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Indian GST: Another Modi gambling for perpetual economic disorder?

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Indian PM Modi is in news again with a new economic project called GST.  GST could mean two big things, one: Global State terrorism and two, Goods and Services Tax.  While Indians are still struggling with the impact of demonetization, the Modi government has come out with yet another shock called GST.

Apparently, Modi is still eager to be in the news and he does things only to promote that goal at a heavy cost for the people of India. His foreign tours, being arranged jointly by PMO, foreign ministry and Indian embassies abroad,  are meant to boost Modi’s image as a fast running PM of India. In fact, Mod runs into wanting state plane to take him for foreign tours. He thoroughly enjoys his foreign tours, meeting big leaders and having food with them and “shake hands” photos with them for Indian media lords.

The Modi government keeps trying various economic strategies, even if for fun, that harms the people at large. But neither Modi nor BJP nor RSS is worried about the consequences of their actions. It seems the BJP regime is targeting the people of India for ignoring them for too long to offer it the mandate to rule the nation. PM Modi is also not sure if people would repose their faith in his party or government when the next general poll take place.

The Modi government thus punishes the people of India while Mod himself keeps visiting big nations as his prime hobby along with big entourage of media lords and  government officals. Modi just ignores the sentiments of Indians by going to Israel against  Indian support for the support for the Palestinians. In order to make his visit to Israel easy without any criticism in India, PM Modi has launched the GST so that people of India and media are busy with the issue while he would enjoy life in Israel. 

The Goods and Services Tax being introduced by Indian regime aiming at a standard tax system for entire country and in every state and region. Either could destabilize the weak nations and common people and could only promote capitalism and support global imperialism. Here we are talking about the second problem of new Indian economic law GST, relating to uniform taxes. PM Modi has called it Good and Simple Tax. But common people are puzzled as they care confused about the consequences of GST. After their disastrous experience with demonetization drive, Indians are scared f of any new shock therapies by the Modi government. Certainly, they want to live with fewer problems.

 One party, one system, one religion, one tax

Taking the one time victory as the permanent vote  by Indian people, the RSS/BJP government is bent upon one  system, one party and one religion system in India. A nationwide Goods and Services Tax (GST), came into effect on Saturday from midnight, has faced criticism for its complex design.  GST, being billed as the biggest tax reform since Independence, will subsume all indirect state and central levies, making India a single market. Under GST law, the producer must have to pass the added benefit of tax reduction. Businesses and their consultants have opposed it and said that it’s against the free market concept.

 Union finance minister Arun Jaitley has likened the roll out of the GST – whose bill was cleared by both houses of Parliament last month after six years of stormy debate – to a revolution and the “most significant taxation overhaul in India.” PM Narendra Modi said the GST reflects the spirit of “one nation, one aspiration, one determination.” Opposition parties oppose it.

 FM Arun Jaitley on June 29 asked opposition parties such as Congress and the Left to reconsider their decision to skip the midnight GST launch tomorrow saying they were all consulted on the indirect tax reform and cannot run away from it. “I hope every political party will reconsider and revisit its decision” on not participating in the launch event to be organised in the Central Hall of Parliament, he said. The government, FM Jaitley said, remains committed to the Goods and Services Tax (GST) as any other reform. “It is single most important taxation reform in 70 years.” All decision on GST, including rules and tax rates, were taken in consultation with states and political parties must display broad shoulder and own up their responsibility, he said.

The leader of Indian opposition Congress decided to keep away from the special midnight June 30 meeting convened by the government on GST implementation. Trinamool Congress has already announced its decision to boycott the event. Left parties also boycott the meeting as they reject the GST. CPI (M) general secretary Sitaram Yechury has already questioned the government on “hurrying” into introducing GST and recalled that the ruling BJP had opposed the system when it was in the opposition.

The Left parties will not take part in the special midnight meeting on June 30 convened by the government to launch the Goods and Services Tax (GST), CPI leader D Raja said today. He said the parties will not take part in the meeting in view of protest by small and medium scale entrepreneurs, traders, weavers and informal sector workers on the way the GST is being implemented. “The Left will not be participating in the midnight GST meeting. People are agitating across the county. ..We cannot be celebrating when people are agitating,” the Rajya Sabha member said.

The Modi government wants smooth rollout of the GST the 30 June in the parliament. A war room will monitor and take immediate action on a complaint. Government officials have specially alerted to thwart any attempt of cartelization or disruption in the new tax regime. The government said it will use the circular-shaped Central Hall to launch the new taxation system that is set to dramatically re-shape the over USD 2 trillion economy. A gong will be sounded at midnight to usher in the GST. Prime Minister Modi will be the key speaker at the function. President Pranab Mukherjee, who is enjoying finals days at Presidential palace with Mogul Garden, , is also likely to attend the function, where former Prime Ministers Manmohan Singh and H D Deve Gowda have been invited too. Central Board of Excise and Customs (CBEC) chief said that “The finance ministry has set up a GST feedback and action room specifically for government officials to approach it with any urgent queries related to problems of GST in any area”.

The PMO and Indian government officials have specially alerted to thwart any attempt of cartelization or disruption in the new tax regime. The government has created a ‘war room’ to monitor GST (Goods and Service Tax) implementation process, a new indirect tax system which will roll out on Saturday. In North Block, the office building of Finance ministry has allotted a space named as ‘GST Feedback and Action Room’. Former Chairman of CBEC said that “The government wants these benefits to reach the consumers through these Anti- Profiteering Rules. On the other hand, its rampant application will create chaos and serious disruptions in business”.

Equipped with multiple phone lines and computer systems and manned by tech-savvy youngsters, a “mini war room” has been set up in the Finance Ministry to deal with crises related to the implementation of GST or goods and services tax. War room is also ready for prompt action from tax evasion to technical confusion on rates to transportation related issues. War room responsibility is more crucial as the anti-profiteering body is still in the process of being.

GST- one tax and several problems

GST is not as simple as Modi and Arun want us believe. It is highly complicated at different levels. BJP, a party of  finical lords,  cannot devise any policy to multiage the poor or common people.

The GST, a worldwide accepted tax system, was first introduced by France in 1954.  Presently, around 160 countries follow the GST or VAT in some form or the other. In some countries, analysts say, VAT is the substitute for a GST, but conceptually it is a destination-based tax levied on consumption of goods and services. However, only Canada has a dual GST model, akin to what India intends doing.

Indian government wants to replace it with a more streamlined nationwide Goods & Services Tax (GST) that is hailed by many as the country’s most pathbreaking tax reform and deplored by others who fear it will turn the economy down. The new system will eliminate India’s notorious complex layers of taxation including purchase, entertainment, excise, luxury and sales taxes (VAT) and others. Analysts predict that the GST, if properly implemented, will likely bolster the country’s GDP by 2 percent.

One of the major objectives of GST is to make the tax incidence on consumers less by reducing compliance costs, removing cascading of taxes, increasing the tax base, reducing logistics costs and reducing the effective rates of taxes from the present level. Other country experiences suggest that GST led inflationary pressures in an economy because producers have refused to pass added profit to consumers.

GST law said, “Any reduction in rate of tax on any supply of goods or services or the benefit of input tax credit shall be passed on to the recipient by way of commensurate reduction in prices”. Revenue secretary Dr Hasmukh Adhia had said that “We expect companies to cooperate. We hope we don’t have to use the weapon.”

A unified tax system is likely to remove a slew of indirect taxes as well as the cascading effect of taxes. Manufacturing costs will be reduced; hence prices of consumer goods – cars, phones, FMCG goods – will also likely plummet. A unified tax regime will also be a deterrent to corruption which will benefit the common man. Other benefits include simpler administration which will ensure an easier collection of revenues, widening of the tax net and plugging of leakages and multiple taxations which will boost the government’s revenue stream and efficiency. For the consumer/tax-paying citizens, the GST would mean more transparency, proportionate taxation, relief in overall tax burdens, slightly cheaper goods and services.

India’s gold industry is optimistic that the gold supply chain will be more transparent and efficient. The GST, some hope, will also provide an edge to the travel and tourism industry by reducing costs for customers, streamlining taxes and thus promoting overall growth. Under the GST, rates finalized for air travel, flying economy will attract a 5 percent tax.

India currently has one of the worst tax-to-GDP ratios among major economies at 16.6 percent, less the half the 34 percent average for the members of the OECD and also below many emerging economies. Improved tax compliance should shore up public finances, augmenting resources for welfare and development spending and giving a lift to the $2 trillion economy.

While there is no official estimate of the potential fiscal gain, some tax experts say the measure, after the initial teething trouble, would lift the tax-to-GDP ratio by as much as 4 percentage points as the number of tax filers is estimated to more than treble to 30 million. In future, compliance is going to be extremely crucial

True, not many are interested in paying taxes and as corruption, being religiously promoted by the regime and politicians, has badly affected the tax officials as well, most pay taxes not properly.

The unorganized sector of India’s economy is vast, employing an estimated nine out of 10 workers. While staying outside the GST regime risks losing business, joining it will necessitate an overhaul of firms’ accounting systems and an investment in technology.

The new tax system requires three filing a month plus an annual return – a total of 37 filings – for each of India’s 29 states in which a firm operates. For smaller companies operating on wafer thin margins, hiring accountants and technical staff could substantially dent their bottom line. A head of portfolio management services at financial firm in Mumbai says all consumer-facing industries will be big beneficiaries of the GST

Most of those who argue for GST are also the supporters of BJP government. Only time will let the peole know the real move of GST as India has long ago under the corrupt Congress misrule mortgaged its economic policy to IMF and World Bank and increasingly work to promote American economic interests in order to gain some favors from Washington. The Hindutva fanatics are too eager to promote those “structured” relations with USA.

Of the eight million existing tax payers, 6.6 million tax assesses have already enrolled for GST. And about 1.7 lakh new applications for GST have come in. However, the silence inside the headquarters of Goods and Services Tax Network or GSTN, housed on the fourth floor of an imposing glass building aptly named World Mark I right next to Delhi’s international airport, is misleading. Behind white and blue cubicles, professionals with expertise in IT and taxation are putting in extra hours to ensure that the switch over to GST is a smooth affair. The biggest task for GSTN – a not-for-profit company set up to manage and collect indirect taxes – is to help traders and businessmen migrate to the GST platform.

Indian GST Network has developed a tool where you can work offline and upload when there is connectivity. It will take seconds to upload your returns. As the officials test and retest their programs and applications, our question “when was your last off day” made everyone burst out. “We will have to check our records,” said a former banker who’s “measuring end user results of the GST software.” “This is our national service.”

However, some chief ministers of Indian states have already expressed their dissent. How is one-nation-one-tax good politics for all 29 states and several Union territories and the center given the fact they all have diverse economic strengths and weaknesses?

Observation

GST interferes with federal arrangement and imposes its will on the states and thereby encroaches upon state rights and privileges. In other words, federal government tries to control entire nation and state resources.

One tax indeed means big problems for the people of India.  Conscious people in India feel if India has been purchased by international frauds that play with the psyche of Indians who want to see their nation a super power as soon as possible to challenge both USA and Russia while making China a non-issue.  

GST is likely to harm the common masses. GST is exorbitant. Tax is likely to increase on a massive scale. Traders are not going to reduce the prices.

Who will benefit? Any reform or policy is supposed to help the people of the nation. Corporate lords will have more profits under GST.

Once lauded as path-breaking, which is now causing rancor in the European Union.  Lesser-developed economies like Portugal, Italy, Greece and Spain have had to adopt extreme austerity measures that have sent unemployment soaring all over southern Europe. This has led many of the anti-EU states to consider a referendum on exiting the union a la Brexit.

In India too, there is a strong chance that the GST, the country’s boldest and riskiest tax reform yet, may give the ruling political establishment a greater headache than it may have bargained for.

The country’s biggest tax reform since independence is promising to bring millions of firms into the tax net, boosting government revenues and India’s sovereign credit profile. Until now, all rundown premises and small scale operation has kept the business below the radar of India’s tax officials. Since July 1, however, the party will be over. The new tax will require firms to upload their invoices every month to a portal that will match them with those of their suppliers or vendors. Because a tax number is needed for a firm to claim a credit on the cost of its inputs, many companies are refusing to buy from unregistered businesses. Those who don’t sign up risk losing any customer who has.

The nation is waiting for the real problems of GST to come to fore.

There are serious apprehensions in the minds of people over GST’s implementation. Unfortunately, India is under the grip of international frauds like the BJP MP and IPL boss Mallya. Unless corruption is contained and done away with, a new tax system won’t be fruitful. If the regime let its supporters to loot the nation’s resources and evade taxes, nothing good or positive is going to come of the envisaged tax reforms.

The GST is in fact a regressive tax, which will consume a higher proportion of poor people’s income, compared to those earning large incomes.  Many feel that imposition will also result in a surge in prices of services like telecoms, banking and airlines. If the actual tax benefit is not passed to consumers, and sellers increase their profit margin, the prices of goods will go up instead of down. Even assuming the GST delivers on the revenue front after an initial lag, one has to realize that it goes counter to the long-term trend of devolving greater powers to states.  It centralizes in the GST Council the powers of indirect taxation, and could thus be a constant source of friction between center and states, or between states if some gain or lose more than the others.

One also suspects if the governments of Congress and BJP are trying to eliminate the poor and have-nots from the Indian economic system by GST and other such measures as the IMF and World Bank, committed to capitalism and colonialism, are pressing the third world to do away all subsidies to the poor. .

The BJP government that worships cow and Israel as real gods, has been searching new ideas to boost the image of the Modi led RSS government which is shattered by false promises to the people and issues like black money and demonetization. GST therefore is crucial for the BJP government which has lost the blackmoney issue as part of gigantic demonetization drive that spelt disastrous for the common people for months and the impact is not completely worn out.

Uncertainty cannot be the foundation of any government because people suffer not knowing how to deal with new threats to their ordinary lives.

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CoVID-19 Control: Can Pakistan Learn From China?

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coronavirus people

It has been over a year since the first case of CoVID-19 was confirmed in Pakistan. The tally has reached 721,018 confirmed cases, 15,443 have died and 4,143 critical cases by 11thApril2021. Across many countries, since January 2020, a massive surge of research into CoVID-19 had enabled the scientific and medical community to better understand how to manage and eliminate the virus through public health interventions. Today, we have learned, CoVID-19 causes acute symptoms and death. We have learned, immunity lasts at least eight months and we also have five licensed vaccines. We have learned, the long-term effects of CoVID-19 and the morbidity attached to having this virus. We have learned, virus transmission occurs through droplets and aerosols spread through coughing, sneezing, breathing and speaking. We also have learned, stopping the spread of CoVID-19 requires people to avoid mixing though restrictions on social life. We have learned, the virus can mutate into various strains that can be more transmissible – and we also have understand cat-and-mouse game between vaccine and variants.

To alleviate the destructive effects of CoVID-19 on the economy, Pakistan has sought debt relief of slightly around $2 billion from its G20 creditors. In addition to the G20 countries, China was the largest bilateral creditor with $9 billion, followed by Japan with $5 billion. By early April 2020, when there were just about 2,000 CoVID-19 positive cases in Pakistan, the World Bank approved $200 million package to help Pakistan. Likewise, the International Monetary Fund (IMF) had approved the payout of $1.386 billion as financial support to Pakistan to meet its urgent balance of payment needs halting from the CoVID-19 outbreak. Further, to support Pakistan’s public health response to the CoVID-19 and allow to meet the basic needs of the vulnerable and poor segment of society, the Asian Development Bank (ADB) approved $500 million emergency assistance loan to Pakistan. Similarly, The Islamic Development Bank (IDB) also provided a $650 million financial package to support Pakistan in its efforts against the CoVID-19. All these grants were provided to Government of Pakistan to assist in effective and timely action in response to the spread of the CoVID-19. The objective was to strengthen Pakistan’s public health infrastructure and to alleviate socioeconomic disruptions due to the pandemic. Despite huge grants and substantial endowments, Pakistan’s response to the CoVID-19 has been unsatisfactory. Lack of basic healthcare infrastructure, disease surveillance and management system,  and inconsistent implementation of policies and SOPs resulted in the rapid and incessant spread of third-wave of CoVID-19 throughout the county.

China’s extraordinary organized and preventive risk management approach, established on coalition between government officials, virologists, epidemiologists and public health experts, has demonstrated to be successful in containing and controlling CoVID-19.The experience in China emphasized the significance of listening to science and public health experts during pandemic event. Firstly, China’s response demonstrates the value of national research and public health capability. Huge investment in research and development rendered China much better prepared for CoVID-19. China’s experience indicates the value of investing in national health and research scheme to boost laboratory capacity along with workforce. They are essential to a rapid and effective national response to health emergencies and to national health security. Secondly, a strong foundation of research and development cannot ensure effective control without powerful top-level political dedication to use science to confront the outbreak. Government and leaders must respect science, understand its significance, and act on science-based advice in a way that is best for society. Thirdly, attaining speedy and successful implementation of control measures for CoVID-19 requires extensive community engagement. Public solidarity during the CoVID-19 outbreak in China had been unprecedented. Control measures that could sacrifice personal freedom were accepted readily by the nation.

To be brief, cricket is to South Asia and football is to Europe. In fighting CoVID-19, everyone is equal. Everyone has the identical liability and shares the equal threat. The effective implementation of prevention and control measures in China is a model for Pakistan other parts of world to follow. From the beginning, a science-based, risk-informed and phased approach was taken, with a clear appreciation and enthusiasm. Today, China has restarted its economy, reopened and almost returned to normality. The key of success story is to make everybody responsible, get every single division involved and held executives accountable. These are the most prominent lessons Pakistan could learn from China at national and local levels. After the failure of “Smart-Lockdown” strategy, Pakistan needs to choose a strict strategy, should follow the example of China and continue the lockdown until the number of CoVID-19 infections is brought close to zero; the strategy should then be to maintain infection rates at very low level until vaccination is done. China’s epidemic management provides an important experience from which countries such as Pakistan can learn. This applies in particular to Pakistan, which would risk to lose many of its achievements in case of a severe third wave of the epidemic. Government of Pakistan should involve not only public health experts, virologists and epidemiologists, but also scientist and respect science advice when making any decision that is required to keep the epidemic under control. The rest of the world can also learn from China’s success in bringing outbreak under control.

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United States snubs India for its excessive maritime claim

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On April7, 2021, a 9,000-ton guided-missile destroyer, USS John Paul Jones (US 7th Fleet), waded (not strayed as it was deliberate) into the vicinity of India’s Lakshadweep Islands. The ship was 131 nautical miles away from India’s coast (12 nautical miles territory) but well within its exclusive economic zone (200 nautical miles, 370.4 kilometre).

Shockwaves

The trespass by the US destroyer triggered indignation through all walks of life. It conjured up memories of the arrival of the 7th fleet during the Indo-Pak war of 1971. The fleet gave a message, loud and clear, to India that it should not dare finish West Pakistan, its long cherished desire. Even Nehru, an ostensibly liberal leader, regarded the creation of Pakistan a blunder. His rancour against Pakistan reaches a crescendo in his remarks: “I shall not have that carbuncle on my back.” (D. H. Bhutani, The Future of Pakistan, page 14). During 1971, Pakistan was a US ally. Now India is in the anti-China US-backed basket.

Yet, the `destroyer’ conjured up memory in India’s mind of `bitter’ American intervention.  Congress leaders voiced surprise at the U.S. move. In a tweet, Manish Tewari said, “This never happened in the 10 years of UPA [Congress-led rule] or perhaps even before that as far as I can recall. The last time I remember it being so rather in your face was 1971 – Task Force 74 – 7th Fleet. What then happened is History. Hope the NDA/BJP shows some Oomph?” Echoing the surprise, former Union Minister Jairam Ramesh, said, “And this happened when the former U.S. Secretary of State and Climate Envoy, John Kerry, was meeting Ministers in New Delhi.”

The euphoria created by US gung-ho support for Quad, and Pakistan’s exclusion from the climate conference petered out.

India’s foreign office tried to play down the event by stating that it was not a “military manoeuvre”. So, the USA was not bound to inform India about it. But, to India’s chagrin, the U.S. The Navy announced that its ship the USS John Paul Jones had carried out Freedom of Navigation Operation (FONOP) in the Indian EEZ, adding that its operations had “challenged” what the U.S. called India’s “excessive maritime claims.” The U.S. defends its actions saying they were in compliance with international laws.  Even Pentagon spokesperson John Kirby justified what India calls “intransigence’ by announcing the US Navy’s move was in compliance with international law.  He told reporters, “I can tell you that the USS John Paul Jones, a Navy destroyer, asserted navigational rights and freedoms in the vicinity of the Republic of the Maldives by conducting innocent passage through its territorial sea in normal operations within its exclusive economic zone without requesting prior permission. We conduct routine and regular FONOPs, as we have done in the past and will continue to in the future. FONOPs are not about one country, nor are they about making political statements’.

India compelled to protest

As a face-saving gesture, India was forced to protest the U.S. decision to conduct a patrol in the Indian Exclusive Economic Zone (EEZ) in the western Indian Ocean, rejecting the U.S.’s claim that its domestic maritime law was in violation of international law. India’s external-affairs ministry retorted, ‘The Government of India’s stated position on the United Nations Convention on the Law of the Sea (UNCLOS) is that the Convention does not authorise other States to carry out in the EEZ and on the continental shelf, military exercises or man oeuvres, in particular those involving the use of weapons or explosives, without the consent of the coastal state.’ The ministry insisted that the USS John Paul Jones was “continuously monitored” transiting from the Persian Gulf towards the Malacca Straits.

The incident is a rare falling out between the two partners in the Quadrilateral Grouping that had recently committed to upholding freedom of navigation in the Indo-Pacific together.

Bone of contention

The USA shrugged off India’s ennui. According to the annual FONOP reports released by the U.S. Department of Defence for each fiscal year, the U.S. had been regularly conducting FONOPs in Indian EEZ. The FONOPs were carried out in several c continental shelves of several countries including its allies and partners. The USA regarded Indian maritime claim as “excessive” and in violation of International Law. From 2007 onwards till 2017, the U.S. carried out multiple FONOPs every year challenging “excessive” Indian maritime claims. No FONOP was carried out in 2018 and 2020 and one FONOP in 2019.

Difference of opinion is due to the fact that the USA has not ratified the UN Convention on the Law of Seas. India and China have ratified it with some reservations. But, the USA does not care a fig about provisos attached by China and India.

Ashamed of USA’s crass rebuttal, India is coining excuses to mitigate its embarrassment. To relieve pressure on Indian government, former Navy Chief Admiral Arun Prakash interpreted the US “trespass” as if it were a message to China that the USA has unfettered “freedom of navigation”. Prakash Tweeted

“While India ratified UNCLOS in 1995, the U.S. has failed to do it so far. For the 7th Fleet to carry out FoNOPs missions in Indian EEZ in violation of our domestic law is bad enough. But publicising it? USN please switch on IFF (Identification, friend or foe)! Prakash added FONOPs by U.S. Navy ships, “ineffective as they may be,” in South China Sea, are meant to “convey a message to China that the putative EEZ” around the artificial SCS islands is an “excessive maritime claim.” “But what is the 7th Fleet message for India?” he asked.

Might is Right

 Obviously, the USA is acting upon might-is-right policy. India itself acted upon this policy to devour princely states, and annex Nepalese territory. Junagadh and Kashmir disputes are still unresolved on UN agenda.  Indian Union is an artificial sally.

In its entire history India had never been a single nation, or one country, until united at gun point by the British. The artificial nature of modern India created by the British colonialists and adopted by post-colonial India generated insurgencies and separatist movements.

At the time of partition, India was in grip of virulent insurgencies and separatist movements (Dravidian South, Khalistan, Seven Sisters in the North East, so on). Wikipedia lists 68 major organizations as terrorist groups. Of them, nine are in the northeast (seven sisters states), four in the center and the east (Maoist/Naxalites), seventeen in the west (Sikh separatist groups), and thirty eight in the northwest (Kashmir). India kept afloat as a union only at the barrel of gun. The Indian army chief paid a five-day visit to Bangladesh as a prelude to conducting a massive operation against the Naxalbari militants.

UK and USA’s Diego Garcia headache

International Court of Justice advisory opinion on Chagos Islands has catapulted Indian Ocean into limelight. The ICJ `advisory’ is a blow to UK’s forcible occupation of Chagos Islands, including the strategic US airbase of Diego Garcia atoll (leased out to the USA by the UK).

The ICJ President Abdulqawi Ahmed Yusuf observed, `The UK has an obligation to bring to an end its administration of Chagos archipelago as rapidly as possible’. The court ruled that separation of Chagos Islands from Mauritius during decolonisation in the 1960s constituted an “unlawful detachment” and was a “wrongful act”.

In 1966, the U.S. signed a secret agreement with Great Britain allowing the Pentagon to use the Indian Ocean territory as an airbase in exchange for a big discount on Polaris nuclear missiles. Three years later, hundreds of Navy Seabees arrived by ship and began pouring out two 12,000-foot runway that would become a bulwark of American Cold War strategy in the region, and a key launching pad for the first and second Gulf wars, the 1998 bombing of Iraq and invasion and carpet-bombing of Afghanistan.

The base can house more than 2,000 troops and 30 warships at a time. It has two bomber runways, a satellite spy station and facilities enabling the use of nuclear-armed submarines. It served as a CIA black site (like Guantanamo Bay) to interrogate and torture terror suspects including those from Afghanistan, Pakistan and Indonesia.

The base holds key to America’s Afghan exit plan, by year 2024, to avoid a rout at the hands of Taliban.

Hand aloft

To India’s chagrin, the USA wants to exert its authority on Indian Ocean also. Forty seven countries have the Indian Ocean on their shores. The Indian Ocean is the third largest body of water in the world. It occupies 20 percent of the world’s ocean surface – it is nearly 10,000 kilometers wide at the southern tips of Africa and Australia and its area is 68.556 million square kilometers, about 5.5 times the size of the United States. India’s motto is ‘whoever controls the Indian Ocean dominates Asia’. Admiral Alfred T. Mahan (1840-1914) of the United States Navy highlighted the strategic importance of the Indian Ocean in these words: “whoever attains maritime supremacy in the Indian Ocean would be a prominent player on the international scene. The Indian peninsula (i.e. the Deccan and below) juts 1,240 miles into the Indian Ocean. 50 per cent of the Indian Ocean basin lies within a 1,000 mile radius of India, a reality that has strategic implications. Under the law of the sea, it has an exclusive economic zone of 772,000 square miles. Chennai is a mere 3,400 miles away from Perth in Australia, slightly more than the distance between New York and Los Angeles.

 To dominate Straits of Malacca (bordering Indonesia and Malaysia), India established its Far Eastern Marine Command at Port Blair in the Andamans. It has developed Port Blair as a strategic international trade center and built an oil terminal and trans-shipment port in Campal Bay in the Nicobar Islands.

Concluding remarks

In diplomacy, there are no permanent friends or foes, only permanent interests. Afghan exit plan requires the USA continues to retain Diego Garcia.

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US-China Developing Confrontation: India and QUAD

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At the request of the editors of International Affairs magazine, the renowned Kanwal Sibal, India’s Foreign Secretary and Ambassador to Turkey, Egypt, France and Russia, comments on new US initiatives in Southeast Asia.

Judging by its Interim National Strategic Security Guidance (INSSG) document (March 2021) the Biden Administration intends to be tough towards China on many fronts. Human rights issues in Xinjiang and Tibet, threats to Taiwan, limiting Hong Kong’s autonomy, encroachments and territorial pressures in the East and South China Seas, freedom of navigation and overflight issues, preserving a free and open Indo-Pacific, unfair trade practices, technology theft, resilience of critical supply chains, emerging technologies, standard setting for 5G, a new competitive US industrial strategy, and so on.

Whereas Trump had alienated allies and weakened America’s hand in dealing with China’s challenge, the Biden administration seeks to speak to China from a position of strength. For this it seeks to restore ties of confidence with Japan, South Korea and Australia in priority. In doing this the US is indirectly recognizing its reduced strength and its inability to meet the China challenge alone. In this perspective, It had reached out to Europe for policy coordination towards China even before it took office, but Europe went ahead to sign a Comprehensive Investment Agreement (CAI) to protect its own independent and competitive interests in China. After the fractious US-China Alaska meeting, the US has continued its coordinating efforts with Europe but faces resistance from Germany and France in particular who want to retain their strategic autonomy in dealing with China, believing that US policy under Biden will remain self-centred and that too much water had flown under the bridge for US-Europe ties to simply revert to the pre-Trump era.

The timing of virtual Quad summit before the Alaska meeting was also intended to signal to China that like-minded countries were coming together to deter what they view as China’s increasingly aggressive policies. From a telephonic meeting at the Foreign Ministers level in February 2021 the summit was a major step forward in consolidating the Quad politically. India, earlier reticent in moving too far too quickly with the Quad in the light of the need to manage the stresses of its China ties, decided to join. After the stand-off in eastern Ladakh India has realized that deferring to Chinese sensitivities is not reciprocated by China. The visit of the US Defense Secretary Lloyd Austin to India coincided with the US-China meeting in Alaska.

In the INSSG, India is not treated strategically in the same category as US allies like Japan, Republic of Korea and Australia. The China challenge is felt primarily in the western Pacific where the US has bases, deployed military forces and a powerful naval presence. China’s challenge in the Indian Ocean is not considered of the same order for the time being, but partnership with India, with its significant naval assets and geographic position, overlooking the critical sea lanes of communication in the region, is important for the future. India is seen as a net security provider, fitting into the template of burden sharing. For this the US has shown its readiness to build India’s maritime surveillance capacities by supplying defense platforms, intelligence sharing, increasingly complex military exercises with the inclusion of Japan and Australia, and utilizing the India-US defense-related foundational agreements that provide for inter-operability and sharing of geo-spatial data.

Although the joint statement issued by the Quad summit did not mention China by name, China was of course discussed, with each leader sharing his thinking. According to US NSA Jake Sullivan, China, about whom none of the leaders had any illusions he said, was discussed at the meeting but was not its focus. Coercion of Australia, harassment around the Senkakus, border aggression against India figured in the discussions. According to him, the Quad is now a critical part of the architecture of the Indo-Pacific. Cybersecurity incidents impacting Quad members too figured, including attacks against India’s power sector. He dismissed the talk about Quad being a military alliance, though he stated that it has to worked out at the leaders level and that of the working groups how the Quad can move from freedom of navigation to broader regional security questions. Apparently, at Alaska, the Chinese reacted negatively to US mentioning its dialogue with India.

The summit rightly felt that the Quad should have a broader agenda than simply China, a point of view that India has studiously supported. India is conscious of the fact that the US, as well as Japan and Australia, have deep economic ties with China, which can be rolled back selectively to lessen dependence by decoupling in critical areas, restricting Chinese access to advanced critical technologies in which China has external dependence such as semi-conductors, preventing Chinese investments in sensitive areas etc but cannot be dramatically reduced, given China’s huge weight in the global economy. The US policy seems to be “extreme competition”, cooperation and confrontation, as required. India’s investment in the Quad, beyond the maritime security aspect, would be to benefit from a shift away from China of critical supply chains, use India’s democratic environment to attract more US investment and technology transfers that would accelerate India’s growth for the welfare of its people, besides enabling it to close the developing gaps with China.

It is in this perspective that the decision on building India’s capacity for vaccines should be seen. The three expert groups set up by the Quad summit, on vaccines, critical technologies (5G, AI, Quantum Computing, human biology) and climate change broaden the Quad’s agenda, opening up bilateral opportunities with the US for India, besides creating the beginnings of a structure. In line with Indian thinking and emphasis on a broader agenda, the Quad leaders pledged “to respond to the economic and health impacts of COVID-19, combat climate change, and address shared challenges, including in cyber space, critical technologies, counterterrorism, quality infrastructure investment, and humanitarian-assistance and disaster-relief as well as maritime domains”. The decision to manufacture US vaccine in India with Biological E Ltd to provide one billion doses to the Indo-Pacific region was taken, with Japanese finance and Australia’s delivery support. The third group will deal with critical – and emerging-technologies to facilitate cooperation on international standards and innovative technologies of the future. 

China’s concerns about the Quad summit and the strengthening of India’s strategic ties with the US have no basis. China has benefited enormously from US capital and technology and that of its allies for China’s rise. The economic power it acquired, and with that military power, has been used by it to expand territorially in the western Pacific and globally through the BRI, not to mention in the Indian Ocean. Now that defenses are being put up against China’s policies and ambitions, China, after the stand-off in Ladakh, has no ground to warn India not to become close to the US. Even now the US is China’s biggest economic partner and China is reaching out to the US to ease pressures on it. Its critique of “selective multilateralism” would apply equally to the Russia-India-China group, BRICS as well as the SCO. It has established a Quad in our region- the China-Pakistan-Afghanistan-Nepal group, in which Nepal does not fit at all.

The bristling encounter at Alaska demonstrates that China’s expectations that a change of administration in the US could lessen tensions and some accommodation could be worked out have been belied for the time being. China touted the Alaska meeting as a strategic dialogue, which was strongly denied the US. In response to Secretary of State Blinken’s severe strictures on China’s infringements of a rules based international order on various issues, Politburo member Yang Jiechi hit back brutally, decrying US democracy, castigating America’s racism, calling it the champion of cyberattacks, rejecting the notion that western nations represent global public opinion, and, most significantly, stating that the US lacked the qualifications to speak to China from a position of strength, now or even 20 or 30 years earlier. Yang Jiechi may have intended to say all this in private but felt compelled to do so in public to show to the domestic and international audience that China will not be bullied and will deal with the US as an equal. If he had reacted meekly, it would have been a blow to China’s prestige and its self-image. It appears that after the public spat the two sides got down to business calmly on the agenda items , with serious differences over Taiwan emerging and raising US concerns that this could become a flash point if Xi Jinping was determined to achieve reunification, by force, if necessary. There was no commitment by the US side to meet again despite persistent probing by Yang Jiechi to elicit a response.

With China and Russia in the cross-hairs of the Biden government, it is not surprising that both countries have closed ranks against the US. Lavrov and Wang Yi rejected US calls for “a rules-based order” and proposed a summit of the UN Security Council’s five permanent members to be held “to establish direct dialogue …in the interests of maintaining global stability”. With the sharper US divisions with China and Russia it is unclear what the P5 summit could achieve concretely, especially as the representative nature of the UN Security Council as currently constituted is questioned in large parts of the world.

Regrettably, a new version of the Cold War might now be taking shape. In the developing scenario, it is very important that the India-Russia dialogue is strengthened so that the implications of the new developments and the compulsions of the two countries are better understood bilaterally.

From our partner International Affairs

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