In the News

New life for old ties: Are India and the US about to improve relations?

Shivam Vij

September 27, 2013

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As India’s Prime Minister Manmohan Singh meets with US President Obama in Washington today, analysts see it as part of a larger sign that New Delhi is ready to repair recently frayed US-India economic ties.

In 2005, President George W. Bush pushed for India to become the only country to get a waiver from the Nuclear Suppliers Group to receive civil nuclear fuel without having signed the Non-Proliferation Treaty. Relations between the US and India became strained when the US sensed it did India a huge favor but got little in return: Not only did India slam the US with hefty liability fines on the fuel it helped India secure, but India did not pursue promised economic reforms to create more opportunities for US business.

But, on the eve of his visit to the US, Prime Minister Singh allowed for a key sticking point in the relationship to come unstuck, and analysts are hopeful that this could grease ties – at least a bit.

“This visit is incremental, not transformational,” says Samir Saran, vice president of the Observer Research Foundation, a leading New Delhi think-tank.

The Indian Parliament ratified the Indo-US civil nuclear deal – the same deal that President Bush was behind – in 2008. Then, two years later, it passed a nuclear liability law that imposed liability on nuclear fuel suppliers’ with heavy financial damages in case of a nuclear accident.

Dismay in Washington about this stalled the deal, but Singh reinterpreted the law to mean Indian nuclear companies could negotiate the scope and extent of liability on the nuclear fuel supplier on a case-by-case basis.

“Fuel suppliers have a point that the global practice is [a] liability for the plant operator,” says C. Uday Bhaskar, a leading Indian foreign policy commentator explaining the Indian viewpoint. “An accident can be of three kinds – material related, operations related, or unforeseen exigencies such as natural disasters, as was the case in Fukushima,” says Mr. Bhaskar adding that leaving it for the plant operator to decide the terms and extent of liability is a move that makes sense.

Analysts say that it may still be a while before there are nuclear fuel transfers to India. But, says Ron Somers, chief of the Indo-US Business Council, this is a solid step forward. “This is progress and we have to be patient with one another’s democracy,” he says.

And it comes at a key time. Many in New Delhi believe that the many policymakers in the US are not actually happy about the Indo-US nuclear deal.

“Over the past few years, voices have grown louder in Washington [saying] that the exception for India was misplaced,” says Mr. Saran.

In June, 170 US lawmakers complained to President Obama that Indian import policies in a variety of sectors were hurting US jobs. And on a visit to India in July, Vice President Joe Biden pointed out that India seemed reluctant to open up to US business. India responded by finally allowing foreign direct investment in single-brand retail, thus opening (somewhat controversially) doors for Wal-Mart to set up shop in India.

Analysts say India looks less attractive today because its economic growth has nearly halved to 4.4 percent partly because the Singh government has been unable to pursue economic reform. An economic turnaround is not expected before the April 2014 general elections.

Analysts say a true boost in relations hinges on a preliminary business agreement between US-based Westinghouse Electric Co. and the state-owned Nuclear Power Corporation of India to set up a nuclear power plant in India’s Gujarat state. The Indian government is keen to use nuclear energy to meet its massive power shortfall.

While India is still pressing for US visa restrictions on skilled workers to be relaxed, India has admitted it needs to do more to address US concerns over trade ties. At $60 billion, Indo-US trade is one-eighth the size of US-China trade.

“It arises from the macro-economic situation. US friends mention concerns about economic reforms and specific policy issues in India. These concerns are not unique to the US. They are, first and foremost, of concern to Indians,” India’s National Security Adviser Shivshankar Menon said.

In the News

India’s rupee crisis crimps middle class lifestyles

Agence France-Presse in New Delhi

India’s government still struggles to provide reliable basic services to a majority of its citizens, trapping hundreds of millions of them in poverty. Now the country’s richest firms have been told they must help.

 Under the new amended Companies Act passed last month by parliament, large businesses have been asked to spend 2 per cent of their profits each year on Corporate Social Responsibility (CSR).

 “The idea is that if we could divert some corporate energy and the corporate way of doing business into our development sector, for a country like India it could help enormously,” said the head of the Indian Institute of Corporate Affairs (IICA), Bhaskar Chatterjee.

 CSR is broadly – some say vaguely – defined in the law to mean funding programmes for education, poverty alleviation, protecting the environment or tackling disease, among others. However, the spending requirement is not legally binding.

 Nevertheless, it’s one of the first such laws of its kind in the world, promising a cash bonanza for charities and non-government organisations while raising serious concerns the funds could worsen India’s endemic corruption problem.

 CSR has been imposed across much of corporate India. Any business with sales of more than 10 billion rupees (HK1.2 billion), a net worth of 5.0 billion rupees, or bottom-line profits of 50 million rupees is liable.

 They must set up a board to implement and report on the company’s CSR policy, in theory ensuring that an average of 2 per cent of the net profits of the previous three years is spent on the scheme annually.

 Failure to file a report on this spending, as with other financial disclosure requirements, will result in fines and possibly imprisonment for a company’s directors.

 But the spending itself is not compulsory. The final law says companies should set aside 2 per cent of profits for CSR and must report on their activities, but it also gives them an easy get-out by claiming there is nothing suitable to spend the money on.

 IICA, a business group established by the ministry of corporate affairs, calculates that 7,000 companies qualify, creating a possible annual pool of funds estimated at between 120-150 billion rupees .

 The success of the CSR revolution will depend on how companies approach the new rules, says Samir Saran from the New Delhi-based think-tank Observer Research Foundation.

 The money could become a “slush fund” channelled into charities and NGOs run by politicians “a legal way of bribing,” says Saran, or into foundations run as pet projects by the family members of business owners.

 “We have to be sure that this is not another policy with good intentions and horrible consequences,” he said. “It is how it is implemented that will decide its success.”

This article appeared in the South China Morning Post print edition as Rich companies to pay 2pc of profits to help poor

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Columns/Op-Eds, In the News, Non-Traditional Security

Keep cyberspace free

SAMIR SARAN | Sep 12, 2013, 12.00 AM IST

It is a global commons that cannot be controlled by any government or corporation.

History today stands on the cusp of a technological pivot much like it did 160 years ago. When US commodore
Matthew Perrysailed into Tokyo Bay in 1853, he found a Japan so fossilised in time by its technophobic bureaucracy and protectionist businesses that the very sight of his steam-belching ships was enough to make the nation capitulate.

This same moment is playing out today in the realm of cyberspace where the surge of collective technological creativity of the masses has deeply dented the power of governments and institutions that were once the drivers of innovation.

Consequently one finds a steady stream of Goebbelsian propaganda to create a phantom enemy intended to terrorise a population into giving up its rights and privileges. The government and big private players are the last and only line of defence between civilisation and a complete descent into anarchy — or so the argument goes. Not true. Anarchy and technology go hand in hand; technology and innovation owe their existence to anarchy.

Anarchy and technology must continue to contest and cooperate to shape cyberspace. This is a process as old as the universe and evolution itself, where each new development brings both danger and opportunity. This is humanity’s technological evolution. There must be no space for sovereign or business interests to control, securitise or regulate this evolving virtual space. This is, after all, the only genuinely free market place ever since the advent of capitalism, a market offering equal opportunities, stakes and roles for everyone.

Counterposing national security and cyberspace or making international cooperation dependent on cybersecurity is both pompous and misplaced. Cyberspace is a free-wheeling mind-space at the cutting edge of innovation precisely because of the absence of sovereignty and artificial barriers. Declaring sovereignty here is as absurd as extending one’s jurisdiction deep into the minds of others.

For example, Libya in 2010 decided to seize .Ly URL shorteners, while the US has recently seized URLs of companies operating abroad because their servers were in the US and American law was at odds with the laws of those countries. This is evidently not about security. It’s about control. It’s about testing the waters to see how far one can go and how far people will cower down. Cyberspace is therefore on the frontline of the battle between freedom and control in the 21st century.

Governments though aren’t the only ones throwing a fuss. Some of the strongest proponents of greater regulation and control over the cybersphere are in the private sector. On the one hand they want to use the seamless fluidity, innovation, reach and speed of this space — the ultimate capitalist ideal — to their advantage. On the other, like the very worst kind of communists, they want to lay down the rules for how this space works, but expect everyone to pick up the tab for their security.

If these companies wish to use cyberspace, they need to be willing to accept the attendant risks and costs, just like they are for road or sea transit. Transfer loss and copyright theft are all part of this. To claim that such losses then entitle one to regulate these cyber pathways is about as nakedly imperialistic an argument as the great European powers used to justify their land-grabs in response to any law and order situation in the 19th century. It is critical that the information age does not turn into an age of ‘digital imperialism’.

So, if governments and corporates don’t decide the rules, who does? The reality is that no corporate house or government has the organisational nimbleness to lay the rules here — technology’s moving too fast for that. Technology is both the problem and the solution. Just as every virus results in an antivirus and for every hack there emerges an anti-hack, technology must compete with technology and creativity must be matched by counter-creativity. Ultimately the needs of order cannot and must not be allowed to stifle creativity. Far from it, creativity must decide order.

Some forms of data do need protection though, such as security operations, banking details etc. Wonderful, so the owners and collators of such information should build their own secure parallel systems unconnected to the global commons that they are free to police, patrol and regulate as they see fit. If they want security they need to build their own infrastructure with its own fences. The commons cannot be fenced off, and neither can the property of others.

Cyberspace, however, fits into no single category — it is an intensely personal extension of one’s deepest thoughts and secrets. An extension of the mind, this makes it both private property as well as an outlet of expression, while at the same time being a global common open to everyone. Cede but a little on the right to property in this space and one loses the right to one’s freedom of expression. This debate is also the frontline between personal liberty and authoritarianism.

Every time the interests of the state and the freedom of the individual collide, the balance of the narrative in the cyber-world must lie with the individual. That is what is truly at stake here; the personal liberty of six billion people.

The writer is vice-president, Observer Research Foundation.

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Books / Papers, BRICS


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The objective of this document is to formulate a long-term vision for BRICS. This in turn flows from substantive questions such as what BRICS will look like in a decade and what the key priorities and  achievements will be. It is true  that  BRICS is a nascent, informal grouping   and   its   agenda   is  evolving   and   flexible.   Therein  lays  the uniqueness of BRICS. The BRICS leaders have reiterated that  BRICS will work  in  a gradual,  practical and  incremental manner. Nonetheless, the grouping  needs  a long-term vision  to  achieve  its  true  potential for two reasons: (1) to dove-tail  the tactical and individual activities into  a larger framework and direction; and (2) to help in monitoring the progress of the various sectoral initiatives in a quantifiable manner.

The  Track  II BRICS dialogue,  under  the  chairmanship of India  in 2012, has been robust. On March  4th  – 6th,  2012,  academics and experts  from the five BRICS nations—Brazil, Russia,  India,  China and South  Africa— assembled  in  New  Delhi   for  the   4th   BRICS  Academic   Forum. The overarching theme was “Stability, Security  and  Growth.” This  theme is useful for understanding the motivation and ethos of BRICS as a platform for dialogue and cooperation on issues of collective interest.

The  dialogue  led to the drafting of a comprehensive set of recommendations for BRICS leaders  (Annexure 1). The  17  paragraphs that  capture the  recommendations to  the  BRICS leaders  were  reached through a consensual process between  60 academics and experts from the five countries. Forum  delegates  contributed a number of research and policy papers  that  formed  the basis for the enriching discussions. Each of these  papers  highlighted key  areas  for  cooperation, within the  overall construct of the BRICS agenda.  This  research led to a significant build-up of knowledge on BRICS. This  long-term vision document is an attempt to aggregate the dialogue and research that  has fed the Track II process so far and to build upon it.

Broadly speaking, the document is divided into four sections. The first, on ‘Common Domestic Challenges’, aims to pinpoint multiple areas in which sharing experiences and best practices within the BRICS Forum  will help to respond to common problems. For example, BRICS nations have vastly differing levels of educational attainment and healthcare policies. As large developing   countries with  significant  governance challenges,  but  also ‘demographic dividends’ and  other  drivers  of growth  to reap,  BRICS can greatly benefit from innovative ideas emanating from similarly positioned nations.

The  second  the  matic section focuses  on  ‘Growing  Economies, Sharing Prosperity’. Given  the  huge distance that  the  BRICS nations have yet to cover   in   tackling  poverty   and   providing   livelihoods  to   their   rising populations, there  is no option other  than maintaining and  accelerating economic growth.  This  section outlines the necessity of deepening intra- BRICS  and  worldwide   trade   and  economic synergies.   Additionally,  it documents growing energy needs and discusses how the economic growth imperative affects the BRICS discourse on climate change.

The third section, titled ‘Geopolitics, Security and Reform of International Institutions’, outlines an enhanced role for BRICS within an increasingly polycentric world  order.  Within the  United  Nations  (particularly the Security  Council), enhanced BRICS representation can institutionalise a greater  respect  for  state   sovereignty and  non-intervention. In  Bretton Woods Institutions, like the IMF and World Bank, BRICS seeks to reform voting  shares   to  reflect  the  evolved  global  system, different  from  that forged in the immediate aftermath of World War II. Finally,  as leaders  in the   developing   world,   BRICS  nations  seek  to  create   a  development discourse that better represent their aspirations.

The  fourth thematic section, on the  ‘Other Possible  Options for Cooperation’, outlines possible  developments to further collective engagement once the necessary prerequisites are achieved. At the present juncture, it  may  be  too  early  to  think of  BRICS  becoming a  formal, institutionalised alliance. However,  it  is important for the  grouping  to envision a commonality of purpose, continuity of operation and dialogue beyond annual summit meetings.

There are five prominent agendas  of cooperation and  collaboration that emerge from this  vision document. These themes are integral to the very idea of long-term engagement between  the  BRICS nations and provide  a framework for accelerating momentum and  increasing significance over the long term:

1.         Reform of Global Political  and Economic Governance Institutions: This  is the centrepiece of the BRICS agenda,  which  in many  ways resulted in the  genesis  of the  grouping. With  the  move  towards a polycentric world order,  BRICS nations must assume a leadership role in the global political  and economic governance paradigm and seek greater equity for the developing world. Over the coming years, they  must continue to  exert  pressure for  instituting  significant reforms within institutions—such as the United Nations Security Council (UNSC),  the World Bank, and the International Monetary Fund  (IMF). Various  suggestions outlined in this  report  provide  a constructive framework for enabling substantive reforms.

2.         Multilateral Leverage: There are multiple formats for engagement and cooperation in order to leverage the BRICS identity at the global high  table.  The  outcome of the  BRICS officials  meeting on  the sidelines of the  November 2012  G20  in  Mexico,  where  it  was decided  to  create  and  pool  a currency reserve  of up  to  USD  240 billion   is  one   instance  of  enhanced  intra-BRICS cooperation. Similarly, the  Conference of Parties, the  United Nations, and  the World  Trade   Organisation are  existing   cooperative frameworks,

within which BRICS countries can collectively position themselves by fostering  intra-BRICS consensus on issues  of significance. The United Nations is central to a multilateral framework, and there  is significant potential for BRICS to collaborate and  assume a more prominent  role   in   global   political   and   economic  governance, conflict  resolution etc.,  through institutions such  as the  Security Council.

3.         Furthering Market Integration: Global  economic growth  has  been seriously  compromised in the years following the Global Financial Crisis. Each percentage point  reduction in global growth  leads to a significant  slowdown  of  economic development within  BRICS which hinges  upon  a necessary component of economic growth.  In this   regard,   market  integration within  BRICS,  whether in  the context of trade, foreign investments or capital markets, is a crucial step  to  ensure that  the  five countries become  less  dependent on cyclical trends in the global economy.

4.         Intra-BRICS  Development   Platform:  Each   BRICS  nation  has followed a unique development trajectory. In the post-Washington Consensus era, developing  economies within BRICS must set the new development agenda, which in turn must incorporate elements of inclusive growth,  sustainable and  equitable development, and perhaps most   importantly,  uplifting those  at  the  bottom of the pyramid. The  institution of BRICS-specific  benchmarks and standards, as  well  as  more  calibrated collaboration on  issues  of common concern including the rapid pace of urbanisation and the healthcare needs of almost half the world’s population represented by BRICS, must be prioritised.

5.   Sharing of Indigenous and Development Knowledge and Innovation Experiences  across   Key  Sectors:   Along   with   the   tremendous potential for resource and technology sharing and mutual research and development efforts, coordination across  key sectors—such as information technology, energy generation, and high-end manufacturing—would prove immensely beneficial for accelerating the BRICS development agenda. Moreover, the BRICS nations must share  indigenous practices and experiences to learn and respond to the immense socio-economic challenges from within and outside. This  vision document contains multiple suggestions for instituting such  sharing mechanisms through various  platforms and cooperation channels.

This   document  analyses  the   above   themes  in   detail.   Each   section concludes with  recommendations specific  to  the  chapter’s theme. The final  section contains synthesised suggestions which  serve as an outline/framework for enhancing intra-BRICS cooperation and collaboration. The  official declarations/statements of BRICS leaders  are available in Annexure (s) 2 to 5.