The Indian Panorama

Tag: US – Rest of the Countries relations

  • The Geopolitics of Oil: Gulf region volatile amid threat of US embargo

    The Geopolitics of Oil: Gulf region volatile amid threat of US embargo

    By G Parthasarathy
    “Given the bitter rivalry between Saudi Arabia and Iran and the likelihood of the Trump administration reimposing sanctions on Iran, India will have to navigate its path through its western neighborhood with dexterity. Our primary interests lie in the safety and welfare of the over 7 million Indians living in Arab Gulf countries. These countries together with Iraq, which can remain our largest supplier of oil, should remain the focal point of our attention, even as we make every effort to sustain economic cooperation with Iran, especially on issues of connectivity”, says the author.

    As sectarian Shia-Sunni and civilizational Arab-Persian-Israeli rivalries dominate the geopolitics of our western neighborhood today, India faces a very different situation from what it confronted four decades ago, when the 1973 Arab-Israeli conflict flared up. The Organisation of Arab Petroleum Oil Exporting Countries (OAPEC), led by Saudi Arabia, announced an oil boycott of countries like Canada, Japan, the Netherlands, the US and the UK, considered to be pro-Israeli. They found themselves squeezed by an Arab embargo on oil supplies. A cash-strapped India found itself in a desperate economic situation, as oil prices rose rapidly from $3 to $43 per barrel. Saudi Arabia demanded that New Delhi should close the Israeli Consulate in Mumbai or face an Arab oil boycott. An enraged Prime Minister Indira Gandhi refused to comply. India emerged relatively unscathed, thanks to developments like oil supplies from the Soviet Union, the discovery of Bombay High oil and gas and “assistance” by the Shah of Iran, who enjoyed a cozy relationship with Israel.

    Four decades later, the global energy and geopolitical scenario stands drastically changed. With the discovery of shale oil/gas in the US and Canada and huge oil reserves in Venezuela, untapped shale gas reserves in Argentina, and with Mexico adding to world oil supplies, North America and parts of Europe are relatively immune to blackmail. This is more so as Russian oil and gas contribute to meeting energy demands in Europe and across Eurasia. Saudi Arabia is now forced to seek Russian cooperation in regulating world energy supplies. Oil prices once at $130 a barrel slumped to $30 and now hover around $60-70 per barrel. The major markets for oil supplies from the Arab/Persian Gulf countries are China (8.4 million barrels per day, bpd), India (4.4 million bpd) and Japan (3.4 million bpd). In the meantime, the oil producing Gulf monarchies, who are major suppliers of oil, are today preoccupied in dealing with a resurgent Iran, which is presently free from Western-led international sanctions. Iran is evidently seeking to become the dominant power in the energy-rich Gulf region.

    The strategic scenario in our oil-rich West is now very different from what it was earlier. The advent of the Islamic Republic in Iran has led to a drastic downturn in Iran’s relations with Israel. Tel Aviv has fomented the hostility to Iran across the world. Iran, in turn, has behaved irresponsibly towards Israel, backing the radical Palestinian group Hamas and even calling for the destruction of Israel. Iran has also sought to change the balance of power in the Arab world, challenging Saudi pre-eminence, provoking former Saudi king Abdullah to ask American military Commander Petraeus to “cut off the head of the snake”. With the ambitious and impetuous Crown Prince Mohammed bin Salman now urging an all too willing President Trump to reimpose crippling economic sanctions on Iran, tensions are set to escalate in our western neighborhood. With some deft handling by Prime Minister Modi, our relations with the Arab Gulf states, notably Saudi Arabia and the UAE, have improved significantly, with the Saudis reaching out to us, to permit Air India over-flights to Israel.

    Despite these developments, the Gulf region is tense, given the Saudi intervention in neighboring Yemen, where thousands of innocents have perished amidst a bitter conflict with Iran-backed Yemeni rebels. There is today a significant Shia-Sunni dimension in rivalries across the Islamic world. With the American intervention in Iraq leading to majority Shia rule there, its effect is being inevitably felt in Shia-ruled, Sunni-majority Syria, where the Russians have intervened decisively in favor of the Iran-backed Assad regime, forcing the Americans on the back foot. India has wisely stayed away from any participation in this rivalry. Iraq is now our largest supplier of oil, overtaking Iran and even Saudi Arabia.

    Given the bitter rivalry between Saudi Arabia and Iran and the likelihood of the Trump administration reimposing sanctions on Iran, India will have to navigate its path through its western neighborhood with dexterity. Our primary interests lie in the safety and welfare of the over 7 million Indians living in Arab Gulf countries. These countries together with Iraq, which can remain our largest supplier of oil, should remain the focal point of our attention, even as we make every effort to sustain economic cooperation with Iran, especially on issues of connectivity. India should continue its emphasis on ties with Saudi Arabia, the UAE and Oman. While Iran remains the third largest supplier of oil to India, imports from Iran are showing signs of decline. Iran has notably been less than forthcoming, or transparent in dealing with projects for oil and gas exploration by India. We would, however, have to reassess the global energy scenario if, as appears likely, American sanctions are reimposed on Iran by the Trump administration, in coming months, though given the glut in global oil supplies, the effect on global oil prices would be manageable.

    Venezuela now has an important role to play in India’s oil imports. The new entrant is the US, where Indian companies have invested significantly in the exploration of shale gas, like they have done for oil and gas in Russia. The US will soon become the largest producer of oil and gas in the world. Gas supplies from the US have now commenced and are set to grow significantly. Thus India, which is today the third largest consumer of oil in the world, after the US and China, has wisely cast its net far and wide to meet its energy needs. We have learnt lessons from the past and are not over-dependent on any single country. While doing so, we have avoided getting involved in regional rivalries, tensions and conflicts in the Islamic world. We must always be prepared for crises in Islamic oil supplying countries, which may necessitate the use of our naval and air assets for evacuation and ensuring the safety and security of Indians living there. We are preparing to develop a significant storage capacity of petroleum in the event of any cut off of oil supplies because of regional tensions. We are also, wisely, placing greater emphasis on the country’s energy security. We are today, a significant exporter of refined petroleum products, estimated at $35.9 billion in 2017.

    (The author is a career diplomat)

     

  • The neighborhood tangle: Opportunity lies in harnessing its history and complexities

    The neighborhood tangle: Opportunity lies in harnessing its history and complexities

    By G Parthasarthy
    “While the Russians will continue to play second fiddle to China whenever it suits them, both Russia and India have an interest in keeping their relationship forward looking, given their common interest in developing a multipolar world order. Moscow needs to be told clearly that the US, Australia, Japan, India “Quad” is to primarily maintain a viable balance of power in the Indo-Pacific Region, even as we seek an increasingly cooperative partnership with Russia”, says the author.

    Given its size, potential and pride in its history, culture and democratic institutions, India has sought to retain its strategic autonomy, by maintaining a careful balance in its relationships with major centers of power-notably the US, Russia, China and the European Union. This has never been easy, given the inherent geopolitical rivalries between major centers of global power. The challenges we now face are unprecedented, because of the determination of a growingly aggressive China to become the unchallenged, sole center of power in Asia, while it prepares to match the United States, in wielding power globally. An assertive China will not brook the thought of India having a vital interest in asserting its right to influence events, especially across the Indian Ocean Region.

    While the US and powers like Japan regard the role of India as important in maintaining a viable balance of power in Asia, there are doubts and misgivings about Russia’s approach towards India. Moscow’s policies are driven largely by the relentless hostility of the US, to oppose and contain Russia’s influence, even on its very doorstep in former Soviet Republics, which often have large Russian populations. Moscow has thus been literally driven into the arms of Beijing, resulting in a virtual Moscow-Beijing alliance, to counter American hegemony. Despite this, India has remained steadfast in endeavoring to maintain its strategic autonomy, by seeking to expand its relationship with Russia. This is being done internationally, by working with Moscow in forums like BRICS, the Shanghai Cooperation Organization and the India-Russia, China triangle, which was initially promoted by Russia. India has also sought to complement Moscow’s efforts to stabilize the secular Assad regime in Syria.

    While limited connectivity has served as an obstacle to trade with Russia, the defense relationship between the two countries remains vibrant. The approximately 270 Russian Sukhoi 30 fighters are the main element of our Air Force’s strike and air defense potential. The lethal Brahmos missile, multi barreled rocket launchers, around 900 T 90 Tanks, an aircraft carrier with Mig 29 aircraft, guided missile stealth frigates and even a leased Russian nuclear submarine, are all meant for frontline use. These are but a small portion of the vast amount of Russian defense equipment with our armed forces. New acquisitions underway from Russia include highly advanced S 400 air defense systems and a large fleet of light helicopters. Russian defense exports to India in recent years account for around 39 per cent of its total exports and far exceed exports to China, which unlike India, has successfully developed a vibrant defense industry, with significant export potential.

    Russia and India have a mutual interest in carrying forward defense and security cooperation, with regular meetings and exchanges between their Defense Ministers and National Security Advisers and periodic joint military exercises. While some concern has been voiced about Russian arms supplies to Pakistan, the Russians are well aware of the fact that a cash-strapped Pakistan cannot afford to buy its frontline equipment, which is presently confined to purchase of some MI 35 attack helicopters. The Russians also know that the Indian market will be closed for the equipment they supply to Pakistan. The greater concern in New Delhi, however, arises from Russian readiness to join with China and Pakistan in seeking to give legitimacy to the Afghan Taliban. This is rather ironic, given the fact that approximately 14,000 Soviet soldiers were killed and more than 35,000 wounded in action between 1979 and 1989 against ISI backed radical Islamic armed Afghan groups. This effort to legitimize the Taliban has been neutralized, by the Afghan Government’s insistence on direct talks with the Taliban.

    While India’s trade with Russia remains limited because of problems in connectivity, mutual cooperation in investments in the petro-chemical sector is substantial and significant. The recent $ 12.9 billion deal for the acquisition of Essar Oil refinery by Russia’s largest oil producer Rosneft, is one of the single biggest foreign investments in India. India’s investments in Russia’s oil and gas industry are presently around $8 billion. They are likely to reach $15 billion by 2020, with India set to acquire an almost 50% stake in Rosneft Siberian oil project. Moreover, there are substantial prospects for increasing Russian supplies of coal, diamonds, LNG and fertilizers to India. Interestingly, while the much touted 2014 Russian gas deal with China was expected to generate $ 400 billion by gas sales to China, the drastic fall in gas prices is likely to reduce the returns by well over 60%. There is also considerable potential for Russia and India to reinforce each other, in executing energy and rail transportation projects in third countries, like Afghanistan and Vietnam. Russia and India are presently cooperating in the construction of the first nuclear power plant in Bangladesh.

    It is evident that India cannot match China’s economic power in its relations with Russia. One should, however, remember that there has been grave mutual distrust between Russia and China for centuries. The Russians view China’s meteoric rise and its growing population, as a threat to their Siberian region and even to Vladivostok. The Soviet Union and Mao’s China, loathed each other, from the very inception of Communist rule in China. Mao was kept waiting for months in 1949, before he got to call on Stalin, who met him only after he met Indian Ambassador Dr. Sarvapalli Radhakrishnan, in January 1950. Mao made no secret about his contempt for both Stalin and Khrushchev. The two countries had several border skirmishes in 1968-1970, in which the Chinese were badly mauled. Just after the 1971 Bangladesh conflict, which saw the emergence of a US-China strategic nexus, the Indian Ambassador in Moscow was informed by a senior Communist Party functionary that the Soviet Union had deployed massive armored formations on the border with China, to deter Beijing from getting involved militarily, in the Bangladesh conflict.

    These are historical and geopolitical realities that neither the Russians, nor the Chinese will forget easily. While the Russians will continue to play second fiddle to China whenever it suits them, both Russia and India have an interest in keeping their relationship forward looking, given their common interest in developing a multipolar world order. Moscow needs to be told clearly that the US, Australia, Japan, India “Quad” is to primarily maintain a viable balance of power in the Indo-Pacific Region, even as we seek an increasingly cooperative partnership with Russia.

    (The author is a career diplomat)

  • Trump’s warning shot: Protectionism can unleash a global trade war

    Trump’s warning shot: Protectionism can unleash a global trade war

    US President Donald Trump appeared to be at his wits’ end when he made a rash comment after his chief economic adviser Gary Cohn put in his papers: “Will be making a decision soon on the appointment of new chief economic advisor. Many people wanting the job — will choose wisely!” It is both a confession of his poor judgment and a desire to have a yes-man. This is an ominous sign of rising protectionism that threatens to disrupt global trade. Although, China appears to be in the President Trump’s direct firing line, India needs to be prepared for collateral damage. The signs are there when the US President in an emotional outburst hauled up India for high import duties on the iconic Harley-Davidson motorbike despite its “insignificant” contribution in the total bilateral trade. Indeed, jingoism in any form is irrational.

    President Trump’s protectionism may, however, hamper the American economy the most. In a last-ditch effort, adviser Cohn tried to make Trump understand that undue tariff protection to domestic steel and aluminum makers would hurt upstream manufacturers like cars and cans. It is unfortunate that the US, which once championed free trade ring-fenced by WTO, is resorting to unilateral trading barriers instead of sharpening the competitiveness of the domestic industry. Apparently under pressure, India has already started importing energy all the way from America, which makes little commercial sense, especially when such resources are freely available in the neighborhood. Indian airlines have placed orders worth several billions of dollars to purchase more than 300 American aircraft.

    President Trump’s decision to impose steep tariffs on steel and aluminum imports is primarily targeted at Canada and China but the impact will be felt by steel and aluminum producers across the world. The decision has the seeds to unleash a global trade war as the US imports steel from more than 100 countries. China has already communicated that it would retaliate if its interests were harmed. For Indian manufacturers, it is the time to become more competitive. Once the US market gets closed, Chinese exporters would turn towards India in a big way.

    (Tribune, India)

  • What to watch in 2018

    What to watch in 2018

    As the new year begins, here are the smartest predictions of what’s coming in politics, tech and business in 2018.

                                                         By Erica Pandey

    The Big picture: In many ways 2018 will mirror 2017. The world’s largest economies will continue to grow in sync, the #MeToo movement will continue to topple men who behave badly from positions of power, and the North Korean nuclear threat will keep fueling international tensions. But new trends may emerge if the Democrats take the House in the midterm elections or media companies find a solution to the “fake news” epidemic.
    At home

    Democrats will take back the House “by an eyelash” in the 2018 midterm elections, the Financial Times’ Courtney Weaver predicts. It’s typical for the party of the president to lose seats in the midterms, and the Republican Party could “lose big” given Trump’s sub-50 approval rating. A Democrat majority in the House would also mean impeachment proceedings against Trump could gain ground in the new year.

    Abroad

    Trump’s approach to China is about to change for several reasons, per Sinocism’s Bill Bishop: the administration’s National Security Strategy very clearly reframed the U.S. government’s view of China in a confrontational way, the president believes China is still not doing enough on North Korea, and the administration’s “America First” trade contingent is ascendant. Several trade actions are in the planning stages and they will likely hit soon.

    Uneasy tension around the North Korean nuclear threat will continue — or escalate. Trump tweeted on Dec. 28 that there won’t be a “friendly solution” to the issue of North Korea if China violates UN sanctions against the rogue regime. And Admiral Mike Mullen, a former chairman of the Joint Chiefs, said on ABC’s This Week that the U.S. is closer “than ever before” to a nuclear confrontation with North Korea.

    UK Prime Minister Theresa May will keep her job, per the Financial Times’ Sebastian Payne. “Sealing a Brexit divorce deal has ensured short-term job security,” Payne writes.

    Zimbabwe won’t hold free and fair elections in 2018 despite the end to Robert Mugabe’s 37-year rule, FT’s David Pilling predicts. And Al Jazeera’s Barnaby Phillips writes, “Emmerson Mnangagwa will surely prove a more capable manager of Zimbabwe’s economy than Mugabe, but there are plenty of reasons to fear he’ll be just as ruthless and undemocratic.”

    The global economy

    Synchronized growth will continue. This year, for the first time since the Great Recession, the world’s leading economies grew in sync. And that growth will hold into 2018, Goldman Sachs research economists predict. They’re forecasting 4.0% GDP growth for the new year, up from a 3.7% projection for 2017.

    Emerging markets will grow as well. Average GDP growth for emerging markets will reach 5%, up from 4.7% in 2017, per the Financial Times’ James Kynge. “This will mostly be because Russia and Brazil, which have stumbled, will bounce back,” Kynge writes.

    In tech

    Big Tech will get stronger. “Silicon Valley got raked over the coals in 2017 about sexism, security and its influence on national affairs. But it hasn’t really grappled with the bigger problem: There’s too much power in the hands of too few … Expect to see tech giants flogging their “social good” efforts in the year ahead, but our trust won’t be restored by watching them act like benevolent dictators,” per the Washington Post’s Gregory Fowler.

    Bitcoin will keep dominating headlines with its dramatic crashes and booms. Goldman Sachs became the first major Wall Street institution to launch a trading desk for the cryptocurrency in 2017, and, as more institutions venture into the crypto world, prices will rise accordingly, CNBC’s Eric Jackson predicts.

    Augmented reality will rise in prominence, Axios’ Alayna Treene reports. “In the next few years, we’re going to see AR develop significantly and start to break through to the mainstream. Once that happens, it will effect almost every aspect of daily life — from entertainment and work to education and transportation.”

    In media

    Transparency will become “the antidote to fake news,” Frontline’s Raney Aronson-Rath tells Nieman Lab. Per Aronson-Rath, “We’ve seen Facebook make moves towards differentiating between verified and unverified stories. Twitter and Google, too. But the problem is massive, and these are just first steps.”

    The #MeToo movement will continue toppling powerful men who behave badly in media and every other industry. Here’s a list of the 82 men accused of sexual harassment and assault in 2017.

    (Source: Axios)

  • President Trump’s ambitious agenda: 7 things to watch in 2018

    President Trump’s ambitious agenda: 7 things to watch in 2018

    President Trump may have big policy plans for 2018, but political distractions are likely to shadow prospects of big legislative achievements.

    WASHINGTON (TIP) White House officials said Trump wants to rein in the threat from North Korea and list four top domestic priorities on his 2018 agenda: Repealing and replacing President Obama’s 2010 health care law, welfare reform, immigration, and a new infrastructure plan.

    “I would expect to see those four areas, as well as national security, which never goes away,” White House spokeswoman Sarah Sanders said.

    Yet the Republican-controlled Congress has been struggling to pass some of Trump’s major priorities since his election – and their challenges will only increase in 2018. The GOP’s Senate bare majority will shrink when Alabama’s newly elected senator, Democrat Doug Jones, is sworn in.

    In January, lawmakers will have to confront a thicket of unfinished business. In their rush to get home for the holidays, the GOP-led Congress passed a short-term spending bill that expires Jan. 19.

    Trump and GOP leaders will have to negotiate a longer-term spending deal before then to avert a government shutdown, and they will likely need Democratic support for that to pass. Other sticky issues on the January agenda include legislation aimed at stabilizing the Obamacare individual insurance markets and reauthorizing the Foreign Intelligence Surveillance Act, a contentious anti-terrorism law that gives law enforcement sweeping spy powers.

    What’s more, lawmakers will be consumed with their own 2018 mid-term elections – and the increasingly contentious Russia investigations. “As everybody in Washington knows, a midterm election year is a year when most legislation comes to a standstill,” said David Cohen, a political science professor at the University of Akron.

    “Members of Congress are going to be obsessed with winning re-election,” Cohen said, and will be more eager to campaign at home than be in Washington casting tough votes.

    Here are seven key issues that Trump and Congress will confront:

    North Korea

    Trump will lobby China – and other countries – to twist the economic screws on North Korea, in the hopes of forcing that rogue nation to give up their nuclear weapons program.

    Trump traveled to Asia to press that issue in November and declared North Korea a state sponsor of terror. Yet North Korea leader Kim Jong Un has more or less thumbed his nose at the effort, recently setting off another ballistic missile test, and continued threatening the U.S. and its allies.

    As 2018 approaches, Trump and his advisers hope to settle the dispute diplomatically, but they have not ruled out the possibility of a military strike.

    Infrastructure

    In his 2018 budget proposal, Trump sought $200 billion over 10 years to spend on infrastructure, leveraging private-sector spending to focus federal dollars on “transformative” projects seen as priorities at both the federal and regional level.

    That went nowhere in 2017, as Trump and the GOP-led Congress focused instead on trying to repeal Obamacare and enacting tax cuts. But the president plans to rev up that push early next year, with the hope that Democrats will cooperate.

    Infrastructure spending is generally a bipartisan issue, and few dispute the need to improve the nation’s highway and bridges. But Trump and Democrats have already outlined competing plans, and conservatives are likely to oppose any legislation that calls for massive new spending.

    So, the fate of that will likely depend on Trump’s willingness to cut a deal with Democrats—and vice versa—heading into a heated election year.

    Health care

    Trump insists he has not given up on his goal of repealing and replacing the Affordable Care Act, President Obama’s health reform law, even though Republicans in Congress could not muster enough votes to deliver on that long-promised goal this year.

    After Congress passed a massive tax bill in December that repealed Obamacare’s individual mandate, Trump declared the law was “essentially” repealed and lawmakers would work together to find a replacement. (However, the law is barely touched, though the requirement that nearly everyone have insurance or pay a penalty at tax time was repealed effective in 2019.)

    Overhauling Obamacare will only get more complicated in 2018, as Republicans will have just 51 seats in the Senate. And the GOP’s previous efforts to nix Obamacare sparked intense anger among voters who wanted to keep the coverage – something lawmakers may not want to reignite when many of them will be on the ballot.

    Senate Majority Leader Mitch McConnell, R-Ky., signaled little interest in taking another stab at the issue. “Well, we obviously were unable to completely repeal and replace with a 52-48 Senate,” McConnell told NPR in a Dec. 21 interview. “We’ll have to take a look at what that looks like with a 51-49 Senate. But I think we’ll probably move on to other issues.”

    Other Republicans pushed back, saying the GOP should not give up on that long-touted campaign promise.

    Immigration

    Congress has a March deadline to decide the fate of the so-called DREAMers, the approximately 700,000 immigrants brought to the U.S. illegally when they were children. Trump nixed an Obama-era program that shielded the DREAMers from deportation, but he also said Congress should figure out a legislative fix, so the young people aren’t sent back to countries they did not grow up in.

    Critics have called the Obama protections—known as DACA, or Deferred Action for Childhood Arrivals— a form of “amnesty” and suggested those young immigrants have taken jobs from Americans. But there’s bipartisan support in Congress and in the public to grant the DREAMers legal status and even a path to citizenship.

    Whether Trump—who campaigned on a hardline anti-immigrant platform—will sign such a bill is unclear. He has sent mixed signals on the issue, and he’s also called for new restrictions on refugees and others seeking entry into the United States.

    After the Dec. 12 arrest of a man who tried to set off a bomb in a New York commuter tunnel, Trump called for the end of “chain migration” and the diversity visa lottery programs.

    Welfare reform

    In announcing a new major legislative priority following the tax cut bill, Trump said welfare reform is “desperately needed in our country.”

    A Trump budget proposal last year called for adding work requirements to some government programs and tightening eligibility requirements for low-income tax credits. “We want to get our people off of welfare and back to work,” Trump said. “So important. It’s out of control. It’s out of control.”

    Democrats say welfare reforms instituted two decades ago are working and that Trump wants to punch major holes in the social safety net.

    Iran

    Trump announced in October he would no longer certify that Iran is in compliance with an Obama-era deal, in which Tehran pledged to give up the means to make nuclear weapons while the U.S. and allies ease economic sanctions. Instead, Trump called on Congress to improve the agreement, and the fate of the Iran nuclear deal is likely to come to a head in 2018.

    Supporters of the agreement fear Iran will walk away from the agreement and pursue nuclear weapons anyway, triggering a dangerous arms race in the Middle East.

    The debt limit

    The U.S. Treasury will run out of money to pay its bills sometime in the spring — unless Congress and the president agree on legislation to raise the nation’s debt limit. The Treasury Department lost its authority to borrow any new money to pay the government’s obligations on Dec. 9.

    Officials are currently taking “extraordinary measures” to keep from defaulting on the government’s current obligations, including Medicare benefits and the interest on the national debt. But the agency will run out of those accounting gimmicks in late March or early April, according to an analysis by the Congressional Budget Office.

    That could lead to a round of partisan fiscal brinksmanship—with threats of defaulting on the government’s debts. Conservatives have generally opposed increasing the nation’s borrowing authority, so Trump will likely have to negotiate with Democrats to come to an agreement.

    (Source: USA Today)