predictable laws and policies, enabling infrastructure and growth prospects. To avoid such migration and ensure that Indian space companies base their headquarters on Indian soil, the Indian government must continue incessantly with the next steps in the space reforms, which include comprehensive legislation, ensuring business sustenance with contracts, assisting them with testing infrastructure, offering them innovation tax benefits, securing their supply chains, and offering them the yet untapped domestic capital - be it the sovereign funds or equity markets.

CONCLUSION

Indian space reforms are the first positive steps in the long line of constructive tasks that lay ahead of us. But we must all remember that despite commercialisation, India’s space sector remains a ‘strategic programme’, and all measures must be taken to continue to be India’s crown jewel - not only in narratives but also for real.

POST-PANDEMIC MARKET SWINGS

Global economic predictions continue to bedevil experts as a host of variables raise their heads. World Bank and OECD have revised their recent projections for the global economy in the coming year. While, on a positive note, the OECD, for instance, increased its growth forecast for 2023 to 2.7 per cent, a slight upward revision from its earlier prediction of 2.6 per cent in March, the World Bank continued with its conservative outlook, making no changes to its March forecast of 2.9 per cent growth for the next year.

However, both institutions had common views on the ongoing effects of monetary policy tightening. This cautionary note emphasizes the potential impact tightening measures may have on the global economy, signalling the need for careful monitoring and management of such policies to ensure a balanced and sustainable economic trajectory.

UNSTABLE LABOUR MARKET SCENARIO

We look at the labour market to get a clearer picture of the economic landscape as it stretches ahead of us into the next year. After all, economic growth requires reallocation across firms and continuous replacement of technologies. The Labour market influences economic dynamism by its impact on a key input, skilled workers for new and growing firms and the re-entrenchment of labour from dying firms for re-skilling

The uneven nature of the recovery is also reflected in the analysis of employment data by occupation. High-wage occupations have generally fared better in employment compared to mediumand low-wage occupations.

for an alternative industry. This ongoing cycle acts as the lifeblood of any economic activity.

The U.S. provides an interesting case study to study this subject, even though the American economic model is unique and cannot be replicated in emerging economies like India. However, the trends are important for an analytical study to work out a country-specific strategy.

THE U.S. PROVIDES AN INTERESTING CASE STUDY.

The post-pandemic labour market was clearly seen as the bright spot in the economic landscape. Since reaching its lowest point in April 2020, the economy has experienced significant job growth, adding an estimated 21.5 million jobs. Unemployment rates decreased, and the employment-to-population ratio gradually returned to pre-COVID-19 levels.

However, the recovery shown in the labour market is marked by uneven progress. Sectors like accommodation and food services, which were near total closure during the lockdown, have not regained their pre-pan-

As economic indices appear shaky, labour markets act as barometers of economies.

#WFH: THE PANDEMIC CHANGED HOW AND WHERE WE WORK:

E-COMMERCE BOOM: COVID-19 TRANSFORMED HOW WE SHOP AND CREATED NEW JOBS: SUPERSPREAD OF AUTOMATION: JOB TRANSITIONS:

demic employment levels. On the other hand, sectors like professional and technical services and retail trade have demonstrated more favourable outcomes. The uneven nature of the recovery is also reflected in the analysis of employment data by occupation. High-wage occupations have generally fared better in employment compared to medium- and low-wage occupations.

The transition of consumer spending from goods to services, which has been occurring steadily since mid2021, will contribute to reducing some of the disparities in the labour market. However, the presence of inflation poses a significant risk. A prolonged period of elevated inflation or a subsequent recession could have adverse effects on overall employment and specific sectors and occupations. Some sectors and occupations may be more susceptible to these economic conditions’ negative impact than others.

The surge in the labour market, coupled with pandemic-induced shortages, has resulted in substantial growth in nominal weekly earnings. However, rising inflation over the past year has eroded the purchasing power gains for individuals. Nonetheless, the labour market has played a pivotal role in bolstering consumer confidence throughout the past year and continues to uplift sentiment, even in the face of high inflation.

The decline in employment during this period would have been more severe if it were not for robust fiscal support. Since the onset of the pandemic, the federal government has allocated a significant amount of US$6 trillion toward various support programs. It is worth noting that, among the major sectors and sub-sectors

within the private sector, couriers and messengers were the only ones that experienced increased employment. This highlights the unique circumstances and demand patterns that emerged during the pandemic, leading to growth in this sector.

Two noteworthy trends have emerged in the recovery process. Firstly, due to the significant decline in economic activity between February and April 2020 and the shift in consumer spending from services to goods during 2020-2021, certain sectors still exhibit noticeably lower levels of economic activity and employment compared to pre-pandemic levels.

Secondly, some sectors have experienced substantial gains during the pandemic, surpassing their pre-pandemic employment levels. Sectors such as professional and technical services have seen an increase in payrolls, indicating higher employment levels than before the pandemic. Additionally, there has been a significant surge in employment within the transportation and warehousing sector, including its key sub-sectors. This can be attributed to the increased reliance on e-commerce as remote work and concerns about COVID-19 prompted a shift towards online shopping.

Out of the 23 major occupations, only one category, namely computer and mathematical occupations, experienced increased employment. On the other hand, lowwage occupations, such as food preparation and serving, as well as personal care and service occupations, saw the most significant declines in employment. This discrepancy can be attributed to the fact that these lowwage occupations could not transition to remote work,

making them more vulnerable to the negative effects of the pandemic compared to occupations like computer and mathematical occupations that could adapt to remote work arrangements more easily.

Since the initial months of significant setbacks, employment across all occupations has been steadily recovering. The pace of recovery has been particularly strong for low-wage occupations, driven by the resurgence in certain services such as food services, travel, personal care, and healthcare support as the severity of the pandemic subsides.

However, it is unlikely that the rapid pace of job growth will continue, even if overall economic growth remains robust. This is because unemployment rates are currently low, and the participation rate is approaching pre-COVID-19 levels. However, the main risk to this scenario lies in the presence of inflation. Increasing prices have offset the strong growth in nominal income experienced since last year, diminish ing consumers’ purchasing power.

If high inflation persists, the re duction in purchasing power may compel consumers to reduce their discretionary spending. This, com bined with monetary tightening mea sures, can slow down economic activi ty and impede employment growth.

Moreover, high inflation or a recession could further exacerbate these challenges. It may also hinder progress in sectors and occupations that have not yet reached their pre-pandemic employment levels. This situation is particularly concerning for individuals in low-paying jobs, as they are already disproportionately affected by inflation. A faltering labour market would be the last thing they need.

Overall, the potential consequences of inflation pose risks to employment growth and could disproportionately impact individuals in low-paying jobs compared to others.

CLIMATE AND ENERGY AS SPOILERS

During the previous summer, global heat waves caused a significant decrease in water levels worldwide, leading to agricultural disruptions, inland transportation, and energy production. The situation was particularly severe in China, where the water level of the Yangtze River sharply declined, resulting in the disruption of hydroelectric and nuclear power generation. Consequently, an electricity shortage ensued, impacting industrial activity and prompting the reopening of closed coal mines by the government.

Unfortunately, China is currently experiencing a similar situation once again. In March, April, and May, the country has been witnessing record-breaking temperatures. On Monday, Shanghai recorded a May temperature record of 36.1 degrees Celsius (96.7 degrees Fahrenheit), joining numerous other cities across Chi-

na that have also experienced unprecedented heat in the preceding two months. This has led to reduced rainfall and declining water levels. Additionally, the power grids are facing added strain.

Although China is experiencing the immediate effects of this issue, it is crucial to recognize that it is not confined to China alone. Instead, the global economy is entering a new phase of intermittent disruption, affecting multiple industries, including energy, agriculture, manufacturing, finance (particularly insurance), healthcare, and construction. As a result, governments and businesses are grappling with the need to adapt swiftly to this changing landscape to mitigate the adverse consequences of climate change and foster resilience in these sectors.

Elsewhere in Europe, the economy has been struggling with uncertainty about the flow of natural gas. A major disruption of gas could push Europe into recession. “The world economy is in a precarious position,” said Indermit Gill, the World Bank Group’s Chief Economist and Senior Vice President. “Outside of East and South Asia, it is a long way from the dynamism needed to eliminate poverty, counter climate change,

PREDICTING THE UNPREDICTABLE

Over the past few decades, the world’s wealth has experienced a significant surge, at least in theory, thanks to the rise in asset prices fuelled by low-interest rates. However, the global financial landscape continues to be susceptible to vulnerabilities, as evidenced by recent turbulence in the financial sector. As a result, the fundamental dynamics of the world’s borrowing, lending, and wealth creation may be on the brink of substantial transformation.

Amidst the current circumstances, one thing is clear: uncertainty has reached an unusually high level. The economic, banking, and investment terrain could undergo significant changes within the next decade, presenting a departure from the landscape witnessed over the past 20 years. However, the future holds a wide array of potential trajectories, where the best and worstcase scenarios depict markedly distinct outcomes.

As part of its continuous research into the global balance sheet, the McKinsey Global Institute has developed four plausible scenarios. The first scenario, termed “return to the past,” envisions a situation where the existing volatility proves temporary, leading to a resumption of balance-sheet expansion. While this may appear appealing to some, it would entail increased risks of economic shocks. Furthermore, such expansion would come at the cost of real economic growth and exacerbate inequality.

In the second scenario, known as the “higher for longer” scenario, inflationary pressures become entrenched, yet worries regarding financial stability lead to a more cautious approach in policy tightening. Demand would remain robust as investments increase to

support crucial objectives such as the transition to clean energy, supply chain reconfiguration, and defence. Additionally, the excessive accumulation of savings would diminish over time.

This scenario parallels the stagflation witnessed by the United States during the 1970s, although with comparatively lower inflation, estimated at around 4 per cent instead of 9 per cent. By 2030, the balance sheet would appear relatively healthier in relation to GDP compared to the present, primarily due to inflation reducing the burden of debt and adjusting asset prices in real terms.

The third scenario, referred to as a “balance-sheet reset,” portrays the worst-case situation. In this scenario, interest rates would continue to rise, placing strain on the financial system and potentially leading to failures within it. This would trigger a significant correction in asset values, resulting in numerous debt-financed assets becoming submerged in negative equity. Subsequently, a protracted process of deleveraging and a prolonged recession could ensue.

It is possible that the value of U.S. equities and real estate could decline by over 30 per cent in real terms between the present and 2030. This scenario evokes memories of Japan’s experience in the 1990s, following its real estate and equity bubble burst.

However, there is also a fourth scenario, far more desirable, known as the “productivity acceleration” scenario. This represents the Goldilocks scenario that benefits both economic growth and wealth.

In this scenario, accelerated productivity gains would fuel robust GDP growth, enhance incomes and wealth, and contribute to a stronger balance sheet. Attaining this optimistic outcome would necessitate policymakers in fiscal and monetary domains to carefully

strike a balance. While some tightening is necessary to address inflationary concerns, excessive tightening could deplete wealth and trigger financial strain.

The disparity between the best-case and worst-case scenarios, particularly regarding growth and the health of the balance sheet, would be significant.

Assessment

The economic landscape has been fraught with uncertainties, as displayed by the swings in the labour market. The post-pandemic work environment has witnessed many swings involving setbacks and some recoveries. An uneven playing field has developed.

Businesses are confronted with the exceptionally arduous task of formulating their strategies. Merely responding to macroenvironmental changes is no longer enough. Instead, organizations must take a proactive approach by planning for diverse outcomes, identifying indicators that can indicate the emergence of different scenarios, and enhancing their risk management practices.

Climate change poses the next barrier to growth. The global economy is undergoing a transformative period marked by sporadic disruptions that impact a wide range of industries, including energy, agriculture, manufacturing, finance (especially insurance), healthcare, and construction. Governments and businesses face the pressing imperative to swiftly adapt to this evolving landscape. Their aim should be to mitigate the adverse repercussions of climate change and cultivate resilience within these sectors.

Source : Institute for New Economic Thinking

ARE THE RICH FALLING BEHIND?

The economy has dominated international concerns amidst inflationary pressures and the recent financial sector turmoil. In the initial months of 2023, indications that the global economy might experience a smooth transition—with decreasing inflation and stable growth—have diminished due to recent turbulence in the financial sector. Despite central banks raising interest rates and declining food and energy prices, inflation has remained stubbornly high. This could be attributed to enduring price pressures and tight labour markets in several economies.

GLOBAL SNAPSHOT

The global economy is expected to experience a significant slowdown this year, reaching its third weakest growth rate in nearly thirty years, surpassed only by the global recessions of 2009 and 2020. This downturn, as per experts, is due to coordinated policy tightening measures aimed at curbing elevated inflation, worsening financial conditions, and persistent disruptions caused by the Russian Federation’s invasion of Ukraine.

The banking sector has demonstrated signs of vulnerability, which has sparked fears of possible wider unrest across the financial sector, including nonbank financial institutions. Furthermore, elevated levels of debt continue to impede fiscal policymakers’ capacity

Global growth is expected to decelerate sharply to 1.7 per cent in 2023—the third weakest pace of growth in nearly three decades, overshadowed only by the global recessions caused by the pandemic and the global financial crisis. This is 1.3 percentage points below previous forecasts, reflecting synchronous policy tightening aimed at containing very high inflation, worsening financial conditions, and continued disruptions from Russia’s invasion of Ukraine.

to address emerging issues. Although commodity prices, which surged after Russia invaded Ukraine, have shown signs of moderation, the conflict persists, and geopolitical tensions remain elevated.

The emergence of infectious COVID-19 variants resulted in widespread outbreaks last year, but economies that were severely impacted, notably China, seem to be rebounding and alleviating disruptions in global supply chains.

Nevertheless, despite the positive effects of decreased food and energy prices and improved supply chain operations, risks are predominantly tilted towards the downside due to heightened uncertainty in the financial sector.

The advanced economies appear to be dragging down global growth, leaving the task of recovery to Asia.

RESEARCH TEAM

SYNERGIA FOUNDATION

The baseline forecast, which assumes that the recent financial sector stresses are contained, is for growth to fall from 3.4 per cent in 2022 to 2.8 per cent in 2023 before rising slowly and settling at 3.0 per cent five years out––the lowest medium-term forecast in decades. Advanced economies are expected to see an especially pronounced growth slowdown, from 2.7 per cent in 2022 to 1.3 per cent in 2023.

In a plausible alternative scenario with further financial sector stress, global growth declines to about 2.5 per cent in 2023––the weakest growth since the global downturn of 2001, barring the initial COVID-19 crisis in 2020 and during the global financial crisis in 2009––with advanced economy growth falling below 1 per cent.

The subdued forecast reflects the necessity of strict policy measures to curb inflation, the repercussions of the recent worsening of financial conditions, the ongoing conflict in Ukraine, and the increasing fragmentation of the global economy. Global headline infla tion is projected to decrease from 8.7 per cent in 2022 to 7.0 per cent in 2023, primarily due to lower commodity prices. However, under lying (core) inflation is expected to decline at a slower pace. It is unlikely that inflation will return to target levels before 2025 in most sce narios. Once inflation rates align with the desired targets, long-term structural factors will likely drive in terest rates towards their pre-pandemic levels.

The outlook is significantly biased towards downside risks, with a substantial increase in the likelihood of a severe economic downturn. The strain on the financial sector may escalate, potentially triggering contagion effects that weaken the real economy by severely deteriorating financing conditions. This situation may force central banks to reassess their policy trajectories. There is a possibility of isolated instances of sovereign debt distress, which could spread and become more systemic in the context of higher borrowing costs and slower economic growth.

This has already been seen in many countries in the Global South, like Sri Lanka and Pakistan. The ongoing conflict in Ukraine can potentially escalate (with tactical nukes not being entirely ruled out), leading to further spikes in food and energy prices, thereby increasing inflationary pressures. Core inflation might prove more persistent than expected, necessitating even more aggressive monetary tightening measures to bring it under control.

Global growth is expected to decelerate sharply to 1.7 per cent in 2023—the third weakest pace of growth in nearly three decades, overshadowed only by the global recessions caused by the pandemic and the global financial crisis. This is 1.3 percentage points below previous forecasts, reflecting synchronous policy tightening aimed at containing very high inflation, worsening financial conditions, and continued disruptions

from Russia’s invasion of Ukraine. The combination of slow growth, tightening financial conditions, and heavy indebtedness will likely weaken investment and trigger corporate defaults. Further negative shocks—such as higher inflation, even tighter policy, financial stress, deeper weakness in major economies, or rising geopolitical tensions and catastrophic climate events—could push the global economy into recession.

SLIDING WESTERN FORTUNES

Both the United States and the euro area are currently experiencing a phase of economic fragility. This condition amplifies the challenges emerging markets and developing economies (EMDEs) face. The increasing debt burden of the United States exacerbates the challenges confronted by a decelerating global economy. As interest rates surge and debt levels soar, the vital investments necessary to drive enhanced productivity are being stifled. Clearly, distress in the world’s biggest economy has impacts on everyone.

On May 31st, subsequent to a consensus reached between US President Joe Biden and House Speaker Kevin McCarthy, a bill was successfully passed by the US House of Representatives, which aimed to temporarily suspend the $31.4 trillion debt ceiling. The agreement has temporarily halted the debt ceiling, which is the Congress-imposed restriction on the government’s borrowing capacity, until 1 January 2025.

According to the nonpartisan Congressional Budget Office, the legislation will generate savings of $1.5 trillion over a span of ten years.

As per the agreement reached between Biden and McCarthy, the debt ceiling of $31.4 trillion will be temporarily suspended until January 2025, extending beyond Biden’s current term.

During this period, the government will have the ability to continue borrowing to meet its financial needs. In exchange, the White House has committed to limiting non-defense discretionary spending at 2023 levels in 2024, with a subsequent 1% increase in the following year. The agreement maintains non-defense spending at the same level next year, with a 1% increment anticipated in 2025.

The debt ceiling deal includes caps on spending, but not on defense, measures for returning unspent covid funds, realigning welfare benefits for the able bodied, funds to enforce tax rules on wealthy Americans, and easier licensing for renewable energy projects.

The U.S. Federal Reserve looks set to temporarily pause its aggressive interest rate hikes in response to the alarming situation. Central bankers, both in the U.S. and internationally, are grappling with an additional apprehension regarding the continuous wage increase. This upward trend in wages has the potential to trigger a wage-price spiral, where higher wages propel prices upward, leading to the entrenchment of inflation.

When the Fed stops raising interest rates in response to stable inflation levels, there could be a corresponding slowing effect on the U.S. economy and possibly beyond.

THE DOLLAR EFFECT

The United States played a pivotal role in instigating a worldwide surge in the cost of living. As signs of abating price inflation become apparent within the country, does it indicate the trajectory that the rest of the world might follow?

The United States was the first major economy to experience inflation, primarily due to a surge in activity and spending driven by government-issued pandemic relief funds. Subsequently, these price escalations extended beyond U.S. borders. Strong demand from American consumers elevated the prices of essential commodities like oil, while global shipping firms increased their fees, and companies coping with shortages raised prices.

However, when the U.S. central bank initiated interest rate hikes to combat this issue, it spurred a flood of capital into the country. As a result, the U.S. dollar strengthened significantly, reaching its highest level in two decades. This, in turn, further elevated costs in other countries.

While the United States was not solely responsible for the abrupt surge in the cost of living, the war in Ukraine also significantly impacted energy markets and food supplies, particularly in Europe. Nonetheless, analysts suggest that if the inflation situation in the United States shows signs of improvement, it could bring positive implications for the rest of the world. This is especially true if it allows the central bank to ease its efforts in combating inflation, potentially leading to stabilization in exchange rates.

There has been a reflection of global price moderation attributed to the recovery of oil markets following the impact of the Ukraine war. Additionally, investors are speculating that energy demand will decline as economies slow down due to the ongoing efforts to combat inflation.

Experts warn that relief from lower inflation in the U.S. may prove a “double-edged sword” since it is likely to reflect a recession in the world’s largest economy. This could prove to be negative for employment and output growth in the rest of the world.

The UK economy is another leading Western economy that has been in the spotlight for the wrong reasons. According to the International Monetary Fund (IMF), the UK economy is projected to have the weakest performance among the G20 countries, including Russia, which sanctions have impacted. The latest projections indicate that the IMF expects the UK economy to contract by 0.3 per cent in 2023, followed by a modest growth of 1 per cent in the subsequent year.The weak economic performance of Britain can be attributed to

several factors, including its vulnerability to high gas prices, the impact of rising interest rates, and sluggish trade performance. Additionally, central banks in the UK, the U.S., Europe, and other countries have been implementing interest rate hikes as a measure to tackle inflationary pressures or the rate of price increases.

THE ASIA STORY

China’s post-COVID recovery has thus far been patchy. While in 2008/09, China’s stimulus helped the global economy recover, these, in turn, have left China mired in a mountain of debt. The IMF points out that the local government debt in China has surged to an unprecedented level, reaching a record of 66 trillion yuan, approximately half of the country’s GDP.

The Indian economy is a key contributor to Asian economic growth, and thus far, the broad-based recovery in demand runs counter to the weakness seen outside Asia. India is currently experiencing the advantages of both cyclical and structural factors propelling its growth. As a result, India is projected to contribute 16 per cent to the global gross domestic product (GDP) growth during 2023-24.

Morgan Stanley experts estimate that “Meanwhile, the key macro stability indicators of inflation and current account deficit have moved back into policy makers’ comfort zones, and we expect it will remain there for some time. This suggests that policymakers will not have to bring monetary policy into restrictive territory, allowing economic expansion further room to run. “

“India’s strong growth outlook stands out as the best among large economies, and we forecast it will contribute 16 per cent to global GDP growth over 2023-24.”

Morgan Stanley

India’s economy is anticipated to grow 6.7 per cent in the calendar year 2024, primarily driven by robust domestic demand. While the economic prospects of other South Asian nations face more challenging circumstances, India’s growth outlook is expected to remain strong.

Assessment

Amidst the overall gloom in the global economy, advanced economies of the U.S. and EU are experiencing the worst turmoil. The current situation underscores the need for stringent policy measures to address inflation, the adverse consequences resulting from the recent deterioration of financial conditions, and the persisting conflict in Ukraine.

In this pervading scene of economic gloom, India’s performance has been reassuring through its broad-based recovery in demand. India stands out in terms of growth outlook among large economies propelled by domestic demand.

SAYING GOODBYE TO COAL?

Despite its universal condemnation as the ‘dirty fuel,’ coal thrives. What will it take to stamp it out?

Coal continues to top global demand pushing asides all the loud declarations about fixing timelines for its phasing out at the Glasgow Summit 2021. Expert reports provoked the pushback against coal consumption that unless coal consumption was not decreased by more than two-thirds within this decade, the goal of limiting global temperature rise to 1.50 was unachievable. Going by the current production rate, coal consumption, at best, will decline by less than a fifth!

A flurry of pledges marked the Glasgow Summit that included an end to the construction of new coalfired power plants and stopping the financing of coal mines. Apparently, there has been little impact on the ground as coal remains the world’s most polluting fuel in use today. The sanctions on Russian oil and gas gave coal a fresh lease of life, leading to a record-high coal consumption in 2022. Although the energy shock has subsided, global coal demand is still expected to experience a slight increase this year.

AN ENERGY-HUNGRY WORLD

Coal contributes to local pollution, where it is extracted and used, while its continued usage inflicts lasting harm to our planet’s climate. Unfortunately, finding a viable replacement for this concentrated energy source has proven increasingly challenging. The transition from wood and charcoal to coal marked the first

International investors are not the only source of funding for coal-related industries. Banks in countries like Indonesia, China and India, which are significant consumers/ producers of coal, have no hesitations in financing its extraction. Many of these institutions are state-owned and prioritise securing a stable energy supply.

major energy shift in the iron industry during the early 1700s. By 1900, coal had become the primary fuel for industrial purposes, surpassing biomass and accounting for half of the world’s fuel consumption. Oil then emerged as the next significant energy source, initially replacing whale oil for lighting and producing gasoline as a by-product of kerosene production. However, oil found its true calling in the transportation sector, particularly with the advent of the Ford Model-T in 1908 and the post-World War II boom in personal mobility.

Over the 20th century, our energy system transformed, transitioning from direct utilisation of fossil energy to a significant reliance on fossil fuels for electricity generation. In essence, the narrative of energy transitions has revolved around the continuous pursuit of fuels that offer greater energy density and convenience compared to their predecessors.

The dangers posed by fossil fuels, particularly coal, are too well known to merit further elaboration. Suffice to say global warming, the most consequential fallout is

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surpassing anything witnessed in the world’s geological history.

Renewables offer a glimmer of hope, and even if their costs have been rapidly declining, they cannot match the affordability of coal. Climate advocates wish to target electricity generation, the biggest culprit in coal consumption, to mitigate the effects of the dirty fuel.

GEOPOLITICAL ROADBLOCKS

Ultimately, all governance issues boil down to politics, whether domestic or geopolitical. Energy, a source of great geopolitical leverage, was mired in the Great Game between nations for centuries and continues to modern times.

Mitigating the impact of climate change entails reshaping a multi-trillion-dollar energy industry (oil, gas and coal) that lies at the core of the global economy and people’s livelihoods. It demands immediate investments with uncertain, long-term outcomes to reduce our dependence on fossil fuels, especially coal. Such decisions are particularly difficult for politicians, who often prioritise policies that offer immediate and visible local benefits to appease voters.

An enduring policy climate necessitates gaining and sustaining support from a diverse array of stakeholders, including rival politicians, business leaders, and civil society.

Naturally, their perspectives will differ, and the absence of consensus, combined with real pressures influencing the policymaking process, contributes to the inherent political complexities surrounding climate action. The Global North, which has both the finan-

cial means and technological wherewithal, has been focussed on reducing greenhouse gas emissions stemming from their energy-intensive lifestyles. This ignores that the solution lies in a ‘whole of the humanity’ approach because energy is consumed by all, rich and poor, inhabiting the planet and impacted by climate.

While the public discourse surrounding climate change often neglects this second objective, it is essential for developing countries to also embark on a cleaner trajectory. The imperative to provide cleaner and increased energy access for developing countries intensifies the overall challenge. Excluding the developing world from the solution would render it ineffective and incomplete.

The abundance and affordability of fossil fuels present a significant obstacle to transitioning away from them. Technological advancements have led to a surge in oil production, tapping into resources that were previously known but economically unfeasible to extract.

This trend is likely to persist in the foreseeable future. However, the challenge lies in the imperative to shift away from oil and other fossil fuels while they remain abundant and inexpensive—a task that is far from easy.

FINANCIAL CONSTRAINTS

In the fight to save our climate, numerous deadlines and commitments have been set. But unfortunately, there is many a slip between the cup and the lip. In the battle to phase out coal, numerous commitments and promises are deferred until later in the decade, while others solely apply to new customers or new mines. Consequently, estimations indicate that 60 major banks channelised $13 billion toward the largest coal produc-

We’re saying goodbye to desflurane for good!

Source : Care Without Carbon

ers worldwide last year. The optimistic outlook for 2021 was partly based on pledges made by major global banks, lenders, and investors. More than 200 predominantly Western financial institutions announced policies restricting investments in coal mining and coalfired power plants.

A noteworthy development is the participation of lenders representing 40 per cent of global banking assets in the Net-Zero Banking Alliance, which aims to align portfolios to achieve net-zero emissions by 2050.

The expectation was that reducing financial support for fossil fuels would aid global decarbonisation efforts by increasing the cost of capital for such projects, dissuading investments, and ultimately reducing the coal supply. However, the current coal boom is exposing the limitations of this approach.

It is important to note that numerous pledges and commitments regarding reducing coal usage come into effect only in the later years of this decade. Additionally, many of these pledges specifically target new customers or new mines while excluding miners who derive only a portion of their revenues from coal.

Furthermore, there are inherent limitations to what a group of financial institutions can accomplish. Domestically, interest lobbies bring pressure on them to relent as a decline in coal-related industries has a blowback effect on the livelihood of the geographical areas where such industries are located. This has its implications for local and national politics.

International investors are not the only source of funding for coal-related industries. Banks in countries like Indonesia, China and India, which are significant consumers/ producers of coal, have no hesitations in financing its extraction. Many of these institutions are state-owned and prioritise securing a stable energy supply. None of these entities has joined the Net-Zero alliance, indicating a disparity in their commitment to climate goals.

Another significant source of capital comes from private investors globally. While some major oil and mining companies are divesting their coal assets, instead of being phased out, these assets are being acquired, and in many cases, expanded, by private funds.

Unfortunately, financial measures to limit coal and other fossil fuels do not directly address the underlying demand for these fuels. On the other hand, such commitments may have created a false sense of security, leading to a lack of additional actions companies and governments take to reduce coal consumption.

The most effective way to phase out coal is by reducing its demand. This can be achieved by making alternative, greener energy sources more affordable and diminishing the allure of coal. Implementing proper carbon pricing, even if initially limited to Western countries, would reduce global fossil fuel demand. Additionally, a well-designed carbon border tariff, which

imposes taxes on imports from countries utilising dirtier forms of energy, could incentivise manufacturers worldwide to adopt cleaner production methods.

THE DILEMMA

The transformation of a deeply entrenched fossil fuel-dependent system cannot be achieved overnight. The transition away from fossil fuels is an immense undertaking that the energy industry and global leaders have long been aware of but have been slow to address. Despite the aspirations of climate activists, a sudden and radical elimination of fossil fuels would have severe economic repercussions, leading to a global economic depression.

The crux of the challenge lies in a decision between capitalising on the advantages of fossil fuels as an affordable and geopolitically crucial energy source or prioritising the long-term sustainability of our planet by leaving the majority of these resources untapped in the ground.

We are undergoing a gradual transition from fossil fuels to renewable energy, expected to span over a generation. Technological advancements, pricing, convenience, reliability and politics primarily influence the pace of this transition.

The positive aspect of decarbonisation is that, in the long term, a renewable resource-based energy system will be more cost-effective than the current outdated and polluting system. Investments in developing and implementing this new energy system will yield financial benefits.

However, public subsidies may be necessary during the transition to prevent harm to individuals who cannot afford the upfront capital required for adopting new technologies. Additionally, utilities transitioning from fossil fuels to renewables may also require subsidies.

Assessment

Transitioning away from a deeply rooted reliance on fossil fuels cannot be accomplished quickly. It is a monumental endeavour that the energy industry and world leaders have been aware of for quite some time, yet progress has been sluggish.

The central challenge revolves around a crucial decision: whether to continue capitalising on the benefits of fossil fuels as a cost-effective and geopolitically significant energy source or to prioritise the long-term sustainability of our planet by leaving a significant portion of these resources untapped beneath the Earth’s surface.

Obviously, the choice is hard to make, but if the future of our planet is at stake, then sacrifices would have to be made, irrespective of the cost.

GREECE ON THE MEND?

Geographically, Greece is important for the rest of Europe. For one, it is the bulwark for stemming the tide of illegal immigrants flooding European shores. As is evident from media reports, Greece has taken a very tough line, irrespective of the human cost. More importantly, as part of the Energy Triangle, it holds promise for the future energy security of Europe after the Russian taps have been shut.

The country has clearly spelt out the strategic direction it wishes to take in terms of defence cooperation with the United States and commitment to the eurozone. Its foreign policy is firmly anchored in the strategic priorities of aligning with the West while assuming a stabilising role within the broader region.

The Greek national election in May/June had two predictable outcomes. Firstly, it was won by the incumbent party, New Democracy (ND).

Secondly, since no party secured an overall majority and no coalition agreement was reached, the announcement of a new election followed.

For over four decades, no ruling party in Greece had managed to increase its vote share. With the backdrop of a state wiretapping scandal and the aftermath of a devastating rail accident in February, Prime Minister Mitsotakis’s prospects seemed vulnerable. Surprisingly, however, the anticipated close race, as predicted by polls, proved to be wildly inaccurate. The centre-right New Democracy (ND) party outperformed its left-wing rival, Syriza, garnering more than double the votes.

Far-right parties experienced gains, while the left-wing parties faced challenges, resulting in the most right-leaning composition of Greece’s parliament since the restoration of Democracy in 1974.

Greek Prime Minister Kyriakos Mitsotakis euphorically characterised the outcome as an “earthquake.” While seemingly hyperbolic, the remarkable nature of the victory lends credence to his exclamation.

THE VICTOR

The Greek parliament is now held by Eight parties who will share the 300 parliamentary seats. Among the parties securing seats in the Greek Parliament are the far-right Spartiates (Spartans) party, led by Vasilis Stigkas. Despite needing to cross the 3 per cent threshold, the Spartans already achieved nearly 5 per cent of the vote with 90 per cent of votes counted, earning them 13 seats.

Joining them in the chamber is the left-wing Pasok party, which secured the third-largest share of the vote with 32 seats, although it trailed behind New Democracy and Syriza.

The Communist Party of Greece (KKE) secured the fourth position, representing the far left, with 20 seats.

Other parties that secured seats include Plefsi Eleftherias (Freedom Sailing), led by Zoe Konstantpoulou, who served as the president of the Hellenic Parliament for six months in 2015 during Syriza’s first term in power. They obtained eight seats.

A handsome victory for the centre-right is the obvious reward for putting the sick economy back on the rails.

RESEARCH TEAM

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The conservative Niki (Victory) party, led by Dimitris Natsios, a theologian with strong ties to the Orthodox Church, secured ten seats.

Additionally, the populist and pro-Russian Elliniki Lisi party (Greek Solution) will also be represented in the parliament with 12 seats.

DRIFTING TO THE RIGHT

Greece has been in the throes of a decade-long financial crisis which has impacted daily living across the country. Between 2009 and 2015, Greece went through a period of political turmoil as it grappled with the imminent risk of national bankruptcy. During this six-year period, the country witnessed five early elections, six different governments, and even a referendum that was tied to the possibility of a disorderly exit from the eurozone.

As individual parties failed in stabilising the economy, the political scenario underwent a change. Starting in 2011, Greece deviated from its traditional approach of one-party majorities and instead formed coalition governments that transcended the conventional leftright divide.

The election outcome represents a significant triumph for Greece’s conservative party, securing an absolute majority in parliament. Furthermore, far-right parties experienced gains, while the left-wing parties faced challenges, resulting in the most right-leaning composition of Greece’s parliament since the restoration of Democracy in 1974.

Under the new electoral system, the New Democracy party, led by Kyriakos Mitsotakis, significantly expanded its double-digit lead over the main rival, the left-wing Syriza party. The party successfully secured 158 seats in Greece’s 300-seat parliament, benefiting from the provision of 50 bonus seats granted to the winning party.

The electoral dominance of New Democracy (ND) signalled the beginning of a transformation in the party system, with a shift towards a single strong party. The official opposition, SYRIZA—the Coalition of the Radical Left—experienced a significant decline, falling below two-thirds of its previous vote share. New Democracy garnered about 40.5 per cent of the vote, almost 23 points ahead of the Syriza party.

The main opposition party, Syriza, performed poorly in the election, leading to speculation about the potential challenge to its status as the primary opposition by the Pasok party. This outcome also implies that the

conservatives could govern without facing significant scrutiny or opposition.

Surprisingly, the rail tragedy in February, which cast a shadow over the election campaign, did not appear to directly impact the election outcome. The disaster claimed the lives of fifty-seven individuals, including numerous students. Opposition parties emphasised the incident as evidence of a malfunctioning state that had been severely weakened due to years of economic crisis and insufficient investment.

The election results are indicative of a broader trend in Southern European countries shifting towards the right. This shift comes after a prolonged financial crisis in the eurozone. In recent elections, the far right has shown strength in countries like Finland and Spain while garnering significant support in Germany. Notably, astute figures within the far right, such as Italian Prime Minister Giorgia Meloni, are starting to exert influence at the European level.

IT IS THE ECONOMY!

Mr Mitsotakis’s electoral victory validates James Carville’s famous quote, “It’s the economy, stupid,” during President Clinton’s successful 1992 campaign that was based on economic priorities. Over the past four years, the centre-right has held power in Greece, and they can proudly point to the country’s impressive economic growth, which reached nearly 6 per cent last year.

Mr Mitsotakis overcame the incumbency factor due to the economic indicators achieved and a desire for stability and continuity among voters who were scarred by the eurozone debt crisis.

The government successfully highlighted various reassuring factors, such as a notable 50 per cent increase in foreign direct investment last year. Despite starting from a low base, the Greek economy is currently growing at a rate twice that of the eurozone average. Following three bailouts totalling €280 billion, international oversight of spending controls by lenders concluded last summer.

In addition to advocating for small state and tax cuts, Mr. Mitsotakis pursued populist policies on migration, including a promise reminiscent of former Pres ident Trump’s approach to extending a steel border fence along almost the entire length of Greece’s border with Turkey.

SUCHITRA PADMANABHAN Policy Research Associate at Synergia Foundation

According to analysts, the election results are viewed as favourable for the market and position Greece firmly on the path to reclaiming an investment-grade rating by the end of the year.

Mr Mitsotakis’s message to the nation centred on his trustworthiness to navigate the Greek economy and solidify recent growth. The Greek population has responded more positively than anticipated to this pitch, demonstrating their confidence in his leadership.

ELECTORAL SYSTEM REFORM

This election, analysts claim, is as much a result of the politics of the parties as it is about the electoral system itself, which has witnessed quite some transformation in the recent past.

In May 2012, the electoral law granting a 50-seat bonus to the leading party lost credibility when it was awarded to a party with only 19 per cent of the vote.

In 2016, the SYRIZA-led government abolished this law and transitioned the electoral system to one of proportional representation (PR) with a parliamentary threshold of 3 per cent.

According to the Greek constitution, the new law was meant to be applied in the election following the next one. However, the succeeding New Democracy (ND) government passed a second law to reinstate the seat bonus. ND then repeatedly pledged to hold a second election under its own electoral law to ensure a majority government.

Thus, the recent vote was anticipated to be the first of two elections held under different electoral laws.

Some voters viewed this first round as an opportunity to express a general protest, leading to a significant increase in support for extra-parliamentary forces, reaching 16 per cent, double the figure from 2019, and second only to 19 per cent in May 2012.

The combined protest vote, including support for two radical parties already in parliament, reached nearly 28 per cent.

Additionally, while the abstention rate (39.2 per cent) was lower than in 2019, it was the third highest since 1974, with abstainers outnumbering those who voted for the leading party.

Interestingly, the two main parties not only presented different political programmes but also represented distinct electoral systems and types of government. ND, advocating for the seat bonus, supported Greece’s traditional single-party majority government model.

On the other hand, SYRIZA, having engineered the switch to PR, called for a return to coalition governments. Many Greeks associated coalitions with the hardships and uncertainties of the previous decade.

Ironically, the vote for stability contributed to a significant reshaping of the political landscape. The steep decline of SYRIZA, the surge in support for ND, and the emergence of two more radical parties as parliamentary contenders have set the stage for a new starting point.

Source : Instaforex

Despite a decade of national hardship, New Democracy (ND) managed to oversee a period of economic growth, gaining public support for its handling of the initial phase of the pandemic and its management of Greek-Turkish relations during a time of heightened tension.

However, opinion polls revealed a significant level of economic dissatisfaction and political mistrust among the populace.

Issues such as the cost-of-living crisis and revelations of extensive surveillance using illicit spyware raised concerns about the rule of law. Additionally, the tragic train crash undermined the government’s image of an efficient and effective state, further eroding its legitimacy.

Mitsotakis has made commitments to in troduce initial bills focused on reforming the public administration and the econo my. He has also expressed intentions to revamp the judicial system, healthcare sector, and education system.

Additionally, he proposed the creation of a family ministry to address Greece’s declining and ageing population.

These plans demonstrate his determi nation to implement comprehensive changes across various sectors of the country.

Mitsotakis has rebranded Greece as a pro-business and fiscally responsible eurozone member, gaining appreciation from investors. The country is expected to regain its investment-grade status over 12 years after its initial downgrade, signalling the end of the dark days of the financial crisis.

During his initial term, Mitsotakis successfully tackled unemployment, implemented tax reductions, attracted foreign investment, and modernised Greece’s outdated bureaucracy, which had long resisted modernisation efforts.

In his second term, Mitsotakis has pledged to further increase salaries, raise the minimum monthly wage to €950 (£815), lower taxes, restructure the public health system, and enhance nationwide infrastructure.

These promises demonstrate his commitment to further improving the economic and social well-being of Greece.

New Democracy faces the challenge of maintaining the trust of centrist voters while also preventing the loss of its right-wing supporters to other political parties. Since the migrant crisis, the majority of Greek voters have shifted towards favouring stricter and more conservative policies.

AN EXTREMIST RESURGENCE?

Greece is now confronted with a crucial question: Can the country effectively combat the resurgence of far-right extremism for the second time in a decade? This challenge is compounded by the weakened state of the left and the prevailing dominance of conservatism in Greek politics.

The unexpected success of an obscure extremist party represents uncharted territory for Greece as it grapples with the reemergence of extreme right-wing ideologies just three years after the conviction of Golden Dawn.

The shockwaves were felt when Ilias Kasidiaris, a neo-Nazi politician and former member of parliament for Golden Dawn, posted a cryptic photograph on Twitter urging his supporters to rally behind a mysterious political entity called Spartiátes, or Spartans, just two weeks before the second round of the Greek general election. To everyone’s surprise, Spartans, a previously under-the-radar political party, managed to secure a significant 4.64 per cent of the total vote share, earning twelve seats in the 300-seat Greek Parliament.

The government attempted to limit the influence of convicted politicians associated with Golden Dawn by passing a law in 2021 that prohibited them from assuming leadership positions in political parties.

However, Kasidiaris boldly declared his intention to run for a parliamentary seat in early 2023, prompting the government to enact emergency legislation banning his participation in the upcoming election.

Assessment

New Democracy’s substantial victory over Syriza is credited primarily to the economic growth experienced during Mitsotakis’s initial term as prime minister. Voters expressed their desire for Greece to maintain a trajectory of stability and “normality” after the turbulent financial crisis the country went through. Economy any day trumps geopolitics!

The outcome of the election reflects a larger pattern observed in Southern European countries, with a notable shift towards right-wing political ideologies. This is compounded by the migrant crises and does not bode well for humanitarian sanctuaries for the hordes of migrants swarming towards European safe-havens.

NAMIBIA: EMERGING FROM SHADOWS

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Tucked into the western corner of Southern Africa, sandwiched between the Atlantic Ocean and Botswana to the East, Zambia and Angola to its North and South Africa to the South, Namibia remains a little jewel of sheer natural beauty but seldom in the news. While oil-rich Angola attracts investments and South Africa leads the continent economically and geopolitically, Namibia remains in the shadows.

It is about time that the world, and India, reach out to this nation with a vast area for its small population (approximately 3 million) and some rich natural resources. Ravaged for almost a century by white big game hunters for its wildlife, it was the first nation to enshrine environmental protection in its constitution.

However, Namibia has emerged from the shadows in recent years thanks to several factors, including strong economic growth, a stable political environment, and a growing tourism industry.

HISTORICAL RELATIONSHIP WITH INDIA

Namibia, called Southwest Africa by its initial German colonisers who were followed by the apartheid regime of South Africa that succeeded them, is no stranger to India. Way back in the 1940s, India was one of the first of the newly liberated nations of the developing world to champion the cause of its independence.

However, Namibia has emerged from the shadows in recent years thanks to several factors, including strong economic growth, a stable political environment, and a growing tourism industry.

Namibian independence struggle was led by SWAPO (South West Africa People’s Organisation) under its guerilla leader Sam Nujoma who became its founding president. The Indian support was not restricted to political rhetoric but also included material support and military training for the fighters. Incidentally, when Namibia was formally declared an independent nation in 1990, the UN mission that oversaw this transition was led by an Indian General, Lt Gen Dewan Prem Chand. Since then, there has been cooperation in the military field with an Indian Air Force training team imparting flight training to Namibian air force pilots on India-supplied helicopters. Namibia is also a participating country in the Africa-India Field Training Exercises (AFINDEX) conducted regularly at Pune.

More important, from the Indian perspective, Namibia reportedly has the world’s second-largest reserve of uranium. In 2009 India and Namibia signed a deal for nuclear cooperation once India was given the necessary exemption by the Nuclear Suppliers Group in 2008. Unfortunately, the deal remained in limbo as the Namibian parliament did not ratify it despite a great deal of diplomatic effort by India. For an ambitious nuclear energy producer like India, which plans to substantially increase energy production through nuclear reactors,

an agreement on uranium supply from Namibia would benefit both countries.

INDIA’S AFRICA-CENTRIC APPROACH

For long, India has extended its soft power outreach towards Africa, acknowledging the potential and size of its market. As the current president of the G20, India has been pushing the case for the inclusion of the African Union in the G20 to give a voice to the African continent.

Namibia’s economy has grown steadily in recent years, with real GDP growth averaging 4.5 per cent annually between 2010 and 2020. Several factors, including a strong mining sector, a growing agricultural sector, growing investment in tourism and manufacturing, and foreign investment, have driven this growth. In 2021, Namibia’s GDP grew by 5.4 per cent, making it one of the fastest-growing economies in Africa. China, of course, has dominated the market in most of Africa, and Namibia is no exception. India would like to get a slice of this market by competing fairly and squarely with its Asian rival.

Areas of particular interest for India would be the diamond industry (Namibia is one of the leading producers of diamonds) to feed India’s world-renowned diamond polishing and jewellery industry. With its vast open spaces, albeit with very little natural rain or water, there is ample scope for enhancing agriculture in this country, where India’s expertise in dry land cultivation could be put to good use.

Namibian desert and wildlife safaris are boosting tourist inflows into the country, where Indian investment could be a mutually beneficial enterprise. The country is home to over 600 species of birds, and there are many opportunities to go fishing in the Atlantic Ocean, the Okavango River, and the Kunene River. Over 1.6 million tourists visited Namibia in 2021. However, the industry is under pressure due to the country’s high airfare cost and limited hotel accommodations and other ancillaries that international tourists expect.

India is not alone in being attracted to Namibia in recent years, as billions of dollars of FDI have flowed in from companies such as Rio Tinto, Anglo-American, and De Beers. However, Namibia also faces some challenges as it seeks to continue its economic growth. One challenge is the country’s high unemployment rate, currently around 23 per cent.

The strongest factor favouring Namibia as an investment destination is its stable political environment with a strong tradition of democracy. Free and fair elections are held on time, leading to a peaceful power transfer.

CHALLENGES

Like any other developing country, investments in Namibia will face challenges. One singular challenge is the stark inequality that prevails despite over three decades of independence. Namibia has one of the highest Gini coefficients, with the richest 10 per cent of Namibians controlling over 40 per cent of the country’s wealth.

Another challenge is the high unemployment rate. The official unemployment rate is around 23 per cent, but the real rate is likely even higher. While law and order is still not a major issue like many emerging African economies in the region, the danger exists.

However, Namibia is a resilient country with a strong track record of overcoming challenges. With continued effort, Namibia is likely to overcome these challenges and progress in the years to come. The current president, Mr Hage Geingob, has been in office since 2015 with considerable administrative experience and a clean record. He has a strong track record in economic management.

Assessment

Namibia is well-positioned for continued economic growth in the years to come. If it can address the challenges of inequality and unemployment, it could become one of the most prosperous countries in Southern Africa.

All economic and social indicators point to a stable political environment in Namibia has made the country an attractive destination for foreign investment. India can be a gainful partner in this growth, which will also help extend its soft power influence over Southern Africa.

There is plenty of scope for Indian investments, especially in mining (diamond and uranium), agriculture, tourism and manufacturing. This is an opportunity that should not be allowed to pass.

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POLITICAL AND ECONOMIC PROSPECTS OF NAMIBIA

The ruling SWAPO is expected to win the 2024 elections with a reduced majority. The party has seen its credibility with voters diminished due to two factors.

First is the range of corruption scandals, including the 2019 ‘Fishrot’ incident involving the fishing industry, which saw two cabinet ministers arrested.

Second is the struggling economy, which is just returning to more sustained growth post-COVID, allied to high levels of unemployment (50 per cent among the youth).

President Hage Geingob is due to stand down in 2025, having served his two terms in office. For the first time, SWAPO will field a female candidate, the incumbent foreign minister Netumbo Nandi-Ndaitwah (70 years old), in the presidential elections due in late 2024.

With the party’s dominance of the Namibian political scene on the wane, SWAPO’s electoral fortunes partly depend on the state of the opposition, which remains often fragmented along regional and ethnic lines.

With less than 18 months to go to the polls, there is little sign of opposition parties becoming more organized and united.

In the 2019 elections, Geingob came under pressure from an independent candidate - Panduleni Itula - who claimed 30 per cent of the vote.

Since then, Itula has gone on to form the Independent Patriots for Change (IPC) party, which took control of several cities and towns, including the main port of Walvis Bay, in local elections held in 2020. The IPC is expected to form the official opposition after 2024.

Significant oil discoveries off the coast in early 2022 and Namibia’s ambitious plans for developing green hydrogen have prompted some optimism regarding economic prospects.

However, the full benefits of these projects, in terms of rents to the government and job creation, will not be felt before

tinue SWAPO’s pragmatic rather than ideological approach to governing - with Namibia remaining open to foreign investment. However, she is seen as less friendly to the West than Geingob.

As foreign minister, she has rejected calls for Namibia to condemn the Russian invasion of Ukraine. She is also likely to continue to develop Namibia’s relations with China - already Namibia’s main trading partner and the owner of three uranium mines.

Germany is Namibia’s most significant bilateral aid donor, but the relationship with Berlin has soured in recent years due to the failure of the two governments to negotiate an apology and reparations package for the 1904-08 genocide of the Herero and Nama peoples.

During Geingob’s time in office, the investment environment has been clouded by two pieces of planned legislation - an investment promotion bill and a black economic empowerment framework.

Both have been criticised for vesting too much discretionary power in ministers and promoting crony capitalism over genuine investment.

These prospective laws remain in draft form, and it is unclear whether Geingob will push them through before he leaves office.

Namibia’s economy is now in recovery mode following several years of recession compounded by the damage caused by the COVID pandemic. The economy grew by 3.5 per cent in 2021 and 4.6 per cent in 2022 after shrinking by just over 8 per cent in 2020.

The ratio of public debt as a proportion of GDP is nearing 70 per cent, although the rate of increase is slowing down. The debt is mainly domestic, with bilateral debts to China and Germany making up less than 3 per cent of the total.

The annual inflation rate was 5.3 per cent in June, with the Bank of Namibia predicting it will average 4.9 per cent in 2023.

After several years of good rains, the El Niño effect is expected to lead to the return of drought in late 2023 and 2024, adding to the woes in the agricultural sector already caused by climate change.

Tourism is one bright spot, with visitor levels expected to return to pre-COVID levels in 2023.

GRAHAM HOPWOOD Executive Director, Institute for Public Policy Research (IPPR)

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