Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Need for maritime cooperation
A week into India’s United Nations Security Council (UNSC) presidency, PM Modi has outlined a five-point framework for maritime security debate at UNSC.
Maritime Security
- Maritime security is one of the latest buzzwords of international relations.
- Major actors in maritime policy, ocean governance and international security have in the past decade started to include maritime security in their mandate or reframed their work in such terms.
- Core dimensions of maritime security involves the concept of blue economy, food security and the resilience of coastal populations.
- A secure maritime environment provides the precondition for managing marine resources.
Threats to maritime security
Need for an agenda
- In today’s economy, the oceans have an increased importance, allowing all countries to participate in the global marketplace.
- More than 80 percent of the world’s trade travels by water and forges a global maritime link.
- About half the world’s trade by value, and 90 percent of the general cargo, are transported in containers.
- Many countries have invested significant resources in maritime infrastructure, trade, energy supply chains, cargo movements and processes.
- China, undeniably a continental country, claims sovereignty over all of the South China Sea islands and their adjacent waters.
5-point agenda for enhancing maritime cooperation
[1] Removal of barriers to legitimate maritime trade:
- Global prosperity depends on the active flow of maritime trade. Any hindrance in maritime trade can threaten the global economy, PM said.
- Maritime trade has always been part of the civilizational ethos of India.
- PM termed this principle as ‘SAGAR’ Security and Growth for All in the Region.
[2] Resolution of maritime disputes peacefully in accordance with international law:
[3] Fight threats from natural disasters, non-state actors:
- PM said the Indian Navy has been patrolling to counter piracy in the Indian Ocean since 2008.
- It is enhancing the common maritime domain awareness of the region through our White Shipping Information Fusion Centre.
- India has provided support for hydrographic surveying and training of maritime security personnel to several countries.
[4] Conservation of marine resources:
- Our oceans directly impact our climate. Hence, it is very important that we keep our maritime environment free of pollutants like plastic waste and oil spills.
- We also need to take joint steps against over-fishing and marine poaching, PM said.
- He also emphasized the need for increased mutual cooperation in Ocean Science research.
[5] Promoting responsible maritime connectivity:
- PM said it is well understood that the creation of infrastructure is necessary to boost maritime trade.
- He advocated for appropriate global norms and standards to ensure that such infrastructure projects are carried out as per the fiscal sustainability and absorption capacity of the host countries.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: United Nations Security Council
Mains level: UNSC reforms
India will take over the Presidency of the UN Security Council on August 1 and is set to host signature events in three major areas of maritime security, peacekeeping, and counterterrorism during the month.
Key agendas on the table
During its Presidency, India will be organizing high-level signature events in three major areas:
- Maritime security
- Peacekeeping and
- Counterterrorism
About United Nations Security Council
- The UNSC is one of the six principal organs of the United Nations and is charged with the maintenance of international peace and security.
- Its powers include the establishment of peacekeeping operations, the establishment of international sanctions, and the authorization of military action through Security Council resolutions.
- It is the only UN body with the authority to issue binding resolutions to member states.
- The Security Council consists of fifteen members. Russia, the United Kingdom, France, China, and the United States—serve as the body’s five permanent members (P5).
- These permanent members can veto any substantive Security Council resolution, including those on the admission of new member states or candidates for Secretary-General.
- The Security Council also has 10 non-permanent members, elected on a regional basis to serve two-year terms. The body’s presidency rotates monthly among its members.
Issues with UNSC
(1) Non-representative
- UNSC in its current form is not representative of the developing world and global needs — with the primacy of policy being a political tool in hands of P5.
- By 1992, India, Brazil, Germany, and Japan (referred as G4) had put up their claims and logic for demanding inclusion as permanent members.
- India has been part of UN since its inception and has contributed maximum peacekeepers to UN so far, has a strong case.
- Brazil is the largest country in Latin America (unrepresented continent) and fifth-largest in the world. Japan and Germany are one of the largest financial donors to UN.
(2) Rivalry with G4
- The pitch for reforms of G4 was lowered by their regional rivals like Italy, Pakistan, Mexico and Egypt.
- They started formulation of another interest group, known to be “Uniting for Consensus” opposing G4 becoming permanent members with veto power.
(3) Rigid framework
- Reforms in the UNSC also require an amendment to the UN charter, in accordance with Article 108.
- This highlights that any reform of the Security Council not only requires the support of at least two-thirds of UN member states but also all the permanent members.
(4) Veto power
- The stance of P5 members to expansion has been varying as per their national interest, like most P5 members agree to Indian inclusion, except China.
- It becomes obvious that even if one member of P5 doesn’t agree to any reform, the UNSC cannot be reformed.
- There have been many proposals since its inception from totally abolishing veto power to selectively using it for vital national security issues.
(5) No consensus
- It has been seen in past that the UNSC, in some of the major global security issues, could not arrive at a consensus and interventions that happened by countries mainly from P5 without UNSC resolution.
- US entry in Iraq war or Warsaw Pact war in Afghanistan are few cases in point.
- The UNSC has thus become an organization, which can pass strong resolutions against weak countries, weak resolutions against strong countries and no resolution against P5 countries.
Suggested reforms
- Expansion: Besides the existing P5 members, an expansion of UNSC from five to 10 permanent members, with the addition of G4 and South Africa. This will provide equitable regional representation besides balancing the developing and developed world to meet the aspirations of humanity.
- Abolition of veto: The expansion of P5 without veto power makes very little impact on the problems, because of which the reforms are required. Ideally the veto power should be abolished.
Will UNSC reforms ever happen?
- Under the given charter, articles and structures, there is very little hope for UNSC reforms in near future.
- The lack of reforms can push the credibility crisis of UN to a degree that it becomes unsustainable for it to function, or incidences of side-lining the UN increase manifold.
- If the UNSC does not appoint new permanent members then its primacy may be challenged by some of the new emerging countries.
- There is also a possibility that if UN doesn’t reform itself, it may lose relevance and alternate global and regional groupings may assume greater importance.
- No P5 member is likely to compromise this power in its own national interest, which is generally prioritized before global interest, thus making the reformation process a mirage.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: UNESCAP
Mains level: Ease of Cross-Border Trade
As per the latest UN Global Survey on Digital and Sustainable Trade Facilitation, India’s rank moved up from 78.49% in 2019 to 90.32% in 2021.
About the Survey
- The Global Survey on Digital and Sustainable Trade Facilitation is conducted every two years by UNESCAP.
- The 2021 Survey includes an assessment of 58 trade facilitation measures covered by the WTO’s Trade Facilitation Agreement.
- The Survey is keenly awaited globally as it evidences whether or not the trade facilitation measures being taken have the desired impact and helps draw comparison amongst countries.
- A higher score for a country also helps businesses in their investment decisions.
Global performance
- Among developed countries, Australia, New Zealand, Netherlands, Japan, and Belgium have scored more than 93%.
- In South Asia, Bangladesh and Sri Lanka were behind India with a score of 64.5% and 60.2%, the survey showed.
India’s improvement
- India has scored 90.32% in United Nation’s Economic and Social Commission for Asia Pacific’s (UNESCAP) latest Global Survey on Digital and Sustainable Trade Facilitation.
- The Survey hails this as a remarkable jump from 78.49% in 2019.
India’s significant improvement in the scores on all 5 key indicators, as follows:
- Transparency:100% in 2021 (from 93.33% in 2019)
- Formalities: 95.83% in 2021 (from 87.5% in 2019)
- Institutional Arrangement and Cooperation: 88.89% in 2021 (from 66.67% in 2019)
- Paperless Trade: 96.3% in 2021 (from 81.48% in 2019)
- Cross-Border Paperless Trade: 66.67% in 2021 (from 55.56% in 2019)
- The Survey notes that India is the best-performing country when compared to the South and southwest Asia region (63.12%) and the Asia Pacific region (65.85%).
- The overall score of India has also been found to be greater than many OECD countries including France, UK, Canada, Norway, Finland etc. and the overall score is greater than the average score of EU.
- India has achieved a 100% score for the Transparency index and 66% in the “Women in trade” component.
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From UPSC perspective, the following things are important :
Prelims level: CRC treaty
Mains level: Child rights abuse
The US has added Pakistan and 14 other countries to a Child Soldier Recruiter List that identifies foreign governments having government-supported armed groups that recruit or use child soldiers.
Who is a child soldier?
- The recruitment or use of children below the age of 15 as soldiers is prohibited by the UN Convention on the Rights of the Child (CRC).
- Currently, 193 countries have ratified the CRC.
- The CRC requires state parties to “take all feasible measures” to ensure that children under 18 are not engaged in direct hostilities.
- It further prohibits the state parties from recruiting children under 15 into the armed forces.
- It is considered a war crime under the Rome Statute of the International Criminal Court.
- In addition, the Optional Protocol to the CRC further prohibits kids under the age 18 from being compulsorily recruited into state or non-state armed forces or directly engaging in hostilities.
- The United States is a party to the Optional Protocol.
What is US law?
- The US adopted the Child Soldiers Prevention Act (CSPA) in 2008.
- The CSPA prohibits the US government from providing military assistance, including money, military education and training, or direct sales of military equipment, to alleged countries.
What is prohibited for countries on the list?
The following types of security assistance are prohibited for countries that are on the list:
- Licenses for direct commercial sales of military equipment
- Foreign military financing for the purchase of defence articles and services, as well as design and construction services
- International military education and training
- Excess defence articles
- Peacekeeping operations
Criticism of the treaty
- International treaties like CRS are valuable and necessary tools to establish international norms as they raise awareness regarding human rights abuses.
- However, these treaties are limited in scope and nature, and they tend to be idealistic rather than practicable.
- The UN’s mechanisms only bind state parties that ratify the treaties.
- It, therefore, has no authority over countries that are not parties to the convention or are non-state entities, such as rebel militias recruiting child soldiers.
- While the UN views its treaties and conventions as binding on state parties, it has no police power mechanism to enforce its decisions.
- Therefore, the CRC and its Optional Protocol are limited by the signatories’ willingness to comply. Somalia, for example, is a signatory but it hasn’t ratified the convention.
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From UPSC perspective, the following things are important :
Prelims level: OPEC, OPEC Plus
Mains level: Global crude oil pricing mechanisms
OPEC+ has failed to reach a deal on oil output policy because the United Arab Emirates blocked some aspects of the pact.
About OPEC
- OPEC is a permanent, intergovernmental organization, created at the Baghdad Conference in 1960, by Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela.
- It aims to manage the supply of oil in an effort to set the price of oil in the world market, in order to avoid fluctuations that might affect the economies of both producing and purchasing countries.
- It is headquartered in Vienna, Austria.
- OPEC membership is open to any country that is a substantial exporter of oil and which shares the ideals of the organization.
- Today OPEC is a cartel that includes 14 nations, predominantly from the middle east whose sole responsibility is to control prices and moderate supply.
What is OPEC+?
- The non-OPEC countries which export crude oil along with the 14 OPECs are termed as OPEC plus countries.
- OPEC plus countries include Azerbaijan, Bahrain, Brunei, Kazakhstan, Malaysia, Mexico, Oman, Russia, South Sudan, and Sudan.
- Saudi and Russia, both have been at the heart of a three-year alliance of oil producers known as OPEC Plus — which now includes 11 OPEC members and 10 non-OPEC nations — that aims to shore up oil prices with production cuts.
Must read:
[Burning Issue] Oil Prices and OPEC+
Concerns for India
- Rising oil prices are posing fiscal challenges for India, where heavily-taxed retail fuel prices have touched record highs, threatening the demand-driven recovery.
- India imports about 84% of its oil and relies on West Asian supplies to meet over three-fifths of its demand.
- As one of the largest crude-consuming countries, India is concerned that such actions by producing countries have the potential to undermine consumption-led recovery.
- This would hurt consumers, especially in our price-sensitive market.
Answer this PYQ in the comment box:
Q.The term ‘West Texas Intermediate’, sometimes found in news, refers to a grade of (CSP 2020):
(a) Crude oil
(b) Bullion
(c) Rare earth elements
(d) Uranium
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From UPSC perspective, the following things are important :
Prelims level: LEAF Coalition
Mains level: Not Much
At the recently concluded Leaders’ Summit on Climate in April 2021, the Lowering Emissions by Accelerating Forest Finance (LEAF) Coalition was announced.
LEAF Coalition
- LEAF Coalition is a collective of the US, UK and Norway governments.
- It is a public-private effort, thus supported by transnational corporations (TNCs) like Unilever plc, Amazon, Nestle, Airbnb etc.
- It came up with a $1 billion fund plan that shall be offered to countries committed to arresting the decline of their tropical forests by 2030.
- The LEAF coalition initiative is a step towards concretizing the aims and objectives of the Reducing Emissions from Deforestation and Forest Degradation (REDD+) mechanism.
How does this coalition work?
- The LEAF Coalition can help reverse the trend by providing unprecedented financial support to tropical forest governments implementing forest protection, contributing to green and resilient growth through sustainable investments.
- It empowers tropical and subtropical forest countries to move more rapidly towards ending deforestation while supporting them in achieving their Nationally Determined Contributions (NDCs) under the Paris Agreement.
- Reductions in emissions are made across entire countries or large states and provinces (“jurisdictions”) through programs that involve all key stakeholders, including Indigenous peoples and local communities.
Why is it significant?
- Financial impetus is crucial as it incentivizes developing countries to capture extensive deforestation and provide livelihood opportunities to forest-dependent populations.
- The initiative comes at a crucial time when the tropics have lost close to 12.2 million hectares (mha) of tree cover year last year according to global estimates released by Global Forest Watch.
- Most of these lost forests were located in the developing countries of Latin America, Africa and South Asia.
- India’s estimated loss in 2020 stands at 20.8-kilo hectares due to forest fires
What lies next?
- Implementation of the LEAF Coalition will help pump in fresh rigour among developing countries like India, that are reluctant to recognize the contributions of their forest-dwelling populations in mitigating climate change.
- With the deadline for proposal submission fast approaching, India needs to act swiftly on a revised strategy.
- Although India has pledged to carry out its REDD+ commitments, it is impossible to do so without seeking knowledge from its forest-dwelling population.
Answer this PYQ in the comment box:
With reference to ‘Forest Carbon Partnership Facility’, which of the following statements is/ are correct? (CSP 2013)
- It is a global partnership of governments, businesses, civil society and indigenous peoples.
- It provides financial aid to universities, individual scientists and institutions involved in scientific forestry research to develop eco-friendly and climate adaptation technologies for sustainable forest management.
- It assists the countries in their ‘REDD+ (Reducing Emissions from Deforestation and Forest Degradation+)’ efforts by providing them with financial and technical assistance.
Select the correct answer using the code given below:
(a) 1 only (b) 2 and 3 only (c) 1 and 3 only (d) 1, 2 and 3
Back2Basics: REDD+
- REDD+ is a mechanism developed by Parties to the United Nations Framework Convention on Climate Change (UNFCCC).
- It creates a financial value for the carbon stored in forests by offering incentives for developing countries to reduce emissions from forested lands and invest in low-carbon paths to sustainable development.
- Developing countries would receive results-based payments for results-based actions.
- REDD+ goes beyond simply deforestation and forest degradation and includes the role of conservation, sustainable management of forests and enhancement of forest carbon stocks.
- It aims to create incentives for communities so that they stop forest degrading practices.
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From UPSC perspective, the following things are important :
Prelims level: Global Minimum Tax, BEPS
Mains level: Global Minimum Tax Debate
India has joining the OECD-G20 framework for a global minimum tax.
Must read
What is Global Minimum Corporate Tax?
What is this tax deal?
- The proposed solution consists of two components:
- Pillar One is about the reallocation of an additional share of profit to the market jurisdictions and
- Pillar Two consists of minimum tax and subject to tax rules
- Some significant issues including share of profit allocation and scope of subject to tax rules, remain open and need to be addressed.
- Further, the technical details of the proposal will be worked out in the coming months and a consensus agreement is expected by October.
Why did India join?
- The principles underlying the solution vindicates India’s stand for a greater share of profits for the markets, consideration of demand-side factors in profit allocation.
- There is a need to seriously address the issue of cross border profit shifting and need for the subject to tax rules to stop treaty shopping.
- India is in favour of a consensus solution that is simple to implement and simple to comply with.
- At the same time, the solution should result in the allocation of meaningful and sustainable revenue to market jurisdictions, particularly for developing and emerging economies.
What is Base Erosion and Profit Shifting (BEPS)?
- BEPS refers to corporate tax planning strategies used by multinationals to “shift” profits from higher-tax jurisdictions to lower-tax jurisdictions.
- It thus “erodes” the “tax base” of the higher-tax jurisdictions.
- Corporate tax havens offer BEPS tools to “shift” profits to the haven, and additional BEPS tools to avoid paying taxes within the haven.
- It is alleged that BEPS is associated mostly with American technology and life science multinationals.
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From UPSC perspective, the following things are important :
Prelims level: Global Cybersecurity Index
Mains level: Cyber security challenges for India
India has made it to the top 10 in Global Cybersecurity Index (GCI) 2020 by ITU, moving up 37 places to rank as the tenth best country in the world on key cybersafety parameters.
Global Cybersecurity Index
- GCI assessment is done on the basis of performance on five parameters of cybersecurity including legal measures, technical measures, organizational measures, capacity development, and cooperation.
- The performance is then aggregated into an overall score.
- For each of the five aspects, all the countries’ performance and commitment are assessed through a question-based online survey, which further allowed for the collection of the supporting evidence.
India’s progress
- As per the ranking, India has moved up by 37 places to rank as the tenth best country in the world.
- The US topped the chart, followed by the UK and Saudi Arabia tied on the second position, while Estonia was ranked third in the index.
- India has also secured the fourth position in the Asia Pacific region, underlining its commitment to cybersecurity.
Its significance
- The affirmation by the UN body of India’s efforts on cybersecurity comes just ahead of the sixth anniversary of Digital India on July 1.
- India is emerging as a global IT superpower, asserting its digital sovereignty with firm measures to safeguard data privacy and online rights of citizens.
Back2Basics: International Telecommunication Union
- ITU is the United Nations specialized agency for information and communication technologies – ICTs.
- Founded in 1865 to facilitate international connectivity in communications networks. It is Headquartered in Geneva, Switzerland.
- It allocates global radio spectrum and satellite orbits, develops the technical standards that ensure networks and technologies seamlessly interconnect, and strives to improve access to ICTs to underserved communities worldwide.
- Recently, India got elected as a member of ITU Council for another 4-year term – from 2019 to 2022. India has remained a regular member since 1952.
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From UPSC perspective, the following things are important :
Prelims level: Chicago Convention of 1944
Mains level: NA
A private commercial flight was forced to make an emergency landing in Minsk by a MiG-29 fighter jet of Belarus. The incident received considerable global attention.
How justified was Belarus in taking such a decision?
- The answer lies at the junction of Belarus’s domestic laws as a sovereign country and international laws governing the action that states can legitimately take to deal with threats to security, real or perceived.
- The issue of the use of military aircraft to neutralize potential threats posed by civilian aircraft acquired a different kind of urgency in the aftermath of terrorist attacks in the US on September 11, 2001.
- Generally speaking, international law grants sovereignty to nations over their airspace as it does in territorial waters.
The Chicago Convention of 1944
- The Convention on International Civil Aviation, better known as the Chicago Convention of 1944, to which Belarus is a signatory state, prohibits any unlawful intervention against a civilian aircraft.
- At the same time, it has various provisions under Article 9 which permit a sovereign state the right to impose restrictions.
- This includes enforced landings at a designated airport in its territory, in “exceptional circumstances or during a period of emergency, or in the interest of public safety”.
- Once a flight has landed, Article 16 provides the host country the right to board/search the aircraft.
- This is probably the clause that provided cover for the local authorities to board Mr. Morales’s aircraft in Austria in 2013.
- But the Chicago Convention applies only to civilian aircraft of the contracting parties.
Other such laws
- International law might also have to be examined in light of the International Air Services Transit Agreement (IASTA), also concluded in Chicago in 1944.
- According to this agreement, contracting states grant to one another the freedom of air transit in respect of scheduled international air services, that is, the privilege to fly across territories without landing.
- Belarus is not a signatory of IASTA.
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From UPSC perspective, the following things are important :
Prelims level: NATO
Mains level: Rise of China in the global agenda
In a communiqué issued following the June 14 summit of its member-states in Brussels, the North Atlantic Treaty Organization (NATO), for the first time, explicitly described China as a security risk.
Try answering this question:
Q.NATO has been an ideal vehicle for power-projection around the world by the US. Critically comment.
China as a global threat
- China has never figured in NATO summit declarations before, except for a minor reference in 2019 to the “opportunities and challenges” it presented.
- But China’s stated ambitions and assertive behaviour present systemic challenges to the rules-based international order and to areas relevant to NATO security.
- China has reacted sharply. It has urged NATO to view China’s development rationally, stop exaggerating various forms of China threat theory.
- The other two threats identified by the NATO communiqué are on predictable lines: Russia and terrorism.
Focus over two nations
- There is a significant difference, however, between a strategic focus on countering Russia and casting China as a “systemic challenge”.
- This goes back to NATO’s founding mandate and subsequent history.
What is NATO, btw?
- NATO, the planet’s largest — and largest-ever — military alliance, was formed in 1949 by 12 Allied powers to counter the massive Soviet armies stationed in Eastern and Central Europe after Second World War.
- According to Paul-Henri Spaak, the second Secretary-General of NATO, it was, ironically enough, Joseph Stalin who is the true father of NATO.
- It was Stalin’s overreach — especially with the Berlin blockade of 1948-49 and the orchestrated coup in Czechoslovakia in 1948 — that convinced a diverse set of war-ravaged European nations to come together under an American security blanket.
- The collective defence principle enshrined in NATO’s Article V states that “an attack against one ally is considered as an attack against all allies”.
- The formation of NATO, and its Soviet counterpart, the Warsaw Pact, in 1955, inaugurated the Cold War era.
NATO and its relevance now
- NATO was completely successful in its mission of protecting the “Euro-Atlantic area” from Soviet expansion and preventing war between the two superpowers.
- When the Soviet Union collapsed in 1991, questions were raised about NATO’s relevance and future.
- Since the Non-aligned Movement (NAM) became irrelevant when the Communist bloc disappeared, one cannot justify the continuation of a military alliance formed to protect Europe from Communist expansion.
Post-Cold War era mandate of NATO
- Its bureaucracy succeeded in refashioning NATO for the post-Cold war era.
- The refashioning rested on a paradigm shift — from collective defence, which implied a known adversary, to collective security, which is open-ended, and might require action against any number of threats.
- The threat included unknown ones and non-state actors.
- In other words, the elimination of one threat to Europe — communist Russia — did not necessarily mean that security risks to Europe have vanished.
Why dismantle a beneficial arrangement
- Another factor in the persistence of NATO is that, like all successful alliances, it has been a mutually beneficial arrangement.
- For Europe, it was an attractive bargain where, in exchange for a marginal loss in autonomy, it enjoyed absolute security at a cheap price.
- Not having to spend massively on defence allowed Europe to focus on building powerful economies and invest its surplus in a strong welfare state.
- NATO also offered the added bonus of keeping Germany down — historically a major factor for peace and stability in the region.
An effective American weapon
- For the US, NATO has been an ideal vehicle for power projection around the world — in places beyond the Euro-Atlantic area, such as Iraq, Afghanistan and Libya.
- It views NATO as a tool to ensure the primacy of American interests across the globe.
- Unsurprisingly, NATO’s post-Cold War role has evolved in tandem with U.S. foreign policy priorities.
- The NATO doctrine of “enlargement”, which Russia calls “expansion”, is essentially about extending the American military footprint by bringing in new members.
- That is how NATO’s membership today stands at 30, having added 14 members between 1999 and 2020.
The final truth
- The Biden administration wants to mobilize NATO member-states behind its larger objective of containing China.
- NATO’s European member states may view China as an economic rival and adversary, but they are unconvinced by the American line that it is an outright security threat.
- This line also, in a way, points to the underlying logic behind NATO’s persistence in the post-Soviet world.
- Unlike the Soviet Union, China offers no alternative vision of society that could make Western capitalism insecure.
- In fact, its own economy is already deeply integrated into Western markets. China, nonetheless, is perceived as posing a ‘threat’.
- It remains to be seen how far an ageing Europe would be willing to commit itself to a strategic path that prefers confrontation to collaboration like the US.
Also read:
India & NATO
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From UPSC perspective, the following things are important :
Prelims level: World Competitiveness Ranking
Mains level: Not Much
India’s position has remained unchanged at 43 for the third year in a row in the World Competitiveness Ranking by Switzerland-based Institute for Management Development (IMD).
World Competitiveness Ranking
- The IMD World Competitiveness Ranking ranks 64 economies and assesses the extent to which a country promotes the prosperity of its people by measuring economic well-being through hard data and survey responses from executives.
- The ranking examines four factors — economic performance, government efficiency, business efficiency, and infrastructure.
- The top-performing economies are characterized by varying degrees of investment in innovation, diversified economic activities, and supportive public policy.
India’s performance
- Among the BRICS nations, India is ranked second after China (16), followed by Russia (45th), Brazil (57th) and South Africa (62th).
- Among the four indices used, India’s ranking in government efficiency increased to 46 from 50 a year ago, while its ranking in other parameters such as economic performance (37), business efficiency (32) and infrastructure (49) remained the same.
- India has maintained its position for the past three years but this year, it had significant improvements in government efficiency.
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From UPSC perspective, the following things are important :
Prelims level: G7
Mains level: Open Societies Pact
India has signed off on a joint statement by G-7 and guest countries on “open societies” that reaffirm and encourage the values of “freedom of expression, both online and offline, as a freedom that safeguards democracy and helps people live free from fear and oppression”.
What is the Open Societies Pact?
- The ‘Open Societies Statement’ was adopted at the end of an outreach session titled ‘Building Back Together—Open Societies and Economies’, where PM Modi was invited as a lead speaker.
- The joint statement was signed by the G-7 countries, and India, South Korea, Australia and South Africa, with host British Prime Minister Boris Johnson calling them “Democracies 11”.
- It refers to “politically motivated internet shutdowns” as one of the threats to freedom and democracy.
- It affirms “human rights for all, both online and offline, as set out in the Universal Declaration of Human Rights and other HR instruments, and opposition to any form of discrimination, so that everyone can participate fully and equally in society”.
Why needs such a pact?
- Democracy and freedom were a part of India’s civilizational ethos”.
- However, the common concern is that open societies are particularly vulnerable to disinformation and cyber-attacks.
Impact of the pact
- While the statement is directed at China and Russia, India has been under scrutiny over Internet curbs in Jammu and Kashmir.
- Moreover, the center is locked in a face-off over its new IT rules with tech giants such as Twitter, which described a police search at its offices in India last month as a “potential threat to freedom of expression”.
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From UPSC perspective, the following things are important :
Prelims level: Rare earth elements
Mains level: US-China Rivalry
Beijing’s dominance in rare earth minerals, the key to the future of manufacturing, is a cause for concern for the West.
Answer this question from CSP 2011 in the comment box:
Q.What is the difference between a CFL and an LED lamp?
- To produce light, a CFL uses mercury vapor and phosphor while an LED lamp uses semi-conductor material.
2. The average life span of a CFL is much longer than that of an LED lamp
3. A CFL is less energy-efficient as compared to an LED lamp.
Which of the statements given above is/are correct?
(a) Only 1
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2 and 3
What are Rare Earth Metals?
- The rare earth elements (REE) are a set of seventeen metallic elements. These include the fifteen lanthanides on the periodic table plus scandium and yttrium.
- Rare earth elements are an essential part of many high-tech devices.
- They have a wide range of applications, especially high-tech consumer products, such as cellular telephones, computer hard drives, electric and hybrid vehicles, and flat-screen monitors and televisions.
- Significant defense applications include electronic displays, guidance systems, lasers, and radar and sonar systems.
- Rare earth minerals, with names like neodymium, praseodymium, and dysprosium, are crucial to the manufacture of magnets used in industries of the future, such as wind turbines and electric cars.
Curbing dependence on China
- At a time of frequent geopolitical friction among those three powers, Washington and Brussels want to avoid this scenario.
- They are investing in the market for 17 minerals with unique properties that today are largely extracted and refined in China.
- The expected exponential growth in demand for minerals that are linked to clean energy is putting more pressure on US and Europe to take a closer look.
- Amid the transition to green energy, in which rare earth minerals are sure to play a role, China’s market dominance is enough to sound an alarm in western capitals.
Why such a move?
- In 2019, the U.S. imported 80% of its rare earth minerals from China.
- The EU gets 98% of its supply from China.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Atlantic Charter
US President Joe Biden and British Prime Minister Boris Johnson seeks to sign a new Atlantic Charter.
What is Atlantic Charter?
- The Atlantic Charter was a statement issued on 14 August 1941 that set out American and British goals for the world after the end of World War II.
- The charter’s adherents signed the Declaration by United Nations on 1 January 1942, which was the basis for the modern United Nations.
- The charter inspired several other international agreements and events that followed the end of the war.
- The dismantling of the British Empire, the formation of NATO, and the General Agreement on Tariffs and Trade (GATT) all derived from the Atlantic Charter.
Why sign new charter?
- At their meeting, the two leaders plan to sign what they’re calling a new Atlantic Charter, pledging to “defend the principles, values, and institutions of democracy and open societies.”
- US hopes to reassure European allies that the US had shed the transactional tendencies of Donald Trump’s term and is a reliable partner again.
- The US staunchly opposed the Brexit movement, the British exodus from the European Union that Mr. Johnson championed, and has expressed great concern with the future of Northern Ireland.
- Biden once called the British leader a “physical and emotional clone” of Trump.
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From UPSC perspective, the following things are important :
Prelims level: QS World University Ranking
Mains level: State of higher education in India
The Prime Minister has congratulated IIT Bombay, IIT Delhi and IISc Bengaluru for top-200 positions in QS World University Rankings 2022.
QS World University Rankings
- QS World University Rankings is an annual publication of university rankings by Quacquarelli Symonds (QS).
- It comprises the global overall and subject rankings (which name the world’s top universities for the study of 51 different subjects and five composite faculty areas).
- It announces ranking for five independent regional tables (Asia, Latin America, Emerging Europe and Central Asia, the Arab Region, and BRICS).
Highlights of the 2022 Report
- IIT Bombay ranks joint-177 in the world, having fallen five places over the past year.
- IIT Delhi has become India’s second-best university, having risen from 193 ranks in last year’s ranking to 185 in the latest ranking. It has overtaken IISc Bangalore, which ranks joint-186.
- The Indian Institute of Science (IISc), Bengaluru, has been ranked the “world’s top research university.
- The top three institutions globally are — Massachusetts Institute of Technology (MIT), University of Oxford, and Stanford University ranked at number one, two, and three respectively.
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From UPSC perspective, the following things are important :
Prelims level: BRICS
Mains level: Future agenda of BRICS
As India is gearing up to host this year’s BRICS summit, the grouping is facing fresh challenges, from disputes among member countries to tackling COVID-triggered crises and opportunities.
What is BRICS?
- To be clear, BRICS was not invented by any of its members.
- In 2001, Goldman Sachs’ Jim O’Neill authored a paper called “Building Better Global Economic BRICs”, pointing out that future GDP growth in the world would come from China, India, Russia and Brazil.
- Significantly, the paper didn’t recommend a separate grouping for them, but made the case that the G-7 grouping, made up of the world’s most industrialized, and essentially Western countries, should include them.
- O’Neill also suggested that the G-7 group needed revamping after the introduction of a common currency for Europe, the euro, in 1999.
- In 2003, Goldman Sachs wrote another paper, “Dreaming with BRICs: Path to 2050”, predicting that the global map would significantly change due to these four emerging economies.
- In 2006, leaders of the BRIC countries met on the margins of a G-8 (now called G-7) summit in St. Petersburg, Russia, and BRIC was formalized that year.
Issues in its consolidation
- Common ground for the members was built by ensuring that no bilateral issues were brought up, but the contradictions remained.
- Many economists soon grew tired of “emerging” economies that didn’t reach the goals they had predicted.
- Others saw India’s closer ties with the US after the civil nuclear deal as a sign its bonds with BRICS would weaken.
- Meanwhile, Russia, which had hoped to bolster its own global influence through the group, had been cast out of the G-7 order altogether after its actions in Crimea in 2014.
- China, under Xi Jinping, grew increasingly aggressive, and impatient about the other underperforming economies in the group, as it became the U.S.’s main challenger on the global stage.
Long-term prospects
- China’s decision to launch the trillion-dollar Belt and Road Initiative in 2017 was opposed by India, and even Russia did not join the BRI plan, although it has considerable infrastructure projects with China.
- South Africa’s debt-laden economy and the negative current account have led some to predict an economic collapse in the next decade.
- Brazil’s poor handling during the Covid-19 crisis has ranked it amongst the world’s worst-affected countries, and its recovery is expected to be delayed.
- India’s economic slowdown was a concern even before Covid-19 hit, and government policies like “Aatmanirbhar” were seen as a plan to turn inward.
Issues with BRICS nations
- Concerns about aggressions from Russia in Ukraine and Eastern Europe and China in the South China Sea, the border with India and internally in Hongkong and Xinjiang are clear visible.
- There is creeping authoritarianism in democracies like Brazil and India have made investors question long-term prospects of the group.
- In the market, BRICS has been mocked for being “broken”, while others have suggested it should be expanded to include more emerging economies like Indonesia, Mexico and Turkey, called the “Next-11”.
A roadmap to progress
- BRICS is an idea that has endured two decades, an idea its members remain committed to, and not one has skipped the annual summits held since 2009.
- Along the way, BRICS has created the New Development Bank (NDB) set up with an initial capital of $100 billion.
- There is a BRICS Contingent Reserve Arrangement fund to deal with global liquidity crunches, and a BRICS payment system proposing to be an alternative to the SWIFT payment system.
Reforming the multilaterals
- The BRICS ministerial meeting held this week sent several important signals to that end, issuing two outcome documents.
- It included the first “standalone” joint statement on reforming multilateral institutions, including the UN and the UNSC, IMF and World Bank and the WTO.
- It remains to be seen how far countries like China and Russia, which are already “inside the tent” at the UNSC, will go in advocating for the other BRICS members.
- Another important agreement was the BRICS ministerial decision to support negotiations at the WTO for the waiver of trade-related intellectual property rights (TRIPs) for vaccines and medicines to tackle the Coronavirus.
Way forward
- What appears clear is in the post-Covid world, priorities for all economies will change, and offer up a churning in the world of the kind seen two decades ago, when the idea of a grouping of emerging economies was first floated.
- For BRICS, the next few months could crystallize that idea, or sink it further, leaving others to wonder whether the “Rise of the Rest” as it was once called, is an idea whose time will ever come at all.
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From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Chinese encroachment of Lankan Sovereignty
Sri Lanka recently passed the controversial Colombo Port City Economic Commission Bill, which governs the China-backed Colombo Port City project worth $1.4 billion, amid wide opposition to the creation of a “Chinese enclave” in the island nation.
Colombo Port City Project
- The Colombo Port City has grabbed headlines in Sri Lanka in recent months even as the relentless third wave of the COVID-19 pandemic sweeps through the country.
- Almost an artificial island, the territory coming up on 2.69 square kilometers of land reclaimed from Colombo’s seafront has stirred controversy since its inception.
- Those backing it see in that patch of land their dream of an international financial hub — a “Singapore or Dubai” in the Indian Ocean.
When was it launched?
- The project was launched in September 2014 by Chinese President Xi Jinping during a visit to the island nation under the Mahinda Rajapaksa administration’s second term.
- After President Mahinda Rajapaksa was ousted in January 2015, the successor “national unity” government of Maithripala Sirisena and Ranil Wickremesinghe went ahead with the project after briefly halting it.
- On returning to power in November 2019, the Rajapaksas vowed to expedite the project. The Sri Lankan government says the project will bring in around 83,000 jobs and $15 billion initially.
Issues with the project
- But skeptics claim that it could well become a “Chinese colony”, with the Bill, which is now an Act.
- The law provides China substantial “immunity” from Sri Lankan laws, besides huge tax exemptions and other incentives for investors.
What is the extent of China’s involvement?
Effectively, China has substantial control over two key infrastructure projects in Sri Lanka for a century.
- The port city project is financed chiefly through Chinese investment amounting to $1.4 billion.
- In return, the company will receive 116 hectares (of the total 269 hectares) on a 99-year lease.
- The city separates from but located adjacent to the Colombo Port, the country’s main harbor — is the third major port-related infrastructure project where China has a significant stake.
- China Merchants Port Holdings has an 85% stake in the Colombo International Container Terminal under a 35-year ‘Build Operate and Transfer’ agreement with the Sri Lanka Port Authority.
- In 2017, the Sirisena-Wickremesinghe administration, unable to repay the Chinese loan with which it was saddled by the previous government, handed over the Hambantota Port to China on a 99-year lease.
Concerns from within Sri Lanka
- Since its launch, the Colombo Port City project has faced opposition from environmentalists and fisherfolk, who feared that the project would affect marine life and livelihoods.
- However, in the absence of wider political and societal support, their resistance did not dent successive governments’ resolve to pursue the project.
- The more recent opposition was specific to the Colombo Port City Economic Commission Bill.
- The resistance came from Opposition parties and civil society groups, including many who do not oppose the project per se, but rather its governance by “an all-powerful commission answerable to no one”.
- Significantly, a section of Buddhist monks, wielding much influence in Sri Lankan politics and the Sinhala society, also opposed the Bill and said that it eroded Sri Lanka’s sovereignty.
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From UPSC perspective, the following things are important :
Prelims level: G7, Global Minimum Tax
Mains level: Global Minimum Tax negotiaitions
Finance Ministers from the Group of Seven (G7) rich nations have reached a landmark accord setting a global minimum corporate tax rate, an agreement that could form the basis of a worldwide deal.
Why a global minimum?
- Major economies are aiming to discourage multinationals 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, allowing companies to avoid paying higher taxes in their traditional home countries.
- With its proposal for a minimum 15% tax rate, the Biden administration hopes to reduce such tax base erosion without putting American firms at a financial disadvantage, allowing competition on innovation, infrastructure and other attributes.
Where are the talks at?
- The G7 talks feed into a much broader, existing effort.
- The OECD has been coordinating tax negotiations among 140 countries for years on rules for taxing cross-border digital services and curbing tax base erosion, including a global corporate minimum tax.
- The OECD and G20 countries aim to reach a consensus on both by mid-year, but the talks on a global corporate minimum are technically simpler and less contentious.
- If a broad consensus is reached, it will be extremely hard for any low-tax country to try and block an accord.
How would a global minimum tax work?
- The global minimum tax rate would apply to overseas profits.
- Governments could still set whatever local corporate tax rate they want, but if companies pay lower rates in a particular country, their home governments could “top-up” their taxes to the minimum rate.
- This would eliminate the advantage of shifting profits.
What about that minimum rate?
- Talks are focusing on the U.S. proposal of a minimum global corporation tax rate of 15% – above the level in countries such as Ireland but below the lowest G7 level.
- Any final agreement could have major repercussions for low-tax countries and tax havens.
- The Irish economy has boomed with the influx of billions of dollars in investment from multinationals.
- Dublin, which has resisted EU attempts to harmonize its tax rules, is unlikely to accept a higher minimum rate without a fight.
- However, the battle for low-tax countries is less likely to be about scuppering the overall talks and more about building support for a minimum rate as close as possible to its 12.5% or seeking certain exemptions.
Back2Basics: G7
- The G7 or the Group of Seven is a group of the seven most advanced economies as per the International Monetary Fund (IMF).
- The seven countries are Canada, USA, UK, France, Germany, Japan and Italy. The EU is also represented in the G7.
- These countries, with the seven largest IMF-described advanced economies in the world, represent 58% of the global net wealth ($317 trillion).
- The G7 countries also represent more than 46% of the global gross domestic product (GDP) based on nominal values, and more than 32% of the global GDP based on purchasing power parity.
- The requirements to be a member of the G7 are a high net national wealth and a high HDI (Human Development Index).
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From UPSC perspective, the following things are important :
Prelims level: SCO
Mains level: India-SCO cooperation
The Union Cabinet has accorded an ex post facto approval for signing and ratifying an agreement on cooperation in the field of mass media between all member states of the Shanghai Cooperation Organization (SCO).
Highlights of the Agreement
- The agreement, which was signed in June 2019, would provide an opportunity for the member states to share best practices and new innovations in the field of mass media.
- It aims to promote equal and mutually beneficial cooperation among associations in the field of mass media.
- The main areas of cooperation in the agreement are the creation of favorable conditions for the wide and mutual distribution of information through mass media in order to further deepen the knowledge about the lives of the peoples of their states.
- It will assist in broadcasting television and radio programmer and those, distributed legally within the territory of the state of the other side.
What is SCO?
- After the collapse of the Soviet Union in 1991, the then security and economic architecture in the Eurasian region dissolved and new structures had to come up.
- The original Shanghai Five were China, Kazakhstan, Kyrgyzstan, Russia and Tajikistan.
- The SCO was formed in 2001, with Uzbekistan included. It expanded in 2017 to include India and Pakistan.
- Since its formation, the SCO has focused on regional non-traditional security, with counter-terrorism as a priority.
- The fight against the “three evils” of terrorism, separatism and extremism has become its mantra. Today, areas of cooperation include themes such as economics and culture.
Try this PYQ now:
Q. In the context of the affairs of which of the following is the phrase “Special Safeguard Mechanisms” mentioned in the news frequently?
(a) United Nations Environment Programme
(b) World Trade Organization
(c) ASEAN- India Free Trade Agreement
(d) G-20 Summits
India’s entry to the SCO
- India and Pakistan both were observer countries.
- While Central Asian countries and China were not in favor of expansion initially, the main supporter — of India’s entry in particular — was Russia.
- A widely held view is that Russia’s growing unease about an increasingly powerful China prompted it to push for its expansion.
- From 2009 onwards, Russia officially supported India’s ambition to join the SCO. China then asked for its all-weather friend Pakistan’s entry.
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From UPSC perspective, the following things are important :
Prelims level: World Employment and Social Outlook: Trends 2021
Mains level: Unemployment since the pandemic
The report titled World Employment and Social Outlook was recently released by the International Labour Organization (ILO).
About the report
- The report analyses the impact of the crisis on the labour market across the world.
- It offers projections for recovery and gives details of the unequal impact of the crisis on different groups of workers and enterprises and calls for a broad-based human-centred recovery.
Findings of the report
- There has been an unprecedented disruption to labour markets worldwide due to the COVID-19 pandemic, which has affected the lives of the younger generation and brought about disruption to their education.
- Also made it more difficult for them to enter the labour market and hold on to their jobs.
- The pandemic worsened long-standing inequalities with many women workers dropping out of the labour force.
- For informal and low-skilled workers, working from home was not an option.
- Many had to face huge health risks to keep their jobs, often with no access to social security benefits.
Major highlights of the report
- Global unemployment is expected to be at 205 million in 2022, surpassing the 2019 level of 187 million.
- The jobs shortfall induced by the novel coronavirus disease (COVID-19) pandemic was 75 million in 2021 and is expected to be 23 million in 2022.
- An estimated additional 108 million workers and their family members now live in poverty.
The long road to recovery
- The recovery would remain fragile in many countries due to the uneven rollout of vaccination campaigns and higher levels of public debt and deficits that would make it difficult to tackle the effects of the pandemic.
- There is an urgent need to build back better — create productive employment opportunities and foster long-term labour market prospects for the most vulnerable.
- There is a need to strengthen social protection schemes like the MGNREGS in India and make sure nobody is left behind.
- This would require strong institutions and social dialogue and strong international cooperation to fight global disparities.
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