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India’s 2019 Budget: Fiscal prudence vis-à-vis Economic diplomacy

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“The conqueror shall think of the circle of states as a wheel – himself as the hub, and his allies, drawn to him by the spokes though separated by intervening territory, as its rim.” – Kautilya, The Arthashastra

A paradigm shift in the nature of India’s foreign policy framework under the Prime Ministership of Narendra Modi has been the focus on – Economic dynamism and Strategic autonomy. The combination of these two policies is the ability of a state to take vital and independent decisions on matters affecting its geopolitical ecosystem. This diplomatic dynamism is a clear signal of India’s rise as a regional as well as a global power.

India is the fastest growing economy in the world, and according to various reports of global political analysts and Think-tanks, the Indian economy is touted to become the next possible superpower on a global level.  India has a fair share of political influence in South Asia due to its position as a regional economic giant, a young country with over a billion people, a stable military, a territorially diverse, a policy incubator and a rich cultural heritage with Soft Power initiatives. India has diplomatically stayed away from coercive carrot-and-stick approach. Economic factors play a crucial impact on the formation of an inclusive foreign policy. Protection and promotion of economic interests are vital pillars ensuring national interests in the foreign policy of any country.

The Union Finance Minister of India, Piyush Goyal presented an Interim Budget for 2019-2020, a perfect piece of smart economics and smart politics in the Parliament last week. “Due to a stable and predictable regulatory regime, growing economy and strong fundamentals, India could attract a massive amount of Foreign Direct Investment (FDI) during the last 5 years as much as $239 billion. This period also witnessed a rapid liberalisation of the FDI policy, allowing most FDI to come through the automatic route,” said Piyush Goyal in his budget speech.

India witnessed its best phase of macro-economic stability during this period. India is the fastest growing major economy in the world with an annual average GDP growth during the last five years higher than the growth achieved by any Government since economic reforms began in 1991. From being the 11th largest economy in the world in 2013-14, the Indian economy became the 6th largest in the world. “Besides generating high growth rate, we contained double-digit inflation and restored fiscal balance,” said Finance Minister.

In an increasingly polarised world, economic diplomacy remains a key tool for effective cooperation between countries and regions on the global level. India’s allocation towards economic diplomacy indefatigably crossed the USD 1 billion mark. Narendra Modi Government’s first budget in 2014-15 allocated around INR 12,620 crore to the Ministry of External Affairs (MEA). The overall grant to the MEA has been increased to INR 16,061 crore in 2018-19.

India is already contributing nearly 15% to global growth and considering this rapid growth, there has to be a diplomatic focus on the consequences of this rapid development.  With more financial stability, MEA should shift its focus to Regional Comprehensive Economic Partnership (RCEP) and Broad-based Trade and Investment Agreement (BTIA) with the European Union (EU) in 2019. The recent constitutional coup in Sri Lanka, China’s dominating ocean diplomacy and upcoming elections in neighbouring countries, the 2019-20 Budget was a clear sign that India must revisit its approach to economic diplomacy in the Asia Pacific region.

India imported $3 billion-dollar worth of oil and gas from the United States last year. The trade deficit with China is over $63 billion. India is also looking to diversify its trade relations with Russia, which is driven by strong defence ties and big-ticket defence purchases. After the opening of Kartarpur Sahib Corridor, India has ruled out any bilateral engagement with Pakistan till general elections in May 2019.

However, on investments, South Asian states receive the bulk of India’s economic assistance. India’s aid to Eurasia stands at INR 25 crore in 2018. Still, there is low or almost no assistance given to Indian companies investing in strategic infrastructure projects abroad by way of concessional financing or budgetary support. Indian Overseas Direct Investment in developing countries is still not diplomatically routed due to non-availability of proper data to direct resources.

2019 would be the year for India to explore multilateral cooperation deals and mutual assistance agreements with countries like the United States, France, Japan, Australia, etc. which have announced new economic initiatives in the Indo-Pacific and Eurasia.

Adithya Anil Variath is a lawyer based in Mumbai, India. He writes frequently on issues of Law & Policy, AI and International relations

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World ‘must engage’ or risk Afghanistan’s collapse

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A woman walks through a corridor in a village in Zindajan district, Afghanistan. © UNICEF/Shehzad Noorani

“Patience is running out” for many in the international community when it comes to effectively engaging with Afghanistan’s de facto rulers, the Taliban, senior UN envoy for the country, Markus Potzel, told the Security Council on Tuesday.

Despite some positive developments over the past few months, the Deputy Special Representative for Afghanistan said they have been “too few and too slow and they are outweighed by the negatives”.

Women’s rights

He drew attention to the ongoing ban on girls’ secondary education and growing restrictions on women’s rights, as “signals that the Taliban are indifferent to more than 50 per cent of the population” and are willing to risk international isolation.

“The relegation of women and girls to the home not only deprives them of their rights, but Afghanistan as a whole is denied the benefit of the significant contributions that women and girls have to offer,” he detailed.

Terrorism concerns ‘dismissed’

Meanwhile, from armed clashes to deadly terrorist attacks, the UN Assistance Mission in Afghanistan (UNAMA) has monitored a steady rise in security incidents by terrorist groups and others.

“Our earlier warnings about the capabilities of Islamic State Khorosan Province (ISKP) were dismissed by the Taliban”, he told ambassadors.

“But ISKP has demonstrated in the last few months alone that it can carry out assassinations of figures close to the Taliban, attacks against foreign embassies, as well as fire rockets across Afghanistan’s border to attack its neighbours – all while maintaining its long-standing sectarian campaign against Shia Muslims and ethnic minorities,” said Mr. Potzel.

Provincial rights violations

And armed clashes are continuing between Taliban security forces and armed opposition groups in the Panjshir, Baghlan, Kapisa, Takhar, and Badakhshan provinces, the UN envoy continued.

“There are disturbing reports, as well as videos and photos, indicating possible serious human rights violations committed in Panjshir,” he said, calling for an investigation into allegations of extra-judicial killings there.

The mission will continue to carefully monitor these and other reports of serious human rights violations, he added.

UN bolstering cash economy

As per capita income has collapsed to 2007 levels – erasing 15 years of economic growth – the country’s economic situation “remains tenuous” (with little detail forthcoming from the Taliban) due in part to Afghanistan’s isolation from the international banking system.

Liquidity remains heavily dependent on the cash that the UN continues to bring in for humanitarian operations – cash, I must stress, that supports the needs of the Afghan people and does not directly reach the de facto authorities,” said Mr. Potzel.

But even the funding is uncertain as the 2022 Humanitarian Response Plan has only received $1.9 billion out of a $4.4 billion requirement.

No representation

Humanitarian and economic measures will not meet the Afghan people’s longer-term needs, and the emergency aid cannot replace essential service delivery systems, such as health and water, or hold off an economic collapse, he warned.

Moreover, a continued lack of political inclusivity and transparency in decision-making leave most Afghans without any government representation.

“There are no consistent mechanisms for citizens to provide feedback to the authorities and little indication that the Taliban wish to even hear any,” the UN envoy said.

‘We have to engage’

While the Taliban’s self-identified emirate has not been recognized by any State, the international community also does not want to see the country collapse, Mr. Potzel stressed.

“If the Taliban do not respond to the needs of all elements of Afghan society and constructively engage within the very limited window of opportunity with the international community, it is unclear what would come next,” said the Deputy Special Representative.

“Further fragmentation, isolation, poverty, and internal conflict are among the likely scenarios, leading to potential mass migration and a domestic environment conducive to terrorist organizations, as well as greater misery for the Afghan population.

“That’s why we have to engage”, he declared, adding that “continued qualified engagement” was the most realistic way of helping the Afghan people.

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Changing Regional Security Paradigm: A Challenge to Kashmir and Options for Pakistan

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The post-cold war world has witnessed shifts in international and regional security paradigms. Due to globalization, easy migrations, advanced technologies, changing geopolitical scenarios, and social resources the world today is more vulnerable to diversified threats.  In this regard, traditional conflict resolution tactics are not enough or influential. New strategies and options are needed to gain interest without being in direct war and confrontations. One such old conflict which has been there for more than 70 years despite 3 major wars between India and Pakistan is Kashmir Issue. While Pakistan is struggling economically and politically, India on the other side is increasing its soft power projection within the region and beyond, posing a serious threat to the traditional tactics of Pakistan towards the Kashmir cause.

The 4 major factors that boosted the strategies of the Indian state are identity, security, prosperity, and soft power. Along with defense, India was focused on its economy, diplomacy, and identity so much from the past few years. It is one of the key drivers of the global economic market, making up about 15% of the world’s economic output. Soon India will become the world’s largest country by Population, accounting for maximum youth, meaning it is offering incentives, consumer markets, and youth force to other countries. Moreover, India has become the third largest producer of steel (producer with Arcelor- Mittal), enhancing the credibility and reliability of MADE IN INDIA across the globe. It is considered an IT giant. Many IT companies from India entered Fortune 500-group that has opened doors of businesses and jobs for the Indian youth.

Furthermore, along with being a major partner in trade and commerce in the international market, regionally India provides aid and acts as an advocate of welfare for many developing countries in Asia. Along with that, it is also looking towards opportunities to gain the interest of Afghanistan which is an internationally isolated state.   Internationally, it has become a major geo-strategic and geo-economic partner of many western states like the US and UK, as it has the potential to counter the Chinese Rise. It is part of various geopolitical alliances initiated for the containment of China such as QUAD and middle eastern alliances i.e., I2U2.  Moreover, India also has a settled Middle Eastern policy to benefit from all major actors instead of choosing blocs. Thus, India has worked on its economy, over the years to bring prosperity and self-sufficiency within the country. It has provided markets and incentives to other countries thereby increasing its lobbying power. Through its strong diplomacy, it has become a major actor that also promoted its values and identity.

Lastly one can’t deny that the hegemonic capabilities of India have challenged the Kashmiris and their freedom movements. India is now integrating into Kashmir not only militarily but also diplomatically, politically, and economically. It has incentivized the Kashmir issue as well.  After India revoked articles 370 and 35A It is working on Kashmir’s demographic changes. India also opened doors for tourism and international investments in Kashmir. If someone starts investing there, that will normalize that Kashmir is part of India. Yet India didn’t receive any backlash, nor it is isolated or being sanctioned. The reason is simple, India has good ties with many western states. It provides incentives and fulfills the economic and political interests of the west.

For Pakistan, which is a party to the conflict, instead of normative a more realistic approach is required now. Though Pakistan has emotional attachments with Kashmir but it’s not enough to just talk about morals and injustice at international forums.  If Pakistan wants to support the Kashmiris it should enhance its intellectual power, academia, and soft power projection. Literature and academia help export the actual ideologies and narratives to the rest of the world. The Kashmiri diaspora within Pakistan and abroad should be supported for that. In addition, Pakistan needs to increase its influence to counter India not only in the military sector but also in the economic and political domains.  The defense ratio between Pakistan and India is 1/8 while on the other hand in the economy it is 1/20. Though the importance of defense can’t be ignored in the balance of power, but international politics has evolved, and power is not limited to military only. One can look at the two recent world events where there was the use of force and weapons to gain interests i.e., Afghanistan and the Ukraine-Russian war. Afghanistan is now internationally isolated while Russia is being sanctioned and criticized. So, direct confrontations and wars are not accepted and supported by states at broad levels. Thus, with the changing global political and strategic environment it is important to work on spheres of academia, research, soft power, and diplomacy.

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The Taliban and the current Afghanistan

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Photo Credit: Wikimedia Commons

After the Taliban seized power in Afghanistan, the Afghan state and the public rapidly declined. The country’s territories have become the source of international terrorism and many global problems.

August 15 is the first anniversary since the power in Afghanistan was seized by the Kabul Taliban, and the ex-president of the Afghan state, Ashraf Ghani fled. After a year of the Taliban’s power, their power has not yet been recognized by any state in the world.

According to the UN International Labor Organization, the Taliban’s ascension to power in Afghanistan has led to rapid growth in the unemployment rate among the population. Based on the data of the UN, such a situation in the Afghan labor market was caused by the economic crisis and the prohibition on work for the female population. Over five hundred thousand people in Afghanistan lost their jobs during the first month of the Taliban rule. “The crisis has affected women the most. Thus, their employment level, already extremely low by world standards, decreased by 16% in the third quarter of last year. By mid—2022, it is projected to fall to 28%,” the UN investigation states.

In addition to the economic decline, there has been a rise in drug production in Afghanistan. Drugs are one of the Taliban’s main income zones, and their power has re-activated the production and export of opium and heroin. However, the drug business was also active under the former Afghan authorities. According to the UN, in 2021, Afghanistan’s income from drug exports amounted from 1.8 billion to 2.7 billion US dollars. This profit is from 6 to 11% of the GDP of the Afghan state. As before, the main drug export channels pass through Pakistan. The leader of the Taliban, Haibatullah Akhundzada, issued a fatwa in 2022 to ban the production and distribution of opium and other drug substances in Afghanistan. However, there have been no significant changes in this situation. Nevertheless, the Taliban repeatedly make statements about the cessation of drug production, but they also confirm that the prohibition on opium production will lead to the loss of the only way of earning for peasants, leading to an uprising.

Pakistan acts as the main partner country for Afghanistan. Bypassing sanctions, weapons are coming from Pakistan to Afghanistan. And the majority of Afghan drugs are exported through Pakistan’s western provinces – the southern route. The main patron and sponsor of the Taliban is also the Pakistani military leadership. With the help of Pakistani support, the radicals seized power in Afghanistan and persecuted other alternatives to power.

The Taliban’s first financial income was provided by transportation fees that the militants took from truck drivers on the border of Afghanistan and the state’s territory. The Taliban’s seizure of power in Afghanistan concentrated its forces on extracting natural resources. In February 2022, the Afghan media reported on the negotiations of the new Afghan government with China on the development of copper and lithium by Chinese companies. But even though China, along with Pakistan, is a vital partner of the Taliban regime, mineral development has not yet begun. Without the support and diplomatic assistance of China and Pakistan, the Taliban would not have been able to establish their authority over Afghanistan. However, Beijing still has not officially recognized their power.

Also, summing up the results of the year of Taliban rule in Afghanistan, we can definitely say that the new regime fails to solve the economic and social problems of the state. According to UN research, Afghanistan is on the verge of famine and humanitarian collapse. It is worth noting that during the presence of the United States and NATO in the country, there was no such catastrophic situation. Also, during the period of the Taliban regime in Afghanistan, the position of terrorist organizations such as al Qaeda and the Islamic State has strengthened. The Taliban does not intend to start the fight with the presence of these organizations.

Also, in June 2022, an earthquake with colossal consequences occurred on the border of Afghanistan and Pakistan. The death toll during the disaster was more than 1.5 people, and more than two thousand were injured. The UN has recorded that Afghanistan’s government cannot cope with the threats that the Afghan society is forced to cope with alone.

UNICEF and the World Food Program note the catastrophic situation of Afghan children, and organizations make statements about the high level of undernutrition and that over 3.5 million children urgently need treatment. The UN website says, “Hospital wards are full of malnourished children: many one-year-olds weigh as much as a six-month-old baby would weigh in a developed country, and some are so weak that they cannot move.”

The new government of Afghanistan carries out mass executions, severe human rights violations, and forced disappearances of citizens and previous security forces employees. This is recorded by the United Nations Assistance Organization in Afghanistan. To a large extent, the repression is carried out by two Talib departments – the Ministry of Propaganda of Virtue and Prevention of Vice and the General Directorate of Intelligence. Both organizations are under the auspices of Pakistani security agencies.

UNAMA experts report “arbitrary arrests and detentions of journalists, human rights defenders and protesters.” There were 160 extrajudicial executions, 178 unjustified arrests and 56 cases of torture of former Afghan military and Government employees. In addition, 2106 victims were registered among ethnic and religious minorities (700 killed, 1406 wounded).

After a year, the Taliban authorities, according to international organizations, destroyed the essential state structures in Afghanistan responsible for solving social issues such as jobs and the state’s humanitarian condition. The Afghan Independent Human Rights Commission premises were also seized, and the Ministry of Women’s Affairs was closed. Afghan women are deprived of the right to work. Except for some professions, they are not allowed to travel more than 72 km unaccompanied by men and cannot appear on the street with an open face. Responsibility for all violations of the rules of a woman is borne by her father or another close male relative. The punishment is dismissal from work or imprisonment.

Freedom of speech was also seriously impaired. The international human rights organization Reporters Without Borders (RSF) reports that there are half as many media in Afghanistan as a result of the year-long run of the Taliban. During the year, 219 organizations out of 547 media were closed. Before the Taliban came to power, there were 11,857 journalists in the country. Today only 4,759 of them remain. Female journalists took the first impact. Almost all of them were left without their job.

The Taliban sees the UN’s message about human rights in Afghanistan as propaganda. On July 21, Taliban official Zabiullah Mujahid posted on social media: “There are no arbitrary killings or arrests in the country. If someone kills or arbitrarily arrests, that person is considered a criminal and will be brought before Sharia law.”

In sum, a few conclusions about the power of the Taliban must be noted. The Taliban is characterized by a lack of qualification in the country’s rule, and the leadership cannot organize public service. Also, the Taliban does not fulfil its duties to combat terrorist organizations, which has ensured the strengthening of the position of existing banned groups. The female population of Afghanistan and various social minorities suffered. The Taliban are building strong relationships with authoritarian countries such as Pakistan, China and Russia. Islamabad carries out the actual control of the Taliban and also uses the Taliban in the South Asian region for its geopolitical purposes.

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