Note4Students
From UPSC perspective, the following things are important :
Prelims level: UNSC
Mains level: Paper 2- Global rules based order
Context
The unexpected Russian military intervention in Ukraine is merely the latest symptom of an underlying cause of decay in the international ‘rules-based’ order.
Background of the idea of international rules-based order and sovereignty
- It was the Diet of Westphalia (in the then Holy Roman Empire) in 1648 that first set out what our post-World War II global institutional framework established as the principle of ‘sovereignty’.
- Sovereignty was for a long time the singular bedrock, the very founding principle that the UN Charter sought to firmly establish, in order to make wars of aggression (as opposed to self-defense) illegal under international law, and liable to be punished by the international community via the UN Security Council and its right to use coercive force.
What is a state?
- State is a community that feels as one, accepts a set of common guiding principles and is constituted by member states who are willing to operate according to rules / norms of behaviour.
- There has always been a theoretical debate in the discipline, drawing on elements of philosophy, psychology and even economics, on whether or not we actually live in an international society of states or whether it is still merely a system of states.
- System of states: A system of states is a very complex landscape consisting of individual actors who possess coercive power to varying degrees, have zero-sum ambitions to varying degrees, adhere to global ‘rules’ to the extent that they are convenient or exigent at a moment, while being willing to covertly and overtly bend and even break those rules, when core national interests are involved.
- In the second interpretation, states are engaged in game-theoretic, rational-utilitarian cooperation, competition and even conflict, depending on the specificities of each situation.
- In a nutshell, it is a highly complicated theoretical and practical situation wherein simplistic, moralising explanations and narratives about events are typically wrong and often misleading or counterproductive.
UN and the issue of enforcement
- Forces like the internet and social media, combined with the cultural dominance of the West, portended a gradual spread of democratic values.
- The biggest challenge to this kind of perspective usually came from the ‘realist’ camp of International Relations researchers who argue that argue that in the absence of effective enforcement of rules, the notion of such rules was an empty idea.
- Enforcement was theoretically meant to happen by way of the Security Council.
- However, this plan was stillborn due to the fundamental unwillingness of the five permanent members to countenance a possibility of global action against themselves and the consequent injection of the notion of a ‘veto’ in the world’s highest security-focused body.
- This has meant that for the entirety of the UN’s existence, true Security Council intervention in an international crisis has only been possible in the rarest of rare exceptions when all five permanent members happened to agree.
Threat to rule-based order
- The foregoing analysis allows us to conclude that far from being an isolated incident that for the first time since the UN Charter was drafted has violated our rules-based order, the Russian intervention in Ukraine is a significant further erosion in the believability of anyone’s claims that such a thing actually exists.
- All states have shown their willingness to conduct foreign policy at the cost of others.
- Most states in the last few decades have provided international rules with a lot of ‘lip-service’ while using clandestine methods to achieve their aims.
Nuclear weapons as a source of stability
- The notion of ‘mutually assured destruction’ created a tension that seemed to preclude even conventional warfare between two nuclear-armed rivals.
- Most interestingly, with the separation of seven decades between Hiroshima / Nagasaki and the present, a gradual shift in the calculus of defence planners seems to have occurred.
- From the sense that a mere conventional conflict would be sufficient trigger for a power to exercise a nuclear option, planners seem to have gained a new comfort with nuclear weapons in existence.
- They no longer seem to believe they will be used short of an existential threat.
- Russia equally feels confident that merely asserting its core security interests in Ukraine will not draw a nuclear response from NATO.
- Waning American dominance combined with a retreat of global norms and a lessening nuclear deterrent to armed conflict and the rise of new power centres in Asia are a potent mix of new dynamics in our world.
Conclusion
Never since the establishment of our post-war global system has it been under such significant threat. India must take stock and with extreme vigilance approach its entire gamut of cooperative, competitive and adversarial options while navigating this wholly new world out there.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Marginal propensities to consume
Mains level: Paper 3- Impact of high crude price
Context
The Russia-Ukraine conflict will impact India’s economy through several channels. The first order impact, emanates from the negative terms of trade shock from higher commodity prices, particularly oil.
- Crude prices have surged well past a $110/barrel and there is a growing expectation that, as the conflict gets more entrenched, crude could remain elevated for much longer and average close to $100/barrel in 2022, vis-a-vis $70/barrel in 2021.
Why crude oil price is increasing?
Limited Supply:
- Major oil-producing countries had cut oil production last year amid a sharp fall in demand due to the Covid-19 pandemic.
- Saudi Arabia pledged extra supply cuts in February and March 2020 following reductions by other members of the Organization of the Petroleum Exporting Countries (OPEC) and its allies.
- In early January 2021, the OPEC and Russia (as OPEC+) agreed to cut back on oil production to increase prices.
Rising Demand:
- The production and rollout of vaccines for Covid-19 and the rising consumption post the Covid lockdowns last year have both led to a revival in international crude oil prices.
Geopolitical reasons
- Geopolitical tension has risen between Russia, which is the second largest oil producer in the world, and neighbouring Ukraine.
- In January, there were drone attacks on oil facilities in UAE, another major oil producer.
- An outage on a major oil pipeline linking Saudi Arabia and Turkey further added to the pressures.
How it will impact India?
- Current Account Deficit: The increase in oil prices will increase the country’s import bill, and further disturb its current account deficit (excess of imports of goods and services over exports).
- According to estimates, a one-dollar increase in crude oil price increases the oil bill by around USD 1.6 billion per year.
- Inflation: The increase in crude prices could also also further increase inflationary pressures that have been building up over the past few months.
- This will decrease the space for the monetary policy committee to ease policy rates further.
- The government had hiked central taxes on petrol and diesel by Rs. 13 per litre and Rs. 11 per litre in 2020 to boost revenues amid lower economic activity.
- Fiscal Health: If oil prices continue to increase, the government shall be forced to cut taxes on petroleum and diesel which may cause loss of revenue and deteriorate its fiscal balance.
- The growth slowdown in the last two years has already resulted in a precarious fiscal situation because of tax revenue shortfalls.
- The revenue lost will erode the government’s ability to spend or meet its fiscal commitments in the form of budgetary transfers to states, payment of dues and compensation for revenue shortfalls to state governments under the goods and services tax (GST) framework.
Why high growth impact on fiscal space leads to a greater hit to demand and growth?
- The growth impact will manifest through constraints on fiscal space, household purchasing power being impinged and firm margins coming under pressure.
- Why does marginal propensity to consume matter? The quantum of the growth impact will depend on how the shock is distributed across the fiscal, households and firms because of the different marginal propensities to consume.
- For example, the excise duty cuts last November have already absorbed about one-third of the shock from oil (0.4 per cent of GDP).
- The cost of this, however, is commensurate pressures on fiscal expenditures and growth, agnostically assuming a fiscal multiplier of 1.
- In contrast, the marginal propensity to consume/invest out of income/earnings is typically lower than 1 for households/firms.
- So, the greater the fraction of the shock absorbed on the fiscal, the greater the hit to demand and growth.
Way forward
1] Let the rupee reach the new equilibrium
- The widening of the CAD and associated BoP pressures will create some depreciation pressures on the rupee.
- More fundamentally, a persistent negative terms of trade shock will argue for a weaker equilibrium real effective exchange rate.
- Policymakers should let the rupee reach this new equilibrium – albeit in a gradual and non-disruptive manner – and not prevent this adjustment because it will facilitate the necessary “expenditure switching” to reduce imports, boost exports and help narrow an elevated CAD.
2] Pragmatic fiscal policies
- Cutting excise duties would buffer the impact on households and protect consumption, but potentially result in a larger hit to demand by shrinking fiscal space to spend.
- If the government doesn’t cut duties, it has resources that can potentially be used to more directly target affected households at the bottom of the pyramid.
- But this will mean higher retail prices that can harden inflationary expectations, increasing the challenges for monetary policy.
- Finally, policymakers could always cut duties, not cut spending and let the deficit widen commensurately — effectively pushing out some of the terms of trade costs to the future — but negative surprises on the fiscal during periods of heightened macro uncertainty can generate significantly risk premia in markets.
- All told, the fiscal will confront several trade-offs, and should try avoiding corner solutions.
- What should be clear is that as soon as markets begin to stabilise, authorities must plough ahead with planned asset sales/disinvestment to create more fiscal headroom, without trying to perfectly time the market.
3) Reduce the dependence
- India has proposed Oil Buyer’s club. This would be a grouping of India, China, Japan and South Korea. The objective is to reduce the dependence on OPEC, have better bargains, increase the imports of crude oil imports from USA etc
- It was put forward by Mani Shankar Ayyar in 2005
- Create a stabilization fund or reserve account – Thailand, UK etc
Conclusion
A persistent adverse supply shock is complicated and challenging to respond to, and the new equilibrium will inevitably need some combination of a weaker rupee, higher rates, and judicious fiscal management.
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Back2Basics: What is a fiscal multiplier?
- The fiscal multiplier measures the effect that increases in fiscal spending will have on a nation’s economic output, or gross domestic product (GDP).
- Fiscal multipliers are important because they can help guide a government’s policies during an economic crisis and help set the stage for economic recovery.
What is Marginal Propensity to Consume?
- In economics, the marginal propensity to consume (MPC) is defined as the proportion of an aggregate raise in pay that a consumer spends on the consumption of goods and services, as opposed to saving it.
- Marginal propensity to consume is a component of Keynesian macroeconomic theory and is calculated as the change in consumption divided by the change in income.
- MPC varies by income level. MPC is typically lower at higher incomes.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: NATO
Mains level: Read the attached story
Amid Russia’s war on Ukraine, the North Atlantic Treaty Organisation (NATO) has been rapidly deploying troops to member countries but has clarified that it has no plans of sending them to Ukraine.
What is NATO?
- NATO is a military alliance established by the North Atlantic Treaty (also called the Washington Treaty) of April 4, 1949.
- It sought to create a counterweight to Soviet armies stationed in Central and Eastern Europe after World War II.
- Its original members were Belgium, Canada, Denmark, France, Iceland, Italy, Luxembourg, the Netherlands, Norway, Portugal, the United Kingdom, and the United States.
- NATO has spread a web of partners, namely Egypt, Israel, Sweden, Austria, Switzerland and Finland.
Why was it founded?
Ans. Communist sweep in Europe post-WWII and rise of Soviet dominance
- After World War II in 1945, Western Europe was economically exhausted and militarily weak, and newly powerful communist parties had arisen in France and Italy.
- By contrast, the Soviet Union had emerged from the war with its armies dominating all the states of central and Eastern Europe.
- By 1948 communists under Moscow’s sponsorship had consolidated their control of the governments of those countries and suppressed all non-communist political activity.
- What became known as the Iron Curtain, a term popularized by Winston Churchill, had descended over central and Eastern Europe.
Ideology of NATO
- NATO ensures that the security of its European member countries is inseparably linked to that of its North American member countries.
- It commits the Allies to democracy, individual liberty and the rule of law, as well as to the peaceful resolution of disputes.
- It also provides a unique forum for dialogue and cooperation across the Atlantic.
What is Article 5 and why is it needed?
- Article 5 was a key part of the 1949 North Atlantic Treaty, or Washington Treaty, and was meant to offer a collective defence against a potential invasion of Western Europe.
- It states: (NATO members) will assist the party or parties so attacked by taking forthwith, individually and in concert with the other parties, such action as it deems necessary, including the use of armed force, to restore and maintain the security of the North Atlantic area.
- However, since then, it has only been invoked once, soon after the 9/11 attack in the United States.
Why has Article 5 not been invoked this time?
- The reason is simple: Ukraine is a partner of the Western defence alliance but not a NATO member.
- As a result, Article 5, or the Collective Defense Pledge, does not apply.
- While NATO has said it will not be sending troops to Ukraine, it did invoke Article 4, which calls for a consultation of the alliance’s principal decision-making body, the North Atlantic Council.
- In its history, it has only been activated half a dozen times.
- But the fact that this time around eight member nations chose to invoke it was enough to demonstrate the seriousness of the situation at a global level.
What may prompt NATO to invoke Article 5?
- NATO will invoke Article 5 only if Russia launches a full-blown attack on one of its allies.
- Some top US officials have warned of the impact of some of Russia’s cyberattacks being felt in NATO countries.
- When you launch cyberattacks, they don’t recognize geographic boundaries.
- Some of that cyberattack could actually start shutting down systems in eastern Poland.
But what is NATO’s problem with Russia?
- Russia has long been opposed to Ukraine’s growing closeness with European institutions, particularly NATO.
- The former Soviet republic shares borders with Russia on one side, and the European Union on the other.
- After Moscow launched its attack, the US and its allies were quick to respond, imposing sanctions on Russia’s central bank and sovereign wealth funds.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Neutral foreign policy
Mains level: Switzerland’s Neutrality Policy
Switzerland broke its 200-year long neutrality policy to sanction Moscow and its leaders.
What is the news?
- Switzerland announced that it would join the European Union (EU) in closing the Swiss airspace to Russian aeroplanes.
- It also wished for imposing financial sanctions on Russian President Vladimir Putin and other leaders.
Switzerland’s Policy of Permanent Neutrality
- The tiny Alpine nation the size of Haryana has had a neutrality policy in place since 1815.
- Its official website attests to this, noting that “permanent neutrality is a principle of Swiss foreign policy.”
- Though it serves as the headquarters of several diplomatic missions and as the venue for historic treaties like the Geneva Convention, Switzerland is not a part of the European Union or NATO.
- Historically, the Swiss had been famed warriors with expansionist ambitions until the 1500s when they lost the Battle of Marignano to the French.
- The years that followed saw the Swiss shift its foreign policy to that of being an armed impartial state during wartime, a stance which was sorely tested in the decades that followed.
The World Wars and Switzerland
- Switzerland shares borders with Germany, France and Italy.
- During WW II, Switzerland found itself surrounded by Axis forces, with Hitler describing the land-locked territory as “a pimple on the face of Europe”.
- It used a combination of military deterrence, strategic planning and economic neutrality to hold its own in 1940s Europe.
- Besides this, the Swiss pursued a policy of armed neutrality, putting into place compulsory military service (which continues till date) to maintain military readiness in event of an invasion.
Recent deviations
- Switzerland joined the United Nations as recently as 2002, putting an end to years to debate after 54 per cent of its population voting in favour of the move.
- The Swiss federal government had said that it had weighed its neutrality and peace policy considerations into account to reach its decision.
- The Swiss government has initially adopted a traditional and very narrow interpretation of neutrality, which translated to a decision to not issue any sanctions.
- However, the Swiss parliament and citizens strongly pushed back, arguing that Russia’s massive military aggression cannot be tolerated.
- This prompted the government to reconsider its position.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Definition of War Crimes
Mains level: War crimes and genocides
The International Criminal Court (ICC) in The Hague announced that it would open an investigation into possible war crimes or crimes against humanity in Ukraine.
What are War Crime?
- War crimes are defined as serious violations of humanitarian laws during a conflict.
- There are specific international standards for war crimes, which are not to be confused with crimes against humanity.
- The definition is established by the Rome Statute of the International Criminal Court (ICC).
- It is derived from the 1949 Geneva Conventions and is based on the idea that individuals can be held liable for the actions of a state or its military.
- There is a long list of acts that can be considered war crimes.
- The taking of hostages, willful killings, torture or inhuman treatment of prisoners of war, and forcing children to fight are some of the more obvious examples.
How to identify war crimes?
To decide whether an individual or a military has committed a war crime, international humanitarian law lays down three principles:
- Distinction: This principle says that you have to be constantly trying to distinguish between civilian and belligerent populations and objects.
- Proportionality: It prohibits armies from responding to an attack with excessive violence. If a soldier is killed, for example, you cannot bomb an entire city in retaliation.
- Precaution: It requires parties to a conflict to avoid or minimize the harm done to the civilian population. For example, attacking a barrack where there are people who have said they no longer participate in the conflict can be a war crime.
Do war crimes constitute to genocides?
- The UN Office on Genocide Prevention and the Responsibility to Protect separates war crimes from genocide and crimes against humanity.
- War crimes are defined as occurring in a domestic conflict or a war between two states.
- However, genocide and crimes against humanity can happen in peacetime or during the unilateral aggression of a military towards a group of unarmed people.
Discrepancy in defining war crimes
- In practice, there is a lot of gray area within that list.
- The laws of war do not always protect civilians from death. Not every civilian death is necessarily illegal.
- Raids on a cities or villages, bombing residential buildings or schools, and even the killing of groups of civilians do not necessarily amount to war crimes — not if their military necessity is justified.
- The same act can become a war crime if it results in unnecessary destruction, suffering and casualties that exceed the military gain from the attack.
- Also civilian and military populations have become increasingly hard to distinguish
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: AIIB
Mains level: Not Much
The Beijing-based Asian Infrastructure Investment Bank (AIIB) said it was putting on hold and reviewing all projects in Russia and Belarus.
About AIIB
- The Asian Infrastructure Investment Bank (AIIB) is a multilateral development bank with a mission to improve social and economic outcomes in Asia, began operations in January 2016.
- It aims to stimulate growth and improve access to basic services by furthering interconnectivity and economic development in the region through advancements in infrastructure.
- AIIB has now grown to 102 approved members worldwide. US & Japan are not its members.
- It is a brainchild of China. It has invested in 13 member regions.
Capital and shareholding of AIIB
- It has authorized capital of US 100 billion dollars and subscribed capital of USD 50 billion.
- It offers sovereign and non-sovereign finance for projects in various sectors with an interest rate of London Interbank Offered Rate (LIBOR) plus 1.15 % and a repayment period of 25 years with 5 years in grace period.
- China is the largest shareholder in AIIB with a 26.06% voting power, followed by India with 7.62% and Russia with 5.92% voting power.
Try this question from CSP 2019
Q.With reference to Asian Infrastructure Investment Bank (AIIB), consider the following statements
- AIIB has more than 80 member nations.
- India is the largest shareholder in AIIB.
- AIIB does not have any members from outside Asia.
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2 and 3
Post your answers here.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Theyyam ritual dance
Mains level: NA
Ritual dance Agni Kandakarnan Theyyam performing at the Kaliyattam festival has begun in Kannur, Kerala.
What is Theyyam?
- Theyyam is a popular thousand-year-old ritual form of dance worship in Kerala and Karnataka, India.
- The people of these districts consider Theyyam itself as a channel to a god and they thus seek blessings from Theyyam.
- There are about 456 types of Theyyam.
- Theyyam is performed by males, except the Devakoothu theyyam; the Devakoothu is the only Theyyam ritual performed by women.
- It is performed only in the Thekkumbad Kulom temple.
Major types of performances
- Vishnumoorthi: It is the most popular Vaishnava Theyyam. This theyyam narrates and performs the story of Hiranyakashipu’s death by the Lord Vishnu in his avatar of Narasimham.
- Sree Muthappan Theyyam: It consists of two divine figures is considered as the personification of two divine figures— the Thiruvappana or Valiya Muttapan (Vishnu) and the Vellatom or Cheriya Muttapan (Shiva).
- Padikutti Amma: It is believed to be the mother of Muthapan. The Padikutti Amma Theyyam is performed in the Palaprath Temple in Kodallur near Parassini Kadavu in the Meenam (a Malayalam month)
Thee
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