Note4Students
From UPSC perspective, the following things are important :
Prelims level: NAM
Mains level: Read the attached story
India and Egypt reiterated their support for the Non-Aligned Movement.
Non-Aligned Movement (NAM)
- NAM is a forum of 120 developing world states that are not formally aligned with or against any major power bloc.
- After the United Nations, it is the largest grouping of states worldwide.
- Drawing on the principles agreed at the Bandung Conference in 1955, the NAM was established in 1961 in Belgrade, SR Serbia, and Yugoslavia.
- It was an initiative of then PM Jawaharlal Nehru, Ghanaian President Kwame Nkrumah, Indonesian President Sukarno, Egyptian President Gamal Abdel Nasser and Yugoslav President Josip Broz Tito.
- The countries of the NAM represent nearly two-thirds of the United Nations’ members and contain 55% of the world population.
Reasons behind NAM creation
- Balancing the US and USSR: Non-alignment, a policy fashioned for the Cold War, aimed to retain the autonomy of policy (not equidistance) between two politico-military blocs i.e. the US and the Soviet Union.
- Platform beyond UN: The NAM provided a platform for newly independent developing nations to join together to protect this autonomy.
Relevance TODAY
- Changing with emerging scenarios: Since the end of the Cold War, the NAM has been forced to redefine itself and reinvent its purpose in the current world system.
- Focus towards development: It has focused on developing multilateral ties and connections as well as unity among the developing nations of the world, especially those within the Global South.
Fading significance of the NAM
- Loosing relevance: The policy of non-alignment lost its relevance after the disintegration of the Soviet Union and the emergence of unipolar world order under the leadership of the US since 1991.
- De-colonization was largely complete by then, the apartheid regime in South Africa was being dismantled and the campaign for universal nuclear disarmament was going nowhere.
- Freed from the shackles of the Cold War, the NAM countries were able to diversify their network of relationships across the erstwhile east-west divide.
India and the NAM
- Important role played by India: India played an important role in the multilateral movements of colonies and newly independent countries that wanted into the NAM.
- India as a leader: Country´s place in national diplomacy, its significant size and its economic miracle turned India into one of the leaders of the NAM and upholder of the Third World solidarity.
- The principle of ‘acting and making its own choices’ also reflected India’s goal to remain independent in foreign policy choices, although posing dilemmas and challenges between national interests on international arena and poverty alleviation.
- Preserving the state’s security required alternative measures: Namely, the economic situation with the aim to raise the population’s living standards challenged the country’s defense capacity and vice versa.
- Fewer choices: Wars with China and Pakistan had led India to an economically difficult situation and brought along food crisis in the mid-1960s, which made the country dependent on US food.
What dictates India’s alignment now?
- National security: China’s rise and assertiveness as a regional and global power and the simultaneous rise of middle powers in the region mean that this balancing act is increasing in both complexity and importance, simultaneously.
- Global decision-making: Another distinctive feature of India’s foreign policy has been the aim to adjust international institutions consistent with changes in international system.
- Prosperity and influence: India’s 21st century’s strategic partnerships aims for India becoming the voice of global South.
- Multi-polarism: Another means to execute India’s foreign policy strategy of autonomy has been forming extensive partnerships with other emerging powers.
Why NAM still matters?
- Global perception of India: India’s image abroad has suffered as a result of allegations that creep into our secular polity and a need arises to actively network and break out of isolation.
- For the Impulsive US: For India complete dependence on the U.S. to counter China would be an error.
- Ukrainian invasion has revitalized Cold War: Critics of NAM who term it as an outcome of the Cold War must also acknowledge that a new Cold War is beginning to unfold, this time between the US and China.
- NAM provides a much bigger platform:NAM becomes relevant to mobilize international public opinion against terrorism, weapons of mass destruction (WMDs), nuclear proliferation, ecological imbalance, safeguarding interests of developing countries in WTO etc.
- NAM as a tool for autonomy:NAM’s total strength comprises 120 developing countries and most of them are members of the UN General Assembly. Thus, NAM members act as an important group in support of India’s candidature as a permanent member in UNSC.
- NAM for multilateralism:Though globalization is facing an existential crisis, it is not possible to return to isolation. In the world of complex interdependence, countries are linked to each other one way or another.
- NAM as a source for soft power:India can use its historic ties to bring together the NAM countries. India’s strength lies in soft power rather than hard power.
Way forward
- Strategic autonomy: India is showing signs of pursuing strategic autonomy separately from non-alignment.
- Bilateralism: Indo-US ties are complementary, and a formal alliance will only help realize the full potential of these relations.
- Non-alliance: India interacts with other states in expectations to change the international system, but without expectations to ‘ally or oppose.’
- Deep engagement: India needs deeper engagement with its friends and partners if it is to develop leverage in its dealings with its adversaries and competitors.
Conclusion
- A wide and diverse range of strategic partners, including the U.S. as a major partner is the only viable diplomatic way forward in the current emerging multipolar world order.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: World Economic Forum
Mains level: Not Much
The World Economic Forum has begun its annual summit in Davos, Switzerland,
World Economic Forum (WEF)
- Headquartered in Geneva, Switzerland, WEF is an international not-for-profit organization, focused on bringing the public and private sectors together to address the global political, social, and economic issues.
- It was founded in 1971 by Swiss-German economist and Professor Klaus Schwab in a bid to promote the global cooperation on these most pressing problems.
- The first meeting of WEF was held more than five decades ago in Davos, which has been the home of the annual gathering almost ever since, also becoming the shorthand for the event.
Tap to read more about important reports published by the World Economic Forum (WEF).
WEF partners
- The WEF is largely funded by its partnering corporations.
- These are generally global enterprises with an annual turnover greater than $ 5 billion.
- For these corporations, the WEF provides a platform “to shape the future, accessing networks and experts to ensure strategic decision-making on the most pressing world issues.”
- Partners range from Apollo Tyres to Apple – they can be from any industry, as long as they wish to engage using WEF’s platforms.
- WEF also partners with public subsidies.
Why are the summits held at Davos?
- Sometimes described as Europe’s highest town, Davos has been the venue for the WEF’s annual meeting every year since its inception – with one exception.
- Davos, a ski resort, and the annual host of WEF’s meeting is a quaint town located on the lap of the Swiss Alps.
- In many ways, it is a surprising choice for a meeting of global economic giants and geopolitical leaders.
- The meeting was held in New York in 2002 in a gesture of solidarity following the 9/11 attacks.
Who are the attendees and what actually happens in Davos?
- Typically, Davos attracts global business executives and policymakers – and it’s strictly invite-only.
- Usually attending will be the sitting U.S. president, top EU and UN leaders, business leaders and entrepreneurs, academics, heads of NGOs and charities, the media, activists and even some celebrities.
- Donald Trump, Jens Stoltenberg, Ursula von der Leyen, Greta Thunberg, Elton John and many other high-profile names have all previously attended Davos.
- The conference includes hundreds of discussions, keynote speeches and panels, and all-important networking sessions, usually behind closed doors in five-star hotels.
- CEOs and investors seize the opportunity for face-to-face deal-makings.
Davos 2023: What’s on this year’s agenda?
- This year’s annual meeting in Davos will take place January 16–20, 2023.
- The theme is “cooperation in a fragmented world” and within that are five sub-themes, including the energy and food crises, inflation, technology for innovation, social vulnerabilities and geopolitical risks.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: APPU
Mains level: Not Much
India took over the leadership of the Asian Pacific Postal Union (APPU) having its Headquarters in Bangkok, Thailand.
About Asian Pacific Postal Union (APPU)
- APPU is an intergovernmental organization of 32-member countries of the Asian-Pacific region.
- It was formed by International treaty through an Asian-Pacific Postal Convention signed in Yogyakarta on 27 March 1981.
- The organisation has origins dating back to 1961.
- APPU is the only Restricted Union of the Universal Postal Union (UPU) in the region, which is a specialized agency of the United Nations.
- Secretary General leads the activities of the Union and is also the Director of the Asian Pacific Postal College (APPC) which is the largest intergovernmental postal training institute in the region.
Goals and objectives
- The goal of APPU is to extend, facilitate and improve postal relations between member countries and to promote cooperation in the field of postal services.
- As the regional center for various UPU projects, APPU also takes the lead in ensuring that all technical and operational projects of the UPU are fulfilled in the region.
Significance of India’s chair
- The Asia Pacific region accounts for around one-third of the world’s postal workforce and about half of the world’s mail volume.
- India seeks to improve the regional coordination with postal players in the Asia Pacific region to improve the growth of the business through the postal network, to ensure the sustainability of the Union.
- This is the first time an Indian is leading an international organization in the postal sector.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Global Minimum Tax
Mains level: Not Much
Members of the EU last week agreed in principle to implement a global minimum tax of 15% on big businesses.
Global Minimum Corporate Tax
- Major economies are aiming to discourage multinational companies from shifting profits – and tax revenues – to low-tax countries regardless of where their sales are made.
- Increasingly, income from intangible sources such as drug patents, software, and royalties on intellectual property has migrated to these jurisdictions.
- This has allowed companies to avoid paying higher taxes in their traditional home countries.
What is the recent EU agreement?
- EU members have agreed to implement a minimum tax rate of 15% on big businesses in accordance with Pillar 2 of the global tax agreement framed by the OECD last year.
- Under the OECD’s plan, governments will be equipped to impose additional taxes in case companies are found to be paying taxes that are considered too low.
- This is to ensure that big businesses with global operations do not benefit by domiciling themselves in tax havens in order to save on taxes.
Need for a global minimum tax
- Corporate tax rates across the world have been dropping over the last few decades as a result of competition between governments to spur economic growth through greater private investments.
- Large multinational companies have traditionally paid taxes in their home countries even though they did most of their business in foreign countries.
- The OECD plan tries to give more taxing rights to the governments of countries where large businesses conduct a substantial amount of their business.
- As a result, large US tech companies may have to pay more taxes to the governments of developing countries.
History of such taxes
- Global corporate tax rates have fallen from over 40% in the 1980s to under 25% in 2020.
- The global tax competition was kick-started by former US President Ronald Reagan and former British PM Margaret Thatcher in the 1980s.
- The OECD’s tax plan tries to put an end to this “race to the bottom” which has made it harder for governments to shore up the revenues required to fund their rising spending budgets.
- The minimum tax proposal is particularly relevant at a time when the fiscal state of governments across the world has deteriorated as seen in the worsening of public debt metrics.
Response to the EU move
- Some governments, particularly those of traditional tax havens, are likely to disagree and stall the implementation of the OECD’s tax plan.
- High tax jurisdictions like the EU are more likely to fully adopt the minimum tax plan as it saves them from having to compete against low tax jurisdictions.
- Low tax jurisdictions, on the other hand, are likely to resist the OECD’s plan unless they are compensated sufficiently in other ways.
Way forward
- Supporters of the OECD’s tax plan believe that it will end the global “race to the bottom” and help governments collect the revenues required for social spending.
- The plan will also help counter rising global inequality by making it tougher for large businesses to pay low taxes by availing the services of tax havens.
- Critics of the OECD’s proposal, however, see the global minimum tax as a threat.
- They argue that without tax competition between governments, the world would be taxed a lot more than it is today, thus adversely affecting global economic growth.
- In other words, these critics believe that it is the threat of tax competition that keeps a check on governments that would otherwise tax their citizens heavily to fund profligate spending programs.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Singapore Declaration
Mains level: Labour reform
CONTEXT: The 17th Asia-Pacific Regional Meeting of the International Labour Organisation (ILO) set ten-point priorities of national action under the Singapore Declaration.
Singapore Declaration
- It seeks to draw attention for the member countries to deal with the issue of dwindling wages of workers, inflation and unemployment.
- It was adopted by the delegates representing governments, employers and workers’ governments, employers and workers in the regions.
- Members agreed that social dialogue is essential to address labour market challenges and finding solutions in crisis situations such as the COVID-19 pandemic, natural disasters, and economic uncertainty.
Key point priorities
- Ensure labour protection for all through the promotion of freedom of association
- Recognition of the right to collective bargaining, including for workers in vulnerable situations and workers in the informal economy, as enabling rights for decent work
- Closing gender gaps, increase women’s labour force participation, promote equal pay for work of equal value, balance work and responsibilities, and promoting women’s leadership.
- Develop and implement inclusive labour market programmes and policies that support life transitions and demographic shifts.
- Pursue collective and determined efforts to promote and accelerate a smooth and sustained transition from the informal to formal economy
- Strengthen governance frameworks and respect for freedom of association for migrant workers
- Strengthen the foundation for social and employment protection and resilience
- Expanding social protection to all workers, guaranteeing universal access to comprehensive, adequate and sustainable social protection for all
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Global South
Mains level: Global South Narrative
As India assumed the presidency of the G20 group of countries for 2022 to 2023, EAM S Jaishankar said on December 1 that India would be the voice of the Global South that is otherwise under-represented in such forums.
What is ‘Global South’?
- The term has since been used multiple times, such as when Jaishankar said of ongoing global conflicts, “polarisation may occur elsewhere, the people who suffer most are the Global South”.
- ‘Global North’ refers loosely to countries like the US, Canada, Europe, Russia, Australia and New Zealand, while ‘Global South’ includes countries in Asia, Africa and South America.
Behind the binary difference: ‘Global North’ and the ‘Global South’
- For a long time in the study of international political systems, the method of categorising countries into broad categories for easier analysis has existed.
- The concepts of ‘East’ and ‘West’ is one example of this, with the Western countries generally signifying greater levels of economic development and prosperity among their people.
- Eastern countries were considered as being in the process of that transition.
What are other such categorizations?
- Another similar categorisation is of First World, Second World and Third World countries.
- It referred to countries associated with the Cold war-era alliances of the US, the USSR, and non-aligned countries, respectively.
- The idea of the “third” world underlined that it was not only different from the “first” — the capitalist West — but also and the second — the socialist “East”.
Concept behind: World Systems Approach
- At the centre of these concepts is the World Systems approach introduced by sociologist Immanuel Wallerstein in 1974, emphasising an interconnected perspective of looking at world politics.
- He said there are three major zones of production: core, peripheral and semi-peripheral.
- The core zones reap profits, being the owners of cutting-edge technologies – countries like the US or Japan.
- Peripheral zones, on the other hand, engage in less sophisticated production that is more labour-intensive.
- In the middle are countries like India and Brazil.
Need for new terms
(1) Global shift of powers
- In the post-Cold War world, the First World/Third World classification was no longer feasible.
- This is because when the Communist USSR disintegrated in 1991, most countries had no choice but to ally at some level with the capitalist US – the only remaining global superpower.
(2) Monolithic classification
- The East/West binary was seen as often perpetuating stereotypical thinking about African and Asian countries.
- Categorising incredibly diverse countries into a monolith was felt to be too simplistic.
- Also, the idea that some countries were ‘developed’ while others were not was thought to be too wide a classification, inadequate for accurately discussing concerns.
(3) Issues with Developed vs. Developing
- Writing in 2014 from the perspective of his organisation’s philanthropic activities, Bill Gates said of the ‘developing’ tag.
- It found an irony that- any category that lumps China and the Democratic Republic of Congo together confuses more than it clarifies.
- Some so-called developing countries have come so far that it’s fair to say they have developed.
- A handful of failed states are hardly developing at all. Most countries are somewhere in the middle.
Emergence of Global South
- Colonial past: A big commonality between the South countries is that most have a history of colonization, largely at the hands of European powers.
- No say since de-colonization: Region’s historical exclusion from prominent international organizations – such as from the permanent membership of the UN is intriguing.
- Consciousness for decision-making: As bodies like the UN and the IMF are involved in major decision-making that affect the world in terms of politics, economy and society, the exclusion is seen by these countries as contributing to their slower growth.
- Economic emergence: China and India have emerged economically sound in the past two decades.
- Declining US hegemony: Many consider the world to now be multipolar rather than one where the US alone dominates international affairs.
- Climate reparations: In the ongoing debate adds Northern countries paying for funding green energy, having historically contributed to higher carbon emissions.
Criticism of the classification
- Only few players: South simply aims to replace the North and the positions it occupies, again continuing a cycle in which a few countries accumulate crucial resources.
- More of a India vs. China competition: Much controversy currently surrounds the question of whether elites of the global South and ‘rising powers’ genuinely have the intention to challenge the dominant structures of global capitalist development”.
- Anti-china motive: China’s tentative “going out” strategy at the turn of the century eventually morphed into the expansive Belt and Road Initiative.
Where does India stand?
- No further diplomatic groupism: EAM S Jaishankar India’s objective is not to rebuild a global trade union against the North.
- Bridging the divide: India is eager to become a bridge between the North and the South by focusing on practical outcomes rather than returning to old ideological battles.
Challenges
- Political consistency: In the past, India’s ideological enthusiasm for the Global South was not matched by material power and political will.
- Bridging the neighbours: India must also come to terms with the fact that the Global South is not a coherent group and does not have a single shared agenda.
- Despaired south: There is much differentiation within the South today in terms of wealth and power, needs and capabilities.
- Defiance from NAM: India’s Third World strategy (and Non-Aligned Movement) in the Cold War era was undermined by multiple internal and regional conflicts within the Global South.
Way ahead
- More engagement in neighborhood: Championing the Global South today would demand more active Indian engagement with the messy regional politics within the developing world.
- Political coherence: If India can translate this ambition into effective policy, there will be no contradiction between the simultaneous pursuit of universal and particular goals.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: 'No First Use' Policy
Mains level: Nuclear disarmament
China responded to a US report alleging a major build-up in Beijing’s nuclear capabilities. It said, it adheres to its policy of no first use of nuclear weapons.
What is the news?
- The Pentagon released an annual China security report that warned Beijing would likely have 1,500 nuclear.
- China currently has 350 nuclear warheads.
- As of 2022, Russia possesses a total of 5,977 nuclear warheads compared to 5,428 in the US inventory.
What is ‘No First Use’ Doctrine?
- In nuclear ethics and deterrence theory, NFU is a commitment to never use nuclear weapons first under any circumstances, whether as a pre-emptive attack or first strike, or in response to non-nuclear attack of any kind.
Where do nuclear-armed countries stand on No First Use?
- China is the only nuclear-armed country to have an unconditional NFU policy.
- India maintains a policy of NFU with exceptions for a response to chemical or biological attacks.
- France, North Korea, Pakistan, Russia, the UK and the US maintain policies that permit the first use of nuclear weapons in a conflict.
- Israel does not acknowledge the existence of its nuclear arsenal so has no publicly known position.
Why advocate for global NFU commitments now?
- The world after US bombing of Japan has never faced any crises that could escalate to nuclear conflict.
- In addition to the precarious situation on the Korean peninsula, we’re running acceptably high risks of nuclear weapons use between-
- NATO and Russia: Amid ongoing Ukrainian Invasion
- India and Pakistan: Jihadist acquiring nuclear weapons
- US and China: Due to provocations over the South China Sea and Taiwan
- In fact right now the chances that nuclear weapons will be used — intentionally, accidentally, or due to miscalculation — are the highest they’ve been since the worst days of the Cold War.
- Establishing global NFU would immediately make the world safer by resolving uncertainty about what a nuclear-armed country might do in a crisis.
- It removes pressure and incentive for any one country to “go nuclear” first in a crisis and thus create a moral obligation on others.
Consequences of nuclear war
- Any use of a nuclear weapon would invite massive retaliation.
- Not to mention the horrific aftermath of nuclear war.
- A 2014 study shows that so-called “limited” nuclear war in South Asia, in which 100 nuclear weapons are used, would have global consequences.
- Millions of tons of smoke would be sent into the atmosphere, plunging temperatures and damaging the global food supply.
- Two billion people would be at risk of death by starvation.
What lies ahead?
- Global No First Use would be an important step toward making nuclear weapons irrelevant to national security.
- These policies would strip nuclear weapons of value in the eyes of military planners, enable future nuclear disarmament negotiations, and accelerate the dismantling of these weapons.
- It would also serve as a “confidence-building measure” that establishes greater trust among nuclear-armed countries.
- It thus makes it easier to work together to reduce nuclear risks and ultimately eliminate all nuclear weapons.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: China Indian Ocean Region Forum, USAID
Mains level: Read the attached story
China’s top development aid agency convened the first “China-Indian Ocean Region Forum” in the southwestern Chinese city of Kunming.
What is the China Indian Ocean Region Forum?
- It is organised by the China International Development Cooperation Agency (CIDCA).
- It is the latest Chinese initiative focusing on the Indian Ocean Region (IOR).
- It underlines Beijing’s growing strategic interests in a region where its economic footprint has been deepening.
What is it about?
- The CIDCA is China’s new development aid agency similar to the United States Agency for International Development (USAID).
- It aims to-
- Strengthen policy coordination,
- Deepen development cooperation,
- Increase resilience to shocks and disasters, and
- Enhance relevant countries’ capacity to obtain economic benefits through use of marine resources such as fisheries, renewable energy, tourism, and shipping in a sustainable way
Which countries have backed the forum?
- The organisers have said the forum was attended by high-level representatives and senior officials from 19 countries.
- But at least two of those countries, Australia and Maldives, subsequently released statements rebutting the claim, emphasising that they did not participate officially.
Why such a move by China?
China’s ambitions in the Indian Ocean have been motivated by three factors-
- Gaining significance of Indo-Pacific: As the new world order unveils around the Indo-Pacific, Beijing aims to challenge other major powers, such as India, and establish its hegemony.
- Domestic energy security: Beijing needs the Indian Ocean to ensure its energy security and continue fuelling its growth, which defines its foreign policy and international leverage.
- Hegemony establishment: Establishing new and alternative institutions with IOR countries helps China display its presence and influence from the China Sea to the Indian Ocean, reflecting its status as a significant power.
How is China perceiving its interests?
- Political corruption: Beijing has cultivated close and personal relationships with political elites and parties of IOR countries, usually through corruption, party funding, and by turning a blind eye to their human rights abuses and democratic infirmities.
- Fractionalization: Friendship with different political parties in Pakistan; bonhomie with the Rajapaksa clan in Sri Lanka, and close relations with Maldives’ Abdulla Yameen are some examples of this widespread phenomenon.
- Elite capture: In addition, China has often used the elite capture tactic to ensure a pro-China policy and bag geo-economically and strategically significant projects. This includes concessions on Pakistan’s Gwadar Port and Sri Lanka’s Colombo Port City project.
Where does India stand?
- India was the lone absentee in the forum ignoring the invitation.
- China has exposed its intention with the Indian Ocean Region (IOR) countries.
- New Delhi has viewed China’s recent moves in the region warily, including the recent visit of a Chinese military tracking vessel, the Yuan Wang 5, to Sri Lanka.
- Moreover, India sees the Indian-Ocean Rim Association (IORA) as an already established platform for the region.
China’s plans for the IOR
- The forum has underlined China’s stepped-up interest in the IOR, where it is already a major trading partner for most countries and where sea routes lie vital to China’s economic interests.
- The CIDCA forum is the latest initiative to reflect Beijing’s view that it has a clear stake in the region, and that more such initiatives are likely.
Has China out-powered India in the IOR with this move?
- The Chinese initiative looks like a kind of delayed response.
- It can be seen only as a comparison and competitor to India’s SAGAR (Security and Growth for All in the Region), as outlined by PM Modi in Mauritius in 2015.
- The Indian idea is implemented through the nation’s ‘Neighbourhood First’ policy and such other initiatives as ‘‘Project Mausam’ and ‘Integrated Coastal Surveillance System’ (now shared with Maldives).
- All of them are confined to the Indian Ocean, where India too belongs legitimately, unlike China.
Conclusion
- In a way, the new initiative reflects China’s unending greed.
- It also reflects China’s desire and ambition to measure up to the US in reach and outreach, and through them, geo-economics, geopolitical, and geostrategic comparability.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: New Start Treaty, INF Treaty
Mains level: Nuclear disarmament
Russia postponed nuclear weapons talks with the United States under the New START Treaty with neither side giving a reason for the postponement.
New START Treaty
- The New Strategic Arms Reduction Treaty (New START) pact limits the number of deployed nuclear warheads, missiles and bombers and is due to expire in 2021 unless renewed.
- The treaty limits the US and Russia to a maximum of 1,550 deployed nuclear warheads and 700 deployed missiles and bombers, well below Cold War caps.
- It was signed in 2010 by former US President Barack Obama and then-Russian President Dmitry Medvedev.
- It is one of the key controls on the superpower deployment of nuclear weapons.
Background of US-Russia Nuclear Relations
- The US formally QUIT the Intermediate-Range Nuclear Forces (INF)
- The agreement obliged the two countries to eliminate all ground-based missiles of ranges between 500 and 5,500 km.
When did nuclear disarmament begin?
- In 1985, the two countries entered into arms control negotiations on three tracks.
- The first dealt with strategic weapons with ranges of over 5,500 km, leading to the START agreement in 1991.
- It limited both sides to 1,600 strategic delivery vehicles and 6,000 warheads.
- A second track dealt with intermediate-range missiles and this led to the INF Treaty in 1987.
- A third track, Nuclear, and Space Talks was intended to address Soviet concerns regarding the U.S.’s Strategic Defence Initiative (SDI) but this did not yield any outcome.
Success of INF
- The INF Treaty was hailed as a great disarmament pact even though no nuclear warheads were dismantled.
- As it is a bilateral agreement, it did not restrict other countries.
- By 1991, the INF was implemented. USSR destroyed 1,846 and the US destroyed 846 Pershing and cruise missiles.
- Associated production facilities were also closed down.
- INF Treaty was the first pact to include intensive verification measures, including on-site inspections.
How has the nuclear behavior been?
- With the end of the Cold War and the break-up of the USSR in end-1991, former Soviet allies were joining NATO and becoming EU members.
- The U.S. was investing in missile defense and conventional global precision strike capabilities to expand its technological lead.
- In 2001, the U.S. announced its unilateral withdrawal from the 1972 Anti-Ballistic Missile Treaty (ABM Treaty).
- The US also blamed Russia for not complying with the ‘zero-yield’ standard imposed by the Comprehensive Test Ban Treaty (CTBT). This may indicate the beginning of a new nuclear arms race.
Implications of the New Start
- The 2011 New START lapsed in 2021. It may meet the fate of the INF Treaty.
- The 2018 NPR envisaged the development of new nuclear weapons, including low-yield weapons.
- China is preparing to operate its test site year-round with its goals for its nuclear force.
- CTBT requires ratification by U.S., China, and Iran, Israel and Egypt and adherence by India, Pakistan and North Korea. It is unlikely to ever enter into force.
Conclusion
- A new nuclear arms race could just be the beginning. It may be more complicated because of multiple countries being involved.
- Technological changes are bringing cyber and space domains into contention. It raises the risks of escalation.
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From UPSC perspective, the following things are important :
Prelims level: Moscow Format
Mains level: Restoration and normalization of governance in Taliban
The Moscow Format of Consultations on Afghanistan was recently held in the Russian capital.
What is the Moscow Format?
- The Moscow format was introduced in 2017 on the basis of the six-party mechanism for consultations between special representatives from Russia, Afghanistan, China, Pakistan, Iran and India.
- The present meeting includes a group of 10 nations including India, China, Pakistan, Iran and the Central Asian republics with Taliban officials.
- Russia had previously convened a new meeting of the ‘Extended Troika’ on Afghanistan which included Russia, the United States, China and Pakistan.
- The US pulled out of the last meeting.
- Taliban did not participate in the talks but, welcomed the discussion and declared that it will not allow Afghan territory to be used against “stability of the region”.
Key outcomes of the meet
- The dialogue called for respect for all Afghan ethnic groups and minorities in a bid to create national reconciliation in the war torn country.
- The Russian hosts, presented a White Book on the civilian losses in Afghanistan due to the actions of the NATO forces during the past two decades.
- The representatives at the talks also called for “complete unfreezing” of Afghanistan’s assets by Washington.
Urging the Taliban Govt.
- Prevent poppy cultivation: Participating countries called upon the Taliban setup to “fulfil its commitments to eradicate terrorism and drug trafficking” that continue to emanate from the Afghan territory.
- Stop atrocities: The return of the Taliban has been followed by a series of attacks on Shia Hazaras and growing atrocities against women and political opponents.
- Inclusive govt. formation: The participants underscored the importance of forming a “truly inclusive government in Afghanistan, reflecting the interests of all major ethno-political groups of the country.”
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From UPSC perspective, the following things are important :
Prelims level: G20
Mains level: Significance of G20 summit
Leaders of the G-20 nations gathered at Bali in Indonesia for the 17th summit of the world’s most advanced economies.
Agenda of this summit
- The motto for this summit is Recover Together, Recover Stronger.
- The leaders will engage in discussions over three sessions on-
- Food and Energy security
- Health Partnership for Global Infrastructure and Investment, and
- Digital Transformation
About G-20
- Formed in 1999, the G20 is an international forum of the governments and central bank governors from 20 major economies.
- Collectively, the G20 economies account for around 85 percent of the Gross World Product (GWP), 80 percent of world trade.
- To tackle the problems or address issues that plague the world, the heads of governments of the G20 nations periodically participate in summits.
- In addition to it, the group also hosts separate meetings of the finance ministers and foreign ministers.
- The G20 has no permanent staff of its own and its chairmanship rotates annually between nations divided into regional groupings.
Aims and objectives
- The Group was formed with the aim of studying, reviewing, and promoting high-level discussion of policy issues pertaining to the promotion of international financial stability.
- The forum aims to pre-empt the balance of payments problems and turmoil on financial markets by improved coordination of monetary, fiscal, and financial policies.
- It seeks to address issues that go beyond the responsibilities of any one organization.
Members of G20
- The members of the G20 consist of 19 individual countries plus the European Union (EU).
- The 19 member countries of the forum are Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, United Kingdom and the United States.
- The European Union is represented by the European Commission and by the European Central Bank.
Why was the G-20 created?
For emerging nations: It was created as an acceptable medium between the more “elitist” G-7 (then the G-8), and the more unwieldy 38-member Organisation for Economic Co-operation and Development (OECD).
- Increasing representation: Over the past two decades, the global economic balance has shifted, and the G-20 has been seen as a more representative and egalitarian grouping of global leadership.
- Reducing groupism within: The G-20 was conceived in a more unified, post-Soviet era, when western economies made the rules, China was just on the rise and Russia was still recovering from its breakup.
- Economic boost for west: It was particularly useful in steering the global economy after the global financing crisis and banking collapse of 2008.
- Global-south on focus: Significantly, next year the “Troika” of G-20 will be made up of emerging economies for the first time with India, Indonesia and Brazil — an indicator of the shift in the global economic agenda towards the Global South.
Economic significance of G-20
- G-20 countries represent 85% of the global GDP.
- It accounts for 75% of global trade and 66% of the world population.
What makes this G-20 different from others?
- War mongers at table: For the world, this is the first G-20 since Russia began the war in Ukraine and the west imposed sanctions on Russia.
- Hosting a stronger China: This is only the second time Chinese President Xi Jinping has travelled abroad since the COVID pandemic, and the first time since he was re-elected at China’s Party Congress last month.
- Next chair for India: For India, the importance of the summit of the world’s most advanced economies is that it is India’s turn to host the summit next.
Bilateral meets on the sidelines
- All eyes will also be on the bilateral summits happening by the sidelines — including the Biden-Xi summit at a time when U.S.-China tensions are at a high.
- While neither Delhi nor Beijing have confirmed a Modi-Xi meeting, any interaction between the two leaders will be the first since the military stand-off at the LAC.
- PM Modi is expected to meet many of the G-20 leaders and others, and will invite them to next year’s summit in India.
- Among the leaders who are attending for the first time as heads of their countries are UK PM Rishi Sunak.
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From UPSC perspective, the following things are important :
Prelims level: East Asia SUmmit
Mains level: India-ASEAN Relations
Vice President Jagdeep Dhankhar addressed the East Asia Summit on the last day of his visit to Cambodia, as the three-day Association of South East Asian Nations (ASEAN) summit concluded.
East Asia Summit
- Simply, the EAS is an ASEAN initiative and refers to the annual Meeting of Heads of States/Governments of these countries, where they are able to discuss common concerns and interests.
- Beginning in 2005, 16 participating countries comprised EAS, with their first meeting in Kuala Lumpur, Malaysia.
- These members were the 10 ASEAN countries, Australia, China, India, Japan, New Zealand, and the Republic of Korea.
- ASEAN’s 10 member countries are Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam.
- The United States and the Russian Federation joined at the 6th East Asia Summit in 2011.
Why was it created?
- Its creation was based on the idea of enhancing cooperation among East Asian countries and those in the neighbouring regions.
- Six priority areas of cooperation were identified – environment and energy, education, finance, global health issues and pandemic diseases, natural disaster management, and ASEAN Connectivity.
Topics discussed
The following issues have been discussed by the countries
- Chinese claims over the South China Sea
- United Nations Convention on the Law of the Sea (UNCLOS),
- Terrorism
- Actions of North Korea and
- Conflict situation in Myanmar
EAS’s links with India
- This year marks the 30th anniversary of ASEAN-India relations and is being celebrated as the ASEAN-India Friendship Year.
- In a joint statement, ASEAN-India acknowledged the deep civilizational linkages, maritime connectivity, and cross-cultural exchanges between Southeast Asia and India.
- All these have grown stronger over the last 30 years, providing a strong foundation for ASEAN-India relations.
New developments
- India has announced an additional contribution of USD 5 million to the ASEAN-India science and technology fund.
- It would enhance cooperation in sectors of public health, renewable energy and smart agriculture.
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From UPSC perspective, the following things are important :
Prelims level: MAC
Mains level: Mangrove conservation efforts
At the 27th Session of the Conference of Parties (COP27), this year’s UN climate summit, the Mangrove Alliance for Climate (MAC) was launched with India as a partner.
Mangrove Alliance for Climate (MAC)
- An initiative led by the UAE and Indonesia, the MAC includes India, Sri Lanka, Australia, Japan, and Spain.
- It seeks to educate and spread awareness worldwide on the role of mangroves in curbing global warming and its potential as a solution for climate change.
- Under MAC, UAE intends to plant 3 million mangroves in the next two months, in keeping with UAE’s COP26 pledge of planting 100 million mangroves by 2030.
Working of MAC
- MAC would work on a voluntary basis. It means that there are no real checks and balances to hold members accountable.
- Instead, the parties will decide their own commitments and deadlines regarding planting and restoring mangroves.
- The members will also share expertise and support each other in researching, managing and protecting coastal areas.
Why protect mangroves?
- Infrastructure projects — industrial expansion, shifting coastlines, coastal erosion and storms, have resulted in a significant decrease in mangrove habitats.
- Between 2010 and 2020, around 600 sq km of mangroves were lost of which more than 62% was due to direct human impacts, the Global Mangrove Alliance said in its 2022 report.
Importance of mangroves
- Biodiversity: Mangrove forests — consisting of trees and shrub that live in intertidal water in coastal areas — host diverse marine life.
- Fishing grounds: They also support a rich food web, with molluscs and algae-filled substrate acting as a breeding ground for small fish, mud crabs and shrimps, thus providing a livelihood to local artisanal fishers.
- Carbon sinks: Equally importantly, they act as effective carbon stores, holding up to four times the amount of carbon as other forested ecosystems.
- Cyclone buffers: When Cyclone Amphan struck West Bengal in May, its effects were largely mitigated by the Sundarbans flanking its coasts along the Bay of Bengal.
Threats to Mangroves
- Anthropogenic activities: They are a major threat to the mangroves. Urbanization, industrialization and the accompanying discharge of industrial effluents, domestic sewage and pesticide residues from agricultural lands threaten these fragile ecosystems.
- Saltpan and aquaculture: This causes huge damage to the mangroves. Shrimp farming alone destroyed 35,000 hectares of mangroves worldwide.
- Destruction for farming: 40% of mangroves on the west coast has been converted into farmlands and other settlements in just 3 decades.
- Sea-level rise: This is another challenge to these mangroves- especially on the Bay of Bengal coast.
Mangroves in India
- India holds around 3 percent of South Asia’s mangrove population.
- Besides the Sundarbans in West Bengal, the Andaman region, the Kutch and Jamnagar areas in Gujarat too have substantial mangrove cover.
How can India benefit from MAC?
- India is home to one of the largest remaining areas of mangroves in the world — the Sundarbans.
- It has years of expertise in restoration of mangrove cover that can be used to aid global measures in this direction.
- The move is in line with India’s goal to increase its carbon sink.
Try this PYQ:
Q.Which one of the following is the correct sequence of ecosystems in the order of decreasing productivity?
(a) Oceans, lakes, grasslands, mangroves
(b) Mangroves, oceans, grasslands, lakes
(c) Mangroves, grasslands, lakes, oceans
(d) Oceans, mangroves, lakes, grasslands
Post your answers here.
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From UPSC perspective, the following things are important :
Prelims level: ETA
Mains level: Climate finance committments by Developed Countries
The US has unveiled a new carbon offset scheme called Energy Transition Accelerator (ETA) for climate finance.
Energy Transition Accelerator (ETA)
- ETA is carbon offset plan that will allow companies to fund clean energy projects in developing countries and gain carbon credits that they can then use to meet their own climate goals.
- The plan will be developed by the US along with the Bezos Earth Fund and the Rockefeller Foundation.
- It would receive inputs from public and private
- The concept is to put the carbon market to work, deploy capital otherwise undeployable, and speed up the transition from dirty to clean power.
Benefits of ETA
- It may be good for renewable energy projects for sure and for those coal plants that are very old and unviable and which India wishes to shut down.
- The scheme comes at a time when there is growing mistrust among developing countries about developed nations failing to deliver on climate finance commitments.
Limitations of ETA
- The proposed initiative would be insufficient to make up for the lack of funding from rich countries.
- What developing countries need is predictable finance – not offset markets.
- The proposed initiative cannot make up for the US’s failure to provide its fair share of climate finance – an estimated $40 billion of the unmet goal of $100 billion a year.
Conclusion
- ETA appears to be a substitute for deep decarbonization needed within the US and other industrialized countries.
- For developing countries like India, the first priority would be to meet their own targets and not provide offsets for reductions in developed nations.
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From UPSC perspective, the following things are important :
Prelims level: G7, G12, G20
Mains level: India's presidentship of G20
PM unveiled the logo, theme and website of India’s G20 presidency.
What is G20?
- The G20 was formed in 1999 in the backdrop of the financial crisis of the late 1990s that hit East Asia and Southeast Asia in particular.
- The first G20 Summit took place in 2008 in Washington DC, US.
- Its aim was to secure global financial stability by involving middle-income countries.
- Its prominent members are: Australia, Brazil, China, France, Germany, India, Japan, Republic of Korea, Russia, Saudi Arabia, South Africa, Turkey, the UK, the US, and the EU.
- Spain is invited as a permanent guest.
Presidency of G20
- The presidency of the G20 rotates every year among members.
- The country holding the presidency, together with the previous and next presidency-holder, forms the ‘Troika’ to ensure continuity of the G20 agenda.
- During India’s presidency, India, Indonesia and Brazil will form the troika.
- This would be the first time when the troika would consist of three developing countries and emerging economies.
How does the G20 work?
- The G20 has no permanent secretariat.
- The agenda and work are coordinated by representatives of the G20 countries, known as ‘Sherpas’, who work together with the finance ministers and governors of the central banks.
- On the advice of the G7 Finance Ministers, the G20 Finance Ministers and Central Bank Governors began holding meetings to discuss the response to the global financial crisis that occurred.
- Since 1999, an annual meeting of finance ministers has taken place.
Economic significance of G20
- G20 is the premier forum for international economic cooperation representing around-
- 85 per cent of the global GDP,
- 75 per cent of the global trade, and
- Two-thirds of the world population
Significance of the G20 logo
- The logo bears a lotus and the message of ‘Vasudhaiva Kutumbakam — One Earth, One Family, One Future’.
- The lotus flower symbolises our Puranic heritage, our aastha (belief) and boddhikta (intellectualism).
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From UPSC perspective, the following things are important :
Prelims level: COP 27
Mains level: Climate change related negotiations
The port city of Sharm El-Sheikh, Egypt is hosting the 27th edition of the UN-Conference of Parties (UN-COP).
Quick recap
- Last year, PM Modi, at the 26th edition of the COP in Glasgow, Scotland, committed to India becoming net-zero, or in effect carbon neutral, by 2070 along with Panchamrita
- Environment Minister will be leading the Indian delegation to COP-27 in Egypt.
- India is determined to press developed countries into making good their unfulfilled commitment to deliver $100 billion a year of climate finance by 2020 and every year thereafter till 2025.
Conference of Parties (CoP): A Backgrounder
- The CoP comes under the United Nations Climate Change Framework Convention (UNFCCC) which was formed in 1994.
- The UNFCCC was established to work towards “stabilisation of greenhouse gas concentrations in the atmosphere.”
- It laid out a list of responsibilities for the member states which included:
- Formulating measures to mitigate climate change
- Cooperating in preparing for adaptation to the impact of climate change
- Promoting education, training and public awareness related to climate change
- The UNFCCC has 198 parties including India, China and the USA. COP members have been meeting every year since 1995.
COP1 to COP25: Key takeaways
- COP1: The first conference was held in 1995 in Berlin.
- COP3: It was held in Kyoto, Japan, in 1997, the famous Kyoto Protocol (wef 2005) was adopted. It commits the member states to pursue limitation or reduction of greenhouse gas emissions.
- COP8: India hosted the eighth COP in 2002 in New Delhi. It laid out several measures including, ‘strengthening of technology transfer… in all relevant sectors, including energy, transport and R&D, and the strengthening of institutions for sustainable development.
- COP21: it is one of the most important that took place in 2015, in Paris, France. Here countries agreed to work together to ‘limit global warming to well below 2, preferably at 1.5 degrees Celsius, compared to pre-industrial levels.’
Significance of COP
- The event will see leaders from more than 190 countries, thousands of negotiators, researchers and citizens coming together to strengthen a global response to the threat of climate change.
- It is a pivotal movement for the world to come together and accelerate the climate action plan after several discussion.
Key agenda of the COP27
Ans. Loss and Damage Funding
- The term ‘Loss and Damage’ refers to the economic and non-economic impacts of climate change, including extreme events in countries that are particularly vulnerable to the adverse effects of climate change.
- Rich countries, historically responsible for the climate crisis, have bullied poorer nations to protect polluters from paying up for climate damages.
- The term was brought up as a demand in 1991 by the island country of Vanuatu, which was representing the Alliance of Small Island States (AOSIS).
Try this PYQ:
Q.With reference to the Agreement at the UNFCCC Meeting in Paris in 2015, which of the following statements is/are correct?
- The Agreement was signed by all the member countries of the UN and it will go into effect in 2017.
- The Agreement aims to limit the greenhouse gas emissions so that the rise in average global temperature by the end of this century does not exceed 2 degree Centigrade or even 5 degree Centigrade above pre-industrial levels.
- Developed countries acknowledged their historical responsibility in global warming and committed to donate dollar 1000 billion a year from 2020 to help developing countries to cope with climate change.
Select the correct answer using the code given below:
(a) 1 and 3 only
(b) 2 only
(c) 2 and 3 only
(d) 1, 2 and 3
Post your answers here.
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From UPSC perspective, the following things are important :
Prelims level: Grain Initiaitve, Black Sea
Mains level: Implications of Russia-Ukraine War
The UN Secretary-General Antonio Guterres has called for the renewal of the Black Sea Grain Initiative as Russia has agreed to resume its participation.
Black Sea Grain Initiative
- The Initiative eased Russia’s naval blockade and saw the reopening of three key Ukrainian ports.
- The agreement to create the sea corridor was negotiated by representatives from Ukraine, Russia, the UN and Turkey in July this year.
- The agreement created procedures to safely export grain from certain ports to attempt to address the 2022 food crisis.
- It provides a safe maritime humanitarian corridor for Ukrainian exports (particularly for food grains) from three of its key ports, namely, Chornomorsk, Odesa and Yuzhny/Pivdennyi in the Black Sea.
Outcomes of this deal
- Approximately 9.8 million tonnes of grains have been shipped so far since the deal was brokered.
- People hoarding the grain in the hope of selling it for a sizable profit owing to the supply crunch were now obligated to sell.
- The initiative has also been credited for having made a huge difference to the global cost of living crisis.
What would suspension of the deal mean?
- In a nutshell, the deal’s suspension was expected to re-introduce the price pressures on grain prices, especially that of wheat, with inventory being at historical lows.
- It could particularly impact countries in the Middle East and Africa such as Egypt, Turkey, Lebanon, Sudan and Yemen which have benefitted from the resumption and are particularly dependent on Russian and Ukrainian exports
About Black Sea
- The famed water body is bound by Ukraine to the north and northwest, Russia and Georgia to the east, Turkey to the south, and Bulgaria and Romania to the west.
- It links to the Sea of Marmara through the Bosphorus and then to the Aegean through the Dardanelles.
Significance of Black Sea for Russia
- Domination of the Black Sea region is a geostrategic imperative for Moscow.
- Black Sea has traditionally been Russia’s warm water gateway to Europe.
- For Russia, the Black Sea is both a stepping stone to the Mediterranean.
- It acts as a strategic buffer between NATO and itself.
- It showcases the Russian power in the Mediterranean and to secure the economic gateway to key markets in southern Europe.
- Russia has been making efforts to gain complete control over the Black Sea since the Crimean crisis of 2014.
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From UPSC perspective, the following things are important :
Prelims level: AIIB
Mains level: Not Much
The Asian Infrastructure Investment Bank (AIIB) is scheduled to lend $500 million to Pakistan in this month.
Asian Infrastructure Investment Bank (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.
- The 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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From UPSC perspective, the following things are important :
Prelims level: ASEAN
Mains level: Military coup in Myanmar
Foreign ministers from member countries of the Association of Southeast Asian Nations (ASEAN) are meeting to discuss an intensifying crisis in Myanmar, 18 months after agreeing a peace plan with its military rulers.
What is ASEAN?
- ASEAN is a political and economic union of 10 member states in Southeast Asia.
- It brings together ten Southeast Asian states – Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam – into one organisation.
- It was established on 8th August 1967 in Bangkok, Thailand with the signing of the Bangkok Declaration by the founding fathers of the countries of Indonesia, Malaysia, Thailand, Singapore, and the Philippines.
- The preceding organisation was the Association of Southeast Asia (ASA) comprising of Thailand, the Philippines, and Malaysia.
- Five other nations joined the ASEAN in subsequent years making the current membership to ten countries.
Why is the meeting happening?
- ASEAN’s peace effort is the only official diplomatic process in play.
- There has been a failure with the junta unwilling to implement a so-called “five-point consensus” that it agreed to with ASEAN in April 2021.
- The United Nations has backed the ASEAN plan, but with suspicion the generals are paying lip service and buying time to consolidate power and crush opponents before a 2023 election.
- For ASEAN to remain credible as a mediator, it may need to present a new strategy before the summit.
What is the consensus?
- Immediate end of hostilities
- All parties engaging in constructive dialogue
- Allowing an ASEAN envoy to mediate and meet all stakeholders, and
- ASEAN to provide humanitarian assistance.
- So far, the only success cited by ASEAN chair Cambodia has been allowing some humanitarian access, but that has been limited and conditional.
How has the Junta (Military govt. in Myanmar) responded?
- The military government has accused critical ASEAN members of meddling and warned them not to engage.
- It has accused its opponents of trying to sabotage the ASEAN plan and has justified military offensives as necessary to secure the country and enable political talks.
- Instead of advocating for the five-point ASEAN plan, the generals have instead been pushing a five-step roadmap of their own towards a new election, with few similarities.
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From UPSC perspective, the following things are important :
Prelims level: FATF
Mains level: Terror financing and money laundering
Global terror-financing watchdog FATF has announced Pakistan‘s removal from its grey list, saying the country has largely completed its action plans on anti-money laundering and financing of terrorism.
What is the FATF?
- FATF is an intergovernmental organization founded in 1989 on the initiative of the G7 to develop policies to combat money laundering.
- The FATF Secretariat is housed at the OECD headquarters in Paris.
- It holds three Plenary meetings in the course of each of its 12-month rotating presidencies.
- As of 2019, FATF consisted of 37 member jurisdictions.
India’s say in FATF
- India became an Observer at FATF in 2006. Since then, it had been working towards full-fledged membership.
- On June 25, 2010, India was taken in as the 34th country member of FATF.
EAG of FATF
- The EAG is a regional body comprising nine countries: India, Russia, China, Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, Uzbekistan and Belarus.
- It is an associate member of the FATF.
What is the role of FATF?
- The rise of the global economy and international trade has given rise to financial crimes such as money laundering.
- The FATF makes recommendations for combating financial crime, reviews members’ policies and procedures, and seeks to increase the acceptance of anti-money laundering regulations across the globe.
- Because money launderers and others alter their techniques to avoid apprehension, the FATF updates its recommendations every few years.
What is the Black List and the Grey List?
- Black List: The blacklist, now called the “Call for action” was the common shorthand description for the FATF list of “Non-Cooperative Countries or Territories” (NCCTs).
- Grey List: Countries that are considered safe haven for supporting terror funding and money laundering are put in the FATF grey list. This inclusion serves as a warning to the country that it may enter the blacklist.
Consequences of being in the FATF grey list:
- Economic sanctions from IMF, World Bank, ADB
- Problem in getting loans from IMF, World Bank, ADB and other countries
- Reduction in international trade
- International boycott
How had it impacted Pakistan economically?
- A country on the ‘grey list’ is not subject to sanctions.
- However, the ‘grey list’ signals to the international banking system that there could be enhanced transaction risks from doing business with the said country.
- In 2018, the Economist noted that there had been no direct economic implications when Pakistan was on the grey list from 2012 to 2015.
- Instead, Pakistan managed to obtain a $6 billion bailout package from IMF in 2013 and raise additional funding in global debt markets in 2015.
Pakistan claimed the politicization of FATF. Is that true?
- In the run-up to the February 2018 decision, the US had weaned Saudi Arabia away, leaving only China and Turkey supporting Pakistan.
- China eventually withdrew its objection.
- A few days later, India publicly congratulated China for its election as vice president of FATF, lending credence to the speculation that a deal had been reached behind closed doors.
How Pakistan managed to get out of the ‘inglorious’ list?
- Removal from the list mark the culmination of a four-year reform process that has required far-reaching changes to Pakistan’s financial system.
- It appears that, Pakistan has performed well in particular to laws governing money laundering and terrorism financing.
- Pakistan was given an action plan by FATF in 2018 to address strategic counter-terrorist financing-related deficiencies.
Conclusion
- This is not the first time for Pakistan to exit Grey List. It has been swinging on its position on terror financing.
- Pakistan first figured in a FATF statement after the plenary of February 2008.
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